SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C.  20549
                                        
                                   FORM 10-K

X  ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934   (Fee Required)

        For the year ended December 31, 1997

   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
   EXCHANGE ACT OF 1934 (No Fee Required)

        For the transition period from _______ to _______

                  Commission File Number 0-19041

                   AMERICAN BIOGENETIC SCIENCES, INC.

            (Exact name of registrant as specified in its charter)

       DELAWARE                               11-2655906

(State or other jurisdiction of     (I.R.S. Employer Identification No.)
 incorporation or organization)

1375 Akron Street, Copiague, New York                  11726
(Address of principal executive offices)             (Zip Code)

                 516-789-2600

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:   None

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

                       Class A Common Stock
                         (Title of Class)

     Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the 
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.     Yes  X    No_____

     Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to 
the best of registrant's knowledge, in definitive proxy or information 
statements incorporated by reference in Part III of this Form 10-K or any 
amendment to this Form 10-K.       [ X ]

     As of the close of business on March 13, 1998, there were outstanding 
19,616,869 shares of the registrant's Class A Common Stock and 1,725,500 shares
of its Class B Common Stock. The approximate aggregate market value (based upon
the closing price on The Nasdaq Stock Market s National Market) of shares held
by non-affiliates of the registrant as of March 13, 1998 was $32,809,000.

                 DOCUMENTS INCORPORATED BY REFERENCE
     Portions of the registrant's Proxy Statement relating to its 1998 Annual
Meeting of Stockholders are incorporated by reference into Part III of this
report.

Cover Page 1
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                                PART I

Item 1.   Business

General

     American Biogenetic Sciences, Inc. ( ABS  or the  Company ) is
engaged in the research and development of cardiovascular and
neurobiology products for commercial development.  The Company
conducts research and development at its own research facilities and
through its Global Scientific Network  in the U.S., Europe, China,
Israel and Russia.  In February 1997, the Company moved its research
and development facilities to Boston, Massachusetts.  The Company's
enabling technology is a patented antigen-free mouse colony which
allows the generation of highly specific monoclonal antibodies that
are difficult to obtain from conventional systems.  The Company has
utilized this technology to supply antibodies for its innovative in
vitro and in vivo diagnostic products.

     Over the last few years the Company has directed its efforts
primarily toward the development of cardiovascular and neurobiology
products, which has led to the development of the Company's Thrombus
Precursor Protein (TpP ) test, an assay for the risk assessment of
thrombosis and the monitoring of anticoagulant therapy, and Functional
Intact Fibrinogen (FiF ) test, an assay to measure levels of
fibrinogen in blood, as well as the Company s patented specific
monoclonal antibody MH1, with radioisotope, for use as an in vivo
agent.  In June 1996, the Company filed with the United States Food
and Drug Administration (FDA) for 510(k) pre-market clearance (see
 Government Regulation  for a discussion of the 510(k) process) for
its TpP  test, clearance for which was received from the FDA in
October 1996, to aid in the risk assessment of thrombosis (blood clot
formation) and the monitoring of anticoagulant therapy.   In January
1997, the Company filed a 510(k) pre-market notification with the FDA
to market its FiF  test, clearance for which was received from the FDA
in June 1997.  The Company initiated its marketing efforts for TpP 
and FiF  by exhibiting and presentation of its products at the MEDICA
'97 trade show held in Dusseldorf, Germany in November 1997.  As a
result of this effort, the Company made initial sale of TpP kits in
1997 and has subsequesntly made sales of TpP  kits to European and
Japanese distributors.

     ABS was incorporated in Delaware in September 1983.  The
Company's principal executive offices are located at 1375 Akron
Street, Copiague, New York 11726 and its telephone number is 516-789-
2600.

     In order to keep investors informed of the Company s future plans
and objectives, this Report (and other reports and statements issued
by the Company and its officers from time to time) contains certain
statements concerning the Company s future results, future
performance, intentions, objectives, plans and expectations that are
or may be deemed to be  forward-looking statements . The Company s
ability to do this has been fostered by the Private Securities
Litigation Reform Act of 1995 which provides a  safe harbor  for
forward-looking statements to encourage companies to provide
prospective information so long as those statements are accompanied by
meaningful cautionary statements identifying important factors that

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could cause actual results to differ materially from those discussed
in the statement.  The Company believes it is in the best interests of
investors to take advantage of the  safe harbor  provisions of that
Act.  Such forward-looking statements are subject to a number of known
and unknown risks and uncertainties that, in addition to general
economic and business conditions (both in the United States and in the
overseas markets where the Company also intends to distribute
products), could cause the Company s anticipated results, performance,
and achievements to differ materially from those described or implied
in the forward-looking statements.  Factors that could cause or
contribute to such differences include, but are not limited to, the
Company s ability to complete products under development and to
maintain superior technological capability, foresee changes and
identify, develop and commercialize innovative and competitive
products (see  Products in Development  below), obtain widespread
acceptance of its products by the medical community, including the
reliability, safety and effectiveness of such products (see "Marketing
and Sales" below), meet competition (see  Competition  below), comply
with various governmental regulations related to the Company s
products and obtain government clearance to market its products (see
 Government Regulation  below), successfully expand its manufacturing
capability (see  Manufacturing  below), attract and retain
technologically qualified personnel (see  Personnel  below), and
generate cash flows and obtain collaborative or other arrangements
with pharmaceutical companies or obtain other financing to support its
product development testing and marketing operations and growth (see
 Management s Discussion and Analysis of Financial Condition and
Results of Operations  in Item 7 of this Report).

Global Scientific Network 

     ABS' operations are comprised of a portfolio of interrelated
programs and projects seeking a high level of synergism between ABS'
management and its scientific entities.  This synergistic relationship
has led to the formation of the Company s Global Scientific Network
for promoting and facilitating collaborative scientific research
leading to product development.

     This network brings together interactive teams of scientists from
many disciplines in a joint effort to expedite the research,
development and commercialization of ABS' diagnostic and therapeutic
products.  This resource offers ABS' management a first look at new
technologies available in addition to a network of certain scientific
leaders who offer advice and direction.  To facilitate the
identification and screening of new technologies, ABS has scientific
coordinators in St. Petersburg, Russia; Beijing, China; and Jerusalem,
Israel.  These activities are coordinated from ABS' office in Dublin,
Ireland.

     ABS is currently collaborating with leading medical and
scientific institutions worldwide including University College Dublin,
Ireland; University of Hanover, Germany; William Harvey Research
Institute, London, England; and Research Center for Medical Genetics,
Russian Academy of Medical Sciences, Moscow, Russia.

     The Company, under its Global Scientific Network, has entered
into various agreements which generally grant the Company an exclusive
license to the results of the research.  Pursuant to these agreements,
the Company is paying certain research expenses and the costs of
filing and processing patent applications in the United States and
other countries, and is to pay the inventors or the university a

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royalty, which is typically 5% of net product sales.  The term of 
each agreement, generally, is the duration of any patents that may be
granted with a minimum term of 10 years.

The Antigen-Free Mouse Colony -- Monoclonal Antibodies

     ABS' enabling technology is a patented antigen-free (AF) mouse
colony which allows the generation of highly specific monoclonal
antibodies that are difficult to obtain from conventional systems. 
The Company utilizes this technology to supply antibodies for its in
vitro and in vivo diagnostic products.  The proprietary AF mouse
colony is maintained in a germ-free environment and fed a chemically
defined and ultrafiltered diet. When the antigen-free mice are
challenged with a foreign entity, there is a large immune response
that eventually results in the proliferation of a large number of
specific monoclonal antibody secreting cells.  The AF mouse colony is
covered under the Company's U.S. Patent No. 5,223,410, entitled
 Method for Production of Antibodies Utilizing an Antigen-Free
Animal , and U.S. Patent No. 5,721,122, entitled "Method Comprising
Immunization of Antigen-Free Mice

Medical Background For Cardiovascular Products

     Several epidemiological studies have revealed a significant
causal relationship between high fibrinogen levels and coronary artery
disease (CAD).  These studies suggest that events leading to CAD are
caused as much by biochemical processes in the coagulation system as
by the metabolism of cholesterol.  One of the landmark trials, the
Framingham epidemiology study (1985) conducted at the Institute for
Prevention of Cardiovascular Disease at the Deaconess Hospital,
Harvard Medical School, concluded that elevated levels of fibrinogen
 exceeded that of all risk factors except elevated systolic blood
pressure .

     Studies support that individuals with elevated levels of
fibrinogen are predisposed to thrombosis.  On the other hand,
diminished levels may result in hemorrhage.  Thus, reagents that can
be used to measure fibrinogen can play a vital role in determining the
appropriate level of thrombolytic therapy, as well as determine an
individual's risk of CAD.

     The Company has developed, through its AF mouse colony,
monoclonal antibodies that react specifically with both fibrinogen and
fibrin.

     Some of the most hazardous sites for inappropriate blood clot
formation include, the coronary arteries where a blood clot can lead
to myocardial infarction (heart attack); the arteries leading to the
brain, where a blood clot can cause stroke; and the veins of the legs
which can lead to a pulmonary embolism.

     Thrombi (blood clots) that form in the bloodstream consist of two
major parts: a cellular component made up of platelets, and a meshwork
of fibrin fibers which cements the platelets into an insoluble mass
which has the mechanical strength to withstand the pressure of blood
in the circulation.  The fibrin component is insoluble and is derived
from a blood protein, fibrinogen, that is manufactured in the liver. 
When thrombin, an enzyme produced in response to injury of a blood

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vessel, is present in blood, it converts soluble fibrinogen to fibrin
at the site of vascular injury.

     Just as the generation of thrombin is the seminal event in fibrin
formation, the generation of plasmin plays the major role in
fragmentation of the fibrin meshwork, a process known as fibrinolysis. 
Like thrombin, plasmin does not ordinarily circulate in plasma but is
derived from the circulating protein plasminogen when the fibrinolytic
system is activated.

     In addition to causing fragmentation of fibrin, plasmin also
attacks fibrinogen and institutes changes in its structure that
prevent its polymerization to fibrin.  In extreme cases
fibrinogenolysis, e.g., dissolution of fibrinogen, can lead to
bleeding caused by lack of clottable fibrinogen.

     Fragmentation of fibrin leads to the production of soluble fibrin
degradation products that circulate in plasma and are generally
elevated in patients following a thrombotic event.  Since all these
products are proteins, it is possible to produce antibodies that can
react specifically with individual fibrin degradation products.

Products in Development

     In Vitro Diagnostic Tests Based on Monoclonal Antibody 45J

     The Company in February 1992 obtained U.S. Patent No. 5,091,512
for a monoclonal antibody, designated 45J, that recognizes
(crossreacts with) fibrinogen and intended to be used as an in vitro
diagnostic tool for assessing accurate measurement of fibrinogen in
blood.  The 45J antibody recognizes a structural epitope on the
fibrinogen molecule that is destroyed when plasmin converts fibrinogen
to its degradation products.  As a result, the antibody does not
cross-react with plasmin-generated degradation products, nor does it
recognize the major degradation products of cross-linked fibrin, e.g.,
D-dimer.
     On January 24, 1992, the Company entered into an agreement with
Yamanouchi Pharmaceutical Co., Ltd. ( Yamanouchi ) of Japan granting
Yamanouchi the exclusive right to manufacture, use and sell in Japan
and Taiwan diagnostic test kits which utilize 45J.  Pursuant to the
license agreement, Yamanouchi made an initial payment to the Company
of $1,000,000, and is to pay a 10% royalty of net sales, if any, made
in Japan and Taiwan.  In accordance with the provisions of the
agreement, Yamanouchi withheld $100,000 of this payment to make
withholding tax payments under the laws of Japan on behalf of the
Company, resulting in a net remittance to the Company of $900,000. 
Additionally, the license agreement requires Yamanouchi to purchase
its 45J requirements from the Company.  The agreement is for a period
of fifteen years, provided that if any of the Company's patent rights
for 45J have not yet expired at the end of that period, the agreement
will continue until such expiration.  Yamanouchi and the Company have
also agreed not to disclose confidential information that one party
may reveal to the other for a period of five years from the date of
the disclosure.  The Company has filed a patent application in Japan
relating to 45J. Yamanouchi is required to use its best efforts to
obtain all required governmental approvals, authorizations and

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consents and is to bear the expense of generating clinical data and
other information required to obtain said approvals, authorizations
and consents of the agreement, its terms and any product distribution.

     Cadkit :  The first version of the fibrinogen test system
developed by the Company, a manual latex agglutination kit, is a
qualitative test that can be used for initial screening of a person's
blood to determine if fibrinogen levels are within the normal range. 
The test is intended to be quick and inexpensive.  Another intended
use is to monitor fibrinogen levels during thrombolytic therapy. 
Studies have shown that specific fibrinogen levels after therapy have
a high correlation with therapeutic success or failure.  If the level
is above the desired range, therapy is unlikely to be successful and,
if fibrinogen falls below the desired range, bleeding problems are
likely to occur.

     The Company received a 510(k) clearance from the FDA to commence
commercial marketing of the manual latex agglutination in vitro
diagnostic test.  See  Government Regulation.   The Company has,
however, elected to proceed instead with the development of a
Functional Intact Fibrinogen Assay (FiF ) a quantitative version of
the test.

     Functional Intact Fibrinogen Assay (FiF ):  The quantitative
version of the test developed by the Company is intended to be used on
automated or non-automated instruments.  This test is an
immunoprecipitation assay, known as Functional Intact Fibrinogen
(FiF ), and is intended to provide a direct and accurate quantitative
measurement of the amount of fibrinogen present in plasma.  In May
1996, a research group of the Framingham Heart Study reported that the
FiF  test to be an accurate method of detecting elevated fibrinogen
levels, a risk factor for cardiovascular disease.  Furthermore, the
findings demonstrated that the fibrinogen levels measured by the FiF 
test was correlated with the prevalence of cardiovascular disease both
by itself and when adjusted for age, weight, smoking and diabetes.  In
January 1997, the Company filed a 510(k) pre-market notification with
the FDA to market the FiF  test, clearance for which was received in
June 1997.

     Fibrinogen concentration in the blood is currently estimated by
functional clotting assays.  Thrombin, an enzyme that converts
fibrinogen to fibrin, is added to a sample of blood and the fibrinogen
concentration is estimated by the amount of time that passes before a
clot is formed.  The current clotting tests are an indirect measure of
fibrinogen which can be influenced by the presence of degradation
products of fibrin/fibrinogen.  FiF on the other hand is a direct
measure of fibrinogen that is not adversely influenced by these
products.


     Diagnostic and Therapeutic Products Based on Monoclonal Antibody MH1

     In June 1992, the Company obtained U.S. Patent No. 5,120,834 for
a monoclonal antibody (designated MH1) that is specific to fibrin and
does not react to fibrinogen or fibrin degradation products.  This
property sets it apart from all other fibrin specific antibodies known
to the Company.  Since an interactive epitope is located only on the

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fibrin molecule and is not found on the degradation products of fibrin
resulting from the fibrinolytic process, the Company believes that
these circulating degradation products will not interfere with the
performance of MH1 as an imaging agent, as a carrier of a thrombolytic
agent to a blood clot, or the ability of the antibody to inhibit clot
formation.  This is especially important since levels of fibrin
degradation products become extremely elevated during clot development
as well as thrombolytic (clot dissolving) therapy.  The Company is
seeking to use MH1 in four potential products described below:

     MH1 as an Imaging Agent:  The Company has labeled a Fab' fragment
of its MH1 with a radioisotope for use as an in vivo imaging agent to
show the size and location of blood clots in pre-clinical animal
studies and clinical human studies which generates an image with the
resolution required for commercial use.  The product is intended to
permit the rapid imaging of blood clots in the lungs, a condition
known as pulmonary embolism (PE); and the detection of blood clots in
the legs (a clinical condition known as deep vein thrombosis (DVT)).

     Traditional methods for detecting a thrombus in the circulatory
system have consisted of angiography, venography, duplex doppler and
monitoring radiolabeled blood clot components, derived from a human
donor, injected into the circulatory system and then absorbed by the
clot.  These procedures are costly, often may lack sensitivity and
some can pose potential risks to the patient.  The large quantity of
dye required in angiography and venography may cause kidney problems
and may irritate the walls of blood vessels.  Also, in angiography a
catheter is used for delivery of the dye into the arterial system
which adds further to the risk of the patient.  In contrast, only a
minimum quantity of the Company's radiolabeled MH1 need be used, and
since the antibody is not derived from man, there is no risk of human
blood-borne disease.  However, whenever a foreign substance is
introduced into the human body, there is the risk of an immune
reaction and cases of reactions to mouse-derived antibody have been
reported.

     The primary protein component of a thrombus is fibrin, and an
antibody that can differentiate fibrin from its plasma precursor,
fibrinogen, can be used when appropriately labeled with a
radioisotope, to image the site and extent of an occlusion and to
carry thrombolytic reagents to the site.

