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                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                   FORM 10-QSB



   [X) QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE
                                   ACT OF 1934
                  For the quarterly period ended March 31, 1999

                                       or

  [ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
                        For the transition period from to

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

                        Commission file number: 333-34765


                           Ixion Biotechnology, Inc.
        (Exact Name of Small Business Issuer as Specified in Its Charter)


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

                   Delaware                     59-3174033
          (State of incorporation) (I.R.S. Employer Identification No.)

                          13709 Progress Blvd., Box 13
                                Alachua, FL 32615
                    (Address of principal executive offices)

                   Registrant's telephone number: 904-418-1428

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

Check whether the issuer: (1) filed all reports required to be filed by Section 
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes  X  No      
                                                             

The number of shares of the registrant's common stock, par value $0.01 per 
share, outstanding as of April 13, 1999 was 2,514,014.

================================================================================
<PAGE>


                            Ixion Biotechnology, Inc.
                               Index to Form 10-QSB


Part I. - Financial Information                                            Page
                                                                           
Item 1.  Financial Statements (unaudited)

  Condensed Balance Sheet - March 31, 1999. . . . . . . . . . . . . . . . . . 2

  Condensed Statements of Operations - Three Months Ended
  March 31, 1999 and 1998 and for the period March 25, 1993
  (Date of Inception) through March 31, 1999. . . . . . . . . . . . . . . . . 3

  Condensed Statements of Cash Flows - Three Months Ended
  March 31, 1999 and 1998 and for the period March 25, 1993
  (Date of Inception) through March 31, 1999. . . . . . . . . . . . . . . . . 4

  Notes to Condensed Financial Statements.... . . . . . . . . . . . . . . . . 5


Item 2.   Management's Discussion and Analysis or Plan of Operation . . . . . 7

Part II. - Other Information

Item 2.   Changes in Securities and Use of Proceeds. . . . . . . . . . . . . 13

Item 6.   Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . .13

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15

Exhibit Index. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>

Part I.  Financial Information

Item 1.  Financial Statements

Balance Sheet
March 31, 1999
Unaudited

                                     Assets
Current  Assets:                                
   Cash and cash equivalents                                      $      20,123
   Accounts receivable                                                    1,916
   Prepaid expenses                                                       1,717
   Other current assets                                                     500
                                                                  -------------
       Total current assets                                              24,256
                                                                  -------------
Property and Equipment, net                                              55,888
                                                                  -------------
Other Assets:                           
   Patents and patents pending, net                                     289,582
   Other                                                                  5,344
                                                                  -------------
       Total other assets                                               294,926
                                                                  -------------
       Total Assets                                               $     375,070
                                                                  =============
                       Liabilities and Capital Deficiency

Current Liabilities:                            
    Accounts payable                                              $      58,083
    Bridge loans payable to officers                                    415,000
    Current portion of notes payable                                     12,408
    Accrued expenses                                                     46,722
    Interest payable                                                     19,411
                                                                  -------------
Total current liabilities                                               551,624
                                                                  -------------


Long-Term Liabilities:                          
    Notes payable                                                       649,121
    Liability under research agreement                                   42,317
    Deferred rent, including accrued interest                            35,878
    Deferred fees and salaries, including accrued interest              783,858
                                                                  -------------
       Total long-term liabilities                                    1,511,174
       Total liabilities                                              2,062,798
                                                                  -------------




Capital Deficiency:                             
    Common stock, $.01 par value; authorized 4,000,000, issued and            
     outstanding 2,514,014 shares at March 31                            25,140
    Common stock warrants outstanding                                    35,494
    Additional paid-in capital                                        1,625,142
    Deficit accumulated during the development stage                 (3,129,630)
    Less unearned compensation                                         (243,874)
                                                                  -------------
        Total capital deficiency                                     (1,687,728)
                                                                  -------------
Total Liabilities and Capital Deficiency                          $     375,070
                                                                  =============









See accompanying notes to condensed financial statements     
<PAGE>

Statements of Operations

                                                              
                                                                For the Period
                                                                March 25, 1993
                                       Three Months Ended    (Date of inception)
                                            March 31,              through     
                                        1999        1998        March 31, 1999
                                       -------    -------      ----------------
                                           Unaudited              Unaudited
Revenues:                                                               
 Income under research agreement     $       0   $      0        $      275,001
 Income from SBIR Grant                      0          0                91,650
 Interest income                            48        146                23,480
 Other income                              445        981                18,250
                                     ---------   --------       ---------------
        Total revenues                     493      1,127               408,381
                                     ---------   --------       ---------------

