______________________
                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             ______________________

                                    FORM 10-K
            (MARK ONE)
                (X) Annual Report Pursuant to Section 13 or 15(d)
            of the Securities and Exchange Act of 1934 (Fee Required)
                   For the Fiscal Year Ended January 31, 2001

                                       Or

              ( ) Transition Report Pursuant to Section 13 or 15(d)
            of the Securities Exchange Act of 1934 (No Fee Required)
                  For the transition period from _____ to _____

                           Commission File No. 0-19122
                                   ___________

                               APHTON CORPORATION
                        444 Brickell Avenue, Suite 51-507
                            Miami, Florida 33131-2492
                                 (305) 374-7338
Incorporated in                                                 I.R.S. Employer
Delaware                                                        Identification
                                                                No. 95-3640931

           Securities Registered pursuant to Section 12(g) of the Act:

                         Common Stock ($.001 par value)
                             ______________________
                               Title of Each Class

               Number of shares of Common Stock ($.001 par value)
                  Outstanding as of April 25, 2001: 16,199,493

            Aggregate market value of Common Stock ($.001 par value)
                    held by non-affiliates on April 25, 2001
          based on the last sale price on April 25, 2001: $247,160,901

            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 the 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. ( )

                       Documents Incorporated by Reference

        Document                                              Part of Form 10-K
Proxy Statement for the Annual                                       Part III
Meeting of Stockholders





                                     PART I

Item 1.  Business
                                   The Company

Aphton Corporation is a biopharmaceutical  company in late-stage clinical trials
for four cancer indications.  Aphton is developing products using its innovative
vaccine-like   technology  for   neutralizing   hormones  that   participate  in
gastrointestinal  system and reproductive system cancer and non-cancer diseases;
and for the prevention of pregnancy. Aphton has strategic alliances with Aventis
Pasteur (NYSE: AVE),  GlaxoSmithKline (NYSE: GSK), Schering Plough Animal Health
(NYSE: SGP), and the World Health Organization (WHO).

                                Basis of Approach

Aphton's  approach  to the  treatment  of major  diseases  is to  employ  (anti)
"hormone therapy." Aphton's hormone therapy involves neutralizing,  or blocking,
targeted hormones which play a critical role in diseases of the gastrointestinal
and  reproduction  systems.  Aphton has selected the strategy of hormone therapy
because it has proved,  over many years,  to be  efficacious in the treatment of
major diseases,  both malignant and  non-malignant.  In short,  this risk-averse
strategy has been proven to be effective in humans.  Well-documented examples of
such efficacy in humans are blocking  gastrin  (Proglumide) or blocking  another
hormone  stimulated by gastrin,  namely histamine (Zantac,  Tagamet),  to reduce
stomach  acid.  These treat GERD  (gastroesophageal  reflux  disease,  or severe
"heart  burn"),  ulcerations  of the  esophagus  and peptic  ulcers.  Additional
examples  are  blocking  estrogen  (Tamoxifen),  for breast  cancer  therapy and
blocking the production of  testosterone  (Lupron,  Zoladex) for prostate cancer
therapy.
                               Results and Status

Anti-Gastrin Immunogen

Aphton's current  anti-gastrin  immunogen,  or vaccine,  clinical programs treat
several human gastrointestinal  system  adenocarcinomas,  including those of the
esophagus,  stomach,  pancreas,  liver,  colon and rectum.  These cancers of the
gastrointestinal   system  are  stimulated  by  the  hormones   gastrin  17  and
glycine-extended gastrin 17. Aphton's proprietary anti-gastrin immunogen induces
antibodies in the patient that  neutralize both of them. The company knows of no
other vaccine or drug that selectively blocks or neutralizes both gastrin 17 and
glycine-extended  gastrin 17. Aphton believes that its anti-gastrin  vaccine can
extend   survival   in   patients   suffering   from   adenocarcinomas   of  the
gastrointestinal system, without adding toxicity to a therapy regimen.

Aphton has successfully  completed Phase I/II safety and dose ranging trials and
has reported on the results  through  news  releases  and in  publications  with
collaborating scientists in the US and abroad, in peer-reviewed journals.

The most recent of these was on  February  9, 2001,  at a meeting of the British
Society of Upper Gastrointestinal  System Surgeons held in the UK. The principal
investigator  in the study  presented  results  from a second  Phase II clinical
trial for advanced pancreatic cancer patients treated with Aphton's anti-gastrin
therapeutic vaccine. These results showed greater increased survival of patients
treated with Aphton's anti-gastrin vaccine as compared to the increased survival
results in the first Phase II trial with advanced  pancreatic  cancer  patients,
announced last year by Aphton. The study consisted of 33 evaluable patients, all
of whom had  advanced  pancreatic  cancer.  All  patients in the trial  received
Aphton's  anti-gastrin  vaccine,  at  one  dose-level,  with  no  additional  or
concurrent therapies.

Overall   median   survival  of  the  33  evaluable   patients  was  8.6  months
post-initiation  of  therapy  (and 10 months  post-diagnosis),  compared  to 6.7
months post initiation of therapy for the first study.  The median  survivals of
both Phase II studies  compare  favorably  with  published data showing a median
survival of  approximately  4.3 months for  patients  with  advanced  pancreatic
cancer, who either receive no therapy or do not respond to additional therapies.
Gemcitabine,  the only  approved  drug in the U.S. for  pancreatic  cancer,  was
reported  in its  pivotal  trial  adding  approximately  5 to 6 weeks to the 4.3
months median survival for advanced pancreatic cancer patients.

Of equal or greater  significance,  in our view,  is that the  expected one year
patient  survival in this study is 30%.  This  compares to an expected  one year
patient survival of 5% for untreated or  non-chemo-responding  patients,  and an
expected one year patient survival of 15% for patients treated with gemcitabine,
as  reported  in the medical  literature.  In  addition,  it was  reported  that
Aphton's  anti-gastrin  therapy was well  tolerated  with no systemic  toxicity,
consistent with all previous Aphton clinical trials.

During the past 10K reporting period, Aphton significantly expanded its clinical
trials programs.  Aphton is currently in late-stage  clinical trials in both the
US and in Europe to treat  patients with  advanced  pancreatic,  colorectal  and
gastric (stomach)/esophageal adenocarcinomas.

These  include:  a) a  pivotal  (Phase  III)  clinical  trial  in the US for the
treatment of  metastatic  pancreatic  cancer,  with a  combination  immuno-chemo
therapy regimen of Aphton's  anti-gastrin 17 immunogen and gemcitabine (Gemzar),
versus gemcitabine.  Gemcitabine, a chemotherapeutic, is the current standard of
care for treatment of pancreatic  cancer in the US; b) a second  pivotal  (Phase
III)  trial in the UK and on the  continent  of  Europe,  for the  treatment  of
advanced pancreatic cancer. In this trial, Aphton's anti-gastrin 17 immunogen is
being  tested  directly  against  gemcitabine,  since  gemcitabine  has not been
adopted as the standard of care in every  country in Europe for the treatment of
pancreatic cancer; c) a clinical trial in the US and on the continent of Europe,
with  patients  who have failed the  approved  chemotherapy  regimen of 5-FU and
irinotecan,  for the  treatment  of  colorectal  cancer,  stage  Dukes' D. These
"chemo-refractive"  patients  are being  treated with a  combination  regimen of
Aphton's anti-G17  immunogen and irinotecan;  d) a late-stage  clinical trial in
the US and on the continent of Europe,  for the treatment of metastatic  gastric
(stomach) cancer,  with a combination  immuno-chemo  therapy regimen of Aphton's
anti-gastrin 17 immunogen and 5-FU plus cisplatin.

Anti-Gastrin Immunogen Alliance
In 1997 Aphton signed an agreement  with Pasteur  Merieux  Connaught (now called
Aventis Pasteur),  for a strategic alliance for all human cancer applications of
its anti-gastrin immunogen product,  including  stomach/esophageal,  colorectal,
and pancreatic cancers. Under the terms of the twenty-year agreement,  Aphton is
responsible  for product  development,  clinical  trials and  regulatory  agency
approvals,  and Aventis  Pasteur is responsible for and will fund the promotion,
advertising,  marketing, distribution and sales of Aphton's anti-gastrin vaccine
in North America,  Mexico and Europe.  In addition,  Aphton and Aventis  Pasteur
have entered into agreements  providing for the supply of certain  components of
the  anti-gastrin  immunogen  (as well as other  Aphton  products)  from Aventis
Pasteur to Aphton.

GnRH pharmaccine
Overview
Aphton has developed a second major  anti-hormone  immunogen,  GnRH pharmaccine,
for  human  cancer  indications,  one  that  targets  the  reproductive  hormone
Gonadotropin Releasing Hormone (GnRH). By successfully  neutralizing  (blocking)
GnRH, the immunogen shuts down the production of estrogen and  progesterone  (in
females)  and  testosterone  (in males),  which are  normally  produced in their
respective  gonadal organs.  Estrogen fuels breast cancer and testosterone fuels
prostate cancer.  It has been known for decades that biological  blockage,  like
physical  castration,  is  efficacious  in the  treatment of prostate and breast
cancers. Aphton's anti-GnRH immunogen induces biological blockage.

Aphton  successfully  completed a pilot Phase I/II safety and dose ranging trial
and has reported on the results through a news release and in a publication with
collaborating scientists in the UK, in a peer-reviewed journal.

The  primary  purpose of the safety and dose  ranging  trial was to  demonstrate
safety;  the  secondary  purpose  was to  gather  data  using  various  doses of
immunogen  and to show  that a  biological  castration  could  be  induced  with
Aphton's immunogen.

Aphton's GnRH  pharmaccine  reduced,  in some patients at the lowest dose level,
gonadal testosterone to levels achieved by surgical castration.  This biological
castration  demonstrated  "proof of concept" in man. In  addition,  the prostate
cancer  "progression"  marker,  Prostate  Specific  Antigen  (PSA),  was reduced
markedly in these patients to very low levels,  in some cases from  triple-digit
to single-digit.

Aphton is now in a Phase II clinical  trial in the US to treat  prostate  cancer
patients who have failed hormone therapy (called hormone  refractory  patients),
with a combination immuno-chemo therapy regimen comprised of Aphton's immunogen,
called GnRH pharmaccine,  and the chemotherapeutic  taxotere. Such patients will
likely  have been  treated  with a GnRH  agonist  drug (to  achieve  a  chemical
castration) or an orchiectomy (a surgical castration), following therapy for the
primary tumor, but will have metastases, relapsed and have a rising PSA.

Strategic Alliance
In June 1998,  Aphton and  GlaxoSmithKline  signed a  Collaboration  and License
agreement,  granting  GlaxoSmithKline  exclusive  rights  worldwide  to Aphton's
GnRH-related  patents  and  proprietary  technology.  The  agreement  covers the
diagnosis,  treatment and prevention of GnRH-related  cancers and other diseases
in humans.  Human cancer  indications  for the  anti-GnRH  product are prostate,
breast,  ovarian and endometrial cancer.  Additional medical indications for the
anti-GnRH  product are  endometriosis,  polycystic  ovaries,  uterine  fibroids,
contraception, infertility and precocious puberty. Under terms of the agreement,
Aphton and  GlaxoSmithKline  are  collaborating  in a joint product  development
program,  with  GlaxoSmithKline  responsible  for clinical trials and regulatory
approvals,  and for worldwide  marketing and distribution of approved  products.
The  agreement  uses a royalty  mechanism  based on product  sales,  in dollars,
worldwide to determine Aphton's revenues.


