EXHIBIT


BIOGRAPHICAL SKETCHES AND BIBLIOGRAPHY

DR. NINA LAMBA (Principal  Investigator)  graduated in 1991 with a B.Sc. (Hons.)
degree in Applied  Chemistry  from Aston  University,  Birmingham,  U.K. She was
awarded  a  doctorate  in   Bioengineering   in  1994  from  the  University  of
Strathclyde,   U.K.  Her  doctoral   thesis   "Blood-biomaterial   interactions:
Application of a parallel plate flow cell to study blood responses in vitro" was
conducted  under  the  supervision  of  Professor  J.  M.  Courtney.   Following
graduation,  she joined the Department of Chemical Engineering at the University
of Delaware as a post-doctoral  research fellow and Research Associate,  working
with Dr. Stuart L. Cooper. Her research  activities included studies of cellular
adhesion  to  polyurethanes,   the  interrelationships   between  infection  and
inflammation associated with biomaterials and aspects of tissue engineering. She
joined Compact  Membrane  Systems,  Inc. last year as Director of the Biomedical
Research  Division.  She has made  significant  contributions  to the biomedical
literature,  and selected publications are listed below. She is also a member of
the Society for  Biomaterials,  the  American  Society for  Artificial  Internal
Organs, and of the Royal Society of Chemistry.
N.M.K.  Lamba,  K.A.  Woodhouse,  S.L.  Cooper.   "Polyurethanes  in  Biomedical
Applications," CRC Press, 1998, pp. 277.
N.M.K. Lamba, J.D.S. Gaylor, J.M. Courtney,  G.D.O. Lowe. "Complement activation
by cellulose:  Investigation of the effects of time, area, flow rate, shear rate
and temperature on C3a generation in vitro, using a parallel plate flow cell."J.
Mater. Sci ., Mater. Med. (1998) 9(7): 409-414.
N.M.K.   Lamba,  J.A.   Baumgartner,   S.L.  Cooper.   "Cell-Synthetic   Surface
Interactions" In: Frontiers in Tissue Engineering. Eds. C.W. Patrick Jr., et al.
Elsevier Science Publishers. 1998, p. 121-137.
N.M.K.  Lamba,  S.L.  Cooper.  "Covalent  grafting of RGD  peptides to synthetic
surfaces." In: Tissue Engineering of Prosthetic  Vascular Grafts.  Eds. P. Zilla
and H.P. Greisler. R.G. Landes Co. 1999, p. 553-559.
N.M.K. Lamba, J.D.S.  Gaylor, J.M. Courtney,  G.D.O. Lowe. "Effect of heparin on
the blood response to  blood-contacting  biomaterials  in vitro."  Biomaterials.
(2000) 21(1): 89-96.

DR. STUART NEMSER - Dr. Nemser  received his BS. in 1966, MS. in 1968, and Ph.D.
in 1972 all from MIT in Chemical  Engineering.  Between 1972 and 1974, he worked
for Millipore Corporation (Bedford, Mass.) and developed their line of Thin Film
Composites (TFCs), ultrafiltration membranes via interfacial membranes formation
("Pellicon"  line)  as  well  as  developing  their  supported   microfiltration
membranes for pleated  cartridges.  Dr. Nemser worked for DuPont from 1974 until
his retirement in May 1993 to found Compact Membrane Systems, Inc. During his 19
years at DuPont, Dr. Nemser held numerous  research,  business and manufacturing
positions,  including  Technical  Superintendent of DuPont's  "Permasep" reverse
osmosis membrane business. As New Business Development Manager for E. I. DuPont,
Dr. Nemser identified and patented the family of PDD homopolymers and copolymers
for various separations.

In his  current  position  as  President  of  CMS,  Dr.  Nemser  is  focused  on
commercializing  the family of PDD polymers in the patented  membrane areas. Dr.
Nemser has been involved in a number of NIH funded projects,  including IVOX and
ECMO,  membrane  oxygenators  for  bioreactors,  ozonation of drinking water and
dental unit water lines,  and portable O2 enriching  systems for lung disorders.
These programs have provided Dr. Nemser with  excellent  experience in enhancing
oxygenation  delivery to fluids through their novel  bubbleless  oxygen delivery
nonporous membranes. Key publications include: S.M. Nemser, "Controlled Porosity
Reverse Osmosis Membranes," MIT Doctoral Thesis, June 2, 1972 S.M. Nemser and I.
C. Roman,  "Perfluorodioxole Membranes," U.S. Patent 5,051,114, (Sept, 24, 1991)
S.M.  Nemser,  "Air-intake  Systems for Mobile Engines," U.S. Patent 5, 147,417,
Sept. 45, 1992 S.M. Nemser,  "Air-intake systems for Residential Furnaces:, U.S.
Patent 5, 053, 059, Oct. 1, 1991


<PAGE>

DR. HUGO O.  JAUREGUI - Dr.  Jauregui  received  his MD from the  University  of
Buenos Aires School of Medicine and his Ph.D. in Pathology from Duke University.
Dr. Jauregui has two decades  experience in the development of cell-based  liver
assist devices.  In 1979, his laboratory was the first to explore the culture of
rat hepatocytes in perfused hollow fiber bioreactors.  Numerous studies aimed to
identify  hepatocyte culture  requirements and optimize culture in these devices
ensued.  These perfusion  bioreactors were later modified (in collaboration with
Dr.  Barry  Solomon of Amicon) to create  liver  assist  device  prototypes  for
testing in experimental  models of hepatic  encephalopathy.  Dr. Jaregui's group
characterized  the  galactosamine  (gal)  intoxicated  rabbit model which nearly
mimics  hepatic   encephalopathy  in  humans.  Studies  to  scale-up  rat-rabbit
hepatocyte isolation procedures led to ex vivo porcine hepatocyte procurement by
collagenase digestion.

         Further activities of Dr. Jauregui's group were directed toward storage
and  transport  requirements  of porcine  hepatocyte  preparations.  Proprietary
methodology  was developed for the frozen storage of porcine  hepatocytes  which
allows  recovery of ~80% viable cells which  maintain ~75% of their initial P450
metabolic  function.  Additional  activities  explored  methods of culture which
would allow scale-up of porcine  hepatocyte  populations  from  monolayer.  Data
generated from these porcine  hepatocyte studies helped guide the development of
the  methodologies  currently  used in the Circe  Biomedical  ELAD system today.
Currently,  Dr.  Jauregui is the  President  of  MultiCell  Associates,  Inc., a
company  dedicated to the  development and  commercialization  of cells and cell
lines for medical use,  with a focus on  developing  immortalized  human hepatic
cell lines which have retained their primary  functionality.  Some  publications
and patents include:

Jauregui HO, C Mullon,  P Press, D Trenkler,  S Naik, H Santangini,  T Muller, B
         Solomon.  1995.  In Vivo  evaluation  of a hollow  fiber  liver  assist
         device. Hepatology 21:460-469.
Jauregui HO, N Roy Chowdury, J Roy Chowdhury. 1996. Use of mammalian liver cells
         for artificial liver support. Cell Trans 5,3:353-367.
Jauregui HO, S Naik, H Santangini,  D Trenkler,  C J-P Mullon.  1997. The use of
         microcarrier-roller  bottle  culture  for  large  scale  production  of
         porcine hepatocytes. Tissue Eng 3(1):17-25.
Jauregui HO. 1997.  The  technology  of biological  extracorporeal  liver assist
         devices: From infancy to adolescence. Artif Org. 4721(11).
Naik S, H  Santangini, D Trenkler, C J-P Mullon,  B Solomon,  HO Jauregui. 1997.
         Functional  recovery   of   porcine  hepatocytes  after  hypothermic or
         cryogenic   preservation  for  liver  support   systems.   Cell  Trans,
         6(5):447-454.
Liu J, P Jing, S Naik,  H  Santangini,  D  Trenkler,  N  Thompson,  A  Rifai, JR
         Chowdhury,  HO  Jauregui.  1998.  Characterization  and  evaluation  of
         detoxification  functions of a Nontumorigenic  Immortalized  Hepatocyte
         Cell Line (HepLiu). Submitted to Cell Trans.
Patents: Patent   #5,043,260.   Perfusion   Device  with   Hepatocytes,   Patent
         #4,795,459.  Implantable  Prosthetic Device  (Endothelial),  Dual Fiber
         Bioreactor.   (Patent  allowed),   Isolation  and  Culture  of  Porcine
         Hepatocytes ( USSN  08/5411,462  filing date  12/22/95),  Cryopreserved
         Hepatocytes and Process for Doing Same. (Patent Pending),  Immortalized
         Hepatocytes. (USSN 08/611, 171 (allowed).


A.  SPECIFIC AIMS

         The long range  objective  of the  proposed R & D project is to enhance
the function of the  bioartificial  liver (BAL) device by improving the external
bubbleless oxygenation system used for hepatocyte culture. More specifically, we
plan to fabricate and evaluate a new bubbleless external hollow fiber oxygenator
for use in the  Sybiol(R)  Bio-Liver  Device  developed by Exten  Industries.



