AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 29, 2001
                                                     REGISTRATION NO. 333-______
================================================================================

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                             -----------------------

                                    FORM SB-2

             REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
                             -----------------------

                         BIOSANTE PHARMACEUTICALS, INC.
                 (Name of small business issuer in its charter)

                                                              
            DELAWARE                          2836                      58-2301143
    (State or other jurisdiction     (Primary Standard Industrial    (I.R.S. Employer
  of incorporation or organization)   Classification Code Number)    Identification No.)

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

                        175 OLDE HALF DAY ROAD, SUITE 247
                          LINCOLNSHIRE, ILLINOIS 60069
                          TELEPHONE NO.: (847) 793-2458

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

                              PHILLIP B. DONENBERG
                CHIEF FINANCIAL OFFICER, TREASURER AND SECRETARY
                         BIOSANTE PHARMACEUTICALS, INC.
                        175 OLDE HALF DAY ROAD, SUITE 247
                          LINCOLNSHIRE, ILLINOIS 60069
                          TELEPHONE NO.: (847) 793-2458
            (Name, address, including zip code, and telephone number,
                     including area code, of agent for service)

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

                                    COPY TO:
                              AMY E. CULBERT, ESQ.
                        OPPENHEIMER WOLFF & DONNELLY LLP
                       45 SOUTH SEVENTH STREET, SUITE 3300
                          MINNEAPOLIS, MINNESOTA 55402
                                 (612) 607-7287

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

         Approximate date of commencement of proposed sale to the public:
      FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES EFFECTIVE.

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

    If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
reinvestment plans, check the following box: [X]

    If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering.[ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]

    If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]

    If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]

                         CALCULATION OF REGISTRATION FEE

=============================================================================================================================
        TITLE OF EACH CLASS OF           NUMBER OF SHARES     PROPOSED MAXIMUM        PROPOSED MAXIMUM        AMOUNT OF
      SECURITIES TO BE REGISTERED        TO BE REGISTERED    OFFERING PRICE PER      AGGREGATE OFFERING      REGISTRATION
                                                (1)               UNIT (2)               PRICE (2)             FEE (2)
- -----------------------------------------------------------------------------------------------------------------------------
                                                                                                 
Common Stock, par value $0.0001 per
share...............................        25,437,500              $0.80               $20,350,000           $5,087.50
=============================================================================================================================

(1)      The amount to be registered hereunder consists of an aggregate of
         25,437,500 shares of common stock to be sold by the selling
         stockholders named in this registration statement. Of the 25,437,500
         shares of common stock, 9,250,000 are currently outstanding and
         beneficially owned by the selling stockholders and 16,187,500 shares
         are issuable upon the exercise of warrants held by the selling
         stockholders.

(2)      Estimated solely for the purpose of calculating the amount of the
         registration fee pursuant to Rule 457(c) under the Securities Act of
         1933, based upon the last sale of the registrant's common stock on June
         27, 2001, as reported by the Over-the-Counter Bulletin Board.

         The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the registrant
shall file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.

================================================================================

The information in this prospectus is not complete and may be changed. We may
not sell these securities until the Securities and Exchange Commission
declares our registration statement effective. This prosepctus is not an
offer to sell these securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.

               Subject to Completion, dated June 29, 2001

PROSPECTUS

                             [BIOSANTE LOGO]

                            25,437,500 SHARES

                              COMMON STOCK

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

Selling stockholders of BioSante Pharmaceuticals, Inc. are offering
25,437,500 shares of common stock. BioSante will not receive any proceeds
from the sale of shares offered by the selling stockholders.

The shares of common stock offered will be sold as described under the
heading "Plan of Distribution," beginning on page 21.

Our common stock is listed on the Over-the-Counter Bulletin Board under the
symbol "BTPH" and on the Canadian Venture Exchange under the symbol "BAI." On
June 27, 2001, the last reported sale price of our common stock on the OTC
Bulletin Board was US $0.80 and on the CDNX was CD $1.48.

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

THE COMMON STOCK OFFERED INVOLVES A HIGH DEGREE OF RISK. WE REFER YOU TO
"RISK FACTORS," BEGINNING ON PAGE 6.

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

Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if
this prospectus is truthful or complete. Any representation to the contrary
is a criminal offense.

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

                  The date of this prospectus is         , 2001

                                TABLE OF CONTENTS

                                                                                    PAGE
                                                                                    ----

RISK FACTORS...........................................................................6

FORWARD-LOOKING STATEMENTS............................................................16

USE OF PROCEEDS.......................................................................16

DIVIDEND POLICY.......................................................................16

SELLING STOCKHOLDERS..................................................................18

PLAN OF DISTRIBUTION..................................................................21

SELECTED CONSOLIDATED FINANCIAL DATA..................................................23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.............................................................24

BUSINESS..............................................................................31

MANAGEMENT............................................................................44

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS........................................50

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS..............................51

SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT...........................53

DESCRIPTION OF SECURITIES.............................................................56

LEGAL MATTERS.........................................................................58

EXPERTS...............................................................................58

WHERE YOU CAN FIND MORE INFORMATION...................................................59

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS...........................................F-1

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

You should rely only on the information contained in this prospectus. We have
not authorized any other person to provide you with different information. This
prospectus may only be used where it is legal to sell these securities. The
information in this prospectus is accurate as of the date on the front cover.
You should not assume that the information contained in this prospectus is
accurate as of any other date.

                                     SUMMARY

THE ITEMS IN THE FOLLOWING SUMMARY ARE DESCRIBED IN MORE DETAIL LATER IN THIS
PROSPECTUS. THIS SUMMARY PROVIDES AN OVERVIEW OF SELECTED INFORMATION AND DOES
NOT CONTAIN ALL THE INFORMATION YOU SHOULD CONSIDER. THEREFORE, YOU SHOULD ALSO
READ THE MORE DETAILED INFORMATION SET OUT IN THIS PROSPECTUS, INCLUDING THE
CONSOLIDATED FINANCIAL STATEMENTS.

                                   OUR COMPANY

We are a development stage biopharmaceutical company that is developing a
pipeline of hormone replacement products to treat hormone deficiencies in men
and in women. We also are engaged in the development of our proprietary calcium
phosphate, nanoparticulate-based platform technology, or CAP, for vaccine
adjuvants, proprietary novel vaccines, drug delivery systems and to purify the
milk of transgenic animals, which are animals that have been genetically
modified to produce certain desired results in their milk.

To enhance the value of our current pharmaceutical portfolio, we are pursuing
the following corporate growth strategies:

       o      accelerate the development of our hormone replacement products;

       o      continue to develop our nanoparticle-based CAP platform technology
              and seek assistance in the development through corporate partner
              sub-licenses;

       o      license or otherwise acquire other drugs that will add value to
              our current product portfolio; and

       o      implement business collaborations or joint ventures with other
              pharmaceutical and biotechnology companies.

Our primary focus is to build a pipeline of hormone replacement products for the
treatment of human hormone deficiencies. Symptoms of hormone deficiency in men
include impotence, lack of sex drive, muscle weakness and osteoporosis, and in
women, menopausal symptoms, such as hot flashes, vaginal atrophy, decreased
libido and osteoporosis.

Our hormone replacement products, which we license on an exclusive basis from
Antares Pharma Inc., are gel formulations of testosterone, estradiol and a
combination of estradiol and a progestogen. The gels are designed to be absorbed
quickly through the skin after application on the arms, shoulders, abdomen or
thighs, delivering the required hormone to the bloodstream evenly and in a
non-invasive, painless manner. We have begun human clinical trials of our
hormone replacement products, a necessary step in the process of obtaining
United States Food and Drug Administration, or FDA, approval to market the
products.

Our CAP technology, which we license on an exclusive basis from the University
of California, is based on the use of extremely small, solid, uniform particles,
which we call "nanoparticles," as immune system boosters, for drug delivery and
to purify the milk of transgenic animals. We have identified four potential
applications for our CAP technology:

       o      the creation of improved versions of current vaccines by the
              "adjuvant" activity of our proprietary nanoparticles that enhance
              the ability of a vaccine to stimulate an immune response;

                                       3

       o      the development of new, unique vaccines against diseases for which
              there currently are few or no effective methods of prevention
              (E.G., genital herpes);

       o      the creation of inhaled forms of drugs that currently must be
              given by injection (E.G., insulin); and

       o      the purification of the milk of transgenic animals, in which
              protein pharmaceuticals are grown by selectively isolating
              biologically active therapeutic proteins from the transgenic milk.

                               RECENT DEVELOPMENTS

On April 4, 2001, we sold an aggregate of 9,250,000 shares of our common stock
and warrants to purchase an aggregate of 4,625,000 shares of our common stock
for $0.40 per unit for an aggregate purchase price of $3,700,000, to accredited
investors, including several existing stockholders. Each unit consisted of one
share of our common stock and a warrant to purchase 0.50 shares of our common
stock. The proceeds from the sale of these units have been and will continue to
be used for general corporate purposes, including working capital.

                              CORPORATE INFORMATION

Our company, which was initially formed as a corporation organized under the
laws of the Province of Ontario on August 29, 1996, was continued as a
corporation under the laws of the State of Wyoming on December 19, 1996 and was
reincorporated under the laws of the State of Delaware on June 26, 2001.

In this prospectus, references to "BioSante," "the company," "we," and "our,"
unless the context otherwise requires, refer to BioSante Pharmaceuticals, Inc.

                          OFFICE AND WEB SITE LOCATION

Our principal executive offices are located at 175 Olde Half Day Road, Suite
247, Lincolnshire, Illinois 60069, and our telephone number is (847) 793-2458.
Our web site is located at WWW.BIOSANTEPHARMA.COM. Our web site, and the
information contained on that site, or connected to that site, are not intended
to be part of this prospectus.

                                       4

                       SUMMARY CONSOLIDATED FINANCIAL DATA

The selected statement of operations data shown below for the years ended
December 31, 1998, 1999 and 2000 and the balance sheet data as of December 31,
1999 and 2000 are derived from our audited financial statements included
elsewhere in this prospectus. The selected statement of operations data shown
below for the period from August 29, 1996 (date of incorporation) to December
31, 1996 and for the year ended December 31, 1997 and the balance sheet data as
of December 31, 1996, 1997 and 1998 are derived from our audited financial
statements not included elsewhere in this prospectus. The selected financial
data for the three months ended March 31, 2000 and 2001 and as of March 31, 2001
has been derived from our unaudited financial statements included elsewhere in
this prospectus, which, in the opinion of management, include all adjustments,
consisting solely of normal recurring adjustments, necessary for a fair
presentation of the financial information shown in these statements. The results
for the three months ended March 31, 2000 and 2001 are not necessarily
indicative of the results to be expected for the full year or for any future
period. When you read this selected consolidated financial data, it is important
that you also read the historical financial statements and related notes
included in this prospectus, as well as "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Historical results are not
necessarily indicative of future results.

                                      PERIOD FROM                                                             THREE MONTHS ENDED
                                    AUGUST 29, 1996                YEAR ENDED DECEMBER 31,                        MARCH 31,
                                       (DATE OF          -------------------------------------------         -------------------
                                     INCORPORATION)
                                   TO DECEMBER 31, 1996   1997        1998         1999         2000          2000         2001
                                   --------------------  ------      ------       ------       ------        ------       ------
                                                           (in thousands, except per share data)
                                                                                                   
STATEMENT OF OPERATIONS DATA:
Interest income ......................    $     53     $    144     $    123     $    199     $    228     $     60     $     32
                                          --------     --------     --------     --------     --------     --------     --------
Expenses:
   Research and development ..........        --            336        1,400          661        1,888          191          233
   General and administration ........         547        1,618        1,112          853        1,679          301          465
   Depreciation and amortization .....           1           52          140           91           98           24           24
   Loss on disposal of capital assets          --            28          130           --           --           --           --
                                          --------     --------     --------     --------     --------     --------     --------
Total expenses .......................         548        2,034        2,782        1,605        3,665          516          722
                                          --------     --------     --------     --------     --------     --------     --------
Loss before other expenses ...........        (495)      (1,890)      (2,659)      (1,406)      (3,437)        (456)        (690)
                                          --------     --------     --------     --------     --------     --------     --------
   Cost of acquisition of Structured
     Biologicals, Inc. ...............         375           --           --           --           --           --           --
   Purchased in-process research and
     development .....................       5,377           --           --           --           --           --           --
                                          --------     --------     --------     --------     --------     --------     --------
Total other expenses .................       5,752           --           --           --           --           --           --
                                          --------     --------     --------     --------     --------     --------     --------
Net loss .............................    $ (6,247)    $ (1,890)    $ (2,659)    $ (1,406)    $ (3,437)    $   (456)    $   (690)
                                          ========     ========     ========     ========     ========     ========     ========
Basic and diluted net loss per
share ................................    $  (0.26)    $  (0.05)    $  (0.08)    $  (0.03)    $  (0.06)    $  (0.01)    $  (0.01)
                                          ========     ========     ========     ========     ========     ========     ========
Weighted average number of
shares outstanding ...................      24,366       35,962       34,858       49,424       57,537       57,451       57,641
                                          --------     --------     --------     --------     --------     --------     --------

                                                             AS OF DECEMBER 31,                      AS OF MARCH 31,
                                            -----------------------------------------------------    ---------------
                                             1996       1997        1998        1999        2000           2001
                                            ------     ------      ------      ------      ------         ------
                                                                    (in thousands)
                                                                                  
BALANCE SHEET DATA:
Cash and cash equivalents.............    $  3,474   $  1,750   $   2,841   $   5,275   $   2,612   $     5,222
Working capital.......................       2,236        356       2,099       5,004       1,735         4,474
Total assets..........................       3,519      2,450       3,449       5,780       3,067         5,637
Convertible debenture - current.......          --         --          --          --         500           500
Stockholders' equity..................       2,269      1,034       2,631       5,451       2,126         4,843

                                       5

                                  RISK FACTORS

THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE
RISKS AND UNCERTAINTIES DESCRIBED BELOW AND THE OTHER INFORMATION CONTAINED IN
THIS PROSPECTUS BEFORE DECIDING WHETHER TO INVEST IN SHARES OF OUR COMMON STOCK.
IF ANY OF THE FOLLOWING RISKS ACTUALLY OCCUR, OUR BUSINESS, FINANCIAL CONDITION
OR OPERATING RESULTS COULD BE HARMED. IN THAT CASE, THE TRADING PRICE OF OUR
COMMON STOCK COULD DECLINE, AND YOU MAY LOSE PART OR ALL OF YOUR INVESTMENT.
THESE RISKS AND UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES FACING
BIOSANTE. ADDITIONAL RISKS AND UNCERTAINTIES NOT CURRENTLY KNOWN TO US OR THAT
WE CURRENTLY DEEM IMMATERIAL MAY ALSO IMPAIR OUR BUSINESS OPERATIONS AND
ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.

RISKS RELATING TO OUR COMPANY

WE HAVE A HISTORY OF OPERATING LOSSES, EXPECT CONTINUING LOSSES AND MAY NEVER
ACHIEVE PROFITABILITY.

We have incurred losses in each year since our amalgamation in 1996 and expect
to incur substantial and continuing losses for the foreseeable future. We
incurred a net loss of $3,437,195 for the year ended December 31, 2000, and as
of December 31, 2000, our accumulated deficit was $15,639,672. We incurred a net
loss of $689,900 for the three months ended March 31, 2001, and as of March 31,
2001, our accumulated deficit was $16,329,572.

All of our revenue to date has been derived from interest earned on invested
funds. We have not commercially introduced any products. We expect to incur
substantial and continuing losses for the foreseeable future as our own product
development programs expand and various preclinical and clinical trials
commence. The amount of these losses may vary significantly from year-to-year
and quarter-to-quarter and will depend upon, among other factors:

       o      the timing and cost of product development;

       o      the progress and cost of preclinical and clinical development
              programs;

       o      the costs of licensure or acquisition of new products; and

       o      the timing and cost of obtaining necessary regulatory approvals.

In order to generate revenues, we must successfully develop and commercialize
our own proposed products in pre-clinical development, in late-stage human
clinical development, or already on the market that we may in-license or
otherwise acquire, or enter into collaborative agreements with others who can
successfully develop and commercialize them. Even if our proposed products and
the products we may license or otherwise acquire are commercially introduced,
they may never achieve market acceptance and we may never generate revenues or
achieve profitability.

WE ARE A DEVELOPMENT STAGE COMPANY WITH A SHORT OPERATING HISTORY, MAKING IT
DIFFICULT FOR YOU TO EVALUATE OUR BUSINESS AND YOUR INVESTMENT.

We are in the development stage and our operations and the development of our
proposed products are subject to all of the risks inherent in the establishment
of a new business enterprise, including:

       o      the absence of an operating history;

       o      the lack of commercialized products;

                                       6

       o      insufficient capital;

       o      expected substantial and continual losses for the foreseeable
              future;

       o      limited experience in dealing with regulatory issues;

       o      the lack of manufacturing experience and limited marketing
              experience;

       o      an expected reliance on third parties for the development and
              commercialization of some of our proposed products;

       o      a competitive environment characterized by numerous,
              well-established and well-capitalized competitors; and

       o      reliance on key personnel.

Because we are subject to these risks, you may have a difficult time evaluating
our business and your investment in our company.

OUR PROPOSED PRODUCTS ARE IN THE RESEARCH AND DEVELOPMENT STAGES AND WILL LIKELY
NOT BE COMMERCIALLY INTRODUCED FOR SEVERAL YEARS, IF AT ALL.

Our proposed products are in the research and development stages and will
require further research and development, preclinical and clinical testing
and investment prior to commercialization in the United States and abroad. We
cannot assure you that any of our proposed products will:

       o      be successfully developed;

       o      prove to be safe and efficacious in clinical trials;

       o      meet applicable regulatory standards;

       o      demonstrate substantial protective or therapeutic benefits in the
              prevention or treatment of any disease;

       o      be capable of being produced in commercial quantities at
              reasonable costs; or

       o      be successfully marketed.

We do not anticipate that any of our proposed products will receive the
requisite regulatory approvals for commercialization in the United States or
abroad for a number of years, if at all, and we cannot assure you that any of
our proposed products, if approved and marketed, will generate significant
product revenue and provide an acceptable return on our investment.

WE WILL NEED TO RAISE SUBSTANTIAL ADDITIONAL CAPITAL IN THE FUTURE TO FUND OUR
OPERATIONS AND WE MAY BE UNABLE TO RAISE SUCH FUNDS WHEN NEEDED AND ON
ACCEPTABLE TERMS.

We currently do not have sufficient resources to complete the commercialization
of any of our proposed products. Therefore, we will need to raise substantial
additional capital to fund our operations sometime in the future. We cannot be
certain that any financing will be available when needed. If we fail to raise
additional financing as we need it, we may have to delay or terminate our own
product development

                                       7

programs or pass on opportunities to in-license or otherwise acquire new
products that we believe may be beneficial to our business.

Our cash on hand as of March 31, 2001 was $5,221,947. We believe this cash will
be sufficient to fund our operations through December 2002. We have based this
estimate on assumptions that may prove to be wrong. As a result, we may need to
obtain additional financing prior to that time. In addition, we may need to
raise additional capital at an earlier time to fund our ongoing research and
development activities, acquire new products or take advantage of other
unanticipated opportunities. Any additional equity financings may be dilutive to
our existing stockholders, and debt financing, if available, may involve
restrictive covenants on our business. In addition, insufficient funds may
require us to delay, scale back or eliminate some or all of our programs
designed to facilitate the commercial introduction of our proposed products,
prevent commercial introduction of our products altogether or restrict us from
acquiring new products that we believe may be beneficial to our business.

OUR STRATEGY TO ACQUIRE PRODUCTS IN THE LATE-STAGE DEVELOPMENT PHASE OR PRODUCTS
ALREADY ON THE MARKET IS RISKY AND THE MARKET FOR ACQUIRING THESE PRODUCTS IS
COMPETITIVE.

We may acquire, through outright purchase, license, joint venture or other
methods, products in the late-stage development phase and assist in the final
development and commercialization of those products or products already on the
market. There are a number of companies that have similar strategies to ours,
many of whom have substantially greater resources than us. It is difficult to
determine the value of a product that has not been fully developed or
commercialized, and the possibility of significant competition for these
products may tend to increase the cost to us of these products beyond the point
at which we will experience an acceptable return on our investment. We cannot
assure you that we will be able to acquire any products on commercially
acceptable terms or at all, that any product we may acquire will be approved by
the FDA or if approved, will be marketable, or that even if marketed, that we
will be able to obtain an acceptable return on our investment.

While we have no current agreements or negotiations underway, if we purchase any
products, we could issue common or preferred stock that would dilute our
existing stockholders' percentage ownership, incur substantial debt or assume
contingent liabilities by paying cash for such products. For example, we paid a
$1.0 million upfront license fee for our hormone replacement products in June
2000. In September 2000, we sublicensed some of these products to a Canadian
company and in connection with this transaction and subject to our achieving
certain milestones we agreed to sell shares of our common stock to this licensee
in the future at a premium of the then market value of our common stock.
Purchases of new products also involve numerous other risks, including:

       o      problems assimilating the purchased products;

       o      unanticipated costs associated with the purchase;

       o      incorrect estimates made in the accounting for acquisitions; and

       o      risks associated with entering markets in which we have no or
              limited prior experience.

IF WE FAIL TO OBTAIN REGULATORY APPROVAL TO COMMERCIALLY MANUFACTURE OR SELL ANY
OF OUR FUTURE PRODUCTS, OR IF APPROVAL IS DELAYED, WE WILL BE UNABLE TO GENERATE
REVENUE FROM THE SALE OF OUR PRODUCTS.

We must obtain regulatory approval to sell any of our products in the United
States and abroad. In the United States, we must obtain the approval of the FDA
for each product or drug that we intend to

                                       8

commercialize. The FDA approval process is typically lengthy and expensive, and
approval is never certain. Products to be commercialized abroad are subject to
similar foreign government regulation.

Generally, only a very small percentage of newly discovered pharmaceutical
products that enter preclinical development are approved for sale. Because of
the risks and uncertainties in biopharmaceutical development, our proposed
products could take a significantly longer time to gain regulatory approval than
we expect or may never gain approval. If regulatory approval is delayed or never
obtained, our management's credibility, the value of our company and our
operating results and liquidity would be adversely affected.

TO OBTAIN REGULATORY APPROVAL TO MARKET OUR PRODUCTS, COSTLY AND LENGTHY
PRECLINICAL STUDIES AND CLINICAL TRIALS MAY BE REQUIRED, AND THE RESULTS OF THE
STUDIES AND TRIALS ARE HIGHLY UNCERTAIN.

As part of the FDA approval process, we must conduct, at our own expense,
preclinical studies on animals and clinical trials on humans on each of our
proposed products. We expect the number of preclinical studies and clinical
trials that the FDA will require will vary depending on the product, the disease
or condition the product is being developed to address and regulations
applicable to the particular product. We may need to perform multiple
preclinical studies using various doses and formulations before we can begin
clinical trials, which could result in delays in our ability to obtain any
regulatory approvals or to market any of our products. Furthermore, even if we
obtain favorable results in preclinical studies on animals, the results in
humans may be different.

After we have conducted preclinical studies in animals, we must demonstrate that
our products are safe and effective for use on the target human patients in
order to receive regulatory approval for commercial sale. The data obtained from
preclinical and clinical testing are subject to varying interpretations that
could delay, limit or prevent regulatory approval. Adverse or inconclusive
clinical results would prevent us from filing for regulatory approval of our
products. Additional factors that could cause delay or termination of our
clinical trials include:

       o      slow patient enrollment;

       o      longer treatment time required to demonstrate efficacy;

       o      adverse medical events or side effects in treated patients; and

       o      lack of effectiveness of the product being tested.

IF WE FAIL TO OBTAIN AN ADEQUATE LEVEL OF REIMBURSEMENT FOR OUR PRODUCTS BY
THIRD PARTY PAYORS, THERE WOULD BE NO COMMERCIALLY VIABLE MARKETS FOR OUR
PRODUCTS.

Our ability to commercialize our products successfully will depend in part upon
the price we may be able to charge for our products and on the extent to which
reimbursement for the cost of our products and related treatment will be
available from government health administration authorities, private health
insurers and other third party payors. We currently have limited expertise
obtaining reimbursement. We will need to seek additional reimbursement expertise
unless we enter into collaborations with other companies with the necessary
expertise. Even if we are able to obtain reimbursement from third party payors,
we cannot be certain that reimbursement rates will be high enough to allow us to
profit from sales of our products and realize an acceptable return on our
investment in product development.

                                       9

WE LICENSE OUR HORMONE REPLACEMENT PRODUCTS AND OUR CAP TECHNOLOGY FROM THIRD
PARTIES AND MAY LOSE THE RIGHTS TO LICENSE THEM.

We license our hormone replacement products from Antares Pharma, Inc. and our
CAP technology from the University of California. We may lose our right to
license these technologies if we breach our obligations under the license
agreements. Although we intend to use our reasonable best efforts to meet these
obligations, if we violate or fail to perform any term or covenant of the
license agreements or with respect to the University of California's license
agreement within 60 days after written notice from the University of California,
Antares and the University of California may terminate these agreements or
certain projects contained in these agreements. The termination of these
agreements, however, will not relieve us of our obligation to pay any royalty or
license fees owing at the time of termination. Our failure to retain the right
to license our hormone replacement products or CAP technology could harm our
business and future operating results. For example, if we were to enter into an
outlicense agreement with a third party under which we agree to outlicense our
hormone replacement products or CAP technology for a license fee, the
termination of the license agreement could either, depending upon the terms of
the outlicense agreement, cause us to breach our obligations under the
outlicense agreement or give the other party a right to terminate that
agreement, thereby causing us to lose future revenue generated by the outlicense
fees.

WE DO NOT HAVE ANY FACILITIES APPROPRIATE FOR CLINICAL TESTING, WE LACK
MANUFACTURING EXPERIENCE AND WE HAVE VERY LIMITED SALES AND MARKETING PERSONNEL.
WE WILL, THEREFORE, BE DEPENDENT UPON OTHERS FOR OUR CLINICAL TESTING,
MANUFACTURING, SALES AND MARKETING.

Our current facilities do not include accommodation for the testing of our
proposed products in animals or in humans for the clinical testing required by
the FDA. We do not have a manufacturing facility that can be used for full-scale
production of our products. In addition, at this time, we have very limited
sales and marketing personnel. In the course of our development program, we will
therefore be required to enter into arrangements with other companies or
universities for our animal testing, human clinical testing, manufacturing, and
sales and marketing activities. If we are unable to retain third parties for
these purposes on acceptable terms, we may be unable to successfully develop,
manufacture and market our proposed products. In addition, any failures by third
parties to adequately perform their responsibilities may delay the submission of
our proposed products for regulatory approval, impair our ability to deliver our
products on a timely basis or otherwise impair our competitive position. Our
dependence on third parties for the development, manufacture, sale and marketing
of our products also may adversely affect our profit margins.

IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, WE MAY NOT BE ABLE TO
COMPETE AS EFFECTIVELY.

The pharmaceutical industry places considerable importance on obtaining patent
and trade secret protection for new technologies, products and processes. Our
success will depend, in part, upon our ability to obtain, enjoy and enforce
protection for any products we develop or acquire under United States and
foreign patent laws and other intellectual property laws, preserve the
confidentiality of our trade secrets and operate without infringing the
proprietary rights of third parties.

Where appropriate, we seek patent protection for certain aspects of our
technology. In February 2000 and June 1999, we filed patent applications
relating to our CAP technology. However, our owned and licensed patents and
patent applications may not ensure the protection of our intellectual property
for a number of other reasons:

                                       10

       o      We do not know whether our patent applications will result in
              actual patents. For example, we may not have developed a method
              for treating a disease or manufacturing a product before others
              have developed similar methods.

       o      Competitors may interfere with our patent process in a variety of
              ways. Competitors may claim that they invented the claimed
              invention before us or may claim that we are infringing on their
              patents and therefore we cannot use our technology as claimed
              under our patent. Competitors may also contest our patents by
              showing the patent examiner that the invention was not original or
              novel or was obvious.

       o      We are in the research and development stage and are in the
              process of developing proposed products. Even if we receive a
              patent, it may not provide much practical protection. If we
              receive a patent with a narrow scope, then it will be easier for
              competitors to design products that do not infringe on our patent.
              Even if the development of our proposed products is successful and
              approval for sale is obtained, there can be no assurance that
              applicable patent coverage, if any, will not have expired or will
              not expire shortly after this approval. Any expiration of the
              applicable patent could have a material adverse effect on the
              sales and profitability of our proposed product.

       o      Enforcing patents is expensive and may require significant time by
              our management. In litigation, a competitor could claim that our
              issued patents are not valid for a number of reasons. If the court
              agrees, we would lose those patents.

       o      We also may support and collaborate in research conducted by
              government organizations or universities. We cannot guarantee that
              we will be able to acquire any exclusive rights to technology or
              products derived from these collaborations. If we do not obtain
              required licenses or rights, we could encounter delays in product
              development while we attempt to design around other patents or we
              may be prohibited from developing, manufacturing or selling
              products requiring these licenses. There is also a risk that
              disputes may arise as to the rights to technology or products
              developed in collaboration with other parties.

It also is unclear whether our trade secrets will provide useful protection.
While we use reasonable efforts to protect our trade secrets, our employees or
consultants may unintentionally or willfully disclose our proprietary
information to competitors. Enforcing a claim that someone else illegally
obtained and is using our trade secrets, like patent litigation, is expensive
and time consuming, and the outcome is unpredictable. In addition, courts
outside the United States are sometimes less willing to protect trade secrets.
Finally, our competitors may independently develop equivalent knowledge, methods
and know-how.

CLAIMS BY OTHERS THAT OUR PRODUCTS INFRINGE THEIR PATENTS OR OTHER INTELLECTUAL
PROPERTY RIGHTS COULD ADVERSELY AFFECT OUR FINANCIAL CONDITION.

The pharmaceutical industry has been characterized by frequent litigation
regarding patent and other intellectual property rights. Patent applications are
maintained in secrecy in the United States until the patents are issued and also
are maintained in secrecy for a period of time outside the United States.
Accordingly, we can conduct only limited searches to determine whether our
technology infringes any patents or patent applications of others. Any claims of
patent infringement would be time-consuming and could likely:

       o      result in costly litigation;

                                       11

       o      divert the time and attention of our technical personnel and
              management;

       o      cause product development delays;

       o      require us to develop non-infringing technology; or

       o      require us to enter into royalty or licensing agreements.

Although patent and intellectual property disputes in the pharmaceutical
industry often have been settled through licensing or similar arrangements,
costs associated with these arrangements may be substantial and often require
the payment of ongoing royalties, which could hurt our gross margins. In
addition, we cannot be sure that the necessary licenses would be available to us
on satisfactory terms, or that we could redesign our products or processes to
avoid infringement, if necessary. Accordingly, an adverse determination in a
judicial or administrative proceeding, or the failure to obtain necessary
licenses, could prevent us from developing, manufacturing and selling some of
our products, which could harm our business, financial condition and operating
results.

BECAUSE WE ARE DEVELOPING NEW PRODUCTS, WE MAY FAIL TO GAIN MARKET ACCEPTANCE
FOR OUR PRODUCTS AND OUR BUSINESS COULD SUFFER.

None of the products we propose to develop or are developing have yet been
approved for marketing by regulatory authorities in the United States or
elsewhere. Even if our proposed products ultimately are approved for sale, there
can be no assurance that they will be commercially successful.

RISKS RELATING TO OUR INDUSTRY

BECAUSE OUR INDUSTRY IS VERY COMPETITIVE AND OUR COMPETITORS HAVE SUBSTANTIALLY
GREATER CAPITAL RESOURCES AND MORE EXPERIENCE IN RESEARCH AND DEVELOPMENT,
MANUFACTURING AND MARKETING THAN US, WE MAY NOT SUCCEED IN DEVELOPING OUR
PROPOSED PRODUCTS AND BRINGING THEM TO MARKET.

Competition in the pharmaceutical industry is intense. Potential competitors in
the United States are numerous and include pharmaceutical, chemical and
biotechnology companies, most of which have substantially greater capital
resources and more experience in research and development, manufacturing and
marketing than us. Academic institutions, hospitals, governmental agencies and
other public and private research organizations also are conducting research and
seeking patent protection and may develop and commercially introduce competing
products or technologies on their own or through joint ventures. We cannot
assure you that our competitors will not succeed in developing similar
technologies and products more rapidly than we do or that these competing
technologies and products will not be more effective than any of those that we
currently are developing or will develop.

WE ARE DEPENDENT UPON KEY PERSONNEL, MANY OF WHOM WOULD BE DIFFICULT TO REPLACE.

Our success will be largely dependent upon the efforts of Stephen M. Simes, our
Vice Chairman, President and Chief Executive Officer, and other key employees.
We are not the stated beneficiary of key person life insurance on any of our key
personnel. Our future success also will depend in large part upon our ability to
identify, attract and retain other highly qualified managerial, technical and
sales and marketing personnel. Competition for these individuals is intense. The
loss of the services of any of our key personnel, the inability to identify,
attract or retain qualified personnel in the future or delays in hiring
qualified personnel, could make it more difficult for us to manage our business
and meet key objectives, such as the timely introduction of our proposed
products, which would harm our business, financial condition and operating
results.

                                       12

RISKS RELATING TO OUR COMMON STOCK

BECAUSE OUR COMMON STOCK IS TRADED ON THE OTC BULLETIN BOARD AND THE CANADIAN
VENTURE EXCHANGE YOUR ABILITY TO SELL YOUR SHARES IN THE SECONDARY TRADING
MARKET MAY BE LIMITED.

Our common stock currently is traded on the Canadian Venture Exchange and the
over-the-counter market on the OTC Bulletin Board. Consequently, the liquidity
of our common stock is impaired, not only in the number of shares that are
bought and sold, but also through delays in the timing of transactions, and
coverage by security analysts and the news media, if any, of our company. As a
result, prices for shares of our common stock may be lower than might otherwise
prevail if our common stock was traded on Nasdaq or a national securities
exchange, like the American Stock Exchange.

BECAUSE OUR SHARES ARE "PENNY STOCKS," YOU MAY HAVE DIFFICULTY SELLING THEM IN
THE SECONDARY TRADING MARKET.

Federal regulations under the Securities Exchange Act of 1934 regulate the
trading of so-called "penny stocks," which are generally defined as any security
not listed on a national securities exchange or Nasdaq, priced at less than
$5.00 per share and offered by an issuer with limited net tangible assets and
revenues. Since our common stock currently trades on the OTC Bulletin Board and
the Canadian Venture Exchange at less than $5.00 per share, our common stock is
a "penny stock" and may not be traded unless a disclosure schedule explaining
the penny stock market and the risks associated therewith is delivered to a
potential purchaser prior to any trade.

In addition, because our common stock is not listed on Nasdaq or any national
securities exchange and currently trades at less than $5.00 per share, trading
in our common stock is subject to Rule 15g-9 under the Exchange Act. Under this
rule, broker-dealers must take certain steps prior to selling a "penny stock,"
which steps include:

       o      obtaining financial and investment information from the investor;

       o      obtaining a written suitability questionnaire and purchase
              agreement signed by the investor; and

       o      providing the investor a written identification of the shares
              being offered and the quantity of the shares.

If these penny stock rules are not followed by the broker-dealer, the investor
has no obligation to purchase the shares. The application of these comprehensive
rules will make it more difficult for broker-dealers to sell our common stock
and our stockholders, therefore, may have difficulty in selling their shares in
the secondary trading market.

SALES OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK IN THE PUBLIC
MARKET, INCLUDING THE SHARES OFFERED HEREBY, COULD LOWER OUR STOCK PRICE AND
IMPAIR OUR ABILITY TO RAISE FUNDS IN NEW STOCK OFFERINGS.

Future sales of a substantial number of shares of our common stock in the public
market, including the shares offered hereby, or the perception that such sales
could occur, could adversely affect the prevailing market price of our common
stock and could make it more difficult for us to raise additional capital
through the sale of equity securities. We filed this registration statement
pursuant to a subscription agreement with the holders of the common stock and
warrants purchased in our April 2001 private placement. We are required under
the subscription agreement to use our reasonable best efforts to cause this
registration statement to remain effective until the earlier of (1) the sale of
all the shares our of

                                       13

common stock covered by this registration statement; or (2) such time as the
selling stockholders named in this registration statement become eligible to
resell the shares of BioSante common stock and the shares of BioSante common
stock issuable upon exercise of warrants pursuant to Rule 144(k) under the
Securities Act.

OUR STOCK PRICE MAY BE VOLATILE AND YOUR INVESTMENT IN OUR COMMON STOCK COULD
SUFFER A DECLINE IN VALUE.

Our common stock has been listed on the Canadian Venture Exchange since December
20, 1996 and the OTC Bulletin Board since May 5, 2000. The market price of our
common stock may fluctuate significantly in response to a number of factors,
some of which are beyond our control. These factors include:

       o      progress of our products through the regulatory process;

       o      results of preclinical studies and clinical trials;

       o      announcements of technological innovations or new products by us
              or our competitors;

       o      government regulatory action affecting our products or our
              competitors' products in both the United States and foreign
              countries;

       o      developments or disputes concerning patent or proprietary rights;

       o      actual or anticipated fluctuations in our operating results;

       o      changes in our financial estimates by securities analysts;

       o      general market conditions for emerging growth and pharmaceutical
              companies;

       o      broad market fluctuations; and

       o      economic conditions in the United States or abroad.

In addition, the value of our common stock may fluctuate because it is listed on
both the OTC Bulletin Board and the Canadian Venture Exchange. We do not know
what effect, if any, the dual listing has on the price of our common stock in
either market. Listing on both the Canadian Venture Exchange and the OTC
Bulletin Board may increase our stock price volatility due to:

       o      trading in different time zones;

       o      different ability to buy or sell our stock; and

       o      different trading volume.

WE MAY INCUR SIGNIFICANT COSTS FROM CLASS ACTION LITIGATION DUE TO OUR EXPECTED
STOCK VOLATILITY.

In the past, following periods of large price declines in the public market
price of a company's stock, holders of that stock occasionally have instituted
securities class action litigation against the company that issued the stock. If
any of our stockholders were to bring this type of lawsuit against us, even if
the lawsuit is without merit, we could incur substantial costs defending the
lawsuit. The lawsuit also could

                                       14

divert the time and attention of our management, which would hurt our business.
Any adverse determination in litigation could also subject us to significant
liabilities.

PROVISIONS IN OUR CORPORATE DOCUMENTS AND DELAWARE LAW COULD DISCOURAGE OR
PREVENT A TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR
STOCKHOLDERS.

Provisions of our certificate of incorporation and bylaws, as well as provisions
of Delaware law, could make it more difficult for a third party to acquire us,
even if doing so would be beneficial to our stockholders. These provisions
include:

       o      authorizing the issuance of "blank check" preferred that could be
              issued by our Board of Directors to increase the number of
              outstanding shares and thwart a takeover attempt; and

       o      prohibiting cumulative voting in the election of directors, which
              would otherwise allow less than a majority of stockholders to
              elect director candidates.

We refer you to "Description of Securities --Undesignated Preferred Stock;
- --Anti-Takeover Provisions of Delaware Law" for more information on the specific
provisions of our certificate of incorporation, our bylaws and Delaware law that
could discourage, delay or prevent a change of control of our company.

OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUFFICIENT NUMBER OF SHARES OF OUR
COMMON STOCK TO CONTROL OUR COMPANY, WHICH COULD DISCOURAGE OR PREVENT A
TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR STOCKHOLDERS.

Our directors and executive officers own or control approximately 50.9% of our
outstanding voting power. Accordingly, these stockholders, individually and as a
group, may be able to influence the outcome of shareholder votes, involving
votes concerning the election of directors, the adoption or amendment of
provisions in our articles of incorporation and bylaws and the approval of
certain mergers or other similar transactions, such as sales of substantially
all of our assets. Such control by existing stockholders could have the effect
of delaying, deferring or preventing a change in control of our company. In
addition, under a stockholders agreement entered into in connection with our May
1999 private placement, several of our stockholders entered into a voting
agreement with respect to the election of directors.