GERD
Aphton is also in late-stage product development with its anti-Gastrin immunogen
approach for the treatment of gastroesophageal reflux disease (GERD), also known
as  "severe  heartburn."  GERD  affects  more than 10% of the adult  population.
Prescription  drugs to treat  this  problem  have  annual  revenues  of over $13
billion.  Aphton believes it's therapy for GERD, which is not yet partnered with
any drug company,  will obviate major risks  associated  with current  therapies
while still providing  their benefits.  As a preliminary to conducting a pivotal
Phase III trial for GERD, Aphton is conducting limited Phase II trials in Europe
to optimize the product,  given the  different  performance-profile  desired for
this major, non-cancer application.

Immunocontraceptive
Aphton's anti-hCG  immunocontraceptive  product,  which prevents pregnancy,  has
been in a Phase I/II trial, funded by the World Health Organization (WHO).

Equine Anti-Gastrin Immunogen
A product  development  and analysis  study is being  conducted  using  Aphton's
Equine  (horse)  anti-gastrin  immunogen to reduce  stomach acid and heal peptic
ulcers in horses.

                                   Technology

Aphton's  approach  to the  treatment  of major  diseases  is to  employ  (anti)
"hormone therapy." Aphton's hormone therapy involves neutralizing,  or blocking,
certain  hormones  that  play  a  critical  role  in  these  diseases.  This  is
accomplished by immunizing the patients with a product called, appropriately, an
"immunogen,"   that  induces  in  them  a  directed   antibody   response  which
neutralizes, and removes from circulation, the targeted hormone.

Aphton  has  developed  an  innovative  and  proprietary   active   immunization
technology  platform  to create  effective  immunogens,  which are  vaccine-like
products.  They  harness  and  direct  the  body's  immune  system  to  generate
antibodies,  which  bind  to  specific  peptide  portions  of  the  administered
immunogen.  These antibodies  cross-react (bind) with targeted "self" molecules,
such as hormones,  when they  encounter  that  portion of the hormone,  which is
similar to the peptide portion of the administered  immunogen.  Because diseases
involving hormones are not pathogen  (microorganism)  driven, they have not been
viewed  traditionally as being  susceptible to treatment using the body's immune
system. Instead, the traditional pharmaceutical industry approach to controlling
these diseases has been to treat them with synthetic drugs. Unfortunately, these
drugs  typically must be administered  in relatively  large  quantities and on a
daily or more frequent basis,  giving rise to patient compliance  problems,  and
often have adverse side effects.

More recently,  drugs based on passive immunization using monoclonal antibodies,
derived from mouse  antibodies,  have been introduced to treat certain  cancers.
Aphton's active immunization technology platform can be targeted to give rise to
a polyclonal  antibody  response,  derived from the patient's own immune system,
against any  hormone,  molecule,  cell  receptor  or surface  antigen to which a
monoclonal antibody can be targeted.  Moreover, Aphton's technology platform has
significant  advantages over passive  immunization  with  monoclonal  antibodies
(humanized or human). These include: a) the patient needs only a booster shot at
approximately six month intervals after the initial  immunization  protocol with
Aphton's  immunogens,  rather than having to infuse the patient with  monoclonal
antibodies  on a weekly  basis,  for one to two  hours  each  time;  b)  passive
immunization with monoclonal antibodies requires thousands of fold more material
to be administered,  at much higher costs, than Aphton's active immunization; c)
Aphton's  immunogens  are  formulated  and  composed  of  ingredients  that  are
manufactured  using low-cost,  proven,  organic  chemistry and classical vaccine
technology,  while monoclonal antibody  manufacturing  plants are limited,  more
complex, more expensive and of limited production capacity for years to come; d)
active  immunization and the ensuing  polyclonal  antibodies induced by Aphton's
immunogens  avoid or greatly  mitigate  the  problems of mutation and changes in
receptor  or other  antigen  configurations,  as the cancer  progresses;  e) the
binding  affinity of  monoclonal  antibodies  is  normally  lower than the mouse
antibody from which they had been derived, and lower than polyclonal  antibodies
resulting  from Aphton's  active  immunization.  Furthermore,  while  monoclonal
antibodies'   affinity  remains  static,  the  binding  affinity  of  polyclonal
antibodies   progressively   rises  through  a  dynamic  process  called  clonal
selection.

In contrast to either drugs or monoclonal antibodies, Aphton's immunogens create
a  strong  antibody  response  from  the  patient's  own  immune  system  (which
effectively  becomes a "drug factory") and have a more potent and longer-lasting
therapeutic  effect.  Aphton's  technology  enables it to specifically  target a
small  sequence  within  the  hormone to be  neutralized,  in order to achieve a
specific desired  biological and physiological  response.  This approach directs
all of the immunogen-induced antibodies to the targeted hormone sequence. At the
same time it minimizes the possibility of undesired  physiological  consequences
through  cross-reactivity  of the  immunogen  with any self  molecule or portion
thereof, other than the specifically-targeted  hormone sequence. This avoids the
possibility of autoimmune  disease where the antibody  production is not "turned
off." This is because the  antibody  production  can only be "turned on and kept
on" in the  presence of the foreign,  "carrier"  portion of the  immunogen  (see
below). Indeed,  without a "booster shot" of the immunogen,  the antibodies wane
(diminish)  and are cleared by the body,  over time.  Aphton's  products  may be
administered  in much  smaller  dosages and on a much less  frequent  basis than
pharmaceutical  drugs;  typically  twice a year.  This virtually  eliminates the
problem of patient compliance, which is associated with pharmaceutical drugs.

Aphton's anti-gastrin immunogen product, for example, consists of:

(a) A synthetic peptide, which is similar to a portion of the hormone gastrin 17
which is targeted to be  neutralized  (i.e.,  blocked or prevented from reaching
and binding to its receptor).

(b) A "carrier,"  Diphtheria Toxoid (DT), foreign to the body, to which a number
of the synthetic peptides in (a) are chemically bound  (conjugated).  This makes
them available to be both bound to and,  together with the DT,  internalized  by
"B-cells." DT contains the structures  (epitopes)  which,  when internalized and
"presented" on B-cells and Macrophages, are bound to by "T-cells." By binding to
these  foreign  epitopes,  these  T-cells  in turn,  proliferate  and signal the
B-cells, which bind to the peptides (a) to proliferate and to "mass produce" the
desired antibodies (all of which bind to the peptide (a)).

(c) A  proprietary,  slow-release  "suspender"  which contains (a) and (b). This
"delivery  vehicle" is designed to enable the  achievement  of four  objectives,
concurrently: i) a high antibody response; ii) a long antibody response; iii) no
systemic toxicity; and iv) long-term stability, or "shelf-life."

The anti-gastrin product, which is administered by injection, with booster shots
at approximately  six-month  intervals,  thus induces  antibodies in the patient
which  bind  with  peptide  (a) and  which  also  bind  (cross-react)  with  and
neutralize  gastrin 17 (when they  encounter that portion on gastrin 17 which is
similar to  peptide  (a)).  Gastrin  17 is known to drive (or fuel)  colorectal,
stomach, liver and pancreatic cancer.  Neutralizing gastrin 17 inhibits both the
growth and metastasis (spread) of these  gastrointestinal  cancers. In addition,
the anti-gastrin product uniquely neutralizes glycine-extended gastrin 17, which
has  also  been  shown   recently   to  be   secreted   by  and  to  fuel  these
gastrointestinal system cancers.

Gastrin 17 is also  responsible  for the  production of the bulk of stomach acid
(approximately  90% in  humans),  the  reduction  of  which is  therapeutic  for
gastroesophageal  reflux  disease  (GERD) and for both  peptic  ulcers and NSAID
-induced ulcers (NSAID examples include aspirin and ibuprofen).

Aphton's anti-GnRH product is similarly constructed. In this case, the synthetic
peptide  sequence in (a)  represents  the hormone GnRH,  which is targeted to be
neutralized. Neutralizing GnRH inhibits the production of estrogen, progesterone
and  testosterone.  Inhibiting  estrogen (and  progesterone)  is therapeutic for
women with breast cancer,  endometrial cancer, ovarian cancer and endometriosis.
Inhibiting testosterone is therapeutic for men with prostate cancer.

Aphton's  immunocontraceptive  product,  which prevents  pregnancy in humans, is
also similarly  constructed.  In this case, the so-called  "C-terminal"  peptide
portion of the hormone hCG (which is targeted to be neutralized) is synthesized.
A second,  unique  epitope  (peptide),  located on the hormone  hCG, is now also
conjugated to the  immunogen,  which  enhances  efficacy.  By not using a larger
portion of the hCG molecule,  Aphton avoids inducing unwanted antibodies against
other hormones in the woman (LH and FSH), which share domains with some portions
of the hormone hCG. Pregnancy is prevented by immunizing the woman; this induces
antibodies which bind to and neutralize hCG.

                               Strategic Alliances

In June,  1998,  Aphton  completed a major  strategic  alliance  agreement  with
GlaxoSmithKline  for  all  human  applications  of  its  anti-GnRH  product,  as
discussed above. GlaxoSmithKline is the world's largest vaccine company in terms
of annual sales.

In  August,   1997,   Aphton   completed  a  major   strategic   alliance   with
Schering-Plough  Animal  Health  covering  all  animal  health  applications  of
Aphton's  anti-gastrin  immunogen,  as discussed above.  Schering-Plough  Animal
Health,  in terms of  annual  sales,  is one of the  largest  animal  healthcare
companies in the world.

In February,  1997, Aphton completed a major strategic  alliance  agreement with
Pasteur  Merieux  Connaught  (now called  Aventis  Pasteur) for all human cancer
applications of the anti-gastrin product, as discussed above. Aventis Pasteur is
the largest vaccine company in the world in terms of annual patients dosed.

In  January,  1995,  Aphton  announced  a  relationship  with the  World  Health
Organization  (WHO),  for the development and testing of an  immunocontraceptive
product  (which  prevents  pregnancy),  as  well  as  exclusive  rights  for the
manufacture,  distribution and supply of the immunocontraceptive product for the
developing   countries,   worldwide.   Under  a  separate   agreement   executed
simultaneously,  Aphton has exclusive  manufacturing and distribution rights for
the immunocontraceptive product in the developed countries.

                           Manufacturing and Marketing

Absent  or  together   with  a  strategic   alliance  or  corporate   partnering
relationship (such as those with Aventis Pasteur and GlaxoSmithKline)  which may
impact on the following, Aphton plans to commercialize its products by executing
long-term   contracts  with  third  parties,   including  major   pharmaceutical
companies,  to  manufacture  its products and by  contracting  with similar drug
companies to market, sell and distribute its products.