     In March 1993, the Company was cleared by the FDA, under an
Investigational New Drug (IND) application, to begin Phase I human
clinical testing of MH1 in imaging blood clots for PE and DVT, thus
becoming the Company's first product to be evaluated in humans.  In
January 1995, the Company completed Phase I testing for PE and DVT. 
The final Phase I report was submitted to the FDA in October 1995. 
Currently, the Company is compiling all necessary information
regarding Phase I/II clinical trials for MH1 imaging and will submit a
final report in 1998.  The Company at the same time is seeking
corporate partners to collaborate, license and conduct full Phase II
and Phase III trials. 

     Thrombus Precursor Protein (TpP ):  The TpP  test is an enzyme
immunoassay which uses ABS' monoclonal antibodies MH1 and 45J.  TpP
measures soluble fibrin polymers in blood to indicate active blood
clot formation (thrombosis) in individuals with possible myocardial
infarction (MI) and other clinical conditions precipitated by clot

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formation such as deep vein thrombosis (DVT).  Approximately 10
million people in the U.S. present with chest pain each year at
emergency rooms.  However, as much as 80% of these individuals do not
have a heart attack and may be suffering from some less serious
conditions.  An early warning test that establishes those patients
that are not having a heart attack will eliminate expensive diagnostic
procedures and unnecessary hospital admissions.  Furthermore, the
early identification of those patients who are forming life
threatening blood clots or suffering from a heart attack would permit
earlier use of thrombolytics (clot dissolving drugs) or
anticoagulants.

     Current biochemical tests for acute myocardial infarction (AMI)
measure cardiac muscle proteins which leak out as a result of dying
heart muscle.  Examples of muscle cell proteins used to confirm MI
include, creatine kinase (CK), creatine kinase MB isoform (CKMB),
lactate dehydrogenase (LD), troponin and myoglobin.  This release of
cardiac specific proteins only occurs 4-6 hours after the onset of
clinical symptoms; therefore, there is a clinical need for an earlier
warning of MI.  The detection of blood clot formation early in the
clinical event should facilitate proper identification and treatment
of MI patients with life saving, clot dissolving drugs. TpP relies on
the measurement of soluble fibrin polymers which are produced and
circulate freely when a clot starts to form, even before the onset of
clinical symptoms, and is elevated when the patient first begins to
experience chest pain.

     In addition, there are 12 million surgical procedures performed
each year in the U.S. alone which put patients at risk of forming a
blood clot.  TpP provides a means to measure intravascular coagulation
(fibrin formation) in post-operative patients to determine the risk of
deep vein thrombosis and its clinical sequelae, pulmonary embolism. 
As described in the TpP product insert, soluble fibrin polymers have
been identified by electrophoretic techniques in the plasma of
patients with different clinical conditions including myocardial
information (MI) and deep vein thrombosis (DVT).  Elevated soluble
fibrin levels, as determined by ELISA, have also been reported in
other clinical conditions where intravascular fibrin formation has
been indicated, included disseminated intravascular coagulation (DIC);
and patients undergoing surgical procedures who are experiencing
thrombotic complications.  It has also been demonstrated that TpP
levels are significantly lower in patients who are undergoing invasive
surgical procedures (e.g. PTCA) and have been adequately
anticoagulated.  Additional studies are underway.  The Company's TpP
test is also expected to offer physicians a screening tool to monitor
patients post-operatively for blood clot formation and to effect
therapeutic intervention if required and monitor their response to
anticoagulant therapy.  A study using the Company's TpP test to
monitor patients post-operatively for the formation of DVT was
conducted at Johns Hopkins School of Medicine and at the University of
Perugia, Italy.

     In September 1995, the Company obtained U.S. Patent No. 5,453,359
for the use of this test to measure intravascular fibrin polymer
formation in patients with symptoms indicating a blood clotting event.

     In October 1995, the Company entered into a license and
collaboration agreement with F. Hoffmann-La Roche, Ltd. ("Hoffman-La
Roche") for the co-development and marketing of the Company's TpP
assay for the detection of active thrombosis (blood clot formation). 
The agreement grants Hoffmann-La Roche a worldwide license to market

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the TpP test in a latex based particle agglutination format.  Under
the agreement, ABS has received certain, and is to receive additional,
development payments to adapt the TpP test in the latex based particle
agglutination format to Hoffmann-La Roche's automated diagnostic
systems.  ABS is also to receive milestone payments upon achievement
of certain commercialization goals.  The TpP test is to be
manufactured by ABS for use on Hoffmann-La Roche's instruments.  The
Company is to receive a percentage of Hoffmann-La Roche's net selling
price for the Company's manufacturing of the TpP test plus a 5%
royalty on net sales made by Hoffmann-La Roche.  Under the agreement,
the TpP test is also to be sold by ABS and Hoffmann-La Roche to other
diagnostic companies using similar particle agglutination technology. 
On these sales, gross profit is to be shared equally between the
Company and Hoffmann-La Roche.

     In December 1995, ABS entered into a license agreement with
Abbott Laboratories ("Abbott") for the marketing of the Company's TpP
assay.  The license agreement grants Abbott a worldwide license to
market the TpP test for Abbott's immunoassay formats.  ABS has and is
to receive non-refundable up-front and milestone payments upon
achievement of certain development and commercialization goals.  The
Company is to receive a 5% royalty on net sales made by Abbott.  In
addition, the reagent for the TpP test is to be manufactured by ABS
for use by Abbott. 

     In June 1996, the Company filed a 510(k) pre-market notification
with the FDA to market the TpP  test.  In October 1996, the Company
received 510(k) clearance from the FDA to market the TpP test to aid
in the risk assessment of thrombosis (blood clot formation) and the
monitoring of anticoagulant therapy.

     In September 1996, the Company entered into an agreement with
Gull Laboratories for the manufacture and distribution of TpP  in a
microtiter plate format.  Under the agreement, Gull will develop,
manufacture and market the TpP  test for use with Gull s DUET 
instrument.  ABS is to sell antibodies and proprietary reagents to
Gull, and will receive certain payments on Gull sales.  ABS may also
sell the products of the alliance directly or through its own
distributors.

     The Company and Gull also entered into a joint venture agreement
to develop a TpP  test to detect the early onset of blood clot
formation in renal dialysis patients.  Under the agreement, Gull is to
develop with ABS a TpP test in a format suitable for the thrombus
detection in dialysis patients.  Gull is to manufacture the products
of the venture and ABS will supply the critical reagents.

     The Company initiated its marketing efforts for TpP  and FiF  by
exhibiting and presentation of its products at the MEDICA '97 trade
show held in Dusseldorf, Germany in November 1997.  As a result of
this effort, the Company made initial sale of TpP kits in 1997 and has
subsequesntly made sales of TpP  kits to European and Japanese
distributors.
     
     In addition, the Company intends to develop, either itself or in
conjunction with outside sources, a hand-held, disposable, point-of-

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care device which will measure TpP levels in blood, either
qualitatively, semi-quantitatively or quantitatively.  The Company
intends to seek outside sources for the manufacture of its point-of-
care device.

     MH1 as a Delivery Vehicle for Thrombolytic Therapy:  ABS is
seeking to develop a product using MH1 as a delivery-vehicle for known
thrombolytics.  Tests by the Company have demonstrated the ability to
link MH1 to a known thrombolytic agent to form a potent, fibrin
specific, therapeutic agent which, in animals, has demonstrated
superior clot dissolving properties. In February 1997, the Company
obtained Patent No. 5,723,126 for this clinical application.

     MH1 as an Antithrombotic:  The Company is also investigating the
utility of MH1 as an antithrombotic agent for the interference and/or
inhibition of excess fibrin deposition in surgical procedures such as
angioplasty.  In January 1996, the Company obtained U.S. Patent No.
5,487,892 for this clinical application.

     There can be no assurance that the Company s products in
development will prove to be commercially viable, that any of the
products will receive regulatory clearance or clearance for particular
indications, or that the Company will successfully market any products
or achieve significant revenues or profitable operations.  The Company
is seeking to enter into additional collaborative, licensing
distribution, and/or co-marketing arrangements with third parties to
expedite the commercialization of its products.  However, there can be
no assurance that the Company will be able to enter into any such
additional arrangements, or if it does, that any such arrangements
will be on terms that will be favorable to the Company.

     Neurobiology Program

      The goal of this longer term program is to develop fine chemical
compounds to halt the progression of neurodegenerative diseases such
as Alzheimer's, Parkinson's, Amyotrophic Lateral Sclerosis (ALS), and
for the treatment of patients suffering from stroke.

     
     Diagnostic

     ABS has exclusive worldwide rights to U.S. Patent No. 5,492,812
issued in February 1996 covering a non-invasive blood test to detect
Alzheimer's disease.  The blood test detects tau-peptide fragments,
which are released into the blood by degenerating neurons in Alzheimer's
disease sufferers.  Because little tau-peptide is found in
normal blood, the Company believes that the blood test will be a test
specific to Alzheimer's disease. The Company's U.S. Patent is available 
for licensing and the Company is not actively commercializing this product.

     Therapeutics

     ABS, in collaboration with the National University of Ireland,
Dublin and fellow researchers within the Company's Global Scientific
Network, has identified chemical compounds for the potential treatment
of neurodegenerative diseases.

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     The ABS 200 series of compounds are putative neuroprotectants designed
to halt the progression of neurodegenerative diseases.  The compounds have
been evaluated in cells where they exhibit nerve growth factor (NGF)-like
activity. The ABS 200 series compounds can penetrate the blood-brain barrier, 
unlike NGF, which requires specific development of a delivery system.  A lead
compound ABS 205 has been identified which can induce the expression of a 
protein known as neural cell adhesion molecule (NCAM) in vitro.  NCAM is 
involved in memory, neurodevelopment and other neuroplastic events.  ABS 205
can also enhance NCAM function in the rat hippocampus, an area known to be
involved in memory acquisition. Moreover, ABS 205 protects against chemical
induced amnesia in animals.  The Company has received patent protection in the
United States for this series.

     The ABS 401 compound has undergone preliminary evaluation in vivo
and has demonstrated protection against chemically induced amnesia, and can
help prevent age-associated loss of memory in animals.

     Epilepsy

     The Company is developing a series of anticonvulsant compounds
which are related to valproate, which is currently used for the
treatment of epilepsy.  In pre-clinical trials in Germany, one
compound has been shown to potently control seizure activity without
sedative action and the induction of birth defects commonly associated
with other anticonvulsants.  The Company has filed for patent
protection in the United States and other countries.

     Agreements for Neuroscience Programs

     The Company has entered into various agreements, primarily with
universities and/or individual scientists under the Company's Global
Scientific Network, which generally grant the Company an exclusive
license to the results of the research for use in various neuroscience
applications, which may include compounds and antibodies.  In general,
the agreements are for a term equal to the duration of any patents
that may be granted with a minimum term of 10 years.  In exchange for
a license, the Company is to pay certain research expenses and the
costs of filing and processing patent applications in the United
States and any other countries that the Company may select.  Pursuant
to these agreements, the Company is also to pay the inventors or the
university a royalty, typically 5% of net product sales.  The Company
is seeking to commercialize the products under development by entering
into collaborative arrangements, licensing agreements and/or through
research development partners.

     There can be no assurance that the Company s Neurobiology
products will prove to be commercially viable, or that the Company
will successfully market the products or achieve significant revenues
or profitable operations or enter into any arrangements with third
parties for development of the Neurobiology products, or if it does,
that any such arrangements will be on terms that will be favorable to
the Company.

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<PAGE>

     Hepatitis A Vaccine

     In March 1994, the Company was issued U.S. Patent No. 5,294,548
for its recombinant Hepatitis A virus vaccine.  Hepatitis A is an
inflammatory process of the liver caused by a virus that is spread by
fecal-oral contact.  It is highly contagious and is more common in
children and young adults.  Hepatitis A is a source of concern in day
care centers, the armed forces and other organizations populated by
young people who are working, living and playing in close proximity to
one another.  In developed countries there is a surprisingly high
percentage of non-immune individuals.  In underdeveloped countries
children are exposed to the virus at an early age and thus acquire
lifetime immunity.  However, as standards of hygiene improve in
developing countries, there is less exposure and, therefore, less
immunity developed resulting in a greater need for the vaccine.

     The Company, in collaboration with researchers at the University
of Iowa, demonstrated the ability to produce neutralizing antibodies
to several of its recombinant viral vaccine candidates.  The research
focus involved the production of non-infectious Hepatitis A empty
capsids, in both the vaccinia and the baculovirus expression systems. 
The Company has conducted a test of its recombinant Hepatitis A virus
vaccine in primates in collaboration with an independent third party. 
After one inoculation, the primates exhibited a level of anti-
Hepatitis A antibodies indicative of a protective immune response. The 
Company is presently seeking licenses for its U.S. Patent, and is not 
actively commercializing this product.

     There can be no assurance that the Company s Hepatitis A Vaccine
product will prove to be commercially viable, or that the Company will
successfully market this product or achieve significant revenues or
profitable operations or enter into any arrangements with third
parties for development of the vaccine, or if it does, that any such
arrangements will be on terms that will be favorable to the Company.


Various Other Agreements

     As part of its development stage activities, the Company, in the
ordinary course of business, enters into various agreements that
provide for the expenditure by the Company of funds for research and
development activities.  These agreements typically provide for the
payment of royalties (typically 2% to 8% of net sales) by the Company
if any products are successfully developed and marketed as a result of
the work being performed under the agreement.  Reference is made to
Notes 3 and 6 of the Notes to Consolidated Financial Statements for a
discussion of various arrangements which the Company has entered into
for collaborative research and development projects (including
arrangements for the use of space and services) and technology license
arrangements for the development and prospective manufacturing and
sale of products being developed.

Marketing and Sales

     Because the Company lacks the necessary financial resources, it
intends to rely on collaborative arrangements with pharmaceutical
firms to conduct and fund the major portion of the human clinical

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<PAGE>

trials that are necessary to obtain regulatory approval for any in
vivo products it may develop.  The Company also intends to rely on
these firms to market and sell the products exclusively during the
first few years of the collaboration.  The Company expects that most
of these collaborations will be based on licenses to sell in specific
countries.  While each arrangement may vary, the Company intends to
require payment to it of a royalty based on sales of the product, with
an amount to be paid  up front  upon entering into the arrangement. 
The licensee may also be required to obtain all or a part of its
product requirements from the Company.  The Company expects to retain
rights to enter the market, selling the product under its own label,
possibly after an exclusive sales period granted to the licensee. 
There can be no assurance that any such marketing arrangements that
will be entered into, or if entered into, will be on terms similar to
those discussed above or on terms that will be favorable to the
Company.  If no arrangements are entered into, the Company will
require substantial alternative financing in order to initiate
commercial marketing of any in vivo products that it may successfully
develop.  There can be no assurance that any such financing
arrangements will be available to the Company or, if available to, it
will be available on terms acceptable or favorable to the Company.

     The use of any products that the Company may develop for in vivo
diagnosis and therapy will require educating the medical community as
to their reliability, safety and effectiveness.  Currently used in
vivo products employ non-specific X-ray imaged dyes for diagnosis and
thrombolytics for therapy.  Commercial sales of any in vivo products
developed by the Company will be dependent on general acceptance by
physicians.  The Company and a pharmaceutical company with which it
may collaborate, may use several approaches to obtain the general
acceptance in the medical community of the Company's proposed
products.  Such promotional approaches may include: publicizing
existing studies; offering the products to current practitioners and
researchers who are leaders in their fields for their use and
publication of their findings; conducting comparative studies with
competitive products and methodologies and publishing the results of
the studies; and sponsoring professional symposia and seminars.  The
personnel and financial resources of the Company are not sufficient to
permit the Company to alone gain the acceptance of the medical
community for the Company's proposed in vivo pharmaceutical products
or vaccines.  Accordingly, the Company may be required to collaborate
with one or more pharmaceutical companies, which will provide the
necessary financing and expertise to obtain the acceptance of the
medical community of the Company's proposed in vivo products.  Such
arrangements are likely to entail, among other things, the sharing of
revenue or profits with such companies.

     Sales of the Company's proposed products on a commercial basis
will be substantially dependent on widespread acceptance by the
medical community.  Widespread acceptance of the Company's will
require educating the medical community as to the benefits and
reliability, safety and effectiveness of such products.  The Company
anticipates that commercial sales of its in vitro test kits will be
directed to hospitals, laboratories, clinical laboratories and
physicians in large group medical practices.  The Company believes
that sales to hospitals and clinical laboratories will be dependent on
general acceptance by physicians using direct fibrinogen level
measurement as part of routine and special blood analyses.  There can
be no assurance that any of the Company s products will be accepted in
the medical community, and the Company is unable to estimate whether

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it will be able to, and if so the length of time it would take to,
gain such acceptance.