EXERCISE OF OUTSTANDING WARRANTS AND OPTIONS WILL DILUTE EXISTING STOCKHOLDERS
AND COULD DECREASE THE MARKET PRICE OF OUR COMMON STOCK.

As of June 15, 2001, we had issued and outstanding 62,202,943 shares of common
stock, 4,687,684 shares of our Class C stock and outstanding warrants and
options to purchase 23,392,157 additional shares of common stock. The existence
of the outstanding warrants and options may adversely affect the market price of
our common stock and the terms under which we could obtain additional equity
capital.

WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS IN THE FORESEEABLE FUTURE AND,
THEREFORE, ANY RETURN ON YOUR INVESTMENT IN OUR CAPITAL STOCK MUST COME FROM
INCREASES IN THE FAIR MARKET VALUE AND TRADING PRICE OF THE CAPITAL STOCK.

We do not intend to pay any cash dividends in the foreseeable future and,
therefore, any return on your investment in our capital stock must come from
increases in the fair market value and trading price of the capital stock.

                                       15

WE LIKELY WILL ISSUE ADDITIONAL EQUITY SECURITIES WHICH WILL DILUTE YOUR SHARE
OWNERSHIP.

We likely will issue additional equity securities to raise capital and through
the exercise of warrants and options that are outstanding or may be outstanding.
These additional issuances will dilute your share ownership.

                           FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, primarily in the sections
entitled "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" and "Business." Generally, you can identify these
statements because they use phrases like "anticipates," "believes," "expects,"
"future," "intends," "plans," and similar terms. These statements are only
predictions. Although we do not make forward-looking statements unless we
believe we have a reasonable basis for doing so, we cannot guarantee their
accuracy, and actual results may differ materially from those we anticipated due
to a number of uncertainties, many of which are unforeseen. You should not place
undue reliance on these forward-looking statements, which apply only as of the
date of this prospectus. Our actual results could differ materially from those
anticipated in these forward-looking statements for many reasons, including,
among others, the risks we face as described on the previous pages and elsewhere
in this prospectus.

We believe it is important to communicate our expectations to our investors.
There may be events in the future, however, that we are unable to predict
accurately or over which we have no control. The risk factors listed on the
previous pages, as well as any cautionary language in this prospectus, provide
examples of risks, uncertainties and events that may cause our actual results to
differ materially from the expectations we describe in our forward-looking
statements. Before you invest in our common stock, you should be aware that the
occurrence of the events described in the previous risk factors and elsewhere in
this prospectus could negatively impact our business, operating results,
financial condition and stock price.

We are not obligated to publicly update or revise any forward-looking statement,
whether as a result of new information, future events or otherwise, except as
otherwise required by law. In light of these risks, uncertainties and
assumptions, the forward-looking events discussed in this prospectus and other
statements made from time to time from us or our representatives, might not
occur. For these statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995.

                                 USE OF PROCEEDS

BioSante will not receive any of the proceeds from the sale of shares offered
under this prospectus by the selling stockholders. This offering is intended to
satisfy our obligations to register, under the Securities Act of 1933, the
resale of the shares of our common stock, including shares of our common stock
that will be issued to the selling stockholders upon the exercise of warrants
held by them, that we issued to the selling stockholders in April 2001 and other
registration rights obligations we owe to previous investors in BioSante. The
net proceeds from our sale of these shares to the selling stockholders in May
1999 and in April 2001 has been and will be used for general corporate purposes,
including working capital.

                                 DIVIDEND POLICY

We never have declared or paid cash dividends. We currently intend to retain all
future earnings for the operation and expansion of our business. We do not
anticipate declaring or paying cash dividends on our common stock in the
foreseeable future. Any payment of cash dividends on our common stock will be at

                                       16

the discretion of our Board of Directors and will depend upon our results of
operations, earnings, capital requirements, contractual restrictions and other
factors deemed relevant by our Board of Directors.

                                       17

                              SELLING STOCKHOLDERS

All of the selling stockholders named below acquired or have the right to
acquire upon the exercise of warrants the shares of our common stock being
offered under this prospectus directly from us in a private transaction in May
1999 or in April 2001. The following table sets forth information known to
BioSante with respect to the beneficial ownership of BioSante common stock as of
June 15, 2001 by the selling stockholders. In accordance with the rules of the
SEC, beneficial ownership includes the shares issuable pursuant to warrants and
options that are exercisable within 60 days of June 15, 2001. Shares issuable
pursuant to warrants and options are considered outstanding for computing the
percentage of the person holding the warrants and options but are not considered
outstanding for computing the percentage of any other person.

The percentage of beneficial ownership for the following table is based on
62,202,943 shares of common stock outstanding as of June 15, 2001. To our
knowledge, except as indicated in the footnotes to this table, each person named
in the table has sole voting and investment power with respect to all shares of
common stock shown in the table to be beneficially owned by such person.

Except as set forth below, none of the selling stockholders has had any
position, office or other material relationship with BioSante within the past
three years. The table assumes that the selling stockholders sell all of the
shares offered by them in this offering. However, BioSante is unable to
determine the exact number of shares that will actually be sold or when or if
these sales will occur. BioSante will not receive any of the proceeds from the
sale of the shares offered under this prospectus.

                                                                                                            SHARES BENEFICIALLY
                                                              SHARES OF COMMON                                  OWNED AFTER
                                                             STOCK BENEFICIALLY                                COMPLETION OF
                                                         OWNED PRIOR TO THE OFFERING                            THE OFFERING
                                                   ---------------------------------------                -------------------------
                                                    SHARES
                                                   SUBJECT TO
                                                    OPTIONS,
                                                   WARRANTS,                                  NUMBER OF
                                                  AND CLASS C    TOTAL SHARES                  SHARES
                                                    SPECIAL      BENEFICIALLY                   BEING
                                                     STOCK          OWNED       PERCENTAGE     OFFERED       NUMBER      PERCENTAGE
SELLING STOCKHOLDER                                ------------  ------------  ------------  ------------ ------------ ------------
                                                                                                     
Edward S. Loeb Revocable Trust................        187,500       562,500          *          312,500      250,000          *
Sherwin and Sheri Zuckerman...................        500,000     1,500,000          2.4%       750,000      750,000          1.2%
The Levenstein & Resnick Profit
   Sharing Plan & Trust by Gary I. Levenstein.        151,250       453,750          *          203,750      250,000          *
James S. Levy.................................         31,250        93,750          *           93,750           --         --
James S. Levy Trust...........................        125,000       375,000          *          125,000      250,000          *
Stephen M. Simes (1)..........................      2,624,728     2,913,587          4.5%       187,500    2,726,087          4.2%
Stephen M. Simes Revocable Trust .............        125,000       375,000          *          125,000      250,000          *
Irving B. Harris Trust........................        583,334     1,750,001          2.8%     1,000,001      750,000          1.2%
Virginia H. Polsky Trust......................        291,666       874,999          1.4%       499,999      375,000          *
Roxanne H. Frank Trust........................        388,889     1,166,666          1.9%       666,666      500,000          *
Couderay Partners.............................        388,889     1,166,666          1.9%       666,666      500,000          *
Jerome Kahn, Jr. Revocable Trust..............         97,223       291,668          *          166,668      125,000          *
Fred Holubow (2)..............................        262,500       637,500          1.0%       312,500      325,000          *
Mitchell I. Dolins Revocable Trust............        225,000       675,000          1.1%       300,000      375,000          *
Sheldon M. Bulwa..............................        125,000       375,000          *          250,000      250,000          *
Morningstar Trust (3).........................        325,000     1,125,000          1.8%       475,000      650,000          1.0%
Faye Morgenstern (3)..........................        100,000       300,000          *          300,000           --         --
Victor Morgenstern (3)........................      1,025,000     2,925,000          4.6%     1,350,000    1,575,000          2.5%
Sibylla M. Mueller............................        312,500       937,500          1.5%       937,500           --         --
Hermann S. Graf Zu Munster....................        312,500       937,500          1.5%       937,500           --         --

                                       18

                                                                                                            SHARES BENEFICIALLY
                                                              SHARES OF COMMON                                  OWNED AFTER
                                                             STOCK BENEFICIALLY                                COMPLETION OF
                                                         OWNED PRIOR TO THE OFFERING                            THE OFFERING
                                                   ---------------------------------------                -------------------------
                                                    SHARES
                                                   SUBJECT TO
                                                    OPTIONS,
                                                   WARRANTS,                                  NUMBER OF
                                                  AND CLASS C    TOTAL SHARES                  SHARES
                                                    SPECIAL      BENEFICIALLY                   BEING
                                                     STOCK          OWNED       PERCENTAGE     OFFERED       NUMBER      PERCENTAGE
SELLING STOCKHOLDER                                ------------  ------------  ------------  ------------ ------------ ------------
                                                                                                     
Adolf Leuze...................................         62,500       187,500          *          187,500           --         --
Boyd B. Massagee, Jr..........................         78,125       234,375          *          234,375           --         --
Anne Marie Nicholson Trust....................         18,750        56,250          *           56,250           --         --
Roscoe F. Nicholson III Trust.................         18,750        56,250          *           56,250           --         --
Shirley M. Nicholson..........................         31,250        93,750          *           93,750           --         --
Roscoe F. Nicholson II........................        137,500       412,500          *          412,500           --         --
Eberhard Thyssen..............................        125,000       375,000          *          375,000           --         --
Florence A. Browning..........................         12,500        37,500          *           37,500           --         --
John E. Urheim................................         31,250        93,750          *           93,750           --         --
Egandale Associates...........................         31,250        93,750          *           93,750           --         --
Rotter Family Partnership.....................        125,000       375,000          *          375,000           --         --
Nancy Butler..................................         62,500       187,500          *          187,500           --         --
John E. Lee (4)...............................        206,250       218,750          *           18,750      200,000          *
Phillip B. Donenberg (5)......................        794,905       833,622          1.3%        18,750      814,872          1.3%
Steven J. Bell (6)............................        196,875       200,625          *            5,625      195,000          *
Ann Lehman (7)................................         50,000       150,000          *          150,000           --         --
Leah M. Lehman (7)............................        262,100       637,100          1.0%       562,500       74,600          *
James J. Pelts................................         25,000        75,000          *           75,000           --         --
Bradley S. Glaser & Amy E. Glaser as Tenants
   by the Entirety............................         31,250        93,750          *           93,750           --         --
Lawrence B. Dolins............................         18,750        56,250          *           56,250           --         --
James G. Hart.................................         62,500       187,500          *          187,500           --         --
Robert Leder, DDS.............................         31,250        93,750          *           93,750           --         --
James G. Johnson Trust........................        125,000       375,000          *          375,000           --         --
Robert Q. Calloway Trust......................         62,500       187,500          *          187,500           --         --
Patricia L. Calloway Trust....................         62,500       187,500          *          187,500           --         --
GOC Irr Tr U/A J.C. Warriner (8)..............        166,666       499,999          *          499,999           --         --
GOC Irr Tr U/A J.O. Cunningham (8)............        166,667       500,002          *          500,002           --         --
John S. Warriner (8)..........................        500,000     1,500,000          2.4%     1,500,000           --         --
GOC Irr Tr U/A A.C. McClure (8)...............        166,666       499,999          *          499,999           --         --
C. Frederick Cunningham II Revocable Trust (8)        125,000       375,000          *          375,000           --         --
Goldstein Asset Management....................         62,500       187,500          *           62,500      125,000          *
Lawrence Goldstein............................         62,500       187,500          *           62,500      125,000          *
John and Joanna Ruder.........................        125,000       375,000          *          125,000      250,000          *
Ronald Nash...................................        125,000       375,000          *          125,000      250,000          *
Stanley Ho (9)................................        750,000     2,250,000          3.6%       750,000    1,500,000          2.4%
King Cho Fung.................................      1,375,000     4,325,000          6.8%       750,000    3,575,000          5.7%
Marcus Jebsen.................................        750,000     2,250,000          3.6%       250,000    2,000,000          3.2%
Hans Michael Jebsen...........................      1,750,000     5,250,000          8.2%       750,000    4,500,000          7.1%
Howard Schraub................................        125,000       125,000          *          125,000           --         --
Anita Nagler..................................        750,000     2,250,000          3.6%       750,000    1,500,000          2.4%
Jarvis H. Friduss.............................         62,500       187,500          *           62,500      125,000          *
Gary N. Wilner................................        125,000       375,000          *          125,000      250,000          *
Steven J. Reid................................        250,000       750,000          1.2%       250,000      500,000          *
Resolute Partners(3)..........................        250,000       750,000          1.2%       250,000      500,000          *
JO & Co(8)....................................      3,750,000    11,250,000         17.1%     3,750,000    7,500,000         12.1%

- --------------------------------------
*        Less than one percent (1%)

                                       19

(1)    Mr. Simes is the Vice Chairman, President and Chief Executive Officer of
       BioSante.

(2)    Mr. Holubow is a director of BioSante.

(3)    Mr. Morgenstern beneficially owns a total of 5,050,000 shares of
       BioSante's common stock. Of these shares, 300,000 shares are owned by
       Faye Morgenstern, Mr. Morgenstern's wife, and 825,000 shares held by Mr.
       Morgenstern's wife as trustee of the Morgenstern Trust, as to which Mr.
       Morgenstern disclaims control, direction or beneficial ownership. Mr.
       Morgenstern is a director of BioSante. Mr. Morgenstern is the managing
       director of Resolute Partners L.P.

(4)    Mr. Lee is the Vice President, Commercial Development of BioSante.

(5)    Mr. Donenberg is the Chief Financial Officer, Treasurer and Secretary of
       BioSante.

(6)    Dr. Bell is the Vice President, Research and Pre-Clinical Development of
       BioSante.

(7)    Dr. Lehman is the Vice President, Clinical Development of BioSante. Ann
       Lehman is Dr. Lehman's mother and Dr. Lehman disclaims beneficial
       ownership of Ann Lehman's shares.

(8)    Ross Mangano, a director of BioSante, acted as an advisor and trustee for
       these selling stockholders in connection with the shareholder's
       acquisition from us of the shares offered by these selling stockholders
       under this prospectus. Mr. Mangano is an investment advisor registered
       with the Securities and Exchange Commission under the Investment Advisors
       Act of 1940. These selling stockholders are advisory clients of Mr.
       Mangano, and the shares offered by these selling stockholders under this
       prospectus are held in discretionary client accounts managed by Mr.
       Mangano. Mr. Mangano is President of JO & Co.

(9)    Mr. Ho is the father of Angela Ho, a director of BioSante. Ms. Ho
       disclaims beneficial ownership of Stanley Ho's shares.

                                       20

                              PLAN OF DISTRIBUTION

The selling stockholders acquired their shares of BioSante common stock and
warrants to purchase directly from us in a private transaction in either May
1999 or April 2001. To our knowledge, none of the selling stockholders has
entered into any agreement, arrangement or understanding with any particular
broker or market maker with respect to the shares offered under this prospectus,
nor do we know the identity of the brokers or market makers that will
participate in the offering. The shares of common stock may be offered and sold
from time to time by the selling stockholders or by their respective pledgees,
donees, transferees and other successors in interest.

The selling stockholders will act independently of us in making decisions with
respect to the timing, manner and size of each sale. Sales may be made over the
OTC Bulletin Board and the Canadian Venture Exchange, in the over-the-counter
market, in privately negotiated transactions or otherwise, at then prevailing
market prices, at prices related to prevailing market prices or at negotiated
prices. Sales may be made directly or through agents designated from time to
time or through dealers or underwriters to be designated or in negotiated
transactions. The shares may be sold by one or more of, or a combination of, the
following methods:

       o      a block trade in which the broker-dealer engaged by a selling
              shareholder will attempt to sell the shares as agent but may
              position and resell a portion of the block as principal to
              facilitate the transaction;

       o      purchases by the broker-dealer as principal and resale by the
              broker or dealer for its account pursuant to this prospectus;

       o      ordinary brokerage transactions and transactions in which the
              broker solicits purchasers; and

       o      privately negotiated transactions.

BioSante has been advised by the selling stockholders that they have not, as of
the date of this prospectus, entered into any arrangement with a broker-dealer
for the sale of shares through a block trade, special offering, or secondary
distribution of a purchase by a broker-dealer. In effecting sales,
broker-dealers engaged by the selling stockholders may arrange for other
broker-dealers to participate. Broker-dealers will receive commissions or
discounts from the selling stockholders in amounts to be negotiated immediately
prior to the sale.

In connection with distributions of the shares or otherwise, the selling
stockholders may, if permitted by law, also enter into hedging transactions. For
example, the selling stockholders may:

       o      enter into transactions involving short sales of the shares of
              common stock by broker-dealers;

       o      sell shares of common stock short and redeliver these shares to
              close out the short position;

       o      enter into option or other types of transactions that require the
              selling stockholders to deliver shares of common stock to a
              broker-dealer, who will then resell or transfer the shares of
              common stock under this prospectus; or

       o      loan or pledge shares of common stock to a broker dealer, who may
              sell the loaned shares or, in the event of default, sell the
              pledged shares.

                                       21

Broker-dealers or agents may receive compensation in the form of commissions,
discounts or concessions from the selling stockholders or the purchasers of the
common stock in amounts to be negotiated in connection with the sale.
Broker-dealers and any other participating broker-dealers may be deemed to be
underwriters within the meaning of the Securities Act of 1933 in connection with
the sales, and any commission, discount or concession may be deemed to be
underwriting discounts or commissions under the Securities Act. In addition, any
securities covered by this prospectus which qualify for sale under Rule 144 of
the Securities Act may be sold under Rule 144 rather than under this prospectus.
No period of time has been fixed within which the shares covered by this
prospectus may be offered and sold.

We have advised the selling stockholders that the anti-manipulation rules under
the Exchange Act of 1934 may apply to sales of shares in the market and to the
activities of the selling stockholders and their affiliates.

This offering will terminate on the earlier to occur of:

       o      the date on which all shares offered have been sold by the selling
              stockholders; or

       o      the date on which all shares held by a selling shareholder may be
              sold by such selling shareholder in compliance with Rule 144 under
              the Securities Act within any three-month period.

We will pay the expenses of registering the shares under the Securities Act,
including registration and filing fees, printing expenses, fees and
disbursements of our counsel and accountants, all of our internal expenses, and
all legal fees and disbursements and other expenses of complying with state
securities or blue sky laws of any jurisdictions in which the securities to be
offered are to be registered or qualified. The selling stockholders will bear
all discounts, commissions or other amounts payable to underwriters, dealers or
agents.

To the extent required, this prospectus may be amended or supplemented from time
to time to describe a specific plan of distribution or a corporate development.
At the time a particular offer of shares is made, if required, a prospectus
supplement will be distributed that will set forth the number of shares being
offered and the terms of the offering, including the name of any underwriter,
dealer or agent, the purchase price paid by any underwriter, any discount,
commission and other item constituting compensation, any discount, commission or
concession allowed or reallowed or paid to any dealer, and the proposed selling
price to the public.

                                       22

                      SELECTED CONSOLIDATED FINANCIAL DATA

The selected statement of operations data shown below for the years ended
December 31, 1998, 1999 and 2000 and the balance sheet data as of December 31,
1999 and 2000 are derived from our audited financial statements included
elsewhere in this prospectus. The selected statement of operations data shown
below for the period from August 29, 1996 (date of incorporation) to December
31, 1996 and for the year ended December 31, 1997 and the balance sheet data as
of December 31, 1996, 1997 and 1998 are derived from our audited financial
statements not included elsewhere in this prospectus. The selected financial
data for the three months ended March 31, 2000 and 2001 and as of March 31, 2001
has been derived from our unaudited financial statements included elsewhere in
this prospectus, which, in the opinion of management, include all adjustments,
consisting solely of normal recurring adjustments, necessary for a fair
presentation of the financial information shown in these statements. The results
for the three months ended March 31, 2000 and 2001 are not necessarily
indicative of the results to be expected for the full year or for any future
period. When you read this selected consolidated financial data, it is important
that you also read the historical financial statements and related notes
included in this prospectus, as well as "Management's Discussion and Analysis of
Financial Condition and Results of Operations." Historical results are not
necessarily indicative of future results.

                                         PERIOD FROM                                                        THREE MONTHS ENDED
                                       AUGUST 29, 1996               YEAR ENDED DECEMBER 31,                      MARCH 31,
                                          (DATE OF       ------------------------------------------          ------------------
                                       INCORPORATION)
                                       TO DECEMBER 31,
                                            1996           1997        1998         1999        2000          2000         2001
                                       --------------     ------      ------       ------      ------        ------       ------
                                                                  (in thousands, except per share data)
                                                                                                  
STATEMENT OF OPERATIONS DATA:
Interest income .....................    $     53     $    144     $    123     $    199     $    228     $     60     $     32
                                         --------     --------     --------     --------     --------     --------     --------
Expenses:
   Research and development .........          --          336        1,400          661        1,888          191          233
   General and administration .......         547        1,618        1,112          853        1,679          301          465
   Depreciation and amortization ....           1           52          140           91           98           24           24
   Loss on disposal of capital assets          --           28          130           --           --           --           --
                                         --------     --------     --------     --------     --------     --------     --------
Total expenses ......................         548        2,034        2,782        1,605        3,665          516          722
                                         --------     --------     --------     --------     --------     --------     --------
Loss before other expenses ..........        (495)      (1,890)      (2,659)      (1,406)      (3,437)        (456)        (690)
                                         --------     --------     --------     --------     --------     --------     --------
   Cost of acquisition of Structured
     Biologicals, Inc. ..............         375           --           --           --           --           --           --
   Purchased in-process research and
     development ....................       5,377           --           --           --           --           --           --
                                         --------     --------     --------     --------     --------     --------     --------
Total other expenses ................       5,752           --           --           --           --           --           --
                                         --------     --------     --------     --------     --------     --------     --------
Net loss ............................    $ (6,247)    $ (1,890)    $ (2,659)    $ (1,406)    $ (3,437)    $   (456)    $   (690)
                                         ========     ========     ========     ========     ========     ========     ========
Basic and diluted net loss per share     $  (0.26)    $  (0.05)    $  (0.08)    $  (0.03)    $  (0.06)    $  (0.01)    $  (0.01)
                                         ========     ========     ========     ========     ========     ========     ========
Weighted average number of shares
outstanding .........................      24,366       35,962       34,858       49,424       57,537       57,451       57,641
                                         --------     --------     --------     --------     --------     --------     --------

                                                             AS OF DECEMBER 31,                     AS OF MARCH 31,
                                           -----------------------------------------------------    ---------------
                                            1996       1997        1998        1999        2000          2001
                                           ------     ------      ------      ------      ------     --------------
                                                                        (in thousands)
                                                                                  
BALANCE SHEET DATA:
Cash and cash equivalents.............    $  3,474   $  1,750   $   2,841   $   5,275   $   2,612   $    5,222
Working capital.......................       2,236        356       2,099       5,004       1,735        4,474
Total assets..........................       3,519      2,450       3,449       5,780       3,067        5,637
Convertible debenture - current.......          --         --          --          --         500          500
Stockholders' equity..................       2,269      1,034       2,631       5,451       2,126        4,843

                                       23

           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS

GENERAL

We are a development stage biopharmaceutical company engaged in the development
and commercialization of hormone replacement products to treat hormone
deficiencies in men and in women. We also are engaged in the development and
commercialization of vaccine adjuvants or immune system boosters, proprietary
novel vaccines, drug delivery systems and the purification of the milk of
transgenic animals using calcium phosphate nanoparticles.

Our hormone replacement products, which we license on an exclusive basis from
Antares Pharma, Inc., address a variety of hormone deficiencies that affect both
men and women. Symptoms of these hormone deficiencies include impotence, lack of
sex drive, muscle weakness and osteoporosis in men and menopausal symptoms in
women including hot flashes, vaginal atrophy, decreased libido and osteoporosis.

The new products we in-licensed are gel formulations of testosterone (the
natural male hormone), estradiol (the natural female hormone), and a combination
of estradiol and a progestogen (another female hormone). The gels are designed
to be quickly absorbed through the skin after application on the arms, abdomen
or thighs, delivering the required hormone to the bloodstream evenly and in a
non-invasive, painless manner. The gels are formulated to be applied once per
day and to be absorbed into the skin without a trace of residue.

Under the terms of our license agreement with Antares, we acquired exclusive
marketing rights, with the right to grant sub-licenses, to the single active
ingredient testosterone and estradiol products for all therapeutic indications
in the U.S., Canada, Mexico, Israel, Australia, New Zealand, China, Malaysia,
Indonesia and South Africa. We acquired exclusive marketing rights, with the
right to grant sub-licenses, for the combination estradiol and progestogen
product in the U.S. and Canada. In partial consideration for the license of the
hormone replacement products, we paid Antares an upfront license fee of $1.0
million. In addition, under the terms of the license agreement, we agreed to
fund the development of the proposed products, make milestone payments and,
after all necessary regulatory approvals are received, pay royalties to Antares
on sales of the products.

In September 2000, we sub-licensed the marketing rights to our portfolio of
female hormone replacement products in Canada to Paladin Labs Inc. In exchange
for the sub-license, Paladin agreed to make an initial investment in our
company, make future milestone payments and pay royalties on sales of the
products in Canada. The milestone payments will be in the form of a series of
equity investments by Paladin in our company's common stock at a 10 percent
premium to the market price of our stock at the time the equity investment is
made. Upon execution of the sub-license agreement, Paladin made an initial
investment of $500,000 in our company in the form of a convertible debenture,
convertible into our common stock at $1.05 per share. Paladin may convert the
debenture at any time after January 1, 2001. Since Paladin did not convert the
debenture by March 31, 2001, we have the right to require it to be converted.

Our strategy with respect to our hormone replacement product portfolio is to
conduct human clinical trials of our proposed hormone replacement products,
which are required to obtain FDA approval to market the products in the United
States.

                                       24

Our CAP technology, which we license on an exclusive basis from the University
of California, is based on the use of extremely small, solid, uniform particles,
which we call "nanoparticles," as immune system boosters and for drug delivery.
We have identified four potential applications for our CAP technology:

       o      the creation of improved versions of current vaccines by the
              "adjuvant" activity of our proprietary nanoparticles that enhance
              the ability of a vaccine to stimulate an immune response;

       o      the development of new, unique vaccines against diseases for which
              there currently are few or no effective methods of prevention
              (E.G., genital herpes);

       o      the creation of inhaled forms of drugs that currently must be
              given by injection (E.G., insulin); and

       o      the purification of the milk of transgenic animals, in which
              protein pharmaceuticals are grown by selectively isolating
              biologically active therapeutic proteins from the transgenic milk.

Our strategy with respect to CAP over the next 12 months, is to continue
development of our nanoparticle technology and actively to seek collaborators
and licensees to accelerate the development and commercialization of products
incorporating this technology. We received clearance in August 2000 from the FDA
to initiate a Phase I clinical trial of our CAP as a vaccine adjuvant and
delivery system based on an Investigational New Drug Application that we filed
in July 2000. The Phase I trial was a double-blind, placebo-controlled trial in
18 subjects to determine the safety of CAP as a vaccine adjuvant. The trial was
completed and there was no apparent difference in side effect profile between
CAP and placebo.

Our goal is to develop and commercialize our hormone replacement products and
CAP technology into a wide range of pharmaceutical products. Our strategy to
obtain this goal is to:

       o      Accelerate the development of our hormone replacement products.

       o      Continue to develop our nanoparticle-based CAP platform technology
              and seek assistance in the development through corporate partner
              sub-licenses.

       o      License or otherwise acquire other drugs that will add value to
              our current product portfolio.

       o      Implement business collaborations or joint ventures with other
              pharmaceutical and biotechnology companies.

We currently do not expect any significant changes in the number of our
employees unless we are able to enter into a business collaboration or joint
venture to further develop and commercialize our hormone replacement products
and products incorporating our CAP technology or in-license or otherwise acquire
products in the late-stage human clinical development phase or products already
on the market. Alternatively, if we are able to enter into business
collaborations or joint ventures, in lieu of hiring additional employees, we may
elect to enter into arrangements with third parties to accomplish the similar
tasks of hired employees.

Since our inception, we have experienced significant operating losses, and we
expect to incur substantial and continuing losses for the foreseeable future. We
incurred a net loss of $3,437,195 for the year ended December 31, 2000,
resulting in an accumulated deficit of $15,639,672. We incurred a net loss of
$689,900 for the three months ended March 31, 2001, and as of March 31, 2001,
our accumulated deficit was $16,329,572.

                                       25

All of our revenue to date has been derived from interest earned on invested
funds. We have not commercially introduced any products. We expect to incur
substantial and continuing losses for the foreseeable future as we seek to
in-license or otherwise acquire new products and as our own product development
programs expand and various preclinical and clinical trials commence. The amount
of these losses may vary significantly from year-to-year and quarter-to-quarter
and will depend upon, among other factors:

       o      the timing and cost of product development;

       o      the progress and cost of preclinical and clinical development
              programs;

       o      the costs of licensure or acquisition of new products; and

       o      the timing and cost of obtaining necessary regulatory approvals.

In order to generate revenues, we must successfully develop and commercialize
our own proposed products in pre-clinical development, in late-stage human
clinical development, or already on the market that we may in-license or
otherwise acquire or enter into collaborative agreements with others who can
successfully develop and commercialize them. Even if our proposed products and
the products we may license or otherwise acquire are commercially introduced,
they may never achieve market acceptance and we may never generate revenues or
achieve profitability.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THREE MONTHS ENDED MARCH 31, 2000

General and administrative expenses increased from $301,175 during the three
month period ended March 31, 2000 to $465,058 during the three month period
ended March 31, 2001. This increase of approximately 54% is due primarily to
expenses related to new personnel and the higher legal expenses related to the
increase in our collaboration and licensing activities.

Research and development expenses increased slightly from $191,175 during the
three month period ended March 31, 2000 to $232,989 during the three month
period ended March 31, 2001 due primarily to the increased expenses associated
with the clinical development of our hormone replacement product portfolio. As a
result of our hormone replacement product in-license entered into in June 2000,
we expect that our research and development expenses will increase
significantly. We also are required under the terms of our license agreement
with the University of California to have available certain amounts of funds
dedicated to research and development activities. The amount of our research and
development expenditures, however, may fluctuate from quarter-to-quarter and
year-to-year depending upon: (1) the resources available; (2) our development
schedule; (3) results of studies, clinical trials and regulatory decisions; and
(4) competitive developments.

Interest income decreased from $60,382 during the three month period ended March
31, 2000 to $32,109 during the three month period ended March 31, 2001 as a
result of lower invested cash balances between the three month periods. We
expect interest income to increase in the following quarter due to our April
2001 private placement, then to decline in subsequent periods as we use our cash
balances for operations.

We incurred a net loss of $689,900 for the three month period ended March 31,
2001, compared to a net loss of $455,820 for the three month period ended March
31, 2000. The increase in the net loss is primarily due to the expenses
associated with (1) new personnel-related expenses, (2) legal expenses related
to increased collaboration and licensing activities, (3) increased expenses
associated with the clinical development of our hormone replacement product
portfolio, and (4) the remaining expenses

                                       26

related to the conducting of a Phase I human clinical trial testing the safety
of our CAP nanoparticles. We anticipate that our operating losses will continue
for the foreseeable future.

LIQUIDITY AND CAPITAL RESOURCES

To date, we have raised equity financing to fund our operations, and we expect
to continue this practice to fund our ongoing operations. Since inception, we
have raised net proceeds of approximately $9.2 million from private equity
financings, class A and class C stock conversions, warrant exercises and in the
third quarter 2000, the issuance of a $500,000 convertible debenture. This
figure does not include $3.7 million raised in a private placement closed on
April 4, 2001. In this private placement, we issued units, which consisted of an
aggregate of 9,250,000 shares of common stock and five-year warrants to purchase
an aggregate of 4,625,000 shares of common stock. The price of each unit, which
consisted of one share of common stock plus a warrant to purchase one half-share
of common stock, was $0.40, the approximate market price of our common stock at
closing. The exercise price of the warrant is $0.50 per full share.

Our cash and cash equivalents were $5,221,947 and $2,611,755 at March 31, 2001
and December 31, 2000, respectively. The increase in our cash balances is due to
cash deposits of approximately $3.4 million recorded as cash and cash
equivalents at March 31, 2001 pursuant to our $3.7 million private placement
which closed on April 4, 2001. The remaining balance of cash proceeds from the
private placement was received in April 2001. We used cash in operating
activities of $785,657 for the three month period ended March 31, 2001 versus
cash used in operating activities of $461,188 for the three month period ended
March 31, 2000. This change reflects the cash expenditures associated with
increased general and administrative and research and development
personnel-related expenses and legal fees associated with the increase in
licensing and collaboration activities in addition to expenses related to the
clinical development of our (1) hormone replacement product portfolio, and (2)
Phase I CAP human clinical trial. Net cash used in investing activities was
$2,121 for the three month period ended March 31, 2001 versus $11,334 used in
investing activities for the three month period ended March 31, 2000. The uses
of cash in investing activities during the three month period ended March 31,
2001 were capital expenditures for the purchase of a new laptop computer.
Similarly, the uses of cash in investing activities for the three month period
ended March 31, 2000 represented the purchase of three computers. Net cash
provided by financing activities was $3,397,970 for the three months ended March
31, 2001 compared to $10,460 for the three months ended March 31, 2000. Net cash
provided during the three months ended March 31, 2001 was the result of the
receipt of cash proceeds as described above pursuant to our private placement
which closed on April 4, 2001, while net cash provided during the three months
ended March 31, 2000 was the result of the conversion of shares of class C stock
into shares of common stock.

We did not have any material commitments for capital expenditures as of March
31, 2001. We have, however several financial commitments, as described below
under the heading "Commitments."

Our cash on hand as of March 31, 2001 was $5,221,947. We believe this cash will
be sufficient to fund our operations through at least December 2002. We have
based this estimate, however, on assumptions that may prove to be wrong. As a
result, we may need to obtain additional financing prior to that time. In
addition, we may need to raise additional capital at an earlier time to fund our
ongoing research and development activities, acquire new products or take
advantage of other unanticipated opportunities. Any additional equity financings
may be dilutive to our existing shareholders, and debt financing, if available,
may involve restrictive covenants on our business. In addition, insufficient
funds may require us to delay, scale back or eliminate some or all of our
programs designed to facilitate the commercial introduction of our proposed
products, prevent commercial introduction of our products altogether or restrict
us from acquiring new products that we believe may be beneficial to our
business.

                                       27

2000 VERSUS 1999

We used cash in operating activities of $3,207,604 for the year ended December
31, 2000 versus cash used in operating activities of $1,787,822 for the year
ended December 31, 1999. This change was driven by the increase in research and
development expenses, including the hormone product portfolio in-license upfront
payment of $1.0 million to Antares Pharma, Inc. during 2000. Net cash used in
investing activities was $43,238 for the year ended December 31, 2000 versus
$4,219 for the year ended December 31, 1999. The significant uses of cash in
investing activities for the year ended December 31, 2000 were capital
expenditures for the purchase of office furniture and computer equipment. The
significant uses of cash in investing activities for the year ended December 31,
1999 included capital expenditures for office furniture and a computer. Net cash
provided by financing activities was $588,045 for the year ended December 31,
2000 compared to $4,225,343 for the year ended December 31, 1999. Net cash
provided during 2000 was primarily the result of a $500,000 convertible
debenture issued to Paladin Labs Inc. pursuant to a sub-license agreement
related to our female hormone replacement products. Net cash provided in 1999
was primarily the result of our private placement in May 1999.

1999 VERSUS 1998

We used cash in operating activities of $1,787,822 for the year ended December
31, 1999 versus cash used in operating activities of $3,041,425 for the year
ended December 31, 1998. This change was driven by a reduction in both
personnel-related expenses in research and development and, a similar reduction
in general and administrative expenses during 1999. Net cash used in investing
activities was $4,219 for the year ended December 31, 1999 versus $124,984 for
the year ended December 31, 1998. The significant uses of cash in investing
activities during 1999 were capital expenditures for the purchase of office
furniture and a computer. The significant uses of cash in investing activities
for the year ended December 31, 1998 included capital expenditures for
laboratory equipment and laboratory office furniture. Net cash provided by
financing activities was $4,225,343 for the year ended December 31, 1999
compared to $4,257,328 for the year ended December 31, 1998. Net cash provided
during 1999 was primarily the result of our private placement completed in May
1999. Net cash provided in 1998 was primarily the result of the conversion of
class A and class C special stock into shares of common stock.

COMMITMENTS

We have several financial commitments, including the following minimum annual
lease payments:

                                             MINIMUM ANNUAL
                         YEAR                LEASE PAYMENTS
                    ---------------- -------------------------------
                             
                     2001                     $  89,401
                     2002                     $  68,254
                     2003                     $  57,239

Under our license agreement with the University of California, we are required
to:

       o      pay the following minimum annual royalties on February 28 of each
              year beginning in the year 2004, to be credited against earned
              royalties, for the life of the agreement (2013):

                                                MINIMUM ANNUAL
                         YEAR                    ROYALTY DUE
                    ---------------- -------------------------------
                                  
                         2004                     $  50,000
                         2005                     $ 100,000
                         2006                     $ 150,000
                         2007                     $ 200,000

                                       28

                         2008                    $  400,000
                         2009                    $  600,000
                         2010                    $  800,000
                         2011                    $1,500,000
                         2012                    $1,500,000
                         2013                    $1,500,000

       o      maintain an annual minimum amount of available capital for
              development and commercialization of products incorporating the
              licensed technology until a product is introduced to the market;
              and

       o      pay the costs of patent prosecution and maintenance of the patents
              included in the agreement.

Our fixed expenses, such as rent, license payments and other contractual
commitments, may increase in the future, as we may enter into additional leases
for new facilities and capital equipment and enter into additional licenses and
collaborative agreements.

OUTLOOK

We expect to continue to spend capital on:

       o      preclinical studies and clinical trials;

       o      research and development programs;

       o      regulatory processes;

       o      establishment of our own marketing capabilities or a search for
              third party manufacturers and marketing partners to manufacture
              and market our products for us; and

       o      the licensure or acquisition of new products.

The amount of capital we may need will depend on many factors, including the:

       o      progress, timing and scope of our preclinical studies and clinical
              trials;

       o      progress, timing and scope of our research and development
              programs;

       o      time and cost necessary to obtain regulatory approvals;

       o      time and cost necessary to seek third party manufacturers to
              manufacture our products for us;

       o      time and cost necessary to establish our own sales and marketing
              capabilities or to seek marketing partners to market our products
              for us;

       o      time and cost necessary to respond to technological and market
              developments;

       o      changes made or new developments in our existing collaborative,
              licensing and other commercial relationships; and

       o      new collaborative, licensing and other commercial relationships
              that we may establish.

                                       29

Management estimates that it currently is expending approximately $125,000 to
$150,000 per month on research and development activities and approximately
$200,000 to $250,000 per month in total expenses, including research and
development activities. We expect to spend approximately $25,000 to $50,000 in
capital expenditures during the next 12 months.

                                       30

                                    BUSINESS

GENERAL

We are a development stage biopharmaceutical company that is developing a
pipeline of hormone replacement products to treat hormone deficiencies in men
and in women. We also are engaged in the development of our proprietary calcium
phosphate, nanoparticulate-based platform technology, or CAP, for vaccine
adjuvants, proprietary novel vaccines, drug delivery systems and to purify the
milk of transgenic animals.

To enhance the value of our current pharmaceutical portfolio, we are pursuing
the following corporate growth strategies:

       o      accelerate the development of our hormone replacement products;

       o      continue to develop our nanoparticle-based CAP platform technology
              and seek assistance in such development through corporate partner
              sub-licenses;

       o      license or otherwise acquire other drugs that will add value to
              our current product portfolio; and

       o      implement business collaborations or joint ventures with other
              pharmaceutical and biotechnology companies.

Our primary focus is to build a pipeline of hormone replacement products for the
treatment of human hormone deficiencies. Symptoms of hormone deficiency in men
include impotence, lack of sex drive, muscle weakness and osteoporosis, and in
women, menopausal symptoms, such as hot flashes, vaginal atrophy, decreased
libido and osteoporosis.