        

Expenses:                                                               
 Operating, general and administrative  89,001    118,884             1,557,508
 Research and development              110,354     87,562             1,621,091
 Interest                               37,170     28,390               359,412
                                     ---------   --------        --------------
        Total expenses                 236,525    234,836             3,538,011
                                     ---------   --------        --------------

Net Loss                            $(236,032)  $233,709)        $   (3,129,630)
                                    ==========  =========        ==============


Net Loss per Share (Basic)          $   (0.09)  $  (0.10)  
                                    ==========  =========


Weighted Average Common Shares       2,513,991  2,460,070
                                    ==========  =========















See accompanying notes to condensed financial statements






<PAGE>



Statements of Cash Flows
<TABLE>
<CAPTION>

                                                                                                                    For the Period
                                                                                                                    March 25, 1993
                                                                              Three Months                       (Date of inception)
                                                                             Ended March 31                             through
                                                                       1999                  1998                    March 31, 1999
                                                                      ------                ------                  ---------------
                                                                               Unaudited                               Unaudited
<S>                                                          <C>                   <C>                            <C>
     
Cash Flows from Operating Activities:                                                                             
 Net loss                                                         $  (236,032)          $  (233,709)                   $ (3,129,630)
 Adjustments to reconcile net loss to net cash used in 
  operating activities:                                                                                   
    Depreciation                                                        5,200                 3,104                          43,055
    Amortization                                                          774                   713                           7,774
    Amortization of debt discount                                      14,292                14,292                         147,684
    Stock warrants issued under license agreement                         -                     -                            20,465
    Stock options/warrants issued for consulting services                 -                     -                            30,000
    Stock compensation                                                 40,725                23,840                         424,928
    Decrease (increase) in prepaid expenses and     
     other current assets                                                (641)                  421                          (2,042)
    Decrease (increase) in accounts receivable                            -                     -                            (1,916)
    Increase (decrease) in liability under 
     research agreement                                                   -                     -                            42,317
    Increase (decrease) in accounts payable and     
     accrued expenses                                                  11,049                 7,405                         106,414
    Increase in deferred fees and salaries                             64,580                59,453                         757,306
    Increase in deferred rent                                          13,783                 3,637                          35,878
    Increase in interest payable                                        6,590                   -                            39,788
                                                                     ----------             ---------                    -----------
       Net cash used in operating activities                          (79,680)             (120,844)                     (1,477,979)
                                                                     ----------             ---------                    -----------

Cash Flows from Investing Activities:                     
 Purchase of property and equipment                                       -                     -                           (44,294)
 Organization Costs                                                       -                     -                              (436)
 Payments for patents and patents pending                                (113)               (3,671)                       (284,228)
                                                                     -----------            ---------                    -----------
        Net cash used in investing activities                            (113)               (3,671)                       (328,958)
                                                                     -----------            ---------                    -----------
Cash Flows from Financing Activities:           
 Proceeds from issuance of subordinated notes       
   payable to related parties                                          90,000                   -                           445,307
 Proceeds from issuance of convertible notes payable                      -                     -                           787,270
 Proceeds from issuance of common stock                                 1,000               145,500                         756,900
 Principal reductions in notes payable                                 (4,897)               (2,692)                        (28,842)
 Payment of deferred offering costs                                    (4,821)              (38,145)                       (121,382)
 Payment of loan costs                                                    -                     -                           (12,194)
                                                                     -----------            --------                     -----------
         Net cash provided by (used in)        
              financing activities                                     81,282               104,663                       1,827,059
                                                                     -----------            --------                     -----------


Net Increase (Decrease) In Cash and Cash Equivalents                    1,490               (19,852)                         20,123



Cash and Cash Equivalents at Beginning of Period                       18,633                44,443                             -  
                                                                     -----------            --------                     -----------
Cash and Cash Equivalents at End of Period                        $    20,123            $   24,591                     $    20,123
</TABLE>

