<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, DC  20549
                                          
                                  FORM 10-K

(Mark One)

/X/  Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
     Act of 1934 For the Fiscal Year Ended December 31, 1998
                                          or
/ /  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934
     For the Transition Period From                 to                 .
                                    ---------------    ----------------

                        Commission file number 0-27976


                                  GalaGen Inc.
--------------------------------------------------------------------------------

             Delaware                                         41-1719104
--------------------------------------------------------------------------------
  (State or other jurisdiction of                          (I.R.S. employer
  incorporation or organization)                          identification no.)


         1275 Red Fox Road
      Arden Hills, Minnesota                                  55112-6943
--------------------------------------------------------------------------------
(Address of principal executive offices)                         (Zip code)


                                 (651) 634-4230
--------------------------------------------------------------------------------
              (Registrant's telephone number, including area code)

        Securities registered pursuant to Section 12(b) of the Act:  None
        Securities registered pursuant to Section 12(g) of the Act:
                     Common Stock, par value $.01 per share

          Indicate by check mark whether the registrant (1) has filed all
     reports required to be filed by Section 13 or 15(d) of the Securities
     Exchange Act of 1934 during the preceding 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  / /
     
          Indicate by check mark if disclosure of delinquent filers
     pursuant to Item 405 of Regulation S-K is not contained herein, and
     will not be contained, to the best of registrant's knowledge, in
     definitive proxy or information statements incorporated by reference
     in Part III of this Form 10-K or any amendment to this Form 10-K.   /X/
     
          The aggregate market value of the Common Stock held by
     non-affiliates of the registrant as of March 18, 1999 was $12,847,863
     based on the closing sale price for the Common Stock on that date as
     reported by The Nasdaq Stock Market.  For purposes of determining such
     aggregate market value, all officers, and directors of the registrant
     are considered to be affiliates of the registrant, as well as
     stockholders holding 10% or more of the outstanding Common Stock as
     reflected on Schedules 13D or 13G filed with the registrant.  This
     number is provided only for the purpose of this report on Form 10-K
     and does not represent an admission by either the registrant or any
     such person as to the status of such person.
     
          As of  March 18, 1999 the registrant had 8,948,446 shares of
     Common Stock issued and outstanding.

<PAGE>

                     DOCUMENTS INCORPORATED BY REFERENCE

     Portions of the registrant's definitive Proxy Statement for the annual 
meeting of stockholders to be held on May 12, 1999 and the Annual Report to 
Stockholders for the year ended December 31, 1998 are incorporated by 
reference in Parts II, III and IV of this Annual Report on Form 10-K.  (The 
Compensation Committee Report and the stock performance graph contained in 
the registrant's Proxy Statement are expressly not incorporated by reference 
in this Form 10-K).

                                    PART I

ITEM 1.   BUSINESS

FORWARD-LOOKING STATEMENTS

     The information presented in this Annual Report on Form 10-K under the 
headings "Item 1. Business" and "Item 2. Properties" and incorporated by 
reference under "Item 7. Management's Discussion and Analysis of Financial 
Condition and Results of Operations" contains forward-looking statements 
within the meaning of the safe harbor provisions of Section 21E of the 
Securities Exchange Act of 1934, as amended.  Such statements are subject to 
risks and uncertainties, including those discussed under "Risk Factors" below 
beginning on page 13 of this Annual Report on Form 10-K, that could cause 
actual results to differ materially from those projected.  Because actual 
results may differ, readers are cautioned not to place undue reliance on 
these forward-looking statements.  Certain forward-looking statements are 
indicated below by an asterisk.

INTRODUCTION

     GalaGen Inc. ("GalaGen" or the "Company"), was incorporated in 1992 as a 
successor to a wholly-owned subsidiary of Land O'Lakes, Inc. ("Land O'Lakes") 
that was incorporated in 1987.  GalaGen's mission is to become the leading 
presence in foods, beverages and dietary supplements that help enhance the 
immune system.* To accomplish this mission, the Company is focusing its 
efforts on channels that demand immune-enhancing benefits in certain segments 
of the consumer food and beverage product markets and in certain segments of 
the clinical nutrition products markets, as described below.

     A critical factor for success of the Company is its immune-enhancing 
ingredient which is derived from colostrum, the highly nutritious first milk 
from a dairy cow after its calf is born, which has been branded 
Proventra-TM- Brand Natural Immune Components ("Proventra"). The primary 
immune-enhancing components of Proventra are antibodies, which are proteins 
that enhance the body's immune system to protect against harmful pathogens.  
Secondary immune-enhancing components of Proventra providing further disease 
resistance are proteins, such as lactoferrin, and multiple vitamins and 
minerals.

     The Company believes it is in a position of strategic advantage with its 
ingredient, Proventra*, as follows: 

          ACCESS TO COLOSTRUM.  The Company has agreements with Land O'Lakes
     which provide the Company with access to the Land O'Lakes dairy system. 
     This dairy system has approximately 750,000 cows, from which the Company
     receives its supply of colostrum.  These cows are located primarily in the
     upper Midwest and both the East and West coasts.
          
          PROPRIETARY MANUFACTURING PROCEDURES.  The Company has patented,
     proprietary manufacturing processes that are used to concentrate antibodies
     from the colostrum.  Standard dairy processing techniques destroy the
     activity of most of the antibodies present in milk and colostrum, whereas
     the Company's processing retains the antibody's effectiveness.

          INGREDIENT PATENT PROTECTION.  GalaGen holds exclusive patent licenses
     that prevent potential competitors from combining antibodies with fibers or
     antibodies with active cultures. The licenses 


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<PAGE>

     provide the Company with a high degree of competitive insulation in 
     addition to establishing the Company as an innovator.*

          ABILITY TO ADDRESS MULTIPLE HEALTH CONDITIONS. Using its proprietary
     immunization technologies, including the use of immune system stimulating
     adjuvants, the Company can produce antibodies in the cow that target
     specific pathogens that may cause problems in the human gastrointestinal
     ("GI") tract, including bacteria and their toxins, parasites, fungi and
     viruses. This technology increases by many fold a dairy cow's natural
     production of these targeted antibodies in its colostrum and can be
     utilized to enhance the body's normal response to conditions like yeast
     infections in women, tooth decay and diarrhea.

     The Company is developing, in conjunction with strategic partners, a 
portfolio of proprietary consumer and clinical nutritional food and beverage 
products which will incorporate Proventra.  Additionally, the Company is 
supplying Proventra as an ingredient to food companies for incorporation into 
dietary supplements or other similar products. These products will target 
needs of both consumers and healthcare professionals.

     In December 1998, the Company acquired Nutrition Medical, Inc.'s 
("NMI") developed line of critical care enteral nutrition products and 
formulas. The products were recently introduced by NMI and are being sold to 
the hospital and home healthcare industries. GalaGen purchased substantially 
all of NMI's critical care enteral nutrition products and formulas, all 
related inventory and certain other assets, including the existing customer 
base of over 500 hospitals and home healthcare facilities. The sales and 
marketing group from NMI joined the Company to provide continuity in 
operations and an essential marketing base. The Company is researching ways 
in which to incorporate certain of its immune-enhancing ingredients into 
selected products acquired from NMI to provide additional proprietary 
protection and added benefits that are not currently available in that market 
segment.*  Additionally, Glutasorb-TM-, one of the acquired products, is 
enriched with glutamine, an amino acid important for the support of the 
immune system.

BACKGROUND

IMMUNE-ENHANCING TECHNOLOGY

     Passive immunity consists of using antibodies produced by one individual 
or animal to provide immune protection in another individual. Dairy cows 
provide antibodies to their calves through the colostrum, which is the milk 
produced during the first several days of lactation.  The concentration of 
antibodies in colostrum is many times higher than the normal concentration in 
milk.  Through their natural exposure to the environment, cows have developed 
antibodies that recognize and bind to many human pathogens.  Clinical studies 
performed by GalaGen and others have proven that the antibodies are not 
destroyed by passage through the gastrointestinal tract, and they remain 
functionally active against these undesirable organisms.

FUNCTIONAL FOODS AND NUTRACEUTICALS

     The Company believes that its immune-enhancing technology lends itself 
to the creation of food products or dietary supplements, for both consumer 
and clinical food and beverage markets, with health claims, often called 
"functional foods" or "nutraceuticals".*  The Company further believes that 
the inclusion of Proventra in functional foods or nutraceuticals, along with 
including other components such as active cultures and dietary soluble fiber 
for which the Company has licensed certain patents, provide important 
benefits and competitive advantages, including (i) a unique immune-enhancing 
system, (ii) a fit with consumer needs, and (iii) a safe, proven means to 
enhance the body's natural resistance.*  
     
     Functional foods and nutraceuticals have been defined as foods which 
provide benefits beyond their nutritional value.  While there is not a 
regulatory definition for the terms "functional food" or "nutraceutical", 
these terms are widely used in the marketplace.  The Company believes that 
the enactment by Congress of the Nutrition Labeling and Education Act 
("NLEA") in 1990 and the Dietary Supplement Health and Education 


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Act ("DSHEA") in 1994 enabled the regulatory process for marketing foods or 
dietary supplements.  NLEA permits certain health claims related to the 
food's ability to reduce the risk of certain diseases.  DSHEA permits such 
products to bear "structure-function" claims related to how the product 
affects the structure or function of the body, and such claims do not require 
Food and Drug Administration ("FDA") review or approval, but must be 
supported by scientific evidence. The Company believes that the incorporation 
of Proventra in foods or dietary supplements would add benefits to these 
products, particularly since there is a significant amount of scientific data 
to support the benefits of colostrum.*

     According to Frost & Sullivan, a competitive-market analysis firm, the 
market for nutraceutical or functional food beverages, into which the 
Company's Proventra could be incorporated, now exceeds $20 billion.  The 
Company believes that this significant market size is due to a number of 
factors, including (i) increased interest in healthier lifestyles, (ii) the 
publication of research findings supporting the positive health effects of 
certain nutritional supplements and (iii) the aging of the "Baby Boom" 
generation combined with the tendency of consumers to purchase more 
nutritional supplements as they age.*

CRITICAL CARE PRODUCTS

     Critically ill or severely injured patients are often unlikely to 
consume adequate nutrients, which can exacerbate a patient's condition, cause 
complications and prolong hospital stays. Total enteral nutrition delivers, 
often via specialized pumps, formulations of protein, carbohydrates, fat and 
vitamins via feeding tubes directly into the patient's intestinal tract.  
Unless nearly all of the intestinal tract is missing or nonfunctional, most 
patients can be fed via this enteral route. One application of enteral 
nutrition is in the treatment of critical care patients. The largest single 
category of total enteral nutrition products used in critical care are 
products that contain unique protein sources referred to as "elemental." 
Unlike long-term care formulas that contain "whole protein," which must be 
digested before it can be absorbed and utilized by the patient, elemental 
formulas contain predigested protein that offers immediately available 
nutrition because little or no digestion is required. All of the Company's 
recently acquired critical care nutrition products are elemental formulas. 
The critical care nutrition formula market is currently dominated by a small 
number of established manufacturers of national brands, each of which focuses 
on particular segments of the market. These manufacturers include Ross 
Laboratories, a division of Abbott Laboratories ("Ross Laboratories"), Mead 
Johnson Nutritionals, a Bristol-Myers Squibb Company ("Mead Johnson"), 
Novartis, formerly known as Sandoz Corp. ("Novartis"), Nestle Ltd ("Nestle"), 
formerly known as Clintec Nutrition Co., and McGaw, Inc. ("McGaw").  
Meanwhile, the United States health care system has been under pressure to 
control costs. As a result, the medical community and consumers have come to 
accept lower cost-effective drugs and private label over-the-counter 
products, and the market for these products has grown rapidly. The Company 
believes it is the only company that has addressed the critical care medical 
nutrition market with lower cost alternatives to established brands.* The 
Company is researching ways in which to incorporate certain of its 
immune-enhancing ingredients into selected products acquired from NMI to 
provide additional proprietary protection and added benefits that are not 
currently available in that market segment.* The Company sells its critical 
care nutrition formulas under its NMI label.