                                       2
<PAGE>


A unique,  non-porous,  highly gas permeable amorphous  perfluorocarbon  polymer
(CMS-7)  will be applied as a very thin  membrane on  microporous  polypropylene
hollow  fibers.  CMS-7 will  provide  excellent  oxygen  transport  with minimal
deposition  and  fouling.  The  non-porous  perfluoropolymer  layer will provide
minimal  resistance  to O2/CO2 flow while  stabilizing  the  system's  long term
performance.  Non-wetting  porous hollow fiber  membranes (HF) have good initial
O2/CO2 transport,  but deteriorate over time due to fluid  infiltration into the
pores and breakthrough of the perfusate into the gas side of the oxygenator (wet
out).  By coating  porous HF with a thin  continuous  layer of our high flux and
non-porous  perfluoropolymer  film, the initial flux will be comparable to other
porous HF (in fact,  coating of porous HF  actually  increases  oxygen  flux-see
Tables 1, 2; Fig.  3),  with  minimal  degradation  over time.  With  increased,
long-term access to oxygen,  hepatocyte viability and detoxification function is
expected to improve. Prolonged hepatocyte function will provide better treatment
for patients with acute or chronic hepatic failure. Specific aims include:

1.   Fabricate CMS oxygenators using  polypropylene  hollow fiber modules coated
     with the CMS-7 polymer.
2.   Compare a number of modules  with and without the CMS membrane by analyzing
     mass transfer of oxygen into water and hepatocyte media, varying conditions
     to optimize performance.
3.   In vitro,  analyze oxygen mass transfer with recirculating media containing
     hepatocytes.  Compare CMS  oxygenators  to those  without the CMS  membrane
     (controls), and monitor cell viability relative to oxygen mass transfer.
4.   Integrate the  oxygenator  and  recirculating  cell culture with the hollow
     fiber  module  used as a  blood/cell  culture  interface  to  monitor  cell
     viability  and  detoxification  function  in vitro,  comparing  controls to
     coated modules.
5.   Plan Phase II, which will include  comparison  of primary and  immortalized
     hepatocytes,  and in vivo animal trials. Food and Drug Administration (FDA)
     approval will be secured for clinical trials for device safety.


B.  SIGNIFICANCE

         One in ten Americans  has some form of liver  disease.  Currently,  the
treatment of choice for patients  with acute  hepatic  failure (AHF) and chronic
hepatic  failure  is liver  transplant.  AHF is brought  on by  Hepatitis  or an
overdose of drugs such as  acetaminophen,  and can lead to  encephalopathy  (HE)
(mortality of 50-80%)(1).  However,  in the United States,  there are only about
3000 donor livers available annually,  while  approximately  30,000 patients die
from liver failure (2). The American Liver Foundation  states that liver failure
is the fourth  leading  cause of death in the United  States  (40,000  deaths in
1996). According to Algenix, Inc. of Minneapolis, a company currently developing
a BAL, the market  potential  for the BAL  industry  exceeds $700 million in the
United  States,  and may reach  $1.4  billion  worldwide  (23).  Transplantation
procedures  are  expensive,  and  carry  risks  increased  by AHF.  If a patient
suffering from AHF could receive temporary liver support, the native liver would
have time to regenerate. Patients with advanced liver disease have been known to
recover once regeneration  begins, often with no residual disease after recovery
(3). In fact, using BAL while awaiting organ  transplant  yields better survival
rates,  less frequent graft failure,  and earlier hospital  discharge than those
patients whose health  deteriorates prior to  transplantation  due to poor liver
function (3).

         A  bioartificial  liver  assist  device  (BAL) can serve as a  "bridge"
during reversible AHF, allowing the native liver to regenerate,  and can prevent
multisystem failure as a result of the accumulation of metabolic byproducts. For
patients with chronic liver diseases,  BAL could also be used for periodic liver
"dialysis," or  detoxification.  The ideal BAL would mimic normal liver function
as  closely  as  possible  for as  long  as  possible  while  requiring  minimal
investment.  Many of the BALs being  developed  today have  focused on providing
support   for  a  short   period  of  time  (six   hours)  as  a  bridge   until
transplantation,  but for the native liver to  regenerate,  the BAL must operate
for a longer  duration  (at least ten days) (21).  In  addition,  pharmaceutical
companies can use BALs for drug  metabolism  evaluations  that would be safe and
inexpensive.  Our  oxygenation  technology is  non-fouling  and resists wet out,
indicating that it would be advantageous  for long term BAL operation.  Adequate
oxygenation  is essential in BAL devices to obtain  maximum cell  viability  and
function.  CMS membrane  technology  will improve  oxygenation of the hepatocyte
cell culture,  allowing better control of oxygen flux while resisting "wet out",
to provide maximum hepatocyte functionality.



                                       3
<PAGE>

1.  Variations of BAL
    -----------------

         BALs  vary in the  choice of  perfusate,  the  choice of cell,  and the
arrangement of hepatocytes within the bioreactor.  Either the patient's blood or
plasma is perfused through a bioreactor  containing the hepatocytes.  Clinically
tested BALs have employed  transformed cell lines (e.g. C3A, a cell line derived
from human  hepablastoma) or freshly isolated porcine  hepatocytes.  Since human
hepatocytes are of limited  availability,  rabbit, rat, and pig hepatocytes have
been successfully used in experimental BALs. Porcine hepatocytes can be procured
in  adequate  numbers,  screened  for  contamination  by other cell  types,  and
cryopreserved  so a  continuous  supply is  assured  (4).  Immortalized  porcine
hepatocytes  have also been  developed  (26) and may be used in Phase II of this
project.  Different  polymer  materials  and/or  configurations  of the man-made
components used in BALs have undergone the most advances.  Hepatocytes have been
used in  suspension or  immobilized  on a  nonspecific  material,  and have been
cultured among three dimensional  nonwoven polyester fabric, with HF oxygenation
(5-7,  9).  Some of the most  promising  and  prevalent  design  technology  has
involved hollow fiber  membranes (HF).  Hepatocytes are cultured in a variety of
arrangements,  including in suspension  (40) within a gel bed inside the HF (8),
outside the HF in suspension,  in cell aggregates, or bound to microcarriers (7,
8), in adhesion outside of HF (3, 8), or among mats of woven capillary membranes
(7, 8). For this Phase I project,  CMS has chosen to work with Exten  Industries
to develop an in-series HF  oxygenator  for use with their  Sybiol(R)  synthetic
bio-liver device, discussed below.


2.   The Sybiol(R) Bio-Liver Device
     ------------------------------

         The  Sybiol(R)  synthetic  bio-liver  device is now being  developed by
Exten  Industries  Corporation.  The  Sybiol(R)  bioartificial-liver  circulates
patients' blood through a replaceable cartridge (hollow fiber module),  where it
is interfaced  with  constantly  recirculating  viable  hepatocytes.  Toxins and
enzymes diffuse across the membrane,  and are  metabolized by the  recirculating
hepatocytes.  The expectation behind all types of bioartificial liver devices is
that by providing liver support with the appropriate  metabolic,  detoxification
and  biosynthetic  functions,  the  native,  ailing  liver  could  be  given  an
opportunity to recover from shock,  disease,  poisoning,  or drug overdoses.  In
cases of acute hepatic failure, it is envisaged that bioartificial liver support
could allow  regeneration  to the degree that no  transplant  would be required,
reducing  the  demand  for  the  already   limited  supply  of  donated  organs.
Furthermore, such a device could also help liver transplant patients prepare for
surgery and provide post-transplant support.

         The Sybiol(R) technology circulates blood extracorporeally, as depicted
in the diagram below (Figure 1). This device may have significant  advantages in
methodology and mechanical  design that allow tangible benefits in treatment and
cost over  competitive  technologies  currently in development.  Although it has
been shown that  hepatocyte  adhesion  improves liver function in vitro (5,6,7),
attachment to  microcarriers  or membranes does not necessarily  determine liver
function.  Reseachers  working on the Sybiol(R) liver device  demonstrated  that
hepatoctyes  remained  viable in suspension  without prior  immobilization  onto
microcarriers  (42). A major advantage of recirculating  hepatocytes rather than
isolating them in the  extracapillary  space,  is that there is a less stringent
limitation  on the  number  of cells  that can be  included  in the  circuit.  A
recirculating   loop  also  offers  the  ability  to  replenish  the  supply  of
hepatocytes as needed,  and allows closer  monitoring and control over variables
such as  temperature,  pH, etc.  Hepatocytes  in BALs that have been  clinically
tested lose function in 6-8 hours. By increasing the number of other hepatocytes
and adding the ability to replenish the  hepatocyte  supply with new cells,  the
Sybiol(R) synthetic bio-liver device should prolong performance. A recirculating
system also has  potential to be used as liver  "dialysis"  treatment for either
chronic liver disease  stemming  from  alcoholism or hepatitis,  and/or to treat
ingestion or overdose of toxic substances.  Other advantages include lower cost,
fast change-over between patients, and a much longer treatment cycle. The design
of this technology also minimizes the possibility of immune reactions.



                                       4
<PAGE>

         An additional role for this recirculating bioartificial liver is in the
evaluation of drug  metabolism.  Therapeutic  drugs introduced into the body are
metabolized  by the  liver,  and may have a  variety  of  beneficial  as well as
detrimental  effects.  It is, therefore,  mandatory that developers of new drugs
thoroughly  evaluate  this  process.  A design  such as this will  allow for the
sampling  of not only the media  used to  suspend  the  cells,  but for the easy
sampling  of  hepatocytes  in order to  evaluate  any  phenotypic  changes.  The
availability of a laboratory device able to accurately  simulate the behavior of
the human liver will provide a significant alternative to animal testing for the
pharmaceutical  industry.  A CMS  oxygenator  will reduce  fouling and "wet out"
compared to a HF oxygenator  without the membrane,  thus  prolonging  oxygenator
performance.  A long term  oxygenator  will be necessary if the  Sybiol(R) is to
deliver liver treatment for a sufficient amount of time. Eliminating the need to
change the oxygenator also reduces the likelihood of introducing  pathogens into
the heptocyte suspension.

         Currently,  oxygenation  of the  hepatocytes is achieved by running the
suspension  through a 28ft  length of  silicone  rubber  tubing,  which is wound
around a mandrel. O2 and CO2 diffuse passively through the tubing wall, and this
is the  source  of O2  for  the  cells.  Replacing  this  coil  with a  membrane
oxygenator  will  allow  increases  in the rates of oxygen  and  carbon  dioxide
transfer  and better  control  over  oxygen  transfer  through  the  increase in
membrane permeability and the use of enriched gas feedstreams. Mixing within the
hepatocyte  suspension  and mass  transfer of the  dissolved  gases will also be
improved. The oxygen flux of silicone rubber is 500 GPUs (GPU=cm3/cm2-sec-cmHG x
10-6) a selectivity  (O2 GPUs/N2 GPUs) of 2, while the CMS-7  membrane  provides
9900 GPUs of oxygen flux and a selectivity of 2. Thus, use of the CMS-7 membrane
dramatically increases oxygen flux.