See accompanying notes to condensed financial statements
<PAGE>

Notes to Condensed Financial Statements
Three Month Period Ended March 31, 1999



1. Basis Of Presentation

   The accompanying unaudited condensed financial statements for the three 
   months ended March 31, 1998 and 1999, and for the period March 25, 1993 
   (date of inception) through March 31, 1999, have been prepared in accordance
   with generally accepted accounting principles for interim financial 
   information.  Accordingly, they do not include all the information and 
   footnotes required by generally accepted accounting principles for complete 
   financial statements.  These interim financial statements should be read in 
   conjunction with the December 31, 1998 financial statements and related notes
   included in the Company's Annual Report on Form 10-KSB for the year ended 
   December 31, 1998.  In the opinion of the Company, the accompanying unaudited
   condensed financial statements contain all adjustments, consisting only of 
   normal recurring accruals, necessary to present fairly the Company's 
   financial position, results of operations, and cash flows for the periods 
   presented.  The results of operations for the interim period ended 
   March 31, 1999 are not necessarily indicative of the results to be expected 
   for the full year.

2. Income Taxes

   The components of the Company's net deferred tax asset and the tax effects of
   the primary temporary differences giving rise to the Company's deferred tax 
   asset are as follows as of March 31, 1999:

               Deferred compensation                               $    310,000
               Net operating loss carry forward                         926,000
                                                                      --------- 
               Deferred tax asset                                     1,236,000
               Valuation allowance                                 $ (1,236,000)

               Net deferred tax asset                              $          0
                                                                      ---------

3. Stockholder's Equity 

   In December, 1997, the Company commenced the public offering of up to 400,000
   Units of newly-issued securities for an aggregate of $4,000,000.  Each Unit 
   consists of one share of common stock, $0.01 par value, and a .25 Charitable
   Benefit Warrants.  Each whole Charitable Benefit Warrant entitles the holder
   to purchase one share of the Common Stock at a price of $20.00 per share.  
   The Company had received proceeds of $344,200 through March 31, 1999.  The 
   offering, which is currently suspended, will continue until all Units have 
   been sold or until December 10, 1999, unless sooner terminated or extended.
   If the proceeds from the offering and the Q-Med AB investment described below
   in Note 6 prove to be insufficient, then the Company would be required to 
   obtain additional funds through equity or debt financing, strategic alliances
    with corporate partners, or through other sources.

   There can be no assurance that the Company will be successful in obtaining 
   the required financing.  Under current circumstances, the Company's ability
   to continue as a going concern depends upon either completing the Q-Med
   transaction or obtaining additional funds through other sources.

   Offering costs of $121,382 have been offset against the proceeds of the 
   offering through March 31, 1999.


4. Related Party Transactions

   The Chairman and Chief Executive Officer and the President of the Company
   have agreed to extend the Company financing in the form of bridge loans.  
   Interest on the bridge loans from officers is at 8% but can be reset
   annually, at the election of either party, to the prime rate in effect on 
   January 1 of any given year, plus 3%.  Under these agreements, the Company 
   borrowed a total of $415,000, which was still outstanding at March 31, 1999 
   and is due on demand.

<PAGE>


5. Subsequent Events

   On April 16, 1999, the Company executed an agreement in principal with 
   Q-Med AB,a Swedish company whose headquarters are in Uppsala, Sweden.  Under 
   the agreement, Q-Med will purchase not less than three million shares of the 
   Company's common stock, in exchange for 

                  *   $6,000,000 in cash, 
                  *   a royalty-free license to Q-Med's non-animal, stabilized 
                      hyaluronic acid  technology for use as an encapsulation 
                      material for transplantable islets, and
                  *   the redemption of up to $571,670 of the Company's
                      Convertible Unsecured Notes which note holders elect not 
                      to convert in August 2001.

   The transaction is contingent on the execution of a mutually satisfactory 
   stock purchase agreement and the successful completion of additional 
   financing by Q-Med, on or before July 15, 1999.  Q-Med advanced $300,000 on 
   April 16, 1999, upon execution of the agreement in principle, which will be 
   converted into approximately 150,000 newly-issued shares of Ixion common 
   stock at the closing or upon termination of the transaction.  At the closing,
   on or before September 1, 1999, Q-Med will pay $3 million in exchange for 
   1.5 million newly-issued shares of common stock and a warrant to purchase an 
   additional 1.35 million shares for $2.7 million on September 1, 2000.  Upon 
   the exercise of the warrant in 2000, Q-Med would own approximately 50% of the
   Company.














<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operations 

     The following discussion and analysis should be read in conjunction with 
the Condensed Financial Statements and the related Notes thereto included 
elsewhere in this report.  This report contains forward-looking statements that
involve risks and uncertainties.  Our actual results may differ significantly 
from the results discussed in the forward-looking statements.  These and
additional risk factors are identified in our annual report to the Securities
and Exchange Commission filed on forms 10-KSB and in other SEC filings.