Business Strategy

     GalaGen has determined to focus on two market segments to optimally 
capitalize on its immune-enhancing capabilities: (i) nutritional consumer 
food and beverage products and (ii) clinical nutrition products. The former 
emphasis will yield products containing Proventra, and other immune 
components, in grocery and health food stores. The latter will yield 
products for hospitals, nursing homes and home healthcare that may contain 
Proventra or other immune-enhancing ingredients.  The Company will utilize 
relationships and collaborations with strategic partners to deliver these 
products to the marketplace.*

     To advance the introduction of GalaGen's Proventra or other 
immune-enhancing ingredients into the two market segments, the Company has 
recently entered into several strategic partner agreements, including the 
following:


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CONSUMER FOOD AND BEVERAGE PRODUCTS

     GENERAL NUTRITION CORPORATION
     
     In December 1998, the Company entered into an agreement with General 
Nutrition Corporation ("GNC").  Under this agreement, GalaGen and GNC will 
develop and market a range of immune-boosting dietary supplements and sports 
nutrition formulas for specialized retail and mass-market retail channels 
using certain proprietary formulations of Proventra.  The Company will sell 
its Proventra to General Nutrition Products, Inc. ("GNP"), the manufacturing 
company of GNC, for incorporation into the products for exclusive 
distribution and retail marketing in North America by GNC, its affiliates, 
franchisees and certain other stores in mass market channels. The agreement 
calls for GNC to maintain minimum sales requirements for both the specialty 
retail and mass market channels for exclusivity to continue.  The first 
products are targeted for launch in the second half of 1999, following the 
initial product development phase of the collaboration.*

     TROPICANA
     
     In March 1999, the Company entered into an agreement with Tropicana 
Products, Inc., a division of PepsiCo Inc.  Under the agreement, the two 
companies will explore development of nutritious beverages for the 
health-conscious consumer.

     LAND O'LAKES
     
     In April 1998, GalaGen entered into an agreement with Land O'Lakes to 
develop and introduce into market a line of yogurt products incorporating 
Proventra.  Products developed under this arrangement will leverage Land 
O'Lakes strength as a dairy producer and marketer. The first products are 
targeted for a second half 1999 test market launch.*
     
     LIFEWAY FOODS, INC.
     
     In December 1997, the Company assisted in introducing Basics Plus-TM-, a 
dietary supplement product, in conjunction with its marketing and 
manufacturing partner, Lifeway Foods, Inc.  It contains active kefir 
cultures, which are cultures that contain beneficial bacteria strains, and 
GalaGen's Proventra. Basics Plus is the first dairy-based dietary supplement 
sold in the United States in the refrigerated section of health food stores 
and grocery stores. The product was featured in the February 1998 issue of 
DAIRY FOODS MAGAZINE and has gained recognition as an industry breakthrough.  
DAIRY FOODS MAGAZINE named Basics Plus the top new dairy product in 1998 for 
the Functional Foods category (November 1998 issue).

     RHONE-POULENC / RHODIA
     
     In June 1998, GalaGen announced a nutritional products collaboration 
with Rhodia, Inc., a $6 billion Rhone-Poulenc spin-off. The two companies are 
exploring the possible development and marketing of a patent-protected 
combination of ingredients for use in nutritional products positioned for the 
nutraceutical and functional foods markets. Under this arrangement, products 
will contain GalaGen's Proventra and Rhodia's proprietary active cultures.

CLINICAL NUTRITION PRODUCTS
     
     CRITICAL CARE PRODUCTS (NMI)
     
     In  September 1998, the Company entered into an asset purchase agreement 
with NMI to acquire NMI's developed line of critical care enteral nutrition 
products and formulas. The products were recently introduced by NMI and are 
being sold to the hospital and home healthcare industries. The asset purchase 
agreement was closed in December 1998. GalaGen purchased substantially all of 
NMI's critical care enteral nutrition products and formulas, all related 
inventory and certain other assets, including the existing customer 


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base of over 500 hospitals and home healthcare facilities.  The sales and 
marketing group from NMI joined the Company to provide continuity in 
operations and an essential marketing base.  The Company will continue to 
have all products associated with this asset purchase manufactured by outside 
parties.

     Critical care nutrition formulas are used by hospitals and other health 
care providers to feed critically ill patients who cannot consume adequate 
nutrients orally and consequently require specialized feeding via tubes into 
the intestinal tract. The use of critical care nutrition formulas often 
continues at home or in a nursing home after a patient is discharged from the 
hospital. The Company's strategy is to focus on the development and sale of a 
core line of critical care formulas for patients who do not metabolize foods 
well and are most likely in intensive care units. Certain unique ingredients 
are combined to meet the special nutritional requirements of specific patient 
populations. The Company markets its critical care and disease specific 
nutrition products to hospitals and other health care providers as cost 
effective alternatives to the established products offered by brand name 
manufacturers.

     The Company is selling nine nutrition products for critical care, liver 
failure and moderately stressed patients. Most products contain elemental 
protein sources, which contain predigested protein that offers immediately 
available nutrition. The first proprietary critical care formula, Glutasorb, 
was launched by NMI in February 1998. This formula is the first high 
glutamine, ready-to-use liquid elemental diet available in the United States 
and, as such, has no specific competing branded product.  The following chart 
provides information regarding each of the Company's critical care nutrition 
products.

<TABLE>
<CAPTION>
                                   DATE
PRODUCT NAME                    INTRODUCED                        PRODUCT DESCRIPTION
------------                  --------------                      -------------------
<S>                           <C>             <C>
L-Emental-TM-                 May 1994        A 100% free amino acid-based elemental nutrition      
                                                formula for gastrointestinal ("GI") impaired or
                                                critically ill patients
L-Emental Hepatic-TM-         June 1996       A 100% free amino acid and calorie supplement for the
                                                dietary management of chronic liver disease
                                                patients.
L-Emental Pediatric-TM-       June 1996       A 100% free amino acid elemental diet for GI impaired
                                                children ages 1 to 10
Pro-Peptide Unflavored-TM-    November 1994   A ready-to-use, isotonic, peptide-based diet for GI
                                                impaired patients
Pro-Peptide VHN-TM-           November 1995   A high nitrogen, isotonic, peptide-based diet for GI
                                                impaired and critically impaired patients who
                                                require high protein levels
Pro-Peptide Vanilla-TM-       November 1995   Vanilla flavored ready-to-use, peptide-based diet for
                                                GI impaired patients who require an oral product
Pro-Peptide For Kids-TM-      May 1997        Vanilla flavored ready-to-use, peptide-based diet for
                                                children ages 1 to 10 who are GI impaired
Glutasorb-TM-                 February 1998   Ready-to-use, high glutamine, amino acid-peptide based
                                                product for patients who have severe catabolic
                                                illness, GI dysfunction, surgery and trauma
Nitro Pro-TM-                 July 1998       A ready-to-use high-protein tube feeding product for
                                                moderately stressed patients                        

</TABLE>

     With the exception of Glutasorb, the Company generally establishes 
target prices for its critical care and disease specific nutrition products 
that are below the selling prices of competing established brand name 
products. To maintain or increase the gross margin of the products, the 
Company is researching ways in which to incorporate certain of its 
immune-enhancing ingredients into certain products listed above to provide 
additional proprietary protection and added benefits that are not currently 
available in that market segment.*  Additional products that the Company may 
introduce would include proprietary immune-enhancing features.*

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     AMERICAN HOME PRODUCTS - WYETH AYERST

     In October 1998, the Company entered into a collaboration and license 
agreement and a manufacturing and supply agreement with Wyeth-Ayerst, a 
division of American Home Products Corporation.  The two companies will 
develop and commercialize a proprietary ingredient with unique antibacterial 
properties for use in pediatric formula and other nutritional products.  The 
companies will collaborate during the research and development phase of the 
product, which will be funded by Wyeth-Ayerst.  Additionally, Wyeth-Ayerst 
will have financial and oversight responsibilities for all clinical trials 
and regulatory compliance related to the use of the ingredient in pediatric 
formula products. Wyeth-Ayerst will have worldwide rights to the use of the 
ingredient in its pediatric formula and other nutritional products.  GalaGen 
will retain certain rights to manufacture the ingredient and has the right to 
request a sublicense from Wyeth-Ayerst to develop and commercialize 
non-pediatric formula nutritional products.  GalaGen will also receive 
licensing and milestone payments.

     HORMEL-AMERICAN INSTITUTIONAL PRODUCTS

     In March 1999, the Company announced that it entered into a licensing and 
distribution agreement with American Institutional Products, Inc. (AIP), a 
subsidiary of Hormel Foods Corporation. Under the agreement, AIP has 
exclusively licensed the manufacturing and distribution rights for a new, 
clinically tested, cultured dairy beverage developed by GalaGen to improve 
the gastrointestinal health of patients in hospitals and nursing homes. The 
product will incorporate Proventra and includes an ingredient combination 
that is patented.  A test market for the product in the Upper Midwest is 
scheduled to begin in mid 1999.*

MANUFACTURING SYSTEM

PROVENTRA MANUFACTURING
     
     The Company's manufacturing system produces antibodies for nutritional 
products.  The Company's system has been designed to access very large 
numbers of cows in commercial milking herds, organize them into discrete 
product-specific groups and, if needed, immunize them with specific antigens 
to heighten the natural production of targeted antibodies in their colostrum, 
collect the colostrum and concentrate the antibodies using proprietary 
processes.  These processes preserve the essential antibody activity and 
other immune-enhancing components while reducing unnecessary components, 
including microbial contaminants. Modern dairy cows, having been bred for 
high volume milk production, produce colostrum in quantities far greater than 
their calves can consume.  After the calf fulfills its colostrum needs, this 
surplus colostrum can then be collected by the Company.

     Standard dairy processing techniques destroy the activity of most of the 
antibodies present in milk and colostrum and render them inactive.  The 
proprietary processes used by the Company to concentrate antibodies have been 
developed by the Company through many years of research and development.  
This work has resulted in processes that use well-tested and efficient dairy 
manufacturing techniques, including pasteurization, that have been modified 
to preserve the biological activity of the antibodies.  The Company has two 
patents that have been issued for these processes. The Company is supporting 
its proprietary antibody processing system with a quality control system 
designed to regulate, monitor and review the processing system.  The Company 
has obtained Kosher certification for the natural immune components found in 
Proventra. Additionally, the Company has obtained the appropriate license 
from the Minnesota Department of Agriculture.

     Construction of the Company's manufacturing facility within the existing 
Land O'Lakes manufacturing complex in Arden Hills, Minnesota was completed in 
1996.  Land O'Lakes has guaranteed the equipment leases associated with the 
manufacturing facility.  The Company believes that the capacity of this 
facility will be adequate for the production of Proventra for nutritional 
products, either for sale or product 


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development requirements, through 2000 and believes that contract 
manufacturers would be available to increase its production capacity quickly, 
if required.*

CRITICAL CARE PRODUCT MANUFACTURING

     All of the Company's critical care products acquired from NMI are 
manufactured by third parties. These toll manufacturers are subject to FDA 
regulatory requirements for food and medical food production, and the 
Company's products undergo quality control testing during and after the 
production process. By using third party manufacturers, the Company is better 
able to introduce new products that require differing manufacturing 
processes and maintain a favorable fixed cost structure. Critical care 
nutrition products are shipped from the manufacturer to the Company's 
distribution facility in Arden Hills, Minnesota.  The Company believes that 
there are several manufacturers in the United States that could manufacture 
the critical care products and that it is not dependent upon one single 
manufacturer for its product supply.*

MARKETING, RESEARCH AND RELATIONSHIPS

MARKETING

     FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS

     To exploit Proventra as broadly as possible in human applications, the 
Company's consumer and clinical products strategy, except for those critical 
care products acquired from NMI, is to enter into strategic relationships 
with food companies to develop products that incorporate Proventra and/or 
other immune combinations and/or to sell Proventra to food companies as an 
ingredient.*  The Company does not anticipate that it will manufacture, 
market or distribute any final food product, but will rely upon 
collaborations with larger companies to accomplish these goals.*

     CRITICAL CARE PRODUCTS

     The Company employs its own inside sales personnel to market its 
critical care nutrition products. These sales personnel target, via 
telephone, the appropriate departments of hospitals, nursing homes and home 
health care organizations. This approach reduces the Company's selling costs 
by eliminating travel expenses and allowing its sales personnel to contact 
and service a larger number of potential and actual customers. The Company 
also uses direct mail and trade shows to further promote its products. In 
addition, the Veteran's Administration and state and county hospitals have 
annual bids for clinical nutrition products, and the Company actively 
participates in these bids.

RESEARCH

     FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS
     
     The Company's product development strategy is to pursue its own research 
programs internally and to complement such programs by establishing 
relationships with key external medical, academic, governmental and major 
research organizations.  Specifically, the Company intends to continue 
complementing its extensive immune-enhancing technology base by acquiring 
access to additional proprietary technology and patents in the areas of 
antibodies, vaccine, molecular biology, and processing and manufacturing 
technology.*  The Company also may seek collaborative arrangements for 
commercialization of its Proventra-based products.* The Company spent 
$1.9 million, $3.8 million and $5.3 million for product development in fiscal 
years 1998, 1997 and 1996, respectively.  The expenses incurred in 1996, 1997 
and a portion of 1998 relate to the Company's pharmaceutical program, which 
has been discontinued.