Figure 1.  The Sybiol(R)Synthetic Bio-Liver Device


          ---------------------------------------------------
          |                                                 |
          |                                                 |
          |                     GRAPHIC                     |
          |                                                 |
          |        Diagram of the Sybiol (R) Synthetic      |
          |                  Bio-Liver Device               |
          |                                                 |
          |                                                 |
          ---------------------------------------------------



                                       5
<PAGE>


3.  Hepatocyte Function for Bioartificial Liver Support
    ---------------------------------------------------

         To date,  the precise  pathogenic  mechanism of hepatic  encephalopathy
(HE) remains  unknown.  Observations  in both animal models and patients with HE
indicate that the syndrome is  precipitated  by the  accumulation of toxins that
are normally  metabolized by the liver.  High levels of these  products  promote
neurotransmission failure. Various neuroactive substances, such as ammonia, (29)
as well as  endogenous  or exogenous  compounds  with  benzodiazepine  agonistic
properties  (28)  have been  implicated  as  potential  neurotoxins  or  agents,
increasing the tone of the inhibitory  gamma-aminobutyric acid neuro transmitter
system.

         Drug metabolism is typically divided into two phases: Phase 1 oxidation
or  reduction  reactions  catalyzed  primarily  by  P450  enzymes,  and  Phase 2
reactions which are conjugative  reactions that increase aqueous solubility.  In
some  cases,  a drug may be  sequentially  metabolized  by  Phase 1 and  Phase 2
reactions, as is the case with certain metabolites of diazepam. Other drugs such
as acetaminophen are primarily  metabolized by Phase 2 reactions (sulphation and
glucuronidation).

         The  primary  requirement  of cells in a liver  support  system  is the
preservation of the in vivo metabolic functions that prevent and/or decrease the
progress of HE in patients with acute liver failure. Benzodiazepines, as well as
other drugs or toxins,  are metabolized in the liver by a family of enzymes that
catalyze their oxidative  degradation  (Phase 1 metabolism) (31). This oxidation
facilitates  further  detoxification  steps (Phase 2  reactions)  by which these
byproducts are conjugated. The oxidative enzymes, known collectively as the P450
system,  usually decay very rapidly in normal  cultured  hepatocytes  (32). Most
importantly,  enhancement  of  diazepam  (a  benzodiazepine)  and  acetaminophen
metabolism may support the utility of these BAL for liver support. Acetaminophen
metabolism is higher in porcine hepatocytes than in human (Jauregui -unpublished
data). In fact,  acetaminophen toxicity is the etiology of acute hepatic failure
most likely to be fully reversible by the provision of porcine  hepatocyte based
BAL  support,  obviating  the need for  transplantation  (presented  at American
Association for the Study of Liver Disease Meeting, Nov. 1997).

         The  study  proposed  here  will  explore  the  potential  of an oxygen
enhanced  bioreactor culture system to support the metabolic function of porcine
hepatocytes in vitro. We will address both Phase 1 and 2 reactions using 3 drugs
for which the  reaction  products  are well  known  and  characterized,  namely,
diazepam,  7-ethoxycoumarin and actaminophen. The ability of porcine hepatocytes
attached to microcarriers to convert ammonia to urea will also be assessed.


4.  Oxygen Demands of Hepatocytes
    -----------------------------

         The liver is one of the organs most dependent on oxygen. In fact, under
basal metabolic  conditions,  20-33% of the total oxygen utilized by the body is
consumed by the liver (22). For this reason,  hepatocytes and cell lines derived
from  hepatocytes  (hepatoma)  have high oxygen demands (10, 11). In vitro,  the
optimal conditions for cultivation and functioning of hepatocyte cell culture is
10-50% oxygen tension (10). Typically,  mammalian cells consume oxygen at a rate
of 0.05-0.5 (mu)mol/106 cells/hr (17). The reported oxygen uptake rate (OUR) for
hepatocytes is approximately 1.0 (mu)mol/106 cells/hr, a high rate for mammalian
cells (18). Oxygen must be continuously supplied because it is depleted quickly,
even at relatively low cell densities.  Oxygen is often the biolimiting nutrient
in BALs, not just because of its high  consumption  rate,  but also because,  in
typical cultures, it is found in relatively low concentrations. For example, the
solubility of oxygen at 1 atm and 37(Degree)C is 0.2mM, while glucose is as high
as 25mN (41).

         Oxygen requirements of hepatocytes vary depending on the culture phase,
extracellular environment, cell density, cell type, and metabolic challenge. Low
concentrations  of  oxygen  in  the  early  phase  of  hepatocyte  cell  culture
establishment hinders cell attachment, spreading, and adaptation (8). Increasing
the  gas  phase  oxygen  levels  increases  attachment  and  spreading;  without
sufficient oxygen,  hepatocytes cannot assume the appropriate physical state for
optimal albumin  secretion (1, 8). The oxygen uptake rate (OUR) varies depending
on the extracellular requirements;  when hepatocytes were sandwiched between two
collagen layers for long term testing, the OUR was 13.6 +/- 3 pmol/sec/(mu)g DNA
in 2-16 hours (22).  In BALs that  contain  hepatocytes  within the hollow fiber
module, high cell densities can cause a steep concentration gradient to form, so
that cells far from  sources  of  oxygen,  nutrients,  and  metabolites  may not
receive sufficient amounts,  causing, at best, loss of function,  at worst, cell
starvation  and  necrosis.  Only the very  first  layer of cells can be  assured
sufficient  oxygen (8, 11). In fact,  when HF membranes  are used for blood flow
with cells cultured outside, oxygen is completely depleted at distances equal to
one to two cell layers from the membrane outer wall (11).



                                       6
<PAGE>


         Hepatocytes must have sufficient  oxygen available to attach and spread
and to perform metabolic functions, including specific liver functions that will
benefit the patient.  In the Sybiol(R)  synthetic  bio-liver  device,  cells are
attached to microcarriers that recirculate through the hepatocyte loop. With the
CMS oxygenator integrated into the hepatocyte loop, cells will regularly receive
oxygen as the media and cells pass through the oxygenator. Since oxygen diffuses
through the CMS membrane to dissolve in the liquid  (media),  all  microcarriers
should receive the same level of oxygenation. Thus, oxygenation will not be site
dependent  and steep  concentration  gradients can be avoided.  The  oxygenation
technology we are proposing will allow control of the oxygen provided  without a
loss of operation over time due to wetting out of the oxygenator or fouling with
biological  matter, and in fact increases the oxygen flux. Another advantage our
oxygenator  provides is that this is a  bubbleless  source of oxygen.  Sparging,
which  involves  bubbling  O2  directly  into the media,  often  results in foam
formation,  and can  damage  cells  (for  details  on the  nature  of the  CMS-7
membrane, see below). The CMS oxygenation technology provides a "gentler" source
of oxygen to cells removed from their natural environment.


5.  Existing Oxygenation Techniques
    -------------------------------

         The BALs that  perfuse  blood  sometimes  rely on red  blood  cells for
oxygenation,  although it has been suggested that additional  oxygenation  would
improve  hepatocyte  function (12). In plasma-based  models, red blood cells are
usually excluded to reduce hemolysis,  so an alternative  oxygenation  method is
necessary.  Many BALs incorporate either an indirect  (in-series) or an integral
(in-parallel)  oxygenation system to maintain cell function and viability.  With
an  indirect  system,  an  oxygenator  aerates  either the plasma or medium with
oxygen (sometimes pure) at pressures of 474-552 mmHg.

         High oxygen pressure, however, is problematic. Oxygen tension modulates
enzyme  activities,  indicating  that  high O2  pressure  could  interfere  with
hepatocyte  function.  Since  sparging can cause bubbles and foam formation that
can damage the delicate  hepatocyte  cells, the preferred choice for oxygenation
is a hollow fiber design,  whether used as a separate,  in-series  unit (often a
blood oxygenator) or integrated with a HF bioreactor. The materials employed for
oxygenation in hepatocyte culture are typically hydrophobic  polypropylene HF or
silicone  rubber (9, 14).  These provide high oxygen flux with reduced  bubbling
and foam formation compared with spargers.

         However,  there  are  adverse  consequences  of  oxygenation  with  HF,
including  bubble  formation  in the cell mass due to  changes  in the  pressure
differences  between the capillary  spaces,  and  concentration  of media due to
evaporation  of  water at the  air/media  interface.  In  addition,  the  oxygen
transfer is so high in the present  oxygenation  scheme that  scavengers of free
radical  oxygenated  species  need  to  be  added  to  the  media.  Coating  the
polypropylene  fibers with CMS-7 would solve  problems of bubble  formation  and
media  concentration  while  still  permitting  sufficient  oxygenation  and  pH
control.

         Furthermore,  with CMS-7 treated fibers, as described in this proposal,
hepatocyte and cell debris adhesion will be reduced, thereby minimizing fouling.
This fouling  problem is similar to the situation  with blood  oxygenators,  the
majority  of  which  are  based  on  non-wetting  microporous  polypropylene  HF
membranes.  Blood flows on one side of the membrane,  O2 on the other. Since the
HF membranes are initially non-wetting,  O2 and CO2 diffuse through the pores in
the membrane. While these membranes function quite well initially, in many cases
after 3-6 hours the holes in these  porous HF become  infiltrated  with  plasma.
Pore blockage causes gas flux to drop  significantly,  plus plasma  breakthrough
into the gas phase occurs  (15).  We propose the use of a  non-fouling  membrane
with higher  oxygen flux in order to improve  hepatocyte  access to a bubbleless
oxygen source,  and,  therefore,  hepatocyte  function and viability.  Our CMS-7
coated HF membrane  will provide a constant  source of higher  oxygen flux for a
longer time period than those HF membranes currently in use.