The contract  (outsourcing)  manufacturing  approach  leverages on the large and
available manufacturing  resources of pharmaceutical industry companies.  Aphton
has  contracted  with drug  manufacturing  sources which are providing  Aphton's
immunogens for toxicology studies and clinical trials.  Aphton's  outsourcing of
marketing,  distribution  and sales,  as  exemplified  by the  Aventis  Pasteur,
GlaxoSmithKline   and  Schering-Plough   Animal  Health  agreements,   similarly
leverages on the large and  effective  sales forces of the major  pharmaceutical
companies.  Aphton's  capital  formation,  personnel  and  plant  and  equipment
requirements,  together with  associated  risks,  are clearly greatly reduced by
such  a  commercialization  strategy,  which  Aphton  pioneered.  In  fact,  the
outsourcing of non-core  functions has now been adopted by major drug companies.
This strategy  significantly  enhances  Aphton's ability to achieve rapid market
penetration  and growth and to exploit  the  benefits  of the patent life of its
products.
                              Strategy and Earnings

It should be noted  that  Aphton's  product  development  and  commercialization
strategy differs  significantly from the normal "licensing" of products to third
parties.  In the  former,  Aphton can retain a  significantly  larger  degree of
control,  share of profits and thus  earnings.  Under  typical  licensing  (with
royalty payments which are generally a small percentage of sales),  the opposite
would be the case. By avoiding the industry norm of "corporate  partnering" with
drug companies in its earlier  development  stages,  and by both undertaking and
overcoming the associated  risks during product  development,  Aphton has earned
and  retained   its  options  and  the  ability  to  optimally   carry  out  its
commercialization  approach.  This  strategy  was  successfully  validated  with
Aphton's  agreements with Aventis Pasteur,  GlaxoSmithKline  and Schering-Plough
Animal Health.

                            Patents and Trade Secrets

Proprietary  protection  for  Aphton's  products  is  central  to the  Company's
business.  Aphton's  policy is to protect its technology by, among other things,
filing patent  applications in worldwide  markets of interest for products which
it considers  important and intends to market. In that regard,  Aphton has filed
patent applications and has continued to receive patents for its products,  both
domestic and foreign. Additional patent applications are in preparation or being
filed  or are  pending  in the US and in  other  countries.  Aphton  intends  to
continue filing  additional  patent  applications  relating to its products and,
when  appropriate,  improvements  in its technology and other specific  products
that it develops.

                                   Regulation

Government  regulation in the US and other countries is a significant  factor in
the  development  and  marketing  of all of the  Company's  products  and in the
Company's ongoing research and development activities. International regulations
governing  human  clinical  studies can vary  widely,  depending on the specific
country.  Regulatory  approval is required for marketing a product in the US and
other  countries.  Aphton  conducts human clinical  trials with the objective of
obtaining regulatory approvals in the key markets, worldwide.

Clinical  trials  of a new  drug are  typically  conducted  in three  sequential
phases.  Phase I studies typically test the product for safety tolerance.  Phase
II studies involve limited trials to determine the optimal dose and frequency of
administration and an indication of efficacy for defined  indications.  When the
product has been found safe and shows  promise of  efficacy,  further  (pivotal)
trials are  undertaken in Phase III to fully evaluate  clinical  efficacy and to
test  further for safety  using a large  number of  patients  at  geographically
diverse medical centers.

                        Directors and Executive Officers

The directors and executive officers of the Company are set forth below:
Name:                            Position(s):
Philip C. Gevas             Chairman of the Board of Directors, President and
                            Chief Executive Officer
William A. Hasler           Vice Chairman of the Board of Directors and
                            Co-Chief Executive Officer
Robert S. Basso             Chairman of Compensation and Audit Committees and
                            Director
Georges Hibon               Director
Nicholas John Stathis, Esq. Director

Philip C.  Gevas -  Chairman  of the  Board of  Directors,  President  and Chief
Executive Officer, has served as Director, President and Chief Executive Officer
since  co-founding  Aphton.  Mr. Gevas conceived and directed the development of
Aphton's  inventions  which have resulted in numerous patents for Aphton for the
treatment of colorectal,  pancreatic, liver, esophageal and stomach cancers, and
GERD.  After serving in as an Officer in the USAF,  Mr. Gevas had  experience in
the defense industry in management,  science and engineering.  Mr. Gevas has the
degrees of M.E., and M.S.  Mathematics  (Stevens  Institute of  Technology)  and
M.S.E.E. (Ohio State University).

William A. Hasler - Vice-Chairman and Co-Chief Executive Officer,  Director. Mr.
Hasler's  expertise  and  experience  in management is focused at Aphton both on
strategy and on the execution of plans and programs.  Previously, Mr. Hasler was
Dean of both the  Graduate  School and  Undergraduate  School of Business at the
University of  California,  Berkeley.  Earlier,  Mr. Hasler was Vice Chairman of
KPMG Peat Marwick, responsible for management consulting worldwide. He is also a
director of Solectron  Corporation,  Walker Interactive  Systems,  Tenera, Inc.,
TCSI Corporation and is Public Governor of the Pacific Exchange.

Robert S. Basso - Director of the Company since shortly after its founding.  Mr.
Basso is President,  Correspondent Services Corporation (CSC).  Previously,  Mr.
Basso was  President,  Broadcort  Capital  Corporation  and  Managing  Director,
Merrill Lynch, Pierce, Fenner & Smith.

Georges  Hibon -  Director  of the  Company,  served as the  Chairman  and Chief
Executive Officer of Pasteur Merieux Connaught,  NA and a member of its Board of
Directors.  Previously,  Mr. Hibon held senior  management  positions in Merck &
Co.,  including  President of Merck France.  The French  Government  awarded Mr.
Hibon the honor of "Chevalier de la Legion d'Honor," created in 1802 by Napolean
Bonaparte to recognize outstanding military and civilian accomplishments.

Nicholas John Stathis, Esq. - Director of the Company, retired from the law firm
of White & Case. Prior to that he was partner at Botein,  Hays & Sklar;  Watson,
Leavenworth,  Kelton & Taggart;  and  Hopgood,  Calimafde,  Kalil,  Blaustein  &
Judlowe.  Mr.  Stathis has been engaged in the practice of all phases of patent,
trademark, copyright and unfair competition law.

The  Company's  Bylaws  authorize  the Board of  Directors  to fix the number of
directors from time to time by vote.

All  directors   currently   hold  office  until  the  next  annual  meeting  of
shareholders and until their successors have been elected.  Officers are elected
to serve,  subject to the  discretion  of the Board of  Directors,  until  their
successors  are appointed.  There are no family  relationships  among  executive
officers or directors of the Company.

Directors  do not receive any fees for service on the Board.  Board  members are
reimbursed for their expenses for each meeting attended.

The Company's Audit Committee is composed of Messrs.  Basso,  Hibon and Stathis.
The Compensation Committee is composed of Messrs. Basso and Stathis.
Messrs. Basso, Hibon and Stathis are non-executive Board Members.

                               Corporate Officers

In addition to the Company's  executive  officers Philip C. Gevas and William A.
Hasler, Aphton's corporate officers are:

Frederick W. Jacobs - Vice President,  Treasurer and Chief  Accounting  Officer.
Previously,  Mr. Jacobs, a CPA, was Chief Financial Officer of an HMO and before
that  served on the staff of  PricewaterhouseCoopers  (then  Coopers & Lybrand),
providing audit and tax services.

Donald  Henderson  -  Vice  President,   and  Managing  Director,   Finance  and
Administration,  Europe. Previously, Mr. Henderson, a Chartered Accountant, held
financial management positions with pharmaceutical companies.

Jeannette L. Whitmore - Vice President,  Director, Investor and Media Relations,
Corporate  Communications.  Previously,  Ms. Whitmore held positions in business
administration in the medical and healthcare fields.

Douglas A. Eayrs, CFA - Vice President,  Finance.  Prior to joining Aphton,  Mr.
Eayrs was a Research  Analyst at J. G.  Kinnard & Company,  an NASD member firm,
where he was also named an "All-Star Analyst" by the Wall Street Journal.

The  following  corporate  officers are  described  more fully under the heading
Scientific Staff, below.

Dov Michaeli,  M.D., Ph.D. - Senior Vice President,  Director of Medical Science
and Chief Medical Officer.

Paul Broome,  MB., Ch.B.,  MFPM-Vice President and Medical Director for Clinical
Trials and Regulatory Affairs, Europe - Asia.

William D. Perkins,  Ph.D., - Vice  President,  Director for Clinical Trials and
Regulatory Affairs, North America.

Richard  Ascione,  Ph.D.,  -  Vice  President,  Director  of the  Laboratory  of
Molecular Medicine.

Theo de Roij, Ph.D., D.V.M., - Vice President, Business and Product Development

Peter Blackburn, Ph.D., - Vice President, Program Development and Manufacturing.

                                Scientific Staff

Dov Michaeli, M.D. (University of California, San Francisco),  Ph.D. (University
of California,  Berkeley) - Senior Vice  President,  Director of Medical Science
and  Chief  Medical  Officer.  Dr.  Michaeli  is a  senior  member  of  Aphton's
management  team with extensive  experience in clinical  medicine and scientific
research.  Previously,  Dr.  Michaeli  was a  Professor  at  the  University  of
California,  San  Francisco  (Departments  of  Biochemistry  and  Surgery).  Dr.
Michaeli  has  numerous  patents  and over  fifty  published  articles  and book
chapters.

Paul Broome, MB., Ch.B., MFPM (University of Sheffield Medical School, UK)--Vice
President  and Medical  Director for  Clinical  Trials and  Regulatory  Affairs,
Europe  -  Asia.  Dr.  Broome's  years  of  clinical   experience  includes  the
responsibility at Glaxo for clinical trials which provided data for US (FDA) and
UK (MCA)  registration of the indication for ranitidine  (Zantac) as maintenance
therapy,  which became the world's largest selling drug.  Later,  Dr. Broome was
Medical Director of a leading company in the UK which provides  services ranging
from  consulting and R&D through  clinical  trials,  regulatory  affairs and the
registration  of  drugs  for  marketing  approval  from  government   regulatory
agencies.

William D. Perkins,  Ph.D., - Vice  President,  Director for Clinical Trials and
Regulatory  Affairs,  North America.  Prior to joining Aphton  Corporation,  Dr.
Perkins had years of  experience  in the  medical  field.  He has been  actively
involved in oncology/immunology  clinical trials, including directing all phases
of clinical  trial  development,  from Phase I through  post-marketing  approval
(Phase IV). Dr.  Perkins has been a major  contributor  to the  formulation  and
writing  of both  investigational  new drug (IND)  applications  and of new drug
application  (NDA)   submissions  to  the  FDA.  Previous  senior   professional
responsibilities  in clinical trials and medical  affairs  include  affiliations
with ILEX Oncology (NASDAQ: ILXO), Elan Corporation PLC (NYSE: ELN) and Novartis
(NYSE: NVS).