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     CRITICAL CARE PRODUCTS

     As part of NMI, the product development process began with a 
determination that a market opportunity existed with respect to a particular 
product. NMI then contracted with an outside laboratory to analyze the 
ingredients of the competitor's product and to formulate its version of the 
product. Certain members of NMI's scientific advisory board consulted with 
the contractors during the development process.  The Company anticipates that 
any future product development may generally follow this procedure, but 
anticipates that any new products will incorporate immune-enhancing benefits 
to make a product proprietary and have unique features not currently 
available in the market so as to maintain or increase gross margins.* The 
Company's critical care, disease specific and intact protein nutrition 
formulas are not required to undergo clinical testing or obtain FDA approval 
for such products, though they are subject to certain FDA guidelines.

LAND O'LAKES RELATIONSHIP

     The Company believes that the Company's existing relationship with Land 
O'Lakes provides it with certain advantages over existing and potential 
competitors.*  Land O'Lakes made significant advances in the development and 
commercialization of antibody products for treating and preventing diseases 
in animals.  This technology provides the Company with a solid foundation on 
which to base its efforts to develop similar products for human use. 

     Under a supply agreement with Land O'Lakes, the Company agreed to 
purchase all of its commercial requirements for colostrum from Land O'Lakes 
through May 7, 2002, subject to Land O'Lakes' option to renew the supply 
agreement for an additional ten-year period.  The Company must provide 
program specifications to Land O'Lakes prior to commencing each of its 
commercial programs and Land O'Lakes must notify the Company within a 
specified period whether it will supply according to the agreement.  If Land 
O'Lakes does not confirm during that period that it will supply colostrum 
according to the specifications, then the Company has the right to obtain the 
colostrum from alternative sources.  Commercial production of Proventra could 
be delayed if Land O'Lakes does not elect to supply according to the supply 
agreement and the Company is required to locate an alternate supplier.

     When the Company was formed, it signed a letter of intent with Land 
O'Lakes to develop strategic relationships focused on the development of 
functional food products.  In March 1998, the Company and Land O'Lakes signed 
an amended and restated license agreement (the "Restated License") in which 
the Company has significantly broadened its rights to develop and market 
functional foods. Under the Restated License, the Company can use, improve, 
exploit, license or share existing Procor Technology, Inc. (the Company's 
predecessor, "Procor") technology, Procor technology improvements and new 
technologies, as defined, in all areas of functional foods except under 
certain "reserved food product" and "first refusal food product" categories, 
as defined.  If the Company intends to engage in manufacturing or marketing 
any "first refusal food product", the Company must give Land O'Lakes notice 
of its intent, in which case Land O'Lakes can negotiate with the Company, in 
good faith and within a defined period of time, to undertake any part of the 
manufacturing or marketing areas.  If the Company intends to engage in 
manufacturing or marketing any "reserved food product", the Company must give 
Land O'Lakes notice of its intent and must only work with Land O'Lakes to 
undertake the manufacturing or marketing of such products.  In the original 
license agreement with Land O'Lakes, the Company retained rights to pursue 
the development of infant formula products containing polyclonal antibody 
technology.
     
     In March 1997, Land O'Lakes granted the Company a license (the "Kefir 
License") to use existing antibody technology and future improvements in the 
development, formulation, manufacture, marketing, distribution and sale of 
kefir-based products, as defined in the Kefir License.  In consideration of 
granting the Kefir License, Land O'Lakes will receive a royalty based on food 
components or ingredients sold by the Company to be included in any 
kefir-based product and on net receipts from any kefir-based finished product 
sold by the Company. 


                                       9

<PAGE>

PROPRIETARY RIGHTS AND PATENTS

FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS

     The Company's policy is to protect its proprietary technology as trade 
secrets and by filing patent applications on technology for which the Company 
believes patent protection is available and is in the best interest of the 
Company.  The Company also relies upon know-how, continuing technological 
innovations and licensing opportunities to develop and maintain its 
competitive position. 

     The Company believes that certain of its process improvements are more 
valuable as trade secrets than as patented processes, where the process 
improvements would have to be publicly disclosed.  The Company relies on 
trade secrets and proprietary know-how it developed while manufacturing 
antibody products as Procor.  The Company believes that substantial barriers 
exist for competitors desiring to commercialize antibodies derived from milk 
or colostrum that have the features that the Company's antibodies, or 
Proventra, have*; however, there can be no assurance that other companies 
will not develop production processes or initiate relationships with other 
large dairy cooperatives to develop a similar procurement system.  The 
Company seeks to protect trade secrets and know-how through confidentiality 
agreements with employees, consultants and other parties.  These agreements 
provide that all confidential information developed or made known during the 
course of the relationship with the Company is to be kept confidential and 
not disclosed to third parties, except in specific circumstances.  No 
assurance can be given that such agreements will provide meaningful 
protection for the Company's unpatented trade secrets or provide adequate 
remedies in the event of unauthorized use of such information.  Neither can 
assurance be given that others will not independently develop substantially 
equivalent proprietary information and technology or otherwise gain access to 
the Company's trade secrets or disclose such technology. 

     The Company has been issued four patents from the United States Patent & 
Trademark Office.  Two patents cover significant processes in its core 
manufacturing technology for antibodies for microfiltering milk and colostrum 
that reduces contaminants while improving yield.  The third patent covers the 
therapeutic use of CLOSTRIDIUM DIFFICILE specific bovine antibodies for the 
treatment of C. DIFFICILE related diseases such as diarrhea. The fourth 
patent covers a vaccine composition for generating specific, high titer 
antibodies against CRYPTOSPORIDIUM PARVUM. The Company also has three United 
States patent applications pending and has acquired licenses to a number of 
patents or patent applications of others.  The Company's United States patent 
applications are in the area of bovine antibody technology and product 
applications.  The Company believes that useful, new and unobvious antibody 
formulations also may be patentable in support of its immune-enhancing 
strategy.*  Furthermore, in some cases, patent coverage may be available for 
the vaccines or antigens used to provoke the immunological response which 
produces the antibodies.  The Company has also obtained sole licenses for 
enabling patents from Metagenics, Inc relating to the combination of 
antibodies and soluble fibers, and antibodies and active cultures for use in 
the fields of dietary supplements and medical foods. Metagenics, Inc. retains 
the right to use these patents for its own products.  The Company has also 
acquired a patent from Biotest Pharma GmbH for an alternative antibody 
processing technology.  The Company's strategy is to pursue patent protection 
for each of its products where possible, including their components, as well 
as for certain process and formulation improvements, although the Company may 
not be successful in achieving broad patent protection for its technology.

     The Company has become aware of several patents that may relate to its 
antibody technology.  In 1991, the Company became aware of one such issued 
patent.  Land O'Lakes engaged outside patent counsel to review the patent and 
such counsel rendered its written opinion to Land O'Lakes that the patent is 
not infringed by the Company's technology.  The Company engaged its own 
outside patent counsel to review the patent and such counsel rendered its 
independent opinion that the patent is not infringed by the Company's 
technology and that, in any event, the patent would be invalid if it were 
interpreted broadly enough so as to cover the Company's technology.  While 
the Company does not regard the patent as a threat to its business*, there 
can be no assurance that the holder of the patent will not pursue litigation 
which could be costly to the Company.


                                      10

<PAGE>

CRITICAL CARE PRODUCTS

     The Company is in the process of registering its existing trademarks, 
for the products acquired from NMI, with the United States Patent & Trademark 
Office.  As part of NMI, the products were not registered but instead relied 
on NMI's common law trademark rights. The lack of such registration may 
impair the ability of the Company to successfully register the trademarks or 
to prosecute successfully an infringement action against other users of these 
trademarks. There can be no assurance that the Company's marks do not or will 
not violate the proprietary rights of others, that the Company's proprietary 
rights in the marks would be upheld if challenged, or that the Company would 
not be prevented from using its marks, any of which could have an adverse 
effect on the Company.* In addition, there can be no assurance that the 
Company will have the financial resources necessary to enforce or defend its 
trademarks.*

GOVERNMENT REGULATION

FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS

     GENERAL

     The formulation, manufacturing, processing, packaging, labeling, 
advertising, distribution and sale of nutritional supplements such as those 
being developed  by the Company are subject to regulation by one or more 
federal agencies, principally the FDA and the Federal Trade Commission (the 
"FTC"), and to a lesser extent the Consumer Product Safety Commission and the 
United States Department of Agriculture.  These activities are also regulated 
by various governmental agencies for the states and localities in which the 
Company's products are sold, as well as by governmental agencies in certain 
foreign countries in which the Company's products are sold.  Among other 
matters, regulation of the Company by the FDA and FTC is concerned with 
claims made with respect to a product which refer to the value of the product 
in treating or preventing disease or other adverse health conditions.

     Federal agencies, primarily the FDA and FTC, have a variety of remedies 
and processes available to them, including initiating investigations, issuing 
warning letters and cease and desist orders, requiring corrective labels or 
advertising, requiring consumer redress (for example, requiring that a 
company offer to repurchase products previously sold to consumers), seeking 
injunctive relief or product seizure and imposing civil penalties or 
commencing criminal prosecution.  In addition, certain state agencies have 
similar authority, as well as the authority to prohibit or restrict the 
manufacture or sale of products within their jurisdiction. These federal and 
state agencies have in the past used these remedies in regulating 
participants in the nutritional products industry, including the imposition 
by federal agencies of civil penalties in the millions of dollars against a 
few industry participants.  There can be no assurance that the regulatory 
environment in which the Company operates will not change or that such 
regulatory environment, or any specific action taken against the Company, 
will not result in a material adverse effect on the Company's business, 
financial condition or results of operations.*  In addition, increased sales 
and publicity of nutritional supplements may result in increased regulatory 
scrutiny of the nutritional supplements industry.

     DIETARY SUPPLEMENT HEALTH AND EDUCATION ACT

     DSHEA was enacted in October 1994, amending the Food, Drug and Cosmetic 
Act.  The Company believes this law is generally favorable to the dietary 
supplement industry.*  DSHEA establishes a new statutory class of "dietary 
supplements," which includes vitamins, minerals, herbs, amino acids and other 
nutritional supplements for human use to supplement the diet and includes in 
such class all dietary ingredients 


                                      11

<PAGE>

on the market as of October 15, 1994.  Such class of nutritional supplements 
will not require the submission by the manufacturer or distributor of 
evidence of a history of use or other evidence of safety establishing that 
the supplement will reasonably be expected to be safe, but a nutritional 
supplement which contains a dietary ingredient which was not on the market as 
of October 15, 1994 does require such submission of evidence of a history of 
use or other evidence of safety. Among other things, this law prevents the 
further regulation of dietary ingredients as "food additives" and allows the 
use of statements of nutritional support on product labels. DSHEA allows the 
use of "structure/function" claims on the label of a product, which may allow 
the Company to communicate advantages of Proventra without the expenses 
associated with FDA clinical trials.*  The law requires companies to file 
label claim information with FDA within 30 days after initiating marketing of 
a product, and FDA may respond with a "courtesy letter" commenting on the 
claims if it believes they are not appropriate.

     OTHER REGULATORY REQUIREMENTS

     The Company is also subject to regulation by the Occupational Safety and 
Health Administration, the Environmental Protection Agency and the Minnesota 
Environmental Quality Board and to regulation under the Toxic Substances 
Control Act, the Resource Conservation and Recovery Act, among others, and 
other regulations, and may in the future be subject to other federal, state 
and local statutes or regulations.  The Company is unable to predict whether 
any agency will adopt any regulation which would have a material adverse 
effect on the Company.

CRITICAL CARE PRODUCTS

     The Company's products purchased from NMI are subject to government 
regulation. The Company's current critical care products are regulated as 
food and medical food by the FDA and are subject to labeling requirements, 
current good manufacturing practice regulations and certain other regulations 
designed to ensure the safety of the products. Claims made by the Company in 
labeling and advertising its products are subject to regulation by the FDA, 
the FTC and various state agencies under their general authority to prevent 
false, misleading and deceptive trade practices. These regulations involve 
more stringent tracking, testing and documentation standards. Failure to 
comply with FDA requirements can result in adverse regulatory action, 
including injunctions, civil or criminal penalties, product recalls or the 
relabeling, reformulation or possible termination of certain products. 

COMPETITION

FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS

     The nutritional products area is highly fragmented and competitive with 
many large nationally known manufacturers and many smaller manufacturers and 
marketers of nutritional products.  The Company has licensed patents from 
Metagenics regarding the incorporation of  antibodies combined with active 
cultures and antibodies combined with soluble fiber.  Many of the nutritional 
products the Company anticipates developing, in conjunction with a strategic 
partner, will be covered by these patents.  Potential competitors, however, 
could be larger than the Company, have greater access to capital and may be 
better able to withstand volatile market conditions.  Moreover, because the 
nutritional products industry generally has low barriers to entry, additional 
competitors could enter the market at any time.  In that regard, although the 
nutritional products industry to date has been characterized by many 
relatively small participants, national or international companies (which may 
include food or pharmaceutical companies or other suppliers to the mass 
markets) may seek to enter or to increase their presence in this industry, 
which would have a material adverse effect on the Company's competitive 
position.

