<PAGE>   1
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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

               /X/  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the Quarterly Period Ended March 31, 1997


                         Commission File Number 0-14278

                        PANAX PHARMACEUTICAL COMPANY LTD.
             (Exact name of registrant as specified in its charter)


                   NEW YORK                                13-3754005
        (State or other jurisdiction of                  (I.R.S.
Employer
        incorporation or organization)                  Identification
No.)



                               425 Park Avenue
                             New York, NY 10022
                   (Address of principal executive office)


       Registrant's telephone number, including area code: (212)
319-8300



Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to
such
filing requirements for the past 90 days.  Yes  /X/     No  / /


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<PAGE>   2 

                      PANAX PHARMACEUTICAL COMPANY LTD.

                            TABLE OF CONTENTS
                                                                       
Page
PART 1 - FINANCIAL INFORMATION

BALANCE SHEETS -- For March 31, 1997 (unaudited) and 
     June 30, 1997 . . . . . . . . . . . . . . . . . . . . . . . . .     
 3

STATEMENT OF OPERATIONS (unaudited) -- For the Three and Nine Months     

     Ended March 31, 1997 and March 31, 1996 and the Period 
     from July 1, 1993 (Commencement of Operations) through 
     March 31, 1997 . . . . . . . . . . . . . . . . . . . . . . .        
 4

STATEMENT OF CASH FLOWS (unaudited) -- For the Nine Months Ended  
     March 31, 1997 and March 31, 1996 and the Period From 
     July 1, 1993 (Commencement of Operations) through 
     March 31, 1997 . . . . . . . . . . . . . . . . . . . . . . .        
 5

NOTE TO FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . .     
 6

PLAN OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . .     
 6

PART II - OTHER INFORMATION  . . . . . . . . . . . . . . . . . . . .     
 9

SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . .  . . .     
10

<PAGE> 3

Part I - Financial Information

                              PANAX PHARMACEUTICAL COMPANY LTD.
                               (a development stage company)
                                      BALANCE SHEET

<TABLE>
<CAPTION>
                                         March 31,1997          June 30,
1997  
                                         ----------------      
-------------
<S>                                              <C>                 <C>
ASSETS
  Current Assets:
    Cash and cash equivalents . . . . . . .    $  181,054          $ 
398,689
    Certificate of deposit  . . . . . . . .       549,012            
200,000  
    Investments to be held on maturity. . .     1,045,592          
2,457,979  
    Other current assets  . . . . . . . . .        65,766             
37,558
                                               ----------         
----------  
      Total current assets  . . . . . . . .     1,841,424          
3,094,226
                                               ----------         
---------- 
  Equipment                                                              
     
    Research equipment  . . . . . . . . . .       111,534            
109,733
    Other equipment . . . . . . . . . . . .        15,872             
15,872  
                                               ----------         
----------  
                                                  127,406            
125,605
  Less accumulated depreciation . . . . . .        93,996             
66,344 
                                                ---------          
---------
                                                   33,410             
59,261

  Other Assets . . . . . . . . . . . . . .        203,587             
38,069  
                                               ----------         
----------
      TOTAL . . . . . . . . . . . . . . . .    $2,078,421         
$3,191,556
                                               ==========         
==========  
LIABILITIES
  Current liabilities:
    Accounts payable and other 
     accrued expenses  . . . . . . . . . .     $   56,707          $  
71,419
                                               ----------         
----------
    Management fees payable  . . . . . . .              0            
112,500
                                               ----------         
----------
    Accrued salary - stockholder . . . . .              0             
28,000
                                               ----------         
----------
STOCKHOLDERS' EQUITY
Common stock, $.0001 par value; 
  authorized 10,000,000 shares;  
  outstanding 3,342,327 and
  3,315,710 shares respectively. . . . . .            334                
331  
Additional paid-in capital . . . . . . . .      6,516,411          
5,460,543 
Unamortized value of warrants. . . . . . .       (921,781)          
(138,819)  
Deficit accumulated during the 
  development stage  . . . . . . . . . . .     (3,573,250)        
(2,342,400)
Less common stock held in treasury
  (0 and 180,000 shares) . . . . . . . . .              0                
(18)
                                              -----------         
-----------  
     Total stockholder's equity  . . . . .      2,021,714          
2,979,637 
                                              -----------         
-----------
     TOTAL . . . . . . . . . . . . . . . .     $2,078,421         
$3,191,556
                                              ===========         
===========
</TABLE>