Richard Ascione,  Ph.D. (Princeton  University),  - Vice President,  is Aphton's
Director of the Laboratory of Molecular Medicine. Dr. Ascione directs R&D in the
area of  Molecular  Biology  and  works  closely  with  Aphton's  Laboratory  of
Immunobiology in research and product development.  Previously,  Dr. Ascione was
Professor in the Department of Experimental  Oncology and Associate  Director of
the Center for Molecular and  Structural  Biology at the Hollings  Cancer Center
and the Medical University of South Carolina, respectively, in Charleston, South
Carolina.  Earlier,  Dr. Ascione was with the National Cancer Institute (NCI) of
the National Institutes of Health (NIH) where he served as Deputy Chief of NCI's
Laboratory of Molecular  Oncology.  Dr.  Ascione has published  over  sixty-five
peer-reviewed  papers,  several  book  chapters  and  articles  related  to  the
molecular  biology  and  gene  regulation  of  cancer,  human  retroviruses  and
HIV/AIDS.

Theo de Roij, Ph.D., D.V.M., - Vice President, Business and Product Development.
Prior to joining the  company,  Dr. de Roij  served as the  Director of Business
Development  at  GlaxoSmithKline  Biologicals  S.A.,  responsible  for worldwide
business  development  activities.  Previously,  Dr. de Roij was employed by the
Animal Health Division of Solvay,  S.A. where he held several senior  positions,
including  responsibility  for  worldwide  business  development  and  strategic
planning.

Peter Blackburn, Ph.D., - Vice President, Program Development and Manufacturing.
Previously,  Dr.  Blackburn was  Executive  Vice  President and Chief  Operating
Officer, Applied Microbiology, Inc. Earlier, he was engaged in academic research
at the Rockefeller  University,  New York, in protein  chemistry  working in the
laboratory of two recipients of the Nobel Prize for Chemistry. Dr. Blackburn has
published  numerous  papers in  peer-reviewed  journals  and is the  inventor on
numerous US and foreign patents.

Stephen L. Karr, Jr., Ph.D.,  University of California,  Davis.  Dr. Karr joined
Aphton soon after its founding and serves as Vice President and General  Manager
of the Laboratory of Immunobiology. He is responsible for the Laboratory's daily
operations,  including program planning,  budgeting and control;  and as Project
Manager,  is  responsible  for the  experimental  design and  implementation  of
special projects. Dr. Karr, who is also an immunoparasitologist,  is an inventor
of numerous Aphton patents.  Dr. Karr has sixteen publications and had presented
twenty papers prior to joining the Company.

Stephen Grimes, Ph.D., University of California, Davis. Dr. Grimes joined Aphton
immediately after its founding and serves as Vice President of the Laboratory of
Immunology. He is responsible for research and development in immunology and for
the experimental design and implementation of immunology-based projects. He also
serves as the principal  scientific  deputy for Aphton's  clinical  trials.  Dr.
Grimes is a  co-inventor  of  numerous  issued  patents  of the  Company  and of
additional  patents in preparation and pending.  Dr. Grimes came directly to the
Company after its founding,  upon  finishing  his doctoral  dissertation  at the
University of California, Davis.

Both Dr. Karr and Dr. Grimes support  closely the office of Program  Development
and Aphton's Product Development/Manufacturing Teams in the US and UK.


The Company employs  approximately  forty individuals  directly and has numerous
others under contracts with other supporting organizations.

                            Scientific Advisory Board

The  members  of  the  company's  Scientific  Advisory  Board,  which  functions
primarily as a review board for  research  projects and for product  development
programs, in addition to its senior staff members, are:

Robert J. Scibienski, Ph.D., University of California, Los Angeles. A co-founder
of the Company, Dr. Scibienski focuses on immunology-related basic technology at
the Company, currently addressing immune system regulation, antigen presentation
and gene interactions.  Dr. Scibienski is a co-inventor of issued Aphton patents
and a number of patent applications of the Company.  Dr. Scibienski is Associate
Professor, Department of Medical Microbiology and Immunology and Director of the
campus-wide  Central Hybridoma Facility at the University of California,  Davis.
Dr. Scibienski has over thirty publications.

Demosthenes Pappagianis,  M.D. (Stanford School of Medicine),  Ph.D. (University
of California,  Berkeley).  A co-founder of the Company,  Dr. Pappagianis is its
principal  resource on the  mechanisms  of infection  of  pathogens  and of host
defenses.  Professor  and  Chairman  (1967-1985)  in the  Department  of Medical
Microbiology  and  Immunology  at  the  University  of  California,  Davis,  Dr.
Pappagianis is widely  recognized in the field of infectious  diseases.  He is a
Diplomate  of the  National  Board of Medical  Examiners  and  Diplomate  of the
American  Board of  Medical  Microbiology.  In  addition,  he is a Fellow of the
Infectious  Diseases  Society of America  and an  Associate  Member of the Armed
Forces Epidemiological Board. Dr. Pappagianis has over one hundred publications.

Vernon  C.  Stevens,   Ph.D.  Professor  of  Reproductive  Biology,  Ohio  State
University.  Dr.  Stevens  is  recognized  worldwide  as one of the  pre-eminent
authorities on vaccines,  contraception  and synthetic  peptide based  immunogen
formulations.  He pioneered the development of synthetic peptide  immunogens for
human use, particularly for Aphton's immunocontraceptive product, which prevents
pregnancy, under development with the World Health Organization (WHO).

Richard L. Littenberg,  M.D. A co-founder of the Company,  Dr.  Littenberg is an
emeritus  member of Aphton's  Scientific  Advisory Board and is a co-inventor of
three Aphton patent filings.  Dr. Littenberg is Board Certified in both Internal
Medicine and Nuclear  Medicine and a Diplomate of the National  Board of Medical
Examiners and is President and Chief  Executive  Officer of HMG. Dr.  Littenberg
received his M.D. degree from the State University of New York. He has practiced
internal and nuclear  medicine for over twenty  years.  He has  participated  in
clinical  trials  for  major   pharmaceutical   companies  and  has  engaged  in
gastrointestinal, cancer and cardiovascular research.

Eliezer Benjamini,  Ph.D.,  University of California,  Berkeley. A co-founder of
the Company,  Dr.  Benjamini is an emeritus  member of the  Scientific  Advisory
Board and is a co-inventor of two Aphton  patents.  Dr.  Benjamini  retired as a
full Professor in the Department of Medical  Microbiology  and Immunology at the
University of California, Davis, where he holds the title of Professor Emeritus.
Dr. Benjamini is widely  recognized in the field of immunology.  He has received
awards from industry and academia,  including the Distinguished Scientists Award
in Virology and Immunology (1984) which was given for his pioneering work in the
development of synthetic  peptide  vaccines.  Dr. Benjamini has over one hundred
publications and is co-author, with Dr. Sidney Leskowitz, of Immunology: A Short
Course, a textbook for medical students.

Other scientists  (consultants)  participate when their expertise is needed on a
specific project.



                           Glossary of Selected Terms


Adenocarcinoma:cancer  that  originates  in  epithelial  cells that line certain
internal organs.

Adjuvant Treatment:an  ancillary treatment that is given to patients in addition
to a primary treatment to enhance the  effectiveness of the primary  treatment.
For  example,  in colon  cancer,  chemotherapy  often  is  given as an  adjuvant
treatment following surgery to remove the primary cancer from the colon.

Antibody:a  protein  produced by certain  white blood cells as part of an immune
response.  These proteins, called antibodies, bind in a specific manner to a
separate molecule and neutralize or inhibit its biological activity.

Antigen:any  substance that can induce antibodies (B-cells) or activate T-cells,
which bind to it.

Cancer Vaccine:technically a misnomer: a large weakly-antigenic molecule derived
from the surface of cancer cells,  which when  combined with a foreign  molecule
(e.g.,  virus) induces a stronger  immune response  against it and, then,  where
located on the surface of the cancer cells.

Control  Group:the  patient group (or arm) of a clinical trial that receives the
placebo or a standard  treatment for a disease,  against which the  experimental
drug is compared.

Gastrin:a  hormone produced in the stomach that regulates stomach acid secretion
and stimulates the proliferation of  gastrointestinal  cells and adenocarcinomas
of the gastrointestinal tract. It occurs in the body in several forms, including
gastrin 17 (a 17 amino acid peptide) and gastrin 34 (a 34 amino acid peptide).

Gonadotropin  Releasing  Hormonea  hormone  secreted  in  the  hypothalmus  that
stimulates  the  release  of  other   (GnRH):reproductive   hormones  (including
ultimately, testosterone, estrogen and progesterone).

Hapten: a small molecule  (peptide),  not antigenic by itself, that can be bound
to by  antibodies.  It can be made  antigenic  and elicit such  antibodies  when
joined to a foreign molecule (carrier).

Hormone:a  chemical  substance  produced by an organ or cells of an organ in one
part of the body, and carried in the blood to another organ or part of the body;
and which has a specific regulatory effect on the activity of the body including
growth, metabolism and reproduction.

human Chorionic Gonadotropin (hCG): a female hormone  secreted by a fertilized
egg necessary to start pregnancy.  Immune System:the complex group of organs and
cells which has the ability to fight infection and disease.

Immunogen:any  molecule  capable of  inducing  the  immune  system to produce an
antibody response against it.

Metastasis:a  process by which  cancer  cells  spread from the primary  tumor to
distant sites such as the lung, liver, bone, or brain.  A cancer that has spread
is said to be metastatic, and the distant tumors are called metastases.

Peptide:a  molecule  composed  of amino acids that are linked to each other in a
sequence.

Placebo:an  inert  non-drug  substance  that is given to the  control  group for
comparison to a new experimental drug, usually in a randomized clinical trial.

Randomized  Clinical Trial:a clinical trial with at least two arms, in which the
decision  as to which arm a new  patient  is  assigned  is, by  design,  made by
chance.

Standard Treatment: a currently accepted treatment for a given disease. The drug
treatment often given to one group (or arm)of patients in a clinical trial.  The
standard  treatment  can serve as the control  arm,  in place of a placebo,  for
comparison to a new experimental drug treatment.

Treatment Group:the patient group, or arm, of a clinical trial that receives the
new experimental drug treatment.

Vaccine:an  immunogen  consisting  of an  attenuated  or  killed  microorganism,
administered  to induce the  immune  system to  produce  antibodies  to fight an
infectious disease.

Vaccine - Like:an  immunogen  consisting of a synthetic  hapten (peptide) joined
together with a foreign  molecule,  administered  to induce the immune system to
produce antibodies against the peptide.


Item 2.  Properties

The Company  has  noncancelable  facilities  leases  expiring  at various  dates
through fiscal 2003. The leases provide  various  options to renew.  The minimum
rental  commitments  for the  fiscal  years  2002 and 2003,  respectively,  are,
$80,000 and $22,000 and none thereafter.

Item 3.  Legal Proceedings

The Company is not involved,  and has never been  involved,  in any  litigation,
administrative or governmental  proceeding and none is believed by the Company's
management to be threatened.

Item 4.  Submission of Matters to a Vote of Security Holders.

Not applicable.

                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

The Common Stock of Aphton has been trading on Nasdaq's  National  Market System
since  June 2,  1994.  Aphton had been  traded in the  Nasdaq  Small-Cap  Issues
(formerly  over-the-counter)  market  since April 1, 1991,  the date of Aphton's
initial  public  offering.  The  following  table  sets forth high and low price
information,  provided by Nasdaq Historical Research  Department,  for each full
quarter  beginning after January 31, 1999. The Company's  Common Stock is traded
under the symbol "APHT."