     The Company continues to seek arrangements with large
pharmaceutical companies to market its products.  In the event the
Company is unable to enter into other arrangements or if the
arrangements which it has entered into or may enter into in the future
are not successful, the Company would likely seek to market such
products through independent distributors which would require the
Company to develop a marketing program to support sales.  The Company
has begun marketing through distributors its TpP diagnostic kit which
will require, among other things, to pay the expenses of developing
promotional literature and aides, hiring sales representatives and
completing studies to support clinical use of the product which will
aid distributors in selling the Company s in vitro diagnostic tests. 
Any independent distributors that the Company may use would in all
likelihood also market competitive products.  There can be no
assurance that the Company will be able to enter into arrangements for
the distribution of any in vitro products on satisfactory terms.

Competition

     Many new companies and research and development units of
established companies have entered the biotechnology field.  These
companies, both public and private, include several well-known
pharmaceutical and chemical companies.  Many of these companies, in
addition to universities and research institutions, have the capacity
to conduct substantial research activities in these areas, and have
substantially greater resources, research and development staffs and
facilities than the Company, greater name recognition and established
sales, marketing and distribution networks. 

Proprietary Technology, Patents and Trade Secrets
     The Company's policy is to seek patent protection for its
proposed products, whether resulting from its own research and
development activities or any development and licensing arrangements
that the Company may enter into.  The Company has two issued United
States Patents, Nos. 4,870,023 and 5,041,379, which will expire 2006
and 2008, respectively; one United States Patent, No. 5,294,548,
relating to the Hepatitis A vaccine, filed jointly with the University
of Iowa, which will expire 2011.  In addition, the Company has been
issued United States Patent, Nos. 5,091,512 and 5,120,834, each of
which will expire in 2009, covering monoclonal antibodies specific for
fibrinogen and monoclonal antibodies specific for fibrin respectively. 
The Company has also been issued a United States Patent No. 5,223,410,
which will expire in 2010, covering the use of its AF mouse colony to
generate monoclonal antibodies.  The Company has also been issued
United States Patent No. 5,721,122 which expires in 2015, covering a
method of obtaining primed lymphocytes collected from immunized
antigen-free mice.  The Company has further been issued United States
Patent No. 5,453,359, which will expire in 2012, covering an
immunoassay for soluble fibrin using the Company's proprietary fibrin-
specific monoclonal antibody as a method of detecting a thrombotic
event, such as myocardial infarction.  The Company has also been
issued United States Patent No. 5,487,892, which will expire in 2014,
covering use of the Company's proprietary fibrin-specific monoclonal

Page 14
<PAGE>

antibody as an antithrombotic agent.  The Company has further been
issued United States Patent No. 5,723,126, which will expire in 2015,
covering the use of the Company's propriety fibrin-specific monoclonal
antibody in conjunction with a thrombolytic reagent for the treatment
of thrombosis.  Additional patent applications are pending covering
alternative embodiments of the Company's proprietary fibrin-specific
monoclonal antibody, as well as improved methods of raising fibrin-
specific monoclonal antibodies and of using the soluble fibrin
immunoassay.  The Company has twenty-two counterpart applications
(including designated countries under patent treaties) covering
monoclonal antibodies specific for fibrinogen, monoclonal antibodies
specific for fibrin, methods for use of the Company's proprietary
fibrin-specific monoclonal antibody in a soluble fibrin assay, and as
an antithrombotic agent, and the use of the AF mouse colony to
generate monoclonal antibodies.  The Company presently has issued
three patents in Australia covering monoclonal antibodies specific for
fibrinogen, monoclonal antibodies specific for fibrin, methods for
localizing a blood clot in a patient, an immunoassay for determining
fibrin levels in a patient's blood, and use of the AM mouse colony to
generate monoclonal antibodies.  The Company has exclusive worldwide
rights in technology relating to certain methods and compositions for
treating epilepsy.  Patent applications to protect this technology
have been filed on behalf of the Company in the United States and the
European Patent Office.   A patent has been issued from the European
Patent Office which has been activated in 16 European states.  The
Company has filed additional patent applications in other foreign
jurisdictions to further protect this technology.  The Company also
has exclusive worldwide rights in technology related to certain novel
neurotrophic methods and compositions.  United States Patent No.
5,672,746 issued September 30, 1997 and a second application has been
allowed.  Foreign applications to protect this technology worldwide
are pending.  The Company is the worldwide exclusive licensee of
United States Patent No. 5,492,812, issued to Trinity College (Dublin,
Ireland), which will expire in 2013, covering a method for diagnosing
Alzheimer's disease, and a corresponding pending European patent
application.

     There can be no assurance that any of the claims in pending or
future applications will issue as patents, that any issued patents
will provide the Company with significant competitive advantages, or
that challenges will not be instituted against the validity or
enforceability of any patent issued to the Company or, if instituted,
that such challenges will not be successful.  The cost of litigation
to uphold the validity and prevent infringement can be substantial. 
Furthermore, there can be no assurance that others have not
independently developed or will not develop similar technologies or
will not develop distinctively patentable technology duplicating the
Company's technology or that they will not design around the
patentable aspects of the Company's technology.  While obtaining
patents is deemed important by the Company, patents are not considered
essential to the success of its business.  However, if patents do not
issue from present or future patent applications, the Company may be
subject to greater competition.  Moreover, unpatented technology could
be independently developed by others who would then be free to use the
technology in competition with unpatented technology of the Company.

     With respect to certain aspects of its technology, the Company
currently relies upon, and intends to continue to rely upon, trade
secrets, unpatented proprietary know-how and continuing technological
innovation to protect its potential commercial position. 
Relationships between the Company and its scientific consultants and
collaborators may provide access to the Company's know-how, although,

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<PAGE>

in general, the Company has entered into confidentiality agreements
with the parties involved.  Similarly, the Company's employees and
consultants have entered into agreements with the Company which
require that they forebear from disclosing confidential information of
the Company and to assign to the Company all rights in any inventions
made while in the Company's engagement relating to Company activities. 
There can be no assurance that trade secrets will be developed and
maintained, or that secrecy obligations will be honored, or that
others will not independently develop similar or superior technology. 
To the extent that consultants, employees, collaborators or other
third parties apply technological information independently developed
by them or by others to Company projects, disputes may arise as to the
ownership of such information which may not be resolved in favor of
the Company.  All members of the Company's Scientific Advisory
Committee are employed by or have consulting agreements with third
parties, the business of which may conflict or compete with the
Company, and any inventions discovered by such individuals will not
become the property of the Company.  See  Management - Scientific
Advisory Committee .

Trademarks

     The Company owns trademarks registered with the United States
Patent and Trademark Office for the names Global Scientific Network 
and Cadkit .  Federally registered trademarks have a perpetual life,
as long as they are renewed on a timely basis, subject to the rights
of third parties to seek cancellation of the marks.  The Company has
filed other trademark applications, including for TpP  and FiF , may
claim common law trade name rights as to other potential products, and
anticipates filing additional trademark applications in the future. 
The Company does not believe that any of its trademarks (or applied
for trademarks) is material to its business.

Government Regulation

     The Company's present and proposed activities are subject to
government regulation in the United States and any other countries in
which the Company may choose to market its proposed products or
conduct product development, research or manufacturing.  The Company
has not determined those countries, other than the United States,
where it will seek regulatory approvals to market its proposed
products.  The following is a discussion of the processes required in
order to obtain FDA approval for marketing a product, which are
different for the three types of products being developed by the
Company: monoclonal antibodies for in vitro use, monoclonal antibodies
for in vivo use and vaccines.

     In Vitro Diagnostic Products

     For some in vitro diagnostic products, a process known as a
510(k) review  is available to enable the manufacturer to demonstrate
that the proposed product is  substantially equivalent  to another
product that was in commercial distribution in the United States
before May 28, 1976 or is lawfully marketed under a 510(k) (a
predicate device ).  When a 510(k) review is used, a sponsor is
required to submit a pre-market notification to the FDA.  In February
1991, the Company submitted a pre-market notification as required
under Section 510(k) for its Cadkit in vitro diagnostic product, and
in April 1991, received notice from the FDA that the FDA had

Page 17
<PAGE>

determined that the device was substantially equivalent (granted
510(k) clearance ).  The Company cannot proceed with commercial sales
of such products for diagnostic use in the United States until it
receives 510(k) clearance from the FDA.  In the event that the FDA
requests additional information for the pre-market notification, this
could result in multiple cycles of submissions, each potentially
involving additional review periods until 510(k) clearance is granted
or FDA determines that the device is not substantially equivalent. 
The FDA has statutory authority to also require clinical data to
support a pre-market notification.  In October 1996, the Company
received 510(k) clearance from the FDA to market the TpP test as an
aid in the risk assessment of thrombosis (blood clot formation) and
the monitoring of anticoagulant therapy and plans to submit additional
per-market notifications to obtain clearance to market the test for
additional specific indications.

     In June 1997 the Company received 510(k) clearance from the FDA
to market its patented Functional Intact Fibrinogen (FiF ) test for
the quantitative determination of fibrinogen in human plasma. 
Fibrinogen is the protein component that forms fibrin which in turn
builds blood clots.  The Company's FiF test provides a rapid and
direct quantitative measurement of coagulable levels of fibrin protein
in plasma.  The Company plans to submit additional in vitro diagnostic
tests in the future.

     In cases where the Company's product is determined by the FDA not
to be  substantially equivalent  to the predicate device, an approved
pre-market approval application ( PMA ), which involves a lengthier
and more burdensome process, will be required before commercial
distribution is permitted.  There can be no assurance that any present
or future in vitro test the Company develops will be determined to be
substantially equivalent by the FDA or receive PMA approval by the FDA
in a timely manner or at all.  A PMA may be required for some or all
the Company's future proposed in vitro products.

     The FDA invariably requires clinical data for a PMA and, although
the FDA may grant 510(k) clearance without supporting clinical data,
such data may be required by the FDA.  The Company expects that it
will submit clinical data in at least some of its anticipated 510(k)
notices.  If clinical studies are necessary, the FDA may require the
Company to obtain an investigational device exemption ( IDE ).  An IDE
restricts the sale of an investigational device to a limited number of
investigators, for the purpose of performing studies to be submitted
to the FDA in a Pre-Market Notification or a PMA.  The amount that can
be charged for use of an investigational device in a clinical study is
limited to recovery of costs until a 510(k) notification is cleared or
PMA approval is granted by the FDA.  Accordingly, no significant
economic return can be expected during the study of investigational
devices.

     Diagnostic products may be exempt from IDE requirements if they
satisfy four criteria.   The exemption applies only to tests that in
addition to having certain investigational use labeling statements,
are not invasive, do not require invasive sampling procedures that
present significant risk to the patient, do not introduce energy (such
as X-rays) into a subject, and are not used as diagnostics without a
confirmatory diagnosis by a medically established diagnostic product
or procedure.  Certain diagnostic products under development by the
Company may not meet the requirements for this exemption.  For
instance, energy may be introduced into test subjects by certain

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<PAGE>

imaging procedures.   Although there can be no assurances, the Company
believes that the clinical investigation of its in vitro diagnostic
products are exempt from the IDE regulation.  Such products may still
be subjected to informed consent and institutional review board
requirements.

     Medical devices may be exported before receiving 510(k)
clearance, an IDE or PMA approval under certain conditions.  To export
a device subject to 510(k) clearance the device must meet the
specifications of the foreign purchaser, not be in conflict with the
laws of the importing country, not be sold or offered for sale in
domestic commerce and be properly labeled.  Other restrictions also
apply to devices that must go through the PMA process.  Once cleared
for marketing, a diagnostic device must comply with certain regulatory
requirements, such as good manufacturing practices (also known as the
Quality System Regulation) , medical device reporting, and
restrictions on advertising and promotion.

     The European Union is developing a structure for the regulation
of in vitro diagnostic devices.  The Company believes that there are
no material regulatory impediments to the sale of its in vitro
diagnostic tests presently under development in North Africa and the
Middle East.

     Monoclonal Antibodies for In Vivo Use and Vaccines

     Any products intended for in vivo use, including vaccines, will
be subject to regulation by the FDA.  The products produced, depending
on their characteristics, may be classified as  biologics  or Products 
regulated under the Public Health Service Act (the  PHS  Act) and the
Federal Food, Drug, and Cosmetic Act (the  FDCA ) or may be classified
as non-biologic drugs regulated only under the FDCA.  Development of a
pharmaceutical product for use in humans under either statute is a
multistep process.  First, laboratory animal testing establishes
probable safety and parameters of use of the experimental product for
testing in humans and suggests potential efficacy with respect to a
given disease.  Once the general investigative plan and protocols for
specific human studies are developed, an investigational new drug
( IND ) application is submitted to the FDA.  FDA regulations do not,
by their terms, require FDA approval of an IND.  Rather, they allow a
clinical investigation to commence if the FDA does not notify the
sponsor to the contrary within 30 days of receipt of the IND.  As a
practical matter, however, FDA approval is typically necessary before
a company would commence clinical investigations.  That approval may
come within 30 days of IND submission but may involve substantial
delays if the FDA places the IND on clinical hold and requests
additional information.

     In general the initial phase of clinical testing (Phase I) is
conducted to evaluate the pharmacological actions and side effects of
the experimental product in humans and, possibly, to gain early
evidence of possible effectiveness.  Phase I studies evaluate the
safety of the drug.  A demonstration of therapeutic benefit is not
required in order to complete such trials successfully.  If acceptable
product safety is demonstrated, then Phase II trials may be initiated. 
Phase II trials are designed to evaluate the effectiveness of the
product in the treatment of a given disease and, often are well-
controlled, closely monitored studies in a relatively small number of
patients.   Routes, dosages and schedules of administration may also
be studied.  If Phase II trials are successfully completed, Phase III
trials may be commenced.  Phase III trials are expanded, controlled
trials which are intended to gather additional information about

Page 18
<PAGE>

safety and effectiveness in order to evaluate the overall risk/benefit
relationship of the product and provide the evidence of safety and
effectiveness necessary for product approval.  Although this is the
standard drug testing pattern, different approaches are often used,
such as combining Phases I and II.

     It is not possible to estimate the time in which Phase I, II and
III studies will be completed with respect to a given product,
although the time period to complete all the testing can be as long as
five to ten years.  Following the successful completion of clinical
trials, the clinical evidence that has been accumulated is submitted
to the FDA as part of a marketing application  There can be no
assurance that the FDA will approve marketing applications for any of
the products developed by the Company in a timely manner, or at all.

     In March 1993, the FDA cleared the Company to begin Phase I human
clinical testing for its patented fibrin specific monoclonal antibody
MH1.  In January 1995, the Company completed Phase I studies of MH1
for imaging deep vein thrombosis (DVT) and pulmonary embolism (PE) and
initiated Phase I/II clinical trials for PE.  Data on the clinical
trials was submitted as a final report on Phase I to the FDA. 

     The FDA also has extensive regulations concerning good
manufacturing practices.  The Company's compliance with good
manufacturing practice, and its ability to assure the potency, purity
and quality of the drugs and biologics manufactured, must be
documented in the applications submitted for the products, and
manufacturing facilities will be subject to pre-approval and other
inspections by the FDA and other government agencies.  The Company has
completed its agreement with Verax Corporation ( Verax ), which
manufactured the MH1 monoclonal antibody for the Phase I human trials. 
The Company has contracted with Creative BioMolecules Inc.
( Creative ), a bioprocess technology company which succeeded Verax,
to manufacture a sufficient quantity of the Company's in vivo
monoclonal antibody to conduct human trials for Phase II, at a total
cost of approximately $250,000. 

     Approval of the application is necessary before a company may
market the product.  The approval process can be very lengthy and
depends upon the FDA's review of the application and the time required
to provide satisfactory answers or additional clinical data when
requested.  With any given product, there is no assurance that an
application will be approved in a timely manner, or at all.  Failure
to obtain such approvals would prevent the Company from
commercializing its products and would have a material adverse effect
on the Company's business.

     Continued compliance with current good manufacturing practices is
required to market both biologic and non-biologic drug products once
they are approved.  Failure to comply with the good manufacturing
practice regulations, or to comply with other applicable legal
requirements, can lead to seizure of violative products, injunctive
actions, other enforcement actions, and potential criminal and civil
liability on the part of a Company and of the officers and employees
of a Company.

Page 19
<PAGE>

     Furthermore, the process of seeking and obtaining FDA approval
for a new product generally requires substantial funding.  The Company
anticipates that, in most instances where it develops a product, the
Company will seek to enter into a joint venture or similar arrangement
with an established chemical or pharmaceutical company that will help
conduct the required preclinical studies and clinical trials and bear
a substantial portion of the expense of obtaining FDA approval.

     In addition to complying with FDA regulations, the Company and
the facilities used by it are also required to comply with federal and
state environmental, occupational health and other applicable
regulations.  The Company believes that its facilities comply with
such regulations.