                                       7
<PAGE>


6.  New Integral Oxygenation Technology
    -----------------------------------

         The cornerstone for developing an improved external  oxygenation system
using hollow fiber membranes (HF) in  bioartificial  liver assist devices (BALs)
is  a  family  of  new  perfluoropolymer  membranes:  perfluoro-2-2-dimethyl-1-3
dioxole (PDD) copolymerized with tetrafluoroethylene  (TFE)(see Figure 2). These
membranes  will  be  employed  in  the HF  oxygenator  to  enhance  performance.
Characteristics of these membranes include: 1) the ability to be made ultra-thin
(0.5-2.0u)  supported  on flat sheet  stock  and/or  porous  hollow  fibers,  2)
chemical  inertness  and  mechanical  non-porous  features  which will  prohibit
cultured  cells from  attaching to the  membrane,  and 3) high oxygen and carbon
dioxide  permeability.  HF treated with the PDD-TFE  (CMS-7)  polymer  provide a
bubbleless,  non-fouling,  biocompatible,  rugged  membrane that affords  higher
oxygen and carbon  dioxide  flux.

                              a) SUPERIOR GAS-LIQUID  TRANSFER- Through a number
        GRAPHIC               of programs,  we have  demonstrated that the CMS-7
                              membrane  provides  oxygen  transfer  into  liquid
                              equal or superior to the  performance  of uncoated
    Diagrams of the           modules   (control   modules   without   the   CMS
     Structure of             membrane).  One of these  projects  involved using
       PDD-TFE                the CMS membrane in  bioreactors to enhance the O2
                              delivery and CO2 removal from fermentation broths.
                              Table  1  summarizes  the   improvement   (4x)  of
                              volumetric  O2 mass  transfer  gained with the CMS
                              membrane.
<TABLE>
<CAPTION>
 TABLE 1: Comparison of volumetric mass transfer coefficients for different contactors
 --------------------- ----------------------- ----------------------- ----------------
 OTR Studies (k(l) a)* Coated Module (s(-1))** Uncoated Module (s(-1)) Spargers (s(-1))
 --------------------- ----------------------- ----------------------- ----------------
<S>                    <C>                     <C>                     <C>
 Air                   0.54 x 10(-3)           0.29 x 10(-3)           0.72 x 10(-3)
 Oxygen                3.3 x 10(-3)            0.88 x 10(-3)           5.5 x 10(-3)
 --------------------- ----------------------- ----------------------- ----------------
</TABLE>
*K(1) a estimated from the time (sec.) for a volume of liquid (10L) to reach 63%
air saturation measured with a dissolved oxygen probe. **Outside coated

         Sparging, another type of oxygenation, involves the physical dispersion
of gas into  liquid and,  therefore,  is more  energy  intensive.  With a coated
module,  we approach  the  performance  obtained by simple  sparging.  Sparging,
however,  is  detrimental  for a number of cell lines,  since the bubbles  cause
unusually  high shear  stresses on the  fragile  cell  walls,  resulting  in the
breakage of the cell wall and cell death.

         We  have  also   completed  a  project  on  oxygenation  of  water  for
aquaculture  (DOC  SBIR).  With PVDF  modules  coated with CMS-7 on the fiber ID
(inside  diameter),  O(2) flux rates for the  coated device  showed  significant
improvement  compared to the uncoated devices, see Table 2. Additional work with
Avecor  polypropylene  (PP)  modules  showed  that  the  CMS  membrane  provided
comparable oxygen mass transfer, see Table 3.

<TABLE>
<CAPTION>
 Table 2:  Comparison of O2 flux rates for a PVDF coated with CMS-7 versus an uncoated module*
 --------------------------------------------------------------------------------------------
 Test Description                       O(2) flux in gm/cm(2)/min              %Increase
                                        Coated           Uncoated              in Flux
<S>                                   <C>               <C>                      <C>
 Oxygenation with Pure O(2)
 (200 cm(2), 1000 um ID fiber)        0.28 x 10(-4)     0.18 x 10(-4)            56%
 Oxygenation with Air
 (200 cm(2), 1000 um ID fiber)        0.34 x 10(-4)     0.19 x 10(-4)            79%
 --------------------------------------------------------------------------------------------
</TABLE>
 *Runs made under identical operating conditions.




                                       8
<PAGE>

<TABLE>
<CAPTION>
         Table 3:  Mass Transfer Testing of Polypropylene Modules with and without the CMS Membrane
 ----------------------------------------------------------------------------------------------------------
 Module       Membrane        Membrane         a             Pressure Drop        K(1) a (sec(-1)), average
 Number        Status         Thickness    O(2)/N(2)        1 LPM     5 LPM           1 LPM       5 LPM
 ----------------------------------------------------------------------------------------------------------
<S>           <C>             <C>             <C>            <C>     <C>             <C>         <C>
 99-1191         -                -            -             ~0      2.2 psi         2.0E-02     4.4E-02
 99-1191      w/CMS-7         3.0 micron       2             ~0      2.3 psi         1.7E-02     4.6E-02
 ----------------------------------------------------------------------------------------------------------
 99-1195         -                -            -             ~0      2.0 psi         1.5E-02     4.6E-02
 99-1195      w/CMS-7         2.3 micron      1.8            ~0      2.1 psi         1.4E-02     5.3E-02
 ----------------------------------------------------------------------------------------------------------
</TABLE>
         Figure 3  schematically  explains  that this  increase in gas  transfer
relates to the position of the gas-liquid interface. In an uncoated module, this
interface  exists at, or at a small  distance  into,  the pore mouth.  Molecules
moving  from the gas to the liquid  phase must  diffuse  through  this  stagnant
liquid phase into the edge of the liquid phase  boundary  layer,  where they are
carried  away into the bulk of the  solution by  convection.  In the case of the
coated fiber,  this stagnant  liquid phase is replaced by the CMS polymer phase,
which has  considerably  less  diffusional  resistance  to gas  molecules.  As a
result, the observed mass transfer rate is greater.  The size of the diffusional
boundary layer is also reduced,  since the portion that would have been occupied
by the liquid phase is now occupied by the CMS polymer.


Figure 3: Gas Liquid Interface for CMS-7 Membrane on a Microporous Substrate



                                    GRAPHIC

                 Diagram of the Gas Liquid Interface for CMS-7
                      Membrane on a Microporous Substrate




b) COMPARISON TO OTHER COMMONLY USED HOLLOW FIBER MEMBRANES - In our studies, we
focus on oxygen  transfer  rather  than  carbon  dioxide  transfer.  Because our
membrane's  gas flux is so high,  the  transfer  of oxygen  into a cell  culture
medium becomes liquid-side limited.  Therefore,  if we optimize the transport of
oxygen into the liquid,  the faster  permeating carbon dioxide will be maximized
as well.  Our CMS-7 polymer has nearly 40 times the oxygen flux of commonly used
silicone  rubber.  We have also compared the oxygen  transfer rate of our coated
flat sheet membranes with microporous  Gore-Tex(TM) and with existing non-porous
silicone rubber materials under no-load  conditions.  The results are summarized
in Table 4, and show a 2-3x improvement with CMS-7.

         Table 4 presents  results of  experiments  with Sf-21 insect cells that
have a high O(2) demand.  The reported  oxygen uptake rate (OUR) for Sf-21 cells
is  0.24  (mu)mol/106  cells/hr  compared  to  approximately  1.0  (mu)mol/10(6)
cells/hr  for  hepatocytes.  We  observed a 3-4x  higher  cell  density per unit
membrane  area for the CMS-7  membrane  oxygenators  versus the silicone  rubber
membrane  oxygenator  when used  with  bioreactors.  We  expect  to see  similar
improvement with hepatocyte detoxification  functions.  Under non-bubble forming
conditions,  our non-porous  CMS-7 membrane  outperforms  Gore-Tex(TM)  with the
measured  O(2) delivery  rate twice as much as  Gore-Tex(TM)  and three times as
much as non-porous silicone rubber.

         We are able to successfully and  reproducibly  coat both the inside and
outside of several different polymeric hollow fiber supports with CMS-7, as seen
in Table 5. We have successfully demonstrated the feasibility of outside coating
both hydrophobic  (polypropylene) and hydrophilic (cellulose ester, polysulfone)
HF by putting a thin layer (0.6-0.9u) of good  selectivity  (O(2)/N(2) ~ 1.7) on
the  outside of HF.  There is no problem  with fiber  sticking  with our coating
procedures.