     The Company has assessed the factors that may make it competitive in 
this environment and believes that its central strength is that the products 
it will develop in conjunction with various partners will be unique, distinct 
and proprietary in the marketplace.*  This distinction is made by offering in 
its products direct immune enhancing benefits that include Proventra and a 
combination of other  key ingredients, such as active 


                                      12

<PAGE>

cultures and soluble fiber, currently not available in the market.  Such 
products will also be subject to patent protection.*  Another strength 
includes proprietary technologies that can enhance Proventra by offering 
immune protection against specific common disease-causing pathogens.*  
Additionally, the Company's collaborative relationships offer financial, 
production, sales and distribution synergies beyond those of GalaGen itself 
which allow the Company to compete more effectively.*  

COLOSTRUM MANUFACTURERS

     The Company knows of certain colostrum manufacturers, including New 
Zealand Dairy and La Belle, Inc., which supply colostrum in dried or liquid 
form.  These competitors are larger than the Company, have greater access to 
capital and may be better able to withstand volatile market conditions. 
Potential competitors could also be larger than the Company, have greater 
access to capital and may be better able to withstand volatile market 
conditions.  The colostrum market requires access to a substantial number of 
dairy cows to be commercially successful.  The Company has assessed the 
factors that may make it competitive in this environment and believe that its 
central strengths are: (i) its access to 750,000 dairy cows in the Land 
O'Lakes system, (ii) its ability to pasteurize, and/or certify Kosher, 
colostrum while still maintaining the effectiveness of the immune-enhancing 
components, namely antibodies, which the Company believes no competitor 
offers, and (iii) additionally, its ability to enhance Proventra by offering 
immune protection against targeted pathogens.* 

CRITICAL CARE PRODUCTS

     Competition in the critical care nutrition products market primarily 
consists of five companies that have established brands in the specialty 
markets in which the Company has chosen to compete. These companies, 
Novartis, Mead Johnson, Nestle, Ross Laboratories and McGaw, each market 
their specialty products through sales personnel who generally use 
traditional in-person sales calls rather than the telemarketing approach 
historically employed by the Company. Novartis, Mead Johnson, Nestle, Ross 
Laboratories and McGaw are all larger than the Company, have greater access 
to capital and are likely to be better able to withstand volatile market 
conditions. Although the Company believes it is the only company currently 
offering low cost alternatives to the established brands, other companies may 
enter this market.*

EMPLOYEES

     At December 31, 1998, the Company had 19 employees, eight of whom came 
from NMI when the Company acquired certain assets of NMI and are in the 
sales, marketing and quality control areas.  Two employees have Ph.D. 
degrees, and one of whom also has an M.D. degree.  Five employees are 
currently working in product development, including the clinical regulatory 
area.  The Company believes its employee relationships are good. 

RISK FACTORS

     
Certain statements made in this Annual Report on Form 10-K, including those 
indicated by an asterisk above, are forward-looking statements based on our 
current expectations, assumptions, estimates and projections about our 
business and our industry.  These forward-looking statements involve risks 
and uncertainties.  Our business, financial condition and results of 
operations could differ materially from those anticipated in these 
forward-looking statements as a result of certain factors, as more fully 
described below and elsewhere in this Form 10-K.  You should consider 
carefully the risks and uncertainties described below, which are not the only 
ones facing our Company. Additional risks and uncertainties also may impair 
our business operations.  We undertake no obligation to update publicly any 
forward-looking statements for any reason, even if new information becomes 
available or other events occur in the future.


                                      13

<PAGE>

GENERAL

     WE MAY NOT EVER ACHIEVE A PROFITABLE LEVEL OF OPERATIONS.

     Our ability to achieve profitable operations depends in large part on:

     -    entering into agreements to develop products and establish markets for
          those products; and

     -    making the transition from a research company to an operating and
          marketing company.  

     We cannot be sure we will be successful in ever achieving either result. 
We have experienced significant operating losses in each year since our 
inception in 1987.  We have an accumulated deficit of more than $57 million 
as of December 31, 1998.  We may continue to lose money in the future.

     IF WE CANNOT OBTAIN CONTINUING FUNDING, WE MAY BE UNABLE TO IMPLEMENT 
OUR BUSINESS PLANS.  
     
     If we cannot find adequate funding, we may have to delay or eliminate 
some of our product development plans.  We may be required to grant licenses 
to others to establish markets for products or technologies that we would 
otherwise seek to market ourselves.  

     Our cash requirements for working capital depend on numerous factors. 
These factors include:

     -    our spending on marketing activities, including clinical marketing 
          trials;
     -    our progress in finding partners to help us develop products and
          market those products;
     -    the willingness and ability of our partners to provide funding for our
          activities;
     -    our spending on product development programs;
     -    the rate of technological advances in the production of our products;
     -    our spending on facilities, equipment and personnel to make our
          products; and
     -    the status of competitive products.

     Our long-term ability to continue funding our planned operations depends 
on our ability to obtain additional funds through:

     -    product revenues; 
     -    equity or debt financing; 
     -    finding partners to help us develop products and market those
          products; 
     -    license agreements; or
     -    other financing sources.

     Because of our significant long-term capital requirements, we may seek 
to raise funds when conditions are favorable.  We may do so even if we do not 
have an immediate need for the capital at the time we raise it.  If we have 
not raised funds prior to when our needs for funding become immediate, we may 
be forced to raise funds when conditions are unfavorable.  This could result 
in significant dilution of our current stockholders.

     IF WE DO NOT ACHIEVE A PROFITABLE LEVEL OF OPERATIONS AND CANNOT FIND 
FUNDING IN THE FUTURE, WE COULD EVENTUALLY BECOME INSOLVENT OR BANKRUPT. 

     If we do not achieve a profitable level of operations and we do not 
obtain funding necessary from some source other than operations, we could 
eventually deplete our cash reserves and become insolvent or bankrupt.

     THE RELATIVELY LOW LEVEL OF TRADING IN OUR COMMON STOCK MAY MAKE IT 
HIGHLY VOLATILE.

     While our Common Stock has been traded on the Nasdaq National Market 
since our initial public offering, the volume of shares of Common Stock 
traded on that market has been relatively small.  Given the small volume of 
shares traded, market fluctuations may have a particularly adverse effect on 
the market price of our Common Stock.  We cannot be sure of the liquidity of 
the market for the Common Stock or the price at which any sales may occur.  
The volume of trading in our 

                                      14

<PAGE>

Common Stock in the future will depend upon the number of holders of the 
Common Stock, the interest of securities dealers in  maintaining a market in 
the Common Stock and other factors beyond our control.  The market price of 
our Common Stock could be subject to significant fluctuations in response to:
     
     -    our operating results; 
     -    the operating results of our competitors or other biotechnology
          companies; 
     -    technological developments;
     -    government regulations;
     -    the status of our proprietary rights to potential products; 
     -    litigation;
     -    public safety concerns; and 
     -    other factors.  

     Some of these factors are unrelated to our operating performance and 
beyond our control.
     
     GALAGEN AND THE OWNERS OF SHARES OF OUR COMMON STOCK MAY HAVE DIFFICULTY 
IN SELLING THOSE SHARES IN THE FUTURE IF OUR COMMON STOCK IS REMOVED FROM 
LISTING ON THE NASDAQ NATIONAL MARKET.

     We must meet specific requirements for our shares to continue to be 
listed on the Nasdaq National Market.  Although we were meeting all of those 
requirement as of December 31, 1998, we cannot be sure that we will continue 
to meet them in the future. If we fail to meet the continued listing 
requirements, or fail to file a plan acceptable to Nasdaq for meeting those 
requirements, Nasdaq may remove our Common Stock from listing on the National 
Market.  We cannot be sure that our Common Stock will continue to be listed 
on the National Market. If in the future our Common Stock fails to qualify 
for continued listing on the National Market, we would apply to have its 
listing transferred to the Nasdaq SmallCap Market.  If the listing of our 
Common Stock is transferred from the National Market to the SmallCap Market, 
it may be more difficult for owners of our Common Stock to sell it through 
brokers.  Additionally, we may have more difficulty raising funds through the 
sale of our Common Stock or securities convertible into Common Stock.

     If trading privileges in our Common Stock on the Nasdaq National Market 
were terminated, we would be required to demonstrate compliance with the 
applicable requirements for initial inclusion of a security on the Nasdaq 
National Market before our Common Stock would be listed again on that 
exchange. The requirements for initial inclusion are more stringent than 
those for continued listing. 

     WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS THAT EXCEED OUR INSURANCE 
COVERAGE.

     Our business involves exposure to potential product liability risks that 
are inherent in the production, manufacture and distribution of consumer and 
clinical food products that are designed to be ingested. The successful 
assertion or settlement of any uninsured claim, a significant number of 
insured claims or a claim exceeding our insurance coverage could have a 
material adverse effect on our business and financial condition.  We cannot 
be sure that we will be able to obtain product liability insurance on 
acceptable terms or that provides adequate protection. Furthermore, we cannot 
be sure that we will be able to secure increased insurance coverage as the 
markets for our products increase.


                                      15

<PAGE>

     IF WE RELY ON INACCURATE MARKET INFORMATION, WE COULD MAKE DECISION THAT 
HAS A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.

     Because we are currently developing our products and markets for those 
products, we are particularly reliant on market data.  If that data is 
inaccurate, we may commit resources to product development and marketing 
efforts that do not become profitable.  Product development and marketing 
efforts that do not become profitable may have a material adverse effect on 
our business and financial condition.  We have obtained market and related 
data from a competitive-market analysis firm.  We have not independently 
verified the accuracy of that information.  In any event, the methodology 
typically used in compiling market and related data makes it subject to 
inherent uncertainties and estimations.  As a result, we cannot be sure as to 
the accuracy or completeness of our market information.  

     INADEQUATE PROVENTRA PRODUCTION COULD HAVE A MATERIAL ADVERSE EFFECT ON 
OUR BUSINESS AND FINANCIAL CONDITION.

     Given our limited experience in manufacturing Proventra, we cannot be 
sure that we will be successful in producing Proventra of acceptable quality 
on a commercial scale and at acceptable costs in our manufacturing facility.  
If we cannot, our business and financial condition could be materially 
adversely affected.  Our production of Proventra will be regulated by the 
Minnesota Department of Agriculture.  We believe that our current 
manufacturing facility will meet the anticipated requirements for the 
production of Proventra for use in consumer and clinical nutritional products 
through the year 2000.  Further, we believe that contract manufacturers would 
be available to increase our Proventra production capacity quickly, if 
required. However, until we begin producing Proventra on a commercial scale, 
we cannot be sure that our production capabilities will be adequate.

     FAILURE OF OUR COLLABORATIONS TO DEVELOP AND MARKET PRODUCTS CONTAINING 
PROVENTRA COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL 
CONDITION.

     We are relying on collaborations with larger more establish companies to 
develop and market products containing Proventra.  Our collaborators' 
inability to bring products to market could have a material adverse effect on 
our business and financial condition.  We anticipate that products containing 
Proventra will be introduced in particular markets in the last half of 1999 
through collaborations we have established with other companies.  However, 
introduction of these products to test markets on schedule depends on our 
ability and our collaborators' ability to accomplish the following:

     -    finalize market research; 
     -    finalize product development; 
     -    establish product manufacturing; 
     -    initiate marketing, sales and distribution activities related to such
          products; and
     -    provide the funding necessary to accomplish such activities.  

     DELAYS OR HIGH COSTS IN PRODUCT DEVELOPMENT COULD HAVE A MATERIAL 
ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.

     If we, or our strategic partners cannot obtain accurate marketing data, 
or to develop a product responsive to the needs identified by that data, our 
business and financial condition could be materially adversely affected.  The 
amount of time it will take us, together with our strategic partner, to 
develop consumer and clinical nutrition products and the associated costs of 
developing those products depends on, among other things, the results of our 
market research for consumer and clinical products.  It also depends on our 
discussions with certain end users or purchasers of the potential products.  
Market research and discussions may give us indications of potential 
customers, what types of products they may desire and what clinical 
information is necessary for effective marketing and sales.


                                      16

<PAGE>

RISKS SPECIFIC TO FUNCTIONAL FOOD AND NUTRACEUTICAL PRODUCTS

     PUBLIC MISPERCEPTION THAT OUR PRODUCTS MAY NOT BE SAFE COULD HAVE A 
MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.

     We are highly dependent upon consumers' perception of the safety and 
quality of our products as well as of similar products distributed by other 
companies.  Thus, for example, the publication of reports asserting that such 
products may be harmful could have a material adverse effect on our business 
and financial condition, regardless of whether such reports are 
scientifically supported and regardless of whether the alleged harmful 
effects would be present at the dosages recommended for such products.