Fiscal Period Ended January 31, 2000:       High                      Low
         1st Quarter                       $17.75                    $10.75
         2nd Quarter                        14.75                      9.81
         3rd Quarter                        15.63                     12.00
         4th Quarter                        27.38                     11.25
Fiscal Period Ended January 31, 2001:
         1st Quarter                       $45.00                    $21.50
         2nd Quarter                        34.00                     16.00
         3rd Quarter                        31.91                     22.00
         4th Quarter                        30.00                     15.75

As of January 31, 2001,  Aphton had approximately 300 shareholders of record and
approximately 5,000 beneficial holders of its Common Stock.

Item 6.  Selected Financial Data

                         SELECTED FINANCIAL INFORMATION

The  selected  financial  data set forth  below with  respect  to the  Company's
statements  of  operations  and balance  sheets for the years ended  January 31,
2001,  2000 and 1999, the nine months ended January 31, 1998 and each of the two
years in the period  ended April 30, 1997,  are derived  from audited  financial
statements and should be read together with the financial statements and related
notes  included in this  Annual  Report.  All  selected  financial  data are not
covered by the independent  accountants' report. The data presented below should
be read  together  with the  financial  statements,  related  notes,  and  other
financial information included herein.
                         SELECTED FINANCIAL INFORMATION

                                                 Nine Months
                                                   Ended        Year Ended
                          Year Ended January 31,  January 31,     April 30,
                              (In thousands except for per share data)
Statement of Operations Data:
                            2001     2000   1999      1998        1997    1996
Research & Development
     Expenditures         $15,302  $10,821  $9,454   $4,963      $5,206  $4,501
Net Loss                  (16,397) (11,193) (9,757)  (6,605)     (5,629) (4,711)
Net Loss per Share         $(1.02) $ (0.76) $(0.68)  $(0.48)     $(0.44) $(0.37)
Weighted Average Shares
     Outstanding           16,100   14,731  14,431   13,733      12,913  12,723

                            2001     2000   1999      1998        1997    1996
Balance Sheet Data:
Cash and Current
     Investments          $18,664  $19,179 $10,555  $14,226      $8,846  $8,169
Total Assets               27,364   28,192  19,891   23,580      18,362   8,354
Total Liabilities          16,208   16,132  13,339   12,273      15,851   1,313
Accumulated Deficit       (69,351) (52,954)(41,760) (32,004)    (25,399)(19,770)
Total Stockholders' Equity 11,157   12,060   6,552   11,307       2,511   7,041







Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations
                  Years Ended January 31, 2001, 2000 and 1999
During the year ended  January  31,  2001,  the  Company  reported a net loss of
$16,397,139.  During  this period the  Company  had no  contract  revenues.  The
investment earnings on cash and current investments for the year was $1,554,611.
This  significant  increase  was due to  higher  average  cash  balances.  Total
research  and  development  expenditures  increased  $4,480,822.   Research  and
development cash expenditures were approximately  $5,468,000 greater in the year
ended  January 31, 2001 than in the year ended  January 31,  2000.  Research and
development  expenses  were  reduced by  approximately  $1,000,000  because of a
reduction in the accrued wages payable  whereby  certain  individuals may forego
immediate  receipt of wages.  The Company has  established a liability for these
accrued  wages  payable  and  funded the  liability  with the  establishment  of
investment  accounts  that are subject to the general  creditors of the Company.
The  employees  direct  the  investments  and the  changes  in  value  in  these
investments  are  recognized as unrealized  gains and losses in the statement of
operations with a corresponding increase or decrease to research and development
expense to adjust the liability for  employees'  wages and benefits.  Unrealized
holding losses on trading securities and the corresponding  decrease in research
and development expense totaled  approximately $1.0 million in 2001.  Unrealized
holding gains on trading  securities and the corresponding  increase in research
and  development  expense  totaled   approximately  $1.0  million  in  2000  and
approximately $.4 million in 1999.

During the year ended  January  31,  2000,  the  Company  reported a net loss of
$11,193,296. During this period the Company had no contract revenues. Investment
earnings on cash and  current  investments  for twelve  months was less than the
$547,000  earned in the year ended  January 31, 1999 due to lower  average  cash
balances.  Although ending cash and investments  were  approximately  $9,000,000
greater than at January 31,  1999,  most of the funds were  received  during the
period from  October,  1999 to January,  2000.  Total  research and  development
expenditures increased approximately  $1,400,000.  Research and development cash
expenditures were approximately  $800,000 greater than in the year ended January
31, 1999.  Non-cash research and development  expenses  increased  approximately
$600,000  and were  related to a Company  plan  whereby  individuals  may forego
immediate receipt of wages, as described above.

During the year ended  January  31,  1999,  the  Company  reported a net loss of
$9,756,815.  During this period the Company had no contract revenues. Investment
earnings on cash and current investments for twelve months was approximately the
same as the  $534,000  earned in the nine months  ended  January 31, 1998 due to
lower  average  cash  balances.   Research  and  development  expenditures  were
$9,453,826  (including  approximately  $.4  million  in  non-cash  expenses,  as
discussed above) which represented an increase in average quarterly research and
development  expenditures from about $1.7 million per quarter in the nine months
ended  January  31,  1998 to about $2.3  million  per quarter for the year ended
January 31, 1999. This 35% increase was budgeted for and related to the on-going
and planned additional (human) clinical trials.

In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities." SFAS No.
133 establishes  accounting and reporting  standards for derivative  instruments
and hedging  activities.  SFAS No. 133 requires  recognition  of all  derivative
instruments  in  the  statement  of  financial  position  as  either  assets  or
liabilities and the measurement of derivative instruments at fair value. In June
1999, the FASB issued SFAS No. 137,  "Accounting for Derivative  Instruments and
Hedging  Activities - Deferral of the Effective Date of FASB Statement No. 133."
The original  effective date for SFAS No. 133 was for all fiscal years beginning
after June 15, 1999.  As a result of the issuance of SFAS No. 137, the effective
date for SFAS No. 133 is for all fiscal  quarters of all fiscal years  beginning
after June 15,  2000.  The adoption of SFAS No. 133, as amended by SFAS No. 137,
is not expected to have a material effect on the financial statements.

Inflation and changing  prices have not had a  significant  effect on continuing
operations and are not expected to have any material  effect in the  foreseeable
future.  Dividend,  interest  and  other  income  were  primarily  derived  from
money-market accounts.

                         Liquidity and Capital Resources

The Company had financed its operations since inception  through the sale of its
equity securities and, to a lesser extent,  operating  revenues from R&D limited
partnerships  to conduct  research  and  development.  These funds  provided the
Company  with the  resources  to  acquire  staff,  construct  its  research  and
development  facility,  acquire capital equipment and to finance  technology and
product development, manufacturing and clinical trials.

During fiscal 2001, the Company  received net proceeds of $15.2 million from the
closing    of    a    private     financing    with    several     international
biotechnology/healthcare  funds.  The Company  issued  491,509  shares of common
stock  and  there  were no  warrants  or  options  included  with  this  private
placement.

The Company  anticipates that its existing capital  resources which are composed
primarily of cash and short-term cash investments, including the proceeds of its
private  placements  and  interest  thereon,  would  enable it to  maintain  its
currently  planned  operations into the year 2002. The Company's working capital
and capital  requirements  will  depend upon  numerous  factors,  including  the
following:  the  progress of the  Company's  research and  development  program,
preclinical  testing  and  clinical  trials;  the timing  and cost of  obtaining
regulatory  approvals;  the  levels of  resources  that the  Company  devotes to
product  development,  manufacturing and marketing  capabilities;  technological
advances;  competition;  and collaborative  arrangements or strategic  alliances
with other drug companies, including the further development,  manufacturing and
marketing of certain of the Company's products and the ability of the Company to
obtain funds from such strategic alliances or from other sources.

Item 7a.  Qualitative and Quantitative  Disclosures About Market Risk.  Aphton's
market risks are all immaterial.  Investment  securities consist  principally of
debt securities  issued by the US Treasury and other US Government  agencies and
corporations and investment in other securities, including mutual funds.

Item 8.  Financial Statements and Supplementary Data.

Financial Statements are set forth in this report beginning at page 17.

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

The registrant changed  accountants from  PricewaterhouseCoopers  LLP to Ernst &
Young  LLP,  effective  May 19,  2000,  for the year  ended  January  31,  2001.
PricewaterhouseCoopers  LLP was dismissed effective May 19, 2000. The reports of
PricewaterhouseCoopers LLP on the financial statements of the registrant for the
past two years contained no adverse  opinion or other  disclaimer of opinion and
were not  qualified  or modified as to  uncertainty,  audit scope or  accounting
principle.

                                    PART III
Item 10.  Directors and Executive Officers of the Registrant.
The  information  required  for this item is  incorporated  by  reference to the
section  captioned  "Election of Directors" in the Company's Proxy Statement for
the Annual Meeting of Stockholders.

Item 11.  Executive Compensation
The  information  required  for this item is  incorporated  by  reference to the
section captioned "Executive  Compensation" in the Company's Proxy Statement for
the Annual Meeting of Stockholders.

Item 12.  Security Ownership of Certain Beneficial Owners and Management.
The  information  required  for this item is  incorporated  by  reference to the
section  captioned  "Election of Directors" of the Company's Proxy Statement for
the Annual Meeting of Stockholders.

Item 13.  Certain Relationships and Related Transactions.
Not applicable.

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a)     Documents filed as part of this Form 10-K
 (i)  Financial Statements:
      Reports of Independent Certified Public Accountants
      Balance sheets as of January 31, 2001 and 2000
      Statements of Operations for the years ended January 31, 2001,
          2000 and 1999
      Statements of Stockholders' Equity for the years ended January 31, 2001,
          2000 and 1999
      Statements of Cash Flows for the years ended January 31, 2001,
          2000 and 1999
      Notes to the Financial Statements
(ii)  Financial Statements Schedules:
      Financial Statement Schedules are omitted because they are either not
      required, not applicable, or the information is included in the Financial
      Statements or Notes thereto.

(b)   Exhibits
    Exhibit Number                  Description
     3.1 Certificate of Incorporation (Incorporated by reference to Exhibit B of
         the Registrant's Definitive Proxy Statement filed October 8, 1997)

     3.3 By-Laws  (Incorporated  by reference  to Exhibit C of the  Registrant's
         Definitive Proxy Statement filed October 8, 1997)

    23.1 Written Consent of Ernst & Young, LLP. (attached as an exhibit)
    23.2 Written Consent of PricewaterhouseCoopers, LLP.(attached as an exhibit)

(c)  Reports on Form 8-K
     During the three-month  period ending January 31, 2001, the Company did not
     file any reports on Form 8-K.


Dated:  April 29, 2001                 APHTON CORPORATION


                           By:         PHILIP C. GEVAS
                                       Chairman of the Board, Chief Executive
                                       Officer, and President

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 and on the dates indicated.