Overview

     Ixion is a development stage, biotechnology company.  We are in the 
development stage because we are devoting substantially all of our efforts to 
establishing our business, and our planned principal operations have not 
commenced.

     Since we were founded in March of 1993, we have principally been doing 
research and development, securing patent protection, and raising capital.  
We have not received any revenues from the sale of products.  In June 1998, 
we reached an agreement in principle with the University of Florida Diagnostic 
Referral Laboratories for them to provide a service to physicians using our 
molecular diagnostic test, the XEntrIx TM Oxalobacter formigenes Monitor.  
We have received no revenue to date under this agreement.  Provided the 
Diagnostic Referral Laboratories markets the service and provided doctors
accept the test as useful, we may receive revenue from this test during 1999. 
However we do not expect any of our other product candidates to be commercially
available for at least several years.  From inception through March 31, 1999, 
we incurred cumulative losses of $3,093,328. These losses were due primarily to
expenditures on general and administrative activities, research and development,
patent preparation and prosecution, and interest charges.

     We expect to continue to incur substantial research and development costs 
resulting from 

                   * ongoing research and development programs,
                   * manufacturing of products for use in clinical trials and
                     preclinical and clinical testing of our products.  

     We also expect that general and administrative costs, including 

                   * amortization of patents,
                   * legal and regulatory costs necessary to support 
                     preclinical development and clinical trials,
                   * SEC reporting costs, and
                   * the creation of a marketing and sales organization, if 
                     warranted,

will increase in the future, assuming we can finance the increased requirements.
Accordingly, we expect to incur operating losses for the foreseeable future.

     We have only a limited operating history upon which you can base an 
evaluation of our prospects.  You should consider the risks, expenses, and 
difficulties encountered by companies at an early stage of development when 
evaluating our prospects.  To address these risks, we must, among other things,

                   * successfully develop and commercialize our products, 
                   * secure all necessary proprietary rights,
                   * respond to competitive developments, and
                   * continue to attract, retain and motivate qualified persons.

     There can be no assurance that we will be successful in addressing these 
risks. 



<PAGE>


     Our operating expenses will depend on several factors, including the level
of research and development expenses and our success in raising capital. 
Research and development expenses will depend on the progress and results of 
our product development efforts, which we cannot predict.  We may sometimes be 
able to control the timing of development expenses in part by accelerating or 
decelerating preclinical testing and clinical trial activities.  As a result of
these factors, we believe that period-to-period comparisons in the future are 
not necessarily meaningful and you should not rely on them as an indication of 
future performance.  Due to all of the foregoing factors, it is possible that 
our operating results will be below the expectations of market analysts, if any,
and investors. In such event, the prevailing market price, if any, of our common
stock would likely be materially adversely affected.

Results of Operations

Three Months Ended March 31, 1999 and 1998

     Total revenues decreased by 56% from $1,127 in the first quarter of 1998 to
$493 in the first quarter of 1999 mainly as a result of the decline in other
income resulting from a reduction in consulting provided by us. We expect income
to increase in 1999 as a result of the award of a research contract under the
Small Business Technology Transfer ("STTR") Program which will provide 
approximately $40,000 of income in 1999.

     Operating, general and administrative expenses decreased 25% from $118,884
in the first quarter of 1998 to $89,001 in the equivalent period of 1999. These
decreased expenses reflect decreased personnel and legal fees in the first 
quarter of 1999 compared to the first quarter of 1998.  The Company expects its
general and administrative expense to increase during the remainder of 1999 as 
a result of an increase in the scale of operations resulting from the pending 
Q-Med transaction, an increase in amortization of capitalized patent costs as 
new patents are issued, continued amortization of capitalized debt issue costs,
and legal and accounting expenses resulting from filings with the Securities 
and Exchange Commission under the Securities Exchange Act of 1934.

     Research and development expenditures consist primarily of payroll-related
expenses of research and development personnel, laboratory supplies, animal
supplies, laboratory rent, depreciation on laboratory equipment, development 
activities, payments for sponsored research, and payments to scientific and 
regulatory consultants.  Research and development expenses increased 26% from 
$87,562 in the first quarter of 1998 to $110,354 in the first quarter of 1999,
mainly due to increased rent, utilities, and interest charges on the purchase 
of lab equipment, offset to some degree by a reduction of personnel (and 
accompanying reduction in lab supplies), and a reduction in preclinical 
expenses. The Company anticipates that its research and development expenses 
will increase during the remainder of 1999 as a result of an increase in the 
scale of operations resulting from the pending Q-Med transaction and as a result
of the receipt of the STTR grant referred to above.