<PAGE> 4
<TABLE>
                 PANAX PHARMACEUTICAL COMPANY LTD.
                   (a development stage company)
                   STATEMENT OF OPERATIONS
                          (Unaudited)
  
<CAPTION>

                                                                         
           Period from 
                                                                         
             July 1, 1993
                                                                         
            (Commencement)
                                           Three Months            Nine
Months         of Operations 
                                          Ended March 31,         Ended
March 31,         Trough 
                                         -----------------      
----------------     --------------
                                          1997       1996         1997   
   996      March 31, 1997
                                         -----       -----       -----   
  -----     --------------
<S>                                      <C>         <C>         <C>     
  <C>        <C>
Sales . . . . . . . . . . . . . .                              $ 1,425   
                $ 1,425   
Cost of Goods Sold  . . . . . . .                                  900   
                    900
                                       -------     -------     -------   
-------      ----------
Profit from Sales . . . . . . . .                                  525   
                    525

Costs and Expenses: 

  Research and development. . . .    $ 198,727   $ 152,144   $ 623,350  
$ 385,199     $1,788,792

  General and administrative. . .      263,093     198,018     707,895   
 621,946      2,128,448

  Write-off of debt discount. . .            -           -           -   
       -         75,000

  Interest expense. . . . . . . .            -           -           -   
       -          6,160
                                      --------    --------    --------   
--------    -----------                      
                                       461,820     350,162   1,331,245  
1,007,145      3,998,400  

Interest (Income) . . . . . . . .      (34,462)    (62,200)    (99,870)  
(202,774)      (424,625)
                                      --------    --------    --------   
--------    -----------

Net Loss  . . . . . . . . . . . .    $ 427,358   $ 287,962  $1,230,750  
$ 804,371     $3,573,250
                                     =========   =========   =========  
=========    ===========

  Net loss per share. . . . . . .        $ .13       $ .09       $ .38   
   $ .25
                                        ======      ======      ======   
  ======
Weighted average number of common 
 shares outstanding . . . . . . .    3,342,327   3,163,732   3,232,986  
3,262,692
                                     =========   =========   =========  
=========
</TABLE>

<PAGE>   5
                 PANAX PHARMACEUTICAL COMPANY LTD.
                  (a development stage company)
                    STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                         
                    Period from 
                                                                         
                   July 1, 1993
                                                                         
                  (Commencements 
                                                          Nine Months
Ended March 31,        of Operations)
                                                         