Signatures                      Title                              Date

PHILIP C. GEVAS        Chairman of the Board,
                       Chief Executive Officer and President    April 20, 2001

WILLIAM A. HASLER      Vice Chairman of the Board and Director
                       Co-Chief Executive Officer               April 26, 2001

ROBERT S. BASSO        Director                                 April 26, 2001

GEORGES HIBON          Director                                 April 26, 2001

NICHOLAS JOHN STATHIS  Director                                 April 26, 2001

FREDERICK W. JACOBS    Vice President, Treasurer and
                       Chief Accounting Officer                 April 26, 2001





                          INDEX TO FINANCIAL STATEMENTS
                              FINANCIAL STATEMENTS

                                                                           Page
Reports of Independent Certified Public Accountants                          19

Balance Sheets - January 31, 2001 and 2000                                   20

Statements of Operations - for the years ended January 31, 2001,
                           2000 and 1999                                     21

Statements of Stockholders' Equity - for the years ended January 31, 2001,
                                     2000 and 1999                           21

Statements of Cash Flows - for the years ended January 31, 2001,
                           2000 and 1999                                     22

Notes to the Financial Statements                                            23



               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

The Board of Directors
Aphton Corporation

We have  audited the  accompanying  balance  sheet of Aphton  Corporation  as of
January 31, 2001 and the related statements of operations, stockholders'  equity
and cash  flows for the year then  ended.  These  financial  statements  are the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these financial statements based on our audit.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position of Aphton  Corporation  as of
January 31, 2001,  and the results of its  operations and its cash flows for the
year then ended, in conformity with accounting  principles generally accepted in
the United States.
                                       /s/Ernst & Young LLP
Miami, Florida
April 20, 2001


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders
Aphton Corporation

In our opinion,  the accompanying  balance sheets and the related  statements of
operations,  stockholders' equity and cash flows present fairly, in all material
respects,  the  financial  position of Aphton  Corporation  (the  "Company")  at
January 31, 2000,  and the results of its  operations and its cash flows for the
two years ended  January 31, 2000,  in  conformity  with  accounting  principles
generally accepted in the United States of America.  These financial  statements
are the  responsibility of the Company's  management;  our  responsibility is to
express  an  opinion  on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally  accepted in the United States of America,  which require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements,  assessing the accounting  principles used and significant estimates
made by  management,  as well as  evaluating  the  overall  financial  statement
presentation.  We believe  that our audits  provide a  reasonable  basis for our
opinion.
                                         /s/PricewaterhouseCoopers LLP
Honolulu, Hawaii
April 24, 2000




                               APHTON CORPORATION

                   Balance Sheets - January 31, 2001 and 2000


         Assets                                     2001              2000
Current Assets:
Cash and current investments:
     Cash and short-term cash investments         $3,508,577        $9,920,263
     Investment securities-trading                 1,653,180         2,380,880
     Investment securities-held-to-maturity       13,502,695         6,878,097
                                                  ----------        ----------
         Total cash and current investments       18,664,452        19,179,240
Other assets (including current portion of
     unconditional supply commitment)                733,322           688,013
                                                  ----------        ----------
         Total current assets                     19,397,774        19,867,253
Equipment and improvements, at cost,
     net of accumulated depreciation
     and amortization                                166,437           173,350
Unconditional supply commitment                    7,800,000         8,151,650
                                                  ----------        ----------
         Total assets                            $27,364,212       $28,192,253
                                                 ===========       ===========

   Liabilities and Stockholders' Equity

Liabilities:
Current liabilities:
     Accounts payable and other                   $6,207,569        $6,131,771
                                                   ---------         ---------
         Total current liabilities                 6,207,569         6,131,771
     Deferred revenue                             10,000,000        10,000,000
                                                  ----------        ----------
         Total liabilities                        16,207,569        16,131,771

Commitments

Stockholders' Equity:
     Common stock, $0.001 par value -
     Authorized:  30,000,000 shares
     Issued and outstanding:  16,199,493 shares at
         January 31, 2001 and 15,592,984 shares
         at January 31, 2000                          16,199            15,593
     Additional paid in capital                   80,292,478        64,799,784
     Purchase warrants                               198,900           198,900
     Accumulated deficit                         (69,350,934)      (52,953,795)
         Total stockholders' equity               11,156,643        12,060,482
         Total liabilities and                    ----------        ----------
              stockholders' equity               $27,364,212       $28,192,253
                                                 ===========       ===========

    The accompanying notes are an integral part of the financial statements.






                               APHTON CORPORATION
                            Statements of Operations
               for the years ended January 31, 2001, 2000 and 1999

                                       2001            2000             1999

Revenue:                           $        -       $        -      $        -

Costs and Expenses:
     General and administrative      1,661,911       1,775,652       1,241,323
     Research and development       15,302,183      10,821,361       9,453,826
                                    ----------      ----------      ----------
         Total costs and expenses   16,964,094      12,597,013      10,695,149
         Loss from operations       16,964,094      12,597,013      10,695,149
                                    ----------      ----------      ----------
Other Income (expense):
     Dividend and interest income    1,554,611         444,980         547,283
     Unrealized (losses) gains
        from investments              (987,657)        958,737         391,051
                                  ------------    ------------     -----------
     Net loss                     $(16,397,139)   $(11,193,296)    $(9,756,815)
                                  ============    ============     ===========
Per share data
     Basic and diluted loss
     per common share                  $(1.02)         $(0.76)         $(0.68)
                                       ======          ======          ======
     Weighted average number of
         common shares outstanding 16,100,108      14,731,301       14,431,417
                                   ==========      ==========       ==========

    The accompanying notes are an integral part of the financial statements.



                               APHTON CORPORATION
                       Statements of Stockholders' Equity
               for the years ended January 31, 2001, 2000 and 1999

                                               Additional
               Common  Stock          Paid in   Purchase  Accumulated
                   Shares    Amount   Capital   Warrants    Deficit     Total
Balance,
Feb 1, 1998    14,191,217 $14,191 $42,955,207 $341,404 $(32,003,684)$11,307,118

Exercise of purchase
 warrants           4,900       5       5,720   (4,500)           -       1,225
Sale of stock,net 237,867      238  4,999,762        -            -   5,000,000

     Net loss           -        -          -        -   (9,756,815) (9,756,815)

Balance,       ----------   ------ ----------  -------  ------------  ---------
Jan 31, 1999   14,433,984   14,434 47,960,689  336,904  (41,760,499)  6,551,528

Exercise of purchase
 warrants         359,000     359   5,639,895 (138,004)           -   5,502,250

Sale of stock,net 800,000     800  11,199,200        -            -  11,200,000

Net loss                -       -           -        -  (11,193,296)(11,193,296)

Balance,       ----------  ------  ----------  -------  -----------  ----------
Jan 31, 2000   15,592,984  15,593  64,799,784  198,900  (52,953,795) 12,060,482
Exercise of
purchase warrants 115,000     115     246,385        -            -     246,500
Sale of stock,net 491,509     491  15,246,309        -            -  15,246,800
Net loss                -       -           -        -  (16,397,139)(16,397,139)
Balance,       ---------- ------- ----------- -------- ------------ -----------
Jan 31, 2001   16,199,493 $16,199 $80,292,478 $198,900 $(69,350,934)$11,156,643
               ========== ======= =========== ======== ============ ===========
    The accompanying notes are an integral part of the financial statements.


                               APHTON CORPORATION
                            Statements of Cash Flows
               for the years ended January 31, 2001, 2000 and 1999

           Increase (decrease) in cash and short-term cash investments
                                          2001           2000          1999
Cash flows from operating activities:
Cash paid to suppliers and employees  $(17,941,258)  $(9,446,861)  $(9,119,463)
Purchase of trading securities            (259,957)   (2,201,968)   (1,207,786)
Proceeds (loss) from trading securities   (987,657)    1,987,611             -
Interest and dividends received          1,554,611       444,980       547,283
                                        ----------    ----------    ----------
Net cash used in operating activities  (17,634,261)   (9,216,238)   (9,779,966)
Cash flows from investing activities:
Purchase of held to maturity securities(55,997,609)  (10,438,097)            -
Proceeds from maturity of held to
            maturity securities         52,788,000     3,560,000             -
Capital expenditures                       (61,116)      (34,986)      (99,925)
                                        ----------    ----------     ---------
Net cash used in investing activities   (4,270,725)   (6,913,083)      (99,925)
Cash flows from financing activities:
Sales of stock                          15,493,300    16,702,250     5,001,225
                                        ----------    ----------     ---------
Cash received from financing activities 15,493,300    16,702,250     5,001,225
Net increase (decrease) in cash and
   short-term cash investments          (6,411,686)      572,929    (4,878,666)
Cash and short-term cash investments:
     Beginning of period                 9,920,263     9,347,334    14,226,000
                                        ----------    ----------    ----------
     End of period                      $3,508,577    $9,920,263    $9,347,334
                                        ==========    ==========    ==========

       Reconciliation of net loss to net cash
            used in operating activities
Net loss                              $(16,397,139) $(11,193,296)  $(9,756,815)
Adjustments to reconcile net loss
to net cash used in operating activities:
  Depreciation and amortization             68,029        77,236        82,062
  Net (increase) decrease in investment
    securities-trading                     379,581      (214,357)            -
  Unrealized (gains) losses
   from investments                        987,657      (958,737)     (391,051)
  Increase (decrease) in accrued employee
   benefits                               (987,657)      958,737       391,051
  Changes in -
   Other assets                             45,310        75,148      (138,357)
   Unconditional supply commitment         820,000       205,000       175,000
   Accounts payable and other              (75,798)    1,834,031      (141,856)
                                       -----------   -----------   -----------
Net cash used in operating activities:$(17,634,261)  $(9,216,238)  $(9,779,966)
                                      ============   ===========   ===========

    The accompanying notes are an integral part of the financial statements.








                               APHTON CORPORATION
                        Notes to the Financial Statements

1.       Organization and Operations

Aphton Corporation is a biopharmaceutical  company in late-stage clinical trials
for four cancer indications.  Aphton is developing products using its innovative
vaccine-like   technology  for   neutralizing   hormones  that   participate  in
gastrointestinal  system and reproductive system cancer and non-cancer diseases;
and for the prevention of pregnancy. Aphton has strategic alliances with Aventis
Pasteur (NYSE: AVE),  GlaxoSmithKline (NYSE: GSK), Schering Plough Animal Health
(NYSE: SGP), and the World Health Organization (WHO).

Aphton's  fiscal year end was changed in March from  January 31 to December  31,
effective for the 11 month period ending December 31, 2001.

2.       Summary of Significant Accounting Policies

Use of Estimates in the Preparation of Financial Statements -
The preparation of financial statements in conformity with accounting principles
generally  accepted in the United States  requires  management to make estimates
and assumptions  that affect the reported  amounts of assets and liabilities and
disclosures  of contingent  assets and  liabilities at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting  period.  Actual  results could differ from those  estimates,  however
management believes such differences are unlikely to be significant.

Research and Development Expenses -
Research and development costs are expensed as incurred.

General and Administrative Expenses -
Amounts shown represent expenses not clearly related to research and development
expense.  A significant  portion of these  expenses are related to  intellectual
property/patent legal costs and salaries.