Our hormone replacement products, which we license on an exclusive basis from
Antares Pharma Inc., are gel formulations of testosterone, estradiol and a
combination of estradiol and a progestogen. The gels are designed to be absorbed
quickly through the skin after application on the arms, shoulders, abdomen or
thighs, delivering the required hormone to the bloodstream evenly and in a
non-invasive, painless manner. We have begun human clinical trials on our
hormone replacement products, a necessary step in the process of obtaining
United States Food and Drug Administration, or FDA, approval to market the
products.

Our CAP technology, which we license on an exclusive basis from the University
of California, is based on the use of extremely small, solid, uniform particles,
which we call "nanoparticles," as immune system boosters, for drug delivery and
to purify the milk of transgenic animals. We have identified four potential
initial applications for our CAP technology:

       o      the creation of improved versions of current vaccines by the
              "adjuvant" activity of our proprietary nanoparticles that enhance
              the ability of a vaccine to stimulate an immune response;

       o      the development of new, unique vaccines against diseases for which
              there currently are few or no effective methods of prevention
              (E.G., genital herpes);

       o      the creation of inhaled forms of drugs that currently must be
              given by injection (E.G., insulin); and

       o      the purification of the milk of transgenic animals, in which
              protein pharmaceuticals are grown by selectively isolating
              biologically active therapeutic proteins from the transgenic milk.

                                       31

Our company, which was initially formed as a corporation organized under the
laws of the Province of Ontario on August 29, 1996, was continued as a
corporation under the laws of the State of Wyoming on December 19, 1996 and
reincorporated in Delaware on June 26, 2001. Our company is the continuing
corporation resulting from an amalgamation, or consolidation, of three
companies, our company, which was previously named "Ben-Abraham Technologies
Inc.", Structured Biologicals Inc., a corporation organized under the laws of
the Province of Ontario, and 923934 Ontario Inc., a corporation organized under
the laws of the Province of Ontario and a wholly owned subsidiary of Structured
Biologicals. The amalgamation was approved by our stockholders on November 27,
1996 and the articles of arrangement were filed and became effective as of
December 6, 1996. In November 1999, our stockholders approved the change of our
corporate name from Ben-Abraham Technologies Inc. to BioSante Pharmaceuticals,
Inc. In June 2001, our stockholders approved our reincorporation to Delaware.

BUSINESS STRATEGY

Our goal is to develop and commercialize our hormone replacement products and
CAP technology into a wide range of pharmaceutical products. Key elements of our
strategy to obtain this goal are to:

       o      ACCELERATE THE DEVELOPMENT OF OUR HORMONE REPLACEMENT PRODUCTS. We
              are focused on building a pipeline of hormone replacement products
              for the treatment of human hormone deficiencies. Symptoms of
              hormone deficiency in men include impotence, lack of sex drive,
              muscle weakness and osteoporosis, and in women, menopausal
              symptoms, such as hot flashes, vaginal atrophy, decreased libido
              and osteoporosis.

       o      CONTINUE TO DEVELOP OUR NANOPARTICLE-BASED CAP PLATFORM TECHNOLOGY
              AND SEEK ASSISTANCE IN THE DEVELOPMENT THROUGH CORPORATE PARTNER
              SUB-LICENSES. We are seeking opportunities to enter into business
              collaborations, joint ventures or sub-licenses with companies that
              have businesses or technologies complementary to our CAP
              technology business, such as vaccine and drug delivery
              pharmaceutical companies and transgenic milk companies. We believe
              that this partnering strategy will enable us to capitalize on our
              partner's strengths in product development, manufacturing and
              commercialization and thereby enable us to introduce into the
              market products incorporating our CAP technology sooner than which
              we otherwise would be able. In addition, such collaborations would
              significantly reduce our cash requirements for developing and
              commercializing products incorporating our CAP technology and
              thereby permit us to spend cash on accelerating the human clinical
              development of our hormone replacement products.

       o      LICENSE OR OTHERWISE ACQUIRE OTHER DRUGS THAT WILL ADD VALUE TO
              OUR CURRENT PRODUCT PORTFOLIO. We intend to seek opportunities to
              in-license or otherwise acquire other products in the late-stage
              development phase or products already on the market. In seeking
              such opportunities, we intend to target products that cover
              therapeutic areas treated by a limited number of physicians and
              drugs that are in or require human clinical trials that involve a
              limited number of patients and not a significant amount of time
              and cost needed to complete them. We believe that targeting these
              products that are currently in or ready for human clinical trials
              would decrease the risks associated with product development and
              would likely shorten the time before we can introduce the products
              into the market. In addition to late-stage development products,
              we intend to seek opportunities to in-license or otherwise acquire
              products that (1) have FDA approval, (2) have been or are about to
              be commercially introduced into the U.S. markets, (3) have a
              concentrated physician prescriber audience, and (4) have the
              potential to generate significant sales.

       o      IMPLEMENT BUSINESS COLLABORATIONS OR JOINT VENTURES WITH OTHER
              PHARMACEUTICAL AND BIOTECHNOLOGY COMPANIES. We intend to seek
              opportunities to enter into business collaborations or joint
              ventures with entities that have businesses or technology
              complementary to our business.

                                       32

              We are particularly interested in entering into product
              co-development and co-marketing arrangements.

DESCRIPTION OF OUR HORMONE REPLACEMENT PRODUCTS

We are focused on building a pipeline of hormone replacement products to treat
hormone deficiencies in men and in women.

Our hormone replacement products are gel formulations of testosterone (the
natural male hormone), estradiol (the natural female hormone), and a combination
of estradiol and a progestogen (another female hormone). The gels are designed
to be quickly absorbed through the skin after application on the arms,
shoulders, abdomen or thighs, delivering the required amount of hormone to the
bloodstream evenly and in a non-invasive, painless manner. The gels are
formulated to be applied once per day and to be absorbed into the skin without a
trace of residue.

Testosterone deficiency in men is known as hypogonadism. Low levels of
testosterone may result in lethargy, depression, decreased sex drive, impotence,
low sperm count and increased irritability. Men with severe and prolonged
reduction of testosterone may also experience loss of body hair, reduced muscle
mass, osteoporosis and bone fractures due to osteoporosis. Approximately five
million men in the United States, primarily in the over age 40 male population
group, have lower than normal levels of testosterone. Testosterone replacement
therapy has been shown to restore levels of testosterone with minimal side
effects.

Testosterone often is delivered through injections or dermal, or skin, patches.
Delivery of testosterone through dermal patches was developed primarily to
promote the therapeutic effects of testosterone replacement therapy without the
often painful side effects associated with testosterone injections. Dermal
patches, however, have been associated with skin irritation. Our
testosterone-formulated gel product is designed to deliver the required amount
of testosterone without the pain of injections and the skin irritation and
discomfort associated with dermal patches. There currently is one gel
testosterone product on the market in the United States and several are in
development.

Estrogen deficiency in women can result in hot flashes, vaginal atrophy,
decreased libido and osteoporosis. Hormone replacement in women decreases the
chance the women will experience the symptoms of estrogen deficiency. According
to industry estimates, approximately twenty million women in the U.S. currently
are receiving some form of estrogen or combined estrogen hormone replacement
therapy.

Estrogen is most commonly given orally in pill or tablet form. There are several
potential side effects, however, with the use of oral estrogen, including
insufficient absorption by the circulatory system, gallstones and blood clots.
Although dermal patches have been shown to avoid some of these problems,
delivery of estrogen through dermal patches, like testosterone patches, can
result in skin irritation. Our estrogen formulated gel product is designed to
deliver the required amount of estrogen without the skin irritation associated
with dermal patches. We are also in the process of developing a combined
estrogen/progestogen formulated gel product. Women whose uterus is intact often
use a combined hormone replacement therapy because evidence suggests adding
progestogen may reduce the potential risks of uterine cancer and endometrial
hyperplasia associated with estrogen therapy in these women.

We believe our hormone replacement products have a number of benefits, including
the following:

       o      estrogen and testosterone gels can be spread over large areas of
              skin where they dry rapidly and decrease the chance for skin
              irritation versus hormone patches;

                                       33

       o      estrogen and estrogen/progestogen gels may have fewer side effects
              than many pills which have been known to cause gallstones, blood
              clots and complications related to metabolism;

       o      adding progestogen to estrogen may reduce the potential risks of
              uterine cancer and endometrial hyperplasia of estrogen therapy
              alone when the uterus is intact;

       o      testosterone gel has been shown to be absorbed evenly, thus
              allowing clinical testosterone levels to reach the systemic
              circulation; and

       o      the clinical trials involving the hormone products will be
              relatively smaller requiring fewer patients than most drug
              development projects which will keep our costs, time and risks
              associated with the approval process down.

We have begun human clinical trials of our hormone replacement products, which
is required to obtain FDA approval to market the products.

We license our hormone replacement products on an exclusive basis from Antares
Pharma, Inc. under a license agreement we entered into in June 2000. Under the
terms of our license agreement with Antares, we acquired exclusive marketing
rights, with the right to grant sub-licenses, to the single active ingredient
testosterone and estradiol products for all therapeutic indications in the U.S.,
Canada, Mexico, Israel, Australia, New Zealand, China, Malaysia, Indonesia and
South Africa. We acquired exclusive marketing rights, with the right to grant
sub-licenses, for the combination estradiol and progestogen product in the U.S.
and Canada.

In September 2000, we sublicensed our female hormone replacement products to
Paladin Labs Inc. for sale in Canada.

DESCRIPTION OF OUR CAP TECHNOLOGY AND CAP TECHNOLOGY PRODUCTS

We believe our CAP technology will serve as an effective vehicle for delivering
drugs and vaccines and enhancing the effects of vaccines. The key component,
calcium phosphate, or CAP, is on the FDA's GRAS (Generally Regarded as Safe)
list. Our nanoparticles have successfully passed the first stage of toxicity
studies for administration orally, into muscles, under the skin and into the
lungs by inhalation.

Research and development involving our CAP technology originated in a project
set up under an agreement dated April 6, 1989 between the University of
California and our predecessor company, Structured Biologicals, relating to
viral protein surface absorption studies. The discovery research was performed
by Structured Biologicals at UCLA School of Medicine and was based, in essence,
on the use of extremely small, solid, uniform particles as components that could
increase the stability of drugs and act as systems to deliver drugs into the
body.

These ultra fine particles are made from inert, biologically acceptable
materials, such as ceramics, pure crystalline carbon or biodegradable calcium
phosphate. The size of the particles is in the nanometer range. A nanometer is
one millionth of a millimeter and typically particles measure approximately
1,000 nanometers (nm). For comparison, a polio virus particle is about 27 nm in
diameter, a herpes virus particle has a central core measuring 100 nm in
diameter, contained in an envelope measuring 150-200 nm, while a tuberculosis
bacterium is rod-shaped, about 1,200 nm long by 300 nm across. Because the size
of these particles is measured in nanometers, we use the term "nanoparticles" to
describe them.

We use the nanoparticles as the basis of a delivery system by applying a layer
of a "bonding" coating of cellobiose or another carbohydrate derivative. The
critical property of these coated nanoparticles is that

                                       34

biologically active molecules, proteins, peptides or pharmacological agents, for
example, vaccine components like bacterial or viral antigens or proteins like
insulin, attached to them retain their activity and can be protected from
natural alterations to their molecular structure by adverse environmental
conditions. It has been shown in studies conducted by us that, when these
combinations are injected into animals, the attachment can actually enhance the
biological activity as compared to injection of the molecule alone in solution.

A major immune response that is triggered by these combination particles is the
creation of antibody molecules, which can then specifically counteract an
invading virus or bacterium. Similarly, a drug will produce an effect on an
organ system only if it can attach to specific receptors on the surface of
target cells (E.G., tumor cells). The stabilizing and slow release capabilities
of a drug carrier and delivery system based on this discovery can lead to
significant advances towards finding more effective and less toxic or harmful
molecules to seek out and attach to such receptors.

We believe our CAP technology has a number of benefits, including the following:

       o      it is biodegradable (capable of being decomposed by natural
              biological processes) and non-toxic and therefore potentially safe
              to use and introduce into the human body;

       o      it is fast, easy and inexpensive to manufacture, which will keep
              our costs down and potentially improve our profit margins;

       o      the nanometer (one-millionth of a millimeter) size range makes it
              ideal for delivering drugs through aerosol sprays or inhalation
              instead of using painful injections; and

       o      it has excellent "loading" capacity -- the amount of molecules
              that can bond with the nanoparticles -- thereby potentially
              decreasing the dose needed to be taken by patients while enhancing
              the release capabilities.

Research in these areas has resulted in the issuance of a number of patents that
we license from the University of California.

We plan to develop commercial applications of our CAP technology and any
proprietary technology developed as a result of our ongoing research and
development efforts. Initially, we plan to pursue the development of (1) vaccine
adjuvants, (2) new virus vaccines, including vaccines to treat or prevent
disease such as Herpes viruses, (3) drug delivery systems, including a method of
delivering proteins (e.g., insulin) through inhalation, and (4) the purification
of the milk of transgenic animals. Our pre-clinical research team in our
laboratory in Smyrna, Georgia is currently pursuing the development of our CAP
technology.

VACCINE ADJUVANTS. We believe that our CAP nanoparticles may offer a means of
preparing new improved formulations of current vaccines that are equal or better
in their immunogenicity, that is, in their capacity to elicit an immune
response, compared to alum-formulated and non-adjuvanted vaccines but may be
injected in lower concentrations and less often which could result in certain
benefits, including cost savings and improved patient compliance.

Our nanoparticles when combined with vaccine antigens have been shown in animal
studies conducted by us and others to possess an ability to elicit a higher
immune response than non-adjuvanted vaccines and an immune response of the same
magnitude as alum-formulated vaccines but up to 100 times lower concentrations.
These preclinical studies also have shown that our CAP nanoparticles also may
sustain higher antibody levels over a longer time period than both
alum-formulated vaccines and non-adjuvanted

                                       35

vaccines. Because our CAP nanoparticles are made of calcium phosphate, which has
a chemical nature similar to normal bone material and therefore is natural to
the human body, as opposed to aluminum hydroxide, or alum, which is not natural
to the human body, we believe that our nanoparticles may be safer to use than
alum. In our animal studies, we observed no material adverse reactions when our
CAP nanoparticles were administered at effective levels.

We filed an investigational new drug, or IND, application with the FDA in July
2000 to commence a Phase I human clinical trial. We completed our Phase I human
clinical trial in October 2000. As discussed in more detail under the heading
"Government Regulation," the purpose of a Phase I trial is to evaluate the
metabolism and safety of the experimental product in humans, the side effects
associated with increasing doses, and, if possible, to gain early evidence of
possible effectiveness. The Phase I trial of our CAP specifically looked at
safety parameters, including local irritation and blood chemistry changes.

In addition to continuing our own research and development in this area, we
intend to seek opportunities to enter into business collaborations or joint
ventures with vaccine companies and others interested in co-development and
co-marketing arrangements with respect to our CAP nanoparticles for use as a
vaccine adjuvant. These arrangements also could include out-licenses of our CAP
technology to vaccine companies and others for further development in their
on-going vaccine development.

Our outlicensing activities with respect to our adjuvant for use in other
companies' vaccines have to date included meeting with target companies and, in
some cases, agreeing that the target company will test our adjuvant in their
animal models. Thereafter, the target company may send to us its vaccine antigen
or DNA which we will then formulate with our nanoparticles and return for use in
the target company's animal models. Once this is completed, if the results are
positive, we would negotiate an out-license agreement with the target company.

In November 1999, we announced that we formed a collaborative research alliance
with Antares Pharma, Inc., the entity that resulted from the merger of Permatec
Technologie, AG with Medi-Ject Corporation, to evaluate the efficacy of
combining our nanoparticle drug delivery and adjuvant or immune system boosters
with Antares' needle-free pressure injection. This research alliance will
evaluate the ability of the combined systems to deliver DNA vaccines as part of
a DNA vaccine program at a major U.S. university.

In August 2000, we announced initial preclinical results from our collaboration
with Antares. The initial tests demonstrated that Antares' needle-free pressure
assisted injections containing our CAP technology produced better cellular
immune responses in the injected animals than the injections without our CAP
technology.

In June 2000, we announced an option license agreement with ID Biomedical
Corporation to use CAP as an adjuvant in a second-generation vaccine against
group-A streptococcus ("GAS"). GAS is considered a worldwide public health
threat causing strep-throat, skin infections, rheumatic fever, invasive
fasciitis (flesh eating disease), toxic shock syndrome and other diseases.

We announced in August 2000, a non-exclusive option license agreement with Antex
Biologics, Inc. to conduct preclinical tests of CAP in vaccines against
CHLAMYDIA PNEUMONIAE and H. PYLORI.

NEW VACCINES. We believe our nanoparticle technology presents a new, and more
effective and safer, approach to vaccine preparation. As with our vaccine
adjuvant technology, we are continuing our own research and development in this
area, but we also intend to seek opportunities to enter into business
collaborations or joint ventures with vaccine companies and others interested in
co-development and co-

                                       36

marketing arrangements. We believe these collaborations may enable us to
accelerate the development of potential improved vaccines for any products
developed from our CAP technology. These arrangements also could include
out-licenses of our CAP technology to vaccine companies and others for further
development and marketing. We have begun discussions with other companies to
out-license our adjuvant for use in those companies' new vaccine development.

DRUG DELIVERY SYSTEMS. The third field of use in which we are exploring applying
our CAP technology involves creating novel and improved forms of delivery of
drugs, including proteins (E.G., insulin). The attachment of drugs to CAP may
enhance their stability in the body or enable the addition of further protective
coatings to permit oral, delayed-release and mucosal (through mucous membranes)
applications. Currently, insulin is given by frequent, inconvenient and often
painful injections. However, several companies are in the process of developing
and testing products that will deliver insulin orally or through inhalation. We
believe we may have successfully created a formulation for the inhaled delivery
of insulin. Our research and development efforts in this area are ongoing. We
are in the process of contacting and meeting the insulin manufacturers and
companies with devices for inhalation of drugs to pursue collaborations for this
development.

TRANSGENIC MILK PURIFICATION. The fourth field of use in which we are exploring
applying our CAP technology is in the purification of the milk of transgenic
animals in which protein drugs are grown. This is achieved by selectively
isolating biologically active therapeutic proteins from the transgenic milk.
This method uses our CAP technology to recover greater than 90% of drug protein
from the milk in a way that may require less downstream processing and may
produce higher overall yields at lower cost than currently used methods.

SALES AND MARKETING

We currently have very limited sales and marketing personnel to sell on a
commercial basis any of our proposed products. If and when we are ready to
commercially launch a product, we will either hire qualified sales and marketing
personnel or seek a joint marketing partner to assist us with this function.

RESEARCH AND PRODUCT DEVELOPMENT

We expect to spend a significant amount of our financial resources on research
and development activities. We spent approximately $233,000 and $191,000 in the
first quarter of 2001 and 2000, respectively, and we spent approximately
$1,888,000 in 2000 and approximately $661,000 in 1999 on research and
development activities. Since we are not yet engaged in the commercial
distribution of any products and we have no revenues, other than interest
revenues earned on available cash balances, these research and development costs
must be financed by us. We estimate that we are currently spending approximately
$125,000 to $150,000 per month on research and development activities. This
amount is expected to increase as we begin to develop the hormone replacement
product portfolio. These expenditures, however, may fluctuate from
quarter-to-quarter and year-to-year depending on the resources available and our
development schedule. Results of preclinical studies, clinical trials,
regulatory decisions and competitive developments may significantly influence
the amount of our research and development activities. In addition, we expect
that our spending on product development will increase if we are successful at
in-licensing or otherwise acquiring other late-stage development products.

MANUFACTURING

We currently do not have any facilities suitable for manufacturing on a
commercial scale basis any of our proposed products nor do we have any
experience in volume manufacturing. If, and when we are ready to

                                       37

commercially launch a product, we will either find our own manufacturing
facilities, hire additional personnel with manufacturing experience and comply
with the extensive Good Manufacturing Practices, or GMP, regulations of the FDA
and other regulations applicable to such a facility or we will more likely rely
upon third-party manufacturers to manufacture our proposed products in
accordance with these regulations.

In September 1999, we entered into an arrangement with the University of Iowa to
manufacture our CAP nanoparticles for use in our Phase I human clinical trial.
Under the arrangement, the University of Iowa manufactured both a trial batch of
our CAP nanoparticles and a clinical batch which was used in the clinical trial.

Currently, our gel hormone products are manufactured through an exclusive
agreement with Antares Pharma, Inc.

PATENTS, LICENSES AND PROPRIETARY RIGHTS

Our success depends and will continue to depend in part upon our ability to
maintain our exclusive licenses, to maintain patent protection for our products
and processes, to preserve our proprietary information and trade secrets and to
operate without infringing the proprietary rights of third parties. Our policy
is to attempt to protect our technology by, among other things, filing patent
applications or obtaining license rights for technology that we consider
important to the development of our business.

ANTARES PHARMA, INC. In June 2000, we entered into a license agreement with
Antares Pharma, Inc. pursuant to which Antares has granted us an exclusive
license to four hormone replacement products for the treatment of testosterone
deficiency in men and estrogen deficiency in women, including rights to
sublicense the hormone replacement technology in order to develop and market the
hormone replacement technology in certain territories. Antares has an issued
patent for these technologies in the United States and has filed patent
applications for this licensed technology in several foreign jurisdictions,
including Argentina, Australia, Canada, Europe, Italy, Japan, Korea, New
Zealand, South Africa, and Taiwan.

The license agreement with Antares required us to make a $1,000,000 payment of a
license issue fee, which we have paid. Also pursuant to the terms of the Antares
license agreement, we expect to:

       o      pay royalties to Antares based on a percentage of the net sales of
              any products incorporating the licensed technology;

       o      accelerate the human clinical development of the hormone product
              portfolio, including:

                  -  testing proposed products;
                  -  conducting clinical trials;
                  -  obtaining government approvals; and
                  -  introducing products incorporating the licensed technology
                     into the market.

       o      and enter into sub-license arrangements or agreements with other
              entities regarding development and commercialization of the
              technology covered by the license.

UNIVERSITY OF CALIFORNIA. In June 1997, we entered into a licensing agreement
with the Regents of the University of California pursuant to which the
University has granted us an exclusive license to nine United States patents
owned by the University, including rights to sublicense such patents, in fields
of use pertaining to: (1) vaccine adjuvants; (2) vaccine constructs or
combinations for use in immunization against herpes virus; (3) drug delivery
systems; and (4) red blood cell surrogates. The University of

                                       38

California has filed patent applications for this licensed technology in several
foreign jurisdictions, including Canada, Europe and Japan.

The license agreement with the University of California requires us to undertake
various obligations, including:

       o      payment of royalties to the University based on a percentage of
              the net sales of any products incorporating the licensed
              technology;

       o      payment of minimum annual royalties on February 28 of each year
              beginning in the year 2004 in the amounts set forth below, to be
              credited against earned royalties, for the life of the agreement
              (2013);

                                                    MINIMUM ANNUAL
                                YEAR                 ROYALTY DUE
                         -----------------  ---------------------------
                                         
                                2004                  $   50,000
                                2005                  $  100,000
                                2006                  $  150,000
                                2007                  $  200,000
                                2008                  $  400,000
                                2009                  $  600,000
                                2010                  $  800,000
                                2011                  $1,500,000
                                2012                  $1,500,000
                                2013                  $1,500,000

       o      maintaining an annual minimum amount of available capital for
              development and commercialization of products incorporating the
              licensed technology until a product is introduced to the market;

       o      payment of the costs of patent prosecution and maintenance of the
              patents included in the agreement which have amounted to $11,722
              in fiscal 2000 and which we estimate will equal approximately
              $15,000 per year;

       o      meeting performance milestones relating to:

                  -  hiring or contracting with personnel to perform research
                     and development, regulatory and other activities relating
                     to the commercial launch of a proposed product;
                  -  testing proposed products;
                  -  conducting clinical trials;
                  -  obtaining government approvals; and
                  -  introducing products incorporating the licensed technology
                     into the market.

       o      entering into partnership or alliance arrangements or agreements
              with other entities regarding commercialization of the technology
              covered by the license.

The license agreement further provides that we have the right to abandon any
project in any field of use without abandoning our license to pursue other
projects in that or other fields of use covered by the agreement. In May 1999,
we notified the University of California that we would not pursue the red blood
cell surrogate use because we do not believe this will be proven an effective
use of CAP. In October 1999, we signed an amendment to our license agreement
with the University of California, which

                                       39

removed the red-blood cell surrogate use from the agreement. In addition, under
the terms of the amendment, the University agreed to make other changes we
suggested to the license agreement, including delaying minimum royalty payments
until 2004 and limiting the University of California's rights to terminate the
agreement in cases where we do not perform under the agreement.

If we violate or fail to perform any term or covenant of the license agreement
and fail to cure this default within 60 days after written notice from the
University of California, the University of California may terminate some
projects included in the agreement.

PATENTS AND PATENT APPLICATIONS. We own one United States patent and no foreign
patents. In February 2000, we filed a patent application with the U.S. Trademark
and Patent Office relating to our development work with vaccine adjuvants,
conventional DNA and RNA vaccines and drug delivery, including aerosol delivery
into the lungs. In June 1999, we filed a patent for our advanced method of
selectively isolating biologically active therapeutic proteins from transgenic
milk. This patent was issued in the first quarter of 2001.

TRADEMARKS AND TRADEMARK APPLICATIONS. We have filed a U.S. trademark
application and received a Notice of Allowance for the mark BIOSANTE for
vaccines and vaccine adjuvants. We have also filed a U. S. application for
BIOSANTE for hormone replacement products, and nine applications for products in
development. We have also filed 21 trademark applications in the European Union
and other countries for marks including the BIOSANTE mark. The Community
Trademark application for BIOSANTE has been published for opposition. The
BIOSANTE mark has registered in Israel. We do not have any other registered
trademarks.

CONFIDENTIALITY AND ASSIGNMENT OF INVENTIONS AGREEMENTS. We require our
employees, consultants and advisors having access to our confidential
information to execute confidentiality agreements upon commencement of their
employment or consulting relationships with us. These agreements generally
provide that all confidential information we develop or make known to the
individual during the course of the individual's employment or consulting
relationship with us must be kept confidential by the individual and not
disclosed to any third parties. We also require all of our employees and
consultants who perform research and development for us to execute agreements
that generally provide that all inventions conceived by these individuals will
be our property.

COMPETITION

Competition in the biopharmaceutical industry is intense both in hormone
replacement therapy and the development of products for prevention and/or
treatment of the same infectious diseases we target and in the acquisition of
products in the late-stage development phase or already on the market. Potential
competitors in the United States are numerous and include major pharmaceutical
and specialized biotechnology companies, universities and other institutions. In
general, competition in the pharmaceutical industry can be divided into four
categories: (1) corporations with large research and developmental departments
that develop and market products in many therapeutic areas; (2) companies that
have moderate research and development capabilities and focus their product
strategy on a small number of therapeutic areas; (3) small companies with
limited development capabilities and only a few product offerings; and (4)
university and other research institutions.

All of our competitors in categories (1) and (2) and some of our competitors in
category (3) have longer operating histories, greater name recognition,
substantially greater financial resources and larger research and development
staffs than we do, as well as substantially greater experience than us in
developing products, obtaining regulatory approvals, and manufacturing and
marketing pharmaceutical products.

                                       40

A significant amount of research in the field also is being carried out at
academic and government institutions. These institutions are becoming
increasingly aware of the commercial value of their findings and are becoming
more aggressive in pursuing patent protection and negotiating licensing
arrangements to collect royalties for use of technology that they have
developed. These institutions also may market competitive commercial products on
their own or in collaboration with competitors and will compete with us in
recruiting highly qualified scientific personnel.

We expect our products, if and when approved for sale, to compete primarily on
the basis of product efficacy, safety, patient convenience, reliability and
patent position. In addition, the first product to reach the market in a
therapeutic or preventative area is often at a significant competitive advantage
relative to later entrants in the market.

We are aware of certain programs and products under development by others which
may compete with our hormone replacement products and products we develop that
incorporate our CAP technology. Several competing companies, including
Wyeth-Ayerst Pharmaceuticals, Novartis, Solvay Pharmaceuticals, Inc., Noven
Pharmaceuticals, Inc. and Berlex Laboratories, Inc., dominate the international
hormone replacement industry. The international vaccine industry is dominated by
three companies: SmithKline Beecham plc, Rhone-Poulenc S.A. (through its
subsidiaries, including Institut Merieux International, Pasteur Merieux Serums
et Vaccins, Connaught Laboratories Limited and Connaught Laboratories, Inc.) and
Merck & Co., Inc.

There are several firms currently marketing or developing transdermal hormone
replacement products. They include The Proctor & Gamble Company, Noven
Pharmaceuticals, Inc., Novavax, Inc., Cellegy Pharmaceuticals, Inc., Auxilium
A2, Watson Pharmaceuticals Inc. and Solvay Pharmaceuticals, Inc.

With regard to our CAP technology, the larger, better known pharmaceutical
companies have generally focused on a traditional synthetic drug approach,
although some have substantial expertise in biotechnology. During the last
decade, however, significant research activity in the biotechnology industry has
been completed by smaller research and development companies, like us, formed to
pursue new technologies. Competitive or comparable companies to us include
Corixa Corporation, generally regarded as the leader in vaccine adjuvant
development, ID Biomedical Corporation and Antex Biologicals Inc., which both
develop sub-unit vaccines from mycobacteria and other organisms.

GOVERNMENTAL REGULATION

Pharmaceutical products intended for therapeutic use in humans are governed by
extensive Food and Drug Administration regulations in the United States and by
comparable regulations in foreign countries. Any products developed by us will
require FDA approvals in the United States and comparable approvals in foreign
markets before they can be marketed. The process of seeking and obtaining FDA
approval for a previously unapproved new human pharmaceutical product generally
requires a number of years and involves the expenditure of substantial
resources.

Following drug discovery, the steps required before a drug product may be
marketed in the United States include:

       o      preclinical laboratory and animal tests;

       o      the submission to the FDA of an investigational new drug
              application, commonly known as an IND application;

       o      clinical and other studies to assess safety and parameters of use;

                                       41

       o      adequate and well-controlled clinical trials to establish the
              safety and effectiveness of the drug product;

       o      the submission to the FDA of a new drug application, commonly
              known as an NDA; and

       o      FDA approval of the NDA prior to any commercial sale or shipment
              of the product.

Typically, preclinical studies are conducted in the laboratory and in animals to
gain preliminary information on a proposed product's uses and physiological
effects and harmful effects, if any, and to identify any potential safety
problems that would preclude testing in humans. The results of these studies,
together with the general investigative plan, protocols for specific human
studies and other information, are submitted to the FDA as part of the IND
application. The 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 often sought before a company
commences clinical investigations. That approval may come within 30 days of IND
receipt but may involve substantial delays if the FDA requests additional
information.

The initial phase of clinical testing, which is known as Phase I, is conducted
to evaluate the metabolism, uses and physiological effects of the experimental
product in humans, the side effects associated with increasing doses, and, if
possible, to gain early evidence of possible effectiveness. Phase I studies can
also evaluate various routes, dosages and schedules of product administration.
These studies generally involve a small number of healthy volunteer subjects,
but may be conducted in people with the disease the product is intended to
treat. The total number of subjects is generally in the range of 20 to 80. A
demonstration of therapeutic benefit is not required in order to complete Phase
I trials successfully. If acceptable product safety is demonstrated, 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 involve people with the disease under study.
These trials often are well controlled, closely monitored studies involving a
relatively small number of subjects, usually no more than several hundred. The
optimal routes, dosages and schedules of administration are determined in these
studies. If Phase II trials are completed successfully, Phase III trials are
often commenced, although Phase III trials are not always required.

Phase III trials are expanded, controlled trials that are performed after
preliminary evidence of the effectiveness of the experimental product has been
obtained. These trials are intended to gather the additional information about
safety and effectiveness that is needed to evaluate the overall risk/benefit
relationship of the experimental product and provide the substantial evidence of
effectiveness and the evidence of safety necessary for product approval. Phase
III trials usually include from several hundred to several thousand subjects.

A clinical trial may combine the elements of more than one Phase and typically
two or more Phase III studies are required. A company's designation of a
clinical trial as being of a particular Phase is not necessarily indicative that
this trial will be sufficient to satisfy the FDA requirements of that Phase
because this determination cannot be made until the protocol and data have been
submitted to and reviewed by the FDA. In addition, a clinical trial may contain
elements of more than one Phase notwithstanding the designation of the trial as
being of a particular Phase. The FDA closely monitors the progress of the Phases
of clinical testing and may, at its discretion, reevaluate, alter, suspend or
terminate the testing based on the data accumulated and its assessment of the
risk/benefit ratio to patients. It is not possible to estimate with any
certainty the time required to complete Phase I, II and III studies with respect
to a given product.

                                       42

Upon the successful completion of clinical testing, an NDA is submitted to the
FDA for approval. This application requires detailed data on the results of
preclinical testing, clinical testing and the composition of the product,
specimen labeling to be used with the drug, information on manufacturing methods
and samples of the product. The FDA typically takes from six to 18 months to
review an NDA after it has been accepted for filing. Following its review of an
NDA, the FDA invariably raises questions or requests additional information. The
NDA approval process can, accordingly, be very lengthy. Further, there is no
assurance that the FDA will ultimately approve an NDA. If the FDA approves that
NDA, the new product may be marketed. The FDA often approves a product for
marketing with a modification to the proposed label claims or requires that
post-marketing surveillance, or Phase IV testing, be conducted.

All facilities and manufacturing techniques used to manufacture products for
clinical use or sale in the United States must be operated in conformity with
current "good manufacturing practice" regulations, commonly referred to as "GMP"
regulations, which govern the production of pharmaceutical products. We
currently do not have manufacturing capability. In the event we undertake any
manufacturing activities or contract with a third-party manufacturer to perform
our manufacturing activities, we intend to establish a quality control and
quality assurance program to ensure that our products are manufactured in
accordance with the GMP regulations and any other applicable regulations.

Products marketed outside of the United States are subject to regulatory
approval requirements similar to those in the United States, although the
requirements governing the conduct of clinical trials, product licensing,
pricing and reimbursement vary widely from country to country. No action can be
taken to market any product in a country until an appropriate application has
been approved by the regulatory authorities in that country. The current
approval process varies from country to country, and the time spent in gaining
approval varies from that required for FDA approval. In certain European
countries, the sales price of a product must also be approved. The pricing
review period often begins after market approval is granted. We intend to seek
and utilize foreign partners to apply for foreign approvals of our products.

EMPLOYEES

We had seven full-time employees as of June 15, 2001, including four in research
and development and three in management or administrative positions. None of our
employees is covered by a collective bargaining agreement. We believe we have an
excellent relationship with our employees.

PROPERTIES

Our principal executive office is located in Lincolnshire, Illinois. We lease
approximately 1,371 square feet of office space for approximately $2,100 per
month, which lease expires in December 2001. We plan to renew our lease for a
one-year term. Our CAP research and development operations are located in
Smyrna, Georgia where we lease approximately 11,840 square feet of laboratory
space for approximately $5,400 per month. This lease expires in October 2003. We
also lease approximately 2,600 square feet of office space in Atlanta, Georgia
for approximately $3,500 per month. This lease expires on September 14, 2002. In
September 1999, we entered into a sublease agreement for the Atlanta office
space under which we receive approximately $3,400 per month from the sub-tenant
through September 14, 2002. Management of our company considers our leased
properties suitable and adequate for our current and immediately foreseeable
needs.

LEGAL PROCEEDINGS

We are not a party to any material, threatened or pending legal proceedings.

                                       43

                                   MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

Set forth below is information concerning our executive officers, directors and
key employees, including their age, as of June 15, 2001:

                   NAME                       AGE                                 TITLE
- -------------------------------------------  -----   ----------------------------------------------------------
                                               
Stephen M. Simes........................       49     Vice Chairman, President and Chief Executive Officer
Phillip B. Donenberg....................       40     Chief Financial Officer, Treasurer and Secretary
John E. Lee.............................       51     Vice President, Commercial Development
Leah M. Lehman, Ph.D....................       38     Vice President, Clinical Development
Steven J. Bell, Ph.D....................       41     Vice President, Research and Pre-Clinical Development
Louis W. Sullivan, M.D. (1)(2)(3).......       67     Chairman of the Board
Victor Morgenstern (2)..................       58     Director
Fred Holubow (3)........................       62     Director
Ross Mangano (1)........................       55     Director
Edward C. Rosenow III, M.D. (3).........       66     Director
Angela Ho (2)...........................       48     Director
Peter Kjaer (1).........................       40     Director
Avi Ben-Abraham, M.D....................       43     Director

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

(1) Member of the audit and finance committee
(2) Member of the compensation committee
(3) Member of the scientific review committee

STEPHEN M. SIMES has served as our Vice Chairman, President and a director of
our company since January 1998 and Chief Executive Officer since March 1998.
From October 1994 to January 1997, Mr. Simes was President, Chief Executive
Officer and a Director of Unimed Pharmaceuticals, Inc., a company with a product
focus on infectious diseases, AIDS, endocrinology and oncology. From 1989 to
1993, Mr. Simes was Chairman, President and Chief Executive Officer of Gynex
Pharmaceuticals, Inc., a company which concentrated on the AIDS, endocrinology,
urology and growth disorders markets. In 1993, Gynex was acquired by
Bio-Technology General Corp., and from 1993 to 1994, Mr. Simes served as Senior
Vice President and director of Bio-Technology General Corp. Mr. Simes' career in
the pharmaceutical industry started in 1974 with G.D. Searle & Co.

PHILLIP B. DONENBERG, CPA has served as our Chief Financial Officer, Treasurer
and Secretary since July 1998. Before joining our company, Mr. Donenberg was
Controller of Unimed Pharmaceuticals, Inc. from January 1995 to July 1998. From
1993 to 1994, Mr. Donenberg was Controller of Molecular Geriatrics Corporation,
a biotechnology corporation. Prior to Molecular Geriatrics Corporation, Mr.
Donenberg held similar positions with other pharmaceutical companies, including
Gynex Pharmaceuticals, Inc. and Xtramedics, Inc.

JOHN E. LEE has served as our Vice President, Commercial Development since
August 2000. Before joining our company, Mr. Lee was Vice President, Sales and
Marketing at Questcor Pharmaceuticals (formerly Cypros Pharmaceuticals, Inc.)
from March 1999 to May 2000. From 1996 to March 1998, Mr. Lee was Vice
President, Commercial Development at Unimed Pharmaceuticals and has held various
sales and marketing positions at G.D. Searle & Co.

LEAH M. LEHMAN, PH.D. has served as our Vice President, Clinical Development
since January 2001. Prior to joining our company, Dr. Lehman was Director of
Clinical Research with Scientific Research

                                       44

Development Corp. from April 1995 to December 2000. From 1993 to 1995, Dr.
Lehman was a clinical statistician at Abbott Laboratories.

STEVEN J. BELL, PH.D. has served as our Vice President, Research and
Pre-Clinical Development since October 2000 and served as a Director of Research
and Development of BioSante from July 1997 to October 2000. Prior to joining our
company Dr. Bell held various positions with Boehringer Mannheim,
Hoffman-LaRoche, The Upjohn Company and Boehringer Ingelheim.

THE HONORABLE LOUIS W. SULLIVAN, M.D. has been our Chairman of the Board of
Directors since March 1998 and has been a director of our company since its
formation. Dr. Sullivan served as Secretary of Health and Human Services in the
cabinet of President George Bush from 1989 to 1993. Since retiring from the Bush
Administration, Dr. Sullivan has been President of the Morehouse School of
Medicine in Atlanta, Georgia. He had previously served as President and Dean of
the School from 1981 to 1985. Since 1993, Dr. Sullivan has served and continues
to serve on the Boards of several large U.S. corporations, including 3M Corp.,
Bristol-Myers Squibb Company, Cigna Corporation, Georgia Pacific Corp. and
Household International Inc.

VICTOR MORGENSTERN was elected a director of our company in July 1999. Mr.
Morgenstern has more than 32 years of investment experience and is the Chairman
of the Board of Trustees of The Oakmark Funds, an open-end registered investment
company and serves as managing director of Resolute Partners L.P. He is a
trustee of the Illinois Institute of Technology.