     INNOVATIVE INGREDIENTS MAY PRODUCE UNWANTED EFFECTS AND EXPOSE US TO 
PRODUCT LIABILITY CLAIMS OR LOSS OF CONSUMER CONFIDENCE.

     If we develop products with innovative ingredients that over time are 
shown to produce unwanted effects, we could be exposed to product liability 
claims and lose consumer confidence, which could have a material adverse 
effect on our business and financial condition.  Some of our future products 
may contain innovative ingredients or combinations of ingredients that do not 
have a long history of human consumption.  While we believe all of our 
products will be safe when taken as we direct, there is little long-term 
experience with human consumption of certain of these innovative product 
ingredients or combinations thereof in concentrated form.  Although we 
perform research and/or test the formulation and production of our products, 
we will sponsor only limited clinical studies or rely on other outside 
published data.  

     IF LARGER COMPANIES WITH GREATER ACCESS TO CAPITAL AND PRODUCT MARKETS 
ENTER OUR SEGMENT OF THE NUTRITIONAL PRODUCTS MARKET, WE MAY BE MATERIALLY 
ADVERSELY AFFECTED.

     Because the nutritional products industry generally has low barriers to 
entry, additional competitors could enter the market at any time. Potential 
competitors could be larger than we are, have greater access to capital than 
we do and may be better able to withstand volatile market conditions than we 
are. Although the nutritional products industry to date has been 
characterized by many relatively small participants, national or 
international companies (which may include pharmaceutical companies or other 
suppliers to mass merchandisers) may seek to enter or to increase their 
presence in this industry or to consolidate it. Increased competition in the 
industry could have a material adverse effect on our business and financial 
condition.

     OUR FAILURE TO OBTAIN NECESSARY APPROVALS OR OTHERWISE COMPLY WITH 
GOVERNMENT REGULATIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS 
AND FINANCIAL CONDITION.

     Our current and potential functional foods and nutraceutical products 
may become subject to governmental regulation in the future. The burden of 
such regulation could add materially to the costs and risks of our 
development and marketing efforts. There can be no assurance that we could 
obtain the required approvals or comply with new regulations if our products 
are subject to additional governmental regulation in the future.

     Some of our products in development may be subject to regulation by one 
or more federal agencies, principally the Food and Drug Administration and 
the Federal Trade Commission, and to a lesser extent the Consumer Product 
Safety Commission and the United States Department of Agriculture regarding 
the formulation, manufacturing, processing, packaging, labeling, advertising, 
distribution and sale of nutritional supplements.  These activities are also 
regulated by various governmental agencies for the states and localities in 
which the Company's products are sold, as well as by governmental agencies in 
certain foreign countries in which the Company's products are sold.  Among 
other matters, regulation of the Company by the FDA and FTC is concerned with 
claims made with respect to a product which refer to the value of the product 
in treating or preventing disease or other adverse health conditions.


                                      17

<PAGE>

RISKS SPECIFIC TO CRITICAL CARE NUTRITION PRODUCTS

     IF WE DO NOT INCREASE THE SALES VOLUME OF OUR CRITICAL CARE NUTRITION 
PRODUCTS, OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY ADVERSELY 
AFFECTED. 

     Increasing the sales of our critical care nutrition products is an 
important part of our business strategy.  If we are not successful in 
obtaining these sales increases, our business and financial condition may be 
materially adversely affected.  We acquired our current critical care enteral 
nutrition products from Nutrition Medical on December 23, 1998.  Our ability 
to increase sales levels of the acquired critical care enteral nutrition 
products will depend on our ability to successfully complete certain clinical 
marketing studies and on our ability to effectively execute our operating 
sales and marketing plans. We cannot be sure that we will succeed in 
increasing the sales of these products.

     IF OUR MARKETING EFFORTS DO NOT GENERATE THE NAME RECOGNITION FOR OUR 
COMPANY AND OUR CRITICAL CARE PRODUCTS NECESSARY TO SIGNIFICANTLY ENHANCE 
REVENUES, OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY ADVERSELY 
AFFECTED

     We cannot be sure that our marketing efforts will achieve the name 
recognition of our company and of our critical care nutrition products 
necessary to significantly enhance revenues.  If they do not, our business 
and financial condition could be materially adversely affected.  Our 
products, with the exception of Glutasorb, are designed to be substantially 
equivalent to existing branded competitive products.  Although we believe 
that the quality and efficacy of our critical care nutrition products are 
comparable to branded competitive products, no independent comparison between 
our critical care nutrition products and competitive products has been 
completed. We cannot be sure that the efficacy or quality of our critical 
care nutrition products is, or will be, comparable to branded competitive 
products.  Furthermore, our name and our products are relatively unknown to 
large segments of our target markets.  

     PRICE REDUCTIONS BY COMPETITORS COULD HAVE A MATERIAL ADVERSE EFFECT ON 
OUR BUSINESS AND FINANCIAL CONDITION.

     Much of our marketing strategy for our critical care nutrition products 
is focused on the price advantage of our critical care nutrition products.  
If a competitor reduces or eliminates the price advantage of our products, we 
cannot be sure that we will be able to compete successfully with the 
competitor, or operate profitably under such conditions.  If we could not, 
our business and financial condition could be materially adversely affected.  
We believe that the principal advantage of our critical care nutrition 
products, with the exception of Glutasorb, is cost effectiveness. Because 
these products were only recently acquired, we have not yet experienced any 
competitor lowering its prices to offset any price advantage we may have.  We 
are aware that while the products were owned by NMI, at least one competitor 
in the critical care nutrition products market lowered prices to various 
customers of some branded products to levels that offset all or part of the 
price advantage held by NMI.  We believe that any selective price reductions 
by a competitor may result in lost sales of our competing products.  

     IF THE CONTRACT MANUFACTURERS THAT PRODUCE OUR PRODUCTS CANNOT DO SO 
ADEQUATELY, OUR BUSINESS AND FINANCIAL CONDITION MAY BE MATERIALLY ADVERSELY 
AFFECTED

     We rely on contract manufacturers to produce our critical care nutrition 
products according to our specifications.  Any interruption in supply from 
these manufacturers of any of our products could have a material adverse 
effect on our business and financial condition. We cannot be sure that 
contract manufacturers will consistently supply adequate quantities of our 
products on a timely basis or that the quality of such products will be 
consistently maintained.  We also rely on these manufacturers to comply with 
all applicable government regulations and manufacturing guidelines.  We 
cannot be sure these contract manufacturers will consistently comply with 
government regulations.  In the event of a sale of a defective product, we 
would be 


                                      18

<PAGE>

exposed to product liability claims and could lose customer confidence.  In 
addition, minimum quantity order requirements imposed by manufacturers may 
result in excess inventory levels, requiring additional working capital and 
increasing exposure to losses from inventory obsolescence. 

     BECAUSE THE WAY WE DISTRIBUTE OUR PRODUCTS MAY RESULT IN A RELATIVELY 
SMALL NUMBER OF CUSTOMERS, THE LOSS OF PARTICULAR CUSTOMERS COULD HAVE A 
MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION.

     Our critical care nutrition product sales may become concentrated with a 
few large distributors and certain customers.  We cannot be sure that orders 
from such customers will continue or that our future orders will not 
significantly decline, which could have a material adverse effect on our 
business and financial condition.

     WE MAY BECOME INVOLVED IN LITIGATION WITH COMPETITORS THAT MAY HAVE A 
MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL CONDITION. 

     Companies in the private label industry are commonly the subject of 
claims and lawsuits brought by brand name competitors alleging that the 
private label products have formulas, labeling or packaging similar to 
competing brand name products. Such litigation may require the commitment of 
substantial management time and legal fees.  Accordingly, such litigation may 
have a material adverse effect on our business and financial condition.  
Certain of the critical care nutrition products we acquired from Nutrition 
Medical were the subject of a lawsuit alleging patent infringement.  The suit 
was favorably resolved before we acquired the products.  Similar claims may 
be made against us by competitors in the future.  Competitors may also 
respond to our marketing strategy by more aggressively seeking patents on 
their products to limit our future product development efforts.  If similar 
infringement allegations are made against us in the future, some of our 
current and future products may need to be reformulated or repackaged in 
order for us to continue to market products that are comparable to 
competitors' patented products. We may be unable to effectively reformulate 
certain of our products.  Furthermore, we cannot be sure that a reformulated 
product would be viewed by customers to be essentially equivalent to the 
patented product. Moreover, we cannot be sure that any future lawsuits could 
be satisfactorily settled by reformulating, relabeling or repackaging a 
product.  

     DIRECT COMPETITION FROM LARGER COMPANIES WITH SIGNIFICANT FINANCIAL 
RESOURCES MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS AND FINANCIAL 
CONDITION. 

     Our competitors in the critical care nutrition products market are 
established companies with significant financial resources that sell branded 
products that have achieved a high level of customer awareness. If we are not 
able to compete successfully or operate profitably in this market, our 
business and financial condition could be materially adversely affected. 
Other companies may also enter this market.

     IF WE CANNOT ENFORCE, FOR ANY REASON, THE TRADEMARKS THAT WE ACQUIRED 
FROM NUTRITION MEDICAL, OUR BUSINESS AND FINANCIAL CONDITION MAY BE 
MATERIALLY ADVERSELY AFFECTED.

     We cannot be sure that the trademarks we acquired from Nutrition Medical 
do not or will not violate the proprietary rights of others.  Nor can we be 
sure that our proprietary rights in the marks would be upheld if challenged.  
If we were prevented from using the marks for any reason, our business and 
financial condition may be materially adversely affected.  In addition, we 
cannot be sure that we will have the financial resources necessary to enforce 
or defend our trademarks, which could also have a material adverse effect on 
our business and financial condition.  We are in the process of registering 
existing trademarks for the products acquired from Nutrition Medical with the 
United States Patent & Trademark Office.  As part of Nutrition Medical, the 
products were not registered.  Instead Nutrition Medical relied on common law 
trademark rights. The lack of such registration may impair the ability of the 
Company to successfully register the trademarks or to prosecute successfully 
an infringement action against other users of these trademarks.


                                      19

<PAGE>

     OUR FAILURE TO OBTAIN NECESSARY APPROVALS OR OTHERWISE COMPLY WITH 
GOVERNMENT REGULATIONS COULD HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS 
AND FINANCIAL CONDITION.

     Our critical care products and potential critical care products are, or 
will be, subject to government regulation.  Our current products are 
regulated as food and medical food by the FDA and are subject to certain 
labeling requirements, current good manufacturing practice regulations and 
certain other regulations designed to ensure the safety of the products. 

     Our current and potential products may become subject to further 
governmental regulation in the future.  The burden of such regulation could 
add materially to the costs and risks of our development and marketing 
efforts. There can be no assurance that we could obtain the required 
approvals or comply with new regulations if our products are subject to 
additional governmental regulation in the future.  

     Claims we make in labeling and advertising our products are subject to 
regulation by the FDA, the FTC and various state agencies under their general 
authority to prevent false, misleading and deceptive trade practices.  These 
regulations involve stringent tracking, testing and documentation standards. 
Failure to comply with such requirements can result in adverse regulatory 
action, including injunctions, civil or criminal penalties, product recalls 
or the relabeling, reformulation or possible termination of certain products. 


                                      20


<PAGE>

ITEM 2.   PROPERTIES

     The Company leases approximately 5,500 square feet of administrative, 
laboratory,  and manufacturing space at the Land O'Lakes corporate office 
located in Arden Hills, Minnesota.   In addition, the Company rents, on an 
as-needed basis, public warehouse space to store inventory.  Management 
believes that the Company's facilities are suitable and adequate for current 
office, research, manufacturing and storage requirements.

ITEM 3.   LEGAL PROCEEDINGS

     The Company is not a party to any material legal proceeding.

ITEM 4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM X.   EXECUTIVE OFFICERS OF REGISTRANT

     The executive officers of the Company are: 

<TABLE>
<CAPTION>

NAME                            AGE                  POSITION
----                            ---                  --------
<S>                             <C>      <C>
Robert A. Hoerr, M.D., Ph.D.     49      Chairman of the Board of Directors
                                         and Chief Executive Officer
Henry J. Cardello                47      President and Director
Eileen F. Bostwick, Ph.D.        48      Vice President, Research and
                                         Development
Michael E. Cady                  46      Vice President, Manufacturing and
                                         Engineering
Gregg A. Waldon                  38      Vice President, Chief Financial
                                         Officer, Secretary and Treasurer
</TABLE>

     ROBERT A. HOERR, M.D., PH.D., was named President and Chief Operating 
Officer of the Company in February 1994, became President and Chief Executive 
Officer in September 1994 and became Chairman of the Board and Chief 
Executive Officer in November 1998. He served as Vice President, Medical and 
Regulatory Affairs of the Company from January 1993 to December 1993 and 
Senior Vice President from December 1993 to February 1994. Dr. Hoerr was 
Director of Medical Affairs for Sandoz Nutrition Corporation, a 
research-based nutrition company, from March 1990 to January 1993. From 1986 
to 1990, Dr. Hoerr was Research Scientist and Assistant Program Director at 
the Clinical Research Center, Massachusetts Institute of Technology ("MIT"). 
Dr. Hoerr received his A.B. in Biology from Indiana University, his M.D. from 
Indiana University School of Medicine and his Ph.D. in Nutritional 
Biochemistry and Metabolism from MIT. 