     Interest expense increased 31% from $28,390 in the first quarter of 1998
to $37,170 in the first quarter of 1999 due primarily to interest on bridge 
loans from officers, and the compounding of interest on deferred fees and 
salaries, including deferred interest, payable to related parties.  Interest 
expense will continue to increase during 1999, as a result of the continued 
compounding of interest on deferred fees and salaries accounts and loans we 
have received and expect to receive. 

Liquidity and Capital Resources 

     In December, 1997, we commenced the public offering of 400,000 Units of 
newly issued securities, for an aggregate of $4,000,000.  Each Unit consists of
one share of common stock and .1/4 of a Charitable Benefit Warrant.  Each whole
Charitable Benefit Warrant entitles someone to purchase one share of common 
stock at a price of $20.00 per share. Ixion is directly (except in Florida where
sales must be made through a broker) making the offering in ten states, 
primarily over the Internet.  There is no minimum number of Units to be sold in
the offering, and all funds received have gone and will go immediately to us. 
On December 10, 1998, we extended the offering through the earliest of: 

                   * the sale of all Units, 

<PAGE>

                   * December 10, 1999, or
                   * the date we decide to close the offering.

In addition, we have reduced the size of the offering from 400,000 Units to 
150,000 Units, including the 34,420 Units we sold to date.

     In connection with the contemplated transaction with Q-Med AB, described
below, we have temporarily suspended the offering until at least June 15, 1999.
Depending on the completion of the Q-Med transaction, we may withdraw the 
offering in the future.

     In February, 1999, we received notice that the NIH had awarded us a 
$100,000 Phase I grant under the Small Business Technology Transfer Program for
research in our oxalate technology. We will subcontract approximately $60,000 
to the University of California, Irvine, but the remaining $40,000 will be 
available during 1999 to support oxalate research at Ixion. We have several 
other grants pending.

     During 1998, our development activities were funded primarily by the 
proceeds from the offering and bridge loans from the Chairman and Chief 
Executive Officer and the President.  The bridge loans total $415,000 at 
March 31, 1999.  Interest on the bridge loans from officers is currently at 8% 
but can be reset annually, at the election of either party, to the prime rate 
in effect on January 1 of any given year, plus 3%.  We have no agreement with 
the officers to advance further funds, however, the officers have continued to
fund operating requirements voluntarily to meet working capital needs. Although
additional bridge loans may not be necessary during 1999 because of the Q-Med 
transaction, we can not assure you that, should such loans be necessary, the 
officers will continue to voluntarily fund them.  We do not have any bank 
financing arrangements.  Our long-term indebtedness consists primarily of 
deferred fees and salaries payable to related individuals and our unsecured 
convertible notes.

     At March 31, 1999, we had $20,123 in cash and cash equivalents.  Until
required for operations, our policy is to invest any excess cash reserves in
bank deposits, money market funds, certificates of deposit, commercial paper,
corporate notes, U.S. government instruments and other investment-grade quality
instruments.  On April 20, 1999, we received $300,000 in the form of a 
convertible loan from Q-Med pursuant to the Q-Med transaction described below.

     On January 1, 1996, we purchased laboratory equipment pursuant to a chattel
mortgage agreement in the amount of $32,309.  The agreement calls for monthly 
payments of $897, commencing August 1, 1996.  At March 31, 1999, $3,590 in 
principal remains outstanding under this agreement.

     In connection with a sponsored research agreement with Genetics Institute,
Inc. which was concluded during 1997, some patent-related expenses were 
reimbursed by Genetics Institute.  We may be contractually obligated to repay 
these reimbursed expenses in installments over a 36 month period upon a notice 
to or by Genetics Institute to the effect that their option to negotiate for a 
license to our technology, contained in the sponsored research agreement has 
expired. We have not given such notice, and, accordingly, reimbursement has not
commenced.  We have accrued $42,317 as a long term liability pending final 
notice under the agreement.

     Through March 31, 1999, we have paid offering-related expenses of $121,382
which have been applied against the proceeds of the public offering. 
We expect further offering-related expenses to be modest.