Equipment and Improvements -
Equipment and  furniture  are  depreciated  using  accelerated  methods over the
estimated  economic lives (5-7 years) of the assets.  Improvements are amortized
over the term of the lease  using the  straight-line  method.  Betterments  that
substantially  extend the useful life of equipment and furniture are capitalized
and depreciated over the period of expected benefit.

Income Taxes -
The Company  accounts  for income  taxes  pursuant  to  Statement  of  Financial
Accounting  Standards  (SFAS)  No. 109  "Accounting  for  Income  Taxes,"  which
requires an asset and liability  approach in accounting for income taxes.  Under
this method,  the amount of deferred tax asset or  liability  is  calculated  by
applying the  provisions of enacted tax laws to the  differences in the bases of
assets and liabilities for financial and income tax purposes. Income tax expense
is the tax payable  for the period and the change  during the period in deferred
tax assets and liabilities.

Per Share Data -
The Company  complies with SFAS No. 128,  "Earnings per Share," which  specifies
the  computation,  presentation  and  disclosure  requirements  for earnings per
share.  The Company's basic loss per common share was calculated by dividing net
loss by the weighted average number of common shares outstanding.  The Company's
potential common shares are  anti-dilutive,  and accordingly,  basic and diluted
loss per share are the same.  Such  potential  common shares consist of purchase
warrants (See Note 7) and could  potentially  dilute basic earnings per share in
the future.

Cash Equivalents -
For purposes of the  statement of cash flows,  the Company  considers all highly
liquid debt instruments,  including short-term cash investments,  purchased with
an original maturity of three months or less to be cash equivalents.

Investment Securities

Investment  securities  consist  principally of debt securities issued by the US
Treasury and other US Government  agencies and  corporations  and  investment in
other securities, including mutual funds.

Investment  securities are classified into three categories and accounted for as
follows:  (1)  Held-to-maturity  securities are debt securities that the Company
has the positive  intent and ability to hold to maturity.  These  securities are
reported at amortized  cost. (2) Trading  securities  are  securities  which are
bought and held  principally  for the purpose of selling  them in the near term.
These  securities are reported at fair value,  with unrealized  gains and losses
included in current  earnings.  (3)  Available-for-sale  securities are debt and
equity  securities  not  classified  as  either   held-to-maturity   or  trading
securities. The Company does not have any available-for-sale  securities.  Gains
and losses realized on the sales of investment  securities are determined  using
the specific identification method.

Concentrations Of Credit Risk -
The  Company's  short-term  cash  investments  are  held  in  several  financial
institutions  and consist  principally of insured money market accounts and cash
management  accounts that are collateralized by or invested in US Government and
US Government agency securities.

The Company's held-to-maturity securities consist of marketable debt securities.
These  securities  are issued by a  diversified  selection of  corporate  and US
government agencies with strong credit ratings.  The Company's investment policy
limits  the  amount of credit  exposure  with any one  institution.  Other  than
asset-backed securities, these debt securities are generally not collateralized.
The Company has not experienced any material losses due to credit  impairment on
investments in marketable debt securities in any year.

Impairment of the unconditional supply commitment -
As  discussed  in Note 3, the  Company  has the  unconditional  right to receive
supplies originally  aggregating $9 million from Aventis Pasteur.  The Company's
policy is to review the current market prices of available supplies,  if any, to
assure that they remain above the stated Aventis  Pasteur  contract price of the
materials and that the right to receive the supplies remains unimpaired. Aventis
Pasteur is one of the largest pharmaceutical vaccine manufacturers in the world.
The Company monitors the financial performance of Aventis Pasteur to assure that
they will continue to be able to perform under the contract, wherein the special
order supplies are to be provided from supplies  manufactured by Aventis Pasteur
in large quantities and sold to many customers,  including the US Government, as
part of Aventis  Pasteur's basic franchise  (business).  The contract allows for
inflation  based  increases  in the per unit  costs of the  supplies  which  the
Company and Aventis Pasteur believe are sufficient to assure that there will be
no future financial hardship incurred by Aventis Pasteur in the execution of the
agreement.

New Accounting Pronouncements-
In June 1998, the Financial  Accounting Standards Board ("FASB") issued SFAS No.
133,  "Accounting for Derivative  Instruments and Hedging  Activities." SFAS No.
133 establishes  accounting and reporting  standards for derivative  instruments
and hedging  activities.  SFAS No. 133 requires  recognition  of all  derivative
instruments  in  the  statement  of  financial  position  as  either  assets  or
liabilities and the measurement of derivative instruments at fair value. In June
1999, the FASB issued SFAS No. 137,  "Accounting for Derivative  Instruments and
Hedging  Activities - Deferral of the Effective Date of FASB Statement No. 133."
The original  effective date for SFAS No. 133 was for all fiscal years beginning
after June 15, 1999.  As a result of the issuance of SFAS No. 137, the effective
date for SFAS No. 133 is for all fiscal  quarters of all fiscal years  beginning
after June 15,  2000.  The Company  adopted SFAS No. 133, as amended by SFAS No.
137, effective February 1, 2001 and this adoption did not have a material effect
on the financial statements.

Comprehensive Income

The Company complies with SFAS No. 130, "Reporting  Comprehensive Income," which
established standards for reporting comprehensive income (defined to include net
income, unrealized gains and losses on available-for-sale investment securities,
foreign currency  adjustments and certain other items not included in the income
statement).  The Company does not have  elements of other  comprehensive  income
other than net loss.

3.       License and Co-Promotion Agreements

In June 1998,  Aphton and SmithKline  Beecham signed a Collaboration and License
agreement,  granting  SmithKline  Beecham exclusive rights worldwide to Aphton's
GnRH-related  patents  and  proprietary  technology.  The  agreement  covers the
diagnosis,  treatment and prevention of GnRH-related  cancers and other diseases
in humans.  Human cancer  indications  for the  anti-GnRH  product are prostate,
breast,  ovarian and endometrial cancer.  Additional medical indications for the
anti-GnRH  product are  endometriosis,  polycystic  ovaries,  uterine  fibroids,
contraception, infertility and precocious puberty. Under terms of the agreement,
Aphton and SmithKline  Beecham are collaborating in a joint product  development
program,  with SmithKline Beecham responsible for clinical trials and regulatory
approvals,  and for worldwide  marketing and distribution of approved  products.
The  agreement  uses a royalty  mechanism  based on product  sales,  in dollars,
worldwide to determine Aphton's revenues.  As part of the Agreement,  SmithKline
Beecham made an equity  investment  of  $5,000,000  for 237,867  shares of newly
issued Aphton common stock.

On February 14, 1997 Aphton signed an agreement with Pasteur  Merieux  Connaught
(Rhone-Poulenc Group) which is now known as Aventis Pasteur, a leader in medical
science and research and the world's largest vaccine  manufacturer and marketer,
for a strategic  alliance for all human  cancer  applications  of the  Company's
anti-gastrin  immunogen  product  including  stomach,   colorectal,   liver  and
pancreatic cancers.  Under the terms of the twenty-year license and co-promotion
agreement,  Aphton will be responsible for product development,  clinical trials
and regulatory  agency  approvals,  and Aventis  Pasteur will be responsible for
promotion,  advertising,  marketing,  distribution and sales of the anti-gastrin
immunogen  product in the United States,  Canada,  Europe  (including the C.I.S.
countries)  and Mexico.  In addition,  Aphton and Aventis  Pasteur  entered into
agreements  providing for: (a) the supply of the anti-gastrin  immunogen product
from Aphton to Aventis Pasteur;  and (b) the supply of certain components of the
anti-gastrin  immunogen  product (as well as other Aphton products) from Aventis
Pasteur to Aphton.  Aventis Pasteur will fund the costs  associated with product
introduction,  promotion,  advertising  and marketing  throughout  the territory
covered by the  agreement.  Under the terms of the  agreement,  in  addition  to
upfront consideration  aggregating $10 million including $1 million cash and the
supply  commitment  (of material  suitable for human use) of $9 million,  Aphton
will  receive  the  majority  of the  profits  from  sales  of the  anti-gastrin
immunogen product with the balance of profits to be retained by Aventis Pasteur.

The supply commitment of materials suitable for human use consists of Diphtheria
Toxoid and/or Tetanus  Toxoid.  Aphton may use some or all of the  unconditional
supply  commitment  in the product  under  development  with Aventis  Pasteur or
Aphton may use some or all of the supply  commitment  on other  current  product
lines or on research and development. The supply commitment of material suitable
for  human  use is not  readily  obtained  on the  open  market  in  such  large
quantities.  By  comparison  to lower  quality  material  available  in  smaller
quantities  management  estimates  that  the  market  value of the  supplies  is
substantially  greater than the carrying  value of $9 million,  if they could be
obtained.  The carrying value of the supplies is based on the negotiated License
Fee.  The amount of  material to be  received  is based on  negotiated  per unit
costs,  which  are well  below  the per unit  costs of lower  quality  materials
available in smaller quantities.

The $10 million upfront  consideration  has been classified as a license payment
and  has  been  deferred  and  will  be  recognized   for  financial   statement
(accounting) purposes as revenue within the twenty-year period of the agreement.
The revenue recognition will begin once regulatory agency approval to market the
product has been  received and will be  recognized  ratably  over the  remaining
period of the  contract,  which ends  February  13,  2017.  The Company does not
speculate on the timing of regulatory approvals.

Under the agreement,  Aventis Pasteur shall have the right to terminate upon one
hundred  eighty  (180)  days  prior  notice  to  Aphton,  in the  event  that it
determines,  following  completion  of Phase III clinical  trials of the Product
(and receipt by Aventis  Pasteur of the results and supporting  data obtained in
such  trials),  that  for  safety  and  efficacy  reasons  it does  not  wish to
co-promote,  market or sell the Product. In addition, either party may terminate
the agreement by (a) mutual  agreement,  (b) for uncured material breach and (c)
due to liquidation,  insolvency,  etc. Further, under the agreement, none of the
aggregate $10 million consideration,  either the cash or the Company's rights to
the full $9 million in unconditional supply commitment, is refundable to Aventis
Pasteur under any conditions.  There is no provision under the agreement for the
unconditional  supply  commitment to be satisfied by Aventis Pasteur with a cash
payment. (The $10 million license payment was recognized for tax purposes in the
year ended April 30, 1997.)

4.       Equipment and Improvements
At January  31,  2001 and 2000,  equipment  and  improvements  consisted  of the
following:
                                                    January 31,    January 31,
                                                        2001           2000
Laboratory equipment                                $ 502,607      $ 501,078
Leasehold improvements                                349,646        293,584
Office and laboratory furniture and fixtures          232,980        229,454
                                                      -------        -------
                                                    1,085,233      1,024,116
Less accumulated depreciation and amortization       (918,796)      (850,766)
                                                    ---------      ---------
                                                     $166,437       $173,350
                                                     ========       ========

5.       Accounts Payable and Other
At January 31, 2001 and 2000, accounts payable and other was composed of:

                                                 January 31,      January 31,
                                                     2001           2000
Trade accounts payable                           $4,140,227       $3,131,861
Accrued wages payable                             1,789,223        2,640,880
Employee benefits payable                           278,119          359,030
                                                 ----------       ----------
                                                 $6,207,569       $6,131,771
                                                 ==========       ==========
See related Note 6.