     HENRY J. CARDELLO, has served as President since January 1999. Mr. 
Cardello has been advising the Company since April 1998 through Marketing 
Ventures of America, Inc. ("MVA"), a consumer-marketing firm that specializes 
in commercializing consumer-based products, of which he has been Chairman and 
President since July 1987.  Prior to July 1987, Mr. Cardello was President of 
Sunkist Soft Drinks, Inc., a unit of Cadbury Schweppes, Vice President of 
Marketing for Cadbury's Canada Dry business and Director of Marketing for 
Coca-Cola USA.   Additionally, Mr. Cardello has held several brand management 
positions with Anheuser-Busch and General Mills, Inc. Mr. Cardello received 
his B.S. degree in engineering from Lehigh University and his M.B.A. from The 
Wharton Graduate School of Business.

     EILEEN F. BOSTWICK, PH.D., has served as Manager of Research and 
Development since July 1992, Director of Research and Development since 
September 1993 and Vice President of Research and Development since March 
1997. Dr. Bostwick joined the Company's predecessor, Procor Technologies, 
Inc. ("Procor") in 1988 as Immunology Group Leader. Prior thereto, Dr. 
Bostwick was a Senior Immunologist in the Biotechnology Section at Minnesota 
Mining & Manufacturing. Dr. Bostwick received her B.S. and M.S. degrees from 
Michigan State University in Dairy Science, and her Ph.D. in immunology and 
physiology from the University of Minnesota. 


                                      21

<PAGE>

     MICHAEL E. CADY has served as Vice President, Manufacturing and 
Engineering of the Company since July 1992.  From January 1988 to July 1992, 
Mr. Cady served as Director of Operations for Procor.  From 1979 to 1988, Mr. 
Cady held engineering and planning positions within several operating groups 
at Land O'Lakes.  Mr. Cady was a member of the Land O'Lakes group that 
evaluated and implemented the polyclonal antibody technology used as a basis 
for the Company's manufacturing process.  Prior to joining Land O'Lakes Mr. 
Cady was an engineer at Swift & Company, a food processing company.  Mr. Cady 
received his B.S. in Engineering from the University of Iowa and earned his 
M.B.A. from the University of St. Thomas in 1985. 

     GREGG A. WALDON served as Controller of the Company from April 1992 to 
September 1992, and was elected Treasurer in September 1992, Secretary in 
March 1993, Vice President in December 1993 and Chief Financial Officer in 
November 1994. From April 1989 to April 1992, Mr. Waldon served as an Audit 
Manager with Price Waterhouse LLP, a public accounting firm, in its Middle 
Market and Emerging Growth Practice in Minneapolis, Minnesota and from 1986 
to 1989 was Senior/Staff accountant with Price Waterhouse. Mr. Waldon is 
resigning from the Company effective March 31, 1999.

     Officers of the Company are chosen by and serve at the discretion of the 
Board of Directors.  There are no family relationships among any of the 
directors, officers or key employees of the Company. 


                                      22

<PAGE>

                                    PART II

ITEM 5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER 
          MATTERS

     Incorporated herein by reference is the information appearing under the 
heading "Market For Registrant's Common Equity and Related Stockholder 
Matters" in the Company's Annual Report to Stockholders for the year ended 
December 31, 1998 (the "1998 Annual Report").

ITEM 6.   SELECTED FINANCIAL DATA

     Incorporated herein by reference is the information appearing under the 
heading "Selected Financial Data" in the 1998 Annual Report.

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND     
          RESULTS OF OPERATIONS

     Incorporated herein by reference is the information appearing under the 
heading "Management's Discussion and Analysis of Financial Condition and 
Results of Operations" in the 1998 Annual Report.

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
     
     Incorporated herein by reference is the information appearing under the 
heading "Quantitative and Qualitative Disclosures About Market Risk" in the 
1998 Annual Report.
     
ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     Incorporated herein by reference is the information appearing under the 
headings "Balance Sheets", "Statements of Operations", "Statement of Changes 
in Stockholders' Equity", "Statements of Cash Flows", "Notes to Financial 
Statements" and "Report of Independent Auditors" in the 1998 Annual Report.

ITEM 9.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND     
          FINANCIAL DISCLOSURE

     None.

                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Incorporated herein by reference is the information appearing under the 
headings "Election of Directors" and "Section 16(a) Beneficial Ownership 
Reporting Compliance" in the Company's definitive Proxy Statement for the 
annual meeting of stockholders to be held on May 12, 1999 (the "Proxy 
Statement").  See also Part I hereof under the heading "Item X. Executive 
Officers of Registrant".

ITEM 11.  EXECUTIVE COMPENSATION

     Incorporated herein by reference is the information appearing under the 
headings "Report of the Compensation Committee", "Executive Compensation" and 
"Comparative Stock Performance" in the Company's Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Incorporated herein by reference is the information appearing under the 
heading "Security Ownership of Principal Stockholders and Management" in the 
Company's Proxy Statement.


                                      23

<PAGE>

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Incorporated herein by reference is the information appearing under the 
heading "Certain Relationships and Related Transactions" in the Company's 
Proxy Statement.




                                      24

<PAGE>

                                   PART IV
                                          
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)  Documents filed as part of this report:

     1.   Financial Statements:

               The consolidated financial statements of the Company are 
          incorporated herein by reference from the information appearing under 
          the headings "Balance Sheets", "Statements of Operations", "Statement 
          of Changes in Stockholders' Equity", "Statements of Cash Flows", 
          "Notes to Financial Statements" and "Report of Independent Auditors" 
          in the 1998 Annual Report.

     2.   Financial Statement Schedules:

               The following consolidated financial statement schedules of the
          Company are included in Item 14(d):

               Schedule II    Valuation and Qualifying Accounts

(b)  Reports on Form 8-K

               The Company filed a report on 8K, dated December 23, 1998,
          relating to the purchase of certain critical care enteral products,
          related inventory and certain fixed assets from NMI.
 
(c)  Exhibits:

     The following exhibits are filed as part of this Annual Report on Form 
10-K for the year ended December 31, 1998.   

<TABLE>
<CAPTION>

 EXHIBIT NO.         DESCRIPTION                                                    METHOD OF FILING
 -----------         -----------                                                    ----------------
 <C>                 <S>                                                            <C>
       3.2           Restated Certificate of Incorporation of the                   Incorporated By 
                     Company.(3)                                                    Reference
                     
       3.4           Restated Bylaws of the Company.(1)                             Incorporated By 
                                                                                    Reference

       4.1           Specimen Common Stock Certificate.(1)                          Incorporated By 
                                                                                    Reference

       4.6           Form of Common Stock Warrant to purchase shares of             Incorporated By 
                     Common Stock of the Company, issued in connection with         Reference
                     the sale of Convertible Promissory Notes.(1)
                     
       4.7           Warrant to purchase 17,144 shares of Series F-1                Incorporated By 
                     Convertible Preferred Stock of the Company issued to           Reference
                     Chiron Corporation, dated March 29, 1995.(1)
                     
       4.8           Warrant to purchase 42,856 shares of Series F-2                Incorporated By 
                     Convertible Preferred Stock of the Company issued to           Reference
                     Chiron Corporation, dated March 29, 1995.(1)
                     
       4.9           Warrant to purchase 60,000 shares of Series F-3                Incorporated By 
                     Convertible Preferred Stock of the Company issued to           Reference
                     Chiron Corporation, dated March 29, 1995.(1)
                     
      4.10           Warrant to purchase 80,000 shares of Series F-3                Incorporated By 
                     Convertible Preferred Stock of the Company issued to           Reference
                     Chiron Corporation, 
</TABLE>


                                      25

<PAGE>

<TABLE>
<CAPTION>

 EXHIBIT NO.         DESCRIPTION                                                    METHOD OF FILING
 -----------         -----------                                                    ----------------
 <C>                 <S>                                                            <C>
                     dated March 29, 1995.(1)

      4.11           Warrant to purchase 18,250 shares of Common Stock of           Incorporated By 
                     the Company issued to IAI Investment Funds VI, Inc.            Reference
                     (IAI Emerging Growth Fund), dated January 30, 1996.(1)
                     
      4.12           Warrant to purchase 6,250 shares of Common Stock of the        Incorporated By 
                     Company issued to IAI Investment Funds IV, Inc. (IAI           Reference
                     Regional Fund), dated January 30, 1996.(1)
                     
      4.13           Warrant to purchase 25,000 shares of Common Stock of           Incorporated By 
                     the Company issued to John Pappajohn, dated February 2,        Reference
                     1996.(1)
                     
      4.14           Warrant to purchase 25,000 shares of Common Stock of           Incorporated By 
                     the Company issued to Edgewater Private Equity Fund,           Reference
                     L.P., dated February 2, 1996.(1)
                     
      4.15           Warrant to purchase 10,000 shares of Common Stock of           Incorporated By 
                     the Company issued to Joseph Giamenco, dated                   Reference
                     February 2, 1996.(1)
                     
      4.16           Warrant to purchase 25,000 shares of Common Stock of           Incorporated By 
                     the Company issued to Gus A. Chafoulias, dated                 Reference
                     February 2, 1996.(1)
                     
      4.17           Warrant to purchase 25,000 shares of Common Stock of           Incorporated By 
                     the Company issued to JIBS Equities, dated February 2,         Reference
                     1996.(1)
                     
      4.18           Warrant to purchase 25,000 shares of Common Stock of           Incorporated By 
                     the Company issued to Land O'Lakes, Inc., dated                Reference
                     February 2, 1996.(1)
                     
      4.19           6% Convertible Debenture Purchase Agreement dated              Incorporated By 
                     November 18, 1997 among the Company and the Purchasers         Reference
                     named therein.(8)
                     
      4.20           Registration Rights Agreement dated November 18, 1997          Incorporated By 
                     among the Company and the Holders named therein.(9)            Reference
                     
      4.21           6% Convertible Debenture due May 18, 1999 issued to CPR        Incorporated By 
                     (USA) Inc. dated November 18, 1997.(10)                        Reference
                     
      4.22           6% Convertible Debenture due May 18, 1999 issued to            Incorporated By 
                     Libertyview Plus Fund dated November 18, 1997.(11)             Reference
                     
      4.23           6% Convertible Debenture due May 18, 1999 issued to            Incorporated By 
                     Libertyview Fund, LLC dated November 18, 1997.(12)             Reference
                     
      4.24           Stock Purchase Warrant issued to CPR (USA) Inc. dated          Incorporated By 
                     November 18, 1997.(13)                                         Reference
                     
      4.25           Stock Purchase Warrant issued to Libertyview Plus Fund         Incorporated By 
                     dated November 18, 1997.(14)                                   Reference
                     
      4.26           Stock Purchase Warrant issued to Libertyview Fund, LLC         Incorporated By 
                     dated November 18, 1997.(15)                                   Reference
                     
      4.27           Warrant issued to CLARCO Holdings dated as of                  Incorporated By 
                     December 1,1997.(16)                                           Reference
</TABLE>


                                      26

<PAGE>

<TABLE>
<CAPTION>

 EXHIBIT NO.         DESCRIPTION                                                    METHOD OF FILING
 -----------         -----------                                                    ----------------
 <C>                 <S>                                                            <C>
      4.28           Warrant issued to CLARCO Holdings dated as of                  Incorporated By 
                     December 1,1997.(17)                                           Reference

      4.29           Warrant issued to CLARCO Holdings dated as of                  Incorporated By 
                     December 1,1997.(18)                                           Reference

      4.30           Warrant issued to Henry J. Cardello dated as of April          Incorporated By 
                     13, 1998.(20)                                                  Reference
                     
      4.31           Warrant issued to Henry J. Cardello dated as of April          Incorporated By 
                     30, 1998.(20)                                                  Reference
                     
      4.32           Warrant issued to Henry J. Cardello dated as of June 19,       Incorporated By 
                     1998.(20)                                                      Reference
                     
      4.33           Warrant issued to William Young and Rebecca Young dated        Electronic  
                     as of August 12, 1998.                                         Transmission

      4.34           Warrant issued to Henry J. Cardello dated as of                Electronic  
                     September 30, 1998.                                            Transmission

      4.35           Warrant issued to American Home Products Corporation           Electronic  
                     dated as of October 15, 1998.                                  Transmission