FRED HOLUBOW was elected a director of our company in July 1999. Mr. Holubow has
been a Vice President of Pegasus Associates since he founded Pegasus in 1982.
Pegasus Associates is currently an operating division of William Harris
Investors, a registered investment advisory firm. He specializes in analyzing
and investing in pharmaceutical and biotechnology companies. Mr. Holubow has
served on the Boards for Bio-Technology General Corp., ThermoRetec Corporation,
Unimed Pharmaceuticals, Inc. and Gynex Pharmaceuticals, Inc.

ROSS MANGANO was elected a director of our company in July 1999. Mr. Mangano has
been the President and a director of Oliver Estate, Inc., a management company
specializing in investments in public and private companies since 1971. He is
the Chairman of Cerprobe Corporation, and serves as a director for Blue Chip
Casino, Inc., Orchard Software Corporation, and U.S. RealTel Inc.

EDWARD C. ROSENOW, III, M.D. has been a director of our company since November
1997. Dr. Rosenow is a Master Fellow of the American College of Physicians as
well as Master Fellow of the American College of Chest Physicians. Dr. Rosenow
was the Arthur M. and Gladys D. Gray Professor of Medicine at the Mayo Clinic
from 1988 until his recent retirement. Beginning with his residency in 1960, Dr.
Rosenow has worked at the Mayo Clinic in many professional capacities including
as a Consultant in Internal Medicine (Thoracic Diseases) from 1966 to 1996, an
Assistant Professor, Associate Professor and Professor of Medicine at the Mayo
Clinic Medical School, President of the Mayo Clinic Staff in 1986, and Chair of
the Division of Pulmonary and Critical Care Medicine from 1987 to 1994. Dr.
Rosenow has also served as a consultant to NASA, space station FREEDOM at the
Johnson Space Center in Houston, Texas from 1989 to 1990 and as the President of
the American College of Chest Physicians from 1989 to 1990. In 1998, he received
the Mayo Distinguished Alumnus Award.

ANGELA HO has been a director of our company since June 1998. Ms. Ho was elected
to our Board of Directors as a representative of certain major investors in Hong
Kong. Ms. Ho has been the Vice Chairman and Chief Managing Officer of Jet-Asia
Ltd., a Hong Kong-based aircraft and management company, since April 1996. From
June 1996 to June 1998, Ms. Ho was the President of Ho Galleries Ltd., a New
York art gallery.

                                       45

PETER KJAER has been a director of our company since July 1999 and is a
representative of certain major investors in Hong Kong. Mr. Kjaer has been
President and Chief Executive Officer of Jet-Asia Ltd., a Hong Kong-based
aircraft and management company, since April 1996. From April 1989 to July 1996,
Mr. Kjaer was the General Manager and a director of the Gallery of Contemporary
Living Ltd., a Hong Kong-based art gallery.

AVI BEN-ABRAHAM, M.D. founded our company and has been a director of our company
since inception. Dr. Ben-Abraham was the Chairman of the Board of Directors and
Chief Executive Officer of our company from inception to March 1998. Dr.
Ben-Abraham was a trustee of the Morehouse School of Medicine in Atlanta,
Georgia until December 1998. From July 1995 to March 1998, Dr. Ben-Abraham
served as Chairman, Chief Executive Officer and Director of Structured
Biologicals, Inc., a predecessor company of BioSante.

BOARD COMMITTEES

The Board of Directors has an Audit and Finance Committee, Compensation
Committee and Scientific Review Committee.

AUDIT AND FINANCE COMMITTEE. The Audit and Finance Committee provides assistance
to the Board of Directors in satisfying its fiduciary responsibilities relating
to our accounting, auditing, operating and reporting practices, and reviews our
annual financial statements, the selection and work of our independent auditors
and the adequacy of internal controls for compliance with corporate policies and
directives. The Audit and Finance Committee consists of Mr. Kjaer, Mr. Mangano
and Dr. Sullivan.

COMPENSATION COMMITTEE.  The Compensation Committee:

       o      reviews general programs of compensation and benefits for all of
              our employees;

       o      makes recommendations to the Board of Directors concerning matters
              as compensation to be paid to our officers and directors; and

       o      administers our stock option plan, pursuant to which stock options
              may be granted to our eligible employees, officers, directors and
              consultants.

The Compensation Committee consists of Dr. Sullivan, Ms. Ho and Mr. Morgenstern.

SCIENTIFIC REVIEW COMMITTEE. The Scientific Review Committee assists in
evaluating potential new licenses or new products. The Scientific Review
Committee consists of Dr. Rosenow, Mr. Holubow and Dr. Sullivan.

DIRECTOR COMPENSATION

We do not pay fees to our directors. We do, however, periodically compensate our
directors through the granting of stock options. On January 1, 2001, we granted
stock options to purchase 25,000 shares of common stock to each of our
non-employee directors. These options have an exercise price of $0.67 per share,
fully vest on January 1, 2002 and expire ten years from the date of grant. All
directors are reimbursed for travel expenses for attending meetings of the Board
of Directors and any Board committees.

                                       46

EXECUTIVE COMPENSATION

The following table provides summary information concerning cash and non-cash
compensation paid to or earned by our President and Chief Executive Officer and
our executive officers, who received or earned cash and non-cash salary and
bonus of more than $100,000, for the fiscal year ended December 31, 2000.

                           SUMMARY COMPENSATION TABLE

                                                                                    LONG-TERM
                                                 ANNUAL COMPENSATION               COMPENSATION
                                           -----------------------------           ------------
                                                                                    SECURITIES
                                                                                    UNDERLYING          ALL OTHER
NAME AND PRINCIPAL POSITION                YEAR     SALARY ($)     BONUS ($)        OPTIONS (#)      COMPENSATION ($)
- ---------------------------                ----     -----------    ---------     ----------------    ----------------
                                                                                      
Stephen M. Simes........................   2000      $275,000     $125,000 (1)               0          $29,317 (2)
   VICE CHAIRMAN, PRESIDENT AND            1999       250,000      115,000           1,856,250           21,882 (2)
   CHIEF EXECUTIVE OFFICER                 1998       218,795            0           1,000,000           16,333 (2)

Phillip B. Donenberg....................   2000       127,000       33,000 (3)               0           13,286 (4)
   CHIEF FINANCIAL OFFICER, TREASURER      1999       110,000       15,000             521,875           13,001 (4)
   AND SECRETARY                           1998        49,359            0             340,000            5,984 (4)

- --------------------------
(1)      Represents a cash bonus of $75,000 and a stock bonus of 163,859 shares
         of common stock valued at $50,000.

(2)      Represents an auto allowance ($12,000 in 2000, $12,000 in 1999 and
         $11,333 in 1998), a 401(k) matching contribution ($5,250 in 2000, and
         $5,000 in each of 1999 and 1998) and insurance premiums and taxes
         associated with the premiums of $12,067 paid by BioSante in 2000.

(3)      Represents a cash bonus of $25,000 and a stock bonus of 26,217 shares
         of common stock valued at $8,000.

(4)      Represents an auto allowance ($7,200 in 2000, $7,200 in 1999 and $3,484
         in 1998), a 401(k) matching contribution ($5,250 in 2000, $5,000 in
         1999 and $2,500 in 1998) and insurance premiums paid and taxes
         associated with the premiums of $836 paid by BioSante in 2000.

OPTION GRANTS IN LAST FISCAL YEAR

None of the executive officers named in the Summary Compensation Table were
granted options during the fiscal year ended December 31, 2000.

                                       47

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table summarizes the number and value of options held by each of
the executive officers named in the Summary Compensation Table at December 31,
2000. None of these executive officers exercised any stock options during 2000.

                                                      NUMBER OF SECURITIES                 VALUE OF UNEXERCISED
                                                     UNDERLYING UNEXERCISED                IN-THE-MONEY OPTIONS
                                                  OPTIONS AT DECEMBER 31, 2000           AT DECEMBER 31, 2000 (1)
                                                  ----------------------------           ------------------------
NAME                                             EXERCISABLE      UNEXERCISABLE      EXERCISABLE      UNEXERCISABLE
- ----                                             -----------      -------------      -----------      --------------
                                                                                          
Stephen M. Simes........................          2,240,199         616,051           $1,113,070          $316,190
Phillip B. Donenberg....................            628,993         232,882           $  313,901          $117,274

- -------------------------
(1) Value based on the difference between the fair market value of one share of
our common stock at December 31, 2000 ($.75), and the exercise price of the
options ranging from $0.23 to $0.29 per share. Options are in-the-money if the
market price of the shares exceeds the option exercise price.

EMPLOYMENT AGREEMENTS

SIMES EMPLOYMENT AGREEMENT

In January 1998, we entered into a letter agreement with Stephen M. Simes
pursuant to which Mr. Simes serves as our Vice Chairman, President and Chief
Executive Officer. The term of this agreement continues until December 31, 2003,
after which time the term will be automatically extended for three additional
years unless on or before October 1 immediately preceding the extension, either
party gives written notice to the other of the termination of the agreement.

Mr. Simes is entitled to receive an annual performance bonus of up to 50%,
subject to compensation committee review and decision, of his then base salary
if certain performance criteria are met. If Mr. Simes is terminated without
cause or upon a change in control or if he terminates his employment for good
reason, all of his options will become immediately exercisable and will remain
exercisable for a period of one year (for the remainder of their term in the
event of a change in control), and he will be entitled to a minimum severance
payment of 12 months base salary. Mr. Simes also is subject to assignment of
inventions, confidentiality and non-competition provisions.

DONENBERG EMPLOYMENT AGREEMENT

In June 1998, we entered into a letter agreement with Phillip B. Donenberg
pursuant to which Mr. Donenberg serves our Chief Financial Officer. The term of
this agreement continues until either party gives 30 days written notice to the
other of the termination of the agreement.

Mr. Donenberg is entitled to receive an annual performance bonus of up to 30%,
subject to compensation committee review and decision, of his then base salary
if certain performance criteria are met. If Mr. Donenberg is terminated without
cause or upon a change in control or if he terminates his employment for good
reason, all of his options will become immediately exercisable and will remain
exercisable for a period of one year (for the remainder of their term in the
event of a change in control), and he will be entitled to a minimum severance
payment of 12 months base salary. Mr. Donenberg also is subject to assignment of
inventions, confidentiality and non-competition provisions.

                                       48

CHANGE IN CONTROL ARRANGEMENTS

Under our 1998 Stock Option Plan options granted under that plan will become
fully exercisable following certain changes in control of our company, such as:

       o      the sale, lease, exchange or other transfer of all or
              substantially all of the assets of our company to a corporation
              that is not controlled by us;

       o      the approval by our stockholders of any plan or proposal for the
              liquidation or dissolution of our company;

       o      certain merger or business combination transactions;

       o      more than 50% of our outstanding voting shares are acquired by any
              person or group of persons who did not own any shares of common
              stock on the effective date of the plan; and

       o      certain changes in the composition of our Board of Directors.

STOCK OPTION PLAN

From time to time we grant options under our Amended and Restated 1998 Stock
Option Plan. The option plan was approved by our Board of Directors on December
8, 1998 and approved by our stockholders on July 13, 1999. The option plan has
been amended several times to increase the number of shares reserved for
issuance. The option plan provides for the grant to employees, officers,
directors, consultants and independent contractors of our company and our
subsidiaries of options to purchase shares of common stock that qualify as
"incentive stock options" within the meaning of Section 422 of the Internal
Revenue Code of 1986, as amended, as well as non-statutory options that do not
qualify as incentive stock options. This plan is administered by the
Compensation Committee of our Board of Directors, which determines the persons
who are to receive awards, as well as the type, terms and number of shares
subject to each award.

We have reserved an aggregate of 8,500,000 shares of common stock for awards
under the option plan. As of June 15, 2001, options to purchase an aggregate of
6,944,657 shares of common stock were outstanding under the option plan, of
which 4,406,302 were fully vested, and a total of 1,555,343 shares of common
stock remained available for grant. As of June 15, 2001, the outstanding options
under the plan were held by an aggregate of 15 individuals and were exercisable
at prices ranging from $0.23 to $1.04 per share of common stock.

Incentive stock options granted under the plan may not have an exercise price
less than the fair market value of the common stock on the date of the grant
(or, if granted to a person holding more than 10% of our voting stock, at less
than 110% of fair market value). Non-statutory stock options granted under the
plans may not have an exercise price less than 85% of fair market value on the
date of grant. Aside from the maximum number of shares of common stock reserved
under the plans, there is no minimum or maximum number of shares that may be
subject to options under the plans. However, the aggregate fair market value of
the stock subject to incentive stock options granted to any optionee that are
exercisable for the first time by an optionee during any calendar year may not
exceed $100,000. Options generally expire when the optionee's employment or
other service is terminated with us. Options generally may not be transferred,
other than by will or the laws of descent and distribution, and during the
lifetime of an optionee, may be exercised only by the optionee. The term of each
option, which is fixed by our Board of Directors at the time of grant, may not
exceed five years from the date the option is granted if our common stock is
then listed on the Canadian Venture Exchange and we have not been exempted from
the

                                       49

Canadian Venture Exchange requirements in this regard (except that an incentive
stock option may be exercisable only for 10 years and an incentive stock option
granted to a person holding more than 10% of our voting stock may be exercisable
only for five years regardless of the availability of such exemption).

The option plan contains provisions under which options would become fully
exercisable following certain changes in control of our company, such as (1) the
sale, lease, exchange or other transfer of all or substantially all of the
assets of our company to a corporation that is not controlled by us, (2) the
approval by our stockholders of any plan or proposal for the liquidation or
dissolution of our company, (3) certain merger or business combination
transactions, (4) more than 50% of our outstanding voting shares are acquired by
any person or group of persons who did not own any shares of common stock on the
effective date of the plan, or (5) certain changes in the composition of our
Board of Directors.

Payment of an option exercise price may be made in cash, or at the Compensation
Committee's discretion, in whole or in part by tender of a broker exercise
notice, a promissory note or previously acquired shares of our common stock
having an aggregate fair market value on the date of exercise equal to the
payment required.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

DIRECTOR RELATIONSHIPS

Messrs. Morgenstern, Holubow and Mangano were elected to our Board of Directors
in July 1999 as representatives of the lead investors in the May 1999 private
placement. We refer you to the discussion under the heading "May 1999 Private
Placement" below.

Ms. Ho and Mr. Kjaer were elected to our Board of Directors as representatives
of several investors located in Hong Kong. Neither Ms. Ho or Mr. Kjaer has
entered into any voting agreements with these Hong Kong investors nor does Ms.
Ho or Mr. Kjaer otherwise have any control over the voting of shares held by
these investors.

MAY 1999 PRIVATE PLACEMENT

In connection with our May 1999 private placement, we entered into a
stockholders' agreement with the investors, which included Stephen M. Simes,
Victor Morgenstern, an affiliated trust and a partnership, Fred Holubow, JO &
Co., of which Ross Mangano is President, and certain of our major investors
located in Hong Kong, including Hans Michael Jebsen, Marcus Jebsen and King Cho
Fung. This agreement contains, among other things, a voting agreement with
respect to the election of directors.

APRIL 2001 PRIVATE PLACEMENT

In connection with our April 2001 private placement, we sold an aggregate of
9,250,000 shares of our common stock and warrants to purchase an aggregate of
4,625,000 shares of our common stock for $0.40 per unit, each unit consisting of
one share of common stock and a warrant to purchase 0.50 shares of our common
stock, for an aggregate purchase price of $3,700,000, to accredited investors,
including certain existing stockholders, directors and officers.

                                       50

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET PRICE

Our common stock has traded in the United States in the over-the-counter market
on the OTC Bulletin Board, under the symbol "BTPH," since May 5, 2000 and in
Canada on the Canadian Venture Exchange, formerly known as the Alberta Stock
Exchange, under the symbol "BAI," since December 20, 1996. From September 10,
1999 to May 4, 2000, our common stock was traded in the United States on the
National Quotation Bureau, commonly referred to as the "Pink Sheets," under the
symbol "BTPH."

The following table sets forth, in U.S. dollars and in dollars and cents (in
lieu of fractions), the high and low sales prices for each of the calendar
quarters indicated, as reported by the Canadian Venture Exchange.

              CANADIAN VENTURE                        HIGH             LOW
              EXCHANGE                                ----             ---

              2001
              ----
                                                                 
              First Quarter....................      $0.72             $0.46

              2000
              ----
              First Quarter....................      $1.38             $0.22
              Second Quarter...................      $1.07             $0.46
              Third Quarter....................      $1.01             $0.71
              Fourth Quarter...................      $0.95             $0.49

              1999
              ----
              First Quarter....................      $0.24             $0.15
              Second Quarter...................      $0.50             $0.21
              Third Quarter....................      $0.37             $0.23
              Fourth Quarter...................      $0.48             $0.45

The following table sets forth, in U.S. dollars and in dollars and cents (in
lieu of fractions), the high and low sales prices for each of the calendar
quarters indicated, as reported by the OTC Bulletin Board and the Pink Sheets.
The prices in the table may not represent actual transactions. These quotations
reflect inter-dealer prices, without retail mark up, mark down or commissions
and may not represent actual transactions.

                  OTC BULLETIN BOARD                    HIGH           LOW
                                                        ----           ----
                  2001
                  ----
                                                                  
                  First Quarter................         $0.75           $0.38

                  2000
                  ----
                  Second Quarter...............         $1.25           $0.47
                  Third Quarter................         $1.03           $0.80
                  Fourth Quarter...............         $0.92           $0.52

                                       51

                  NATIONAL QUOTATION BUREAU ("PINK SHEETS")

                  2000                                   HIGH           LOW
                  ----                                   ----           ---
                                                                  
                  First Quarter................         $1.50           $0.28

                  1999                                   HIGH           LOW
                  ----                                   ----           ---
                  Third Quarter................         $0.51           $0.27
                  Fourth Quarter...............         $1.125          $.175

                                       52

                  SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS
                                 AND MANAGEMENT

The following table sets forth information known to us with respect to the
beneficial ownership of each class of our capital stock as of June 15, 2001 for
(1) each person known by us to beneficially own more than 5% of any class of our
voting securities, (2) each of the executive officers named in the Summary
Compensation Table under the heading "Management" (3) each of our directors and
(4) all of our executive officers and directors as a group. Except as otherwise
indicated, we believe that each of the beneficial owners of our capital stock
listed below, based on information provided by these owners, has sole investment
and voting power with respect to its shares, subject to community property laws
where applicable.

Unless otherwise noted, each of the stockholders listed in the table possesses
sole voting and investment power with respect to the shares indicated. Shares
not outstanding but deemed beneficially owned by virtue of the right of a person
or member of a group to acquire them within 60 days are treated as outstanding
only when determining the amount and percent owned by such person or group.

                                                                             CLASS C            COMMON STOCK    PERCENT OF
                                               COMMON STOCK               SPECIAL STOCK          AND COMMON        TOTAL
                                        ---------------------------    ----------------------       STOCK         VOTING
NAME                                        NUMBER         PERCENT      NUMBER       PERCENT     EQUIVALENTS     POWER (1)
- --------------------------------------  ---------------   ---------    --------     ---------   -------------   -----------
                                                                                              
Stephen M. Simes (2).................    3,288,587 (3)        5.1%         --           --        3,288,587         4.7%
Louis W. Sullivan, M.D. (2)..........      125,000 (4)        *        1,000,000       21.3%      1,125,000         1.7%
Edward C. Rosenow III, M.D. (2)......      150,000 (5)        *            --           --          150,000          *
Victor Morgenstern (2)...............    5,100,000 (6)        8.0%         --           --        5,100,000         7.4%
Fred Holubow (2).....................      637,500 (7)        1.0%         --           --          637,500          *
Ross Mangano (2).....................   15,025,000 (8)       22.4%         --           --       15,025,000        20.9%
Angela Ho (2)........................      725,000 (9)        1.2%     1,000,000       21.3%      1,725,000         2.6%
Peter Kjaer (2)......................       75,000 (10)       *            --           --           75,000          *
Avi Ben-Abraham, M.D. (2)............   10,954,800 (11)      17.6%         --           --       10,954,800        16.4%
Phillip B. Donenberg (2).............      833,622 (12)       1.3%         --           --          833,622         1.2%
JO & Co..............................   14,925,000 (13)      22.3%         --           --       14,925,000        20.8%
Hans Michael Jebsen..................    4,250,000 (14)       6.8%     1,000,000       21.3%      5,250,000         7.8%
King Cho Fung........................    3,700,000 (15)       5.9%       625,000       13.3%      4,325,000         6.5%
Marcus Jebsen........................    1,750,000 (16)       2.8%       500,000       10.7%      2,250,000         3.4%
All executive officers and directors
as a group (13 persons)..............    37,970,984(17)      51.4%     2,000,000       42.7%     39,970,984        50.9%

- --------------------------------------
* less than 1%.

(1)      In calculating the percent of total voting power, the voting power of
         shares of our class C special stock and our common stock is combined.

(2)      Address:  175 Olde Half Day Road, Lincolnshire, IL  60069.

(3)      Mr. Simes' beneficial ownership includes 2,562,228 shares of common
         stock issuable upon exercise of stock options and 187,500 shares of
         common stock issuable upon exercise of warrants.

(4)      Dr. Sullivan's beneficial ownership  includes 125,000 shares of common
         stock issuable upon exercise of a stock option.

                                       53

(5)      Dr. Rosenow's beneficial ownership includes 150,000 shares of common
         stock issuable upon exercise of stock options.

(6)      Mr. Morgenstern's beneficial ownership includes: (1) 75,000 shares of
         common stock issuable upon exercise of a stock option, (2) 950,000
         shares of common stock issuable upon exercise of warrants, (3) 325,000
         shares of common stock issuable upon exercise of warrants and 800,000
         shares of common stock held by Mr. Morgenstern's wife as trustee of the
         Morningstar Trust, as to which Mr. Morgenstern disclaims control,
         direction or beneficial ownership, (4) 100,000 shares of common stock
         issuable upon exercise of a warrant and 200,000 shares of common stock
         held by Mr. Morgenstern's wife, as to which Mr. Morgenstern disclaims
         control, director or beneficial ownership, and (5) 250,000 shares of
         common stock issuable upon exercise of a warrant and 500,000 shares of
         common stock held by Resolute Partners L.P. Victor Morgenstern is a
         managing director of Resolute Partners L.P.

(7)      Mr. Holubow's beneficial ownership includes 187,500 shares of common
         stock issuable upon exercise of warrants and 75,000 shares of common
         stock issuable upon exercise of a stock option.

(8)      Mr. Mangano's beneficial ownership includes: (1) 75,000 shares of
         common stock issuable upon exercise of a stock option, (2) 3,750,000
         shares of common stock issuable upon exercise of a warrant and
         7,800,000 shares of common stock held by JO & Co., of which Mr. Mangano
         is President, and (4) an aggregate of 2,250,001 shares of common stock
         and an aggregate of 1,124,999 shares of common stock issuable upon
         exercise of warrants held in various accounts, of which Mr. Mangano is
         an advisor and/or a trustee. Mr. Mangano has sole dispositive power
         over these shares. See note (13) below.

(9)      Ms. Ho's beneficial ownership includes 125,000 shares of common stock
         issuable upon exercise of stock options.

(10)     Mr. Kjaer's beneficial ownership includes 75,000 shares of common
         stock issuable upon exercise of a stock option.

(11)     Dr. Ben-Abraham's beneficial ownership includes 25,000 shares of common
         stock issuable upon exercise of a stock option. Dr. Ben-Abraham has
         entered into an agreement limiting the voting rights with respect to
         his shares of common stock in certain circumstances. His percentage
         ownership has been calculated without taking these restrictions into
         account.

(12)     Mr. Donenberg's beneficial ownership includes 788,655 shares of common
         stock issuable upon exercise of stock options and 6,250 shares of
         common stock issuable upon exercise of a warrant.

(13)     Includes 3,750,000 shares of common stock issuable upon exercise of a
         warrant. Ross Mangano, a director of BioSante, has sole voting power
         over these shares. See note (8) above. The address for JO & Co. is 112
         West Jefferson Boulevard, Suite 613, South Bend, Indiana 46634.

(14)     Mr. Jebsen's beneficial ownership includes 750,000 shares of common
         stock issuable upon exercise of a warrant. Mr. Jebsen's address is c/o
         Jebsen & Co. Ltd., 28/F Caroline Center, 28 Yun Ping Road, Causeway
         Bay, Hong Kong.

(15)     Mr. Fung's beneficial ownership includes 750,000 shares of common stock
         issuable upon exercise of a warrant. Mr. Fung's address is c/o SP2
         15/F, 46 Lyndhurst Terrace, Central Hong Kong.

(16)     Mr. Jebsen's beneficial ownership includes 250,000 shares of common
         stock issuable upon exercise of a warrant. Mr. Jebsen's address is c/o
         Jebsen & Co. Ltd., 28/F Caroline Center, 28 Yun Ping Road, Causeway
         Bay, Hong Kong.

(17)     The amount beneficially owned by all current directors and executive
         officers as a group includes 6,072,358 shares issuable upon exercise of
         warrants and stock options held by these individuals and

                                       54

         5,549,999 shares issuable upon exercise of warrants held by entities
         affiliated with these individuals. See notes (6), (8) and (13) above.

                                       55

                            DESCRIPTION OF SECURITIES

AUTHORIZED SHARES

We are authorized to issue 100,000,000 shares of common stock, $0.0001 par value
per share and 10,000,000 shares of undesignated preferred stock, $0.0001 par
value per share. The following is a summary of the material terms and provisions
of our capital stock. Because it is a summary, it does not include all of the
information that is included in our certificate of incorporation. The text of
our certificate of incorporation, which is attached as an exhibit to this
registration statement, is incorporated into this section by reference.

COMMON STOCK

We are authorized to issue 100,000,000 shares of common stock, of which
62,202,943 shares were issued and outstanding as of June 15, 2001. Each share of
our common stock entitles its holder to one vote per share. Holders of our
common stock are entitled to receive dividends as and when declared by our Board
of Directors from time to time out of funds properly applicable to the payment
of dividends. Subject to the liquidation rights of any outstanding preferred
stock, the holders of our common stock are entitled to share pro rata in the
distribution of the remaining assets of our company upon a liquidation,
dissolution or winding up of our company. The holders of our common stock have
no cumulative voting, preemptive, subscription, redemption or sinking fund
rights.

CLASS C SPECIAL STOCK

We are authorized to issue 4,687,684 shares of class C special stock, of which
4,687,684 shares were issued and outstanding as of June 15, 2001. Each share of
class C special stock entitles its holder to one vote per share. Each share of
our class C special stock is exchangeable, at the option of the holder, for one
share of common stock, at an exchange price of $0.25 per share, subject to
adjustment upon certain capitalization events. Holders of our class C special
stock are not entitled to receive dividends. Holders of our class C special
stock are not entitled to participate in the distribution of our assets upon any
liquidation, dissolution or winding-up of our company. The holders of our class
C special stock have no cumulative voting, preemptive, subscription, redemption
or sinking fund rights.

UNDESIGNATED PREFERRED STOCK

We are authorized to issue 10,000,000 shares of preferred stock, none of which
are issued and outstanding. Our Board of Directors is authorized to issue one or
more series of preferred stock with such rights, privileges, restrictions and
conditions as our Board may determine. The preferred stock, if issued, may be
entitled to rank senior to our common stock with respect to the payment of
dividends and the distributions of assets in the event of a liquidation,
dissolution or winding-up of our company.

OPTIONS AND WARRANTS

As of June 15, 2001, we had outstanding options to purchase an aggregate of
6,944,657 shares of common stock at a weighted average exercise price of $0.37
per share. All outstanding options provide for antidilution adjustments in the
event of certain mergers, consolidations, reorganizations, recapitalizations,
stock dividends, stock splits or other similar changes in our corporate
structure and shares of our capital stock. We typically grant options with a
ten-year term. We have outstanding warrants to purchase an aggregate of
16,447,500 shares of common stock at a weighted average exercise price of $0.37
per share with a majority of those warrants having a five-year term. The
warrants provide for antidilution adjustments in the event of certain mergers,
consolidations, reorganizations,

                                       56

recapitalizations, stock dividends, stock splits or other changes in our
corporate structure of our company and, subject to certain exceptions, the
issuance by our company of any securities for a purchase price of less than
$0.40 per share.

REGISTRATION RIGHTS

The holders of the common stock and warrants purchased in our April 2001 private
placement are entitled to certain registration rights under the Securities Act.
No later than 90 days after April 4, 2001, we are required to file a
registration statement to register under the Securities Act the resale of the
shares of BioSante common stock underlying the shares of common stock and
warrants purchased in our April 2001 private placement. The registration
statement, of which this prospectus is a part, satisfies this requirement. We
are required to use our reasonable best efforts to cause this registration
statement to become effective under the Securities Act as promptly as
practicable and to use our reasonable best efforts to cause this registration
statement to remain effective until the earlier of (1) the sale of all the
shares of BioSante common stock covered by this registration statement; or (2)
such time as the selling stockholders named in this registration statement
become eligible to resell the shares of BioSante common stock and the shares of
BioSante common stock issuable upon exercise of the warrants pursuant to Rule
144(k) under the Securities Act.

The holders of the common stock and warrants purchased in our May 1999 private
placement are entitled to certain registration rights under the Securities Act.
If at any time after we become listed on Nasdaq, the holders of a specified
amount of these registrable shares request that we file a registration statement
covering the shares, we will use commercially reasonable efforts to cause these
shares to be registered. We are not required to file more than two registration
statements under these demand rights, or more than one registration statement in
any twelve-month period. In addition, the holders of these registrable shares
are entitled to have their shares included in a registration statement under the
Securities Act in connection with the public offering of our securities. In any
underwritten public offering, the registration rights are limited to the extent
that the managing underwriter has the right to (1) limit the number of
registrable shares to be included in the registration statement; (2) prohibit
the sale of any of our securities other than those registered and included in
the underwritten offering for a period of 180 days; and (3) require holders of
registrable shares not to sell or otherwise dispose of any securities of our
company (other than securities included in the registration) without the prior
written consent of the underwriters for a period of up to 180 days from the
effective date of such registration. These registration rights will terminate as
to any registrable shares when such registrable shares are effectively
registered and sold by the holder thereof or when such registrable shares are
sold pursuant to Rule 144(k) or are sold pursuant to Rule 144 under the
Securities Act.

ANTI-TAKEOVER PROVISIONS OF DELAWARE LAW AND OUR CERTIFICATE OF INCORPORATION

We are subject to Section 203 of the Delaware General Corporation Law. In
general, Section 203 prohibits a publicly held Delaware corporation from
engaging in a business combination with an interested stockholder for a period
of three years following the date the person became an interested stockholder,
unless the business combination or the transaction in which the person became an
interested stockholder is approved in a prescribed manner. Generally, a business
combination includes a merger, asset or stock sale, or other transaction
resulting in a financial benefit to the interested stockholder. Generally, an
interested stockholder is a person who, together with affiliates and associates,
owns or, in the case of affiliates or associates of the corporation, within
three years prior to the determination of interested stockholder status, did own
15% or more of a corporation's voting stock. The existence of this provision
could have anti-takeover effects with respect to transactions not approved in
advance by the Board of Directors, such as discouraging takeover attempts that
might result in a premium over the market price of the common stock.

                                       57

There are several provisions of our amended and restated certificate of
incorporation that may have the effect of deterring or discouraging hostile
takeovers or delaying changes in control of our company. In addition,
stockholders are not entitled to cumulative voting in the election of directors.
Our certificate of incorporation has authorized undesignated preferred stock
which could make it possible for our Board of Directors to issue preferred stock
with voting or other rights or preferences that could impede the success of any
attempt to effect a change of control of our company.

LIMITATIONS ON LIABILITY OF DIRECTORS AND INDEMNIFICATION

Our certificate of incorporation limits our directors' liability to the fullest
extent permitted under Delaware's corporate law. Specifically, our directors are
not liable to us or our stockholders for monetary damages for any breach of
fiduciary duty by a director, except for liability for:

       o      any breach of the director's duty of loyalty to us or our
              stockholders;

       o      acts or omissions not in good faith or which involve intentional
              misconduct or a knowing violation of law;

       o      dividends or other distributions of our corporate assets that are
              in contravention of restrictions in Delaware law, our amended and
              restated certificate of incorporation, bylaws or any agreement to
              which we are a party; and

       o      any transaction from which a director derives an improper personal
              benefit.

This provision generally does not limit liability under federal or state
securities laws.

Delaware law, and our certificate of incorporation, provide that we will, in
some situations, indemnify any person made or threatened to be made a party to a
proceeding by reason of that person's former or present official capacity with
our company against judgments, penalties, fines, settlements and reasonable
expenses including reasonable attorney's fees. Any person is also entitled,
subject to some limitations, to payment or reimbursement of reasonable expenses
in advance of the final disposition of the proceeding.

TRANSFER AGENTS AND REGISTRARS

The transfer agents and registrars for our common stock in Canada is
Computershare Trust Company of Canada, formerly Montreal Trust of Canada, and in
the United States is American Securities Transfer & Trust, Inc.

                                  LEGAL MATTERS

The validity of the shares of common stock offered hereby will be passed upon
for BioSante by Oppenheimer Wolff & Donnelly LLP, Minneapolis, Minnesota.

                                     EXPERTS

The financial statements as of December 31, 2000 and 1999 and for each of the
two years in the period ended December 31, 2000, included in this prospectus,
have been audited by Deloitte & Touche LLP, independent auditors, as stated in
their report appearing herein (which report expresses an unqualified opinion and
includes an explanatory paragraph referring to the developmental stage nature of
BioSante).

                                       58

The financial statements as of December 31, 1998 and for the year then ended,
included in this prospectus, have been audited by Deloitte & Touche LLP (Canada)
independent auditors, as stated in their report appearing herein (which report
expresses an unqualified opinion and includes an explanatory paragraph referring
to the developmental stage nature of BioSante). These reports have been so
included in reliance upon the reports of such firms given upon their authority
as experts in accounting and auditing.

                       WHERE YOU CAN FIND MORE INFORMATION

We file reports, proxy statements and other information with the Securities
and Exchange Commission. Copies of our reports, proxy statements and other
information may be inspected and copied at the following public reference
facilities maintained by the SEC:

Judiciary Plaza           Citicorp Center             7 World Trade Center
450 Fifth Street, N.W.    500 West Madison Street     Suite 1300
Washington, D.C. 20549    Chicago, Illinois 60621     New York, New York 10048

Copies of these materials also can be obtained by mail at prescribed rates from
the Public Reference Section of the SEC, 450 Fifth Street, N.W., Washington,
D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC maintains a web site
that contains reports, proxy statements and other information regarding us. The
address of the SEC web site is HTTP://WWW.SEC.GOV. The Securities Act file
number for our SEC filings is 0-28637.

We have filed a registration statement on Form SB-2 with the SEC for the common
stock offered by the selling stockholders under this prospectus. This prospectus
does not include all of the information contained in the registration statement.
You should refer to the registration statement and its exhibits for additional
information that is not contained in this prospectus. Whenever we make reference
in this prospectus to any of our contracts, agreements or other documents, you
should refer to the exhibits attached to the registration statement for copies
of the actual contract, agreement or other document.

We also file annual audited and interim unaudited financial statements, proxy
statements and other information with the Ontario, Alberta and British Columbia
Securities Commissions and with the Canadian Venture Exchange. Copies of these
documents that are filed through the System for Electronic Document Analysis and
Retrieval of the Canadian Securities Administrators are available at its web
site HTTP://WWW.SEDAR.COM and on the Canadian Venture Exchange web site
HTTP://WWW.CDNX.COM under INFOCDNX.

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

This prospectus does not constitute an offer to sell, or a solicitation of an
offer to purchase, the securities offered by this prospectus or the solicitation
of a proxy, in any jurisdiction to or from any person to whom or from whom it is
unlawful to make an offer, solicitation of an offer or proxy solicitation in
that jurisdiction. Neither the delivery of this prospectus nor any distribution
of securities pursuant to this prospectus shall, under any circumstances, create
any implication that there has been no change in the information set forth or
incorporated herein by reference or in our affairs since the date of this
prospectus.

                                       59

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Description                                                                                                    Page
- -----------                                                                                                    ----

Balance Sheets as of March 31, 2001 and December 31, 2000.......................................................F-2

Statements of Operations for the three months ended March 31, 2001 and 2000 and the cumulative period
from August 29, 1996 (date of incorporation) to March 31, 2001..................................................F-3

Statements of Cash Flows for the three months ended March 31, 2001 and 2000 and the cumulative period
from August 29, 1996 (date of incorporation) to March 31, 2001..................................................F-4

Notes to the Financial Statements for the three months ended March 31, 2001...............................F-5 - F-6

Independent Auditors' Reports.............................................................................F-7 - F-8

Balance Sheets as of December 31, 2000 and 1999.................................................................F-9

Statements of Operations for the years ended December 31, 2000, 1999 and 1998 and the
cumulative period from August 29, 1996 (date of incorporation) to December 31, 2000............................F-10

Statements of Stockholders' Equity for the years ended December 31, 2000, 1999 and 1998
and the cumulative period from August 29, 1996 (date of incorporation) to December 31, 2000....................F-11

Statements of Cash Flows for the years ended December 31, 2000, 1999 and 1998
and the cumulative period from August 29, 1996 (date of incorporation)
to December 31, 2000...........................................................................................F-12

Notes to the Financial Statements for the years ended December 31, 2000, 1999
and 1998 and the cumulative period from August 29, 1996 (date of incorporation)
to December 31, 2000....................................................................................F-13 - F-26

                                      F-1

                         PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

BIOSANTE PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
MARCH 31, 2001 AND DECEMBER 31, 2000

=======================================================================================================================
                                                                                   MARCH 31,           DECEMBER 31,
                                                                                     2001                 2000
                                                                               -----------------  ---------------------
ASSETS                                                                             (UNAUDITED)            (NOTE)
                                                                                            
CURRENT ASSETS
    Cash and cash equivalents                                                        $5,221,947           $  2,611,755
    Prepaid expenses and other sundry assets                                             46,325                 64,341
- -----------------------------------------------------------------------------------------------------------------------
                                                                                      5,268,272              2,676,096
PROPERTY AND EQUIPMENT, NET                                                             368,980                390,821
- -----------------------------------------------------------------------------------------------------------------------
                                                                                     $5,637,252           $  3,066,917
=======================================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable                                                                  $  93,115             $   44,746
    Accrued compensation                                                                150,756                258,598
    Other accrued expenses                                                               50,657                137,919
    Convertible debenture                                                               500,000                500,000
- -----------------------------------------------------------------------------------------------------------------------
                                                                                        794,528                941,263
- -----------------------------------------------------------------------------------------------------------------------

STOCKHOLDERS' EQUITY
    Capital stock
      Issued and Outstanding
              4,687,684 (2000 - 4,687,684) Class C special stock                            469                    469
             52,952,943 (2000 - 52,952,943) Common stock                             17,782,857             17,782,857
      Subscriptions to purchase common stock (Note 5)                                 3,397,970                      -
- -----------------------------------------------------------------------------------------------------------------------
                                                                                     21,181,296             17,783,326

    Deferred unearned compensation                                                      (9,000)               (18,000)
    Deficit accumulated during the development stage                               (16,329,572)           (15,639,672)
- -----------------------------------------------------------------------------------------------------------------------
                                                                                      4,842,724              2,125,654
- -----------------------------------------------------------------------------------------------------------------------
                                                                                     $5,637,252           $  3,066,917
=======================================================================================================================

Note: The balance sheet as of December 31, 2000 has been derived from the
audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles.

See accompanying notes to the financial statements.