---------------------------           Through
                                                             1997        
     1996          March 31, 1997   
                                                            ------       
    ------         --------------
<S>                                                         <C>          
    <C>            <C> 
Cash flows from operating activities:
    Net loss . . . . . . . . . . . . . . . . . . . . . .  $ (1,230,850)  
   $ (804,371)      $ (3,573,250)  
 Adjustments to reconcile net loss to
  net cash (used in) operating activities:
    Depreciation and amortization  . . . . . . . . . . .        27,653   
       25,746             94,496
    Write-off of debt discount . . . . . . . . . . . . .                 
                          75,000
    Value of services paid by      
     options & warrants. . . . . . . . . . . . . . . . .                 
                          80,000
    Accretion of compensatory 
     options and warrants. . . . . . . . . . . . . . . .       132,425   
       51,460            211,106
    (Increase)decrease in prepaid expenses 
     and other assets. . . . . . . . . . . . . . . . . .      (193,726)  
      (69,571)          (268,784)
    Increase (decrease) in accounts payable 
     and accrued expenses. . . . . . . . . . . . . . . .       (14,712)  
      (24,832)            84,707
    Expenses paid by affiliate . . . . . . . . . . . . .                 
                          96,682
    Increase in management fees payable. . . . . . . . .                 
                         112,500  
                                                            ----------   
   ----------        -----------
       Net cash (used in) operation activities . . . . .    (1,279,210)  
     (821,410)        (3,087,543)
                                                            ----------   
   ----------        -----------
 CASH FLOW FROM INVESTING ACTIVITIES
  Purchases of investments . . . . . . . . . . . . . . .     1,063,375   
      582,688         (4,904,604)
  Redemption of investments and 
   certificate on deposits . . . . . . . . . . . . . . .                 
                       3,310,000
  Acquisition of equipment . . . . . . . . . . . . . . .        (1,800)  
      (35,014)          (127,404)  
   Organization costs  . . . . . . . . . . . . . . . . .                 
                          (1,069)
                                                            ----------   
   ----------        -----------
       Net cash (used in) investing activities . . . . .     1,061,575   
    (547,674)         (1,723,077)
                                                            ----------   
   ----------        -----------
 CASH FLOW FROM FINANCING ACTIVITIES
   Issuance of common stock - net of expenses. . . . . .                 
                       4,991,674
   Proceeds form note payable - affiliates . . . . . . .                 
                          14,000 
   Proceeds from notes payable - stockholders  . . . . .                 
                          96,300
   Proceed from notes payable - other  . . . . . . . . .                 
                         300,000 
   Repayment of notes payable - stockholders and other .                 
                        (410,300)  
                                                            ----------   
   ----------        -----------
      Net cash provided by financing activities  . . . .                 
                       4,991,674   
                                                            ----------   
   ----------        -----------
 NET INCREASE (DECREASE)IN CASH AND CASH EQUIVALENTS . .      (217,635)  
     (273,894)           181,054

 Cash and cash equivalents - beginning of period . . . .       398,689   
      458,534              - 0 -  
  
 CASH AND CASH EQUIVALENTS - END OF PERIOD . . . . . . .    $  181,054   
   $  184,640         $  181,054  
                                                            ==========   
   ==========         ==========
</TABLE>

NON-CASH ACTIVITY:  Conversion of management fee payable and accrued
salary into 206,617 shares of common stock (26,617 newly issued shares and
180,000 shares held in treasury).

<PAGE> 6

                     PANAX  PHARMACEUTICAL  COMPANY LTD.
                        (a development stage company)

                        NOTE  TO  FINANCIAL  STATEMENTS
                                  (unaudited)

     The unaudited financial statements of Panax Pharmaceutical Company
Ltd. ("Panax or the "Company") as of March 31, 1997 and three and nine
months ended March 31, 1997 and March 31, 1996 have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission ("SEC") and, in the opinion of management, reflect all
adjustments (consisting only of normal recurring accruals) necessary to
present fairly the results of operations for the interim periods
presented.  Certain information and footnote disclosures normally
included in financial statements, prepared in accordance with generally
accepted accounting principles, have been condensed or omitted pursuant
to such rules and regulations.  However, management believes that the
disclosures are adequate to make the information presented not
misleading.  These financial statements and the notes thereto should be
read in conjunction with the financial statements and notes thereto
included in the Company's Annual Report on Form 10-KSB for the fiscal
year ended June 30, 1996.  The results for the interim periods are not
necessarily indicative of the results for the full fiscal year.

PLAN OF OPERATION

General

     Panax historically has been engaged in the discovery and
development of new pharmaceutical compounds identified in and isolated
from plants.  The Company takes the ethnobotanical approach to the study
of plants which is supplemented by medical science and natural product
chemistry.  Many of the plants targeted by the Company are indigenous to
Russia and other states of the Commonwealth of Independent States.