     #10.1           License Agreement between the Company and Land O'Lakes         Incorporated By 
                     dated May 7, 1992.(1)                                          Reference
                     
     #10.2           Royalty Agreement between the Company and Land O'Lakes         Incorporated By 
                     dated May 7, 1992.(1)                                          Reference
                     
     #10.3           Supply Agreement between the Company and Land O'Lakes          Incorporated By 
                     dated May 7, 1992.(1)                                          Reference
                     
      10.4           Master Services Agreement between the Company and Land         Incorporated By 
                     O'Lakes dated May 7, 1992.(1)                                  Reference
                     
     *10.5           GalaGen Inc. 1992 Stock Plan, as amended.(5)                   Incorporated By 
                                                                                    Reference

      10.7           Stock and Warrant Purchase Agreement between the Company       Incorporated By 
                     and Chiron Corporation dated March 20, 1995.(1)                Reference

     #10.8           License and Collaboration Agreement between the Company        Incorporated By 
                     and Chiron Corporation dated March 20, 1995.(1)                Reference

     *10.9           GalaGen Inc. Employee Stock Purchase Plan, as amended.(2)      Incorporated By 
                                                                                    Reference

      10.10          Credit Agreement between the Company and Norwest Bank          Incorporated By 
                     Minnesota, N.A., dated as of January 24, 1996.(1)              Reference

      10.11          Commitment Letter between the Company and Cargill              Incorporated By 
                     Leasing Corporation, dated June 5, 1996.(2)                    Reference
                                                                                    
      10.12          Master Equipment Lease between the Company and Cargill         Incorporated By 
                     Leasing Corporation, dated June 6, 1996.(2)                    Reference
                                                                                    
      10.13          Agreement for Progress Payments between the Company and        Incorporated By 
                     Cargill Leasing Corporation, dated June 6, 1996.(2)            Reference
                                                                                    
</TABLE>


                                      27

<PAGE>

<TABLE>
<CAPTION>

 EXHIBIT NO.         DESCRIPTION                                                    METHOD OF FILING
 -----------         -----------                                                    ----------------
 <C>                 <S>                                                            <C>
      10.14          Agreement for Lease between the Company and Land               Incorporated By 
                     O'Lakes, dated June 3, 1996.(2)                                Reference

     *10.15          Letter agreement with John G. Watson dated September 14,       Incorporated By 
                     1996.(3)                                                       Reference

     #10.16          Agreement with Colorado Animal Research Enterprises,           Incorporated By 
                     Inc. dated November 1, 1996.(4)                                Reference
                                                                                    
     *10.17          Letter agreement with Francois Lebel, M.D., dated              Incorporated By 
                     December 27, 1996.(4)                                          Reference
                                                                                    
     *10.18          Consulting agreement with Stanley Falkow, Ph.D., dated         Incorporated By 
                     January 15, 1997.(4)                                           Reference

     *10.19          GalaGen Inc. Annual Short Term Incentive Cash                  Incorporated By 
                     Compensation Plan.(4)                                          Reference

     *10.20          GalaGen Inc. Annual Long Term Incentive Stock Option           Incorporated By 
                     Compensation Plan.(4)                                          Reference

     *10.21          GalaGen Inc. 1997 Incentive Plan.(6)                           Incorporated By 
                                                                                    Reference

      10.22          Master Loan and Security Agreement with TransAmerica           Incorporated By 
                     Business Credit Corporation dated June 8, 1997.(7)             Reference

      10.23          Amended and Restated License Agreement between the             Incorporated By 
                     Company and Land O'Lakes dated March 11, 1998.(19)             Reference 

     #10.24          License Agreement between the Company and Metagenics,          Incorporated By 
                     Inc. dated April 7, 1998.(20)                                  Reference 
                     
      10.25          Marketing Agreement between the Company and Nutrition          Incorporated By 
                     Medical, Inc., dated September 1, 1998.(21)                    Reference
                     
      10.26          Asset Purchase Agreement between the Company and               Incorporated By 
                     Nutrition Medical, Inc., dated  September 1, 1998.(21)         Reference
                     
     *10.27          Letter agreement with John G. Watson dated September 16,       Incorporated By 
                     1998.(21)                                                      Reference

      10.28          Asset Purchase Agreement Amendment 1 between the Company       Incorporated By 
                     and Nutrition Medical, Inc., dated  October 28,                Reference
                     1998.(22)
                     
      10.29          Asset Purchase Agreement Amendment 2 between the Company       Incorporated By 
                     and Nutrition Medical, Inc., dated  December 23,               Reference
                     1998.(23)
                     
    ##10.30          Collaboration and License Agreement between the Company        Electronic  
                     and American Home Products Corporation acting through          Transmission
                     its Wyeth-Ayerst Laboratories Division, dated October
                     15, 1998
                     
    ##10.31          Manufacturing and Supply Agreement between the Company         Electronic  
                     and American Home Products Corporation acting through          Transmission
                     its Wyeth-Ayerst Laboratories Division dated October 15,
                     1998.
                     
    ##10.32          Product Development Collaboration, Manufacturing and           Electronic  
                     Supply, and Retail Marketing Agreement between the             Transmission
                     Company and 
</TABLE>


                                      28

<PAGE>


<TABLE>
<CAPTION>

 EXHIBIT NO.         DESCRIPTION                                                    METHOD OF FILING
 -----------         -----------                                                    ----------------
 <C>                 <S>                                                            <C>
                     General Nutrition Corporation, dated December 22, 1998

      11.1           Statement re: computation of per share earnings (loss).        Electronic  
                                                                                    Transmission

      13.1           1998 Annual Report to Stockholders                             Electronic 
                                                                                    Transmission

      23.1           Consent of Ernst & Young LLP.                                  Electronic 
                                                                                    Transmission

      27.1           Financial Data Schedule for Year Ended December 31,            Electronic 
                     1998.                                                          Transmission

      27.2           Restated Financial Data Schedule for Quarter ended March       Incorporated By 
                     31, 1996.(19)                                                  Reference
</TABLE>

     (1)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Registration Statement on Form S-1 (Registration No.
          333-1032).
     
     (2)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the quarterly period ended
          June 30, 1996 (File No. 0-27976).
     
     (3)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the quarterly period ended
          September 30, 1996 (File No. 0-27976).
     
     (4)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Annual Report on Form 10-K for the period ended December 31,
          1996 (File No. 0-27976).

     (5)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the quarterly period ended
          March 31, 1997 (File No. 0-27976).
     
     (6)  Incorporated herein by reference to Appendix A to the Company's 1997
          Definitive Proxy Statement on Schedule 14A (File No. 0-27976).
     
     (7)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the quarterly period ended
          June 30, 1997 (File No. 0-27976).
     
     (8)  Incorporated herein by reference to Exhibit No. 4.4 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (9)  Incorporated herein by reference to Exhibit No. 4.5 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (10) Incorporated herein by reference to Exhibit No. 4.6 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (11) Incorporated herein by reference to Exhibit No. 4.7 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (12) Incorporated herein by reference to Exhibit No. 4.8 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (13) Incorporated herein by reference to Exhibit No. 4.9 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (14) Incorporated herein by reference to Exhibit No. 4.10 to the Company's
          Registration Statement on Form S-3(Registration No. 333-41151).


                                      29

<PAGE>

     (15) Incorporated herein by reference to Exhibit No. 4.11 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (16) Incorporated herein by reference to Exhibit No. 4.12 to Amendment No.
          1 to the Company's Registration Statement on Form S-3 (Registration
          No. 333-41151).
     
     (17) Incorporated herein by reference to Exhibit No. 4.13 to Amendment No.
          1 to the Company's Registration Statement on Form S-3 (Registration
          No. 333-41151).
     
     (18) Incorporated herein by reference to Exhibit No. 4.14 to Amendment No.
          1 to the Company's Registration Statement on Form S-3 (Registration
          No. 333-41151).
          
     (19) Incorporated herein by reference to the same numbered Exhibit to the
          Company's Annual Report on Form 10-K for the period ended December 31,
          1997 (File No. 0-27976).    

     (20) Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the period ended June 30,
          1998 (File No. 0-27976).

     (21) Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the period ended September
          30, 1998 (File No. 0-27976).

     (22) Incorporated herein by reference to Exhibit No. 2.2 to the Company's
          Report on Form 8-K, dated December 23, 1998 (File No. 0-27976).

     (23) Incorporated herein by reference to Exhibit No. 2.3 to the Company's
          Report on Form 8-K, dated December 23, 1998 (File No. 0-27976).
     
      *   Management contract or compensatory plan or arrangement required to be
          filed as an exhibit to this Form 10-K.  
     
      #   Contains portions for which confidential treatment has been granted
          to the Company.

      ##  Contains portions of which confidential treatment has been applied
          for by the Company.


(d)  Valuation and Qualifying Accounts:

<TABLE>
<CAPTION>
                                                      Balance at       Charged to                     Balance at end
                                                     beginning of      Costs and                         of period
                                                        period          Expenses      Deductions
     <S>                                             <C>               <C>            <C>             <C>
     Year Ended December 31, 1998:
     Allowance for returns and doubtful accounts           -               $14,020           -               $14,020
                                                      -----------      -----------    ----------      --------------
                                            Total          -               $14,020           -               $14,020
                                                      -----------      -----------    ----------      --------------
     Year Ended December 31, 1997:
                                            Total          -                     -           -                     -
                                                      -----------      -----------    ----------      --------------
     Year Ended December 31, 1996:
                                            Total          -                     -           -                     -
                                                      -----------      -----------    ----------      --------------
</TABLE>


                                      30

<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 report 
to be signed on its behalf by the undersigned thereunto duly authorized, on 
March 31, 1999.

                          GALAGEN INC.


                          By    /s/ Robert A. Hoerr                            
                              -----------------------------------
                              Robert A. Hoerr, M.D., Ph.D.
                              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
Registrant and in the capacities indicated on March 31, 1999.



                            /s/ Robert A. Hoerr
                          -----------------------------------------------------
                          Robert A. Hoerr, Chairman and Chief Executive Officer
                          (Principal Executive Officer) and Director


                            /s/ Gregg A. Waldon
                          -----------------------------------------------------
                          Gregg A. Waldon, Vice President, Chief Financial
                          Officer, Treasurer and Secretary (Principal Financial
                          Officer and Principal Accounting Officer)


                            /s/ Henry J. Cardello
                          -----------------------------------------------------
                          Henry J. Cardello, President and Director


                            /s/ Ronald O. Ostby
                          -----------------------------------------------------
                          Ronald O. Ostby, Director


                            /s/ R. David Spreng
                          -----------------------------------------------------
                          R. David Spreng, Director


                            /s/ Winston R. Wallin
                          -----------------------------------------------------
                          Winston R. Wallin, Director


                                      31

<PAGE>

                                EXHIBIT INDEX
                                          
<TABLE>
<CAPTION>

 EXHIBIT NO.           DESCRIPTION                                                    METHOD OF FILING
 -----------           -----------                                                    ----------------
 <C>                   <S>                                                            <C>
       3.2             Restated Certificate of Incorporation of the Company.(3)       Incorporated By 
                                                                                      Reference

       3.4             Restated Bylaws of the Company.(1)                             Incorporated By 
                                                                                      Reference

       4.1             Specimen Common Stock Certificate.(1)                          Incorporated By 
                                                                                      Reference

       4.6             Form of Common Stock Warrant to purchase shares of Common      Incorporated By 
                       Stock of the Company, issued in connection with the sale       Reference
                       of Convertible Promissory Notes.(1)
                       
       4.7             Warrant to purchase 17,144 shares of Series F-1                Incorporated By 
                       Convertible Preferred Stock of the Company issued to           Reference
                       Chiron Corporation, dated March 29, 1995.(1)
                       
       4.8             Warrant to purchase 42,856 shares of Series F-2                Incorporated By 
                       Convertible Preferred Stock of the Company issued to           Reference
                       Chiron Corporation, dated March 29, 1995.(1)
                       
       4.9             Warrant to purchase 60,000 shares of Series F-3                Incorporated By 
                       Convertible Preferred Stock of the Company issued to           Reference
                       Chiron Corporation, dated March 29, 1995.(1)
                       
       4.10            Warrant to purchase 80,000 shares of Series F-3                Incorporated By 
                       Convertible Preferred Stock of the Company issued to           Reference
                       Chiron Corporation, dated March 29, 1995.(1)
                       
       4.11            Warrant to purchase 18,250 shares of Common Stock of the       Incorporated By 
                       Company issued to IAI Investment Funds VI, Inc. (IAI           Reference
                       Emerging Growth Fund), dated January 30, 1996.(1)
                       
       4.12            Warrant to purchase 6,250 shares of Common Stock of the        Incorporated By 
                       Company issued to IAI Investment Funds IV, Inc. (IAI           Reference
                       Regional Fund), dated January 30, 1996.(1)
                       
