______________________
                                  UNITED STATES

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

                                    FORM 10-K
                                   (MARK ONE)
                ( ) 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, 2000

                                       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 3, 2000: 15,592,384

            Aggregate market value of Common Stock ($.001 par value)
                     held by non-affiliates on April 1, 2000
           based on the last sale price on April 3, 2000: $445,500,963

            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 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 the  prevention of pregnancy.  Aphton has strategic  alliances  with Aventis
Pasteur (formerly Pasteur Merieux Connaught,  Rhone-Poulenc  Group),  SmithKline
Beecham,  Schering-Plough Animal Health and the World Health Organization (WHO).
Aphton's Web page, describing the company, its technology,  products,  strategic
alliances and news releases can be visited at: www.aphton.com.

                                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,  because  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  (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
Overview

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.

Safety / Dose Ranging
Aphton has successfully  completed  safety and dose-ranging  Phase I/II clinical
trials with its anti-gastrin  immunogen in patients with terminal cancers of the
colon/rectum,  stomach and pancreas.  The anti-gastrin  immunogen  induced large
antibody responses in the patients, with no systemic toxicity.

Survival in Advanced Pancreatic Cancer Patients
In March 2000,  Aphton and  collaborating  scientists  announced  results from a
Phase II  dose-ranging  clinical  trial.  The study  consisted  of 30  evaluable
patients,  all of whom had advanced pancreatic cancer. All patients in the trial
received  Aphton's  anti-gastrin  vaccine,  with  no  additional  or  concurrent
therapies.  Overall  median  survival  of the 30 patients  was 6.7 months.  This
median survival of the patients treated with Aphton's anti-gastrin vaccine (both
responders and non-responders) was 56% greater than the baseline median survival
from  published  data of  approximately  4.3 months for patients  with  advanced
pancreatic   cancer.  A  further  analysis  showed  that  among  those  patients
responding to Aphton's  anti-gastrin  vaccine,  median survival increased to 7.3
months.  Thus,  Aphton's  anti-gastrin  vaccine increased median survival by 70%
among patients responding to the therapy when compared to published data showing
a median  survival  of  approximately  4.3 months  for  patients  with  advanced
pancreatic cancer. In this dose-ranging trial, approximately 30% of the patients
responded to Aphton's  anti-gastrin vaccine at low-dose levels and approximately
80% of the patients  responded at the higher-dose  level. The immune  responders
had the same clinical status as the immune  non-responders.  Thus, the likeliest
difference  in survival is due to the immune  responsiveness  of the patients to
Aphton's  anti-gastrin  vaccine. As previously noted in patients with colorectal
or stomach  cancer,  the vaccine was well tolerated by these  patients,  with no
systemic toxicity.

Survival in End-stage Colorectal Cancer Patients
In 1998, Aphton announced  increased survival results,  which were statistically
significant,  from a comparative  analysis of its Phase I/II clinical  trials in
which Aphton's  anti-gastrin vaccine was administered to patients with end-stage
colorectal cancer ("advanced" Duke's D). The study was carried out at the Queens
Medical Center, University of Nottingham, United Kingdom (UK). The group treated
with the anti-gastrin vaccine had 40 evaluable patients. The comparative placebo
group was from a parallel study, time-wise, at the same medical center, with the
same principal  investigator as the Aphton study,  and was carried out under the
auspices of the Cancer  Research  Campaign  (CRC).  (The CRC is a leading cancer
research  organization  in the UK.) The placebo  group from the CRC study had 77
evaluable patients, also with end-stage,  "advanced" Duke's D colorectal cancer.
The  anti-gastrin  vaccine  treatment  group and the  placebo  group had similar
patient  inclusion and  exclusion  criteria.  The  treatment  group had a higher
proportion of patients  with liver  metastases  and a similar  incidence of lung
metastases.  A larger  proportion  of patients in the placebo group had received
adjuvant chemotherapy or chemotherapy for advanced disease,  prior to entry into
the trial.  Both the lower rate of liver metastases and the higher proportion of
antecedent  chemotherapy  in the placebo group,  tended to confer on the placebo
group an "expected," or  theoretical,  "survival  advantage"  over the treatment
group (Aphton's  anti-gastrin vaccine). The end-stage colorectal cancer patients
immunized with Aphton's  anti-gastrin vaccine had a median survival of 338 days,
versus 184 days for the placebo group.  The increased  survival in the treatment
group was statistically significant both by univariate analysis and even more so
by multivariate analysis, which takes into account antecedent differences in the
groups of patients.

Phase III Clinical Programs
Aphton's   Phase  III  clinical  trial   programs   encompass   several  of  the
gastrointestinal  system cancers.  Aphton  selected  stomach cancer as the first
indication to begin Phase III clinical trials in, because:  (a) survival time in
stomach  cancer the "end point," is short relative to colon cancer (the patients
selected in the first Phase I/II trial); (b) trial costs are relatively low; (c)
there is no current effective therapy; (d) the number of patients, worldwide, is
in the millions.

Aphton's plan, which has been initiated, was to enter subsequently into separate
pivotal  Phase  III  clinical  trials,  in  the  US  and  in  Europe,  with  its
anti-gastrin vaccine to treat patients with advanced pancreatic cancer,  because
such cancer  patients  have an even shorter  survival  time than stomach  cancer
patients. Aphton also plans to initiate additional pivotal Phase III trials, one
in patients  with  metastatic  colorectal  cancer and the other in patients with
early-stage colorectal cancer.