                                      F-2

ITEM 1 - FINANCIAL STATEMENTS (CONTINUED)

BIOSANTE PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000 AND THE CUMULATIVE
PERIOD FROM AUGUST 29, 1996 (DATE OF INCORPORATION) TO MARCH 31, 2001
(UNAUDITED)

====================================================================================================================
                                                                                                   CUMULATIVE
                                                                                                   PERIOD FROM
                                                                                                 AUGUST 29, 1996
                                                                                                    (DATE OF
                                                       THREE MONTHS ENDED MARCH 31,             INCORPORATION) TO
                                                --------------------------------------------        MARCH 31,
                                                       2001                   2000                    2001
                                                -------------------  -----------------------  ----------------------
                                                                                     
REVENUE
    Interest income                                     $   32,109              $    60,382           $      778,645
- --------------------------------------------------------------------------------------------------------------------

EXPENSES
    Research and development                               232,989                  191,175                4,517,361
    General and administration                             465,058                  301,175                6,275,296
    Depreciation and amortization                           23,962                   23,852                  405,796
    Loss on disposal of capital assets                           -                        -                  157,545
    Costs of acquisition of Structured
      Biologicals Inc.                                           -                        -                  375,219
    Purchased in-process research
      and development                                            -                        -               5,377,000

- --------------------------------------------------------------------------------------------------------------------
                                                           722,009                  516,202               17,108,217
- --------------------------------------------------------------------------------------------------------------------

NET LOSS                                               $  (689,900)             $  (455,820)          $  (16,329,572)
====================================================================================================================

BASIC AND DILUTED NET LOSS
    PER SHARE                                          $     (0.01)             $     (0.01)           $       (0.37)
====================================================================================================================

WEIGHTED AVERAGE NUMBER
    OF SHARES OUTSTANDING                               57,640,627               57,450,551               43,704,568
====================================================================================================================

See accompanying notes to the financial statements.

                                      F-3

ITEM 1 - FINANCIAL STATEMENTS (CONTINUED)

BIOSANTE PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2001 AND 2000 AND THE CUMULATIVE
PERIOD FROM AUGUST 29, 1996 (DATE OF INCORPORATION) TO MARCH 31, 2001
(UNAUDITED)

================================================================================================================================
                                                                                                                CUMULATIVE
                                                                                                               PERIOD FROM
                                                                                                             AUGUST 29, 1996
                                                                                                                 (DATE OF
                                                                                                            INCORPORATION) TO
                                                                       THREE MONTHS ENDED MARCH 31,              MARCH 31
                                                                   --------------------------------------  ---------------------
                                                                         2001                2000                  2001
                                                                   -----------------   ------------------  ---------------------
                                                                                                  
CASH FLOWS USED IN OPERATING ACTIVITIES
     Net loss                                                           $ (689,900)         $  (455,820)         $ (16,329,572)
     Adjustments to reconcile net loss to
        net cash used in operating activities
          Depreciation and amortization                                     23,962               23,852                405,796
          Amortization of deferred unearned compensation                     9,000                    -                 33,290
          Purchased in-process research and development                          -                    -              5,377,000
          Loss on disposal of equipment                                          -                    -                157,545
     Changes in other assets and liabilities
        affecting cash flows from operations
          Prepaid expenses and other sundry assets                          18,016               13,602                (43,357)
          Accounts payable and accrued expenses                           (146,735)             (42,822)              (445,659)
          Due from SBI                                                            -                    -              (128,328)
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES                                     (785,657)             (461,188)          (10,973,285)
- --------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS USED IN INVESTING ACTIVITIES
     Purchase of capital assets                                             (2,121)             (11,334)              (898,211)
- --------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
     Issuance of convertible debenture                                           -                    -                500,000
     (Conversion) issuance of Class "C" shares                                   -                   (4)                   469
     Proceeds from subscription, sale or conversion of shares            3,397,970               10,464             16,592,974
- --------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                3,397,970               10,460             17,093,443
- --------------------------------------------------------------------------------------------------------------------------------

NET INCREASE (DECREASE) IN CASH
     AND CASH EQUIVALENTS                                                2,610,192             (462,062)             5,221,947

CASH AND CASH EQUIVALENTS
     AT BEGINNING OF PERIOD                                              2,611,755            5,274,552                       -
- --------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                              $5,221,947          $ 4,812,490          $   5,221,947
================================================================================================================================
SUPPLEMENTAL SCHEDULE OF
     CASH FLOW INFORMATION
        Acquisition of SBI
          Purchased in-process research and development                   $      -            $       -          $   5,377,000
          Other net liabilities assumed                                          -                    -               (831,437)
- --------------------------------------------------------------------------------------------------------------------------------
                                                                                 -                    -              4,545,563
          Less:  subordinate voting shares issued therefor                       -                    -              4,545,563
================================================================================================================================
        Income tax paid                                                   $      -            $       -             $        -
================================================================================================================================
        Interest paid                                                     $      -            $       -             $        -
================================================================================================================================

See accompanying notes to the financial statements.

                                      F-4

                         BIOSANTE PHARMACEUTICALS, INC.
                                   FORM 10-QSB
                                 MARCH 31, 2001

                    NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

1.       INTERIM FINANCIAL INFORMATION

         In the opinion of management, the accompanying unaudited financial
statements contain all necessary adjustments, which are of a normal recurring
nature, to present fairly the financial position of BioSante Pharmaceuticals,
Inc. as of March 31, 2001, the results of operations for the three months ended
March 31, 2001 and 2000 and for the cumulative period from August 29, 1996 (date
of incorporation) to March 31, 2001, and the cash flows for the three months
ended March 31, 2001 and 2000 and for the cumulative period from August 29, 1996
(date of incorporation) to March 31, 2001, in conformity with accounting
principles generally accepted in the United States of America. Operating results
for the three month period ended March 31, 2001 are not necessarily indicative
of the results that may be expected for the year ended December 31, 2001.

         These unaudited interim financial statements should be read in
conjunction with the financial statements and related notes contained in
BioSante's Annual Report on Form 10-KSB for the year ended December 31, 2000.

2.       BASIC AND DILUTED NET LOSS PER SHARE

         The basic and diluted net loss per share is computed based on the
weighted average number of shares of common stock and class C stock outstanding,
all being considered as equivalent of one another. Basic net loss per share is
computed by dividing the net loss by the weighted average number of shares
outstanding for the reporting period. Diluted net loss per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock. Because BioSante has
incurred net losses from operations in each of the periods presented, there is
no difference between basic and diluted net loss per share amounts. The
computation of diluted net loss per share does not include options and warrants
with dilutive potential that would have an antidilutive effect on net loss per
share.

3.       LICENSE AND SUPPLY AGREEMENTS

         On June 13, 2000, BioSante entered into a licensing agreement and a
supply agreement with Antares Pharma Inc. (the entity that resulted from the
merger of Permatec Technologie, AG with Medi-Ject Corporation), covering four
hormone products for the treatment of testosterone deficiency in men and
estrogen deficiency in women. The agreement requires BioSante to pay Antares a
percentage of future net sales, if any, as a royalty. Under the terms of the
license agreement, BioSante is also obligated to make milestone payments upon
the occurrence of certain future events. Under terms of the supply agreement,
Permatec has agreed to manufacture or have manufactured and sell exclusively to
BioSante, and BioSante has agreed to purchase exclusively from Antares,
BioSante's total requirements for the products covered under the license
agreement between the two parties.

         As allowed by the licensing agreement with Antares, on September 1,
2000, BioSante entered into a sub-license agreement with Paladin Labs Inc.
("Paladin") to market the female hormone replacement products in Canada. In
exchange for the sub-license, Paladin agreed to make an initial investment in
BioSante, make future milestone payments and pay royalties on sales of the
products in Canada. The milestone payments will be in the form of a series of
equity investments by Paladin in

                                      F-5

BioSante's common stock at a 10% premium to the market price of BioSante's
common stock at the date of the equity investment.

4.       CONVERTIBLE DEBENTURE

         In connection with entering into the sub-license agreement with Paladin
as described in Note 3, BioSante issued a convertible debenture to Paladin in
the principal amount of $500,000. The debenture matures on September 1, 2001 and
does not accrue interest unless it is not paid, or has not been converted into
BioSante common stock, by the maturity date. If unpaid, interest accrues at a
rate of 10% from September 1, 2001 until paid or converted. The convertible
debenture is convertible into BioSante common stock at $1.05 per share, which
conversion price is subject to adjustment under certain circumstances.
Commencing January 1, 2001, the debenture may be converted at the option of
Paladin. In the event Paladin has not converted the debenture prior to March 31,
2001, BioSante has the right, in its sole discretion, after March 31, 2001, to
require the debenture to be converted.

5.       SUBSEQUENT EVENT

         On April 4, 2001, BioSante closed a private placement, raising US$3.7
million upon the issuance of units, which consisted of an aggregate of 9,250,000
shares of common stock and five-year warrants to purchase an aggregate of
4,625,000 shares of common stock. The price of each unit, which consisted of one
share of common stock plus a warrant to purchase one half-share of common stock
was US$0.40, the approximate market price of BioSante's common stock at closing.
The exercise price of the warrant is US$0.50 per full share. Transaction costs
related to the private placement have been netted against the proceeds. As of
March 31, 2001, approximately $3.4 million of the private placement proceeds had
been deposited with BioSante and are reflected in cash and "Subscriptions to
purchase common stock" on the Balance Sheet.

                                      F-6

INDEPENDENT AUDITORS' REPORT

Board of Directors
BioSante Pharmaceuticals, Inc.
Lincolnshire, Illinois

We have audited the accompanying balance sheets of BioSante Pharmaceuticals,
Inc. (a development stage company) as of December 31, 2000 and 1999 and the
related statements of operations, stockholders' equity and cash flows for each
of the two years ended December 31, 2000, and for the period from August 29,
1996 (date of incorporation) through December 31, 2000. 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. The Company's financial statements as of and for the year ended
December 31, 1998 and for the period from August 29, 1996 (date of
incorporation) through December 31, 1998 were audited by other auditors whose
report, dated February 19, 1999, expressed an unqualified opinion on those
statements. The financial statements for the period August 29, 1996 (date of
incorporation) through December 31, 1998 reflect total revenues and net loss of
$320,135 and $10,796,218, respectively, of the related totals. The other
auditors' report has been furnished to us, and our opinion, insofar as it
relates to the amounts included for such prior period, is based solely on the
report of such other auditors.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an audit to obtain reasonable assurance about whether the financial
statements are free of material misstatements. 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, based on our audits and the report of other auditors, such
financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2000 and 1999 and the results of its
operations and its cash flows for each of the two years ended December 31, 2000,
and for the period from August 29, 1996 (date of incorporation) through December
31, 2000 in conformity with accounting principles generally accepted in the
United States of America.

As discussed in Note 1 to the financial statements, the Company is in the
development stage.

/s/ Deloitte & Touche LLP

February 16, 2001
Chicago, Illinois

                                      F-7

INDEPENDENT AUDITORS' REPORT

Board of Directors
BioSante Pharmaceuticals, Inc.
(formerly Ben-Abraham Technologies Inc.)

We have audited the balance sheet of BioSante Pharmaceuticals, Inc. (formerly
Ben-Abraham Technologies Inc.), a development stage company, as of December 31,
1998 and the related statements of operations, stockholders' equity and cash
flows for the year ended December 31, 1998, and for the period from August 29,
1996 (date of incorporation) to December 31, 1998. 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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform an 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, such financial statements present fairly, in all material
respects, the financial position of the Company as of December 31, 1998 and the
results of its operations and its cash flows for the year ended December 31,
1998, and for the period from August 29, 1996 (date of incorporation) through
December 31, 1998 in conformity with accounting principles generally accepted in
the United States of America.

As discussed in Note 1 to the financial statements, the Company is in the
development stage.

/s/ Deloitte & Touche LLP

Chartered Accountants

Toronto, Ontario
February 19, 1999

                                      F-8

BIOSANTE PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
DECEMBER 31, 2000 AND 1999

================================================================================================================

                                                                                2000                1999
                                                                         -------------------  ------------------
                                                                                        
ASSETS

CURRENT ASSETS
    Cash and cash equivalents                                                    $2,611,755          $5,274,552
    Prepaid expenses and other sundry assets                                         64,341              58,994
- ----------------------------------------------------------------------------------------------------------------
                                                                                  2,676,096           5,333,546

PROPERTY AND EQUIPMENT, NET (Note 4)                                                390,821             446,083
- ----------------------------------------------------------------------------------------------------------------
                                                                                 $3,066,917          $5,779,629
================================================================================================================

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
    Accounts payable (Note 11)                                                   $   44,746          $   76,057
    Accrued compensation                                                            258,598             182,973
    Other accrued expenses                                                          137,919              45,085
    Convertible debenture (Note 6)                                                  500,000                   -
    Due to licensor                                                                       -              25,000
- ----------------------------------------------------------------------------------------------------------------
                                                                                    941,263             329,115
- ----------------------------------------------------------------------------------------------------------------

COMMITMENTS (Notes 10 and 12)

STOCKHOLDERS' EQUITY (Note 7)
    Capital stock
      Issued and Outstanding
            4,687,684 (1999 - 4,807,865) Class C special stock                          469                 481
           52,952,943 (1999 - 52,642,686) Common stock                           17,782,857          17,652,510
- ----------------------------------------------------------------------------------------------------------------
                                                                                 17,783,326          17,652,991

    Deferred unearned compensation                                                  (18,000)                  -
    Deficit accumulated during the development stage                            (15,639,672)        (12,202,477)
- ----------------------------------------------------------------------------------------------------------------
                                                                                  2,125,654           5,450,514
- ----------------------------------------------------------------------------------------------------------------
                                                                                 $3,066,917          $5,779,629
================================================================================================================

See accompanying notes to the financial statements.

                                      F-9

BIOSANTE PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
AND THE CUMULATIVE PERIOD FROM AUGUST 29, 1996 (DATE OF INCORPORATION) TO
DECEMBER 31, 2000

=================================================================================================================================

                                                                                                                CUMULATIVE
                                                                                                                PERIOD FROM
                                                                                                              AUGUST 29, 1996
                                                                                                                 (DATE OF
                                                                                                               INCORPORATION)
                                               YEAR ENDED          YEAR ENDED            YEAR ENDED                 TO
                                               DECEMBER 31,        DECEMBER 31,          DECEMBER 31,           DECEMBER 31,
                                                  2000                 1999                  1998                  2000
                                            -----------------  ---------------------  --------------------  --------------------
                                                                                                
REVENUE
    Interest income                            $     227,718            $   198,683           $   123,061           $   746,536
- --------------------------------------------------------------------------------------------------------------------------------

EXPENSES

    Research and development                       1,887,832                660,588             1,400,129             4,284,372
    General and administration                     1,678,581                853,389             1,112,647             5,810,238
    Depreciation and amortization                     98,500                 90,965               139,769               381,834
    Loss on disposal of capital assets                     -                      -               129,931               157,545
    Costs of acquisition of Structured
      Biologicals Inc.                                     -                      -                     -               375,219
    Purchased in-process research
      and development                                      -                      -                     -             5,377,000

- --------------------------------------------------------------------------------------------------------------------------------
                                                   3,664,913              1,604,942             2,782,476            16,386,208
- --------------------------------------------------------------------------------------------------------------------------------

NET LOSS                                       $  (3,437,195)          $ (1,406,259)          $(2,659,415)       $  (15,639,672)
=================================================================================================================================

BASIC AND DILUTED NET LOSS
    PER SHARE (Note 2)                            $   (0.06)            $    (0.03)           $    (0.08)        $        (0.36)
=================================================================================================================================

WEIGHTED AVERAGE NUMBER
    OF SHARES OUTSTANDING                         57,536,761             49,424,140            34,858,243            42,914,244
=================================================================================================================================

See accompanying notes to the financial statements.

                                      F-10

BIOSANTE PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
AND THE CUMULATIVE PERIOD FROM AUGUST 29, 1996 (DATE OF INCORPORATION) TO
DECEMBER 31, 2000

====================================================================================================================================

                                                              Class A                 Class C
                                                           Special Shares          Special Shares               Common Stock
                                                       ----------------------   ---------------------      -----------------------
                                                          Shares      Amount      Shares     Amount           Shares      Amount
                                                       ----------------------------------------------------------------------------
                                                                                                      
BALANCE, AUGUST 29, 1996,
    DATE OF INCORPORATION                                       -       $   -             -      $   -              -        $    -
Issuance of Class "C" shares August 29, 1996
    ($0.0001 per share)                                         -           -     4,150,000        415              -             -
Issuance of Class "A" shares September 23, 1996                 -           -             -          -              -
    ($0.0001 per share)                                20,000,000       2,000             -          -              -             -
Issuance of common shares                                       -           -             -          -              -             -
    September 23, 1996                                          -           -             -          -      4,100,000     4,100,000
    Financing fees accrued                                      -           -             -          -              -      (410,000)
    November 27, 1996 - issued as consideration
      upon   acquisition  of  SBI (Note 3)                      -           -             -          -      7,434,322     4,545,563
    Exercise of Series "X" warrants(Note 7)                     -           -             -          -        215,714       275,387
    Exercise of Series "Z" warrants(Note 7)                     -           -             -          -          1,428         2,553
Net loss                                                        -           -             -          -              -             -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996                             20,000,000       2,000     4,150,000        415     11,751,464     8,513,503
Conversion of shares
    January 13, 1997                                            -           -      (282,850)       (28)       282,850        70,741
    January 13, 1997                                            -           -       (94,285)        (9)        94,285        23,580
    December 2, 1997                                            -           -      (106,386)       (11)       106,386        26,607
    December 2, 1997                                            -           -      (100,000)       (10)       100,000        25,010
Exercise  of Series "V"  warrants (Note 7)                      -           -             -          -         24,000        36,767
Exercise  of Series "X"  warrants (Note 7)                      -           -             -          -         28,571        36,200
Exercise  of Series "W"  warrants (Note 7)                      -           -             -          -         20,000        25,555
Adjustment for partial shares issued
    upon amalgamation                                           -           -             -          -            130             -
     Financing fees reversed                                    -           -             -          -              -       410,000
Net loss                                                        -           -             -          -              -             -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997                             20,000,000       2,000     3,566,479        357     12,407,686     9,167,963

Conversion of shares
    March 4, 1998                                               -           -      (20,000)         (2)        20,000         5,002
    March 16, 1998                                              -           -      (10,000)         (1)        10,000         2,501
    May 8, 1998                                       (15,000,000)     (1,500)           -           -     15,000,000     3,751,500
    June 1, 1998                                       (1,000,000)       (100)           -           -      1,000,000       250,100
    June 1, 1998                                       (1,000,000)       (100)           -           -      1,000,000       250,100
Return of shares to treasury
    May 8, 1998                                        (1,468,614)       (147)           -           -              -             -
    May 8, 1998                                                 -           -     (250,000)        (25)             -             -
Net loss                                                        -           -            -           -              -             -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                              1,531,386         153    3,286,479         329     29,437,686    13,427,166
Conversion of shares
    February 2, 1999                                            -           -      (10,000)         (1)        10,000         2,501
Private placement of common shares, net
    May 6, 1999                                                 -           -            -           -      23,125,000    4,197,843
Share redesignation
    July 13, 1999                                      (1,531,386)       (153)   1,531,386         153               -            -
Issuance of common shares
    August 15, 1999                                             -           -            -           -          70,000       25,000
Net loss                                                        -           -            -           -               -            -
- ------------------------------------------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                                      -           -    4,807,865         481      52,642,686   17,652,510

Conversion of shares
    March 17, 2000                                              -           -      (10,000)         (1)         10,000        2,501
    March 24, 2000                                              -           -      (31,840)         (3)         31,840        7,963
    June 12, 2000                                               -           -      (50,000)         (5)         50,000       12,505
    July 13, 2000                                               -           -      (28,341)         (3)         28,341        7,088
Issuance of common shares
    July 18, 2000                                               -           -            -           -         190,076       58,000
Issuance of warrants for services received                      -           -            -           -                       42,290
Amortization of deferred unearned compensation                  -           -            -           -               -            -
Net loss                                                        -           -            -           -               -            -
====================================================================================================================================
BALANCE, DECEMBER 31, 2000                                      -           $    4,687,684        $469      52,952,943  $17,782,857
====================================================================================================================================

                                                                      Deficit
                                                                     Accumulated
                                                       Deferred      During the
                                                       Unearned      Development
                                                     Compensation       Stage             Total
                                                     ------------------------------  -------------
                                                                            
BALANCE, AUGUST 29, 1996,
    DATE OF INCORPORATION                                $    -          $   -            $    -
Issuance of Class "C" shares August 29, 1996
    ($0.0001 per share)                                       -              -               415
Issuance of Class "A" shares September 23, 1996
    ($0.0001 per share)                                       -              -             2,000
Issuance of common shares                                     -              -                 -
    September 23, 1996                                        -              -         4,100,000
    Financing fees accrued                                    -              -          (410,000)
    November 27, 1996 - issued as consideration
      upon   acquisition  of  SBI (Note 3)                    -              -         4,545,563
    Exercise of Series "X" warrants(Note 7)                   -              -           275,387
    Exercise of Series "Z" warrants(Note 7)                   -              -             2,553
Net loss                                                      -     (6,246,710)       (6,246,710)
- -------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1996                                          (6,246,710)        2,269,208
Conversion of shares
    January 13, 1997                                          -              -            70,713
    January 13, 1997                                          -              -            23,571
    December 2, 1997                                          -              -            26,596
    December 2, 1997                                          -              -            25,000
Exercise  of Series "V"  warrants (Note 7)                    -              -            36,767
Exercise  of Series "X"  warrants (Note 7)                    -              -            36,200
Exercise  of Series "W"  warrants (Note 7)                    -              -            25,555
Adjustment for partial shares issued
    upon amalgamation                                         -              -                 -
     Financing fees reversed                                  -              -           410,000
Net loss                                                      -     (1,890,093)       (1,890,093)
- ------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1997                                     -    (8,136,803)        1,033,517

Conversion of shares
    March 4, 1998                                             -              -             5,000
    March 16, 1998                                            -              -             2,500
    May 8, 1998                                               -              -         3,750,000
    June 1, 1998                                              -              -           250,000
    June 1, 1998                                              -              -           250,000
Return of shares to treasury
    May 8, 1998                                               -              -              (147)
    May 8, 1998                                               -              -               (25)
Net loss                                                      -     (2,659,415)       (2,659,415)
- ------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1998                                    -    (10,796,218)        2,631,430
Conversion of shares
    February 2, 1999                                          -              -             2,500
Private placement of common shares, net
    May 6, 1999                                               -              -         4,197,843
Share redesignation
    July 13, 1999                                             -              -                 -
Issuance of common shares
    August 15, 1999                                           -              -            25,000
Net loss                                                      -     (1,406,259)       (1,406,259)
- ------------------------------------------------------------------------------------------------
BALANCE, DECEMBER 31, 1999                                    -    (12,202,477)        5,450,514

Conversion of shares
    March 17, 2000                                            -              -             2,500
    March 24, 2000                                            -              -             7,960
    June 12, 2000                                             -              -            12,500
    July 13, 2000                                             -              -             7,085
Issuance of common shares
    July 18, 2000                                             -              -            58,000
Issuance of warrants for services received              (42,290)             -
Amortization of deferred unearned compensation           24,290              -            24,290
Net loss                                                      -     (3,437,195)       (3,437,195)
================================================================================================
BALANCE, DECEMBER 31, 2000                             $(18,000)  $(15,639,672)       $2,125,654
================================================================================================

See accompanying notes to the financial statements.

                                      F-11

BIOSANTE PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOW
YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
AND THE CUMULATIVE PERIOD FROM AUGUST 29, 1996 (DATE OF INCORPORATION) TO
DECEMBER 31, 2000

====================================================================================================================================
                                                                                                                    CUMULATIVE
                                                                                                                    PERIOD FROM
                                                                                                                  AUGUST 29, 1996
                                                                                                                     (DATE OF
                                                           YEAR ENDED         YEAR ENDED         YEAR ENDED      INCORPORATION) TO
                                                          DECEMBER 31,       DECEMBER 31,       DECEMBER 31,       DECEMBER 31,
                                                              2000               1999               1998               2000
                                                         ----------------  -----------------  -----------------  ------------------
                                                                                                     
CASH FLOWS USED IN OPERATING ACTIVITIES
   Net loss                                               $ (3,437,195)       $ (1,406,259)     $ (2,659,415)      $  (15,639,672)
   Adjustments to reconcile net loss to
       net cash used in operating activities
         Depreciation and amortization                          98,500              90,965           139,769              381,834
         Amortization of deferred unearned compensation         24,290                   -                 -               24,290
         Purchased in-process research and development               -                   -                 -            5,377,000
         Loss on disposal of equipment                               -                   -           129,931              157,545
   Changes in other assets and liabilities
       affecting cash flows from operations
         Prepaid expenses and other sundry assets               (5,347)             16,272           (53,376)             (61,373)
         Accounts payable and accrued expenses                 137,148            (386,483)         (598,334)            (298,924)
         Due to licensor                                       (25,000)           (102,317)                -                    -
         Due from SBI                                                -                   -                 -             (128,328)
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH USED IN OPERATING ACTIVITIES                       (3,207,604)         (1,787,822)       (3,041,425)         (10,187,628)
- -----------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS USED IN INVESTING ACTIVITIES
   Purchase of capital assets                                  (43,238)             (4,219)         (124,984)            (896,090)
- -----------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
   Issuance of convertible debenture                           500,000                   -                 -              500,000
   (Conversion) issuance of Class "A" shares                         -                   -            (1,847)                   -
   (Conversion) issuance of Class "C" shares                       (12)                  -               (28)                 469
   Proceeds from sale or conversion of shares                   88,057           4,225,343         4,259,203           13,195,004
- -----------------------------------------------------------------------------------------------------------------------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                      588,045           4,225,343         4,257,328           13,695,473
- -----------------------------------------------------------------------------------------------------------------------------------

NET (DECREASE) INCREASE IN CASH
   AND CASH EQUIVALENTS                                     (2,662,797)          2,433,302         1,090,919            2,611,755

CASH AND CASH EQUIVALENTS
   AT BEGINNING OF PERIOD                                    5,274,552           2,841,250         1,750,331                    -
- -----------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                $  2,611,755        $  5,274,552      $  2,841,250        $   2,611,755
====================================================================================================================================

SUPPLEMENTAL SCHEDULE OF
   CASH FLOW INFORMATION
       Acquisition of SBI
         Purchased in-process research and development    $          -        $          -      $          -        $   5,377,000
         Other net liabilities assumed                               -                   -                 -             (831,437)
- -----------------------------------------------------------------------------------------------------------------------------------
                                                                     -                   -                 -            4,545,563
         Less: subordinate voting shares issued therefor             -                   -                 -            4,545,563
- -----------------------------------------------------------------------------------------------------------------------------------
                                                          $          -        $          -      $          -        $           -
====================================================================================================================================

       Income tax paid                                    $          -        $          -      $          -        $           -
====================================================================================================================================

       Interest paid                                      $          -        $          -      $          -        $           -
====================================================================================================================================

                                      F-12

BIOSANTE PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998, AND THE CUMULATIVE PERIOD
FROM AUGUST 29, 1996 (DATE OF INCORPORATION) TO DECEMBER 31, 2000
================================================================================

1.     ORGANIZATION

       On December 19, 1996, Ben-Abraham Technologies, Inc. ("BAT") was
       continued under the laws of the State of Wyoming, U.S.A. Previously, BAT
       had been incorporated under the laws of the Province of Ontario effective
       August 29, 1996. Pursuant to the shareholders meeting to approve the
       arrangement on November 27, 1996 and subsequent filing of the articles of
       arrangement December 6, 1996, BAT acquired Structured Biologicals Inc.
       and its wholly-owned subsidiary 923934 Ontario Inc. ("SBI"), a Canadian
       public company listed on the Alberta Stock Exchange. The "acquisition"
       was effected by a statutory amalgamation wherein the stockholders of BAT
       were allotted a significant majority of the shares of the amalgamated
       entity. Upon amalgamation, the then existing stockholders of SBI received
       7,434,322 subordinate voting shares of BAT (1 such share for every 3 1/2
       shares held in SBI). On November 10, 1999, BAT changed its name to
       BioSante Pharmaceuticals, Inc. ("the Company").

       The Company was established to develop prescription pharmaceutical
       products, vaccines and vaccine adjuvants using its nanoparticle
       technology ("CAP") licensed from the University of California. The
       research and development on the CAP technology is conducted in the
       Company's Smyrna, Georgia laboratory facility. In addition to its
       nanoparticle technology, the Company also is developing its pipeline of
       hormone replacement products to treat testosterone deficiency in men and
       estrogen deficiency in women. The business office is located in
       Lincolnshire, Illinois.

       The Company has been in the development stage since its inception. The
       Company's successful completion of its development program and its
       transition to profitable operations is dependent upon obtaining
       regulatory approval from the United States (the "U.S.") Food and Drug
       Administration ("FDA") prior to selling its products within the U.S., and
       foreign regulatory approval must be obtained to sell its products
       internationally. There can be no assurance that the Company's products
       will receive regulatory approvals, and a substantial amount of time may
       pass before the achievement of a level of sales adequate to support the
       Company's cost structure. The Company will also incur substantial
       expenditures to achieve regulatory approvals and will need to raise
       additional capital during its developmental period. Obtaining marketing
       approval will be directly dependent on the Company's ability to implement
       the necessary regulatory steps required to obtain marketing approval in
       the United States and in other countries. It is not possible at this time
       to predict with assurance the outcome of these activities.

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       BASIS OF PRESENTATION

       These financial statements are expressed in U.S. dollars.

       The financial statements have been prepared in accordance with accounting
       principles generally accepted in the United States of America ("generally
       accepted accounting principles") and Statement of Financial Accounting
       Standards ("SFAS") No. 7 "Accounting and Reporting by Development Stage
       Enterprises". The preparation of financial statements in conformity with

                                      F-13

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

       generally accepted accounting principles requires management to make
       estimates and assumptions that affect the reported amounts of assets and
       liabilities, the 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.

       CASH AND CASH EQUIVALENTS

       For purposes of reporting cash flows, the Company considers all
       instruments with original maturities of three months or less to be cash
       equivalents.

       PROPERTY AND EQUIPMENT

       Property and equipment is stated at cost less accumulated depreciation
       and amortization. Depreciation of computer, office and laboratory
       equipment is computed primarily by accelerated methods over estimated
       useful lives of seven years. Leasehold improvements are amortized on a
       straight-line basis over the terms of the leases, plus option renewals.

       RESEARCH AND DEVELOPMENT

       Research and development costs are charged to expense as incurred.

       BASIC AND DILUTED NET LOSS PER SHARE

       The basic and diluted net loss per share is computed based on the
       weighted average number of the aggregate of common stock and Class C
       shares outstanding, all being considered as equivalent of one another.
       Basic earnings (loss) per share is computed by dividing income (loss)
       available to common stockholders by the weighted average number of shares
       outstanding for the reporting period. Diluted earnings (loss) per share
       reflects the potential dilution that could occur if securities or other
       contracts to issue common stock were exercised or converted into common
       stock. The computation of diluted earnings (loss) per share does not
       include the Company's stock options, warrants or convertible debt with
       dilutive potential because of their antidilutive effect on earnings
       (loss) per share.

       STOCK-BASED COMPENSATION

       The Company follows the provisions of APB Opinion No. 25, which requires
       compensation cost for stock-based employee compensation plans be
       recognized based on the difference, if any, between the quoted market
       price of the stock on the date of grant and the amount the employee must
       pay to acquire the stock. As a result of the Company continuing to apply
       APB No. 25, SFAS No. 123, "Accounting for Stock-Based Compensation,"
       requires certain additional disclosures of the pro forma compensation
       expense arising from the Company's fixed and performance stock
       compensation plans. The expense is measured as the fair value of the
       award at the date it was granted using an option-pricing model that takes
       into account the exercise price and the expected

                                      F-14

2.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES  (CONTINUED)

       term of the option, the current price of the underlying stock, its
       expected volatility, expected dividends on the stock and the expected
       risk-free rate of return during the term of the option. The compensation
       cost is recognized over the service period, usually the period from the
       grant date to the vesting date. The Company has disclosed the required
       pro forma net loss and loss per share data in Note 8 as if the Company
       had recorded compensation expense using the fair value method per SFAS
       No. 123. Warrants issued to non-employees as compensation for services
       rendered are valued at their fair value on the date of issue.

       INTEREST INCOME

       Interest income on invested cash is recorded as earned following the
       accrual basis of accounting.

       NEW STATEMENTS OF FINANCIAL ACCOUNTING STANDARDS

       In June 1998, the FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVES
       INSTRUMENTS AND HEDGING ACTIVITIES. This Statement establishes accounting
       and reporting standards for derivative instruments, including certain
       derivative instruments embedded in other contracts, and for hedging
       activities. It requires that an entity recognize all derivatives as
       either assets or liabilities in the statement of financial position and
       measure those instruments at fair value. The Company adopted this
       statement effective January 1, 2001. No cumulative transition adjustment
       was required.

3.     ACQUISITION

       Pursuant to the shareholders meeting to approve the arrangement held on
       November 27, 1996 and the subsequent filing of the articles of
       arrangement December 6, 1996, the Company completed the acquisition of
       100% of the outstanding shares of SBI. The acquisition was effected by a
       statutory amalgamation wherein the stockholders of the Company were
       allotted a significant majority of the shares of the amalgamated entity.
       Upon amalgamation, the then existing shareholders of SBI received
       7,434,322 shares of common stock of the Company (1 such share for every 3
       1/2 shares they held in SBI). SBI's results of operations have been
       included in these financial statements from the date of acquisition. The
       acquisition was accounted for by using the purchase method of accounting,
       as follows:

      ASSETS
                                                                
        In-process research and development                       $     5,377,000
        Other                                                              37,078
      ----------------------------------------------------------------------------
                                                                        5,414,078
      ----------------------------------------------------------------------------
      LIABILITIES
        Current liabilities                                               679,498
        Due to directors                                                   60,689
        Due to the Company                                                128,328
      ----------------------------------------------------------------------------
                                                                          868,515
      ----------------------------------------------------------------------------
        Net assets acquired                                       $     4,545,563
      ----------------------------------------------------------------------------
      CONSIDERATION
        Common stock                                              $     4,545,563
      ----------------------------------------------------------------------------

                                      F-15

3.     ACQUISITION (CONTINUED)

       In connection with the acquisition of SBI, accounted for under the
       purchase method, the Company acquired the rights to negotiate with the
       Regents of the University of California for licenses of specific
       CAP-related technologies and products. The specific technologies and
       products relate to investigative research funded by SBI. At the time of
       acquisition, the technologies and products had not yet been approved for
       human clinical research. The value ascribed to the rights, based on an
       independent evaluation, was $5,377,000. This amount was immediately
       expensed as the technologies and products did not have their
       technological feasibility established and had no identified future
       alternative use.

       As of the date of acquisition, the technology related to the development
       of products for six indications (i.e. applications of the technology).
       The Company determined the value of the in process research and
       development related to the acquired rights based on an independent
       valuation using discounted cash flows. Principle assumptions used in the
       valuation were as follows:

       o   FDA approval for the CAP-related for the six indications was expected
           to be received at various dates between 2002 and 2004, however, there
           are many competitive products in development. There are also many
           requirements that must be met before FDA approval is secured. There
           is no assurance that the products will be successfully developed,
           proved to be safe in clinical trials, meet applicable regulatory
           standards, or demonstrate substantial benefits in the treatment or
           prevention of any disease.

       o   The estimated additional research and development expenditures
           required before FDA approval was $26.5 million, to be incurred over 8
           to 10 years.

       o   Future cash flows were estimated based on estimated market size, with
           costs determined based on industry norms, an estimated annual growth
           rate of 3%.

       o   The cash flows were discounted at 25%. The rate was preferred due to
           the high-risk nature of the biopharmaceutical business.

       o   The Company is continuing to develop the technology related to five
           of the six indications.

       o   In June 1997, the Company exercised its option and entered into a
           license agreement with UCLA for the technology that it had previously
           supported.

                                      F-16

4.     PROPERTIES AND EQUIPMENT

       Property and equipment, net of accumulated depreciation at December 31
       comprise:

                                                                       2000            1999
                                                                 ---------------   -------------

     Computer equipment                                          $        61,643   $     23,951
     Office equipment                                                     34,208         32,862
     Laboratory equipment                                                103,012        103,012
     Leasehold improvements - Laboratory                                 474,294        470,094
     -------------------------------------------------------------------------------------------
                                                                         673,157        629,919
     Accumulated depreciation and amortization                          (282,336)      (183,836)
     -------------------------------------------------------------------------------------------
                                                                 $       390,821   $    446,083
     ===========================================================================================

5.     INCOME TAXES

       The components of the Company's net deferred tax asset at December 31,
       2000, 1999 and 1998 were as follows:

                                                  2000                1999               1998
                                            ------------------  ------------------  ----------------

       Net operating loss carryforwards           $ 3,886,495         $ 2,367,292       $ 1,778,246
       Amortization of intangibles                  1,468,699           1,613,942         1,759,186
       Research & development credits                 191,358             235,310           144,310
       Other                                           60,993              38,794            16,594
                                            ------------------  ------------------  ----------------
                                                    5,607,545           4,255,338         3,698,336
       Valuation allowance                         (5,607,545)         (4,255,338)       (3,698,336)
                                            ------------------  ------------------  ----------------

                                                  $         -         $         -       $         -
                                            ------------------  ------------------  ----------------

       The Company has no current tax provision due to its accumulated losses,
       which result in net operating loss carryforwards. At December 31, 2000,
       the Company had approximately $10,500,000 of net operating loss
       carryforwards that are available to reduce future taxable income for a
       period of up to 20 years. The net operating loss carryforwards expire in
       the years 2011-2020. The net operating loss carryforwards as well as
       amortization of various intangibles, principally acquired in-process
       research and development, generate deferred tax benefits, which have been
       recorded as deferred tax assets and are entirely offset by a tax
       valuation allowance. The valuation allowance has been provided at 100% to
       reduce the deferred tax assets to zero, the amount management believes is
       more likely than not to be realized. Additionally, the Company has
       approximately $191,000 of research and development credits available to
       reduce future income taxes through the year 2014.

                                      F-17

5.     INCOME TAXES  (CONTINUED)

       The provision for income taxes differs from the amount computed by
       applying the statutory federal income tax rate of 34% to pre-tax income
       as follows:

                                                        2000                 1999                1998
                                                  ------------------   -----------------  ------------------

       Tax at U.S. federal statutory rate             $ (1,160,388)        $  (469,799)         $  (904,201)
       State taxes, net of federal benefit                (195,854)            (91,015)             (90,810)
       Change in valuation allowance                     1,352,207             556,972              986,730
       Other, net                                            4,035               3,842                8,281
                                                  ------------------   -----------------  ------------------

                                                      $          -         $         -           $        -
                                                  ==================   =================  ==================

6.     CONVERTIBLE DEBENTURE

       In September 2000, in connection with entering into a sub-license
       agreement, the Company issued a convertible debenture to Paladin Labs
       Inc. ("Paladin") in the face amount of $500,000. The debenture does not
       bear interest and is due September 1, 2001, unless converted into shares
       of the Company's common stock. If the debenture is not converted and not
       paid in full by September 1, 2001, then any unpaid principal shall bear
       interest at a rate of 10 percent from September 1, 2001 forward, until
       paid in full. The debenture is convertible at the conversion price of
       $1.05 per share, subject to adjustment in certain situations, at the
       option of Paladin at anytime after January 1, 2001. The Company can
       declare the debenture mandatorily convertible in full at any time after
       March 31, 2001 if Paladin has not previously converted the debenture.

7.     STOCKHOLDERS' EQUITY

       By articles of amendment dated July 20, 1999 (effective as of July 13,
       1999), the subordinate voting shares of the Company were redesignated as
       common stock, the Class A special shares were reclassified as Class C
       special shares and the Class B special shares were eliminated. There were
       no changes in the number of shares outstanding.

       a)    AUTHORIZED

             PREFERENCE SHARES

             An unlimited number of preference shares issuable in series subject
             to limitation, rights, and privileges as determined by the
             directors. No preference shares have been issued as of December 31,
             2000.

                                      F-18

7.     STOCKHOLDERS' EQUITY  (CONTINUED)

              SPECIAL SHARES

              An unlimited number of Class C special shares without par value,
              convertible to common stock on the basis of one Class C special
              share and U.S. $0.25. These shares are not entitled to a dividend
              and carry one vote per share.

              COMMON STOCK

              An unlimited number of common shares of stock without par value,
              which carry one vote per share.