Manufacturing

     While the Company is presently producing a limited quantity of
monoclonal antibodies for testing and evaluation of its in vitro
products, there can be no assurances that the Company will be able to
either finance or meet FDA regulations for good manufacturing
practices  required in order to convert and operate such facility for
commercial production of such products.  The Company does not intend
to establish its own manufacturing operations for its in vivo products
unless and until, in the opinion of management of the Company, the
size and scope of its business and its financial resources so warrant. 
It is the Company s intention to seek additional third parties to
manufacture its in vivo monoclonal antibody for commercial production
or enter into a joint venture or license agreement with a partner who
will be responsible for future manufacturing.  Each joint venture
partner or contract manufacturer participating in the manufacturing
process of the Company s monoclonal antibody must comply with FDA
regulations and provide documentation to support that part of the
manufacturing process in which it is involved.  The company is
currently contracting with four different GMP manufacturers for the
production of antibodies and the TpP  and FiF  kits.  There is no
assurance that third parties will be able to manufacture sufficient
quantities of the Company s in vivo monoclonal antibody necessary to
obtain full FDA clearance, that the FDA will accept the Company s
manufacturing arrangements, or find the facilities in GMP compliance,
or that these commercial manufacturing arrangements can be obtained on
acceptable terms.

Product Liability

     The testing, marketing, manufacture and sale of pharmaceutical
products entails a risk of product and other liability claims by
consumers and others.  Additionally, the Company's monoclonal
antibodies are generated from an antigen free mouse colony and
instances of the human immune system negatively reacting to mouse
derived antibodies have been reported.  Product and other liability
claims may be asserted by physicians, laboratories, hospitals or
patients relying upon the results of the Company's proposed diagnostic
tests.  Product liability claims may be asserted by physicians,
laboratories, hospitals or patients relying upon the results of the
Company s diagnostic tests.  Claims may also be asserted against the
Company by end users of the Company s products, including persons who
may be treated with any in vivo diagnostic or therapeutics.

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<PAGE>

     Certain distributors of pharmaceutical products require minimum
product liability insurance coverage as a condition precedent to
purchasing or accepting products for distribution.  Failure to satisfy
such insurance requirements could impede the ability of the Company to
achieve broad distribution of its proposed products, which would have
a material adverse effect upon the business and financial condition of
the Company.

     The Company has obtained product liability insurance covering the
TpP and FiF products. Although the Company will attempt to obtain
product liability insurance prior to the marketing of any of its
proposed products, there is no assurance that the Company will be able
to obtain such insurance or, if obtained, that such insurance can be
acquired at a reasonable cost or will be sufficient to cover all
possible liabilities.  In the event of a successful suit against the
Company, lack or insufficiency of insurance coverage could have a
material adverse effect on the Company.

Scientific Advisory Committee

     The Company has a Scientific Advisory Committee (the  Committee)
comprised of scientists and physicians active in the fields of
microbiology, immunology and molecular biology and in cardiovascular
disease, hepatic disease and drug development.  These scientists serve
as consultants to the Company.   Members of the Committee generally
make themselves available on an informal basis for consultations with
the Company.  Members of the Committee are selected by the Company's
management.

     Members of the Committee review the feasibility of the Company's
proposed research and  development programs, the progress of programs
undertaken and assist in establishing both the scientific goals of the
Company and the priorities of its product development.  All members of
the Company's Scientific Advisory Committee may be employed by or have
consulting agreements with third parties, the business of which may
conflict or compete with the Company, and any inventions discovered by
such individuals will not become the property of the Company.  These
individuals are expected to devote only a small portion of their time
to the Company, and are not expected to actively participate in the
development of the Company's technology.  It is possible regulations
or policies now in effect or adopted in the future might limit the
ability of the scientific advisors to continue their relationship with
the Company.  Members of the Scientific Advisory Committee were used
on an informal basis for consultations in 1997.  Payments to the
members, exclusive of expenses, is $1,000 per meeting attended. 
Members of the Advisory Committee have been granted ten year options
to purchase from 5,000 to 15,000 shares of Common Stock from the
Company, an aggregate of 203,000 shares, at prices ranging from $1.94
per share to $7.75 per share.  The 1997 annual compensation for the
advisors as a group was approximately $87,000.  Certain members of the
Committee are associated with institutions with which the Company has
undertaken or may in the future engage in collaborative research
efforts.  Arrangements with such institutions may result in one or
more members of the Committee receiving royalties or other
compensation from such institution or the Company if such member works
as a scientist in the collaborative effort.

     The members of the Committee have no general fiduciary duties to
the Company, have entered into limited confidentiality agreements and

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<PAGE>

may, in their discretion, engage in activities which are competitive
with those engaged in by the Company.  The members of the Committee as
of March 13, 1998 are: 

     Giancarlo Agnelli, M.D., is Associate Professor of Internal
Medicine at the University of Perugia, Italy, where he received his
medical education.  Prior to appointment to his present post he was a
research fellow and clinical fellow in the Department of Pathology and
Department of Medicine at McMaster University, Hamilton, Ontario,
Canada.  He continues as an associate member of the Hamilton Civic
Hospital Research Center at McMaster University.  Dr. Agnelli is a
member of the editorial board or a manuscript reviewer for such
journals as Haemostasis, Blood, Diabetologia, Thrombosis and
Haemostasis, and Thrombosis Research.  He has presented lectures at
more than 200 international and national meetings and is the author or
co-author of more than 200 scientific articles.

     Denian Ba, M.D., is presently Academician, The Chinese Academy of
Engineering; President of the Chinese Academy of Medical Sciences &
Peking Union Medical College; Chairman, Chinese Society of Immunology;
Vice Chairman, Chinese Medical Association.  Dr. Ba was engaged in
research on Cancer Immunology as Associate Chief, Chief, Department of
Immunology at the Institute of Cancer Research in Harbin Medical
University, and Deputy Director, Director at the Institute of Cancer
Research in Harbin Medical University.  Dr. Ba received his M.D. from
the Department of Medicine of Harbin Medical University, received his
Master of Science of Biochemistry from Beijing Medical University and
received his Ph.D. from the School of Medicine of Hokkaido University,
Japan.

     Konrad T. Beyreuther, Ph.D., is presently professor of Molecular
Biology and Head of Laboratory for Molecular Neuropathology at the
Center of Molecular Biology, University of Heidelberg, Federal
Republic of Germany.  His primary research deals with genetics and
molecular biology of Alzheimer's disease and related dementia
disorders.  He earned his doctorate at the Max-Plank Institute for
Biochemistry Munich, University Munich, Germany.

     Gustav Victor Rudolf Born, M.D., D. Phil., F.R.S., is presently
Research Director of The William Harvey Research Institute at St.
Bartholomew's Hospital Medical College, London, England, and Emeritus
Professor of Pharmacology in the University of London.  Among
Professor Born's distinctions, appointments and activities are: 
Fellowship and Royal Medal of the Royal Society; Foundation President
of the British Society for Thrombosis and Haemostasis; Corresponding
Member of the Belgian Royal Academy of Medicine; Professor of the
Foundation de France, Paris; Robert Pfleger, Paul Morawitz and
Alexander-von-Humbolst Prizes; Honorary Life Member of the New York
Academy of Sciences; Medical Advisor of the Heineman Medical Research
Center, Charlotte, North Carolina; Co-Director for Centre for
Thrombosis and Loyola Research, Perugia, Italy; Honorary Doctorates
from eight universities including Brown.

     Francis J. Castellino, Ph.D., is Dean of the College of Science,
and Kleiderer-Pezold Professor of Biochemistry at the University of
Notre Dame.  He earned a doctorate in biochemistry at the University
of Iowa, and was a postdoctoral fellow at Duke University Medical
Center.  He maintains a research program studying blood coagulation
and fibrinolysis.

Page 22
<PAGE>

     Jeffrey Ginsberg, M.D., is a hematologist with research training
in clinical and laboratory aspects of thrombosis.  His current
research interests include the clinical development of novel
antithrombotic agents, the diagnosis and management of thrombosis
during pregnancy, the prevention and treatment of the post-phlebitic
syndrome, the investigation of the clinical complications of
antiphospholipid antibodies, and the diagnosis of venous thrombosis
and pulmonary embolism.  He is currently the principal investigator of
a number of clinical trials relative to thrombosis. He is the Director
of the Thromboembolism Unit at Chedoke-McMaster Hospitals and a
Research Scholar of the Heart and Stroke Foundation of Canada.

     Lawrence Grossman, Ph.D., is University Distinguished Service
Professor of Biochemistry at the Johns Hopkins University School of
Hygiene and Public Health, Baltimore, Maryland.  He is consultant to
Applied DNA Systems, Inc.  He earned a Ph.D. degree from the
University of Southern California, and subsequently trained and worked
thereafter at Johns Hopkins University and Brandeis University.  His
expertise are in DNA repair, molecular basis of mutagenesis and
molecular biology in general.

     Thomas W. Meade, CBE, DM, FRCP, FRS, is presently Director of the
Medical Research Council Epidemiology and Medical Care Unit, Wolfson
Institute of Preventive Medicine, St. Bartholomew's and the Royal
London Hospital School of Medicine and Dentistry, London, England. 
Additional appointments include:  Professor of Epidemiology University
of London, Hon. Consultant in Epidemiology, Northwick Park and St.
Mark's NHS Trust, Hon. Consultant in Epidemiology, The Royal Hospitals
NHS Trust.  Hon. Director British Heart Foundation Cardiovascular
Epidemiology Research Group.  He is: Doctor of Medicine, Fellow of the
Royal College of Physicians and Fellow of the Royal Society.

     Daniel M. Michaelson, Ph.D., is presently Professor of
Neurobiology, Department of Neurobiochemistry, Tel Aviv University,
Tel Aviv, Israel.  He earned a Ph.D. in Biophysics from the University
of California, Berkley.  Among Professor Michaelson s distinctions,
appointments and activities are: Membership of the International
Society of Neurochemistry, International Society for Developmental
Neuroscience, International Brain Research Organization, the New York
Academy of Sciences, Israel Society of Neurosciences, Israel
Biochemical Society and the Israel Society for Pharmacology and
Physiology.  He is a member of the Scientific Advisory Board of the
Alzheimer Foundation, a board member of the Israel Society for
Neuroscience, and a board member of Ramot - University Authority for
Applied Research and Industrial Development Ltd.

     Peter Victorovich Morozov, M.D., Ph.D., is Professor of
Psychiatry at the Russian State Medical University, Moscow.  He has
served as the Secretary of the International Section of the National
Scientific Society of Psychiatrists and is currently secretary of the
Russian Section of French-Russian Society of Psychiatrists.  Dr.
Morozov's primary area of research is psychopharmacology, problems of
classification and diagnosis, post-traumatic stress disorders.  Dr.
Morozov graduated from Pirogov II Medical School and received his
doctorate from the Institute of Psychiatry AMS USSR.

Page 23
<PAGE>

     Gerald P. Murphy, M.D., before joining The Pacific Northwest
Research Foundation in 1993 was with the American Cancer Society as
the Chief Medical Officer since 1988, served as the Associate Director
and Director of the Roswell Park Memorial Institute, Cancer Research
and Treatment Center, Buffalo, New York, from 1968 to 1985.  Dr.
Murphy was Professor of Urology and in charge of the Urologic Cancer
Research Laboratory at the State University of New York at Buffalo
from 1985 to June 1988.  Dr. Murphy was National American Cancer
Society President for 1983 & 1984.  Dr. Murphy received his B.Sc.
degree (Summa Cum Laude) from Seattle University and a M.D. degree
from the University of Washington.

     Alfred Nisonoff, Ph.D., is Professor of Biology (Emeritus) at the
Rosenstiel Research Center, Brandeis University, Waltham,
Massachusetts.  He earned a doctorate in chemistry from Johns Hopkins
University, Baltimore, Maryland and was a postdoctoral fellow at the
Johns Hopkins Medical School.  Dr. Nisonoff is on the Scientific
Advisory Committee of the Roswell Park Cancer Institute, Buffalo, New
York. His expertise is in the field of immunology and idiotypic
antibodies.  Member, U.S. National Academy of Sciences; Former
President, American Association of Immunologists; Member, American
Academy of Avis and Sciences; Foreign Correspondent; Belgian Academy
of Medicine.

     Rem V. Petrov, M.D., is currently Vice-President of Russian
Academy of Sciences, Moscow, Russia and chief of the Immunology
Department of the Institute of Bioorganic Chemistry of the Academy. 
His main scientific interests are in fields of Immunogenetics
(genetical control of Immune response, interactions of syngeneic and
nonsyngeneic cells) and Immunobiotechnology (artificial immunogens and
vaccines, immunopharmacology-myelopeptides and other natural
immunodulators).

     Craig M. Pratt, M.D., currently is a Professor of Medicine,
Section of Cardiology, Department of Internal Medicine, Baylor College
of Medicine, Houston, Texas.  Dr. Pratt is currently Director of the
Coronary Care Unit and Non-invasive Laboratories at The Methodist
Hospital.  Nationally, Dr. Pratt is Chairman of the Cardiovascular and
Renal Drugs Advisory Board to the Food and Drug Administration.  Dr.
Pratt also serves on the Program Planning Committee for the Annual
Meeting, American College of Cardiology.

     John H. Proctor, Ph.D., was Secretary General of the World
Academy of Art and Science from 1986-1997, and Past President of the
Washington Academy of Sciences in Washington, D.C., and a
corresponding member of the Spanish Royal Academy of Pharmacy.   He
has facilitated national and international technology transfer,
organizational development and productivity improvement projects for
over thirty years.  Dr. Proctor has written three books and has
published sixty-three technical papers.

     Ciaran M. Regan, Ph.D., D.Sc. is presently Statutory Lecturer in
Pharmacology at University College, Dublin, Ireland.  Dr. Regan
received his B.Sc. and Ph.D., both in Zoology, from University
College, Dublin.  He is a past Postdoctoral Fellow, Department of
Biochemistry, University of Nijmegen, The Netherlands and past
Scientific Officer of Medical Research Council, Institute of
Neurology, London.  Dr. Regan has numerous publications.

Page 24
<PAGE>

     Jacob Szmuszkovicz, Ph.D., is a Professor of Chemistry at the
University of Notre Dame, Notre Dame, Indiana.  He earned a doctorate
in Chemistry from the Hebrew University, Jerusalem.  He served as a
Member of Staff at the Weizmann Institute before joining the Upjohn
Company where he held the position of a Distinguished Scientist in the
CNS (Central Nervous System) Unit from 1954 to 1985.  Dr. Szmuszkovicz
is co-inventor on over 100 patents.  He has served as a Member of the
Executive Committee of the Organic Division of the ACS (American
Chemical Society).

Personnel

     As of March 13, 1998, the Company had 31 full time employees and
4 part-time employees.  Of the full-time employees 15 are research and
development personnel including 7 Ph.D.s, and the remaining are
executive and administrative personnel.

     The President and Chief Operating Officer, Executive Vice
President, and Senior Vice President  Business Development, are
parties to employment agreements with the Company ending December 31,
1999, September 30, 2001 and November 30, 2001, respectively.  They
also are parties to agreements with the Company to keep corporate
information with regard to the business of the Company confidential
during and subsequent to their employment with the Company.  The
Company believes its personnel relations are satisfactory.

Item 2.   Properties

     The Company leases 7,700 square feet of space from Boston
University in Boston, Massachusetts which houses all of the Company s
research and development activities for an annual base rent of
$275,000 for a three year term ending December 31, 1999.

     The Company also has a lease covering 5,200 square feet in South
Bend, Indiana, with an  annual base rent of $52,200 and terms ending
March 31, 2000.  The facility is closed and the Company is in the
process of subleasing the facility.

     The Company has an office lease in Copiague, New York (6,000
square feet) expiring July 1998 and Dublin, Ireland under a short-term
office and facilities arrangement.

Item 3.   Legal Proceedings
     Not Applicable

Item 4.   Submission of Matters to a Vote of Security Holders
     No matters were submitted to a vote of security holders during
the fourth quarter of fiscal 1997.

Page 25
<PAGE>

                              PART II

Item 5.   Market for Registrant's Common Stock and Related Security 
          Holder Matters

     The Company's Class A Common Stock ( Common Stock ) is traded on
the Nasdaq National Market tier of the Nasdaq Stock Market under the
trading symbol MABXA.  The following table sets forth the high and low
closing bid prices for the Company's Common Stock for the periods
indicated, as reported by Nasdaq, without retail mark-ups, mark-downs
or commissions.


Fiscal Years
                                 High                Low
1997

First Quarter                    $6                  $3 3/8

Second Quarter                    3  15/16            2  1/8

Third Quarter                     3  15/16            2  15/16

Fourth Quarter                    3  3/4              1  1/2

1996

First Quarter                      6  7/8              2  7/16

Second Quarter                     8  1/8              5
 
Third Quarter                      6  1/8              4  3/16

Fourth Quarter                     6  1/16             4



     There were approximately 679 holders of record of Common Stock as
of March 13, 1998 (exclusive of stockholders whose shares are held in
street name by brokers, depositories and other institutional firms).

     The Company has not paid any cash dividends on its Common Stock
since its inception and does not anticipate paying dividends for the
foreseeable future.

Page 26
<PAGE>

Item 6.   Selected Financial Data

   The following selected financial data for the periods indicated
have been derived from the consolidated financial statements of the
Company audited by Arthur Andersen, LLP, independent public
accountants.  This information should be read in conjunction with the
related financial statements and notes thereto included elsewhere in
this report.