Advanced Gastric Cancer Clinical Program
In March 2000,  Aphton announced that the FDA has allowed its IND application to
commence  late-stage  clinical  trials 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.  The primary center for these
US trials is the M.D. Anderson Cancer Center in Houston, Texas.

Advanced Pancreatic Cancer Clinical Program
In April 2000,  Aphton announced that the FDA has allowed its IND application to
commence a pivotal  Phase III clinical  trial 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. The primary center for this US trial will be the
University of California Los Angeles (UCLA) School of Medicine Cancer Center.


A second pivotal Phase III trial has been allowed, this by the Medicines Control
Agency (MCA) in the UK, for the treatment of advanced pancreatic cancer. In this
trial, which is being expanded on the continent of Europe, Aphton's anti-gastrin
17 immunogen will be tested directly  against  gemcitabine.  Gemcitabine has not
been  adopted  as the  standard  of care in  every  country  in  Europe  for the
treatment of pancreatic cancer.

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.

Aphton is in active discussions with potential  strategic partners for marketing
rights to Aphton's anti-gastrin product for treatment of human cancers in Japan,
Asia  and  Latin  America.   Because  of  the  high  per  capita   incidence  of
gastrointestinal  cancers in Japan,  other  Asian  countries  and certain of the
Latin  American  countries,  Aphton  is  pursuing  these  discussions  as a high
priority subject.

GnRH pharmaccine
Overview
Aphton has  developed a second  major  anti-hormone  immunogen  for human cancer
indications,  one that targets the reproductive hormone  Gonadotropin  Releasing
Hormone (GnRH);  and which is now in Phase I/II clinical trials. 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.

Safety / Dose Ranging
In October  1998, a Safety / Dose Ranging  trial was  initiated  using  Aphton's
anti-GnRH immunogen product, called GnRH pharmaccine,  in patients with advanced
prostate  cancer.  The primary  purpose of the Safety / Dose Ranging trial is to
demonstrate  safety, as well as to determine an optimal dose regimen to use in a
Phase III Efficacy trial.

Biological Castration
The  objective  of  immunizing  with  GnRH  pharmaccine  is  to  reduce  gonadal
testosterone to levels achieved by surgical  castration.  In March 1999,  Aphton
announced  that GnRH  pharmaccine  reduced,  in some patients at the lowest dose
level,  gonadal  testosterone  to levels achieved by surgical  castration.  This
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 proceeding in the development program which is designed
to exploit and capitalize on certain recent scientific findings,  their relation
to  prostate   cancer  patient   survival,   and  related   Aphton   proprietary
developments.

Strategic Alliance
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.

GERD
Aphton  is  also  in  late-stage  product  development  with  it's  anti-Gastrin
immunogen approach for the treatment of gastroesophageal  reflux disease (GERD),
also known as "severe  heartburn." GERD affects  approximately  10% of the adult
population.  Prescription  drugs to treat this problem  have annual  revenues of
approximately  $10 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).
Aphton has developed a "next generation" anti-hCG product which incorporates two
major  advances:  (1) Aphton's  proprietary  delivery  vehicle which  provides a
protection  profile  tailored to meet the consensus of needs as  communicated to
Aphton and WHO by Women's  Healthcare  Organizations;  (2) An additional  target
(epitope) on hCG as part of the immunogen which is expected to provide increased
efficacy.  A patent was issued in April,  1999 for this,  the patent  rights are
part of the intellectual property rights of Aphton. Women will be immunized in a
Phase I/II trial with the new formulation. Upon successful completion, a pivotal
Phase III trial will follow thereafter.

Equine Anti-Gastrin Immunogen
In 1998, a safety trial  commenced  using Aphton's  Equine (horse)  anti-gastrin
immunogen  product  to reduce  stomach  acid and heal  peptic  ulcers in horses.
Following completion of the safety trial, a pivotal Efficacy study is planned.

In  August,  1997,  Aphton  announced  that it  formed  an  exclusive  worldwide
strategic  alliance  with  Schering-Plough  Animal  Health for the  development,
clinical   testing,   manufacturing   and  marketing  of  Aphton's   proprietary
anti-gastrin  immunogen , as a veterinary product, that reduces stomach acid and
heals peptic ulcers in animals.  Equine (horse) ulcers was selected as the first
indication to be pursued under the alliance.  Under the terms of the  agreement,
Schering-Plough  Animal  Health will work closely with Aphton's  scientists  and
management to bring the  anti-gastrin  immunogen to market.  Schering-Plough  is
responsible   for  all  capital  costs  and  financial   requirements,   product
development,  clinical  trials and marketing for each animal health  indication.
Schering-Plough Animal Health and Aphton will share in all product profits.

                                   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  technology to create  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.

In contrast,  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:  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 "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.