              SIGNIFICANT EQUITY TRANSACTIONS

              Significant equity transactions since the date of the Company's
              incorporation are as follows:

               o    -Prior to the Amalgamation on December 6, 1996, the Company
                    issued 20,000,000 shares of the Company's Class A stock for
                    $0.0001 per share, 4,150,000 shares of Class C stock for
                    $0.0001 per share and 4,100,000 shares of the Company's
                    common stock for $1.00 per share.
               o    -Pursuant to the shareholders meeting to approve the
                    arrangement held on November 27, 1996 and the subsequent
                    filing of articles of arrangement on December 6, 1996, the
                    Company completed the acquisition of 100% of the outstanding
                    shares of SBI. Upon the effectiveness of this Amalgamation,
                    the then existing stockholders of SBI received 7,434,322
                    shares of common stock of the Company (1 common share of the
                    Company for every 3 1/2 shares of SBI). The deemed fair
                    market value of this stock was $4,545,563.
               o    -In May 1998, the Company and Avi Ben-Abraham, M.D., a
                    director and a founder of the Company and the Company's then
                    Chief Executive Officer and Chairman of the Board, entered
                    into an agreement pursuant to which Dr. Ben-Abraham would
                    relinquish his executive position and remain as a director
                    of the Company. Pursuant to the agreement, Dr. Ben-Abraham
                    converted shares of the Company's Class A stock held by him
                    into 15,000,000 shares of common stock at $0.25 per share
                    for proceeds to the Company of $3,750,000. In addition, Dr.
                    Ben-Abraham agreed to return to the Company 1,468,614 shares
                    of Class A stock and 250,000 shares of Class C stock to the
                    Company, and also agreed not to sell any of his shares of
                    common stock or any other securities of the Company for a
                    period of 15 months. The Company and Dr. Ben-Abraham agreed
                    to cross-indemnify each other upon the occurrence of certain
                    events.
               o    -In June 1998, the Company issued an aggregate of 2,000,000
                    shares of common stock pursuant to the conversion of Class A
                    stock at a conversion price of $0.25 per share.

                                      F-19

7.     STOCKHOLDERS' EQUITY  (CONTINUED)

              o      -On May 6, 1999, the Company sold an aggregate of
                     23,125,000 common shares and warrants to purchase
                     11,562,500 shares of common stock at an exercise price of
                     $0.30 per share to 31 accredited investors in a private
                     placement, including several current members of the board
                     of directors and one executive officer. Net proceeds to the
                     Company from this private placement were approximately $4.2
                     million.

              o      -In August 1999, an outstanding liability of $25,000 was
                     converted into 70,000 shares of common stock.

              o      -In July 2000, 190,076 shares of common stock were issued
                     to certain corporate officers in lieu of a cash bonus.

       b)     WARRANTS

             The Company, upon the acquisition of SBI, assumed 2,577,129
             exercisable warrants to purchase common stock, all of which expired
             prior to or as of December 31, 1998. Of this amount, 72,571 were
             exercised in 1997 prior to their expiration.

             Pursuant to the Company's private placement financing in May 1999,
             warrants to purchase an aggregate of 11,562,500 shares of common
             stock were issued at an exercise price of $0.30 per share with a
             term of five years. These warrants remain outstanding and are all
             exercisable as of December 31, 2000.

             In June 2000, a five-year warrant to purchase 250,000 shares of
             common stock at an exercise price of $0.88 was issued to a
             communications firm for various consulting services. The warrant
             vests quarterly over the first year. As of December 31, 2000,
             125,000 of these shares were exercisable. The Company recognized
             expense in 2000 of approximately $18,000 for this warrant grant,
             and will recognize a similar amount in 2001.

                                      F-20

8.     STOCK OPTIONS

       The Company has a stock option plan for certain officers, directors and
       employees whereby 7,000,000 shares of common stock have been reserved for
       issuance. Options for 5,263,125 shares of common stock have been granted
       as of December 31, 2000 at prices equal to either the ten-day weighted
       average closing price, or the closing price of the stock at the date of
       the grant, and are exercisable and vest in a range substantially over a
       three-year period. The options expire either in five or ten years from
       the date of the grants.

       The Company applies APB Opinion No. 25 and related interpretations in
       accounting for its plan. Accordingly, no compensation cost has been
       recognized for the plan. Had the compensation cost for the Company's plan
       been determined based on the fair value of the awards under the plan
       consistent with the method of SFAS No. 123 the Company's net loss,
       cumulative net loss, and basic net loss per common share would have been
       increased to the pro forma amounts indicated below:

                                                                2000               1999                1998
                                                           ---------------    ---------------     -------------
                                                                                         
      Net loss
         As reported                                        $(3,437,195)        $(1,406,259)       $(2,659,415)
         Pro forma                                          $(3,960,210)        $(1,713,693)       $(2,771,391)

      Basic and diluted net loss per share
         As reported                                          $ (0.06)             $ (0.03)          $ (0.08)
         Pro forma                                            $ (0.07)             $ (0.03)          $ (0.08)

      Cumulative net loss
         As reported                                        $(15,639,672)              --                --
         Pro forma                                          $(16,817,160)              --                --

      Cumulative basic and diluted net loss per share
         As reported                                          $ (0.36)                 --                --
         Pro forma                                            $ (0.39)                 --                --

                                      F-21

8.     STOCK OPTIONS  (CONTINUED)

       The weighted average fair value of the options at the date of the grant
       for options granted during 2000, 1999 and 1998 was $0.90, $0.33 and $0.44
       was estimated using the Cox Rubinstein binomial model and the
       Black-Scholes option-pricing model with following weighted average
       assumptions:

                                                         2000             1999            1998
                                                    -------------    -------------   ------------
                                                                            
      Expected option life (years)                       10                5               5
      Risk free interest rate                             6.03%            4.59%           5.05%
      Expected stock price volatility                   157.06%          238.08%         350.00%
      Dividend yield                                      -                -               -

       The following table summarizes the Company's stock option activity:

                                             Weighted                        Weighted                            Weighted
                                             Average                         Average                             Average
                                             Exercise                        Exercise                            Exercise
                               2000            Price            1999           Price             1998              Price
                            -----------     -----------      -----------     -----------      -----------       -----------
                                                                                              
Options outstanding,
   Beginning of period        4,973,125        $   0.30        2,465,000        $   0.37          250,000        $   1.07
Options granted                 510,000        $   0.91        3,068,125        $   0.24        2,225,000        $   0.29
Options cancelled/expired      (220,000)       $   1.00         (560,000)       $   0.31          (10,000)       $   0.29
Options exercised                     -        $      -                -        $      -                -        $   -
                            -----------                      -----------                       ----------
Options outstanding,
   End of period              5,263,125        $   0.33        4,973,125        $   0.30        2,465,000        $   0.37
                            -----------     -----------      -----------     -----------      -----------       -----------
Options exercisable,
   End of year                3,865,025        $   0.28        2,117,113        $   0.35          674,500        $   0.60
                            -----------     -----------      -----------     -----------      -----------       -----------

                                      F-22

8.     STOCK OPTIONS  (CONTINUED)

       The following table summarizes information about stock options
       outstanding at December 31, 2000:

                                     Outstanding Options                             Options Exercisable
                        -------------------------------------------------     --------------------------------
        Range of                         Weighted Avg.       Weighted Avg.                    Weighted Avg.
        Exercise          Number           Remaining          Exercise          Number           Exercise
         Prices         Outstanding     Contractual Life        Price         Outstanding         Price
     --------------     -----------     ----------------     ------------    -------------    -------------
                                                                                  
         $0.23            2,378,125       3.2 YEARS            $   0.23       1,680,692          $   0.23
     $0.28 - $0.29        2,325,000       3.1 YEARS            $   0.28       2,046,833          $   0.28
     $0.75 - $1.04          560,000       9.4 YEARS            $   0.92         137,500          $   0.96
                         -----------                                         -----------
                          5,263,125                                           3,865,025
                         ===========                                         ===========

9.     RETIREMENT PLAN

       In July 1998, the Company began offering a discretionary 401(k) Plan (the
       Plan) to all of its employees. Under the Plan, employees may defer income
       on a tax-exempt basis, subject to IRS limitation. Under the Plan the
       Company can make discretionary matching contributions. Company
       contributions expensed in 2000, 1999 and 1998 totaled $26,296, $23,899
       and $21,799, respectively.

10.    LEASE ARRANGEMENTS

       The Company has entered into lease commitments for rental of its office
       space and laboratory facilities. The future minimum lease payments are:

                                                       
                          2001                            $    89,401
                          2002                                 68,254
                          2003                                 57,239
                          THEREAFTER                              -
- ----------------------------------------------------------------------------
                                                          $   214,894
============================================================================

       Rent expense amounted to $82,069, $89,110 and $134,788 for the years
       ended December 31, 2000, 1999 and 1998, respectively. Effective September
       16, 1999, the Company entered into a sublease agreement for its Atlanta
       office space under which the Company receives approximately $3,400 per
       month from the sub-tenant through September 14, 2002.

                                      F-23

11.    RELATED PARTY TRANSACTIONS

                                                                                2000         1999          1998
                                                                           -----------  ------------   -----------
                                                                                             
      Management fees paid to a company controlled
         by a former member of management, who was also a shareholder
         and was a member of the Board of Directors                        $       -     $       -     $   94,200

       Included in current liabilities are $379, $5,588, and $133,901 which
       represent amounts due to directors and officers of the Company as of
       December 31, 2000, 1999 and 1998, respectively.

       Prior to the Amalgamation on December 6, 1996, the Company issued
       20,000,000 shares of class A stock and 4,150,000 shares of class C stock
       for $0.0001 per shares. 17,000,000 of the class A shares were sold to a
       director of the Company. 1,050,000 of the class C shares were sold to the
       same director of the Company to be held by him in trust for the benefit
       of others; 500,000 of the class C shares were sold to a separate company
       controlled by a then officer of the Company; and 2,000,000 of the class C
       shares were sold to other directors of the Company.

       The 20,000,000 class A shares and 4,150,000 class C shares were founder's
       shares and the terms under the authorization of these shares, provided
       for their conversion to common stock at $0.25 per share.

       In May 1998, the Company and Avi Ben-Abraham, M.D., a director and a
       founder of the Company and the Company's then Chief Executive Officer and
       Chairman of the Board, entered into an agreement pursuant to which Dr.
       Ben-Abraham would relinquish his executive position and remain as a
       director of the Company. See Note 7.

       In connection with the May 1999 private placement of 23,125,000 shares of
       common stock and warrants to purchase 11,562,500 shares of common stock,
       the Company's Chief Executive Officer purchased 250,000 shares of the
       common stock sold and warrants to purchase 125,000 shares of common
       stock. Three other individuals, who purchased either individually or
       through affiliated entities, an aggregate 10,250,000 shares of common
       stock and warrants to purchase 5,125,000 shares of common stock, became
       directors of the Company upon their acquisition of the shares or sometime
       later.

                                      F-24

12.    COMMITMENTS

       UNIVERSITY OF CALIFORNIA LICENSE

       The Company's license agreement with the University of California
       requires it to undertake various obligations, including:

       o   Payment of royalties to the University based on a percentage of the
           net sales of any products incorporating the licensed technology;

       o   Payment of minimum annual royalties on February 28 of each year
           beginning in the year 2004 in the amounts set forth below, to be
           credited against earned royalties, for the life of the agreement
           (2013);

                                                             Minimum
                                    Year                  Annual Royalty
                                                               Due
                          -------------------------     -------------------

                                    2004                  $       50,000
                                    2005                         100,000
                                    2006                         150,000
                                    2007                         200,000
                                    2008                         400,000
                                    2009                         600,000
                                    2010                         800,000
                                    2011                       1,500,000
                                    2012                       1,500,000
                                    2013                       1,500,000

       o   Development of products incorporating the licensed technology until
           a product is introduced to the market;

       o   Payment of the costs of patent prosecution and maintenance of the
           patents included in the agreement which for the year ended December
           31, 2000 have amounted to $11,722 and which management estimates will
           equal approximately $15,000 per year;

                                      F-25

12.    COMMITMENTS (CONTINUED)

      o     Meeting performance milestones relating to:

            -     Hiring or contracting with personnel to perform research and
                  development, regulatory and other activities relating to the
                  commercial launch of a proposed product;

            -     Testing proposed products;

            -     Obtaining government approvals;

            -     Conducting clinical trials; and

            -     Introducing products incorporating the licensed technology
                  into the market.

      o     Entering into partnership or alliance arrangements or agreements
            with other entities regarding commercialization of the technology
            covered by the license.

      o     The Company has agreed to indemnify, hold harmless and defend the
            University of California and its affiliates, as designated in the
            license agreement, against any and all claims, suits, losses,
            damage, costs, fees and expenses resulting from or arising out of
            exercise of the license agreement, including but not limited to, any
            product liability claims.

       ANTARES PHARMA, INC. LICENSE

       The Company's license agreement with Antares Pharma, Inc. (formerly known
       as Permatec Technologie, AG) required the Company to make a $1.0 million
       upfront payment to Antares. The Company expects to fund the development
       of the products, make milestone payments and once regulatory approval to
       market is received, pay royalties on the sales of products.

       The Company's sub-license agreement (of the Antares license) with Paladin
       Labs Inc. required Paladin to make an initial investment in the Company
       of $500,000 in the form of a convertible debenture. Paladin will also
       make milestone payments to the Company in the form of a series of equity
       investments at a 10 percent premium to the Company's market price at the
       time the equity investment is made. In addition, Paladin will pay the
       Company a royalty on sales of the sub-licensed products.

                                      F-26

                                25,437,500 SHARES

                         [BIOSANTE PHARMACEUTICALS LOGO]

                                  COMMON STOCK

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

                                   PROSPECTUS

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

                                         , 2001

                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 24.  INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Delaware General Corporate Law and our certificate of incorporation provide that
we will, under some situations, indemnify any director, officer, employee or
agent of our company made or threatened to be made a party to a proceeding, by
reason of the former or present official capacity of the person, against
judgments, penalties, fines, settlements and reasonable expenses including
attorney's fees, incurred by the person in connection with the proceeding if
specified statutory standards are met. Any person also is entitled, subject to
some limitations, to payment or reimbursement of reasonable expenses in advance
of the final disposition of the proceeding. A proceeding means a threatened,
pending or completed civil, criminal, administrative, arbitration or
investigative proceeding, including one by or in the right of our company.
Reference is made to Section 145 of the Delaware General Corporate Law for a
full statement of these indemnification rights.

We also maintain a directors and officers insurance policy pursuant to which our
directors and officers are insured against liability for actions in their
capacity as directors and officers.

ITEM 25.  OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

         The following table sets forth the costs and expenses payable by
BioSante in connection with the issuance and distribution of the Shares being
registered. All such expenses are estimated except for the SEC registration fee.

                                                                                         
         SEC registration fee...........................................................    $        5,088
         Printing expenses..............................................................             1,000
         Fees and expenses of counsel for BioSante......................................            40,000
         Fees and expenses of accountants for BioSante..................................             8,000
         Blue sky fees and expenses.....................................................            10,000
         Miscellaneous..................................................................            10,000
                                                                                            --------------

                  *Total................................................................    $       74,088
                                                                                            ==============

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

*        None of the expenses listed above will be borne by the Selling
         Stockholders.

ITEM 26.  RECENT SALES OF UNREGISTERED SECURITIES.

         Since January 1, 1997, BioSante has issued the following securities
without registration under the Securities Act:

1.       In January 1997, we issued: (1) an aggregate of 24,000 shares of
         common stock pursuant to the exercise of warrants issued prior to the
         Amalgamation, at an exercise price of $1.53 per share, for an aggregate
         payment of $36,720; (2) 377,135 shares of common stock (94,285 of such
         shares to Wagner-Bartak Holdings Inc. and 282,850 of such shares to an
         unaffiliated accredited investor) pursuant to the conversion of an
         aggregate of 377,135 class C stock, at a conversion price of $0.25 per
         share, for an aggregate payment of $94,283.75 to us; and (3) an
         aggregate of 28,571 shares of common stock pursuant to the exercise of
         warrants issued prior to the Amalgamation, at an exercise price of
         $1.28 per share, for an aggregate payment of $36,570.88.

                                      II-1

2.       In July 1997, we issued an aggregate of 20,000 shares of common stock
         pursuant to the exercise of warrants issued prior to the Amalgamation,
         at an exercise price of $1.28 per share for an aggregate payment of
         $25,500.

3.       In December 1997, we issued an aggregate of 206,386 shares of common
         stock (106,386 of such shares to Wagner-Bartak Holdings Inc. and
         100,000 of such shares to Marblegate Holdings Limited) pursuant to the
         conversion of an aggregate of 206,386 class C stock at a conversion
         price of $0.25 per share for an aggregate payment of $51,596.50.

4.       In March 1998, we issued 30,000 shares of common stock to one
         accredited investor pursuant to the conversion of class C stock, at a
         conversion price of $0.25 per share for an aggregate payment of $7,500.

5.       In May 1998, we issued 15,000,000 shares of common stock to Dr.
         Ben-Abraham pursuant to his conversion of class A stock at a conversion
         price of $0.25 per share for a payment of $3,750,000. In addition, Dr.
         Ben-Abraham returned 1,468,614 class A stock and 250,000 class C stock
         to our treasury for no consideration.

6.       In June 1998, we issued an aggregate of 2,000,000 shares of common
         stock pursuant to the conversion of class A stock to two accredited
         investors, at a conversion price of $0.25 per share for an aggregate
         payment of $500,000.

7.       In February 1999, we issued 10,000 shares of common stock to an
         accredited investor pursuant to the conversion of class C stock, at a
         conversion price of $0.25 per share, which was satisfied by the
         settlement of claims.

8.       In May 1999, we issued an aggregate of 23,125,000 shares of common
         stock and warrants to purchase 11,562,500 shares of common stock at an
         exercise price of $0.30 per share to 31 accredited investors pursuant
         to a private placement of our stock for an aggregate payment of
         $4,372,500. Stephen Simes purchased 250,000 shares of common stock,
         Victor Morgenstern, including an affiliated Trust and a Partnership,
         purchased an aggregate of 2,500,000 shares of common stock, Fred
         Holubow purchased 250,000 shares of common stock and JO & Co. purchased
         7,500,000 shares of common stock to which Ross Mangano has sole voting
         power.

9.       In August 1999, an outstanding liability of $25,000 was converted into
         70,000 shares of common stock to an accredited investor at
         approximately $.36 per share for executive placement services.

10.      In March and June 2000, we issued 91,840 shares of common stock to
         accredited investors pursuant to the conversion of Class C stock, at a
         conversion price of $0.25 per share for an aggregate payment of
         $22,960.

11.      In September 2000, we issued a $500,000 convertible debenture to
         Paladin Labs, Inc.

12.      In July 2000, we issued an aggregate of 190,076 shares of common stock
         (163,859 shares to Stephen Simes and 26,217 shares to Phillip
         Donenberg) pursuant to the granting of common stock bonuses, in lieu of
         cash valued at $58,000.

13.      In July 2000, we issued 28,341 shares of common stock to an accredited
         investor pursuant to the conversion of Class C stock, at a conversion
         price of $0.25 per share for a payment of $7,085.25.

                                      II-2

14.      In April 2001, we issued an aggregate of 9,250,000 shares of our
         common stock and warrants to purchase an aggregate of 4,625,000 shares
         of our common stock for $0.40 per unit, each unit consisting of one
         share of common stock and a warrant to purchase 0.50 shares of our
         common stock, for an aggregate purchase price of $3,700,000, to 49
         accredited investors, including certain existing stockholders,
         directors and officers. Stephen Simes purchased 125,000 shares of
         common stock and a warrant to purchase 62,500 shares of common stock,
         Leah Lehman purchased 375,000 shares of common stock and a warrant to
         purchase 187,500 shares of common stock, Fred Holubow purchased 125,000
         shares of common stock and a warrant to purchase 62,500 shares of
         common stock, Victor Morgenstern, including an affiliated trust and his
         wife, purchased an aggregate of 750,000 shares of common stock and
         warrants to purchase an aggregate of 375,000 shares of common stock,
         Phillip Donenberg and John Lee, each purchased 12,500 shares of common
         stock and a warrant to purchase 6,250 shares of common stock, Steve
         Bell purchased 3,750 shares of common stock and a warrant to purchase
         1,875 shares of common stock, and Ross Mangano, as a trustee and
         investment advisor purchased an aggregate of 2,250,001 shares of common
         stock and warrant to purchase an aggregate of 1,124,999 shares of
         common stock.

         No underwriting commissions or discounts were paid with respect to the
sales of the unregistered securities described above. In addition, all of the
above sales were made in reliance on either Section 4(2) of the Securities Act
as transactions by an issuer not involving any public offering or Regulation D
of the Securities Act. In all such transactions, certain inquiries were made by
BioSante to establish that such sales qualified for such exemption from the
registration requirements. In particular, BioSante confirmed that with respect
to the exemption claimed under Section 4(2) of the Securities Act (i) all offers
of sales and sales were made by personal contact from officers and directors of
BioSante or other persons closely associated with BioSante, (ii) each investor
made representations that he or she was sophisticated in relation to this
investment (and BioSante has no reason to believe that such representations were
incorrect), (iii) each purchaser gave assurance of investment intent and the
certificates for the shares bear a legend accordingly, and (iv) offers and sales
within any offering were made to a limited number of persons.

ITEM 28.  UNDERTAKINGS.

(a)      The undersigned Registrant hereby undertakes:

         (1)        To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:

                  (i)      To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;

                  (ii)       To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement;

                  (iii)      To include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;

         (2)        That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the

                                      II-3

securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.

         (3)        To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.

(b)        Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

                                      II-4

                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form SB-2 and authorized this registration statement
on Form SB-2 to be signed on its behalf by the undersigned, thereunto duly
authorized in City of Lincolnshire, State of Illinois.

Dated:  June 27, 2001           BIOSANTE PHARMACEUTICALS, INC.

                                By  /s/ Stephen M. Simes
                                   ---------------------------------------------
                                    Stephen M. Simes
                                    Vice Chairman, President and Chief Executive
                                    Officer

                                By  /s/ Phillip B. Donenberg
                                   ---------------------------------------------
                                    Phillip B. Donenberg
                                    Chief Financial Officer, Treasurer and
                                    Secretary

                                POWER OF ATTORNEY

Each person whose signature appears below constitutes and appoints Stephen M.
Simes and Phillip B. Donenberg, and either of them, his or her true and lawful
attorney-in-fact and agent with full powers of substitution and resubstitution,
for and in his or her name, place and stead, in any and all capacities, to sign
any or all amendments (including post-effective amendments) to this registration
statement, and to file the same, with all exhibits thereto, and other documents
in connection therewith, with the Securities and Exchange Commission, granting
unto said attorney-in-fact and agent full power and authority to do and perform
each and every act and thing requisite or necessary to be done in and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorney-in-fact and agent
or his substitute or substitutes, may lawfully do or cause to be done by virtue
thereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this
registration statement on Form SB-2 has been signed by the following persons in
the capacities indicated, on June 27, 2001.

                 NAME AND SIGNATURE                           TITLE
                 ------------------                           -----
                                         
/s/ Stephen M. Simes                        Vice Chairman, President and Chief
- --------------------------------            Executive Officer (Principal
Stephen M. Simes                            Executive Officer)

/s/ Phillip B. Donenberg                    Chief Financial Officer, Treasurer
- --------------------------------            and Secretary (Principal Financial
Phillip B. Donenberg                        and Accounting Officer)

/s/ Louis W. Sullivan, M.D.                 Chairman of the Board
- --------------------------------
Louis W. Sullivan, M.D.

                                      II-5

                                         

/s/ Edward C. Rosenow, III, M.D.            Director
- --------------------------------
Edward C. Rosenow, III, M.D.

/s/ Victor Morgenstern                      Director
- --------------------------------
Victor Morgenstern

/s/ Ross Mangano                            Director
- --------------------------------
Ross Mangano

/s/ Peter Kjaer                             Director
- --------------------------------
Peter Kjaer

/s/ Fred Holubow                            Director
- --------------------------------
Fred Holubow

/s/ Angela Ho                               Director
- --------------------------------
Angela Ho

                                            Director
- --------------------------------
Avi Ben-Abraham, M.D.

                                      II-6

                         BIOSANTE PHARMACEUTICALS, INC.
                       REGISTRATION STATEMENT ON FORM SB-2
                                  EXHIBIT INDEX

EXHIBIT NO.                                      EXHIBIT                                 METHOD OF FILING
- -----------                                      -------                                 -----------------
                                                                                  
2.1                Arrangement Agreement, dated October 23, 1996, between Structured
                   Biologicals Inc. and BioSante Pharmaceuticals, Inc. ................  Incorporated by reference to
                                                                                         Exhibit 2.1 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

3.1                Amended and Restated Certificate of Incorporation of BioSante
                   Pharmaceuticals, Inc................................................  Filed herewith electronically

3.2                Bylaws of BioSante Pharmaceuticals, Inc.............................  Filed herewith electronically

4.1                Form of Warrant issued in connection with May 1999 Private
                   Placement...........................................................  Incorporated by reference to
                                                                                         Exhibit 4.1 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

4.2                Form of Warrant issued in connection with April 2001 Private
                   Placement...........................................................  Filed herewith electronically

5.1                Opinion of Oppenheimer Wolff & Donnelly LLP.........................  Filed herewith electronically

10.1               License Agreement, dated June 18, 1997, between BioSante
                   Pharmaceuticals, Inc. and The Regents of the University of
                   California (1)......................................................  Incorporated by reference to
                                                                                         Exhibit 10.1 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

                                      II-7

                                                                                  
10.2               Amendment to License Agreement, dated October 26, 1999, between
                   BioSante Pharmaceuticals, Inc. and the Regents of the University of
                   California (1)......................................................  Incorporated by reference to
                                                                                         Exhibit 10.2 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.3               Amended and Restated 1998 Stock Option Plan.........................  Filed herewith electronically

10.4               Stock Option Agreement, dated December 7, 1997,
                   between BioSante Pharmaceuticals, Inc. and Edward C. Rosenow, III,
                   M.D.................................................................  Incorporated by reference to
                                                                                         Exhibit 10.5 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.5               Stock Option Agreement, dated December 8, 1998, between BioSante
                   Pharmaceuticals, Inc. and Stephen M. Simes..........................  Incorporated by reference to
                                                                                         Exhibit 10.6 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.6               Stock Option Agreement, dated December 8, 1998, between BioSante
                   Pharmaceuticals, Inc. and Stephen M. Simes..........................  Incorporated by reference to
                                                                                         Exhibit 10.7 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.7               Stock Option Agreement, dated March 30, 1999, between BioSante
                   Pharmaceuticals, Inc. and Stephen M. Simes..........................  Incorporated by reference to
                                                                                         Exhibit 10.8 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

                                      II-8

                                                                                  
10.8               Escrow Agreement, dated December 5, 1996, among BioSante
                   Pharmaceuticals, Inc., Montreal Trust Company of Canada, as Escrow
                   Agent, and certain stockholders of BioSante Pharmaceuticals, Inc....  Incorporated by reference to
                                                                                         Exhibit 10.9 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.9               Voting Agreements, dated May 6, 1999, between BioSante
                   Pharmaceuticals, Inc., Avi Ben-Abraham, M.D. and certain
                   stockholders of BioSante Pharmaceuticals, Inc.......................  Incorporated by reference to
                                                                                         Exhibit 10.11 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.10              Shareholders'  Agreement,   dated  May  6,  1999,  between  BioSante
                   Pharmaceuticals,   Inc.,   Avi   Ben-Abraham,   M.D.   and   certain
                   stockholders of BioSante Pharmaceuticals, Inc.......................  Incorporated by reference to
                                                                                         Exhibit 10.12 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.11              Registration Rights Agreement, dated May 6, 1999, between BioSante
                   Pharmaceuticals, Inc. and certain stockholders of BioSante
                   Pharmaceuticals, Inc. ..............................................  Incorporated by reference to
                                                                                         Exhibit 10.13 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.12              Securities Purchase Agreement, dated May 6, 1999, between BioSante
                   Pharmaceuticals, Inc. and certain stockholders of BioSante
                   Pharmaceuticals, Inc. ..............................................  Incorporated by reference to
                                                                                         Exhibit 10.14 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.13              Lease, dated September 15, 1997, between BioSante Pharmaceuticals,
                   Inc. and Highlands Park Associates..................................  Incorporated by reference to
                                                                                         Exhibit 10.15 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.14              Employment Agreement, dated January 21, 1998, between
                   BioSante Pharmaceuticals, Inc. and Stephen M. Simes, as amended.....  Incorporated by reference to
                                                                                         Exhibit 10.16 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.15              Employment Agreement, dated June 11, 1998, between BioSante
                   Pharmaceuticals, Inc. and Phillip B. Donenberg, as amended..........  Incorporated by reference to
                                                                                         Exhibit 10.17 contained in
                                                                                         BioSante's Registration
                                                                                         Statement on Form 10-SB, as
                                                                                         amended
                                                                                         (File No. 0-28637)

10.16              License Agreement, dated June 13, 2000, between Permatec
                   Technologie, AG and BioSante Pharmaceuticals, Inc. (1)..............  Incorporated by reference to
                                                                                         Exhibit 10.1 contained in
                                                                                         BioSante's Current Report on
                                                                                         Form 8-K on July 11, 2000
                                                                                         (File No. 0-28637)

10.17              Supply Agreement, dated June 13, 2000, between Permatec
                   Technologie, AG and BioSante Pharmaceuticals, Inc. (1)..............  Incorporated by reference to
                                                                                         Exhibit 10.2 contained in
                                                                                         BioSante's Current Report on
                                                                                         Form 8-K on July 11, 2000
                                                                                         (File No. 0-28637)

10.18              Employment Agreement, dated August 1, 2000, between BioSante
                   Pharmaceuticals, Inc. and John E. Lee...............................  Incorporated by reference to
                                                                                         Exhibit 10.18 contained in
                                                                                         BioSante's Annual Report on
                                                                                         Form 10-KSB on March 30, 2001
                                                                                         (File No. 0-28637)

                                     II-10

                                                                                  
10.19              Employment Agreement, dated 15, 2000, between BioSante
                   Pharmaceuticals, Inc. and Leah M. Lehman, Ph.D......................  Incorporated by reference to
                                                                                         Exhibit 10.19 contained in
                                                                                         BioSante's Annual Report on
                                                                                         Form 10-KSB on March 30, 2001
                                                                                         (File No. 0-28637)

10.20              Form of Subscription Agreement in connection with the April 2001
                   Private Placement...................................................  Filed herewith electronically

23.1               Consent of Deloitte & Touche LLP....................................  Filed herewith electronically

23.2               Consent of Deloitte & Touche LLP (Cananda)..........................  Filed herewith electronically

23.3               Consent of Oppenheimer Wolff & Donnelly LLP (included in
                   Exhibit 5.1)........................................................  Filed herewith electronically

24.1               Power of Attorney (Included on page II-5)...........................  Filed herewith electronically

- ------------------------------
(1) Confidential treatment under Rule 24b-2 of the Securities Exchange Act of 1934, as amended has been granted with respect to
designated portions of this document.

                                     II-11

                                                                 Exhibit 3.1
                              AMENDED AND RESTATED
                          CERTIFICATE OF INCORPORATION
                                       OF
                         BIOSANTE PHARMACEUTICALS, INC.

         BioSante Pharmaceuticals, Inc., a Delaware corporation, hereby
certifies as follows:

         The Certificate of Incorporation of BioSante Pharmaceuticals, Inc. (the
"Corporation") was filed in the office of the Secretary of State of the State of
Delaware on April 11, 2001, and is hereby amended and restated pursuant to
Section 242 and Section 245 of the Delaware General Corporation Law. All
amendments to the Certificate of Incorporation reflected herein have been duly
proposed by the Board of Directors of the Corporation in accordance with the
provisions of such Sections.

         This amended and restated certificate of incorporation restates and
further amends and restates the certificate of incorporation of the corporation
currently on file with the secretary of state of the state of Delaware. The text
of the certificate of incorporation is hereby amended in its entirety to read as
herein set forth:

                                   ARTICLE I

         The name of the Corporation is BioSante Pharmaceuticals, Inc.

                                   ARTICLE II

         The address of its registered office in the State of Delaware is 1209
Orange Street, in the City of Wilmington, County of New Castle. The name of its
registered agent is The Corporation Trust Corporation.

                                  ARTICLE III

         The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
law of Delaware (the "DGCL").

                                   ARTICLE IV

         The aggregate number of shares of stock which the Corporation shall
have authority to issue is One Hundred Fourteen Million Six Hundred Eighty-Seven
Thousand Six Hundred Eighty-Four (114,687,684) shares, consisting of One Hundred
Million (100,000,000) shares of common stock, $0.0001 par value (the "COMMON
STOCK"), Four Million Six Hundred Eighty-Seven Thousand Six Hundred Eighty-Four
(4,687,684) shares of class C special stock, $0.0001 par value (the "CLASS C
SPECIAL STOCK"), and Ten Million (10,000,000) shares of preferred stock, $0.0001
par value (the "PREFERRED STOCK"). Shares of Preferred Stock of the Corporation
may be issued from time to time in one or more series, each of which series
shall have such distinctive designation or title and such number of shares as
shall be fixed by the Board of Directors prior to the issuance of any shares
thereof. Each such series of Preferred Stock shall have such voting powers, full
or limited, or no voting powers, and such preferences and relative,
participating,

optional or other special rights and such qualifications, limitations or
restrictions thereof, as shall be stated and expressed in the resolution or
resolutions providing for the issue of such series of Preferred
Stock as may be adopted from time to time by the Board of Directors prior to the
issuance of any shares thereof pursuant to the authority hereby expressly vested
in it. The Board of Directors is further authorized to increase or decrease (but
not below the number of shares then outstanding) the number of shares of any
series of Preferred Stock subsequent to the issuance of shares of that series.
In case the number of shares of any series shall be so decreased, the shares
constituting such decrease shall resume the status of which they had prior to
the adoption of the resolution originally fixing the number of shares of such
series. Except as provided in the resolution or resolutions of the Board of
Directors creating any series of Preferred Stock and in Section 2 of this
Article IV, the shares of Common Stock shall have the exclusive right to vote
for the election and removal of directors and for all other purposes.

         The relative rights, preferences and privileges of the Common Stock and
the Class C Special Stock shall be as follows:

          1. DIVIDEND RIGHTS

              (a) DIVIDEND RIGHTS OF COMMON STOCK

                           The holders of the Common Stock, shall be entitled to
                           receive dividends as and when declared by the
                           directors from time to time out of moneys of the
                           Corporation properly applicable to the payment of
                           dividends and the amount per share of each such
                           dividend shall be determined by the directors of the
                           Corporation at the time of declaration.

              (b) DIVIDEND RIGHTS OF CLASS C SPECIAL STOCK

                           The holders of the Class C Special Stock shall not be
                           entitled to receive any dividends.

          2. VOTING RIGHTS

              (a) VOTING OF COMMON STOCK

                           Subject to the provisions of the DGCL, the holders of
                           the Common Stock shall be entitled to receive notice
                           of and to attend all meetings of the stockholders of
                           the Corporation and shall be entitled to vote at all
                           meetings of stockholders, except meetings at which
                           only holders of another class of shares are entitled
                           to vote. Each share of Common Stock shall entitle the
                           holder thereof to one vote.

              (b) VOTING OF CLASS C SPECIAL STOCK

                           Subject to the provisions of the DGCL, the holders of
                           the Class C Special Stock shall be entitled to
                           receive notice of and to attend all meetings of the
                           stockholders of the Corporation and shall be entitled
                           to vote at all meetings of stockholders, except
                           meetings at which only holders of

                                       2

                           another class of shares are entitled to vote. Each
                           Class C share shall entitle the holder thereof to one
                           vote.

          3. PURCHASE RIGHTS

              (a) COMMON STOCK PURCHASE RIGHTS OF CLASS C SPECIAL STOCK

                           A holder of Class C Special Stock shall be entitled,
                           in accordance with the provisions hereof, to acquire
                           Common Stock of the Corporation as the same may then
                           be constituted by tendering any of the Class C
                           Special Stock held and registered in such holder's
                           name together with $0.25 per share (the "Common Stock
                           Purchase Price") on the basis of one Common Stock for
                           each share of Class C Special Stock and $0.25. The
                           purchase right herein provided shall be exercised by
                           notice in writing given to the Corporation which
                           notice shall specify the number of shares of Class C
                           Special Stock that the holder desires to have applied
                           to the purchase price of Common Stock. If any shares
                           of Class C Special Stock are applied to the purchase
                           of Common Stock pursuant to this paragraph, the
                           holder of such shares of Class C Special Stock shall
                           surrender the certificate or certificates
                           representing the shares of Class C Special Stock so
                           applied to the registered office of the Corporation,
                           or to the transfer agent of the Corporation at the
                           time of purchase together with cash or a certified
                           cheque in the amount of $0.25 per share of Common
                           Stock being acquired, and the Corporation shall
                           thereupon issue to such holder certificates
                           representing the number of shares of Common Stock to
                           which the holder became entitled upon such purchase.

          4. ADJUSTMENT OF PURCHASE RIGHTS AND CONVERSION RIGHTS

              (a)          In case of any reclassification or redesignation of
                           the Common Stock (hereinafter referred to in this
                           subsection 4(a) as the "Shares") or change of the
                           Shares into other shares, or in case of the
                           consolidation, amalgamation or merger of the
                           Corporation with or into any other body corporate
                           (other than a consolidation, amalgamation or merger
                           which does not result in any reclassification or
                           redesignation of the outstanding Shares or a change
                           of the Shares into other shares), or in the case of
                           any transfer of the undertaking or assets of the
                           Corporation as an entirety or substantially as an
                           entirety to another corporation, the holder of any
                           shares of Class C Special Stock who thereafter shall
                           exercise such holder's right to purchase Shares
                           pursuant to Section 3 hereof shall be entitled to
                           receive, and shall accept, in lieu of the number of
                           Shares to which such holder was theretofore entitled
                           upon such exercise of such right to purchase or
                           convert, as the case may be, the kind and amount of
                           Shares which such holder would have been entitled to
                           receive as a result of such reclassification,
                           redesignation, change, consolidation, amalgamation,
                           merger or transfer if, on the effective date thereof,
                           such holder had been the registered holder of the
                           number of Shares to which such holder was

                                       3

                           theretofore entitled upon exercising such holder's
                           right to purchase or convert, as the case may be. The
                           subdivision or consolidation of Shares at anytime
                           outstanding into a greater or lesser number of Shares
                           shall be deemed not to be a reclassification of the
                           capital of the Corporation for the purposes of this
                           paragraph 4(a).

              (b)          If and whenever the Shares shall be subdivided into a
                           greater or consolidated into a lesser number of
                           Shares, or the Corporation shall issue Shares (or
                           securities exchangeable for or convertible into
                           Shares) to the holders of all or substantially all of
                           the outstanding Shares by way of a dividend or other
                           distribution of Shares (or securities exchangeable
                           for or convertible into Shares), any holder of shares
                           of Class C Special Stock who has not exercised such
                           holder's right of purchase pursuant to Section 3
                           hereof on or prior to the effective date or record
                           date, as the case may be of such subdivision,
                           consolidation, dividend or other distribution, upon
                           the exercise of such right thereafter, shall be
                           entitled to receive, and shall accept, in lieu of the
                           number of Shares to which such holder was theretofore
                           entitled upon such exercise of such right to purchase
                           or convert (and, in the case of a purchase of Shares
                           pursuant to Section 3 hereto, at the Common Stock
                           Purchase Price adjusted in accordance with subsection
                           5(a) hereof), the aggregate number of Shares that
                           such holder would have been entitled to receive as a
                           result of such subdivision, consolidation, dividend
                           or other distribution as if, on such record date or
                           effective date, as the case may be, such holder had
                           been the registered holder of the number of Shares to
                           which such holder was theretofore entitled upon such
                           exercise of such right to purchase or convert, as the
                           case may be.