<TABLE>
<CAPTION>
                                        For the Year Ended December 31,
                             ------------------------------------------------------------------------------------------
                                         1997              1996              1995              1994              1993
                                        -----             -----             -----             -----             -----
<S>                          <C>               <C>               <C>               <C>               <C>
Operating Results
Revenues:
  Sales                               $150,000                 -
  Royalties/License Fees                     -                 -          $100,000                 -                 -
  Collaborative Agreements               9,000           $54,000           $27,000                 -                 -
Net Loss                           ($7,147,000)      ($7,700,000)      ($5,607,000)      ($7,431,000)      ($6,521,000)
Net Loss Per Share                      ($0.35)           ($0.45)           ($0.39)           ($0.52)           ($0.46)
Weighted Average Shares             20,223,000        17,209,000        14,455,000        14,399,000        14,327,000


                                                                       As Of December 31,
                             ------------------------------------------------------------------------------------------
                                         1997              1996              1995              1994              1993
                                        -----             -----             -----             -----             -----
Balance Sheet

Working Capital                     $6,961,000       $13,697,000        $9,485,000        $7,055,000       $14,489,000
Total Assets                        $9,388,000       $16,473,000       $12,521,000        $8,964,000       $16,636,000
Long-Term Debt                      $2,208,000       $10,319,000        $7,865,000                 -                 -
Total Liabilities                   $2,705,000       $10,931,000        $8,376,000          $408,000          $846,000
Accumulated Deficit               ($49,415,000)     ($42,268,000)     ($34,568,000)     ($28,961,000)     ($21,530,000)

</TABLE>

     The Company has not paid any cash dividends on its Common Stock since its
 inception.
Page 27
<PAGE>

Item 7.   Management's Discussion and Analysis of Financial Condition and
            Results of Operations

Liquidity and Capital Resources

     The Company, incorporated in September 1983, a development
stage company, has launched two commercial products ( TpP , the
Company's Thrombus Precursor Protein diagnostic test and FiF ,
the Company's Functional Intact Fibrinogen diagnostic test), in
the fourth quarter of 1997 although it has not yet derived any
significant revenues from the sale of these products.  The
Company has funded its research and development activities to
date, principally from the sale of Common Stock issued in an
initial public offering, the exercise of the Class A and Class B
Warrants issued in the Company's initial public offering, the
private placement of $8.5 million 8% Convertible Debentures and
$9.0 million 7% Convertible Debentures, the exercise of stock
options, capital contributions to the Company by the Chairman of
the Board, a $900,000 net initial license fee payment and the
income on funds invested in bank deposits, U.S. Treasury bills
and notes and other high grade liquid investments.

     The Company expects to continue to incur substantial
expenditures in research and product development in the
neurobiology program and in the development of a point of care
format for TpP  , as well as in the FDA approval process relating
to Phase I/II human clinical testing of its MH1 imaging product
and additional 510(k) filings for TpP  and FiF .  

     As of December 31, 1997, the Company had working capital of
$6,961,000, compared to $13,697,000 at December 31, 1996.  The
Company's management believes that current working capital will
be sufficient to fund its liquidity needs through 1998. 
Currently, product development plans of the Company include 
marketing TpP  and FiF , entering into distribution,
collaborative, licensing and co-marketing arrangements with large
pharmaceutical companies to provide additional funding and
clinical expertise, to perform additional testing necessary to
obtain regulatory approvals, to provide manufacturing expertise
and to market the Company's products.  Without such
collaborative, licensing or co-marketing arrangements, additional
sources of funding will be required to finance the Company.

     At December 31, 1997, the Company had net operating loss
carryforwards of approximately $47,710,000 for income tax
purposes.  The net operating loss carryforwards  will expire in
varying amounts through 2012.    In addition, the Company has
approximately $975,000 of available research and development tax
credits to offset future taxes.  These credits expire in 2011. 
In accordance with Statement of Financial Accounting Standards
No. 109  Accounting for Income Taxes,  the Company has recorded a
valuation allowance to fully reserve for the deferred tax benefit
attributable to its net operating loss and tax credit
carryforwards due to the uncertainty as to their ultimate
realizability.


In accordance with certain provisions of the Tax Reform Act of
1986, a change in ownership of a corporation of greater than 50
percentage points within a three-year period places an annual
limitation on the corporation's ability to utilize its existing
net operating loss carryforwards, investment tax and research and

Page 28
<PAGE>

development credit carryforwards (collectively  tax attributes).
Such a change in ownership was deemed to have occurred in
connection with the Company's 1990 initial public offering at
which time the Company's tax attributes amounted to approximately
$4.9 million.  The annual limitation of the utilization of such
tax attributes is approximately $560,000.  To the extent the
annual limitation is not utilized, it may be carried forward for
utilization in future years.  At December 31, 1997, the Company
has approximately $4,272,000 of the $4.9 million of net operating
losses that are no longer subject to this limitation.

Results of Operations

     Since its inception, the Company's primary activities have
consisted of research and development, acquiring laboratory
equipment, developing and improving proprietary rights, preparing
and filing patent applications, preparing and filing FDA
applications, monitoring clinical trials, negotiating license
agreements and hiring and training personnel with respect to the
development of its proposed products.

     The Company has not generated any significant revenues from
the sale of any products.  Revenues from inception through
December 31, 1997 of $1,452,000 are attributable to nonrefundable
initial license fees and collaborative research agreements and
initial sale of TpP  in the fourth quarter of 1997.  As a result
of the Company's substantial start-up expenses and minimal
revenues, the Company had an accumulated deficit of $49,415,000
as of December 31, 1997.  The Company's research and development
expenses are anticipated to be substantial for the foreseeable
future and the Company expects to continue to incur significant
operating losses.

     The Company initiated its marketing efforts for TpP  and
FiF  by exhibiting and presentation of its products at the MEDICA
'97 trade show held in Dusseldorf, Germany in November 1997.  As
a result of this effort, the Company made initial sale of TpP
kits in 1997 and has subsequesntly made sales of TpP  kits to
European and Japanese distributors.

     The Company's efforts in 1998 will be to sell TpP  in the
U.S., add distributors in Europe and Asia, begin marketing and
selling the FiF  diagnostic kit and enter into collaborative
agreements to develop point of care formats of TpP  .  To broaden
its product portfolio, decrease its manufacturing costs and
expand its distribution channels, the Company intends to make
acquisitions.  In the nuerobiology area, the Company intends to
continue focused research of its compounds in appropriate models
of neurodegeneration.  Coincident with these efforts, the Company
intends to seek corporate partnership agreements.


Comparison of Years Ended December 31, 1997 and 1996

     The Company's  net loss was $7,147,000 for the year ended
December 31, 1997 compared to $7,700,000 for the year ended
December 31, 1996.  The decrease of $553,000 was primarily due to
a decrease in interest expense of $1,035,000 and increase  in
cost and expenses of $598,000 and product revenue of $150,000. 
Revenue in fiscal year 1997 was primarily from the sale of TpP 
diagnostic kits.

Page 29
<PAGE>

     Research and development expenses increased $539,000 from
$2,703,000 in the 1996 fiscal year to $3,242,000 in the 1997
fiscal year as a result of relocating the Company's  research
laboratories from South Bend, Indiana to Boston Massachusetts 
(including severance, relocation and moving costs), increased rent
costs offset in part by a reduction in payments for research /
collaborative projects.

     General and administrative expenses increased $27,000 from
$3,640,000 in the 1996 period to $3,667,000 in the 1997 period as
a result of increased personnel, increased travel and meeting
costs offset by a reduction in consulting costs.

     Interest expenses decreased by $1,035,000 from $1,950,000 in
the 1996 period to $915,000 in the 1997 period, as a result of
$1,351,000 amortization of debt discount and $431,000 of debt
issuance costs included in the 1996 period as compared to
$492,000 amortization of debt discount included in the 1997
period.  During fiscal year 1997, $8,600,000 of Convertible
Debentures plus $161,000 of accrual interest were converted into
2,995,006 shares of Class A Common Stock.

Comparison of Years Ended December 31, 1996 and 1995

     The Company s net loss was $7,700,000 for the year ended
December 31, 1996 compared to $5,607,000 for the year ended
December 31, 1995.  The increase of $2,093,000 was the result of
the non-cash amortization ($1,351,000) of debt discount relating
to the 7% Convertible Debentures issued in September 1996, non-
cash amortization of $285,000 relating
to the accounting for warrants issued for certain consulting
agreements and increases in public and stockholder communication
costs.

     Research and development costs decreased by $270,000 in 1996
as a result of reduced research personnel, travel costs and
consulting services offset by increases in clinical costs and FDA
filing costs.

     General and administrative costs increased by $762,000 in
1996 primarily due to increases in public and stockholder
communication costs, additional personnel relating to licensing
efforts, increased travel and meeting costs and professional
service costs.

     Interest expense increased $1,725,000 due to the issuance of
$8.5 million 8% Convertible Debentures in late October 1995, and
$9.0 million 7% Convertible Debentures in September 1996. Of the
$1,950,000 interest expense in 1996, $1,351,000 related to the
amortization of debt discount and $431,000 related to
amortization of debt issuance costs.  The interest on the 8%
Convertible Debentures is included with the principal amount to
determine the number of shares issued at conversion.  During
1996, $6,050,000 of principal amount plus $166,000 interest on
the 8% Debentures was converted into 2,269,755 shares of Class A
Common Stock.  Interest on the 7% Convertible Debentures is paid
in cash at the end of each quarter, while conversions during a
calendar quarter include accrued but unpaid interest.  During
1996, no conversions occurred relating to the 7% Convertible
Debentures.  During January and February 1997, $3,630,000 of
Convertible Debentures plus $31,000 of accrued interest were
converted into 1,155,410 shares of Class A Common Stock.  The

Page 30
<PAGE>

amount of interest expense in 1997 will depend upon the extent to
which the debentures are converted.

     Investment income, net, increased by $203,000 in 1996
primarily due to the increased average balances in cash
equivalents and marketable securities during 1996.  The Company
invested in U.S. Treasury Bills and Notes with an average
maturity of five months during 1996.

Item 8.   Financial Statements and Supplementary Data

     The response to this item is submitted in a separate section
of this report, starts on page F-1.

Item 9.   Disagreements on Accounting and Financial Disclosure

     Not applicable.
                                 PART III

     The information called for by Part III (Items 10, 11, 12 and
13 of Form 10-K) is incorporated herein by reference to such
information which will be contained in the Company's Proxy
Statement to be filed pursuant to Regulation 14A of the
Securities Exchange Act of 1934 with respect to the Company's
1998 Annual Meeting of Stockholders.

Page 31
<PAGE>

                                  PART IV

Item 14.  Exhibits, Financial Statements and Reports on Form 8-K

  (a)  1. and 2. Financial Statements and Financial Statement Schedules 
  
  The following consolidated financial statements of the Company are annexed
hereto immediately following the signature page of this Report.


                                                   Page

  Index to Consolidated Financial Statements       F - 1 

  Report of Independent Public Accountants         F-2

  Consolidated Balance Sheets                      F-3

  Consolidated Statements of Operations            F-4

  Consolidated Statements of Cash Flows            F-5

  Consolidated Statements of Stockholders' Equity  F-6  -  F-8

  Notes to Consolidated Financial Statements       F-9  -  F-21

   Information required by schedules called for under Regulation S-X is either
not applicable or the information required therein is included in the 
consolidated financial statements or notes thereto.

Page 32
<PAGE>

           3.                    Exhibits


Exhibit No.                           Description

3.1        Restated Certificate of Incorporation of the Company, as
           filed with the Secretary of State of Delaware on July 30,
           1996.  Incorporated herein by reference to Exhibit 4.01 to
           the Company's Registration Statement on Form S-8, File No.
           333-09473.

3.2        Amended and Restated By-Laws of the Company.  Incorporated
           herein by reference to Exhibit 4.02 to the Company's
           Registration Statement on Form S-8, File No. 333-09473.

4.1(a)     Form of the Company's 8% Convertible Debentures due October
           13, 1998.  Incorporated herein by reference to Exhibit 4.1
           to the Company's Current Report on Form 8-K dated October
           12, 1995 (date of earliest event reported), File No. 0-
           19041.

4.1(b)     Form of the Company s 7% Convertible Debentures due
           September 30, 1998.  Incorporated herein by reference to
           Exhibit 4.01 to the Company s Current Report on Form 8-K
           dated September 30, 1996 (date of earliest event reported),
           File No. 0-19041.

10.1(a)+   Employment Agreement dated October 1, 1996 between the
           Company and Ellena M. Byrne.  Incorporated herein by
           reference to Exhibit 10.1(b) to the Company s Form 10-K/A
           dated April 30, 1997, File  No. 0-19041.

10.1(b)+   Employment Agreement dated December 16, 1996 between the
           Company and Dr. Stephen H. Ip.  Incorporated herein by
           reference to Exhibit 10.1(c) to the Company s Form 10-K/A
           dated April 30, 1997, File No. 0-19041.

10.1(c)+*  Employment Agreement dated November 12, 1997 between the
           Company and Dr. Emer Leahy.

10.2(a) +  The Company's Stock Option Plan, as amended.  Incorporated
           herein by reference to Exhibit 28.1 to the Company's
           Registration Statement on Form S-8, File No. 33-51240.

10.2(b)+   The Company's 1993 Non-Employee Director Stock Option Plan. 
           Incorporated herein by reference to Exhibit 99.01 to the
           Company's Registration Statement on Form S-8, File No. 33-
           65416.

10.2(c)+   The Company s 1996 Stock Option Plan.  Incorporated herein
           by reference to Exhibit A to the Company s Proxy Statement
           dated April 29, 1996 used in connection with the Company s

Page 33
<PAGE>

           1996 Annual Meeting of Stockholders, File No. 0-19041.

10.3       Exclusive License Agreement dated January 24, 1992 between
           the Company and Yamanouchi Pharmaceutical Co., Ltd. 
           Incorporated herein by reference to Exhibit 10.29 to the
           Company's Current Report on Form 8-K dated January 24, 1992
           (date of earliest event reported), File No. 0-19041.

10.4       Warrant dated October 25, 1995 issued to Swartz
           Investments, Inc. Incorporated herein by reference to
           Exhibit 10.13 to the Company's Current Report on Form 8-K
           dated October 12, 1995 (date of earliest event reported),
           File No. 0-19041.

21*        List of Subsidiaries

24*        Consent of Independent Public Accountants



           *    Filed herewith.  All other exhibits are incorporated
                by reference to the document following the description
                thereof.

           +    Management contract or compensatory plan.   



           (b)  Reports on Form 8-K
                None

Page 34
<PAGE>

                                  Signatures

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be
signed on its behalf by the undersigned, thereunto duly authorized.


                               AMERICAN BIOGENETIC SCIENCES, INC. 
                                             (Registrant)


        
    March 23, 1998            By     /s/ Josef C. Schoell
        (Date)                     Josef C. Schoell
                                   Vice President, Finance
                                   (Principal Financial and
                                   Accounting Officer)

        Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.




       March 23, 1998              /s/ Alfred J. Roach
        (Date)                     Alfred J. Roach, Chairman of the 
                                   Board of Directors and Chief
                                   Executive Officer and Director


       March 23, 1998              /s/ Josef C. Schoell 
        (Date)                     Josef C. Schoell
                                   Vice President, Finance
                                   (Principal Financial and
                                   Accounting Officer)


       March 23, 1998              /s/ Stephan H. Ip
        (Date)                     Stephan H. Ip, President,
                                   Chief Operating Officer and
                                   Director

Page 35
<PAGE>

                                  Signatures





       March 23, 1998              /s/ Timothy J. Roach
        (Date)                     Timothy J. Roach, Secretary, 
                                   Treasurer, and Director





       March 23, 1998              /s/ Ellena M. Byrne
        (Date)                     Ellena M. Byrne, Executive
                                   Vice President and Director





       March 23, 1998              /s/ Joseph C. Hogan 
        (Date)                     Joseph C. Hogan, Director






       March 23, 1998              /s/ William G. Sharwell              
        (Date)                     William G. Sharwell, Director





       March 23, 1998              /s/ Gustav Victor Rudolf Born        
        (Date)                     Gustav Victor Rudolf Born, Director

Page 36
       AMERICAN  BIOGENETIC SCIENCES, INC. AND SUBSIDIARY 
                                                  
                  (a development stage company)

            INDEX TO CONSOLIDATED FINANCIAL STATEMENTS


                                                  Page

Report of Independent Public Accountants          F-2

Consolidated Balance Sheets                       F-3

Consolidated Statements of Operations             F-4

Consolidated Statements of Cash Flows             F-5

Consolidated Statements of Stockholders' Equity   F-6 - F-8

Notes to Consolidated Financial Statements        F-9 - F-21



     Information required by schedules called for under Regulation
S-X is either not applicable or the information required therein is
included in the consolidated financial statements or notes thereto.