Aphtons 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 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
SmithKline  Beecham for all human  applications  of its  anti-GnRH  product,  as
discussed  above.  SmithKline  Beecham 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 major  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 SmithKline  Beecham) 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  manufacturing  approach takes advantage of the large and available
manufacturing  resources  of  pharmaceutical  industry  companies.   Aphton  has
contracted  with  drug  manufacturing   sources  which  have  provided  Aphton's
immunogens  for  toxicology  studies  and  clinical  trials.  Aphton's  contract
marketing,  distribution  and sales  strategy,  as  exemplified  by the  Aventis
Pasteur,  SmithKline  Beecham  and  Schering-Plough  Animal  Health  agreements,
similarly  takes  advantage of 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.  This  significantly  enhances
Aphton's  ability to achieve rapid market  penetration and growth and to exploit
the benefits of the patent life of its products.

It should be noted that contract  manufacturing  and contract  marketing  differ
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,  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, SmithKline
Beecham 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 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, Executive Officers and Employees

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

Nicholas John Stathis, Esq.           Director

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,
                                      Clinical Trials and Regulatory Affairs

Douglas A. Eayrs                      Vice President, Finance

Frederick W. Jacobs                   Vice President, Treasurer and
                                      Chief Accounting Officer

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  in  1981.  Previously,  Mr.  Gevas  had  many  years
experience  in  executive  management,   including  finance,  manufacturing  and
marketing,  following years of experience as a project  scientist/engineer.  Mr.
Gevas conceived and directed the development of Aphton's  inventions  which have
resulted in numerous patents for Aphton, both US and foreign,  for the treatment
of  colorectal,  pancreatic,  liver,  esophageal and stomach  cancers,  GERD and
chronic peptic ulcers. He is also a co-inventor for Aphton's human contraceptive
product (issued patent). 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 - Co-Chief Executive Officer,  Director.  In August, 1998, Mr.
Hasler was appointed the Co-Chief  Executive Officer of the Company.  Mr. Hasler
has been a Director  of the Company  since  October,  1991 and was elected  Vice
Chairman in 1996.  From 1991 until he joined the Company in 1998 as Co-CEO,  Mr.
Hasler was Dean of both the Graduate School and Undergraduate School of Business
at the University of California, Berkeley. Mr. Hasler was formerly 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  February,  1988,  has been a
Director of the Company or of its now dissolved  subsidiary,  Aphton Development
Corporation,  since 1984. Mr. Basso has been President,  Correspondent  Services
Corporation  (CSC) since 1990.  Formerly,  Mr.  Basso was  President,  Broadcort
Capital  Corporation  and Managing  Director,  Merrill Lynch,  Pierce,  Fenner &
Smith.

Nicholas John Stathis,  Esq. - Director of the Company since January,  1994. Mr.
Stathis  is retired  from the law firm of White & Case,  where he was of counsel
from 1989 to 1993.  Prior to that he was partner at Botein,  Hays & Sklar,  from
1984 to 1989.  Previously,  Mr.  Stathis was a partner  successively  at Watson,
Leavenworth,  Kelton &  Taggart  and  Hopgood,  Calimafde,  Kalil,  Blaustein  &
Judlowe.  Since 1954, Mr. Stathis has been engaged in the practice of all phases
of patent, trademark, copyright and unfair competition law, including conduct of
litigation and counseling of clients.

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 joined Aphton as a senior member of the
management team and was elected Vice President in 1989. Previously, Dr. Michaeli
was a Professor for twenty years at the University of California,  San Francisco
(Departments of Biochemistry and Surgery). He has served as a member of Aphton's
Scientific  Advisory Board since 1988. He has over thirty years of experience in
scientific research and in clinical medicine. This experience includes extensive
consulting on human clinical trials  sponsored by drug  companies.  Dr. Michaeli
has five 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.  Dr.
Broome's   more  than  twenty   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 for BIOS, 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.

Douglas A. Eayrs - Vice President, Finance. Prior to joining Aphton Corporation,
Mr.  Eayrs  was  a  Research   Analyst  for  John  G.   Kinnard  &  Company,   a
Minneapolis-based  brokerage  firm,  for more than eight  years where he focused
primarily on companies  developing new pharmaceutical drugs and emerging medical
technologies.  In 1996,  Mr.  Eayrs was named an  "All-Star  Analyst" in medical
stocks in the Wall Street Journal's annual analyst survey.  Mr. Eayrs also holds
a Masters degree in Applied Economics (Marquette University).

Frederick W. Jacobs - Vice President,  Treasurer and Chief  Accounting  Officer,
has been with the Company since June, 1989.  Previously,  Mr. Jacobs, a CPA, was
Chief  Financial  Officer for three years at a Health  Maintenance  Organization
(HMO) and before  that  served for four years on the staff of Coopers & Lybrand,
providing both audit and tax services.

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 and Stathis.  The
Compensation Committee is similarly composed of Messrs. Basso and Stathis.

Messrs. Basso and Stathis are non-executive Board Members.

                            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 Philip C.  Gevas,  William A.  Hasler  and Drs.  Dov
Michaeli, Paul Broome, Richard Ascione and Theo de Roij (see below), 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  and  antigen
presentation.  Dr.  Scibienski is a co-inventor  of both issued US 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 for  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).

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

In addition to the founding scientists R. Scibienski,  Ph.D. and D. Pappagianis,
M.D., Ph.D., the Company's full-time scientific staff includes the following:

     Dov Michaeli, M.D., Ph.D. - see "Directors and Executive Officers."

     Paul Broome, MB., Ch.B., MFPM, - see "Directors and Executive Officers."