6.       Investment Securities
Securities  classified as trading and  held-to-maturity  at January 31, 2001 and
2000 are summarized below. Estimated fair value is based on quoted market prices
for these or similar investments.
                                     Unrealized     Unrealized
 January 31, 2001           Cost        Gains         Losses       Fair Value
Total trading securities
 (carried at fair value):     $2,640,837     $--        $987,657     $1,653,180

Securities held to maturity
 (carried at amortized cost):$13,502,695   $13,270           $--    $13,515,965

 January 31, 2000
Total trading securities
 (carried at fair value):    $1,031,092 $1,349,788           $--     $2,380,880

Securities held to maturity
 (carried at amortized cost):$6,878,097       $448          $499     $6,878,046



The Company held no available-for-sale investment securities at January 31, 2001
and January 31, 2000.

The carrying  value of all  investment  securities  held at January 31, 2001 and
2000 is summarized below:

Security                                     2001             2000
Trading securities                       $1,653,180        $2,380,880
Securities held-to-maturity
   maturing within one year              13,502,695         6,878,097
                                         ----------         ---------
     Total short-term investments       $15,155,875        $9,258,977
                                        ===========        ==========

The Company's trading securities consist of mutual funds and relate to a Company
plan whereby  individuals may forego immediate receipt of wages. The Company has
established a liability for these accrued wages payable and funded the liability
with the  establishment  of investment  accounts that are subject to the general
creditors of the  Company.  The  employees  may direct the  investments  and the
changes in value in trading  securities are  recognized as unrealized  gains and
losses in the statement of operations with a corresponding  increase or decrease
to research and development expense to adjust the liability for employees' wages
and  benefits.   Unrealized   holding  losses  on  trading  securities  and  the
corresponding decrease in research and development expense totaled approximately
$1.0 million in 2001.  Unrealized  holding gains on trading  securities  and the
corresponding   increase   in   research   and   development   expense   totaled
approximately$1.0 million in 2000 and approximately$.4 million in 1999.

7.       Common Stock, Preferred Stock and Purchase Warrants

Common Stock -

During fiscal 2001, the Company received proceeds of approximately $15.2 million
net of  approximately  $1.0 million offering costs from the closing of a private
financing with several international biotechnology/healthcare funds. The Company
issued  491,509  shares of common  stock and there were no  warrants  or options
included with this private placement.

During  fiscal 2000, in a private  placement the Company sold 800,000  shares of
common stock for $11,200,000 net of insignificant  legal,  accounting and filing
fee expenses.  The Company also issued  359,000  shares  through the exercise of
outstanding purchase warrants, netting $5,502,250 in proceeds.

During fiscal 1999,  SmithKline  Beecham made an equity investment of $5,000,000
for 237,867 shares of newly issued Aphton common stock.

Preferred Stock -

The Company has 2,000,000 shares of authorized preferred stock, none of which
has ever been issued or outstanding.

Purchase Warrants -

Each warrant described below is exercisable for one share of common stock and is
subject to the restrictive holding requirements of SEC Rule 144. The term of the
warrants is from 8 to 23 years.

The Company  accounts for  stock-based  awards to employees  using the intrinsic
value method as prescribed by Accounting  Principles  Board Opinion  ("APB") No.
25,  "Accounting  for Stock Issued to Employees," and related  interpretations.
Accordingly,  no  compensation  expense  is  recorded  for  warrants  issued  to
employees in fixed amounts and with fixed exercise  prices at least equal to the
fair  market  value of the  Company's  common  stock at the date of  grant.  The
Company has adopted the provisions of SFAS No. 123,  "Accounting for Stock-Based
Compensation,"  through  disclosure only. All stock-based awards to nonemployees
are  accounted for at their fair value in  accordance  with SFAS No. 123.  There
were  36,000  employee  stock  purchase  warrants  granted  in  2001.  Based  on
Black-Scholes  values,  for the year ended  January 31, 2001,  the pro forma net
loss  would be  $16,908,699  and the pro forma loss per  common  share  would be
$1.05.  There were 150,000  employee  stock purchase  warrants  granted in 2000.
Based on  Black-Scholes  values,  for the year ended  January 31, 2000,  the pro
forma net loss would be  $13,231,796  and the pro forma  loss per  common  share
would be $.90. There were no employee stock purchase warrants granted in 1999.

The following  assumptions were used in the  Black-Scholes  option pricing model
for the 36,000 and 150,000  purchase  warrants  granted in fiscal 2001 and 2000,
respectfully, to employees. The stock price and exercise price of $14.75 was set
equal to the fair  market  value of the  Company's  common  stock on the date of
grant.  The risk-free rate of return used was 7.0%. The expected dividend yield
used was 0%. The  expected  time to  exercise  used was 10 years.  The  expected
volatility used was 100%.

The following table summarizes
purchase warrant activity                         Weighted-Average
over the past three fiscal periods:      Number of Shares     Exercise Price
         Outstanding and exercisable
          at February 1,1998                    2,018,300            $13.76
                     Exercised                     (4,900)             $.25
                                                ---------
         Outstanding and exercisable
          at January 31,1999                    2,013,400            $13.76
                     Granted                      150,000            $14.75
                     Exercised                   (359,000)           $15.33
                                                ---------
         Outstanding and exercisable
          at January 31,2000                    1,804,400            $13.58
                     Granted                       36,000            $14.75
                     Exercised                   (115,000)            $2.14
                                                ---------
         Outstanding and exercisable
          at January 31,2001                    1,725,400            $14.37
                                                =========            ======


In December, 1999 there were 1,000,000 warrants with an exercise price of $14.75
reserved for future use that were not issued or outstanding at January 31, 2001.
For warrants outstanding and exercisable at January 31, 2001, the exercise price
ranges and average remaining lives were:

Warrants Outstanding and Exercisable
 Range of Exercise Prices
                       Number Outstanding    Average Period(1) Average Price(2)
      $.25  to  $14.00     532,400                   13.9          $11.38
    $14.01  to  $14.99     770,000                   13.9          $14.75
    $15.00  to  $24.00     423,000                   13.9          $17.42
                         ---------
                         1,725,400                   13.9          $14.37
                         =========
(1) Weighted average remaining years
(2) Weighted average exercise price

8.       Income Taxes

Gross  deferred tax assets result from net operating  loss and income tax credit
carryforwards. Realization of these assets is dependent on the Company's ability
to generate  sufficient  future taxable  income,  prior to the expiration of the
carryforwards,  which is dependent on the completion of research and development
activities and successful  marketing of the Company's various  products.  Due to
the uncertainties related to the above and in accordance with guidance contained
in SFAS No. 109, a valuation  allowance has been provided for these deferred tax
assets.  Accordingly,  these assets do not appear in the Company's balance sheet
at January 31, 2001 and 2000. The changes in the valuation allowance in 2001 and
2000 were $5,553,000 and $3,160,000, respectively.


Deferred tax assets consisted of:        January 31, 2001   January 31, 2000

 Federal net operating loss carryforward     $17,968,000        $12,218,000
 State net operating loss                        324,000            324,000
                                              ----------         ----------
  Total operating loss carryforward           18,292,000         12,542,000

  Deferred license payment revenues            4,014,000          4,014,000
  Expenses deductible in future periods          803,000          1,200,000

  Federal tax credits                          2,171,000          1,971,000
  State tax credits                              554,000            554,000
                                              ----------         ----------
   Total tax credits                           2,725,000          2,525,000
                                              ----------         ----------
      Total deferred tax assets               25,834,000         20,281,000
      Valuation allowance                    (25,834,000)       (20,281,000)
                                              ----------         ----------

           Net deferred tax assets          $          -        $         -
                                            ============        ===========

At January  31,  2001,  for  Federal  income tax  purposes,  the Company had net
operating loss carryforwards of approximately $52,847,000 and various income tax
credit  carryforwards,  primarily  research  and  experimentation,   aggregating
$2,171,000, which expire at various dates through 2021.

At January 31, 2001,  for  California  income tax purposes,  the Company had net
operating  loss  carryforwards  of  approximately  $5,281,000,  which  expire at
various  dates  through  2005;  and  various  income tax  credit  carryforwards,
primarily research and experimentation,  aggregating  $554,000,  which expire at
various dates through 2014.

9.       Commitments

The Company  has  noncancelable  facilities  leases  expiring  at various  dates
through fiscal 2003. The leases provide  various  options to renew.  The minimum
rental  commitments  for the  fiscal  years  2002 and 2003,  respectively,  are,
approximately $80,000 and $22,000 and none thereafter.  Rental expense for these
leases for the years ended  January 31,  2001,  2000 and 1999 was  approximately
$103,000,  $101,000 and $115,000.  Rental expense is allocated  between research
and development expense and general and administrative expense, based on use, in
the accompanying statements of operations.

10.      Selected Quarterly Financial Data (unaudited)
Selected  unaudited  quarterly  financial data for the years ended 2001 and 2000
are summarized below.

Statement of Operations Data:
For the year ended           First     Second       Third          Fourth
 January 31, 2001           Quarter    Quarter     Quarter        Quarter
Research and Development
 Expenditures             $2,949,508  $3,647,340  $3,790,199    $4,915,136
Investment Income            329,904     546,612     372,125       305,970
Net Loss                  (3,237,514) (3,705,035) (4,088,111)   (5,366,479)
Basic and Diluted Net
 Loss per Share               $(0.20)     $(0.23)     $(0.25)       $(0.33)
Weighted Average
  Shares Outstanding      15,804,954  16,199,493  16,199,493    16,199,493

Statement of Operations Data:
For the year ended          First      Second       Third          Fourth
 January 31, 2000           Quarter    Quarter     Quarter        Quarter
Research & Development
 Expenditures             $1,452,084  $2,316,700  $2,870,908    $4,181,669
Investment Income            102,987      70,976      42,839       228,178
Net Loss                  (1,506,844) (2,321,004) (2,969,122)   (4,396,326)
Basic and Diluted Net
 Loss per Share               $(0.10)     $(0.16)     $(0.20)       $(0.28)
Weighted Average
  Shares Outstanding      14,433,384  14,433,384  14,700,051    15,592,184




CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to the  incorporation  by  reference in the  Registration  Statements
(Form S-3 No.333-48680,  Form S-3 No.  333-31217,  and Form S-3 No. 33-77286) of
Aphton Corporation and in the related Prospectuses of our report dated April 20,
2001, with respect to the financial statements of Aphton Corporation included in
this Annual Report (Form 10-K) for the year ended January 31, 2001.
                                     /s/ Ernst & Young LLP

Miami, Florida
April 27, 2001



CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


We  hereby  consent  to the  incorporation  by  reference  in  the  registration
statements on Form S-3 (Registration Nos. 333-48680,  333-31217 and 33-77286) of
Aphton  Corporation of our report dated April 24, 2000 relating to the financial
statements which appear in this Form 10-K.


                                     /s/PricewaterhouseCoopers LLP

Honolulu, Hawaii
April 26, 2001