     On October 8, 1998, upon the expiration of our lease at the Biotechnology 
Development Institute, we moved to comparable rental facilities across the 
street from our former location. The new lease is for increased space and rent 
and for a three-year term, with two one-year renewal options. We expect that 
annual payments under the new lease (including repayment of funds provided by 
lessor for tenant improvements and an emergency generator) will be approximately
$84,000 per year. We will continue to have access, as a graduate affiliate, to
the Biotechnology Development Institute's specialized facilities, centralized 
equipment, and core laboratories.  Relocation has not materially affected our
research and development operations; however, we incurred relocation expenses
and have been obliged to purchase or lease laboratory and office furnishings
and equipment in the amount of approximately $55,000.  We expect to purchase or
lease additional lab equipment in the amount of approximately $30,000 in the 
future.



<PAGE>

     We have incurred negative cash flows from operations since our inception.
We have spent and expect to continue to spend, substantial funds to complete 
our planned product development efforts, commence clinical trials, and diversify
our technology.  Our future capital requirements and the adequacy of available
funds will depend on numerous factors, including

                   * the completion of the Q-Med transaction described below
                   * the success of the continuing public offering of our 
                     securities (in the event of a failure of the Q-Med    
                     transaction),
                   * the successful commercialization of the XEntrIx 
                     ( Oxalobacter formigenes Monitor (our new diagnostic test)
                     and IxC1-62/47 (our lead therapeutic compound),
                   * progress in our product development efforts,
                   * the magnitude and scope of development efforts, 
                   * progress with preclinical studies and clinical trials,
                   * the cost of contract manufacturing and research 
                     organizations,
                   * cost of filing, prosecuting, defending and enforcing patent
                     claims and other intellectual property rights,
                   * competing technological and market developments, and 
                   * the development of strategic alliances for the development
                     and marketing of our products.

The Q-Med Transaction

     On April 16, 1999, we reached agreement in principle with Q-Med AB, a 
biotechnology company based in Uppsala, Sweden. Under the agreement, Q-Med will
purchase not less than three million shares of Ixion common stock, in exchange
for 

                   * $6,000,000 in cash,
                   * a royalty-free license to Q-Med's non-animal, stabilized
                     hyaluronic acid  technology for use as an encapsulation 
                     material for our transplantable islets, and  
                   * the  redemption of up to $571,670 of our Convertible 
                     Unsecured Notes which note holders elect not to convert in
                     August 2001.

     The transaction is contingent on the approval by boards of both 
companies, execution of a mutually satisfactory stock purchase agreement, and 
the successful completion of additional financing by Q-Med, on or before July 
15, 1999.  Q-Med advanced $300,000 upon execution of the agreement in principle,
which will be converted into approximately 150,000 newly-issued shares of Ixion 
common stock at the closing or upon termination of the transaction.  At the 
closing, on or before September 1, 1999, Q-Med will pay $3 million in exchange 
for 1.5 million newly-issued shares of common stock and a warrant to purchase 
an additional 1.35 million shares for $2.7 million on September 1, 2000.  Upon 
the exercise of the warrant in 2000, Q-Med would own approximately 50% of Ixion,
which could amount to a change of control at that time.  Bengt (Agerup, Ph.D., 
majority stockholder in Q-Med and its Managing Director, will join the Ixion 
board at the closing.

     Q-Med, a growing, profitable Swedish  company, develops, manufactures
and sells natural, specialized medical implants. All of Q-Med's products are 
constructed using a proprietary form of non-animal, stabilized hyaluronic acid.
Hyaluronic acid is a natural polysaccharide, first isolated in 1934.  Its main
function in the body is to lubricate moveable parts like joints and muscles and
to transport substances to and within cells.  The majority of Q-Med's revenues
are accounted for by Restylane(r) for the filling out of lips, facial wrinkles,
and facial folds. 

     We must close the Q-Med transaction to meet our planned operating
requirements through December 31, 1999.  Failing that, we must successfully 
complete the suspended public offering.  Shortfalls in the proceeds of the
public offering to date have forced a curtailment in our operations to adjust
to reduced resources.  In the event our plans change or our assumptions change
or prove to be inaccurate or we fail to close the Q-Med transaction or the 
proceeds of the offering continue to be insufficient to fund operations at the
planned level (due to further unanticipated expenses, delays, problems or 