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.  Prior to that,  Dr.  Ascione was with the National  Cancer  Institute
(NCI) of the National Institutes of Health (NIH) for approximately twenty years,
the last ten of which 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 of cancer,
human retroviruses and HIV/AIDS.

Theo de Roij, Ph.D., D.V.M., - Vice President,  Business and Product Development
since  September 1998.  Prior to joining the company,  Dr. de Roij served as the
Director  of  Business   Development  at  SmithKline  Beecham  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 during his 13 year tenure with the company. For several
years,  he was the Corporate  Director,  Business  Development for Solvay Animal
Health responsible for worldwide business development and strategic planning.

Peter  Blackburn,  Ph.D., - Vice President,  Program  Development of the Company
since  September,  1997.  Previously Dr. Blackburn was Executive Vice President,
Applied  Microbiology,  Inc.,  where he was  employed  for over ten  years.  His
responsibilities  encompassed those of a chief operating officer, engaged in the
R&D and  manufacture of  antimicrobial  peptides and  pharmaceutical  grade bulk
drug.  Earlier,  and for ten years,  he was engaged in academic  research at the
Rockefeller University,  New York, in protein chemistry 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 in 1983 and serves in a number of capacities,  namely:.  Divisional  Vice
President and General  Manager,  Laboratory of  Immunobiology.  Responsible for:
daily operations;  program planning, budgeting and control; and Project Manager,
in  which  capacity  he  is  responsible   for  the   experimental   design  and
implementation   of   special    projects.    Dr.   Karr,   who   is   also   an
immunoparasitologist,  is an inventor of two of the Company's issued patents and
three pending patent  applications.  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,  Divisional
Vice  President,  Immunology,  is  responsible  for research and  development in
immunology and the experimental  design and  implementation of  immunology-based
projects.  He also serves as the principal scientific deputy to Dr. Michaeli and
Dr. Broome for Aphton's clinical trials projects. Dr. Grimes is a co-inventor of
issued US patents of the Company and of additional  patents in  preparation  and
pending.  Dr.  Grimes came  directly to the Company in 1981 upon  finishing  his
doctoral  dissertation  under Dr.  Scibienski 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  Team in the UK, which includes
former   SmithKline   Beecham   employees  with  many  years  of  development  /
manufacturing experience.

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

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 2001 through 2003,  respectively,  are,
$103,000, $80,000, $22,000 and none thereafter.  Rental expense for these leases
for the years ended  January 31, 2000 and 1999 and the nine months ended January
31, 1998, was approximately $101,000, $115,000, and $80,000.

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, 1998. The Company's  Common Stock is traded
under the symbol "APHT."

Fiscal Period Ended January 31, 1999:   High                          Low
         1st Quarter                     $15                      $ 11 7/16
         2nd Quarter                      18 1/8                    11
         3rd Quarter                      13 1/4                     6 1/4
         4th Quarter                      17 1/2                    10 3/8
Fiscal Period Ended January 31, 2000:
         1st Quarter                     $17 3/4                   $10 3/4
         2nd Quarter                      14 3/4                     9 13/16
         3rd Quarter                      15 5/8                    12
         4th Quarter                      27 3/8                    11 1/4


As of January 31, 2000,  Aphton had approximately 300 shareholders of record and
approximately 4,000 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, 2000
and 1999,  the nine months ended January 31, 1998 and each of the three 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.
                          SUMMARY FINANCIAL INFORMATION
                    (In thousands except for per share data)

<TABLE>
     <S>                              <C>              <C>            <C>                <C>            <C>               <C>
                                     Year             Year          Nine Months
                                    Ended             Ended            Ended                    Year Ended April 30,
                                 January 31,       January 31,      January 31,


Statement of Operations Data:

                                     2000             1999             1998            1997            1996              1995
                                     ----             ----             ----            ----            ----              ----
Investment Income              $     1,404       $        938     $       534     $       271     $       438      $       463
Net Loss                           (11,193)           (9,757)          (6,605)         (5,629)         (4,711)          (3,930)
Research & Development
     Expenditures                   10,821            9,454             4,963           5,206           4,501            3,905
Net Loss per Share             $     (0.76)      $    (0.68)      $    (0.48)     $    (0.44)     $    (0.37)      $    (0.32)
Weighted Average Shares
     Outstanding                   14,731           14,431           13,733          12,913          12,723           12,378


                               January 31,       January 31,      January 31,                            April 30,
                                     2000             1999             1998            1997            1996              1995
                                     ----             ----             ----            ----            ----              ----
Balance Sheet Data:

Cash and Current

     Investments               $19,179           $10,555          $14,226           $8,846          $8,169           $7,520
Total Assets                     28,192            19,891           23,580          18,362            8,354            7,741
Total Liabilities                16,132            13,339           12,273          15,851            1,313               997
Accumulated Deficit             (52,954)         (41,760)          (32,004)        (25,399)        (19,770)        (15,059)
Total Stockholders'              12,060             6,552           11,307            2,511           7,041           6,744
     Equity
</TABLE>

Item 7. Management's  Discussion and Analysis of Financial Condition and Results
of Operations
                 Years Ended January 31, 2000, 1999 and the Nine
                         Months Ended January 31, 1998

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 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.  The
Company has  established  a liability for these accrued wages payable and funded
the liability with the establishment of investment accounts which are subject to
the general  creditors of the Company.  The employees may 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 gains on trading  securities
and the corresponding  increase in research and development expense totaled $1.0
million in 2000 and $.4 million in 1999.