       4.13            Warrant to purchase 25,000 shares of Common Stock of the       Incorporated By 
                       Company issued to John Pappajohn, dated February 2,            Reference
                       1996.(1)
                       
       4.14            Warrant to purchase 25,000 shares of Common Stock of the       Incorporated By 
                       Company issued to Edgewater Private Equity Fund, L.P.,         Reference
                       dated February 2, 1996.(1)
                       
       4.15            Warrant to purchase 10,000 shares of Common Stock of the       Incorporated By 
                       Company issued to Joseph Giamenco, dated February 2,           Reference
                       1996.(1)
                       
       4.16            Warrant to purchase 25,000 shares of Common Stock of the       Incorporated By 
                       Company issued to Gus A. Chafoulias, dated February 2,         Reference
                       1996.(1)
                       
       4.17            Warrant to purchase 25,000 shares of Common Stock of the       Incorporated By 
                       Company issued to JIBS Equities, dated February 2,             Reference
                       1996.(1)
                       
       4.18            Warrant to purchase 25,000 shares of Common Stock of the       Incorporated By 
                       Company issued to Land O'Lakes, Inc., dated February 2,        Reference
                       1996.(1)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

 EXHIBIT NO.           DESCRIPTION                                                    METHOD OF FILING
 -----------           -----------                                                    ----------------
 <C>                   <S>                                                            <C>
       4.19            6% Convertible Debenture Purchase Agreement dated              Incorporated By 
                       November 18, 1997 among the Company and the Purchasers         Reference
                       named therein.(8)
                       
       4.20            Registration Rights Agreement dated November 18, 1997          Incorporated By 
                       among the Company and the Holders named therein.(9)            Reference
                       
       4.21            6% Convertible Debenture due May 18, 1999 issued to CPR        Incorporated By 
                       (USA) Inc. dated November 18, 1997.(10)                        Reference
                       
       4.22            6% Convertible Debenture due May 18, 1999 issued to            Incorporated By 
                       Libertyview Plus Fund dated November 18, 1997.(11)             Reference
                       
       4.23            6% Convertible Debenture due May 18, 1999 issued to            Incorporated By 
                       Libertyview Fund, LLC dated November 18, 1997.(12)             Reference
                       
       4.24            Stock Purchase Warrant issued to CPR (USA) Inc. dated          Incorporated By 
                       November 18, 1997.(13)                                         Reference
                       
       4.25            Stock Purchase Warrant issued to Libertyview Plus Fund         Incorporated By 
                       dated November 18, 1997.(14)                                   Reference
                       
       4.26            Stock Purchase Warrant issued to Libertyview Fund, LLC         Incorporated By 
                       dated November 18, 1997.(15)                                   Reference
                       
       4.27            Warrant issued to CLARCO Holdings dated as of                  Incorporated By 
                       December 1,1997.(16)                                           Reference
                       
       4.28            Warrant issued to CLARCO Holdings dated as of                  Incorporated By 
                       December 1,1997.(17)                                           Reference
                       
       4.29            Warrant issued to CLARCO Holdings dated as of                  Incorporated By 
                       December 1,1997.(18)                                           Reference
                       
       4.30            Warrant issued to Henry J. Cardello dated as of April 13,      Incorporated By 
                       1998. (20)                                                     Reference
                       
       4.31            Warrant issued to Henry J. Cardello dated as of April 30,      Incorporated By 
                       1998. (20)                                                     Reference
                       
       4.32            Warrant issued to Henry J. Cardello dated as of June 19,       Incorporated By 
                       1998. (20)                                                     Reference
                       
       4.33            Warrant issued to William Young and Rebecca Young dated        Electronic  
                       as of August 12, 1998.                                         Transmission

       4.34            Warrant issued to Henry J. Cardello dated as of September      Electronic  
                       30, 1998.                                                      Transmission

       4.35            Warrant issued to American Home Products Corporation           Electronic  
                       dated as of October 15, 1998.                                  Transmission

      #10.1            License Agreement between the Company and Land O'Lakes         Incorporated By 
                       dated May 7, 1992.(1)                                          Reference

      #10.2            Royalty Agreement between the Company and Land O'Lakes         Incorporated By 
                       dated May 7, 1992.(1)                                          Reference
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

 EXHIBIT NO.           DESCRIPTION                                                    METHOD OF FILING
 -----------           -----------                                                    ----------------
 <C>                   <S>                                                            <C>
      #10.3            Supply Agreement between the Company and Land O'Lakes          Incorporated By 
                       dated May 7, 1992.(1)                                          Reference
                       
       10.4            Master Services Agreement between the Company and Land         Incorporated By 
                       O'Lakes dated May 7, 1992.(1)                                  Reference
                       
      *10.5            GalaGen Inc. 1992 Stock Plan, as amended. (5)                  Incorporated By 
                                                                                      Reference

       10.7            Stock and Warrant Purchase Agreement between the Company       Incorporated By 
                       and Chiron Corporation dated March 20, 1995.(1)                Reference

      #10.8            License and Collaboration Agreement between the Company        Incorporated By 
                       and Chiron Corporation dated March 20, 1995.(1)                Reference

      *10.9            GalaGen Inc. Employee Stock Purchase Plan, as amended.(2)      Incorporated By 
                                                                                      Reference

      10.10            Credit Agreement between the Company and Norwest Bank          Incorporated By 
                       Minnesota, N.A., dated as of January 24, 1996.(1)              Reference

      10.11            Commitment Letter between the Company and Cargill Leasing      Incorporated By 
                       Corporation, dated June 5, 1996. (2)                           Reference
                                                                                      
      10.12            Master Equipment Lease between the Company and Cargill         Incorporated By 
                       Leasing Corporation, dated June 6, 1996. (2)                   Reference
                                                                                      
      10.13            Agreement for Progress Payments between the Company and        Incorporated By
                       Cargill Leasing Corporation, dated June 6, 1996. (2)           Reference
                                                                                      
      10.14            Agreement for Lease between the Company and Land O'Lakes,      Incorporated By
                       dated June 3, 1996. (2)                                        Reference
                                                                                      
      *10.15           Letter agreement with John G. Watson dated September 14,       Incorporated By
                       1996. (3)                                                      Reference
                                                                                      
      #10.16           Agreement with Colorado Animal Research Enterprises, Inc.      Incorporated By
                       dated November 1, 1996. (4)                                    Reference
                                                                                      
      *10.17           Letter agreement with Francois Lebel, M.D., dated              Incorporated By
                       December 27, 1996. (4)                                         Reference
                                                                                      
      *10.18           Consulting agreement with Stanley Falkow, Ph.D., dated         Incorporated By
                       January 15, 1997. (4)                                          Reference
                                                                                      
      *10.19           GalaGen Inc. Annual Short Term Incentive Cash                  Incorporated By
                       Compensation Plan. (4)                                         Reference
                                                                                      
      *10.20           GalaGen Inc. Annual Long Term Incentive Stock Option           Incorporated By
                       Compensation Plan. (4)                                         Reference
                                                                                      
      *10.21           GalaGen Inc. 1997 Incentive Plan. (6)                          Incorporated By
                                                                                      Reference
                                                                                      
      10.22            Master Loan and Security Agreement with TransAmerica           Incorporated By
                       Business Credit Corporation dated June 8, 1997. (7)            Reference
</TABLE>

<PAGE>

<TABLE>
<CAPTION>

 EXHIBIT NO.           DESCRIPTION                                                    METHOD OF FILING
 -----------           -----------                                                    ----------------
 <C>                   <S>                                                            <C>
      10.23            Amended and Restated License Agreement between the             Incorporated By
                       Company and Land O'Lakes dated March 11, 1998. (19)            Reference 
                       
     #10.24            License Agreement between the Company and Metagenics,          Incorporated By
                       Inc. dated April 7, 1998. (20)                                 Reference 
                       
      10.25            Marketing Agreement between the Company and Nutrition          Incorporated By
                       Medical, Inc., dated September 1, 1998. (21)                   Reference
                       
      10.26            Asset Purchase Agreement between the Company and               Incorporated By
                       Nutrition Medical, Inc., dated  September 1, 1998.(21)         Reference
                       
      *10.27           Letter agreement with John G. Watson dated September 16,       Incorporated By
                       1998.(21)                                                      Reference
                                                                                      
      10.28            Asset Purchase Agreement Amendment 1 between the Company       Incorporated By
                       and Nutrition Medical, Inc., dated  October 28, 1998.(22)      Reference
                       
      10.29            Asset Purchase Agreement Amendment 2 between the Company       Incorporated By
                       and Nutrition Medical, Inc., dated  December 23,               Reference
                       1998.(23)
                       
     ##10.30           Collaboration and License Agreement between the Company        Electronic  
                       and American Home Products Corporation acting through its      Transmission
                       Wyeth-Ayerst Laboratories Division, dated October 15,
                       1998
                       
     ##10.31           Manufacturing and Supply Agreement between the Company         Electronic  
                       and American Home Products Corporation acting through its      Transmission
                       Wyeth-Ayerst Laboratories Division dated October 15,
                       1998.
                       
     ##10.32           Product Development Collaboration, Manufacturing and           Electronic  
                       Supply, and Retail Marketing Agreement between the             Transmission
                       Company and General Nutrition Corporation, dated December      
                       22, 1998

       11.1            Statement re: computation of per share earnings (loss).        Electronic  
                                                                                      Transmission

       13.1            1998 Annual Report to Stockholders                             Electronic 
                                                                                      Transmission

       23.1            Consent of Ernst & Young LLP.                                  Electronic 
                                                                                      Transmission

       27.1            Financial Data Schedule for Year Ended December 31, 1998.      Electronic 
                                                                                      Transmission

       27.2            Restated Financial Data Schedule for Quarter ended March       Incorporated By
                       31, 1996. (19)                                                 Reference 
</TABLE>

     (1)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Registration Statement on Form S-1 (Registration No.
          333-1032).
     
     (2)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the quarterly period ended
          June 30, 1996 (File No. 0-27976).

<PAGE>

     (3)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the quarterly period ended
          September 30, 1996 (File No. 0-27976).
     
     (4)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Annual Report on Form 10-K for the period ended December 31,
          1996 (File No. 0-27976).

     (5)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the quarterly period ended
          March 31, 1997 (File No. 0-27976).
     
     (6)  Incorporated herein by reference to Appendix A to the Company's 1997
          Definitive Proxy Statement on Schedule 14A (File No. 0-27976).
     
     (7)  Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the quarterly period ended
          June 30, 1997 (File No. 0-27976).
     
     (8)  Incorporated herein by reference to Exhibit No. 4.4 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (9)  Incorporated herein by reference to Exhibit No. 4.5 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (10) Incorporated herein by reference to Exhibit No. 4.6 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (11) Incorporated herein by reference to Exhibit No. 4.7 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (12) Incorporated herein by reference to Exhibit No. 4.8 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (13) Incorporated herein by reference to Exhibit No. 4.9 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (14) Incorporated herein by reference to Exhibit No. 4.10 to the Company's
          Registration Statement on Form S-3(Registration No. 333-41151).
     
     (15) Incorporated herein by reference to Exhibit No. 4.11 to the Company's
          Registration Statement on Form S-3 (Registration No. 333-41151).
     
     (16) Incorporated herein by reference to Exhibit No. 4.12 to Amendment No.
          1 to the Company's Registration Statement on Form S-3 (Registration
          No. 333-41151).
     
     (17) Incorporated herein by reference to Exhibit No. 4.13 to Amendment No.
          1 to the Company's Registration Statement on Form S-3 (Registration
          No. 333-41151).
     
     (18) Incorporated herein by reference to Exhibit No. 4.14 to Amendment No.
          1 to the Company's Registration Statement on Form S-3 (Registration
          No. 333-41151).
          
     (19) Incorporated herein by reference to the same numbered Exhibit to the
          Company's Annual Report on Form 10-K for the period ended December 31,
          1997 (File No. 0-27976).    

     (20) Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the period ended June 30,
          1998 (File No. 0-27976).

     (21) Incorporated herein by reference to the same numbered Exhibit to the
          Company's Quarterly Report on Form 10-Q for the period ended September
          30, 1998 (File No. 0-27976).

<PAGE>

     (22) Incorporated herein by reference to Exhibit No. 2.2 to the Company's
          Report on Form 8-K, dated December 23, 1998 (File No. 0-27976).

     (23) Incorporated herein by reference to Exhibit No. 2.3 to the Company's
          Report on Form 8-K, dated December 23, 1998 (File No. 0-27976).

               
     *    Management contract or compensatory plan or arrangement required to be
          filed as an exhibit to this Form 10-K.  
     
     #    Contains portions for which confidential treatment has been granted to
          the Company.

     ##   Contains portions of which confidential treatment has been applied for
          by the Company.