                                       9
<PAGE>


<TABLE>
<CAPTION>
 Table 4:  Oxygen transfer rate for flatsheet materials/zero bubble formation
 ----------------------------------------- ---------------------- --------------------- ---------------------
                                           CMS-7                  Gore-Tex(TM)          Silicone Rubber
                                           (Non-porous)           (Porous)              (Non-porous)
 ----------------------------------------- ---------------------- --------------------- ---------------------
<S>                                        <C>                    <C>                   <C>
 Membrane Thickness (um)                   1                      ? 100                 60
 Gas Pressure (psig)                       3                      < 1                   3
                      ml/L
 O(2) Delivery Rate  ------*10(2)
                      min                  18.1                   8.8                   5.5
 ----------------------------------------- ---------------------- --------------------- ---------------------
 Cell Densities of SF-21 obtained          2.1 x 10(4)                                  0.6 x 10(4)
 with Flat Membrane Sheets                 (Membrane area                               (Membrane area
 (cells/ml-cm(2) membrane area)            =130 cm(2))                                  =260 cm(2))
 ----------------------------------------- ---------------------- --------------------- ---------------------
</TABLE>




<TABLE>
<CAPTION>
   Table 5.  Outside -vs- Inside Coating of PDD-TFE on Various Polymeric Hollow Fiber Supports
 --------------- ------------- --------------------- -------------- ---------------- -----------
 Unit               Coating           Support         Area (cm(2))    Thickness(m)    O(2)/N(2)
 =============== ============= ===================== ============== ================ ===========
<S>                 <C>           <C>                     <C>             <C>           <C>
 MCE-50-E           Outside       Cellulose Ester           50            0.7           1.7
 MCE-50-D           Inside        Cellulose Ester           50            1.5           1.7

 TexasLOD-A         Outside         Polysulfone             22            1.9           1.5
 MPS-680-3          Inside          Polysulfone            680            0.2           1.7

 MPP-63-G19         Outside        Polypropylene            63            0.8           1.8
 MPP-250-21         Outside        Polypropylene           250            0.9           1.7
 MPP-250-G14        Outside        Polypropylene           250            0.9           1.9
 MPP-850-G23        Outside        Polypropylene           850            0.6           1.7
 MPP-1000-G1        Inside         Polypropylene          1000            1.0           1.8
 --------------- ------------- --------------------- -------------- ---------------- -----------
</TABLE>




<TABLE>
<CAPTION>
           Table 6: Coating of Polypropylene Hollow Fiber Substrates from Various Manufacturers
 ----------------------------------------------------------------------------------------------------------
                       Supplier/         Surface       Number    Selectivity(O(2)/N(2))    Thickness (mm)
    Module Type       Manufacturer      Area(m(2))     Coated     Average      Std Dev    Average  Std Dev
 ----------------------------------------------------------------------------------------------------------
<S>                  <C>                   <C>            <C>      <C>           <C>        <C>      <C>
 Terumo BLOX(a)          Terumo            1.8            2        1.51          0.01       0.4      0.3
 Liqui-Cel(b)           Celgard            2.0            5        1.60          0.4        0.6      0.1
 KrosFlow(1a)        Spectrum, Inc.        1.0            5        1.69          0.06       0.4      0.2
 KrosFlow(1b)        Spectrum, Inc.        4.25           2        1.7           0.05       0.6      0.1
 Avecor Affinity(2a)     Avecor            2.5            8        1.6           0.05       1.5      0.5
 Cellgas(1b)         Spectrum, Inc.        0.25           5        1.66          0.1        0.3      0.2
 IVOX(1b)              OTD, Inc.           0.25           8        1.59          0.08       0.9      0.2
 ----------------------------------------------------------------------------------------------------------
</TABLE>
 1 Fibers manufactured by Mitsubishi         a Inside Coated
 2 Fibers manufactured by Celgard            b Outside Coated

         Table 5 discusses our ability to successfully  inside or outside coat a
wide range of PPs,  suggesting  that we have  developed a universal  process for
coating PP. This table  demonstrates the  reproducibility of our success and the
ability to scale it up to sizes  consistent  with large  scale  bioreactors.  By
contrast,  others have been  unsuccessful  when  coating the outside  surface of
microporous  PP supports.  Bob Schucker from Exxon reported at the November 1995
American Institute of Chemical Engineers annual meeting that they were unable to
coat  microporous  PP with their  polyurea/urethane  membranes.  Our  success in
coating CMS-7 onto microporous PP most likely relates to 1) the very low surface
energy of the  perfluoropolymer,  2) the  excellent  film forming  capability of
CMS-7,  and 3) our  superior  fabrication  process.  Success  in  coating  PP is
especially  valuable to this application since PP is inherently  hydrophobic,  a
quality that will  provide a "second  layer of  protection"  should there be any
defects in our coating. In addition, PP is tough and flexible, and it is already
familiar to those in the bioreactor industry.



                                       10
<PAGE>


c)  RESISTANCE  TO  FOULING  AND  DEPOSITION  - The  drop  in mass  transfer  of
microporous  membrane-based  gas-liquid  contactors  can  be  attributed  to the
wetting  out of the  substrate  pores by the liquid  phase  (refer to Figure 3).
Coating the membrane  increases  the time over which a contactor can be operated
without  having to be dried to  recover  the mass  transfer  performance  of the
original device.  The device can now be operated with both phases at atmospheric
pressure.  In  addition,  one can now use these  devices to carry out  selective
absorption  of gases  into  liquids at high  pressures,  without  requiring  the
pressurization  of the gas phase to prevent the  intrusion  of the liquid  phase
into the pores of the microporous substrate.

         Compact  Membrane   Systems,   Inc.  has  supplied  modules  to  Cellex
Biosciences,  a company with the largest hollow fiber  bioreactor  market in the
world.  Cellex  manufactures a gas-exchange  cartridge  (GEX) to reoxygenate the
medium and remove CO2 for pH control.  When  Cellex  uses a silicone  sheet GEX,
this accounts for 25-50% of the total  manufacturing cost. Using a porous PP GEX
is one  quarter the cost,  but this tends to wet out through the pores.  Even in
the absence of surface active foulants,  the PP GEX wetted out after two days of
use. Cellex is using a PP GEX coated with the CMS polymer in a bioreactor with a
murine  hybridoma  (MH483)  producing an IgM antibody,  a passive  anti-malarial
immunization.  The run is over 30 days old, and has  produced  1.5g of antibody.
The pH control was good,  demonstrating  sufficient CO2 exchange through the CMS
GEX, and no loss in GEX efficiency was observed.  No condensation was noted, and
wet-out has not occurred.  The CMS membrane significantly improved the long term
performance of the GEX (20).

d)  RUGGEDNESS - CMS-7 also has  excellent  thermal  stability,  with a high Tg,
above 200(degrees)C, so autoclave temperatures of 120(degree)C have little or no
effect on it. Secondly,  membranes  tested before and after  autoclaving show no
significant change in gas flux performance in either direction. This indicates a
very rugged  material  that can operate in a  supported  as well as  unsupported
mode.  This ability to work in an unsupported  mode is significant in gas/liquid
applications,  as gas  transfer is higher if the liquid flows on the coated side
of the membrane, allowing the gas to pass through an unsupported membrane.

         Because of our membrane's organophobic and hydrophobic  properties,  we
tested its ability to operate in an oil/gas environment. We tested our nonporous
CMS-7 and an enhanced  microporous  PTFE  (e-PTFE)  sheet.  The gas flux of each
membrane was  measured and then they were  submerged in a vacuum pump oil for at
least two hours. The oil was then drained and the system was blown with air. The
change  in  performance  before  and  after oil  coating  for CMS-7 was  modest;
however,  the flux of the e-PTFE  dropped to zero when  exposed to oil.  We also
observed  breakthrough  of the vacuum pump oil with the e-PTFE.  This was due to
oil getting  into the pores of e-PTFE,  hindering  the flow of gas. By contrast,
oil could not pass through the non-porous,  organophobic, perfluoro CMS coating,
and never reached the  microporous  support.  The oil was easily washed from the
surface of the CMS-7 coated  membrane.  Similar  results were obtained  using an
air/oil aerosol.  These tests demonstrate the ruggedness and fouling  resistance
of CMS-7.

e) BIOCOMPATIBILITY  TESTING - We have also conducted  biocompatibility  testing
both in vitro and in vivo for the use of our membrane in extracorporeal membrane
oxygenators  (ECMO).  Platelet  adhesion  was studied in vitro using a perfusion
chamber to visualize  fluorescently  labeled  platelet  adhesion to CMS-7 coated
glass coverslips.  Whole blood from healthy,  non-medicated  donors was perfused
over the slides, and non-adherent  platelets were removed.  Platelet  deposition
onto CMS-7 coated  coverslips  was not  significantly  different  (p>0.05)  than
deposition  onto  uncoated  glass   coverslips   (controls).   To  evaluate  the
thrombogenicity  of the CMS-7  copolymer,  coated and uncoated  mini-oxygenators
were perfused with radiolabeled platelets. Platelet deposition onto CMS-7 coated
mini-oxygenators   was  less   than  that   measured   on   uncoated   (control)
mini-oxygenators. However, this difference was not significant (p>0.05).



                                       11
<PAGE>

         In vivo biocompatibility of CMS-7 coating used in ECMO was tested using
calves.  In this experiment,  one coated and one uncoated  (control)  oxygenator
were tested in parallel for 24 hours. The surgical  procedure was well-tolerated
and the animals  recovered  rapidly.  All biochemical  indices of organ function
remained  stable.  Figures 4 and 5 summarize CO2 transfer results for the coated
and uncoated  membrane  oxygenators.  Similar  findings were obtained as regards
VO2.  However,  because  the  inlet  pCO2 for the data  shown  below is in close
conformity with AAMI standards for venous CO2 content during oxygenator testing,
VCO2 data are presented here for discussion. The trend regarding CO2 transfer in
uncoated,  HF  oxygenators  follows  the  usual,  well-documented  pattern  of a
dramatic loss in gas exchange capacity over a period of hours (15). On the other
hand, VCO2 in the CMS-7 coated membrane  oxygenator is virtually unchanged at 20
hours versus the very early perfusion time points.  Further, VCO2 for the coated
units at these same very early  times  matches  the CO2  transfer  rates for the
control.  This latter finding supports the in vitro data above regarding minimal
loss of mass  transfer  capability in HF covered with CMS-7.  Further,  the VCO2
data suggest that the  perfluoropolymer  may resist the fluid  infiltration  and
plasma  breakthrough  associated with currently  available hollow fiber membrane
oxygenators,  at least for the  duration of in vivo  perfusions  approaching  24
hours.