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 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.

During the nine months ended January 31, 1998,  the Company  reported a net loss
of $6,604,544, including non-cash interest expense of $1,566,971 relating to the
convertible  debenture  described  below.  During this period the Company had no
contract  revenues.  Investment  earnings on cash increased $262,738 to $533,908
due to higher average cash balances.  Research and development expenditures were
$4,963,481  which  represented  an increase in average  quarterly  research  and
development  expenditures  from about $1.3 million per quarter in the year ended
April 30, 1997 to about $1.7  million  per  quarter  for the nine  months  ended
January 31, 1998. This 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.
The Company has had no adverse  impact from the year 2000 ("Y2K") issue and does
not expect that material  incremental costs will be incurred in the aggregate or
in any single future year.

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.

On April 12, 2000, the Company  announced that it had received gross proceeds of
$16.22   million  from  the  closing  of  a  private   financing   with  several
international  biotechnology/healthcare funds. The company issued 491,515 shares
of common  stock at a price of $33.00  per  share.  There  were no  warrants  or
options included with this private placement.

On January 14, 2000,  the Company  announced  that it had received  $5.5 million
from a leading  investment banking firm through the exercise of 350,000 warrants
issued in prior years. The new Aphton common shares were purchased at an average
price of $15.714 per share through the exercise of these warrants.

On October 13, 1999,  the Company  announced  that it had received $11.2 million
from the  closing of a private  financing  of common  stock with an  undisclosed
institutional  investor.  The company placed 800,000 shares of common stock at a
price of $14.00  per  share.  There  were no  warrants,  options  or agent  fees
included with this private financing.

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.

In April 1997, the Company issued a $5,000,000 7% senior redeemable  convertible
debenture.  During the nine months  ended  January 31,  1998 the  debenture  and
related  interest was  converted  into 559,068  shares of the  Company's  common
stock.  Non-cash  interest on such debt amounted to approximately  $1,567,000 in
the nine months ended January 31, 1998 and $15,000 in fiscal 1997.

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 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. Not applicable.

                                    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:
        Report of Independent Accountants

        Balance sheets as of January 31, 2000 and 1999
        Statements of Operations  for the years ended January 31, 2000,  January
             31, 1999 and the nine months ended January 31, 1998

        Statements of Stockholders' Equity for the years ended January 31, 2000,
             January 31, 1999 and the nine months ended January 31, 1998

        Statements of Cash Flows for the years ended  January 31, 2000,  January
              31, 1999 and the nine months ended January 31, 1998

        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 PricewaterhouseCoopers LLP.
                  (attached as an exhibit)

         27.1     Financial Data Schedules.  (attached as an exhibit)

(c)     Reports on Form 8-K

        During the  three-month  period ending January 31, 2000, the Company did
not file any reports on Form 8-K.

Dated:  April 28, 2000                                 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 28, 2000

WILLIAM A. HASLER      Vice Chairman of the Board
                       and Co-Chief Executive Officer            April 28, 2000

ROBERT S. BASSO        Director                                  April 28, 2000

NICHOLAS JOHN STATHIS  Director                                  April 28, 2000

FREDERICK W.  JACOBS   Vice President, Treasurer and
                       Chief Accounting Officer                  April 28, 2000











                          INDEX TO FINANCIAL STATEMENTS

                              FINANCIAL STATEMENTS

Report of Independent Accountants..........................................18

Balance Sheets - January 31, 2000 and 1999 .............................. .19

Statements of Operations - for the years ended January 31, 2000,
    January 31, 1999 and the nine months ended January 31, 1998............20

Statements of Stockholders' Equity - for the years ended January 31, 2000,
    January 31, 1999 and the nine months ended January 31, 1998......... ..21

Statements  of Cash Flows - for the years ended  January 31,  2000,
    January 31, 1999 and the nine months ended January 31, 1998............22

Notes to the Financial Statements..........................................23






















                        REPORT OF INDEPENDENT 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 1999,  and the results of its operations and its cash flows
for the two years ended  January 31, 2000 and the nine months ended  January 31,
1998, in conformity with accounting  principles generally accepted in the United
States.  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,
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 the opinion expressed above.

                                         PricewaterhouseCoopers LLP

Honolulu, Hawaii
April 24, 2000

                               APHTON CORPORATION

                   Balance Sheets - January 31, 2000 and 1999

                                                   2000              1999

                  Assets

Current Assets:
Cash and current investments:
     Cash and short-term cash investments    $9,920,263        $9,347,334
     Investment securities-held-to-maturity   6,878,097                 -
     Investment securities-trading            2,380,880         1,207,786
                                              ---------        ----------
         Total cash and current investments  19,179,240        10,555,120
Other assets (including current portion of
     unconditional supply commitment)           688,013           469,811
                                              ---------        ----------
         Total current assets                19,867,253        11,024,931
Equipment and improvements, at cost,
     net of accumulated depreciation
     and amortization                           173,350           215,599
Unconditional supply commitment               8,151,650         8,650,000
                                              ---------         ---------
         Total assets                       $28,192,253       $19,890,530
                                            ===========       ===========