          5. ADJUSTMENT OF PURCHASE PRICE

                           If the Corporation shall:

                           (a)      subdivide its outstanding Common Stock
                                    (hereinafter referred to in this paragraph 5
                                    as the "Shares") into a greater number of
                                    shares,

                           (b)      consolidate the outstanding Shares into a
                                    lesser number of shares, or

                           (c)      issue Shares or securities exchangeable for
                                    or convertible into Shares ("convertible
                                    securities") to the holders of all or
                                    substantially all of the outstanding Shares
                                    by way of a dividend or distribution of
                                    Shares or securities convertible into Shares
                                    (other than the issue of Shares or
                                    convertible securities as dividends paid in
                                    the ordinary course),

                           the Common Stock Purchase Price shall, on the
                           effective date of such subdivision or consolidation
                           or on the record date of such dividend or other
                           distribution, as the case may be, be adjusted by
                           multiplying the

                                       4

                           Common Stock Purchase Price in effect immediately
                           prior to such subdivision, consolidation, dividend or
                           other distribution by a fraction, the numerator of
                           which is the number of outstanding Shares before
                           giving effect to such subdivision, consolidation or
                           stock dividend and the denominator of which is the
                           number of outstanding Shares after giving effect to
                           such subdivision, consolidation, dividend or other
                           distribution (including in the case where convertible
                           securities are distributed, the number of Shares that
                           would have been outstanding had such securities been
                           exchanged for or converted into Shares on such record
                           date). Such adjustment shall be made successively
                           whenever any event referred to in this Section 5
                           shall occur.

           6.  DISTRIBUTION RIGHTS ON LIQUIDATION

                  If the Corporation is liquidated, dissolved or wound-up or its
                  assets are otherwise distributed among the stockholders by way
                  of repayment of capital, whether voluntary or involuntary and
                  subject to the rights, privileges, and conditions attaching to
                  any series of preference shares of the Corporation:

                  (a)      the holders of the Common Stock shall be entitled to
                           share, equally share for share, in the distribution
                           of the remaining assets of the Corporation; and

                  (b)      the holders of the Class C Special Stock shall not be
                           entitled to share in the remaining assets of the
                           Corporation.

                                   ARTICLE V

         In furtherance and not in limitation of the powers conferred by
statute, the Board of Directors is expressly authorized to adopt, amend or
repeal the bylaws of the Corporation, subject to the voting rights of any series
of Preferred Stock.

                                   ARTICLE VI

         The Corporation shall indemnify, to the fullest extent authorized or
permitted by law, as the same exists or may hereafter be amended, any person who
was or is made or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Corporation), by
reason of the fact that such person is or was a director or officer of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee or agent of any other company, partnership, limited
liability company, joint venture, trust, employee benefit plan or other
enterprise; provided, however, that the Corporation shall not indemnify any
director or officer in connection with any action by such director or officer
against the Corporation unless the Corporation shall have consented to such
action. The Corporation may, to the extent authorized from time to time by the
Board of Directors, provide rights to indemnification to employees and agents of
the Corporation similar to those conferred in this Article VI to directors and
officers of the Corporation. No amendment or repeal of this

                                       5

Article VI shall apply to or have any effect on any right to indemnification
provided hereunder with respect to any acts or omission occurring prior to such
amendment or repeal.

                                  ARTICLE VII

         No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages for any breach of fiduciary
duty by such a director as a director, except to the extent provided by
applicable law (i) for any breach of the director's duty of loyalty to the
Corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the General Corporation Law of Delaware, or (iv) for
any transaction from which such director derived an improper personal benefit.
If the General Corporation Law of Delaware is amended to authorize corporate
action further eliminating or limiting the personal liability of directors, then
the liability of a director of the Corporation shall be eliminated or limited to
the fullest extent permitted by the General Corporation Law of Delaware as so
amended. No amendment to or repeal of this Article VII shall apply to or have
any effect on the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such director
occurring prior to such amendment or repeal.

                                  ARTICLE VIII

         The Corporation reserves the right to amend, alter, change, or repeal
any provisions contained in this Certificate of Incorporation in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.

                                   ARTICLE IX

          Elections of directors need not be by written ballot unless the bylaws
  of the Corporation shall so provide.

         IN WITNESS WHEREOF, the undersigned signatures shall constitute the
affirmation or acknowledgment of the signatory, under penalties of perjury, that
the instrument is the signatory's act and deed and that the facts stated herein
are true.

Dated: June 26, 2001      BIOSANTE PHARMACEUTICALS, INC.,

                          By:      /s/ STEPHEN M. SIMES
                             --------------------------------------------------
                                   Stephen M. Simes
                          Its:     President and Chief Executive Officer

ATTEST:

By:      /s/ PHILLIP B. DONENBERG
   ---------------------------------
         Phillip B. Donenberg
Its:     Secretary

                                    6

                                                                 Exhibit 3.2

                                     BYLAWS
                                       OF
                         BIOSANTE PHARMACEUTICALS, INC.
                             A DELAWARE CORPORATION
                               (the "Corporation")

                                   ARTICLE I.
                                     OFFICES

         SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State of Delaware.

         SECTION 2. OTHER OFFICES. The Corporation may also have offices at such
other places both within and without the State of Delaware as the Board of
Directors may from time to time determine.

                                   ARTICLE II.
                            MEETINGS OF STOCKHOLDERS

         SECTION 1. PLACE OF MEETINGS. Meetings of the stockholders for the
election of directors or for any other purpose shall be held at such time and
place, either within or without the State of Delaware as shall be designated
from time to time by the Board of Directors and stated in the notice of the
meeting or in a duly executed waiver of notice thereof.

         SECTION 2. ANNUAL MEETINGS. The annual meetings of stockholders shall
be held on such date and at such time as shall be designated from time to time
by the Board of Directors and stated in the notice of the meeting, at which
meetings the stockholders shall elect by a plurality vote a Board of Directors,
and transact such other business as may properly be brought before the meeting.

         SECTION 3. SPECIAL MEETINGS. Unless otherwise prescribed by law or by
the Certificate of Incorporation, special meetings of stockholders, for any
purpose or purposes, may be called by either (i) the Chairman, if there be one,
(ii) the President and Chief Executive Officer, (iii) the Chief Financial
Officer, or (iv) the Board of Directors. Such request shall state the purpose or
purposes of the proposed meeting. At a special meeting no business shall be
transacted and no corporate action shall be taken other than that stated in the
notice of the meeting.

         SECTION 4. NOTICE. Written or printed notice of every annual or special
meeting of the stockholders, stating the place, date, time, and, in the case of
special meetings, the purpose or purposes, of such meeting, shall be given to
each stockholder entitled to vote at such meeting not less than ten (10), nor
more than sixty (60), days before the date of the meeting.

         SECTION 5. QUORUM AND ADJOURNMENT. Except as otherwise provided by law
or by the Certificate of Incorporation, the holders of a majority of the capital
stock issued and outstanding and entitled to vote thereat, present in person or
represented by proxy, shall constitute a quorum at all meetings of the
stockholders for the transaction of business. If,

however, such quorum shall not be present or represented at any meeting of the
stockholders, the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from time to time,
without notice other than announcement at the meeting, until a quorum shall be
present or represented. At such adjourned meeting at which a quorum shall be
present or represented, any business may be transacted which might have been
transacted at the meeting as originally noticed.

         SECTION 6. VOTING. Unless otherwise required by law, the Certificate of
Incorporation or these Bylaws, any question brought before any meeting of
stockholders shall be decided by the vote of the holders of a majority of the
stock represented and entitled to vote. Each stockholder represented at a
meeting of stockholders shall be entitled to cast one (1) vote for each share of
the capital stock entitled to vote held by such stockholder, except as provided
in the Certificate of Incorporation or a resolution of the Board of Directors
fixing rights and preferences of a class or series established by the Board of
Directors. Such votes may be cast in person or by proxy but no proxy shall be
voted on or after three (3) years from its date, unless such proxy provides for
a longer period. The Board of Directors, in its discretion, or the officer of
the Corporation presiding at a meeting of stockholders, in his or her
discretion, may require that any votes cast at such meeting shall be cast by
written ballot.

         SECTION 7. RECORD DATE OF STOCKHOLDERS. The Board of Directors is
authorized to fix in advance a date not exceeding sixty (60) days nor less than
ten (10) days preceding the date of any meeting of stockholders, or the date for
the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining the consent of stockholders for
any purposes, as a record date for the determination of the stockholders
entitled to notice of, and to vote at, any such meeting, and any adjournment
thereof, or entitled to receive payment of any such dividend, or to any such
allotment of rights, or to exercise the rights in respect of any such change,
conversion or exchange of capital stock, or to give such consent, and, in such
case, such stockholders and only such stockholders as shall be stockholders of
record on the date so fixed shall be entitled to such notice of, and to vote at,
such meeting, and any adjournment thereof, or to receive payment of such
dividend, or to receive such allotment of rights, or to exercise such rights, or
to give such consent, as the case may be, notwithstanding any transfer of any
stock on the books of the Corporation, after such record date fixed as
aforesaid.

         SECTION 8. CONSENT OF STOCKHOLDERS IN LIEU OF MEETING. Unless otherwise
provided in the Certificate of Incorporation, any action required or permitted
to be taken at any Annual or Special Meeting of Stockholders of the Corporation,
may be taken without a meeting, without prior notice and without a vote, if a
consent in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted. Prompt notice of the
taking of the corporate action without a meeting by less than unanimous written
consent shall be given to those stockholders who have not consented in writing.

         SECTION 9. VOTING LIST. The officer of the Corporation who has charge
of the stock ledger of the Corporation shall prepare and make, at least ten (10)
days before every meeting of

                                       2

stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder of the
Corporation who is present.

         SECTION 10. STOCK LEDGER. The stock ledger of the Corporation shall be
the only evidence as to who are the stockholders entitled to examine the stock
ledger, the list required by Section 10 of this Article II or the books of the
Corporation, or to vote in person or by proxy at any meeting of stockholders.

         SECTION 11. CONDUCT OF MEETINGS. The Chairman, or, if there be no
Chairman or in his or her absence, the Vice Chairman or any other officer
designated by the Board of Directors or the Chairman, shall preside at all
regular or special meetings of stockholders. To the maximum extent permitted by
law, such presiding person shall have the power to set procedural rules,
including but not limited to rules respecting the time allotted to stockholders
to speak, governing all aspects of the conduct of such meetings.

         SECTION 12.       BUSINESS TO BE CONDUCTED.

                  (a) At any annual meeting of stockholders, only such business
         shall be conducted, and only such proposals shall be acted on, as are
         properly brought before the meeting. In order for business to be
         properly brought before the meeting, the business must be either (1)
         specified in the notice of meeting (or any supplement thereto) given by
         or at the direction of the Board of Directors, (2) otherwise properly
         brought before the meeting by or at the direction of the Board of
         Directors, or (3) otherwise properly brought before the meeting by a
         stockholder who is entitled to vote at the meeting and who complies
         with the notice procedure set forth in this Section 12. In addition to
         any other applicable requirements, for business to be properly brought
         before an annual meeting by a stockholder, the stockholder must have
         given timely notice thereof in writing to the Secretary of the
         Corporation. To be timely, a stockholder's notice to the Secretary must
         be delivered to or mailed and received at the principal executive
         offices of the Corporation not less than ninety (90) days nor more than
         one hundred twenty (120) days prior to the first anniversary of the
         date that the Corporation first released or mailed its proxy statement
         to stockholders in connection with the immediately preceding annual
         meeting of stockholders; provided, however, that in the event that the
         annual meeting is called for a date that is not within thirty (30) days
         before or the anniversary date of the immediately preceding annual
         meeting of stockholders, notice by the stockholder in order to be
         timely must be so received not later than the close of business on the
         tenth (10th) day following the day on which such notice of the date of
         the annual meeting was mailed or such public disclosure of the date of
         the annual meeting was made, whichever first occurs. To be in proper
         written form, a stockholder's notice to the Secretary must set

                                       3

         forth as to each matter such stockholder proposes to bring before the
         annual meeting (1) a brief description of the business desired to be
         brought before the annual meeting and the reasons for conducting such
         business at the annual meeting, (2) the name and record address of
         such stockholder, (3) the class or series and number of shares of
         capital stock of the Corporation which are owned beneficially or of
         record by such stockholder, (4) a description of all arrangements or
         understandings between such stockholder and any other person or
         persons (including their names) in connection with the proposal of
         such business by such stockholder and any material interest of such
         stockholder in such business and (5) a representation that such
         stockholder intends to appear in person or by proxy at the annual
         meeting to bring such business before the meeting.

                  (b) Notwithstanding anything in these bylaws to the contrary,
         no business shall be conducted at the annual meeting except in
         accordance with the procedures set forth in this Section 12 of Article
         II; provided, however, that nothing in this Section 12 of Article II
         shall be deemed to preclude discussion by any stockholder of any
         business properly brought before the annual meeting.

                  (c) The Chairman of the annual meeting shall, if the facts
         warrant, determine and declare to the meeting that business was not
         properly brought before the meeting in accordance with the provisions
         of this Section 12 of Article II, and if the Chairman should so
         determine, he or she shall so declare to the meeting and any such
         business not properly brought before the meeting shall not be
         transacted.

                  (d) At any special meeting of the stockholders, only such
         business shall be conducted as shall have been brought before the
         meeting by or at the direction of the Board of Directors.

         SECTION 13. STOCKHOLDER NOMINATION OF DIRECTORS. Any stockholder who
intends to make a nomination of one or more persons for election to the Board of
Directors of the Corporation shall have given timely notice thereof in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice to the
Secretary must be delivered to or mailed and received at the principal executive
offices of the Corporation not less than ninety (90) days nor more than one
hundred twenty (120) days prior to the first anniversary of the date that the
Corporation first released or mailed its proxy statement to stockholders in
connection with the immediately preceding annual meeting of stockholders;
provided, however, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after the anniversary date of
the immediately preceding annual meeting of stockholders, notice by the
stockholder in order to be timely must be so received not later than the close
of business on the tenth (10th) day following the day on which such notice of
the date of the annual meeting was mailed or such public disclosure of the date
of the annual meeting was made, whichever first occurs. Such stockholders'
notice shall set forth (A) as to each nominee whom the stockholder proposes to
nominate for election or reelection as a director, (1) the name, age, business
address and residence address of the nominee, (2) the principal occupation or
employment of the nominee, (3) the class and number of shares of capital stock
of the Corporation which are beneficially owned by the nominee and (4) any other
information concerning the nominee that would be required, under the rules of
the Securities and Exchange Commission, in a proxy statement

                                       4

soliciting proxies of the election of such nominee; and (B) as to the
stockholder giving the notice, (1) the name and record address of the
stockholder, (2) the class and number of shares of capital stock of the
Corporation which are beneficially owned by the stockholder (3) a description
of all arrangements or understandings between such stockholder and each
proposed nominee and any other person or persons (including their names)
pursuant to which the nomination(s) are to be made by such stockholder, (4) a
representation that such stockholder intends to appear in person or by proxy
at the meeting to nominate the persons named in its notice and (5) any other
information relating to such stockholder that would be required to be
disclosed in a proxy statement or other filings required to be made in
connection with solicitations of proxies for election of directors pursuant
to Section 14 of the Exchange Act and the rules and regulations promulgated
thereunder. Such notice shall include a signed consent to serve as a director
of the Corporation, if elected, of each such nominee. The Corporation may
require any proposed nominee to furnish such other information as may
reasonably be required by the Corporation to determine the eligibility of
such proposed nominee to serve as a director of the Corporation.

                                  ARTICLE III.
                                    DIRECTORS

         SECTION 1. NUMBER AND TERM OF OFFICE. The number of directors which
will constitute the whole board will be at least one, or such other number as
may be determined by the Board of Directors or by the stockholders at an annual
or special meeting. Except as otherwise permitted by statute, the directors will
be elected at each annual meeting of the Company's stockholders (or at any
special meeting of the stockholders called for that purpose) by a majority of
the voting power of the shares represented and voting, and each director will be
elected to serve until the next annual meeting of the stockholders and
thereafter until a successor is duly elected and qualified, unless a prior
vacancy will occur by reason of death, resignation, or removal for office.
Directors will be natural persons, but need not be stockholders.

         SECTION 2. REMOVAL AND RESIGNATION OF DIRECTORS. Any director may be
removed from the Board of Directors, with or without cause, by the holders of a
majority of the shares of capital stock entitled to vote, either by written
consent or consents or at any special meeting of the stockholders called for
that purpose, and the office of such director shall forthwith become vacant. Any
director may resign at any time. Such resignation shall take effect at the time
specified therein, and if no time be specified, at the time of its receipt by
the President or Secretary. The acceptance of a resignation shall not be
necessary to make it effective, unless so specified therein.

         SECTION 3. VACANCIES. If the office of any director becomes vacant by
reason of death, resignation, retirement, disqualification, removal from office,
increase in the number of directors or otherwise, a majority of the remaining
directors, although less than a quorum, at a meeting called for that purpose, or
a sole remaining director, may choose a successor, for the unexpired term in
respect of which such vacancy occurred or until a successor is duly elected and
qualified, or until such director's earlier resignation or removal.

         SECTION 4. DUTIES AND POWERS. The business of the Corporation shall be
managed by or under the direction of the Board of Directors which may exercise
all such powers of the

                                       5

Corporation and do all such lawful acts and things as are not by statute or by
the Certificate of Incorporation or by these Bylaws directed or required to be
exercised or done by the stockholders.

         SECTION 5. MEETINGS. The Board of Directors of the Corporation may hold
meetings, both regular and special, either within or without the State of
Delaware. Regular meetings of the Board of Directors may be held without notice
at such time and at such place as may from time to time be determined by the
Board of Directors. Special meetings of the Board of Directors may be called (i)
by the Chairman, if there be one, or the President and Chief Executive Officer
on twenty-four (24) hours' notice or (ii) any director on ten (10) days' notice,
to each director, either personally, or by mail, telephone, facsimile, e-mail or
telegram. Every such notice shall state the date, time and place of the meeting.
Notice of a meeting called by a person other than the Chairman or the President
and Chief Executive Officer shall state the purpose of the meeting.

         SECTION 6. QUORUM. Except as may be otherwise specifically provided by
law, the Certificate of Incorporation or these Bylaws, at all meetings of the
Board of Directors, a majority of the entire Board of Directors shall constitute
a quorum for the transaction of business and the act of a majority of the
directors present at any meeting at which there is a quorum shall be the act of
the Board of Directors. If a quorum shall not be present at any meeting of the
Board of Directors, the directors present may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until a quorum
shall be present.

         SECTION 7. ACTIONS OF BOARD. Unless otherwise provided by the
Certificate of Incorporation or these Bylaws, any action required or permitted
to be taken at any meeting of the Board of Directors or of any committee thereof
may be taken without a meeting, if all the members of the Board of Directors or
committee, as the case may be, consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board of Directors or
committee.

         SECTION 8. PARTICIPATION BY ELECTRONIC COMMUNICATIONS. Unless otherwise
provided by the Certificate of Incorporation or these Bylaws, members of the
Board of Directors of the Corporation, or any committee designated by the Board
of Directors, may participate in a meeting of the Board of Directors or such
committee by means of a conference telephone or similar communications equipment
by means of which all persons participating in the meeting can hear each other,
and participation in a meeting pursuant to this Section 8 shall constitute
presence in person at such meeting.

         SECTION 9. COMMITTEES. The Board of Directors may, by resolution passed
by a majority of the Board of Directors, designate one (1) or more committees,
each committee to consist of one (1) or more of the directors of the
Corporation. The Board of Directors may designate one (1) or more directors as
alternate members of any committee, who may replace any absent or disqualified
member at any meeting of any such committee. In the absence or disqualification
of a member of a committee, and in the absence of a designation by the Board of
Directors of an alternate member to replace the absent or disqualified member,
the member or members present at any meeting and not disqualified from voting,
whether or not he, she or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act

                                       6

at the meeting in the place of any absent or disqualified member. Any committee,
to the extent allowed by law and provided in the resolution establishing such
committee, shall have and may exercise all the powers and authority of the Board
if Directors in the management of the business and affairs of the Corporation.
Each committee shall keep regular minutes and report to the Board of Directors
when required.

         SECTION 10. COMPENSATION. The directors may be paid their expenses, if
any, of attendance at each meeting of the Board of Directors and may be paid a
fixed sum for attendance at each meeting of the Board of Directors or a stated
salary as director. No such payment shall preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.

         SECTION 11. CONDUCT OF MEETINGS. The Chairman, or, if there be no
Chairman or in his or her absence, the Vice Chairman or any other officer
designated by the Board of Directors, shall preside at all meetings of the Board
of Directors. The Secretary shall act as secretary of all meetings of the Board
of Directors, and in his or her absence any person appointed by the Chairman
shall act as secretary.

         SECTION 12. CHAIRMAN OF THE BOARD. The Board of Directors shall, from
time to time, elect one of the directors to serve as Chairman of the Board (the
"Chairman"). The Chairman of the Board will be considered an officer of the
Corporation and will have such duties as the Board of Directors will determine.

         SECTION 13. VICE CHAIRMAN OF THE BOARD. The Board of Directors shall,
from time to time, elect one of the directors to serve as Vice Chairman of the
Board (the "Vice Chairman"). The Vice Chairman of the Board will be considered
an officer of the Corporation and will have such duties as the Board of
Directors will determine.

                                   ARTICLE IV.
                                    OFFICERS

         SECTION 1. GENERAL. The officers of the Corporation shall be chosen by
the Board of Directors and shall be a President and Chief Executive Officer, a
Secretary and a Chief Financial Officer. The Board of Directors, in its
discretion, may also choose a Chairman of the Board of Directors (who must be a
director) and one (1) or more Vice Presidents, Assistant Secretaries, Assistant
Financial Officers and other officers. Any number of offices may be held by the
same person, unless otherwise prohibited by law, the Certificate of
Incorporation or these Bylaws. The officers of the Corporation need not be
stockholders of the Corporation nor, except in the case of the Chairman of the
Board of Directors, need such officers be directors of the Corporation.

         SECTION 2. ELECTION. The Board of Directors at its first meeting held
after each annual meeting of stockholders shall elect the officers of the
Corporation, who shall hold their offices for such terms and shall exercise such
powers and perform such duties as shall be determined from time to time by the
Board of Directors; and all officers of the Corporation shall hold office until
their successors are chosen and qualified, or until their earlier resignation or
removal.

                                       7

         SECTION 3. REMOVAL AND RESIGNATION. Any officer of the Corporation may
be removed from office, with or without cause, by a vote of a majority of the
Board of Directors. Any officer of the Corporation may resign at any time. Such
resignation shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective, unless
so specified therein. Any vacancy occurring in any office of the Corporation
shall be filled by the Board of Directors.

         SECTION 4. COMPENSATION. The compensation of the officers of the
Corporation shall be fixed by the Board of Directors, or any committee upon whom
power in that regard may be conferred by the Board of Directors.

         SECTION 5. VOTING SECURITIES OWNED BY THE CORPORATION. Powers of
attorney, proxies, waivers of notice of meeting, consents and other instruments
relating to securities owned by the Corporation may be executed in the name of
and on behalf of the Corporation by the President and Chief Executive Officer,
the Chief Financial Officer or any Vice President and any such officer may, in
the name of and on behalf of the Corporation, take all such action as any such
officer may deem advisable to vote in person or by proxy at any meeting of
security holders of any corporation in which the Corporation may own securities
and at any such meeting shall possess and may exercise any and all rights and
power incident to the ownership of such securities and which, as the owner
thereof, the Corporation might have exercised and possessed if present. The
Board of Directors may, by resolution, from time to time confer like powers upon
any other person or persons.

         SECTION 6. PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President and
Chief Executive Officer shall be the chief executive officer of the Corporation,
shall have general active management of the business of the Corporation, shall
see that all orders and resolutions of the Board of Directors are carried into
effect and shall have and exercise all such powers and discharge such duties as
usually pertain to the office of President, except to the extent otherwise
provided by resolution of the Board of Directors. In the absence or disability
of the Chairman of the Board, or there be none, the President and Chief
Executive Officer shall preside at all meetings of the stockholders and Board of
Directors. Except as otherwise prescribed by these Bylaws or the Board of
Directors, the President and Chief Executive Officer shall prescribe the duties
of other officers.

         SECTION 7. VICE PRESIDENTS. The Vice President or the Vice Presidents
if there is more than one (1) (in the order designated by the Board of
Directors) shall, at the request of the President and Chief Executive Officer or
in his or her absence or in the event of his or her inability or refusal to act
(and if there be no Chairman of the Board of Directors), perform the duties of
the President and Chief Executive Officer, and when so acting, shall have all
the powers of and be subject to all the restrictions upon the President and
Chief Executive Officer. Each Vice President shall perform such other duties and
have such other powers as the Board of Directors from time to time may
prescribe.

         SECTION 8. SECRETARY. The Secretary shall attend all meetings of the
Board of Directors and all meetings of stockholders and record all the
proceedings thereat in a book or

                                       8

books to be kept for that purpose; the Secretary shall also perform like duties
for the standing committees when required. The Secretary shall give, or cause to
be given, notice of all meetings of the stockholders and special meetings of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors or President and Chief Executive Officer, under whose
supervision he or she shall be.

         SECTION 9. CHIEF FINANCIAL OFFICER. The Chief Financial Officer shall
have the custody of the corporate funds and securities and shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
Corporation and shall deposit all moneys and other valuable effects in the name
and to the credit of the Corporation in such depositories as may be designated
by the Board of Directors. The Chief Financial Officer shall disburse the funds
of the Corporation as may be ordered by the Board of Directors, taking proper
vouchers for such disbursements, and shall render to the President and Chief
Executive Officer and the Board of Directors, at its regular meetings, or when
the Board of Directors so requires, an account of all his or her transactions as
Chief Financial Officer and of the financial condition of the Corporation. If
required by the Board of Directors, the Chief Financial Officer shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his or her office and for the restoration to the Corporation, in case
of his or her death, resignation, retirement or removal from office, of all
books, papers, vouchers, money and other property of whatever kind in his or her
possession or under his or her control belonging to the Corporation.

         SECTION 10. ASSISTANT SECRETARIES. Except as may be otherwise provided
in these Bylaws, Assistant Secretaries, if there be any, shall perform such
duties and have such powers as from time to time may be assigned to them by the
Board of Directors, the President and Chief Executive Officer, any Vice
President, if there be one, or the Secretary, and in the absence of the
Secretary or in the event of his or her disability or refusal to act, shall
perform the duties of the Secretary, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the Secretary.

         SECTION 11. ASSISTANT FINANCIAL OFFICERS. Assistant Financial Officers,
if there be any; shall perform such duties and have such powers as from time to
time may be assigned to them by the Board of Directors, the President and Chief
Executive Officer, any Vice President, if there be one, or the Chief Financial
Officer, and in the absence of the Chief Financial Officer or in the event of
his or her disability or refusal to act, shall perform the duties of the Chief
Financial Officer, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the Chief Financial Officer. If required by
the Board of Directors, an Assistant Financial Officers shall give the
Corporation a bond in such sum and with such surety or sureties as shall be
satisfactory to the Board of Directors for the faithful performance of the
duties of his or her office and for the restoration to the Corporation, in case
of his or her death, resignation, retirement or removal from or her office, of
all books, papers, vouchers, money and other property of whatever kind in his or
her possession or under his or her control belonging to the Corporation.

         SECTION 12. OTHER OFFICERS. Such other officers as the Board of
Directors may choose shall perform such duties and have such powers as from time
to time may be assigned to them by

                                       9

the Board of Directors. The Board of Directors may delegate to any other officer
of the Corporation the power to choose such other officers and to prescribe
their respective duties and powers.

                                   ARTICLE V.
                                      STOCK

         SECTION 1. FORM OF CERTIFICATES. Every holder of stock in the
Corporation shall be entitled to have a certificate signed, in the name of the
Corporation (i) by the Chairman of the Board of Directors, the President and
Chief Executive Officer or a Vice President and (ii) by the Chief Financial
Officer or an Assistant Financial Officer, or the Secretary or an Assistant
Secretary of the Corporation, certifying the number of shares owned by him, her
or it in the Corporation.

         SECTION 2. SIGNATURES. Where a certificate is countersigned by (i) a
transfer agent other than the Corporation or its employee, or (ii) a registrar
other than the Corporation or its employee, any other signature on the
certificate may be a facsimile. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he, she or it were such officer, transfer agent or registrar at the date
of issue.

         SECTION 3. LOST CERTIFICATES. The Board of Directors may direct a new
certificate to be issued in place of any certificate theretofore issued by the
Corporation alleged to have been lost, stolen or destroyed, upon the making of
an affidavit of that fact by the person claiming the certificate of stock to be
lost, stolen or destroyed. When authorizing such issue of a new certificate, the
Board of Directors may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
certificate, or his, her or its legal representative, to advertise the same in
such manner as the Board of Directors shall require and/or to give the
Corporation a bond in such sum as it may direct as indemnity against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.

         SECTION 4. TRANSFERS. Stock of the Corporation shall be transferable in
the manner prescribed by law and in these Bylaws. Transfers of stock shall be
made on the books of the Corporation only by the person named in the certificate
or by his, her or its attorney lawfully constituted in writing and upon the
surrender of the certificate therefor, which shall be cancelled before a new
certificate shall be issued.

         SECTION 5. BENEFICIAL OWNERS. The Corporation shall be entitled to
recognize the exclusive right of a person registered on its books as the owner
of shares to receive dividends, and to vote as such owner, and to hold liable
for calls and assessments a person registered on its books as the owner of
shares, and shall not be bound to recognize any equitable or other claim to or
interest in such share or shares on the part of any other person, whether or not
it shall have express or other notice thereof, except as otherwise provided by
law.

                                       10

                                   ARTICLE VI.
                                     NOTICES

         SECTION 1. WAIVERS OF NOTICE. Any director, member of a committee or
stockholder may at any time waive any notice required to be given by law, the
Certificate of Incorporation or these Bylaws, by a writing signed by such person
or persons entitled to said notice. If any director, member of a committee or
stockholder shall be present at any meeting, his or her presence shall
constitute a waiver of such notice.

         SECTION 2. NOTICES. Whenever written notice is required by law, the
Certificate of Incorporation or these Bylaws, to be given to any director,
member of a committee or stockholder, such notice may be given by mail,
addressed to such director, member of a committee or stockholder, at his or her
address as it appears on the records of the Corporation, with postage thereon
prepaid, and such notice shall be deemed to be given at the time when the same
shall be deposited in the United States mail. Written notice may also be given
personally or by facsimile, telegram, telex, e-mail or cable and will be deemed
given when delivered or transmitted.

                                  ARTICLE VII.
                               GENERAL PROVISIONS

         SECTION 1. DIVIDENDS. Dividends upon the capital stock of the
Corporation, subject to the provisions of the Certificate of Incorporation, if
any, may be declared by the Board of Directors at any regular or special
meeting, and may be paid in cash, in property, or in shares of the capital
stock. Before payment of any dividend, there may be set aside out of any funds
of the Corporation available for dividends such sum or sums as the Board of
Directors from time to time, in its absolute discretion, deems proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the Corporation, or for any proper
purpose, and the Board of Directors may modify or abolish any such reserve.

         SECTION 2. DISBURSEMENTS. All checks or demands for money and notes of
the Corporation shall be signed by such officer or officers or such other person
or persons as the Board of Directors may from time to time designate.

         SECTION 3. FISCAL YEAR. The fiscal year of the Corporation shall be
fixed by resolution of the Board of Directors.

         SECTION 4. CORPORATE SEAL. The Corporation may, but need not, have a
corporate seal. In the event the Corporation has a seal, the seal need not be
affixed for any contract, resolution or other document executed by or on behalf
of the Corporation to be valid and duly authorized.

                                  ARTICLE VIII.
                                 INDEMNIFICATION

         SECTION 1. RIGHT TO INDEMNIFICATION. The Corporation shall indemnify
any and all of its directors or officers, including former directors or
officers, and any employee, who shall serve

                                       11

as an officer or director of any corporation at the request of this Corporation,
to the fullest extent permitted under and in accordance with the laws of the
State of Delaware.

         SECTION 2. NONEXCLUSIVITY OF RIGHTS. The indemnification rights
conferred on any person under this Article VIII and the laws of the State of
Delaware shall not be exclusive of any other rights which such person may have
or hereafter acquire under any statute, provision of the certificate of
incorporation or these Bylaws, agreement, contract, vote of stockholders or
disinterested directors or pursuant to the direction (howsoever embodied) of any
court of competent jurisdiction or otherwise, both as to action in his or her
official capacity and as to action in another capacity while holding such
office.

         SECTION 3. AMENDMENT OR REPEAL. Any repeal or modification of the
foregoing provision of this Article VIII shall not adversely affect any right or
protection hereunder of any person in respect of any act or omission occurring
prior to the time of such repeal or modification.

                                   ARTICLE IX.
                                   AMENDMENTS

         The Board of Directors shall have the power to make, rescind, alter,
amend and repeal these By-laws, provided, however, that the stockholders shall
have power to rescind, alter, amend or repeal any by-laws made by the Board of
Directors, and to enact by-laws which if so expressed shall not be rescinded,
altered, amended or repealed by the Board of Directors.

                                                          Dated:  April 11, 2001

                                       12

                                                                     Exhibit 4.2

                                 FORM OF WARRANT

                            Warrant to Purchase Up To
                    ______________ Shares Of Common Stock of
                         BioSante Pharmaceuticals, Inc.

         THIS CERTIFIES that, for value received, ________________ ("Investor")
or any transferee of Investor (Investor or such transferee being hereinafter
referred to as the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, to purchase from BioSante Pharmaceuticals,
Inc., a Wyoming corporation (the "Company"), that number of fully paid and
nonassessable shares of common stock, no par value (the "Warrant Shares") of the
Company (the "Common Stock") at the purchase price per share as set forth in
Section 1 below (the "Exercise Price"). The number of Warrant Shares purchasable
and Exercise Price are subject to adjustment as provided in Section 10 hereof.

         1. NUMBER OF WARRANT SHARES; EXERCISE PRICE; TERM.

                  (a) Subject to adjustments as provided herein, the Holder of
         this Warrant may, at the Holder's option, exercise this Warrant in
         whole at any time or in part from time to time for
         _____________________________ (__________) Warrant Shares at an
         Exercise Price of $0.625 per Warrant Share.

                  (b) Subject to the terms and conditions set forth herein, this
         Warrant and all rights and options hereunder shall expire at 5:00 p.m.
         central standard time on __________________, 2006. This Warrant and all
         options and rights hereunder shall be wholly void to the extent this
         Warrant is not exercised before it expires.

         2. TRANSFERABILITY OF WARRANT. The Warrant and all rights hereunder are
not transferable, in whole or in part.

         3. EXERCISE OF WARRANT. The Warrant is exercisable by the Holder, in
whole or in part, at any time, or from time to time, during the term hereof as
described in Section l above, by the surrender of the Warrant and the Notice of
Exercise annexed hereto duly completed and executed on behalf of the Holder
hereof, at the office of the Company in Lincolnshire, Illinois (or such other
office or agency of the Company as it may designate by notice in writing to the
Holder hereof at the address of the Holder appearing on the books of the
Company), and subject to Section 4 hereof, upon payment of the Exercise Price in
cash or check, whereupon the Holder of the Warrant shall be entitled to receive
shares of Common Stock of the Company for the number of Warrant Shares so
purchased and, if the Warrant is exercised for fewer than all of the Warrant
Shares, a new Warrant representing the right to acquire the number of Warrant
Shares in respect of which this Warrant shall not have been exercised.
Notwithstanding the foregoing, payment of the Exercise Price may also be made by
(a) delivering shares of Common Stock already owned by the Holder having a total
Fair Market Value (as defined in Section 4) on the date of delivery equal to the
aggregate Exercise Price; (b) authorizing the Company to return Warrant Shares
which would otherwise be issuable upon exercise of this Warrant having a total
Fair Market Value on the date of exercise equal to the aggregate Exercise Price;
or (c) any combination of the foregoing. The Company agrees that, upon exercise
of the Warrant in

accordance with the terms hereof, the Warrant Shares so purchased shall be
deemed to be issued to the Holder as the record owner of such Warrant Shares as
of the close of business on the date on which the Warrant shall have been
exercised.

         Certificates for Warrant Shares purchased hereunder and, on exercise of
fewer than all of the Warrant Shares purchasable hereunder, a new Warrant
representing the right to acquire Warrant Shares not so purchased shall be
delivered to the Holder hereof as promptly as practicable after the date on
which the Warrant shall have been exercised.

         The Company covenants that all Warrant Shares which may be issued upon
the exercise of the Warrant shall, upon exercise of the Warrant and payment of
the Exercise Price, be fully paid and nonassessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously or otherwise specified herein).

         4. NO FRACTIONAL WARRANT SHARES OR SCRIP. No fractional Warrant Shares
or scrip representing fractional shares shall be issued upon the exercise of the
Warrant. In lieu of any fractional Warrant Share to which the Holder would
otherwise be entitled, such Holder shall be entitled, at its option, to receive
either (a) a cash payment equal to the excess of Fair Market Value (as defined
herein) for such fractional Warrant Share above the Exercise Price for such
fractional share or (b) a whole share if the Holder tenders the Exercise Price
for one whole Warrant Share. For purposes hereof, the term "Fair Market Value"
shall mean an amount determined as follows: (A) if the Common Stock is listed on
a national or regional securities exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on the Nasdaq National Market
System or the Nasdaq Small Cap Market (collectively, "Nasdaq"), the Fair Market
Value on a particular day shall be the last reported sale price of a share of
Common Stock on such exchange or on Nasdaq, on the last business day prior to
such day or, if no such sale is made on such business day, the business day
before such business day, or (B) if the Common Stock is not listed or admitted
to unlisted trading privileges on an exchange or on Nasdaq, the fair market
value on a particular day shall be the mean of the last reported bid and asked
prices reported by the National Quotation Bureau, Inc., or the National
Association of Securities Dealers, Inc. OTC Bulletin Board on the last business
day prior to such day, or (C) if the Common Stock is not so listed or admitted
to unlisted trading privileges on an exchange or on Nasdaq and bid and asked
prices are not so reported, the Fair Market Value on a particular day shall be
an amount determined in such reasonable manner as may be prescribed by the board
of directors of the Company.

         5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for Warrant
Shares upon the exercise of the Warrant shall be made without charge to the
Holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of the Warrant or in such name or names as may be directed by the
Holder of the Warrant; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder of
the Warrant, the Warrant when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by the Holder and the Notice
of Exercise duly completed and executed and stating in whose name the

certificates are to be issued; and provided further, that such assignment shall
be subject to applicable laws and regulations.

         6. NO RIGHTS AS WARRANT SHAREHOLDERS. The Warrant does not entitle the
Holder hereof to any voting rights, dividend rights or other rights as a
shareholder of the Company prior to the exercise thereof.

         7. EXCHANGE AND REGISTRY OF WARRANT. The Company shall maintain a
registry showing the name and address of the Holder of the Warrant. The Warrant
may be surrendered for exchange, transfer or exercise, in accordance with the
terms hereof, at the office of the Company, and the Company shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such
registry.

         8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of the Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of the Warrant.

         9. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.

         10. ADJUSTMENTS. The above provisions are, however, subject to the
following:

                  (a) The Exercise Price shall be subject to adjustment from
         time to time as hereinafter provided. Upon each adjustment of the
         Exercise Price, the Holder shall thereafter be entitled to purchase, at
         the Exercise Price resulting from such adjustment, the number of shares
         obtained by multiplying the Exercise Price in effect immediately prior
         to such adjustment by the number of shares purchasable pursuant to this
         Warrant immediately prior to such adjustment and dividing the product
         thereof by the Exercise Price resulting from such adjustment.