             Figure 4:                              Figure 5:


            [GRAPHIC]                               [GRAPHIC]

    Diagram of the Uncoated MO            Diagram of the Perfluoropolymer
  In Vivo Perfusion Time (Hours)                    Coated MO
                                          In Vivo Perfusion Time (Hours)


         We believe the improved oxygen flux delivered by a CMS-7 coated HF will
benefit hepatocytes used in BALs. Oxygenation will be bubbleless, and should not
damage cells.  The hepatocytes in BALs are especially  fragile because they have
been removed from their native  environment.  Any "protection" that can possibly
be provided to these cells will encourage  greater  viability and function.  The
coated  membrane is non-fouling  and resists liquid  penetrations,  so it should
outperform the commonly used  polypropylene  and silicone rubber,  where fouling
and wet out can be problematic.  Its ruggedness assures the ability to withstand
repeated sterilization for long term use. For these reasons, CMS-7 coated hollow
fiber membranes should improve the access of hepatocyte cells to oxygen, thereby
improving  their   viability  and  function,   and  the  modules  should  remain
operational  for longer  periods than  oxygenators  containing  uncoated  hollow
fibers.

7.  Technical Objectives
    --------------------

         The  overall  goals of this  program  are to  develop  and  test  CMS-7
membrane modules for O2 and CO2 transport for use as an in-series  oxygenator in
a BAL hepatocyte loop. We will demonstrate enhanced hepatocyte function compared
to use of oxygenators without the CMS-7 membrane. The key technical goals of the
Phase I program are:

1)   Design and fabricate CMS oxygenators using polypropylene CMS-7 membranes.



                                       12
<PAGE>


2)   Demonstrate  that  the  CMS  oxygenator  permits  sufficient   microcarrier
     passage.
3)   Demonstrate   that  the  CMS  oxygenators  have  the  ability  to  transfer
     oxygen/carbon  dioxide into/from water and hepatocyte media at a rate equal
     or superior to that of oxyenators  without the CMS-7  membrane  (controls).
     Determine which type(s) and  configuration(s)  are most appropriate for use
     with the Sybiol(R) Bio-Liver Device.
4)   Demonstrate  that the CMS-7 coated  membrane has a broader  operating range
     (greater  resistance to bubble formation or wet out [liquid  penetrations])
     than uncoated polypropylene membranes.
5)   Demonstrate  short  term  performance  of the  CMS  oxyenator  assessed  by
     viability of a recirculating hepatocyte suspension.
6)   Demonstrate a significant  increase in primary porcine hepatocyte  function
     with the CMS  oxygenator  by using  the CMS  oxygenator  and the  Sybiol(R)
     Bio-Liver Device as compared to performance of control oxygenators.

     In Phase II, we will:

     a)   Conduct extensive  evaluations of hepatocyte function.  Long term (ten
          days)  performance will be a key goal. We look forward to working with
          MultiCell Associates, Inc. (MCA) and Exten Industries in this area.
     b)   Consider  using a human  hepatocyte  cell line developed by MCA and/or
          use of a medium with higher O2 carrying capacity for Phase II.
     c)   The Sybiol(R)  Bio-Liver  Device will be evaluated in vivo with use of
          the CMS  oxygenator  for  provision  of liver  support  function  in a
          well-documented large animal model.
     d)   Food and Drug  Administration  (FDA)  approval  will be secured  for a
          Phase I clinical trial for device safety.  This will set the stage for
          Phase III of the development, which will consist of Phase I and II FDA
          clinical  trial  assessment  of  the  device  for  safety,  dose,  and
          efficacy.


8.  Significance of Phase I Effort
    ------------------------------

         This Phase I effort is composed of three work  stages:  1)  Fabrication
and performance  evaluation of the CMS oxygenator,  2) Enhancement of hepatocyte
functional  viability when the CMS  oxygenator is used in  conjunction  with the
Sybiol(R)  Bio-Liver  Device,  and 3) Assessment of program results and planning
for Phase  II.  More  specifically,  Phase I will  demonstrate  our  ability  to
fabricate  CMS  oxygenators  by  applying  the CMS-7  membrane  to  commercially
available polypropylene hollow fiber modules. We will determine which type(s) of
modules and  membrane  configuration(s)  are most  appropriate  for use with the
Sybiol(R) Bio-Liver Device based on initial gas testing,  microcarrier  passage,
and  oxygen  flux  into  water  and cell  culture  media.  Furthermore,  we will
demonstrate  that  performance of these CMS  oxygenators is equal or superior to
comparable  oxygenators  without the CMS membrane (controls) in oxygen flux/mass
transfer.  Phase I will also  demonstrate  that  these HF with the CMS  membrane
provide a broader  operating range (greater  resistance to bubble  formation and
liquid  wet-out)  than uncoated HF PP. In addition,  HF with the CMS-7  membrane
will perform for a longer  duration  than fibers  without the  membrane  because
CMS-7 is non-fouling,  thus providing prolonged  function.  Thus, use of the CMS
oxygenator  will enhance  performance of hepatocytes in the Sybiol(R)  Bio-Liver
Device.  Prolonged BAL  performance  will provide the treatment the patient with
acute or chronic hepatic failure requires.


C.  RELEVANT EXPERIENCE

Dr. Nina Lamba (Principal Investigator) - Through her graduate and post-doctoral
studies,  Dr. Lamba developed an extensive knowledge of bioengineering,  and the
advancing field of tissue engineering. Recently appointed as the Director of the
Biomedical  Research  Division  of  Compact  Membrane  Systems,   Inc.,  she  is
overseeing  projects  to develop  oxygenation  devices  for  extracorporeal  and
intravenous  application  and an artificial  liver project based on a dual fiber
bioreactor.  These  programs are also funded  through the NIH SBIR program.  The
information  gathered  from  these  investigations  can be  directly  applied to
advance the development of membrane devices to oxygenate bioartificial organs.



                                       13
<PAGE>

Dr. Stuart M. Nemser  (President - Compact Membrane Systems) - Dr. Nemser has 25
years   experience  in  the  development  and   commercialization   of  membrane
technologies.  Dr. Nemser identified and patented the family of PDD polymers for
separations.  Related to PDD-TFE  copolymer  development,  E.I. DuPont holds key
patents on the PDD monomer and  associated  polymers.  Dr.  Nemser has a strong,
close working relationship with the key DuPont groups and DuPont is committed to
exclusively  supplying Dr. Nemser with PDD-TFE  copolymers for evaluation in key
membrane separation  applications.  In his current position as President of CMS,
Dr. Nemser is focused on commercializing this family of PDD polymers.

Compact Membrane Systems,  Inc. - CMS is currently  involved in two key research
areas that relate directly to this program: 1) PDD-TFE copolymer development and
2) thin film membrane development. Markets where CMS is presently active include
membranes to facilitate oxygen transfer to blood and to an artificial liver, and
membranes  to  facilitate  ozone to water for  disinfection  of food  processing
plants and dental equipment.  We anticipate starting a BAL project on developing
a dual fiber bioreactor  (integral O2 verus the in-series  oxygenation  proposed
here)  shortly.   Compact  Membrane  Systems,   Inc.  has  also  made  excellent
commercialization  progress  since  receiving its first Phase II SBIR in the 4th
quarter of 1994.  Our  accomplishments  during the last five years  include  the
following:

(1)  Sales/royalties  have  doubled  each of the last four  years  and  exceeded
     $290,000 in 1999.
(2)  We have established a long term licensing and supplier  agreement with Pall
     Corporation  (sales of  $1,000,000,000).  This  agreement will be supplying
     between  $100,000 and $200,000  minimum annual royalty for their sales into
     the  semiconductor  market using our  chemically  resistant  bubbleless gas
     delivery system.  Equally important,  Pall Corporation has agreed to supply
     us with  membrane  systems.  This  now  provides  us  with a large  quality
     supplier to drive our technology into the semiconductor and other markets.
(3)  We have established a strong  relationship  with Praxair and their membrane
     subsidiary  Innovative  Membrane Systems,  Inc. (IMS).  Praxair is a global
     leader in  industrial  gases  ($5,000,000,000/yr)  and they provide us with
     excellent  market  access and  needed  module  manufacture.  CMS and IMS in
     collaboration  with a major industrial  diesel  manufacturer  have invested
     over $150,000 developing an improved CMS membrane.
(4)  We are commercially supplying  Celgard/Hoechst  standard degassing modules.
     Sales to date to Celgard/Hoechst have been in excess of $100,000. They have
     introduced  our  technology  as a separate  product line for  degassing low
     surface energy fluids.
(5)  Our portable membrane systems for supplying oxygen for respiratory care has
     been  developed  and  will be  submitted  shortly  for FDA  approval.  Five
     separate   companies   have   presented   proposals   to  CMS   for   joint
     commercialization  of this  technology.  One  company  (Chad  Therapeutics)
     commissioned a market research study that  identified a market  opportunity
     of $30,000,000 (20,000 units per year at $1500 per system).
(6)  E.I. DuPont, from whom we have licensed the original technology,  continues
     to show  interest in our  technology.  DuPont has provided CMS in excess of
     $100,000 of key  equipment  (e.g. GC and mass  spectrometer)  and access to
     other facilities (e.g. SEMs and computer  models).  They also have supplied
     us  with  research  materials  that  are  not  available   commercially  or
     developmentally.
(7)  We have filed nine  patents  and four have been  either  issued or allowed.
     These patents will provide us with a sustainable competitive advantage.



                                       14
<PAGE>


Please refer to the Biographical  Sketches and Bibliography  section for details
on key personnel, including consultants.


D.  EXPERIMENTAL DESIGN AND METHODS

         The protocols described below will demonstrate the improved performance
achieved  with the  Sybiol(R)  system by improving the function of the in-series
oxygenator.  It is critical for CMS and its  collaborators  to demonstrate  such
advantages before moving to commercialization.