     In late 1996 and 1997 to date, Panax has sought out opportunities
to expand its product pipeline via licensing or acquisition of drug
candidates and platform technologies.  As previously reported, the
Company entered in (i) January 1997 into a letter of intent to acquire
Sangen Pharmaceutical Company Inc. ("Sangen"), which was recently
organized to engage in the discovery and development of pharmaceutical
products for the treatment of cancer, and (ii) February 1997 into an
agreement granting the Company an exclusive worldwide license to
manufacture and sub-license a novel preparative product being developed
by the licensors for clearing the colon prior to colonoscopy ("Purgative
Product").  Sangen's principal asset is its right to acquire an
exclusive worldwide license to the Thrombospondin ("TSP-1") technology
which as indicated by early preclinical studies, may be useful in the
prevention of metastatic cancer including breast, lung, prostate,
pancreas and squamous cell cancer.  In May 1997 Panax executed a letter
of intent to acquire CorBec Pharmaceuticals, Inc. ("CorBec"), which is
engaged in the development of pharmaceuticals designed to modulate the
immune system by manipulating macrophage and mast cell function.

     Consummation of the proposed acquisitions of Sangen, the TSP-1
technology and CorBec are subject to several conditions, including, the
execution and delivery of acquisition agreements and the consummation by
the Company of a financing of at least $7,500,000 by November 1997 with
respect to Sangen and the TSP-1 technology and a financing of at least
$8,000,000 by August 1997 with respect to CorBec.  The license agreement
for the Purgative Product, provides the licensor with the right to
terminate the agreement if the Company has not completed a financing of
at least $2,000,000 by November 1997.

<PAGE> 7

     The proposed Sangen acquisition, if consummated, will result in the
issuance at the time of the acquisition, to Dr. Leonard S. Jacob,
Sangen's sole stockholder and Chief Executive Officer, who will become
Chairman of the Board and Chief Executive Officer of the Company under a
long term employment agreement, of options to purchase the greater of
1,200,000 shares of Common Stock or such number of shares of Common
Stock at the time of the acquisition as equals 7.5% of the Fully Diluted
Capitalization.  Dr. Taffy J. Williams, Panax's President and Chief
Executive Officer who will become President and Chief Operating Officer
of the Company following the acquisition, received in January 1997, an
option to purchase the greater of 500,000 shares of Common Stock or such
number of shares of Common Stock at the time of the acquisition as
equals 5% of the Fully Diluted Capitalization.  The exercise price of
the options is $.61 per share, the market price on the date of the
agreement in principle. Fully Diluted Capitalization means all the
outstanding shares of Common Stock, plus all shares of Common Stock
reserved for issuance upon conversion or exercise of outstanding
convertible securities, options and warrants other than the warrants
issued in the Company's initial public offering.  

     The Sangen acquisition will also involve the grant to the inventor
of the TSP-1 technology and a university of options to purchase an
aggregate of 250,000 shares of which one-half will be exercisable upon
achievement of specified milestones in the development of a new drug
candidate.  In addition, the inventor and the university will also be
entitled to cash royalties based on net sales and sub-license fees
derived from the technology.  The Company has agreed to fund additional
research in the inventor's laboratory for a two year period at a cost of
$200,000 per year with commitment for an additional one year based on
the successful completion of Phase II clinical trials.  The inventor
will be engaged as a consultant to the Company for a two year period at
a fee of $50,000 per year.

     In consideration for the grant of a license to the Purgative
Product, the Company (i) is obligated to make certain payments based on
milestones, aggregating to $500,000 based on the completion of a
financing and certain development milestones, of which $100,000 has been
paid, (ii) has issued options to purchase an aggregate of 750,000 shares
of Common Stock at a price of $0.61 per share, of which 250,000 shares
are currently exercisable and 500,000 shares become exercisable if
certain development milestones are met and (iii) is required to pay cash
royalties of 2% of net sales of the related drug which percentage which
will increase to 4% with respect to sales in excess of $5,000,000 and to
6% as to sales in excess of $10,000,000.  The payment of $100,000 is not
refundable in the event a financing of at least $2,000,000 is not
completed by November 1997 and the licensor chooses to terminate the
license agreement.