<PAGE>


otherwise), we will require additional financing.  We will be required to 
obtain additional funds in any event through equity or debt financing, 
strategic alliances with corporate partners and others, mergers or the sale of
substantially all our assets, or through other sources in order to bring our 
products through regulatory approval to commercialization.  The terms and prices
of any equity or debt financings or corporate combination may be significantly 
more favorable to new investors than those of the Units sold in the offering, 
resulting in significant dilution to current investors.  We do not have any 
material committed sources of additional financing.  We can not assure you that
additional funding, consolidation, or alliance, if necessary, will be available
on acceptable terms, if at all.  If adequate funds are not available, we may be
required to further delay, scale-back, or eliminate certain aspects of our
operations or attempt to obtain funds through arrangements with collaborative
partners or others that may require us to relinquish rights to certain of our 
technologies, product candidates, products, or potential markets.  If adequate 
funds are not available, our business, financial condition, and results of 
operations will be materially and adversely affected.

Product Research and Development Plan

     Our plan of operation for 1999 consists primarily of research and 
development and related activities, resources permitting, including:

                   * further research into the biology of islet and islet stem
                     cell growth and differentiation, aimed at developing cell 
                     lines of functioning islets for transplantation into 
                     diabetic patients;
                   * further research into identifying and characterizing novel
                     growth factors associated with islets to discover factors
                     important in islet cell differentiation and possible 
                     regulation of diabetes and to identify stem cell markers 
                     to which we hope to produce monoclonal antibodies useful 
                     in stem cell isolation
                   * research into differential gene expression studies on 
                     differentiated islet cells;
                   * further research into encapsulation materials for 
                     transplantation of islets;
                   * further preclinical development of a quantitative version 
                     of our molecular diagnostic test, the XEntrIx 
                     ( Oxalobacter formigenes Monitor,
                   * further preclinical development of our oxalate therapeutic
                     compound, IxC1-62/47;
                   * continuing the prosecution and filing of patent 
                     applications; and
                   * hiring additional employees.

     Our actual research and development and related activities may vary 
significantly from current plans depending on numerous factors, including 
changes in the costs of such activities from current estimates, the results of
our research and development programs, the results of clinical studies, the 
timing of regulatory submissions, technological advances, determinations as to 
commercial potential, the status of competitive products, and, most important,
our success in raising capital.  The focus and direction of our operations will
also be dependent upon the establishment of collaborative arrangements with 
other companies, and other factors. 
 
      We can not assure you that we will be able to commercialize our 
technologies or that profitability will ever be achieved.  We expect that our 
operating results will fluctuate significantly from quarter to quarter in the 
future and will depend on a number of factors, most of which are outside our 
control.

Year 2000 Compliance

     Many computer systems and computer chips embedded in equipment are unable 
to tell the difference between the year 1900 and the year 2000.  This is known 
as the Year 2000 issue. Many businesses are at risk for possible miscalculations
or systems failures as a result of their computers, software, or equipment's
not being Year 2000 compliant.

     Our assessment of Year 2000 compliance issues is not complete.  

     Software and Computers.  Our computers all run Windows operating systems  
which are or will be Year 2000 compliant according to our tests and information

<PAGE>



received from Microsoft.  We have been assured by the vendors that our office 
applications programs are Year 2000 compliant.  We have been also been assured 
by the vendor that our finance and accounting software, our only 
mission-critical software, is Year 2000 compliant.  

      Equipment.  Most of our laboratory equipment does not use a computer or
embedded chip.  Our policy is that all equipment that we purchase must be Year
2000 compliant.  Our assessment of our laboratory equipment is not complete.  

      With respect to equipment made available to us as a result of our 
affiliation with the Biotechnology Development Institute, we have requested a 
statement of compliance.  

      Suppliers.  We are contacting key suppliers regarding their Year 2000 
compliance in order to determine if there might be any effect on our operations.
In general, our suppliers (primarily scientific reagent and disposable 
equipment vendors), have developed or are in the process of developing plans to
address Year 2000 issues.  We will continue to monitor and evaluate the 
progress of our suppliers.

     In general our review of the potential consequences of Year 2000 compliance
issues on us leads us to believe that those issues will prove to be immaterial
to our business, operations, and financial condition.  Accordingly, we do not 
have contingency plans and have no plans to develop any unless our further 
assessment indicates one is necessary.  No material expenses have been incurred
to date, and none are anticipated.