           Liabilities and Stockholders' Equity

Liabilities:
Current liabilities:
     Accounts payable and other              $6,131,771        $3,339,002
                                             ----------        ----------
         Total current liabilities            6,131,771         3,339,002
     Deferred revenue                        10,000,000        10,000,000
                                             ----------        ----------
         Total liabilities                   16,131,771        13,339,002
                                             ----------        ----------

Commitments and Contingencies

Stockholders' Equity:
     Common stock, $0.001 par value -
     Authorized:  30,000,000 shares
     Issued and outstanding:  15,592,984
     shares at January 31, 2000 and
     14,433,984 shares at January 31, 1999      15,593            14,434
     Additional paid in capital             64,799,784        47,960,689
     Purchase warrants                         198,900           336,904
     Accumulated deficit                   (52,953,795)      (41,760,499)
                                           ------------      ------------
         Total stockholders' equity         12,060,482         6,551,528
                                            ----------         ----------
         Total liabilities and
             stockholders' equity          $28,192,253       $19,890,530
                                           ===========       ===========


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

                               APHTON CORPORATION

                            Statements of Operations

                  for the years ended January 31, 2000 and 1999

                 and for the nine months ended January 31, 1998

                                      2000             1999             1998

Revenue:                       $         -       $        -        $       -
Costs and Expenses:

     General and administrative  1,775,652         1,241,323         608,000
     Research and development   10,821,361         9,453,826       4,963,481
                                ----------         ---------       ---------
       Total costs and expenses 12,597,013        10,695,149       5,571,481
                                ----------        ----------       ---------
         Loss from operations   12,597,013        10,695,149       5,571,481
                                ----------        ----------       ---------
Other Income (expense):

  Dividend, interest and
        other income              444,980            547,283         533,908
  Unrealized gains from
         investments              958,737            391,051               -
  Non-cash interest expense             -                  -      (1,566,971)
                                  -------            -------       ---------
          Net loss           $(11,193,296)       $(9,756,815)    $(6,604,544)
                             =============       ============    ============
Per share data

   Basic loss per common share     $(0.76)            $(0.68)         $(0.48)
                                   =======            =======         =======
   Diluted loss per common share   $(0.76)            $(0.68)         $(0.48)
                                   ======             =======         =======
   Weighted average number of
     common shares outstanding  14,731,301        14,431,417       13,733,478
                                ==========        ==========       ==========










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

                               APHTON CORPORATION
                       Statements of Stockholders' Equity
                  for the years ended January 31, 2000 and 1999
                 and for the nine months ended January 31, 1998

                                    Additional
               Common     Stock      Paid in   Purchase  Accumulated
               Shares     Amount     Capital   Warrants    Deficit       Total
Balance,
May 1, 1997 12,913,149 $26,665,091 $1,097,560 $147,004 $(25,399,140) $2,510,515

Sale of
stock, net     715,000  10,000,000          -        -             - 10,000,000

Issuance of
purchase warrants
for services         -           -          -  198,900             -    198,900

Exercise of
purchase
warrants         4,000       5,500          -   (4,500)            -      1,000

Transfer between
equity accounts
resulting from a
change in the par
value of the stock   - (41,857,647)41,857,647        -              -         -

Conversion of
convertible
debt           559,068   5,201,247          -        -              - 5,201,247

Net loss             -           -          -        -    (6,604,544)(6,604,544)
            ---------- -----------    -------  --------  ----------  ----------
Balance,
January 31,
1998        14,191,217  42,955,207     14,191  341,404  (32,003,684) 11,307,118

Exercise of
purchase
warrants         4,900       5,720          5   (4,500)          -        1,225

Sale of
stock, net     237,867   4,999,762        238        -           -    5,000,000

Net loss             -           -          -        -  (9,756,815)  (9,756,815)
            ---------- -----------    -------  --------  ----------  ----------
Balance,
January 31,
 1999       14,433,984  47,960,689     14,434   336,904 (41,760,499)  6,551,528

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

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

Net loss             -           -          -         - (11,193,296)(11,193,296)
            ---------- -----------    -------  --------  ----------  ----------
Balance,
January 31,
2000        15,592,984 $64,799,784    $15,593  $198,900 $(52,953,795)12,060,482
            ========== ===========    =======  ========  =========== ==========

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




                               APHTON CORPORATION
                            Statements of Cash Flows
                 for the years ended January 31, 2000 and 1999
                   and the nine months ended January 31, 1998

           Increase (decrease) in cash and short-term cash investments
                                  2000              1999              1998
Cash flows from
operating activities:

Cash paid to suppliers
and employees                 $(9,446,861)      $(9,119,463)     $(5,115,606)

Purchase of trading
securities                    (2,201,968)        (1,207,786)               -

Proceeds from trading
securities                     1,987,611                  -                -

Interest and
dividends received               444,980            547,283          533,908
                               ---------            -------          -------
Net cash used in
operating activities          (9,216,238)       (9,779,966)       (4,581,698)
                               ---------         ---------         ---------
Cash flows from
investing activities:

Purchase of held to
maturity securities         (10,438,097)                 -                 -

Proceeds from maturity
of held to maturity
securities                    3,560,000                  -                 -

Capital expenditures            (34,986)           (99,925)          (39,041)
                             ----------            -------            ------

Net cash used in
investing activities        (6,913,083)            (99,925)          (39,041)
                             ---------              ------            ------
Cash flows from
financing activities:

Sales of stock              16,702,250           5,001,225         10,001,000
                            ----------           ---------         ----------
Cash received from
financing activities        16,702,250           5,001,225         10,001,000
                            ----------           ---------         ----------
Net increase (decrease)
in cash and short-term
cash investments              572,929           (4,878,666)         5,380,261

Cash and short-term
cash investments:
Beginning of period         9,347,334           14,226,000          8,845,739
                            ---------           ----------          ---------
End of period              $9,920,263           $9,347,334        $14,226,000
                           ==========           ==========        ===========

                     Reconciliation of net loss to net cash
                          used in operating activities

Net loss                 $(11,193,296)         $(9,756,815)       $(6,604,544)
Adjustments to reconcile
net loss to net cash
used in operating
activities:

Depreciation and
amortization                   77,236               82,062            57,428

Net increase in investment
securities-trading           (214,357)                   -                 -

Unrealized gains
from investments             (958,737)            (391,051)                -

Increase in accrued
employee benefits             958,737              391,051                 -

Warrants issued for
services received                   -                    -           198,900

Stock issued for
non-cash debenture
interest, debenture
discount and
issuance costs                      -                    -         1,566,971

Changes in -

Other assets                  (138,357)           (124,698)           75,148

Unconditional
supply commitment              205,000             175,000                 -

Accounts payable and other   1,834,031            (141,856)          324,245
                             ---------            ---------          -------
Net cash used in
operating activities:      $(9,216,238)        $(9,779,966)      $(4,581,698)
                           ============        ============      ============

Non-cash investing and financing activities:

For information about non-cash investing and financing activities,
please see Note 7


                 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 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 the  prevention of pregnancy.  Aphton has strategic  alliances  with Aventis
Pasteur,  SmithKline  Beecham PLC,  Schering-Plough  Animal Health and the World
Health Organization (WHO).

Aphton changed its state of incorporation  from California to Delaware effective
January 29, 1998. As part of the reincorporation,  the Company's fiscal year end
was changed from April 30 to January 31.

2.       Summary of Significant Accounting Policies

Use of Estimates in the Preparation of Financial Statements -

    The  preparation  of  financial  statements  in  conformity  with  generally
    accepted  accounting  principles  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.

Reclassifications

    The 1999 and 1998 financial statements were reclassified in certain respects
    to conform to the 2000 presentation. Such reclassifications had no effect on
    net loss as previously reported.

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.  Investment
    tax credits and research and experimentation credits are accounted for using
    the flow-through method.

Per Share Data -

    The Company has adopted 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 common stock equivalents are anti-dilutive, and accordingly, basic
    and  diluted  loss per share are the same.  Such  common  stock  equivalents
    consist of purchase warrants (See Note 8) 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 which 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.   Available-for-sale
    securities  are  reported at fair value,  with  unrealized  gains and losses
    excluded from current earnings. The unrealized gains and losses are reported
    as a separate component of stockholders'  equity.  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.  Our
    investment  policy  limits  the  amount  of  credit  exposure  with  any one
    institution.  Other than asset-backed securities,  these debt securities are
    generally not  collateralized.  We have not  experienced any material losses
    due to credit impairment on our 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  believes 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 adoption of SFAS No. 133, as amended by SFAS No. 137,
is not expected to have a material effect on the financial statements.
Comprehensive Income

    Effective  February 1, 1998,  the Company  adopted 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, 2000 and 1999, equipment and improvements consisted
 of the following:
                                              January 31,    January 31,
                                                  2000           1999
Laboratory equipment                           $ 501,078      $ 495,557
Leasehold improvements                           293,584        276,955
Office and laboratory furniture and fixtures     229,454        216,618
                                                --------       --------
                                               1,024,116        989,130
Less accumulated depreciation and amortization  (850,766)      (773,531)
                                               ---------       --------
                                                $173,350      $ 215,599
                                               =========       ========

5.       Accounts Payable and Other

At January 31, 2000 and 1999,  accounts payable and other was composed of (000's
omitted):

                                                  January 31,

                                                2000           1999

Trade accounts payable                         $3,132         $1,673
Accrued wages payable                           2,641          1,468
Employee benefits payable                         359            198
                                                -----          -----
                                               $6,132         $3.339
                                               ======         ======
See related Note 6.

6.       Investment Securities

Securities  classified as trading and  held-to-maturity  at January 31, 2000 and
1999 are summarized below. Estimated fair value is based on quoted market prices
for these or similar investments.

                          Amortized     Unrealized    Unrealized
January 31, 2000             Cost          Gains         Losses    Fair Value

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          $499       $448      $6,878,046

January 31, 1999

Total trading securities
(carried at fair value):      $816,735      $391,051     $   --      $1,207,786


The Company held no available-for-sale investment securities at January 31, 2000
and January 31, 1999. The Company had no held-to-maturity  investment securities
at January 31, 1999.

The carrying  value of all  investment  securities  held at January 31, 2000 and
1999 is summarized below:

Security                                                2000          1999
--------                                                ----          ----
Trading securities                                  $2,380,880     $1,207,786
Securities held-to-maturity maturing within one year 6,878,097
                                                     ---------      ---------
     Total short-term investments                   $9,258,977     $1,207,786
                                                    ==========     ==========

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 which 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 gains (losses) on trading  securities and the
corresponding  increase in research and development expense totaled $1.0 million
in 2000 and $.4 million in 1999.