     The acquisition of CorBec, if consummated will result in the
payment of $750,000 and the issuance of 750,000 shares of Common Stock
of the Company with provisions for additional cash payments and stock
issuances based upon the achievement of certain milestones for CorBec's
most advanced drug candidate, CBP-1011, an orally administered
glucocorticoid analog, which is in a Phase III pivotal clinical trial in
the United States for the treatment of Idiopathic Thrombocytopenia
Purpura. These milestones include the receipt of an FDA letter of
approval to sell the drug, and certain designated annual amounts of
sales.  The maximum cash and shares to be issued will be an aggregate of
$8,000,000 in cash and 440,000 shares of Common Stock.  Additional cash
payments of up to $8,500,000 and 280,000 shares of Common Stock are to
be made based on the achievement of certain annual levels of sales of a
second drug developed from the CorBec technology.

<PAGE> 8

Results of Operations

     The Company incurred a loss of $427,358 and $287,962 for the three
month and $1,230,850 and $804,371 for the nine month periods ended March
31, 1997 and 1996,  respectively.  The Company expects to incur
additional losses in the foreseeable future.  The per share loss was
$0.13 and $0.09 for the three month and $0.38 and $0.25 for the nine
month periods ended  March 31, 1997 and 1996, respectively.  The
increase in the weighted average number of common shares outstanding in
the current fiscal year is the result of the issuance of 165,441 shares
of the Common Stock of the Company to Amercom in full satisfaction of
the deferred obligation of the Company to pay $112,500 as management fee
for consulting services rendered in 1994, and of the issuance of 41,176
shares of the Common Stock of the Company to Dr. Tanya Akimova, Vice
President of the Company, in full satisfaction of the deferred
obligation of the Company to pay Dr. Akimova $28,000 as her salary for
the six months ended in June 30, 1993. 

     The Company anticipates incurring additional losses over at least
the next several years, and such losses are expected to increase as the
Company expands its research and development activities relating to its
Purgative Product and its contemplated acquisition of two technologies
for the treatment of auto-immune diseases and cancer.  To achieve
profitability, the Company, alone or with others, must successfully
develop and commercialize its technologies and products, conduct pre-
clinical studies and clinical trials, obtain required regulatory
approvals and successfully manufacture, introduce and market such
technologies and products.  The time required to reach profitability is
highly uncertain, and there can be no assurance that the Company will be
able to achieve profitability on a sustained basis, if at all.

     The Company had no revenues in the three months ended March 31,
1997 and revenues of $1,425 for the nine months ended March 31, 1997. 
The revenues were derived from chemical synthesis services provided by
the Company and its contractors.  The Company intends to seek additional
opportunities to generate revenues from chemical synthesis and the sale
of extracts.

     Interest income amounted to $34,462 and $62,200 for the three month
and $99,870 and $202,774 for the nine month periods ended March 31, 1997
and 1996, respectively and $424,625 for the period from inception
through March 31, 1997.  Interest income was earned on the proceeds of
the Company's initial public offering in January 1996 of its common
stock and warrants.  Interest income has been decreasing reflecting
reduced cash balances.

     Research and development expenses amounted to $198,726 and $152,144
for the three month and $623,350 and $385,199 for the nine month periods
ended March 31, 1997 and 1996, respectively.  The increases were
attributable to the expansion of operations including research conducted
under an agreement with the University of Kansas, as well as agreements
with contract research organizations for preclinical testing of the
Company's compounds.  Research and development expenses are expected to
increase substantially in the future if the foregoing proposed
acquisitions are consummated and development of the Purgative Product
continues provided the license is not terminated.

     General and administrative expenses amounted to $263,094 and
$198,018 for the three month and $707,895 and $621,946 for the nine
month periods ended March 31, 1997 and 1996, respectively.  The
increases in general and administrative expenses in the respective
periods are the result of increased legal and consulting expenses with
respect to the proposed acquisitions.  The Company anticipates an
increase in general and administrative expenses with the addition of Dr.
Leonard S. Jacob as Chairman of the Board and Chief Executive Officer of
the Company under a long term agreement if the Sangen acquisition is
consummated.