1.       Fabrication of CMS Oxygenators
         ------------------------------

         Compact   Membrane   Systems,   Inc.  (CMS)  will  fabricate   improved
oxygenators appropriate for use with the Sybiol(R) device. Subtasks include:

1. SELECT MODULES  APPROPRIATE  FOR USE WITH  MICROCARRIERS - The primary design
consideration  will be choosing a configuration  which will allow passage of the
hepatocyte  microcarriers.  Although  Phase I  hepatocyte  testing  will not use
microcarriers,  CMS  plans to  design  the  oxygenator  so  microcarrier  use is
possible.  Exten  Industries has used  microcarriers  in the past, but has found
that in a recirculating  system,  attachment is not necessary for function (42).
For future commercialization,  CMS believes that the ability to function with or
without microcarriers, for use with either Sybiol(R) or similar devices, will be
advantageous.  Typical  microcarriers  such as those  proposed for the Sybiol(R)
device are  150-200(mu)m  in  diameter.  This  requires  the  development  of an
oxygenator  which  will  not  entrap  microcarriers.  There  are  at  least  two
approaches  to avoid this  problem.  First,  we could use  modules  with a lower
packing density (fewer fibers per unit area) so microcarriers  could flow freely
on the outside (shell) of the fibers with oxygen/air on the inside (lumen).  The
second design option is to use large diameter  fibers so that the perfusate with
microcarriers  can pass  through the lumen with gas in the shell.  The former is
preferable  to obtain  higher mass  transfer  rates.  CMS has a number of module
options  available  to address  this  issue.  We plan to  purchase  commercially
available  polypropylene  (PP)  hollow  fiber (HF)  modules  from  Celgard  (see
attached letter).  In a routine process,  CMS currently applies the CMS membrane
to Celgard PP modules  for  commercial  sale by Celgard  for  industrial  liquid
degassing.  However,  for this BAL project we will require modules with either a
lower fiber packing density or a larger fiber inside diameter (ID).

         Although CMS does not anticipate  problems with availability of Celgard
modules in the  appropriate  configurations,  other  options are available to us
should the Celgard  modules not be feasible.  We have  experience  with in-house
fabrication of modules using commercially  available fibers, and have fabricated
such  modules  in a variety  of  configurations,  sizes,  and with a variety  of
different  fiber   materials  and  IDs.  In  addition,   recently  CMS  acquired
Intravenous Oxygenator (IVOX) fabrication equipment and will soon begin in-house
fabrication  for a Phase II NIH SBIR project.  This  equipment and the knowledge
gained from this project will be applicable to in-house module fabrication. This
would permit design and fabrication of either low packing density or large fiber
diameter modules.  CMS also has access to polysulfone  fibers in larger IDs with
the CMS membrane applied to the outside from Innovative  Membrane  Systems,  Inc
(IMS)(see attached letter).  Once the CMS membrane is applied to the polysulfone
support,  "wet  out" is no  longer a  problem.  Thus,  CMS  does not  anticipate
problems with obtaining the  appropriate  module  configurations  for oxygenator
fabrication.

2.  APPLY THE CMS  MEMBRANE  - Applying  the CMS-7  membrane  to HF modules is a
routine  procedure  at  CMS.  First  the  CMS-7  polymer  is  dissolved  in  the
appropriate perfluorosolvent,  then pushed through the module shell (for outside
coating) or fiber bore (for inside  coating).  The solution is then removed from
the module,  taking into  consideration  the need to remove all residual solvent
and polymer. After allowing the module to sit for an appropriate period of time,
the module is dried to remove any residual  solvent.  Our in-situ  technique for
applying the CMS  membrane  lends  itself to easy scale up and  multiplicity  of
production  units.  As shown in Tables 5 and 6, CMS is able to coat  either  the
inside or outside  of a variety  of module  types.  Key  variables  that we will
consider are coating solution concentration and in-situ coating conditions, such
as solution  pressure and flow rate.  We will focus on assuring that there is no
significant   change  in  fiber  ID  while  developing  high  transmembrane  gas
transport.   We  will  also  be  sensitized  to  any  issues   associated   with
biocompatibility and potential system leaks.



                                       15
<PAGE>

3. TEST  GAS/GAS  PERFORMANCE  OF  MODULES  - After  these  membranes  have been
fabricated,  we will do initial  non-destructive,  in-house,  gas-gas testing to
determine  if these  modules  are  meeting  our  target  performance  goals.  We
routinely use  oxygen/nitrogen  selectivity and membrane  thickness  (calculated
based on nitrogen GPUs, Gas Permeation Units) to establish membrane quality.

4. TEST PERFORMANCE WITH MICROCARRIERS - Successfully fabricated modules will be
tested for performance  with unseeded  microcarriers  to visualize  microcarrier
flow  patterns.  Using a dye to  color  the  microcarriers  will  make  tracking
microcarrier flow easier.  This subtask will allow us to determine which modules
will perform  best with the  microcarriers.  If any problems are noted,  we will
consider other module sources and configurations.  The best performing module(s)
will be used for mass transfer testing in Task 2.


2.       Testing of Oxygen Flux of CMS Oxygenators
         -----------------------------------------

         Modules successfully fabricated in Task 1 will be used for initial mass
transfer testing to determine oxygen flux and operating range.  With the current
silicone  rubber-based  passive oxygenation system used for in Sybiol(R) device,
control of oxygen flux is not possible.  For each module type or configuration a
comparable module without the CMS membrane will be used as a control.

         Initial oxygen flux testing will use an oxygen sweep on the unsupported
(no CMS-7  membrane)  side of the PP fibers and water on the  supported/membrane
side.  The rate of oxygen  uptake  with time and the mass  transfer  coefficient
(K1a) will be measured.  In our studies, we focus on oxygen transfer rather than
carbon  dioxide  transfer,  because if O2  transport  is  optimized,  the faster
permeating  CO2 will be maximized as well.  The pressure will be kept low enough
to prevent bubbling.  Water and media flow rate will be similar to the flow rate
currently  used  for the  Sybiol(R)  system,  and we will  vary  oxygen  flow to
determine  optimal  flow  rate  and  pressure.   In  testing  conducted  for  an
aquaculture  project, CMS observed that oxygen removal from water did not differ
significantly  between  modules  with and  without  the CMS  membrane,  but that
differences could be observed between manufacturers. We are currently developing
oxygen mass transfer  testing as a means to determine  membrane  suitability for
gas/liquid  applications,  so it is appropriate  to include such testing.  After
preliminary  tests with water, we will repeat these tests using Chee's essential
media,  the cell  culture  media we will  use for the  hepatocytes.  To test the
operating  range,  the gas  pressure  will be increased  and a suitable  surface
wetting agent will be added. Increased pressurization tends to cause fouling and
wet out (liquid  penetrations)  with  uncoated PP. The  experiment  will then be
rerun as described above.  With this task, we will  demonstrate  which module(s)
provides  the most  appropriate  oxygen  flux  into  water and  media,  and what
conditions (ie oxygen flow rate and pressure) are needed.


3.       Hepatocyte Isolation
         --------------------

         Primary porcine hepatocytes will be isolated by established  techniques
(27).  Briefly,  a  modification  of  Seglen's  two step  collagenase  digestion
procedure will be used.  Female  Yorkshire swine (~12 kg) will be  anesthetized,
intubated,  and supported with supplemental  oxygen. The liver perfusion will be
performed in situ under sterile  conditions.  The liver will be perfused via the
vena cava with a calcium  free buffer until clear of blood.  Collagenase  buffer
solution will be perfused until the liver is visibly  digested and then excised.



                                       16
<PAGE>

The liver will be minced  gently and washed  three  times with an iced  buffered
salt solution and sedimented by centrifugation. The final hepatocyte slurry will
be resuspended in supplemented Chee's essential media (Gibco,  GrandIsland,  NY)
to a concentration  of ~35 x 10(6) cells/ml.  Typical  hepatocyte  yield is 17 x
10(9)  at  85%  viability.  Porcine  hepatocytes  have  been  chosen  for  these
investigations based on the following:

1.  MultiCell  Associates  (MCA) has nearly 10 years of experience  with porcine
hepatocytes  having  developed in vitro growth and maintenance  requirements and
developed   proprietary   procedures   for   their   isolation,    culture   and
cryopreservation.

2. Porcine hepatocytes are the cell of choice in most ongoing clinical trials of
temporary liver support  systems.  Vitagen,  Inc. uses their  proprietary  human
tumor-derived  C3A  cell  line,  which  in a study  comparing  them  to  porcine
hepatocytes in vitro expressed much lower detoxification functions.

3. Human hepatocytes,  while theoretically  optimal,  are in limited supply. The
scarcity of donor human livers for transplantation severely limits the potential
to procure human  hepatocytes  in  commercially  feasible  numbers for temporary
liver support systems. In addition,  the function of human hepatocytes is highly
variable. Specifically, enzymatic function decays substantially within the first
24-48 hours after cell isolation.

         Unlike porcine  hepatocytes,  the  methodologies  to procure and freeze
large quantities of human  hepatocytes have not been well  established.  MCA has
tested human hepatocyte  cultures produced by  Biowhittaker/Clonetics,  S. Strom
and  others but found them to be of poor  quality,  with no P450  detoxification
expression  in vitro.  Currently,  we feel they are a poor choice of cell to use
for liver assist device design and  optimization.  Rat hepatocytes would be more
readily  available and far less costly than pig, but in our  experience and that
of others they can not be easily  scaled-up to clinical  size  devices,  are not
representative  of either human or porcine  hepatocyte  function;  and have very
different  requirements  for in  vitro  maintenance  than  either  pig or  human
hepatocytes.  MCA is developing an immortalized  nontumorigenic human hepatocyte
cell  line  which  may be  used in  future  studies,  however,  their  stage  of
characterization  makes it premature to use. The zoonotic concerns raised by the
use  of  porcine  hepatocytes  remain  unresolved.  The  findings  that  porcine
endogenous  retrovirus (PERV) (Patience,  et al., 1997) could infect human cells
in vitro led to a moratorium on clinical trials  involving  porcine tissue.  The
FDA is now examining each clinical trial on a case-by-case basis and has allowed
many to go forward including the Phase III pivotal of Circe Biomedical's porcine
hepatocyte-based  extracorporeal liver support system,  "HepatASSIST." Among the
requirements for these studies to continue are the archiving donor and recipient
sera and tissues and patient  follow-up  protocols.  While France and the United
Kingdom are still on clinical holds,  clinical  trials have been  reactivated in
Holland,  Germany,  Italy,  and  Belgium.  While the debate  continues,  we must
proceed  cautiously under the prevailing  guidelines and regulations of the FDA,
but we should not rule out the clinical use of  porcine-derived  hepatocytes  at
this time.