<PAGE>

Part II - Other Information 

Item 2.  Changes in Securities and Use of Proceeds

     In 1997, the Company registered 400,000 newly-issued Units of its 
securities for direct sale on Form SB-2 at a price of $10.00 per Unit.  The 
registration statement, Commission Registration No. 333-334765, was declared 
effective on December 10, 1997 and Post-Effective Amendment No. 1 was declared
effective on March 19, 1998.  On December 10, 1998, the Company extended the 
offering, and thereafter filed Post-Effective Amendment No. 2 to reduce the 
number of Units being registered to 150,000 Units (including the Units already
sold), for an aggregate offering price of $1,500,000.  Each Unit consists of 
one share of common stock, $0.01 par value, and .25 Charitable Benefit Warrant. 
There is no minimum number of Units to be sold in the offering, and all funds 
received will go immediately to the Company.  The offering has not terminated 
and is not scheduled to terminate until the earliest of: the sale of all Units,
December 10, 1999, or the date on which the Company decides to close the 
offering; however, the offering is currently suspended pending the completion
of the Q-Med transaction described elsewhere in this report. The securities are
being sold directly by the Company (except when sales are to Florida residents,
in which case sales must be made through Unified Management Corporation, a 
Florida-registered broker dealer).  

     As of March 31, 1999, a total of 34,420 Units at an aggregate price of 
$344,200 have been sold.  From the effective date of the offering to 
March 31, 1999, $200 in expenses and $1,854 in commissions have been paid to 
Unified Management Company as broker and there have been no finders' fees.  
Other offering related expenses through March 31, 1998, amounted to $121,382,
all of which have been offset against proceeds.  No payments were made to 
directors, officers, general partners of the Company, or to their associates in
connection with the offering.  

     Net offering proceeds as of March 31, 1999 amounted to $228,818. The net 
proceeds were used entirely to fund the operations of the Company as reflected 
in the financial statements included elsewhere in this report. The use of 
proceeds still to be received from the offering is not expected to vary 
materially from the use of proceeds described in the amended registration 
statement.

Item 6.  Exhibits and Reports on Form 8-K

(a)      Exhibits

Exhibit        Description                                                 Page

(2)            Plan of Acquisition, Reorganization, Arrangement,           
               Liquidation or Succession                                   None

(4)            Instruments Defining the Rights of Security Holders         None

(10)           Material Contracts                                          None

(11)           Statement re: Computation of Per Share Earnings             None

(15)           Letter re: Unaudited Interim Financial Information          None

(18)           Letter re: Change in Accounting Principles                  None

(19)           Report Furnished to Security Holders                        None

(22)           Published Report re: Matters Submitted to Vote of 
               Security Holders                                            None

(23)           Consents of Experts and Counsel                             None




<PAGE>

(24)           Power of Attorney                                           None

(27)           Financial Data Schedule

(99)           Additional Exhibits                                         None

(b)       Reports on Form 8-K

     The Company filed a Form 8-K on April 30, 1999 in connection with the 
execution of an agreement in principal with Q-Med AB, pursuant to which Q-Med 
could acquire up to 50% of the common stock of the Company which could lead to 
a change in control of the Company. 

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

<PAGE>



                                   Signatures

     In accordance with the requirements of the Exchange Act, the registrant 
caused this report to be signed on its behalf by the undersigned, thereunto 
duly authorized.

                           Ixion Biotechnology, Inc.


Dated: May 13, 1999     By: /s/ Weaver H. Gaines                           
                            ------------------------  
                            Weaver H. Gaines
                            Chairman and Chief  Executive Officer

Dated: May 13, 1999     By: /s/ David C. Peck                                 
                            ------------------------
                            David C. Peck
                            President and Chief Financial Officer 
                            (Principal Financial Officer

Dated: May 13, 1999     By: /s/ Kimberly A. Ramsey                        
                            ------------------------
                            Kimberly A. Ramsey
                            Controller (Principal Accounting Officer)


     Exhibit Index

Exhibit        Description                                                 Page

(3)            Plan of Acquisition, Reorganization, Arrangement,
               Liquidation or Succession                                   None

(4)            Instruments Defining the Rights of Security Holders         None

(10)           Material Contracts                                          None

(11)           Statement re: Computation of Per Share Earnings             None

(15)           Letter re: Unaudited Interim Financial Information          None

(18)           Letter re: Change in Accounting Principles                  None

(19)           Report Furnished to Security Holders                        None

(23)           Published Report re: Matters Submitted to Vote of 
               Security Holders                                            None

(23)           Consents of Experts and Counsel                             None

(24)           Power of Attorney                                           None

(28)           Financial Data Schedule

(99)           Additional Exhibits                                         None