<PAGE> 9

Liquidity and Capital Resources

     Since its inception, the Company has incurred net operating losses
and, as of March 31, 1997, had an accumulated deficit of $3,573,250. 
The Company has financed its net operating losses through March 31, 1997
by a series of debt and equity financing.  

     At March 31, 1997, the Company had cash and cash equivalents of
$1,841,424.  Cash and cash equivalents is comprised primarily of the
proceeds from the Company's initial public offering in January 1996.

     The proposed Sangen and CorBec acquisitions will be subject to
completion of an equity financing by the Company of at least $7,500,000
with respect to Sangen by November 1997 and of at least $8,000,000 with
respect to CorBec by August 15, 1997.  No assurance can be given that
the financing will be effected.

     The Company estimates that the cost of operations for the year
ending June 30, 1997 will be approximately $1,800,000, of which at least
$800,000 will be expended for research and development.

     The Company's future capital requirements depend on numerous
factors which cannot be quantified, including continued progress in its
research and development activities, progress with pre-clinical studies
and clinical trials, prosecuting and enforcing patent claims,
technological and market developments, the ability of the Company to
establish product development arrangements, the cost of manufacturing
scale-up, effective marketing activities and arrangements, and licensing
or acquisition activity.  The Company will seek to obtain additional
funds through equity or debt financing, collaborative or other
arrangements with corporate partners and others, and from other sources. 
No assurance can be given that additional financing will be available
when needed or on terms acceptable to the Company.  If adequate
additional funds are not available, the Company may be required to
delay, scale back or eliminate certain of its research, drug discovery
or development activities or certain other aspects of its business.  If
adequate funds are not available, the Company's business will be
materially and adversely affected.

PART II - OTHER INFORMATION

Item 5 - Other Information.  
 --------------------------

     See "Plan of Operations" for information concerning the execution
of a letter of intent to acquire for cash and shares of Common Stock of
the Company CorBec Pharmaceuticals, Inc. which is engaged in the
development of pharmaceuticals designed to modulate the immune system by
manipulating macrophage and mast cell function. The letter provides that
the acquisition is subject to the satisfaction of several conditions,
including the execution of a definitive acquisition agreement and the
consummation of a financing of at least $8,000,000 by the Company.  No
assurance can be given that the conditions will be satisfied and that
the acquisition will be effected.  

     In March 1997 resignations previously submitted by Dr. Armen
Takhtajan as Chairman of the Board, Mr. Norman Eisner as Vice President-
Chief Financial Officer, Treasurer,  Secretary and Director and Mr.
David Zaretsky as Director of the Company were accepted by the Company. 
At such time, Dr. Taffy J. Williams, President and Chief Executive
Officer of the Company was appointed to also serve as Chairman of the
Board, Mr. Bernard Nagelberg, Vice President, Finance and a Director,
was appointed to also serve as Treasurer and Dr. Tanya Akimova, Vice
President-Administration and Business Development, was appointed to also
serve as Secretary of the Company.  In April 1997 Dr. Robert Krell
resigned as Senior Vice President, Research and Development of the
Company.

<PAGE> 10

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

(a)     Exhibits:
     10(j) - Copy of letter of intent between the Company and CorBec
     Pharmaceuticals, Inc.

(b)  Reports on Form 8-K

     No Reports on Form 8-K were filed during three months ended March
31, 1997 except for a Report on Form 8-K for February 18, 1997 providing
information under Item 5 with respect to the  worldwide exclusive
license of the Company to manufacture, sell and sub-license a novel
purgative tablet to clean the colon prior to colonoscopy.

<PAGE> 11
                               Signatures



     Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this Report to be signed on its
behalf  by the undersigned hereunto duly authorized.






                                  PANAX PHARMACEUTICAL COMPANY LTD.

                            /s/ Taffy J. Williams
                            --------------------------------------
                            Taffy J. Williams, President, Chairman 
                            and Chief Executive Officer                  
                                   

                                                      
                                                           
                                                           
                                                           
                                                           
                                                           
                                                           
May 15, 1997