Page F - 1
<PAGE>

             Report of Independent Public Accountants


To American Biogenetic Sciences, Inc.:

     We have audited the accompanying consolidated balance sheets
of American Biogenetic Sciences, Inc. (a Delaware corporation in
the development stage) and subsidiary as of December 31, 1997 and
1996, and the related consolidated statements of operations, cash
flows and stockholders' equity for each of the three years in the
period ended December 31, 1997 and for the period from inception
(September 1, 1983) to December 31, 1997.  These financial
statements are the responsibility of the Company's management.  Our
responsibility is to express an opinion on these financial
statements based on our audits.

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

     In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of
American Biogenetic Sciences, Inc. and subsidiary as of December
31, 1997 and 1996, and the results of their operations and their
cash flows for each of the three years in the period ended December
31, 1997 and for the period from inception to December 31, 1997 in
conformity with generally accepted accounting principles.


                                        Arthur Andersen LLP


Melville, New York
February 18, 1998

Page F - 2
<PAGE>

<TABLE>
   AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARY
             (A DEVELOPMENT STAGE COMPANY)

              CONSOLIDATED BALANCE SHEETS

<CAPTION>
                                                       December 31,   December 31,
Assets                                                     1997           1996
                                                       ------------   ------------

<S>                                                    <C>            <C>
Current Assets:
  Cash and cash equivalents                             $7,121,000    $10,760,000
  Marketable securities                                          -      3,021,000
  Inventory                                               $296,000              -
  Other current assets                                     $41,000        528,000
                                                       ------------   ------------
    Total current assets                                 7,458,000     14,309,000
                                                       ------------   ------------
Fixed assets, at cost, net of accumulated
depreciation and amortization of $1,481,000
and $1,183,000, respectively                               511,000        591,000

Patent costs, net of accumulated
amortization of $292,000 and $212,000,
respectively                                             1,337,000        983,000

Debt issuance costs, net of accumulated
amortization of $520,000 and $370,000,
respectively                                                59,000        569,000

Other assets                                                23,000         21,000
                                                       ------------   ------------
                                                        $9,388,000    $16,473,000
                                                       ============   ============

Liabilities and Stockholders' Equity

Current Liabilities:
  Accounts payable and accrued expenses                   $494,000       $609,000
  Current portion of capital lease obligation                3,000          3,000
                                                       ------------   ------------
    Total current liabilities                              497,000        612,000
                                                       ------------   ------------
Long Term Liabilities:
  7% convertible debentures, net of unamortized
     debt discount of $0 and $492,000, respectively      1,350,000      8,508,000
  8% convertible debentures                                850,000      1,800,000
  Long-term portion of capital lease obligation              8,000         11,000
                                                       ------------   ------------
    Total liabilities                                    2,705,000     10,931,000
                                                       ------------   ------------
Commitments (Notes 1,3,5, and 6)

Stockholders' Equity:
  Class A common stock, par value $.001 per
  share; 50,000,000 shares authorized;
  19,341,617 and 16,270,994 shares issued
  and outstanding, respectively                             19,000         16,000

  Class B common stock, par value $.001 per
   share; 3,000,000 shares authorized; 1,725,500 and
   1,375,500 shares issued and outstanding, respectivel      2,000          1,000

  Additional paid-in capital                            56,077,000     47,793,000

  Deficit accumulated during the
    development stage                                  (49,415,000)   (42,268,000)
                                                       ------------   ------------
    Total stockholders' equity                           6,683,000      5,542,000
                                                       ------------   ------------
                                                        $9,388,000    $16,473,000
                                                       ============   ============
The accompanying notes are an integral part of these consolidated balance sheets.

Page F - 3
</TABLE>
<PAGE>
<TABLE>
 AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARY
     (a development stage company)

 CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                    For the Period
<CAPTION>                                                                           From Inception
                                                     Year Ended December 31,        (September 1,
                                        ------------------------------------------  1983) Through
                                                                                     December 31,
                                            1997          1996           1995            1997
                                        ------------  ------------  --------------  --------------
<S>                                     <C>           <C>           <C>             <C>
Revenues:
  Sales                                    $150,000   $         -   $           -        $150,000
  Royalties / license fees                        -             -         100,000       1,000,000
  Collaborative agreements                    9,000        54,000          27,000         302,000
                                        ------------  ------------  --------------  --------------
                                            159,000        54,000         127,000       1,452,000

Costs and expenses:
  Cost of sales                              32,000             -               -          32,000
  Research and development                3,242,000     2,703,000       2,973,000      26,645,000
  General and administrative              3,667,000     3,640,000       2,878,000      24,661,000
                                        ------------  ------------  --------------  --------------
Loss from operations                     (6,782,000)   (6,289,000)     (5,724,000)    (49,886,000)
                                        ------------  ------------  --------------  --------------

Other Income (Expense):
  Interest expense                         (915,000)   (1,950,000)       (225,000)     (3,742,000)
  Net gain on sale of fixed assets            1,000             -           6,000           7,000
  Investment income (loss), net             549,000       539,000         336,000       4,206,000
                                        ------------  ------------  --------------  --------------
Net loss                                ($7,147,000)  ($7,700,000)    ($5,607,000)   ($49,415,000)
                                        ============  ============  ==============  ==============
Per Share Information (Note 2):
 Net loss per common share
      Basic                                  ($0.35)       ($0.45)         ($0.39)
                                        ============  ============  ==============
      Diluted                                ($0.35)       ($0.45)         ($0.39)
                                        ============  ============  ==============
 Common shares used in computing
   per share amounts:
      Basic                              20,223,000    17,209,000      14,455,000
                                        ============  ============  ==============
      Diluted                            20,223,000    17,209,000      14,455,000
                                        ============  ============  ==============

The accompanying notes are an integral part of these consolidated statements.


Page  F - 4
</TABLE>
<PAGE>
<TABLE>
        AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARY
                  (a development stage company)

              CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                             For the Period
                                                                                                             From Inception
<CAPTION>                                                                                                    (September 1,
                                                                            Year Ended December 31,              1983)
                                                                 ------------------------------------------     Through
                                                                                                              December 31,
                                                                     1997          1996           1995            1997
                                                                 ------------  ------------  --------------  --------------
<S>                                                              <C>           <C>           <C>             <C>
Cash Flows From Operating Activities:
Net income (loss)                                                ($7,147,000)  ($7,700,000)    ($5,607,000)   ($49,415,000)
Adjustments to reconcile net (loss) to
 net cash used in operating activities:
  Depreciation and amortization                                      531,000       541,000         392,000       2,225,000
  Net (gain) loss on sale of fixed assets                             (1,000)            -          (6,000)         (7,000)
  Net (gain) loss on sale of marketable securities                         -             -               -        (217,000)
  Other non-cash expenses accrued primarily for stocks and warran    299,000       285,000         122,000       1,736,000
  Amortization of debt discount included in interest expense         492,000     1,351,000               -       1,843,000
  Write-off of patent costs                                                -             -               -          93,000
  (Increase) decrease in inventory                                  (296,000)            -               -        (296,000)
  (Increase) decrease in other current assets                        487,000      (365,000)         41,000         (41,000)
  (Increase) decrease in other assets                                 (2,000)        2,000          (5,000)         72,000
  Increase (decrease) in accounts payable and accrued expenses        46,000       267,000         108,000         711,000
  Increase in interest payable to stockholder                              -             -               -         112,000
                                                                 ------------  ------------  --------------  --------------
   Net cash used in operating activities                          (5,591,000)   (5,619,000)     (4,955,000)    (43,184,000)
                                                                 ------------  ------------  --------------  --------------
Cash Flows From Investing Activities:
  Capital expenditures                                              (222,000)     (158,000)        (41,000)     (2,002,000)
  Proceeds from sale of fixed assets                                   2,000             -          16,000          18,000
  Payments for patent costs and other assets                        (434,000)     (275,000)       (257,000)     (1,699,000)
  Proceeds from maturity and sale of marketable securities         5,817,000    11,098,000       6,705,000      67,549,000
  Purchases of marketable securities                              (2,796,000)   (9,722,000)     (5,872,000)    (67,332,000)
                                                                 ------------  ------------  --------------  --------------
   Net cash provided by (used in) investing activities             2,367,000       943,000         551,000      (3,466,000)
                                                                 ------------  ------------  --------------  --------------
Cash Flows From Financing Activities:
  Payments to debentureholders                                    (1,246,000)            -               -      (1,246,000)
  Proceeds from issuance of common stock, net                        834,000     1,439,000          23,000      36,302,000
  Proceeds from issuance of 7% convertible debentures, net                 -     8,565,000               -       8,565,000
  Proceeds from issuance of 8% convertible debentures, net                 -             -       7,790,000       7,790,000
  Principal payments under capital lease obligation                   (3,000)       (4,000)         (2,000)         (9,000)
  Capital contributions from chairman                                      -             -               -       1,000,000
  Increase in loans payable to stockholder / affiliates                    -             -               -       2,669,000
  Repayment of loans payable to stockholder and affiliates
   (remainder contributed to capital by the stockholder)                   -             -               -      (1,300,000)
                                                                 ------------  ------------  --------------  --------------
   Net cash (used in) provided by financing activities              (415,000)   10,000,000       7,811,000      53,771,000
                                                                 ------------  ------------  --------------  --------------
Net Increase (Decrease) in Cash and Cash Equivalents              (3,639,000)    5,324,000       3,407,000       7,121,000
Cash and Cash Equivalents at Beginning of Period                  10,760,000     5,436,000       2,029,000               -
                                                                 ------------  ------------  --------------  --------------
Cash and Cash Equivalents at End of Period                        $7,121,000   $10,760,000      $5,436,000      $7,121,000
                                                                 ============  ============  ==============  ==============

Supplemental Disclosure of Non-cash Activities:
 Capital expenditures made under capital lease obligation                  -             -         $20,000         $20,000
                                                                 ============  ============  ==============  ==============
 Convertible Debentures converted into 2,995,006, 2,269,755,
  354,204 and 5,618,965 shares of Common Stock, respectively      $7,155,000    $5,485,000        $571,000     $13,211,000
                                                                 ============  ============  ==============  ==============
  Warrants issued to placement agents                                      -       $45,000        $480,000        $525,000
                                                                 ============  ============  ==============  ==============
The accompanying notes are an integral part of these consolidated statements.
Page F - 5
</TABLE>
<PAGE>
<TABLE>
   AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARY
             (a development stage company)

    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<CAPTION>

                                                                            Class A                    Class B
                                                         Per             Common Stock               Common Stock
                                                        Share   ---------------------------  ------------------------
                                                       Amount      Shares        Dollars       Shares       Dollars
                                                       -------  ------------  -------------  -----------  -----------
<S>                                                    <C>      <C>           <C>            <C>          <C>
BALANCE, AT INCEPTION,  (SEPTEMBER 1, 1983)            $               -         $  -                 -     $  -   

  Sale of common stock to chairman for cash              .33         78,000              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1983                                           78,000              -            -            -

  Sale of common stock to chairman for cash              .33        193,500              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1984                                          271,500              -            -            -

  Sale of common stock to chairman for cash              .33        276,700              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1985                                          548,200          1,000            -            -

  Sale of common stock to chairman for cash              .33        404,820              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1986                                          953,020          1,000            -            -

  Sale of common stock to chairman for cash              .33         48,048       -                   -            -
  Net (loss) for the period                                               -       -                   -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1987                                        1,001,068          1,000            -            -

  Exchange of common stock for Class B stock                     (1,001,068)        (1,000)   1,001,068        1,000
  Sale of Class B stock to chairman for cash             .33              -              -    1,998,932        2,000
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1988                                                -              -    3,000,000        3,000

  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1989                                                -              -    3,000,000        3,000

  Conversion of loans payable to stockholder into
    additional paid-in capital                                            -              -            -            -
  Sale of 1,150,000 Units to public consisting of
    3,450,000 shares of Class A common stock and
    warrants (net of $1,198,000 underwriting expenses)   2.00     3,450,000          3,000            -            -
  Conversion of Class B stock into
    Class A stock                                                   668,500          1,000     (668,500)      (1,000)
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1990                                        4,118,500         $4,000    2,331,500       $2,000
                                                                ------------  -------------  -----------  -----------
CONTINUED
  Page F - 6
<PAGE>




BALANCE, DECEMBER 31, 1990                                        4,118,500         $4,000    2,331,500       $2,000

  Exercise of Class A Warrants (net of $203,000 
    in underwriting expenses) for cash                   3.00     3,449,955          3,000            -            -
  Exercise of Class B Warrants for cash                  4.50        79,071              -            -            -
  Conversion of Class B stock 
    into Class A stock                                              850,000          1,000     (850,000)      (1,000)
  Exercise of stock options                              2.00       417,750          1,000            -            -
  Expense for warrants issued                                             -              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1991                                        8,915,276          9,000    1,481,500        1,000

  Exercise of Class B Warrants (net of $701,000
    in underwriting expenses) for cash                   4.50     3,370,884          3,000            -            -
  Conversion of Class B stock 
    into Class A stock                                              106,000              -     (106,000)           -
  Exercise of stock options                              2.49       348,300          1,000            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1992                                       12,740,460         13,000    1,375,500        1,000

  Sale of common stock to Medeva PLC.                    7.50       200,000              -            -            -
  Exercise of stock options                              2.00        32,700              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1993                                       12,973,160         13,000    1,375,500        1,000

  Exercise of stock options                              2.16        91,250              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1994                                       13,064,410         13,000    1,375,500        1,000

  Conversion of 8% Convertible Debentures into
    Class A Common Stock                                 1.85       354,204              -            -            -
  Exercise of stock options                              1.82        12,750              -            -            -
  Expense for warrants/options issued                                     -              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1995                                       13,431,364        $13,000    1,375,500       $1,000
                                                                ------------  -------------  -----------  -----------
CONTINUED
  Page F - 7
<PAGE>

                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1995                                       13,431,364        $13,000    1,375,500       $1,000

  Conversion of 8% Convertible Debentures into
    Class A Common Stock                                 2.74     2,269,755          2,000            -            -
  Exercise of stock options                              2.53       569,875          1,000            -            -
  Expense for warrants/options issued                                     -              -            -            -
  Discount on 7% convertible debentures                                   -              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 30, 1996                                       16,270,994         16,000    1,375,500        1,000
                                                                ------------  -------------  -----------  -----------

  Conversion of 7% and 8% Convertible Debentures
    into Class A Common Stock                            2.93     2,995,006          3,000            -            -
  Sale of Class B stock for cash                         2.23             -              -      350,000        1,000
  Exercise of stock options                              2.00        27,500              -            -            -
  Expense for warrants issued                                             -              -            -            -
  Class A Common Stock issued                            3.12        48,117              -            -            -
  Net (loss) for the period                                               -              -            -            -
                                                                ------------  -------------  -----------  -----------
BALANCE, DECEMBER 31, 1997                                       19,341,617        $19,000    1,725,500       $2,000
                                                                ============  =============  ===========  ===========



See notes to unaudited consolidated financial statements
Page F - 8

</TABLE>
<PAGE>
<TABLE>
   AMERICAN BIOGENETIC SCIENCES, INC. AND SUBSIDIARY
             (a development stage company)

    CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                                                                 Deficit
                                                                               Accumulated
                                                                 Additional    During the
                                                                  Paid-in      Development
                                                                  Capital         Stage         Total
                                                                ------------  -------------  -----------
<S>                                                             <C>           <C>            <C>
BALANCE, AT INCEPTION,  (SEPTEMBER 1, 1983)                       $  -           $  -          $  -   

  Sale of common stock to chairman for cash                          26,000              -       26,000
  Net (loss) for the period                                               -        (25,000)     (25,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1983                                           26,000        (25,000)       1,000

  Sale of common stock to chairman for cash                          65,000              -       65,000
  Net (loss) for the period                                               -       (242,000)    (242,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1984                                           91,000       (267,000)    (176,000)

  Sale of common stock to chairman for cash                          92,000              -       92,000
  Net (loss) for the period                                               -       (305,000)    (305,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1985                                          183,000       (572,000)    (388,000)

  Sale of common stock to chairman for cash                         134,000              -      134,000
  Net (loss) for the period                                               -       (433,000)    (433,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1986                                          317,000     (1,005,000)    (687,000)

  Sale of common stock to chairman for cash                          16,000              -       16,000
  Net (loss) for the period                                               -       (730,000)    (730,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1987                                          333,000     (1,735,000)  (1,401,000)

  Exchange of common stock for Class B stock                              -              -            -
  Sale of Class B stock to chairman for cash                        664,000              -      666,000
  Net (loss) for the period                                               -     (1,031,000)  (1,031,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1988                                          997,000     (2,766,000)  (1,766,000)

  Net (loss) for the period                                               -     (1,522,000)  (1,522,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1989                                          997,000     (4,288,000)  (3,288,000)