4.       In Vitro CMS Oxygenator Performance with Recirculating Hepatocytes
         ------------------------------------------------------------------

         The  Sybiol(R)  Bio-Liver  Device,  as  described  in section  B.2. and
diagrammed  in  Figure  1, is  based on  recirculation  of  hepatocyte  cells in
suspension.  Preliminary  tests  will  include a  recirculating  loop of primary
porcine  hepatocytes  isolated as described above with oxygen delivery  provided
in-series  by the CMS  oxygenator.  This will allow for initial  cell  viability
testing before  integrating with the entire  Sybiol(R)  Bio-Liver Device to test
detoxification  function.  In  all  experiments,   monloayer  cultures  will  be
established  as controls,  maintained  and tested in parallel to the  bioreactor
cultures to ascertain viability of the isolated hepatocyte population. To reduce
the number of animals needed for this study,  only the most promising one or two
CMS oxygenators will be used for this testing. We may also choose to use smaller
scale/lower volume systems for these test.

         In these studies,  the freshly  isolated cells will be inoculated  into
Chee's  modified  media at a  density  of 35 x 10(6)  hepatocytes/cc  of  system
volume. Initial viability will be assessed with Trypan Blue staining.  Viability
of the  hepatocytes  will be  monitored  over  the  culture  period  by  lactate
dehydrogenase (LDH) leakage into the media  reservoir.(35)  Assay of LDH leakage
offers a non-invasive  method to evaluate plasma membrane  integrity  confirming
that  metabolism of the test substrate is not due to  "persistence of microsomal
activity in non-viable cells."



                                       17
<PAGE>

         Morphologic  evaluation  of the  hepatocytes  maintained  will  also be
performed by sampling the cell culture media at regular intervals.  Samples will
be extracted and the cells evaluated using  fluorescein  diacetate and propidium
iodide labeling to detect viability by fluorescence microscopy. We recognize the
critical  importance  of the multiple in vitro  environmental  factors which can
influence  cell  function  beyond  simple  oxygenation.  In fact,  in an  effort
supported by Circe Biomedical to develop the biological component of their liver
support   system.(36,37);   MCA  scientists  have  studied  media  formulations,
substrate  requirements,  and other conditions of porcine  hepatocyte culture to
develop proprietary methods for their isolation,  culture,  and cryopreservation
(USPN5,795,711; USSn 08/5,411,462).

         A key objective of this program is to use our high gas flux  non-porous
membranes  to supply  needed  dissolved  oxygen in order to maintain  hepatocyte
viability.  If  cell  viability  is  not  maintained  by the  testing  procedure
described  above we will first  consider  exploring  other  types of modules and
membrane   configurations   available   to  address  this   problem.   If  these
modifications  are not successful we will consider media related  modifications.
Previous studies using rat hepatocytes  showed Chee's media supported pO2 levels
up to 100 mmHg.  We will soon begin a similar NIH SBIR project on  bioartificial
livers (based on a dual fiber  bioreactor)  that should address issues of oxygen
carrying capacity of the media; thus, for this project, we will have established
the media  limitations and requirements.  Nevertheless,  if higher O2 levels are
necessary  for  porcine  hepatocytes,  we  will  explore  the  incorporation  of
hemoglobin and/or  perfluorinated  species to improve oxygen carrying  capacity.
(38,39)


5.       In Vitro CMS Oxygentator Performance with the Sybiol(R) System
         --------------------------------------------------------------

         The CMS oxygenator  will be placed in line with the complete  Sybiol(R)
Bio-Liver  Device (see Fig. 1),  including the HF cartridge  that acts as a cell
culture media/blood interface.  Before using the device for patients, trial runs
are recommended to test the hepatocyte  suspension  quality.  Standard operating
procedures  for these trials will be the model for this  task.(40) The Sybiol(R)
will be filled with 250ml of hepatocyte  suspension in the hepatocyte loop, with
300ml of albumin  solution or frozen plasma in the blood loop,  functioning in a
"closed loop"  configuration.  A stock solution of 100 mM ammonium chloride will
be prepared,  and 5.5ml will be added to the blood loop. Urea production will be
measured. Three additional substrates will be used: acetaminophen,  diazepam and
7-ethoxycoumarin  (7-EC).  (Refer to the  "Significance"  section for details on
hepatocyte  function).  Levels of albumin (a  hepatocyte  specific  protein)  in
culture  media will also be measured  by ELISA.  Diazepam  (50 ug/ml),  7-EC (50
mg/mL),  and  acetaminophen  (5mM)  will  be  added  to the  blood  loop.  These
preliminary  tests will last 6-8 hours.  Prior testing with the Sybiol(R) device
has  demonstrated  sufficient urea  production (83% of ammonium  chloride added)
after six hours (40).  The cultures will be incubated  with the test  substrates
for three hours,  at which time media  samples  will be collected  from each and
stored at -30(degree)C  for later assay.  Diazepam and 7-EC  metabolites will be
analyzed by high  performance  liquid  chromatography  (HPLC) methods  described
previously by Jauregui et al (33). Acetaminophen will also be determined by HPLC
(34).  The conversion of ammonia to urea will be measured by a kit assay (Sigma,
St Louis,  MO). As with Task 4 we will  monitor  hepatocyte  viability  over the
culture period by lactate  dehydrogenase (LDH) leakage into the media reservoir.
Monolayer  cultures  will be  established  as controls to  ascertain  functional
integrity of the isolated hepatocyte population.

         Performance of the oxygenation  fibers (based on ability to deliver the
required oxygen, resistance to breakthrough, etc.) will also be monitored during
testing. If possible, once testing is complete, the oxygenators will be returned
to CMS for oxygen  transfer  rate  testing to see if any changes  have  occurred
while the oxygenators were in use. Results will be statistically  analyzed using
ANOVA and student's t test.




                                       18
<PAGE>

6.   Evaluation of Results and Preparation for Phase II
     --------------------------------------------------

         Success will be  determined  by our ability to fabricate  polypropylene
hollow fiber modules  appropriate  for  oxygenation  of the Sybiol(R)  Bio-Liver
Device that do not severely inhibit microcarrier passage and that provide oxygen
transfer  equal or  superior  to that of  comparable  modules  without the CMS-7
membrane.  We will  demonstrate  that,  when  the  Sybiol(R)  system  is used in
conjunction  with the CMS  oxygenator,  hepatocyte  viability is  comparable  or
superior to that of cells  oxygenated  with  control  oxygenators.  We will also
demonstrate  that the CMS  oxygenator  significantly  enhances  primary  porcine
hepatocyte  phase 1 and 2  detoxifications  when the CMS  oxygenator  is  placed
in-series in the Sybiol(R) system. Furthermore, we will demonstrate that the CMS
oxygenator  provides  longer term  performance  due to resistance to wet out and
fouling.  This  will set the  stage  for  Phase  II,  which  will  include  more
comprehensive  short-term  testing of primary and immortalized  hepatocytes (MCA
has  developed  a cell line that  functions  best in  suspension),  longer  term
functionality  tests,  and in vivo  animal  trials.  Working  with MCA and Exten
Industries will be important factors in determining project success.

<TABLE>
<CAPTION>
<S><C>
 Timeline of Scheduled Tasks and Responsibilities:
 -----------------------------------------------------------------------------------------------------------
                Tasks                                          Months                        Key
                                           1   2   3   4   5    6   7   8   9   10  11   12  Responsibility
 -----------------------------------------------------------------------------------------------------------
 1) Fabricate Oxygenators                  ---------->                                       CMS
 2) Oxygen Mass Transfer Testing                      ------->                               CMS
 3) Hepatocyte Isolation                                      -------->                      MCA
 4) Test with recirculating hepatocytes                           ---------------->          MCA
 5) Test with Sybiol(R)                                                         ---------->  MCA/Exten
 6) Plan Phase II                                                                      ----> CMS/MCA/Exten
 -----------------------------------------------------------------------------------------------------------
</TABLE>

F.  VERTEBRATE ANIMALS

MCA's (Dr. Jauregui) primary facility (~ 4500 sq ft.) is located in Warwick,  RI
where  activities  focus on the  development  of human  origin  cell  lines  for
therapeutic  and  diagnostic  applications.  Additionally  MCA has a contractual
agreement  with Rhode  Island  Hospital  (RIH)  leasing ~750 sq ft of office and
laboratory  space for their porcine  hepatocyte-based  activities.  Through this
agreement,  MCA has access to RIH's AALAC  accredited  Central  Animal  Facility
which includes sterilization,  surgical, and husbandry facilities. Additionally,
the  RIH-MCA  agreement  provides  for MCA  access  to  numerous  Core  Research
Laboratory  services  including:  electron  microscopy,  digital  imaging,  flow
cytometry  etc. on a fee for service  basis.  MCA  anticipates  IACUC review and
approval of the animal procedures  described in this Phase 1 SBIR proposal to be
completed by May 2000.


G.  CONSULTANTS - See attached letters


H.  CONTRACTUAL AGREEMENTS

         Contractual  agreements have been established with Dr. Hugo Jauregui of
MultiCell Associates, Inc. and Barbara Corbett of Exten Industries.


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3.   Sussman,  NL, JH Kelly.  1996.  Artificial liver support.  Clin Invest Med.
     19(5):393-99.



                                       19
<PAGE>

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