7.       Senior Redeemable Convertible Debenture

In April 1997, the Company issued a $5,000,000 7% senior redeemable  convertible
debenture.  For  financial  reporting  purposes,  $1,097,560 of the proceeds was
allocated to the conversion  feature of the debt and recorded as additional paid
in capital. The value of the conversion feature was based on the Company's stock
market price at the date of issuance,  less an 18%  discount.  As a result,  the
convertible  debt instrument of $5,000,000 was recorded net of discount equal to
the conversion  feature which increased the effective interest rate of the debt.
Accordingly,  beginning  on the date of  issuance,  the  discount was charged to
interest expense on a pro rata basis using the effective  interest method as the
security became  convertible.  The effective interest rate on this debenture was
approximately  52%.  Non-cash  interest on such debt  amounted to  approximately
$15,000 in fiscal 1997. In the period ended January 31, 1998,  the debenture and
related  interest was  converted  to 559,068  shares of common  stock.  Non-cash
interest expense for the period then ended was approximately $1,567,000.

8.       Common Stock and Purchase Warrants

Common Stock -

    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.

    During fiscal 1998, in a private placement,  the Company sold 715,000 shares
    of common stock for $10,000,000 net of insignificant  legal,  accounting and
    filing fee  expenses and 4,000  shares  through the exercise of  outstanding
    purchase warrants.

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 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 or 1998.

    The following  assumptions  were used in the  Black-Scholes  option  pricing
    model  for the  150,000  purchase  warrants  granted  in  fiscal  2000 to an
    employee.  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 Company  issued 13,000  warrants for services to  nonemployees  in 1998,
    recognizing $198,900 in expense. The following  assumptions were used in the
    Black-Scholes  option pricing model for the 13,000 purchase warrants granted
    in fiscal 1998.  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 7.01%.  The expected  dividend  yield
    used was 0%. The expected time to exercise  used was 10 years.  The expected
    volatility used was 75%. In 1998 the Company also issued 225,000 warrants to
    an institutional investor in conjunction with the sale of stock.

The following table summarizes purchase warrant activity      Weighted-Average
over the past three fiscal periods:
                                    Number of Shares           Exercise Price
                                    ----------------           --------------
 Outstanding and exercisable
 at May 1, 1997                          1,784,300                 $13.26
                  Granted (1)              238,000                 $17.35
                  Exercised                 (4,000)                  $.25
                                         ---------                 ------
Outstanding and exercisable
at January 31,1998                      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
                                        =========                  ======



For warrants outstanding and exercisable at January 31, 2000, the exercise price
ranges and average remaining lives were:

                      Warrants Outstanding and Exercisable

 Range of Exercise Prices

                    Number Outstanding    Average Period (2)   Average Price (3)

  $.25  to  $14.00     632,400                   14.9               $ 9.62
$14.01  to  $14.99     749,000                   14.9               $14.75
$15.00  to  $24.00     423,000                   14.9               $17.42
                      --------
                     1,804,400                   14.9               $13.58
                     =========

(1)  Weighted  average  grant  date fair value is $15.30
(2)  Weighted  average remaining years
(3) Weighted average exercise price

9.       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, 2000 and 1999. The changes in the valuation allowance in 2000 and
1999 were $3,160,000 and $3,450,000, respectively.

                                   January 31,

Deferred tax assets consisted of:             2000                1999


Federal net operating loss carryforward     $12,218,000       $9,123,000
State net operating loss carryforward           324,000        1,213,000
                                            -----------        ---------
Total operating loss carryforward            12,542,000       10,336,000

Deferred license payment revenues             4,014,000        4,014,000
Expenses deductible in future periods         1,200,000          512,000

Federal tax credits                           1,971,000        1,651,000
State tax credits                               554,000          608,000
                                                -------          -------
Total tax credits                             2,525,000        2,259,000
                                              ---------        ---------
Total deferred tax assets                     20,281,000      17,121,000
Valuation allowance                          (20,281,000)    (17,121,000)
                                              ----------      ----------
         Net deferred tax assets             $         -     $         -
                                             ===========     ===========

At January  31,  2000,  for  Federal  income tax  purposes,  the Company had net
operating loss carryforwards of approximately $35,935,000 and various income tax
credit  carryforwards,  primarily  research  and  experimentation,   aggregating
$1,971,000, which expire at various dates through 2020.

At January 31, 2000,  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.

10.      Commitments and Contingencies

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 2001 through 2003,  respectively,  are,
$103,000, $80,000, $22,000 and none thereafter.  Rental expense for these leases
for the years ended  January 31, 2000 and 1999 and the nine months ended January
31, 1998,  was  approximately  $101,000,  $115,000,  and $80,000,  respectively.
Rental expense is allocated between research & development expense and general &
administrative  expense,  based  on  use,  in  the  accompanying  statements  of
operations.

11.      Subsequent Event

On April 12, 2000, the Company  announced that it had received gross proceeds of
$16.22   million  from  the  closing  of  a  private   financing   with  several
international  biotechnology/healthcare funds. The Company issued 491,515 shares
of common  stock at a price of $33.00  per  share.  There  were no  warrants  or
options included with this private placement.