  Conversion of loans payable to stockholder into
    additional paid-in capital                                    1,481,000              -    1,481,000
  Sale of 1,150,000 Units to public consisting of
    3,450,000 shares of Class A common stock and
    warrants (net of $1,198,000 underwriting expenses)            5,699,000              -    5,702,000
  Conversion of Class B stock into
    Class A stock                                                         -              -            -
  Net (loss) for the period                                               -     (2,100,000)  (2,100,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1990                                       $8,177,000    ($6,388,000)  $1,795,000
                                                                ------------  -------------  -----------
  CONTINUED
  Page F - 6 (column continuation)
<PAGE>




BALANCE, DECEMBER 31, 1990                                       $8,177,000    ($6,388,000)  $1,795,000

  Exercise of Class A Warrants (net of $203,000 
    in underwriting expenses) for cash                           10,143,000              -   10,146,000
  Exercise of Class B Warrants for cash                             356,000              -      356,000
  Conversion of Class B stock 
    into Class A stock                                                    -              -            -
  Exercise of stock options                                         835,000              -      836,000
  Expense for warrants issued                                       900,000              -      900,000
  Net (loss) for the period                                               -     (4,605,000)  (4,605,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1991                                       20,411,000    (10,993,000)   9,428,000

  Exercise of Class B Warrants (net of $701,000
    in underwriting expenses) for cash                           14,465,000              -   14,468,000
  Conversion of Class B stock 
    into Class A stock                                                    -              -            -
  Exercise of stock options                                         865,000              -      866,000
  Net (loss) for the period                                               -     (4,016,000)  (4,016,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1992                                       35,741,000    (15,009,000)  20,746,000

  Sale of common stock to Medeva PLC.                             1,500,000              -    1,500,000
  Exercise of stock options                                          65,000              -       65,000
  Net (loss) for the period                                               -     (6,521,000)  (6,521,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1993                                       37,306,000    (21,530,000)  15,790,000

  Exercise of stock options                                         197,000              -      197,000
  Net (loss) for the period                                               -     (7,431,000)  (7,431,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1994                                       37,503,000    (28,961,000)   8,556,000

  Conversion of 8% Convertible Debentures into
    Class A Common Stock                                            571,000              -      571,000
  Exercise of stock options                                          23,000              -       23,000
  Expense for warrants/options issued                               602,000              -      602,000
  Net (loss) for the period                                               -     (5,607,000)  (5,607,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1995                                      $38,699,000   ($34,568,000)  $4,145,000
                                                                ------------  -------------  -----------

  CONTINUED
  Page F - 7 (column continuation)
<PAGE>

BALANCE, DECEMBER 31, 1995                                      $38,699,000   ($34,568,000)  $4,145,000

  Conversion of 8% Convertible Debentures into
    Class A Common Stock                                          5,483,000              -    5,485,000
  Exercise of stock options                                       1,438,000              -    1,439,000
  Expense for warrants/options issued                               330,000              -      330,000
  Discount on 7% convertible debentures                           1,843,000              -    1,843,000
  Net (loss) for the period                                               -     (7,700,000)  (7,700,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1996                                       47,793,000    (42,268,000)   5,542,000
                                                                ------------  -------------  -----------

  Conversion of 7% and 8% Convertible Debentures
    into Class A Common Stock                                     7,152,000              -    7,155,000
  Sale of Class B stock for cash                                    778,000              -      779,000
  Exercise of stock options                                          55,000              -       55,000
  Expense for warrants issued                                       149,000              -      149,000
  Class A Common Stock issued                                       150,000              -      150,000
  Net (loss) for the period                                               -     (7,147,000)  (7,147,000)
                                                                ------------  -------------  -----------
BALANCE, DECEMBER 31, 1997                                      $56,077,000   ($49,415,000)  $6,683,000
                                                                ============  =============  ===========

 See notes to unaudited consolidated financial statements
 CONTINUED
 Page F - 8 (column continuation)
</TABLE>
<PAGE>


       AMERICAN  BIOGENETIC SCIENCES, INC. AND SUBSIDIARY 

                  (a development stage company)

            Notes to Consolidated Financial Statements


1.    Business and Development Stage Risks:

     American Biogenetic Sciences, Inc. (together with its
subsidiary, the "Company") was incorporated in Delaware on
September 1, 1983.  The Company was formed to engage in the
research, development and production of bio-pharmaceutical
products.  As a development stage company, the Company has not
materially commenced its principal operations.  Most of its efforts
have been devoted to research and development, acquiring equipment,
recruiting and training personnel, and financial planning.  The
Company's research efforts have been focused on the development of
products to diagnose, prevent and treat diseases in humans.

     The Company has insignificant product sales to date and has
had limited revenues from collaborative and licensing agreements
(Note 6).  Since its inception, the Company has been dependent upon
the receipt of capital investment or other financing to fund its
continuing research activities. The Company expects to incur
substantial expenditures in research and product development and
the Food and Drug Administration approval process relating to Phase
I and Phase II human clinical studies of its MH1 imaging product
and processing 510(k) applications for its TpP diagnostic test. 
Currently product development plans of the Company include entering
into collaborative, licensing and co-marketing arrangements with
large pharmaceutical companies to provide additional funding and
clinical expertise to perform tests necessary to obtain regulatory
approvals, provide manufacturing expertise and market the Company's 
products.  Without such collaborative, licensing or co-marketing
arrangements, additional sources of funding will be required to
finance the Company. In addition to the normal risks associated
with a business engaged in research and development of new
products, there can be no assurance that the Company's research and
development will be successfully completed, that any products
developed will obtain the necessary U.S. regulatory approvals
(principally from the FDA), that any approved product will be a
commercial success, that adequate product liability insurance can
be obtained or that sufficient capital will be available when
required to permit the Company to realize its plans.  In addition,
the Company operates in an environment of rapid changes in
technology and in an industry which has many competitors who have
far more resources available to them than does the Company. 
Further, the Company is dependent upon the services of several
employees and advisors.

     While losses from development stage activities are expected to
continue in 1998, management believes that its liquidity and
capital resources at December 31, 1997 are adequate to fund its
planned activities through 1998.

Page F - 9
<PAGE>

2.    Summary of Significant Accounting Policies:

Principles of Consolidation

      During 1989, the Company formed a subsidiary, American
Biogenetic Sciences (Ireland), Ltd., which is 99% owned by the
Company and, to fulfill legal requirements, 1% owned by an officer
of the Company.  The financial statements reflect the accounts of
the Company and this subsidiary since formation.  All significant
intercompany transactions and balances have been eliminated in
consolidation.

Cash Equivalents

      Cash equivalents include highly liquid securities which have
an original maturity of less than three months from date of
purchase.

Marketable Securities

     Marketable securities consist  of short-term U.S. Government
obligations, which have an original maturity of greater than 3
months.

     In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 115,
"Accounting for Certain Investments in Debt and Equity Securities". 
This Statement requires the classification of debt and equity
securities based on whether the securities will be held to
maturity, are considered trading securities or are available for
sale.  Classification within these categories may require the
securities to be reported at their fair market value with
unrealized gains and losses included either in current earnings or
reported as a separate component of stockholders' equity, depending
on the ultimate classification.  The Company adopted the provisions
of this Statement effective January 1, 1995.  As of December 31,
1996, all debt securities have been classified as held to maturity.
These investments were stated at cost which approximated market. 
Interest is accrued as earned.

Inventory

     Inventory is valued at the lower of cost or market.  Cost is
determined, generally, on a first-in, first-out basis.

Fixed Assets

     Depreciation and amortization of fixed assets are recorded on
the straight-line method over the estimated useful life of the
assets or life of the lease, whichever is shorter, generally 5
years.

Page F - 10
<PAGE>


Patent Costs 

     Costs of certain patent applications are capitalized.  Upon
issuance of a patent, such costs are charged to operations over the
estimated period of benefit or 17 years, whichever is shorter, on
the straight-line method.  Costs of unsuccessful patent
applications or discontinued projects are charged to expense.

Deferred Financing Costs

     Deferred financing costs, which were incurred by the Company
in connection with the issuance of convertible debentures (Note 4 -
Long Term Debt) are capitalized and charged to operations as
additional interest expense over the life of the related debt. 
Upon the conversion of the underlying debt, any unamortized
deferred financing costs are charged to paid-in capital.

Research and Development Income and Expenses 

     Revenues from collaborative agreements are recognized as the
Company performs research activities under the terms of each
agreement.  Research and development costs are charged to expense
in the year incurred. 

Stock-Based Compensation

     Effective January 1, 1995, the Company adopted SFAS No. 123,
"Accounting for Stock-Based Compensation."  This statement
establishes financial accounting and reporting standards for stock-based 
employee compensation plans.  SFAS No. 123 encourages
entities to adopt a fair value based method of accounting for stock
compensation plans.  However, SFAS No. 123 also permits the Company
to continue to measure compensation costs under pre-existing
accounting pronouncements.  If the fair value based method of
accounting is not adopted, SFAS No. 123 requires pro forma
dislosures of net (loss) and net (loss) per common share in the
notes to consolidated financial statements.  The Company has
elected to provide the necessary pro forma disclosures (Note 5).

Net Loss Per Common Share

     Effective December 31, 1997, the Company adopted SFAS No. 128,
"Earnings Per Share."  Basic net loss per common share ("Basic
EPS") is computed by dividing net loss by the weighted average
number of common shares outstanding.  Diluted net loss per common
share ("Diluted EPS") is computed by dividing net loss by the
weighted average number of common shares and dilutive potential
common shares then outstanding.  SFAS No. 128 requires the
presentation of both Basic EPS and Diluted EPS on the face of the
consolidated statements of operations.  The impact of the adoption
of this statement was not material to all previously reported EPS
amounts.  Diluted EPS for 1995, 1996 and 1997 is the same as Basic
EPS  because the inclusion of stock options and convertible
debentures outstanding would be anti-dilutive.

Page F - 11
<PAGE>

Use of Estimates

     The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period.  Actual results could differ from those estimates.

Fixed Assets
     The following table lists fixed assets by category:

<TABLE>
<CAPTION>
                                                   December 31,
                                             ------------------------
                                                  1997        1996
                                                  -----       -----
<S>                                          <C>         <C>
Laboratory equipment                          $1,241,000  $1,097,000
Office equipment, furniture and vehicles         521,000     462,000
Leasehold improvements                           230,000     215,000
                                             ------------------------
                                               1,992,000   1,774,000
Accumulated depreciation and amortization      1,481,000   1,183,000
                                             ------------------------
                                                $511,000    $591,000
                                             ========================
</TABLE>


3.   Agreements with Boston University; Agreement with the
     University of Notre Dame; Employment Agreements; Scientific
     Advisory Board Agreements:

Boston University Agreements

     On December 1, 1996, the Company entered into a Sublease
Agreement and, effective January 1, 1997, an Agreement for Services
with Boston University.  These two agreements provide for the
Company's use of approximately 7,700 square feet of space for
laboratories and for its antigen-free technology at a total annual
payment of $275,000.  The agreements have an initial term of three
years.

University of Notre Dame Agreement 

     On December 1, 1983, the Company entered into a five year
agreement with the University of Notre Dame ("Notre Dame
Agreement") which was amended and extended on November 15, 1988 to
cover the period from that date until November 30, 1993, at which
time it was terminated.  As of December 1, 1993, the Company
entered into a lease with Notre Dame ("Notre Dame Lease") for
substantially the same premises occupied by the Company under the
Notre Dame Agreement for a term ending August 31, 1995.  Notre Dame
extended the rental of a portion of the space through August 31,
1996.  In February 1996, the Company entered into a lease in South
Bend, Indiana for approximately 5,200 square feet with an annual

Page F - 12
<PAGE>

base rent of $52,200.  This lease commenced on April 1, 1996 and is
a five-year lease with three one year renewal options after the
initial five year period.  In September 1996, the Company entered
into a second lease in South Bend, Indiana for approximately 3,000
square feet with an annual base rent of $30,400.  This lease is a
three year lease.  In 1997, the Company moved its research and
development activites from South Bend , Indiana to Boston,
Massachusetts.  The Company closed both facilities and subleased
the 3,000 square foot facility and is in the process of subleasing
the 5,200 square foot facility.

     Under the Notre Dame Agreement, the Company was required to
pay Notre Dame for the direct and indirect payroll cost of
substantially all of the Company's research and development
personnel, purchases of laboratory supplies, items of equipment or
other costs associated with the research projects.  The Notre Dame
Agreement and Notre Dame Lease  provided the Company with use of a
research building and use of certain on site equipment as well as
access to other university assets and facilities.

     Notre Dame has granted the Company all rights, title and
interest in and to any inventions, patents and patent applications
for research projects funded by the Company.  Inventors of any
processes or technology which receive Company support have assigned
his or her interest in the product,  patent or patent applications
to the Company.  The Company incurred costs under the Notre Dame
Agreement of approximately $0, $14,000 and $35,000 during  the
years ended December 31, 1997, 1996, and 1995, respectively, and
$6,150,000 for the period from inception (September 1, 1983)
through December 31, 1997.

     The Company has agreed to pay Notre Dame a royalty of 5% of
the net income the Company achieves from sales of products
resulting from Company-sponsored research activities at Notre Dame. 
Royalty payments shall continue for a ten-year period from the date
of the first commercial sale of a product, regardless of the
continuation of the Notre Dame Agreement.

Employment Agreements
 
     The President and Chief Operating Officer, Executive Vice President, and 
Senior Vice President  Business Development, are parties to employment 
agreements with the Company ending December 31, 1999, September 30, 2001 and 
November 30, 2001, respectively.  The aggregate annual minimum compensation 
under these agreements as of December 31, 1997 was approximately $410,000.  
They also are parties to agreements with the Company to keep corporate 
information with regard to the business of the Company confidential during and
subsequent to their employment with the Company.  

Scientific Advisory Committee Agreements
 
     The Company has entered into advisory board agreements with
certain research scientists with respect to specific projects in
which the Company has an interest.  The 1997 annual compensation
for the advisors as a group was approximately $87,000.  Generally,
members of the Company's Scientific Advisory Committee are employed

Page F - 13
<PAGE>

by or have consulting agreements with third parties, the businesses
of which may conflict or compete with the Company and any
inventions discovered by such individuals will not become the
property of the Company.

4.   Long Term Debt:

     On October 26, 1995, the Company completed an $8,500,000
private placement of 8% Convertible Debentures.  The outstanding
Debentures are payable on October 13, 1998 and accrue interest,
payable at maturity, at a rate of 8% per annum.  Each holder of
Debentures is entitled to convert the aggregate principal amount
and accrued interest of the Debentures through October 13, 1998 at
an exercise price equal to the lesser of the closing bid price of
the Company's Common Stock on October 13, 1995 ($3.375) or 85% of
the average closing bid price of the Company's Common Stock for the
five trading days prior to the conversion date. The Company has the
right to demand conversion of the Debentures and any accrued
interest on or after April 13, 1997.  The Company also has the
right to redeem Debentures submitted for conversion for an amount
determined under a formula related to the market price of the
shares which would otherwise be issued upon conversion.  In
conjunction with this offering, the Company incurred both cash and
noncash issuance costs totaling $1,190,000.  These issuance costs
are being amortized as a component of interest expense over the
term of the Debentures.  Upon the conversion of the Debentures, the
related unamortized deferred financing costs are charged to paid-in
capital.  As compensation to the placement agent of the Debentures,
the Company paid the placement agent an 8% commission and issued
warrants entitling the placement agent to purchase 201,481 shares
of Common Stock at an exercise price of $4.05 per share at any time
until October 23, 2000.  The estimated noncash value of these
warrants, $480,000, has been recorded as additional paid-in
capital, while their cost has been included in the $1,190,000 total
issuance costs described above.

     On September 30, 1996, the Company completed a $9,000,000
private placement of 7% Convertible Debentures due September 30,
1998.  Interest on the Debentures is payable quarterly at the rate
of 7% per annum.   The Debentures (together with any accrued
interest) are convertible to the extent of 25% of the principal
amount thereof commencing on December 23, 1996, with an additional
25% of the principal amount of the Debentures becoming convertible
on each of the 30th, 60th and 90th days thereafter, at a conversion
price equal to 83% of the average of the closing prices of the
Company's Class A Common Stock for the five consecutive trading
days ending on the trading day immediately preceding the conversion
date of the Debentures (the "Current Market Price"); provided,
however, that in no event may the conversion price be less than
$3.00 per share (the "Minimum Conversion Price") nor greater than
$8.00 per share (the "Maximum Conversion Price").  In the event
that, but for the Minimum Conversion Price, the number of shares
that would have been issued is greater than the number of shares
actually issued, the holder converting such Debenture shall also be
entitled to receive cash in an amount equal to  such difference
multiplied by the Current Market Price.  In the event any Debenture
remains outstanding at its maturity date, the Company has the
option to either convert such Debenture into shares of Class A
Common Stock on the same basis as the Debenture holder could have

Page F - 14
<PAGE>

converted such Debenture or pay the outstanding principal amount
thereof, plus any accrued interest thereon, in cash.  In
conjunction with this offering, the Company incurred both cash and
noncash issuance costs totaling $480,000.  These issuance costs are
being amortized as a component of interest expense over the term of
the Debentures.  Upon the conversion of the Debentures, the related
unamortized deferred financing costs are charged to paid-in-capital.  
As compensation to the placement agent of the Debentures,
the Company paid the placement agent a 4% commission and issued to
brokers affiliated with the placement agent warrants entitling them
to purchase an aggregate of 15,618 shares of Common Stock at an
exercise price of $5.76 per share at any time until September 30,
1998.  The estimated noncash value of these warrants, $45,000, has
been recorded as additional paid-in capital, while their cost is
included in the $480,000 total issuance costs related to these
Debentures.  In addition, the Company recorded additional paid in
capital and debt discount of $1,843,000 to reflect the dollar value
of the market price conversion discount (17%) related to these
Debentures.  The debt discount was amortized and charged to
interest expense from October 1, 1996 through March 23, 1997, the
period during which the Debentures become 100% convertible.  In
1996, $1,351,000 of this debt discount was amortized and charged to
interest expense and the balance of $492,000 was amortized in 1997.

5.    Stockholders' Equity:

Description of Class A and Class B Common Stock

     Holders of Class A Common Stock and Class B Common Stock have
equal rights to receive dividends, equal rights upon liquidation,
vote as one class on all matters requiring stockholder approval,
have no preemptive rights, are not redeemable and do not have
cumulative voting rights; however, holders of Class A Common Stock
have one vote for each share held while holders of the Class B
Common Stock have ten votes for each share held on all matters to
be voted on by the stockholders.  All Class B Common Stock is owned
by the Chairman of the Board and may be converted into Class A
Common Stock on a share for share basis at the option of the holder
and generally are automatically converted in the event of sale or,
with certain exceptions, transfer.

Initial Public Offering

      In May and June 1990, the Company completed an initial public
offering of 1,150,000 units of its equity securities.  Each unit
consisted of three shares of Class A Common Stock and three
redeemable Class A Warrants.  As a result of this offering, the
Company received approximately $5,702,000 of proceeds, net of
underwriting and other expenses.

     Each holder of a Class A Warrant was entitled to purchase one
share of Class A Common Stock and one Class B Warrant at an
exercise price of $3.00 at any time until five years from the date
of the public offering.  Each holder of a Class B Warrant was
entitled to purchase one share of Class A Common Stock at an
exercise price of $4.50 at any time after exercise of the Class A
Warrants and until May 1995.

Page F - 15
<PAGE>

     During 1991, 3,449,955 Class A Warrants and 79,071 Class B
Warrants were exercised yielding net proceeds to the Company of
approximately $10,502,000 (after expenses of approximately
$203,000).  During 1992, 3,370,884 Class B Warrants were exercised
for $14,468,000 (net of approximately $701,000 of expenses).  At
December 31, 1997 and December 31, 1996, there were no outstanding
Class A and Class B Warrants.

Stock Option Plans 

     The Company's 1986 Stock Option Plan (the "1986 Plan")
provided for the grant of incentive stock options and/or non-qualified 
options until July 1997 of up to an aggregate of
4,450,000 shares of Class A Common Stock to employees, officers and
consultants of the Company  Options were granted at exercise prices
not less than the fair market value at the date of grant and for a
term not to exceed ten years from the date of grant; except that an
incentive stock option granted under the 1986 Plan to a stockholder
owning more than 10% of the outstanding Common Stock of the Company
could not exceed five years nor have an exercise price of less than
110% of the fair market value of the Class A Common Stock on the
date of the grant.  The outstanding options have a vesting period
ranging two years to four years ratably from the date of grant.

     Changes in outstanding options and options available for grant
under the 1986 Plan, expressed in number of shares, are as follows:

<TABLE>
<CAPTION>
                                         For the Years Ended
                      -------------------------------------------------------------
                      December 31, 1997                December 31, 1996
                      ----------------------------     ----------------------------
                        Shares      Weighted Avg.        Shares      Weighted Avg.
                         Under          Option            Under          Option
                        Option          Price            Option          Price
                      -----------   --------------     -----------   --------------
<S>                   <C>           <C>                <C>           <C>
Options outstanding,
 beginning of year     2,979,500            $4.07       3,540,750            $3.74

Granted                        -                -         126,000            $4.35
Exercised                (27,500)           $2.01        (552,375)           $2.49
Cancelled                (78,375)           $3.86        (134,875)           $1.93
Options outstanding,
end of year            2,873,625            $4.10       2,979,500            $4.07
Options exercisable,
end of year            2,737,125            $4.13       2,516,750            $4.26

Options available
for grant, end
of year                        -                                -

</TABLE>

Page F - 16
<PAGE>


     The Company's 1993 Non-Employee Director Stock Option Plan
(the "1993 Plan")  provides for the issuance of stock options for
up to 500,000 shares of Class A Common Stock to outside directors
of the Company.  Options are automatically granted immediately
following each Annual Meeting of the Company to purchase 10,000
shares of Class A Common Stock to each outside director elected at
the Annual Meeting.  The option exercise price is 100% of the fair
market value of the Class A Common Stock on the date of grant and
the option may be exercised during a period of five years from the
date of grant at the rate of 25% each year on a cumulative basis,
commencing one year from the date of grant.

     Changes in outstanding options and options available for
grant under the 1993 Plan, expressed in number of shares, are as
follows:

<TABLE>
<CAPTION>
                                       For the Years Ended
                      -------------------------------------------------------------
                      December 31, 1997                December 31, 1996
                      ----------------------------     ----------------------------
                        Shares      Weighted Avg.        Shares      Weighted Avg.
                         Under          Option            Under          Option
                        Option          Price            Option          Price
                      -----------   --------------     -----------   --------------
<S>                   <C>           <C>                <C>           <C>
Options outstanding,
 beginning of year        80,000            $4.25          90,000            $3.42

Granted                   30,000            $3.50          20,000            $6.75
Exercised                      -                -         (12,500)           $3.38
Cancelled                      -                -         (17,500)           $3.13
Options outstanding,
end of year              110,000            $4.05          80,000            $4.25
Options exercisable,
end of year               50,000            $3.89          30,000            $3.65

Options available
for grant, end
of year                  377,500                          407,500

</TABLE>

     The Company's 1996 Stock Option Plan (the "1996 Plan"),
which replaced the 1986 plan,  provides for the issuance of
incentive stock options and/or non-qualified options to purchase up
to an aggregate of 1,000,000 shares of Class A Common Stock to
employees, officers and consultants  of the Company.  Options may
be granted at exercise prices not less than the fair market value
at the date of grant and may be exercisable for a period not to
exceed ten years from the date of grant; except that the term of an
incentive stock option granted under the 1996 plan to a stockholder
owning more than 10% of the outstanding Common Stock of the Company

Page F - 17
<PAGE>

must not exceed five years nor have an exercise price of less than
110% of the fair market value of the Class A Common Stock on the
date of the grant.  The majority of options outstanding are
exercisable 25% each year on a cumulative basis, commencing one
year from the date of grant.

     Changes in outstanding options and options available for
grant under the 1996 Plan, expressed in number of shares, are as
follows:

<TABLE>
<CAPTION>
                                       For the Years Ended
                      -------------------------------------------------------------
                      December 31, 1997                December 31, 1996
                      ----------------------------     ----------------------------
                        Shares      Weighted Avg.        Shares      Weighted Avg.
                         Under          Option            Under          Option
                        Option          Price            Option          Price
                      -----------   --------------     -----------   --------------
<S>                   <C>           <C>                <C>           <C>
Options outstanding,
 beginning of year        80,000            $4.94               -                -

Granted                  917,000            $3.34         155,000            $4.86
Exercised                      -                -               -                -
Cancelled               (176,000)           $4.02         (75,000)           $4.78
Options outstanding,
end of year              821,000            $3.35          80,000            $4.94
Options exercisable,
end of year              231,418            $3.46               -                -

Options available
for grant, end
of year                  179,000                          920,000

</TABLE>


       The Company has adopted the disclosure-only provisions of
Statement of Financial Accounting Standards No. 123, "Accounting
for Stock-Based Compensation."  Accordingly, no compensation cost
has been recognized for the stock option plans.  Had compensation
cost for the Company's stock option plans been determined based on
the fair value at the grant date for options granted in 1997 and
1996 with the provisions of SFAS No. 123, the Company's net loss
and loss per share would have been increased to the pro forma
amounts indicated below:

<TABLE>
<CAPTION>
                                                      1997              1996
-----------------------------------------------------------------------------------
<S>                                            <C>               <C>
Net loss - as reported                               ($7,147,000)      ($7,700,000)

Net loss - pro forma                                 ($7,522,000)      ($8,075,000)

Net loss per share - as reported                          ($0.35)           ($0.45)

Net loss per share - pro forma                            ($0.37)           ($0.47)

-----------------------------------------------------------------------------------

</TABLE>
Page F - 18
<PAGE>

       The fair value of each option grant is estimated on the date
of grant using the Black-Scholes option-pricing model with the
following weighted-average assumptions used for grants in 1997 and
1996:  dividend yield of 0%; expected volatility of 84%; risk-free
interest rate of range 5.4% to 7.0% and expected lives of seven
years.

       The weighted average fair value of all three option plans
for options granted were $2.10 and $3.77 in 1997 and 1996,
respectively.  The following table sets forth additional SFAS No.
123 disclosure information as to options outstanding for all three
plans at December 31, 1997:
 
<TABLE>
<CAPTION>
                                                                Weighted Average
    Shares       Exercisable     Exercise     Weighted Average     Remaining
  Outstanding      Shares       Price Range    Exercise Price   Contractual Life
---------------------------------------------------------------------------------
<C>            <C>            <C>            <C>               <C>
       834,750        717,500  $1.50 - $2.25             $1.90               6.0
       573,750        198,875  $2.38 - $3.50             $3.24               8.8
     1,926,750      1,671,543  $3.63 - $5.38             $4.61               5.1
       468,375        429,625  $5.50 - $7.75             $5.63               4.5
         1,000          1,000     $10.00                $10.00               4.2
------------------------------
     3,804,625      3,018,543

</TABLE>


Other Options Granted

     The Company entered into a consulting agreement with an
unaffiliated third party to assist in the strategic planning and
implementation of the Company's licensing, collaborative and co-marketing 
plans, which expired February 29, 1996.  Pursuant to the
agreement, the Company granted an option to purchase 50,000 shares
of Class A Common Stock on or before February 28, 2000 at $2.25 per
share.  The Company also granted performance options to purchase
50,000 shares of Class A Common Stock at $2.25 for licensing or
collaborative agreement entered into which met certain criteria. 
These options are exercisable for five years from the date of
grant.  The Company has recorded a noncash charge of $122,000 in
1996 relating to options for 100,000 shares granted.

     The Company has granted an investor relations consultant a
warrant to purchase 50,000 shares of Class A Common Stock on or
before November 14, 2000 at $3.50 per share pursuant to an
agreement dated November 27, 1995.  The Company has recorded a
noncash charge of $254,000 ratably over the life of the agreement
relating to these warrants.

     The Company entered into an agreement with an unaffiliated
third party dated October 6, 1995 to assist with the marketing of
the Company's products and intellectual property, which agreement
has expired.  Pursuant to this agreement, the Company granted
performance options to purchase 25,000 shares of Class A Common
Stock and issued 5,000 shares for services rendered under the
agreement.  Options were granted for 12,500 shares at $3.00 per
share and 12,500 shares at $5.50.  These options are exercisable
for five years from the date of grant.

Page F - 19
<PAGE>

6.   Various Other Agreements:

     As part of its development stage activities, the Company
enters into various agreements that provide for the expenditure of
funds for research and development activities and typically provide
for the payment of royalties (between 2% to 8% of net sales) by the
Company if any products are successfully developed and marketed as
a result of the work being performed under the agreement.  The
following is a summary of significant agreements the Company has
entered into:

License Agreements 

     On January 24, 1992, the Company entered into an exclusive,
15 year license agreement with Yamanouchi Pharmaceutical Co., Ltd.
("Yamanouchi"), a Japanese pharmaceutical company.  Under this
agreement, Yamanouchi may manufacture, use or market diagnostic
assays that contain the Company's monoclonal antibody, 45-J, in
Japan and Taiwan.  Yamanouchi has paid a non-refundable, initial
sign-up payment to the Company of $1,000,000.  In accordance with
the provisions of the agreement, Yamanouchi withheld $100,000 of
this payment to make withholding tax payments under the laws of
Japan on behalf of the Company, resulting in a net remittance of
$900,000.  The agreement provides that Yamanouchi is to pay the
Company a fixed percentage over the Company's manufacturing costs
of the 45-J antibody supplied to Yamanouchi.  On an ongoing basis,
Yamanouchi is to pay the Company royalties at the rate of 10% of
all net sales of diagnostic assays sold by Yamanouchi or its
affiliates during each calendar year of the agreement term. 
Additionally, Yamanouchi is to pay the Company 50% of any initial
fees, royalties or other consideration received with respect to any
sublicense granted by Yamanouchi.  No payments have been made by
Yamanouchi to the Company since the initial sign-up payment.

     On December 10, 1992, the Company entered into an agreement
(as amended) with University College Dublin, Ireland granting the
Company an exclusive license for drugs/compounds to halt the onset
and/or progression of neurodegenerative diseases, in general, and
Alzheimer's Disease, in particular.  The agreement's term is the
duration of any patents that may be granted to the university with
a minimum of 10 years.  Pursuant to the agreement, the Company is
to pay the university a royalty of 5% of net income relating to
product sales.  The Company expensed $12,000 in 1997, $62,000 in
1996 and $150,000 in 1995 for certain research expenses, supplies
and equipment under this agreement.

     On August 10, 1993, the Company entered into a five-year
collaboration agreement with the Free University of Berlin to
develop therapeutic compounds.  The Company also acquired a series
of anticonvulsant compounds.  Pursuant to the agreement, the
Company is to pay a royalty of 5% of the net product sales.  The
agreement lasts the life of the patent or a minimum of 10 years. 
The Company expensed $116,000 in 1997 and $117,000 in both 1996 and
1995 for research expenses and supplies under this agreement.

     On October 12, 1995, the Company entered into a license and
collaboration agreement with F.Hoffmann-La Roche Ltd. ("Hoffmann-La
Roche") for the co-development and marketing of the Company's

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Thrombus Precursor Protein (TpP ) for the detection of active
thrombosis (blood clot formation).  The agreement grants Hoffmann-La Roche
a worldwide license to market the TpP test in a latex
based particle agglutination format.  Under the agreement, the
Company has received certain, and is to receive additional,
development payments to adapt the TpP test in the latex based
particle agglutination format to Hoffmann-La Roche's automated
diagnostic systems.  The Company is also to receive non-refundable
milestone payments upon achievement of certain commercialization
goals.  The TpP test is to be manufactured by the Company for use
on Hoffmann-La Roche's instruments. The Company is to receive a
percentage of Hoffmann-La Roche's net selling price for the
Company's manufacturing of the TpP test plus a 5% royalty on net
sales made by Hoffmann-La Roche.  Under the agreement, the TpP test
is also to be sold by the Company and Hoffmann-La Roche to other
diagnostic companies using similar particle agglutination
technology.  On these sales, gross profit is to be shared equally
between the Company and Hoffmann-La Roche.

     On December 13, 1995, the Company entered into a license
agreement with Abbott Laboratories, Inc. ("Abbott") for the
marketing of the Company's Thrombus Precursor Protein (TpP )
immunoassay. This agreement grants Abbott a worldwide license to
market the TpP test for Abbott's immunoassay formats.  The Company
has and is to receive non-refundable up-front and milestone
payments upon achievement of certain development and
commercialization goals.  The Company is to receive a 5% royalty on
net sales made by Abbott.  In addition, the reagent for the TpP
test is to be manufactured by the Company for use by Abbott. 

7.   Federal Income Taxes:

     At December 31, 1997, the Company had net operating loss
carryforwards of approximately $47,710,000 for income tax purposes. 
The net operating loss carryforwards  will expire in varying
amounts through 2012.    In addition, the Company has approximately
$975,000 of available research and development tax credits to
offset future taxes.  These credits expire in 2011.  In accordance
with Statement of Financial Accounting Standards No. 109
"Accounting for Income Taxes," the Company has recorded a valuation
allowance to fully reserve for the deferred tax benefit
attributable to its net operating loss and tax credit carryforwards
due to the uncertainty as to their ultimate realizability.

     In accordance with certain provisions of the Tax Reform Act
of 1986, a change in ownership of a corporation of greater than 50
percentage points within a three-year period places an annual
limitation on the corporation's ability to utilize its existing net
operating loss carryforwards, investment tax and research and
development credit carryforwards (collectively "tax attributes"). 
Such a change in ownership was deemed to have occurred in
connection with the Company's 1990 initial public offering at which
time the Company's tax attributes amounted to approximately $4.9
million.  The annual limitation of the utilization of such tax
attributes is approximately $560,000.  To the extent the annual
limitation is not utilized, it may be carried forward for
utilization in future years.  At December 31, 1997, the Company has
approximately $4,272,000 of the $4.9 million of net operating
losses that are no longer subject to this limitation.

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