                  (b) Except for (i) shares of capital stock of the Company
         issued to employees, directors, advisors and consultants of the
         Company, vendors and other similar persons to whom the Company owes
         money, (ii) options and warrants granted to employees, directors,
         advisors and consultants of the Company, (iii) shares of Common Stock
         of the Company issuable upon the exercise of options and warrants
         granted to employees, directors, advisors and consultants, (iv) shares
         of Common Stock issuable upon the exercise of all currently outstanding
         warrants and other convertible securities and (v) shares of capital
         stock issuable upon the conversion of all currently outstanding shares
         of preferred stock of the Company, if the Company shall issue or sell
         any shares of Common Stock during the next twelve months for a
         consideration per share less than $0.50, then, forthwith upon such
         issue or sale, the Exercise Price shall be reduced to the price
         (calculated to the nearest cent) determined by dividing (A) an amount
         equal to the

         sum of (1) the number of shares of Common Stock outstanding immediately
         prior to such issue or sale multiplied by the then existing Exercise
         Price, and (2) the consideration, if any, received by the Company upon
         such issue or sale by (B) an amount equal to the sum of (1) the number
         of shares of Common Stock outstanding immediately prior to such issue
         or sale and (2) the number of shares of Common Stock thus issued or
         sold.

                  (c) For the purposes of paragraph (b), the following
         provisions (i) to (vi), inclusive, shall also be applicable:

                           (i) In case at any time the Company shall grant
                  (whether directly or by assumption in a merger or otherwise)
                  any rights to subscribe for or to purchase, or any options for
                  the purchase of, Common Stock or any obligations, stock or
                  securities convertible into or exchangeable for Common Stock
                  (such convertible or exchangeable stock or securities being
                  herein called "Convertible Securities") whether or not such
                  rights or options or the right to convert or exchange any such
                  Convertible Securities are immediately exercisable, and the
                  price per share at which shares of Common Stock are issuable
                  upon the exercise of such rights or options or upon conversion
                  or exchange of such Convertible Securities (determined by
                  dividing (A) the total amount, if any, received or receivable
                  by the Company as consideration for the granting of such
                  rights or options, plus the minimum aggregate amount of
                  additional consideration payable to the Company upon the
                  exercise of such rights or options, plus, in the case of such
                  rights or options which relate to Convertible Securities, the
                  minimum aggregate amount of additional consideration, if any,
                  payable upon the issue or sale of such Convertible Securities
                  and upon the conversion or exchange thereof, by (B) the total
                  maximum number of shares of Common Stock issuable upon the
                  exercise of such rights or options or upon the conversion or
                  exchange of all such Convertible Securities issuable upon the
                  exercise of such rights or options) shall be less than the
                  Exercise Price in effect immediately prior to the time of the
                  granting of such rights or options, then the total maximum
                  number of shares of Common Stock issuable upon the exercise of
                  rights or options or upon conversion or exchange of the total
                  maximum amount of such Convertible Securities issuable upon
                  the exercise of such rights or options shall (as of the date
                  of granting of such rights or options) be deemed to have been
                  issued for such price per share. Except as provided in
                  paragraph (f) below, no further adjustments of the Exercise
                  Price shall be made upon the actual issue of such Common Stock
                  or of such Convertible Securities upon exercise of such rights
                  or options or upon the actual issue of such Common Stock upon
                  conversion or exchange of such Convertible Securities.

                           (ii) In case the Company shall issue or sell (whether
                  directly or by assumption in a merger or otherwise) any
                  Convertible Securities, whether or not the rights to exchange
                  or convert thereunder are immediately exercisable, and the
                  price per share for which Common Stock is issuable upon such
                  conversion or exchange (determined by dividing (A) the total
                  amount received or receivable by the Company as consideration
                  for the issue or sale of such Convertible Securities, plus the
                  minimum aggregate amount of additional consideration, if any,
                  payable to the Company upon the conversion or exchange
                  thereof, by (B) the total

                  maximum number of shares of Common Stock issuable upon the
                  conversion or exchange of all such Convertible Securities)
                  shall be less than the Exercise Price in effect immediately
                  prior to the time of such issue or sale, then the total
                  maximum number of shares of Common Stock issuable upon
                  conversion or exchange of all such Convertible Securities
                  shall (as of the date of the issue or sale of such Convertible
                  Securities) be deemed to be outstanding and to have been
                  issued for such price per share, provided that (x) except as
                  provided in paragraph (f) below, no further adjustments of the
                  Exercise Price shall be made upon the actual issue of such
                  shares of Common Stock upon conversion or exchange of such
                  Convertible Securities, and (y) if any such issue or sale of
                  such Convertible Securities is made upon exercise of any
                  rights to subscribe for or to purchase or any option to
                  purchase any such Convertible Securities for which adjustments
                  of the Exercise Price have been or are to be made pursuant to
                  other provisions of this paragraph (c), no further adjustment
                  of the Exercise Price shall be made by reason of such issue or
                  sale.

                           (iii) In case the Company shall declare a dividend or
                  make any other distribution upon any stock of the Company
                  payable in Common Stock or Convertible Securities, or in any
                  rights or options to purchase any Common Stock or Convertible
                  Securities, any Common Stock or Convertible Securities, or any
                  such rights or options, as the case may be, issuable in
                  payment of such dividend or distribution shall be deemed to
                  have been issued or sold without consideration.

                           (iv) In case any shares of Common Stock or
                  Convertible Securities or any rights or options to purchase
                  any shares of Common Stock or Convertible Securities shall be
                  issued or sold for cash, the consideration received therefor
                  shall be deemed to be the amount received by the Company
                  therefor, without deduction therefrom of any expenses incurred
                  or any underwriting commissions, discounts or concessions paid
                  or allowed by the Company in connection therewith. In case any
                  shares of Common Stock or Convertible Securities or any rights
                  or options to purchase any shares of Common Stock or
                  Convertible Securities shall be issued or sold for a
                  consideration other than cash, the amount of the consideration
                  other than cash received by the Company shall be deemed to be
                  the fair value of such consideration as determined by the
                  Board of Directors of the Company, without deduction of any
                  expenses incurred or any underwriting commissions, discounts
                  or concessions paid or allowed by the Company in connection
                  therewith. In case any shares of Common Stock or Convertible
                  Securities or any rights or options to purchase shares of
                  Common Stock or Convertible Securities shall be issued in
                  connection with any merger or consolidation in which the
                  Company is the surviving corporation, the amount of
                  consideration therefor shall be deemed to be the fair value as
                  determined by the Board of Directors of the Company of such
                  portion of the assets and business of the non-surviving
                  corporation or corporations as such Board shall have
                  determined to be attributable to such shares of Common Stock,
                  Convertible Securities, rights or options, as the case may be.
                  In the event of any consolidation or merger of the Company in
                  which the Company is not the surviving corporation or in the
                  event of any sale of all or substantially all of the assets of
                  the Company

                  for stock or other securities of any other corporation, the
                  Company shall be deemed to have issued a number of shares of
                  its Common Stock for stock or securities of the other
                  corporation computed on the basis of the actual exchange ratio
                  on which the transaction was predicated and for a
                  consideration equal to the fair market value on the date of
                  such transaction of such stock or securities of the other
                  corporation, and if any such calculation results in adjustment
                  of the Exercise Price, the determination of the number of
                  shares of Common Stock issuable upon exercise immediately
                  prior to such merger, consolidation or sale, for purposes of
                  paragraph (f) below, shall be made after giving effect to such
                  adjustment of the Exercise Price.

                           (v) In case the Company shall take a record of the
                  holders of its Common Stock for the purpose of entitling them
                  (A) to receive a dividend or other distribution payable in
                  shares of Common Stock or in Convertible Securities, or in any
                  rights or options to purchase any shares of Common Stock or
                  Convertible Securities, or (B) to subscribe for or purchase
                  shares of Common Stock or Convertible Securities, then such
                  record date shall be deemed to be the date of the issue or
                  sale of the shares of Common Stock deemed to have been issued
                  or sold upon the declaration of such dividend or the making of
                  such other distribution or the date of the granting of such
                  rights of subscription or purchase, as the case may be.

                           (vi) The number of shares of Common Stock outstanding
                  at any given time shall not include shares owned or held by or
                  for the account of the Company, and the disposition of any
                  such shares shall be considered an issue or sale of Common
                  Stock for the purposes of this paragraph (c).

                  (d) In case the Company shall at any time subdivide its
         outstanding shares of Common Stock into a greater number of shares, the
         Exercise Price in effect immediately prior to such subdivision shall be
         proportionately reduced, and conversely, in case the outstanding shares
         of Common Stock of the Company shall be combined into a smaller number
         of shares, the Exercise Price in effect immediately prior to such
         combination shall be proportionately increased.

                  (e) Upon the happening of any of the following events, namely,
         if the purchase price provided for in any rights or options referred to
         in clause (i) of paragraph (c), the additional consideration, if any,
         payable upon the conversion or exchange of Convertible Securities
         referred to in clause (i) or clause (ii) of paragraph (c), or the rate
         at which any Convertible Securities referred to in clause (i) or clause
         (ii) of paragraph (c) are convertible into or exchangeable for Common
         Stock shall change (other than under or by reason of provisions
         designed to protect against dilution), the Exercise Price in effect at
         the time of such event shall forthwith be increased or decreased to the
         Exercise Price which would have obtained had the adjustments made upon
         the issuance of such rights, options or Convertible Securities been
         made upon the basis of (i) the issuance of the number of shares of
         Common Stock theretofore actually delivered upon the exercise of such
         options or rights or upon the conversion or exchange of such
         Convertible Securities, and the total consideration received therefor,
         and (ii) the issuance at the time of such

         change of any such options, rights or Convertible Securities then still
         outstanding for the consideration, if any, received by the Company
         therefor and to be received on the basis of such changed price; and on
         the expiration of any such option or right or the termination of any
         such right to convert or exchange such Convertible Securities, the
         Exercise Price then in effect hereunder shall forthwith be increased to
         the Exercise Price which would have obtained had the adjustments made
         upon the issuance of such rights or options or Convertible Securities
         been made upon the basis of the issuance of the shares of Common Stock
         theretofore actually delivered (and the total consideration received
         therefor) upon the exercise of such rights or options or upon the
         conversion or exchange of such Convertible Securities. If the purchase
         price provided for in any such right or option referred to in clause
         (i) of paragraph (c) or the rate at which any Convertible Securities
         referred to in clause (i) or clause (ii) of paragraph (c) are
         convertible into or exchangeable for Common Stock shall decrease at any
         time under or by reason of provisions with respect thereto designed to
         protect against dilution, then in case of the delivery of Common Stock
         upon the exercise of any such right or option or upon conversion or
         exchange of any such Convertible Securities, the Exercise Price then in
         effect hereunder shall forthwith be decreased to such Exercise Price as
         would have obtained had the adjustments made upon the issuance of such
         right, option or Convertible Securities been made upon the basis of the
         issuance of (and the total consideration received for) the shares of
         Common Stock delivered as aforesaid.

                  (f) If any capital reorganization or reclassification of the
         capital stock of the Company, or consolidation or merger of the Company
         with another corporation, or the sale of all or substantially all of
         its assets to another corporation shall be effected in such a way that
         holders of Common Stock shall be entitled to receive stock, securities
         or assets with respect to or in exchange for shares of Common Stock
         (such stock, securities or assets being hereinafter referred to as
         "substituted property"), then, as a condition of such reorganization,
         reclassification, consolidation, merger or sale, lawful and adequate
         provision shall be made whereby the holder of this Warrant shall
         thereafter have the right to purchase and receive upon the basis and
         upon the terms and conditions specified herein and in lieu of the
         shares of the Common Stock of the Company immediately theretofore
         purchasable and receivable upon the exercise of this Warrant, such
         substituted property as may be issued or payable with respect to or in
         exchange for a number of outstanding shares of such Common Stock equal
         to the number of shares of such stock immediately theretofore
         purchasable and receivable upon the exercise of this Warrant had such
         reorganization, reclassification, consolidation, merger or sale not
         taken place, and in any such case appropriate provision shall be made
         with respect to the rights and interests of the holder of this Warrant
         to the end that the provisions hereof (including without limitation
         provisions for adjustments of the Exercise Price and of the number of
         shares purchasable upon the exercise of this Warrant) shall thereafter
         be applicable, as nearly as may be, in relation to any substituted
         property thereafter purchasable and receivable upon the exercise of
         this Warrant. The Company shall not effect any such consolidation,
         merger or sale, unless prior to the consummation thereof the successor
         corporation (if other than the Company) resulting from such
         consolidation or merger or the corporation purchasing such assets shall
         assume by written instrument executed and mailed to the holder of this
         Warrant at the last address of such holder appearing on the books of
         the Company, the obligation to deliver to such holder such substituted
         property as, in

         accordance with the foregoing provisions, such holder may be entitled
         to purchase and receive.

                  (g) If the Company takes any other action, or if any other
         event occurs, which does not come within the scope of the provisions of
         Paragraphs (a) through (f) of this Section 10 but which should result
         in adjustment in the Exercise Price and/or the number of shares subject
         to the Warrant in order to fairly protect the purchase rights of the
         holder of this Warrant, an appropriate adjustment of such Exercise
         Price shall be made by the Company.

                  (h) Upon any adjustment of the Exercise Price, then and in
         each such case, the Company shall give written notice thereof, by
         first-class mail, postage prepaid, addressed to the holder of this
         Warrant at the address of such holder as shown on the books of the
         Company, which notice shall state the Exercise Price resulting from
         such adjustment and the increase or decrease, if any, in the number of
         shares purchasable at such price upon the exercise of this Warrant,
         setting forth in reasonable detail the method of calculation and the
         facts upon which such calculation is based.

                  (i)      In case any time:

                           (i) the Company shall pay any dividend payable in
                  stock upon its Common Stock or make any distribution (other
                  than regular cash dividends) to the holders of its Common
                  Stock;

                           (ii)  the Company shall offer for subscription pro
                  rata to the holders of its Common Stock any additional shares
                  of stock of any class or other rights;

                           (iii) there shall be any capital reorganization,
                  reclassification of the capital stock of the Company, or
                  consolidation or merger of the Company with, or sale of all or
                  substantially all of its assets to, another corporation; or

                           (iv)  there shall be a voluntary or involuntary
                  dissolution, liquidation or winding up of the Company;

         then, in any one or more of said cases, the Company shall give written
         notice, by first-class mail, postage prepaid, addressed to the holder
         of this Warrant at the address of such holder as shown on the books of
         the Company, of the date on which (A) the books of the Company shall
         close or a record shall be taken for such dividend, distribution or
         subscription rights, or (B) such reorganization, reclassification
         consolidation, merger, sale, dissolution, liquidation or winding up
         shall take place, as the case may be. Such notice shall also specify
         the date as of which the holders of Common Stock of record shall
         participate in such dividend distribution or subscription rights, or
         shall be entitled to exchange their Common Stock for securities or
         other property deliverable upon such reorganization, reclassification,
         consolidation, merger, sale, dissolution, liquidation or winding up, as
         the case may be. Such written notice shall be at least 20 days prior to
         the action in question and not less than 20 days prior to the record
         date or the date on which the Company's transfer books are closed in
         respect thereto.

                  (j) Notwithstanding anything in this Warrant to the contrary,
         no adjustment will be made to the Exercise Price as a result of the
         issuance of securities by the Company after twelve months after the
         date of this Warrant.

         11.      MISCELLANEOUS.

                  (a) GOVERNING LAW. The Warrant shall be binding upon any
         successors or assigns of the Company. The Warrant shall constitute a
         contract under the laws of Illinois and for all purposes shall be
         construed in accordance with and governed by the laws of said state,
         without giving effect to the conflict of laws principles.

                  (b) RESTRICTIONS. THIS WARRANT AND THE COMMON STOCK TO BE SOLD
         UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THEY MAY NOT
         BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF
         AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION
         THEREFROM.

                  (c) AMENDMENTS. The Warrant may be amended and the observance
         of any term of the Warrant may be waived with the written consent of
         the Company and the Holder.

                  (d) SECTION HEADINGS. The section headings used herein are for
         convenience of reference only, are not part of this Warrant and are not
         to affect construction of or be taken into consideration in
         interpreting this Warrant.

                  (e) NOTICES. Any notice required or permitted hereunder shall
         be deemed effectively given upon personal delivery to the party to be
         notified upon deposit with the United States Post Office, by certified
         mail, postage prepaid and addressed to the party to be notified at the
         address: with respect to the Company, at its principal address in
         Lincolnshire, Illinois (or such other office or agency of the Company
         as it may designate by notice in writing to the Holder); and with
         respect to the Holder, at the address of the Holder appearing on the
         books of the Company.

                                     * * * *

THIS WARRANT AND THE COMMON STOCK TO BE SOLD UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN EXEMPTION THEREFROM.

         IN WITNESS WHEREOF, BioSante Pharmaceuticals, Inc. has caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated:  _______________________, 2001

                                 BIOSANTE PHARMACEUTICALS, INC.

                                 By:_________________________________

                                 Title:______________________________

                               NOTICE OF EXERCISE

To:      BioSante Pharmaceuticals, Inc.

         1. The undersigned hereby elects to exercise the right to purchase
represented by the attached Warrant for, and to purchase thereunder, _______
shares of common stock, no par value (the "Warrant Shares") of BioSante
Pharmaceuticals, Inc. (the "Company") and tenders herewith payment of the
purchase price and any transfer taxes payable pursuant to the terms of the
Warrant.

         2. The Warrant Shares to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Warrant Shares. The undersigned believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Warrant Shares.

         3. Please issue a certificate or certificates representing said Warrant
Shares in the name set forth below:

                                           _____________________________________
                                           [Name]

         4. If said number of Warrant Shares are not all the Warrant Shares
purchasable under the Warrant, please issue a new Warrant for the balance of
such Warrant Shares in the name set forth below:

                                           _____________________________________
                                           [Name]

Executed on __________________________ (date).

_________________________________________
[NAME OF HOLDER]

By:___________________________________________________________

Printed Name:_________________________________________________

Title (if applicable):________________________________________

[OPPENHEIMER LETTERHEAD]

June 29, 2001

Board of Directors
BioSante Pharmaceuticals, Inc.
175 Olde Half Day Road
Suite 247
Lincolnshire, IL  60069

RE:  REGISTRATION STATEMENT ON FORM SB-2

Ladies and Gentlemen:

We have acted as counsel to BioSante Pharmaceuticals, Inc., a Delaware
corporation, in connection with the registration by BioSante of the offer and
resale of 25,437,500 shares of the common stock, $0.0001 par value per share, of
BioSante pursuant to BioSante's registration statement on Form SB-2 filed with
the Securities and Exchange Commission on the date hereof, on behalf of the
certain selling stockholders named therein. The shares consist of outstanding
shares (the "Issued Shares") and shares issuable by BioSante upon the exercise
of outstanding warrants (the "Warrant Shares") that were issued by BioSante in a
private placement.

In acting as counsel for BioSante and arriving at the opinions expressed below,
we have examined and relied upon originals or copies, certified or otherwise
identified to our satisfaction, of such records of BioSante, agreements and
other instruments, certificates of officers and representatives of BioSante,
certificates of public officials and other documents as we have deemed necessary
or appropriate as a basis for the opinions expressed herein. In connection with
our examination, we have assumed the genuineness of all signatures, the
authenticity of all documents tendered to us as originals, the legal capacity of
all natural persons and the conformity to original documents of all documents
submitted to us as certified or photostatic copies.

Based on the foregoing, and subject to the qualifications and limitations stated
herein, it is our opinion that:

1.       BioSante had the corporate authority to issue the Issued Shares and has
         corporate authority to issue the Warrant Shares in the manner and under
         the terms set forth in the registration statement.

Board of Directors
June 29, 2001
Page 2

2.       The Issued Shares being registered for resale by the selling
         stockholders under the registration statement have been duly
         authorized, validly issued, fully paid and nonassessable. The Warrant
         Shares being registered for resale by the selling stockholders under
         the registration statement have been duly authorized, and when issued
         in accordance with the terms of the warrants, will be validly issued,
         fully paid and non-assessable.

We express no opinion with respect to laws other than those of the federal law
of the United States of America and the Delaware General Corporation Law, and we
assume no responsibility as to the applicability thereto, or the effect thereon,
of the laws of any other jurisdiction.

We hereby consent to the filing of this opinion as Exhibit 5.1 to the
registration statement, to its use as part of the registration statement, and to
the use of our name under the caption "Legal Matters" in the prospectus
constituting a part of the registration statement.

Very truly yours,

OPPENHEIMER WOLFF & DONNELLY LLP

/s/ OPPENHEIMER WOLFF & DONNELLY LLP

                         BIOSANTE PHARMACEUTICALS, INC.
                              AMENDED AND RESTATED
                             1998 STOCK OPTION PLAN

                       (As amended through June 13, 2001)

1.       PURPOSE OF PLAN.

         The purpose of the BioSante Pharmaceuticals, Inc. 1998 Stock Option
Plan (the "Plan") is to advance the interests of BioSante Pharmaceuticals, Inc.
(the "Company") and its shareholders by enabling the Company and its
Subsidiaries to attract and retain persons of ability to perform services for
the Company and its Subsidiaries by providing an incentive to such individuals
through equity participation in the Company and by rewarding such individuals
who contribute to the achievement by the Company of its objectives, as the Board
of Directors describes them.

2.       DEFINITIONS.

         The following terms will have the meanings set forth below, unless the
context clearly otherwise requires:

         2.1 "CVE" means the Canadian Venture Exchange.

         2.2 "CVE REQUIREMENTS" means the by-laws, rules, circulars and
policies of the CVE.

         2.3 "BOARD" means the Board of Directors of the Company.

         2.4 "BROKER EXERCISE NOTICE" means a written notice pursuant to
which a Participant, upon exercise of an Option, irrevocably instructs a broker
or dealer to sell a sufficient number of shares or loan a sufficient amount of
money to pay all or a portion of the exercise price of the Option and/or any
related withholding tax obligations and remit such sums to the Company and
directs the Company to deliver stock certificates to be issued upon such
exercise directly to such broker or dealer.

         2.5 "CHANGE IN CONTROL" means an event described in Section 9.1 of
 the Plan.

         2.6 "CODE" means the Internal Revenue Code of 1986, as amended.

         2.7 "COMMITTEE"  means the group of individuals  administering the
 Plan, as provided in Section 3 of the Plan.

         2.8 "COMMON STOCK" means the common stock of the Company, no par value,
or the number and kind of shares of stock or other securities into which such
Common Stock may be changed in accordance with Section 4.3 of the Plan.

         2.9 "DISABILITY" means the disability of the Participant such as would
entitle the Participant to receive disability income benefits pursuant to the
long-term disability plan of the Company or Subsidiary then covering the
Participant or, if no such plan exists or is applicable to

the Participant, the permanent and total disability of the Participant within
the meaning of Section 22(e)(3) of the Code.

         2.10 "ELIGIBLE RECIPIENTS" means all employees of the Company or any
Subsidiary and any non-employee directors, officers, consultants and independent
contractors of the Company or any Subsidiary.

         2.11 "EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.

         2.12 "FAIR MARKET VALUE" means, with respect to the Common Stock, as of
any date (or, if no shares were traded or quoted on such date, as of the next
preceding date on which there was such a trade or quote) (a) the mean between
the reported high and low sale prices of the Common Stock if the Common Stock is
listed, admitted to unlisted trading privileges or reported on any foreign or
national securities exchange or on the Nasdaq National Market or an equivalent
foreign market on which sale prices are reported; (b) if the Common Stock is not
so listed, admitted to unlisted trading privileges or reported, the closing bid
price as reported by the Nasdaq SmallCap Market, OTC Bulletin Board or the
National Quotation Bureau, Inc. or other comparable service; or (c) if the
Common Stock is not so listed or reported, such price as the Committee
determines in good faith in the exercise of its reasonable discretion.

         2.13 "INCENTIVE STOCK OPTION" means a right to purchase Common Stock
granted to an Eligible Recipient pursuant to Section 6 of the Plan that
qualifies as an "incentive stock option" within the meaning of Section 422 of
the Code.

         2.14 "NON-STATUTORY STOCK OPTION" means a right to purchase Common
Stock granted to an Eligible Recipient pursuant to Section 6 of the Plan that
does not qualify as an Incentive Stock Option.

         2.15 "OPTION" means an Incentive Stock Option or a Non-Statutory Stock
 Option.

         2.16 "PARTICIPANT" means an Eligible Recipient who receives one or more
 Options under the Plan.

         2.17 "PREVIOUSLY ACQUIRED SHARES" means shares of Common Stock or any
other shares of capital stock of the Company that are already owned by the
Participant or, with respect to any Option, that are to be issued upon the
exercise of such Option.

         2.18 "RETIREMENT" means termination of employment or service pursuant
to and in accordance with the regular (or, if approved by the Board for purposes
of the Plan, early) retirement/pension plan or practice of the Company or
Subsidiary then covering the Participant, provided that if the Participant is
not covered by any such plan or practice, the Participant will be deemed to be
covered by the Company's plan or practice for purposes of this determination.

         2.19 "SECURITIES ACT" means the Securities Act of 1933, as amended.

         2.20 "SUBSIDIARY" means any entity that is directly or indirectly
controlled by the Company or any entity in which the Company has a significant
equity interest, as determined by the Committee.

                                       2

         2.21 "TAX DATE" means the date any withholding tax obligation arises
under the Code or other applicable tax statute for a Participant with respect to
an Option.

3.       PLAN ADMINISTRATION.

         3.1 THE COMMITTEE. The Plan will be administered by the Board or by a
committee of the Board. So long as the Company has a class of its equity
securities registered under Section 12 of the Exchange Act, any committee
administering the Plan will consist solely of two or more members of the Board
who are "non-employee directors" within the meaning of Rule 16b-3 under the
Exchange Act and, if the Board so determines in its sole discretion, who are
"outside directors" within the meaning of Section 162(m) of the Code. Such a
committee, if established, will act by majority approval of the members (but may
also take action with the written consent of all of the members of such
committee), and a majority of the members of such a committee will constitute a
quorum. As used in the Plan, "Committee" will refer to the Board or to such a
committee, if established. To the extent consistent with corporate law, the
Committee may delegate to any officers of the Company the duties, power and
authority of the Committee under the Plan pursuant to such conditions or
limitations as the Committee may establish; provided, however, that only the
Committee may exercise such duties, power and authority with respect to Eligible
Recipients who are subject to Section 16 of the Exchange Act. The Committee may
exercise its duties, power and authority under the Plan in its sole and absolute
discretion without the consent of any Participant or other party, unless the
Plan specifically provides otherwise. Each determination, interpretation or
other action made or taken by the Committee pursuant to the provisions of the
Plan will be final, conclusive and binding for all purposes and on all persons,
including, without limitation, the Company, the shareholders of the Company, the
participants and their respective successors-in-interest. No member of the
Committee will be liable for any action or determination made in good faith with
respect to the Plan or any Option granted under the Plan.

         3.2      AUTHORITY OF THE COMMITTEE.

                  (a) In accordance with and subject to the provisions of the
         Plan, the Committee will have the authority to determine all provisions
         of Options as the Committee may deem necessary or desirable and as
         consistent with the terms of the Plan, including, without limitation,
         the following: (i) the Eligible Recipients to be selected as
         Participants; (ii) the nature and extent of the Options to be made to
         each Participant (including the number of shares of Common Stock to be
         subject to each Option, the exercise price and the manner in which
         Options will become exercisable) and the form of written agreement, if
         any, evidencing such Option; (iii) the time or times when Options will
         be granted; (iv) the duration of each Option; and (v) the restrictions
         and other conditions to which the Options may be subject. In addition,
         the Committee will have the authority under the Plan in its sole
         discretion to pay the economic value of any Option in the form of cash,
         shares of Common Stock, shares of any capital stock of the Company, or
         any combination of both.

                  (b) The Committee will have the authority under the Plan to
         amend or modify the terms of any outstanding Option in any manner,
         including, without limitation, the authority to modify the number of
         shares or other terms and conditions of an Option,

                                       3

         extend the term of an Option, accelerate the exercisability or
         otherwise terminate any restrictions relating to an Option, accept the
         surrender of any outstanding Option or, to the extent not previously
         exercised or vested, authorize the grant of new Options in substitution
         for surrendered Options; provided, however that the amended or modified
         terms are permitted by the Plan as then in effect and that any
         Participant adversely affected by such amended or modified terms has
         consented to such amendment or modification. No amendment or
         modification to an Option, however, whether pursuant to this Section
         3.2 or any other provisions of the Plan, will be deemed to be a
         re-grant of such Option for purposes of this Plan.

                  (c) In the event of (i) any reorganization, merger,
         consolidation, recapitalization, liquidation, reclassification, stock
         dividend, stock split, combination of shares, rights offering,
         extraordinary dividend or divestiture (including a spin-off) or any
         other similar change in corporate structure or shares, (ii) any
         purchase, acquisition, sale or disposition of a significant amount of
         assets or a significant business, (iii) any change in accounting
         principles or practices, or (iv) any other similar change, in each case
         with respect to the Company or any other entity whose performance is
         relevant to the grant or vesting of an Option, the Committee (or, if
         the Company is not the surviving corporation in any such transaction,
         the board of directors of the surviving corporation) may, without the
         consent of any affected Participant, amend or modify the conditions to
         the exercisability of any outstanding Option that is based in whole or
         in part on the financial performance of the Company (or any Subsidiary
         or division thereof) or such other entity so as equitably to reflect
         such event, with the desired result that the criteria for evaluating
         such financial performance of the Company or such other entity will be
         substantially the same (in the sole discretion of the Committee or the
         board of directors of the surviving corporation) following such event
         as prior to such event; provided, however, that the amended or modified
         terms are permitted by the Plan as then in effect.

4.       SHARES AVAILABLE FOR ISSUANCE.

         4.1 MAXIMUM NUMBER OF SHARES AVAILABLE. Subject to Section 4.4 below
and adjustment as provided in Section 4.3 of the Plan, the maximum number of
shares of Common Stock that will be available for issuance under the Plan will
be 8,500,000 shares of Common Stock, plus any shares of Common Stock which, as
of the date the Plan is approved by the shareholders of the Company, are
reserved for issuance under the Company's existing Stock Option Plan and which
are not thereafter issued or which have been issued but are subsequently
forfeited and which would otherwise have been available for further issuance
under such plan.

         4.2 ACCOUNTING FOR OPTIONS. Shares of Common Stock that are issued
under the Plan or that are subject to outstanding Options will be applied to
reduce the maximum number of shares of Common Stock remaining available for
issuance under the Plan. Any shares of Common Stock that are subject to an
Option that lapses, expires, is forfeited or for any reason is terminated
unexercised and any shares of Common Stock that are subject to an Option that is
settled or paid in cash or any form other than shares of Common Stock will
automatically again become available for issuance under the Plan.

                                      4

         4.3 ADJUSTMENTS TO SHARES AND OPTIONS. In the event of any
reorganization, merger, consolidation, recapitalization, liquidation,
reclassification, stock dividend, stock split, combination of shares, rights
offering, divestiture or extraordinary dividend (including a spin-off) or any
other change in the corporate structure or shares of the Company, the Committee
(or, if the Company is not the surviving corporation in any such transaction,
the board of directors of the surviving corporation) will make appropriate
adjustment (which determination will be conclusive) as to the number and kind of
securities or other property (including cash) available for issuance or payment
under the Plan and, in order to prevent dilution or enlargement of the rights of
Participants, the number and kind of securities or other property (including
cash) subject to, and the exercise price of, outstanding Options.

         4.4 CVE REQUIREMENTS. So long as the Common Stock of the Company is
listed on the CVE and the Company has not been exempted from the CVE
Requirements the number of shares of Common Stock that may be reserved for
issuance pursuant to the Plan and any other stock option plan, stock purchase
plan or for remuneration for any service performed for or on behalf of the
Company to any one party shall not exceed five percent of the outstanding shares
of Common Stock, on a non-diluted basis;

5.       PARTICIPATION.

         Participants in the Plan will be those Eligible Recipients who, in the
judgment of the Committee, have contributed, are contributing or are expected to
contribute to the achievement of objectives as determined by the Board of the
Company or its Subsidiaries. Eligible Recipients may be granted from time to
time one or more Options as may be determined by the Committee in its sole
discretion. Options will be deemed to be granted as of the date specified in the
grant resolution of the Committee, which date will be the date of any related
agreement with the Participant.

6.       OPTIONS.

         6.1 GRANT. An Eligible Recipient may be granted one or more Options
under the Plan, and such Options will be subject to such terms and conditions,
consistent with the other provisions of the Plan, as may be determined by the
Committee in its sole discretion. The Committee may designate whether an Option
is to be considered an Incentive Stock Option or a Non-Statutory Stock Option.
To the extent that any Incentive Stock Option granted under the Plan ceases for
any reason to qualify as an "incentive stock option" for purposes of Section 422
of the Code, such Incentive Stock Option will continue to be outstanding for
purposes of the Plan but will thereafter be deemed to be a Non-Statutory Stock
Option.

         6.2 EXERCISE PRICE. The per share price to be paid by a Participant
upon exercise of an Option will be determined by the Committee in its discretion
at the time of the Option grant; provided, however, that (a) such price will not
be less than 100% of the Fair Market Value of one share of Common Stock on the
date of grant with respect to an Incentive Stock Option (110% of the Fair Market
Value if, at the time the Incentive Stock Option is granted, the Participant
owns, directly or indirectly, more than 10% of the total combined voting power
of all classes of stock of the Company or any parent or subsidiary corporation
of the Company), and (b) such price will not be less than 85% of the Fair Market
Value of one share of Common Stock on the date of

                                       5

grant with respect to a Non-Statutory Stock Option. Notwithstanding the
foregoing, so long as the Common Stock of the Company is listed on the CVE and
the Company has not been exempted from the CVE Requirements in this regard, the
exercise price per share of an Option shall not be less than the price per share
permitted by the CVE Requirements.

         6.3 EXERCISABILITY AND DURATION. An Option will become exercisable at
such times and in such installments as may be determined by the Committee in its
sole discretion at the time of grant; provided, however, that no Incentive Stock
Option may be exercisable after 10 years from its date of grant (five years from
its date of grant if, (a) at the time the Incentive Stock Option is granted, the
Participant owns, directly or indirectly, more than 10% of the total combined
voting power of all classes of stock of the Company or any parent or subsidiary
corporation of the Company or (b) the Common Stock of the Company is then listed
on the CVE and the Company has not been exempted from the CVE Requirements in
this regard).

         6.4 PAYMENT OF EXERCISE PRICE. The total purchase price of the shares
to be purchased upon exercise of an Option must be paid entirely in cash
(including check, bank draft or money order); provided, however, that the
Committee, in its sole discretion and upon terms and conditions established by
the Committee, may allow such payments to be made, in whole or in part, by
tender of a Broker Exercise Notice, Previously Acquired Shares, a promissory
note (on terms acceptable to the Committee in its sole discretion) or by a
combination of such methods.

         6.5 MANNER OF EXERCISE. An Option may be exercised by a Participant in
whole or in part from time to time, subject to the conditions contained in the
Plan and in the agreement evidencing such Option, by delivery in person, by
facsimile or electronic transmission or through the mail of written notice of
exercise to the Company (Attention: Chief Financial Officer) at its principal
executive office in Lincolnshire, Illinois and by paying in full the total
exercise price for the shares of Common Stock to be purchased in accordance with
Section 6.4 of the Plan.

         6.6 AGGREGATE LIMITATION OF STOCK SUBJECT TO INCENTIVE STOCK OPTIONS.
To the extent that the aggregate Fair Market Value (determined as of the date an
Incentive Stock Option is granted) of the shares of Common Stock with respect to
which incentive stock options (within the meaning of Section 422 of the Code)
are exercisable for the first time by a Participant during any calendar year
(under the Plan and any other incentive stock option plans of the Company or any
subsidiary or parent corporation of the Company (within the meaning of the
Code)) exceeds $100,000 (or such other amount as may be prescribed by the Code
from time to time), such excess Options will be treated as Non-Statutory Stock
Options. The determination will be made by taking incentive stock options into
account in the order in which they were granted. If such excess only applies to
a portion of an Incentive Stock Option, the Committee, in its discretion, will
designate which shares will be treated as shares to be acquired upon exercise of
an Incentive Stock Option.

7.       EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE.

         7.1 TERMINATION DUE TO DEATH, DISABILITY OR RETIREMENT.
Unless  otherwise  provided  by the Committee in its sole discretion in the
agreement evidencing an Option:

                                       6

                  (a) In the event a Participant's employment or other service
         with the Company and all Subsidiaries is terminated by reason of death
         or Disability, all outstanding Options then held by the Participant
         will remain exercisable, to the extent exercisable as of the date of
         such termination, for a period of six months after such termination
         (but in no event after the expiration date of any such Option).

                  (b) In the event a Participant's employment or other service
         with the Company and all Subsidiaries is terminated by reason of
         Retirement, all outstanding Options then held by the Participant will
         remain exercisable, to the extent exercisable as of the date of such
         termination, for a period of three months after such termination (but
         in no event after the expiration date of any such Option).

         7.2 TERMINATION FOR REASONS OTHER THAN DEATH, DISABILITY OR RETIREMENT.

                  (a) Unless otherwise provided by the Committee in its sole
         discretion in the agreement evidencing an Option, in the event a
         Participant's employment or other service is terminated with the
         Company and all Subsidiaries for any reason other than death,
         Disability or Retirement, or a Participant is in the employ or service
         of a Subsidiary and the Subsidiary ceases to be a Subsidiary of the
         Company (unless the Participant continues in the employ or service of
         the Company or another Subsidiary), all rights of the Participant under
         the Plan and any agreements evidencing an Option will immediately
         terminate without notice of any kind, and no Options then held by the
         Participant will thereafter be exercisable; provided, however, that if
         such termination is due to any reason other than termination by the
         Company or any Subsidiary for "cause," all outstanding Options then
         held by such Participant will remain exercisable, to the extent
         exercisable as of such termination, for a period of three months after
         such termination (but in no event after the expiration date of any such
         Option).

                  (b) For purposes of this Section 7.2, "cause" (as determined
         by the Committee) will be as defined in any employment or other
         agreement or policy applicable to the Participant or, if no such
         agreement or policy exists, will mean (i) dishonesty, fraud,
         misrepresentation, embezzlement or deliberate injury or attempted
         injury, in each case related to the Company or any Subsidiary, (ii) any
         unlawful or criminal activity of a serious nature, (iii) any
         intentional and deliberate breach of a duty or duties that,
         individually or in the aggregate, are material in relation to the
         Participant's overall duties, or (iv) any material breach of any
         employment, service, confidentiality or non-compete agreement entered
         into with the Company or any Subsidiary.

         7.3 MODIFICATION OF RIGHTS UPON TERMINATION. Notwithstanding the other
provisions of this Section 7, upon a Participant's termination of employment or
other service with the Company and all Subsidiaries, the Committee may, in its
sole discretion (which may be exercised at any time on or after the date of
grant, including following such termination), cause Options (or any part
thereof) then held by such Participant to become or continue to become
exercisable and/or remain exercisable following such termination of employment
or service; provided, however, that no Option may remain exercisable beyond its
expiration date.

                                       7

         7.4 EXERCISE OF INCENTIVE STOCK OPTIONS FOLLOWING TERMINATION. Any
Incentive Stock Option that remains unexercised more than one year following
termination of employment by reason of Disability or more than three months
following termination for any reason other than death or Disability will
thereafter be deemed to be a Non-Statutory Stock Option.

         7.5 DATE OF TERMINATION OF EMPLOYMENT OR OTHER SERVICE. Unless the
Committee otherwise determines in its sole discretion, a Participant's
employment or other service will, for purposes of the Plan, be deemed to have
terminated on the date recorded on the personnel or other records of the Company
or the Subsidiary for which the Participant provides employment or other
service, as determined by the Committee in its sole discretion based upon such
records.

8.       PAYMENT OF WITHHOLDING TAXES.

         8.1 GENERAL RULES. The Company is entitled to (a) withhold and deduct
from future wages of the Participant (or from other amounts that may be due and
owing to the Participant from the Company or a Subsidiary), or make other
arrangements for the collection of, all legally required amounts necessary to
satisfy any and all foreign, federal, state and local withholding and
employment-related tax requirements attributable to an Option, including,
without limitation, the grant or exercise of an Option or a disqualifying
disposition of stock received upon exercise of an Incentive Stock Option, or (b)
require the Participant promptly to remit the amount of such withholding to the
Company before taking any action, including issuing any shares of Common Stock,
with respect to an Option.

         8.2 SPECIAL RULES. The Committee may, in its sole discretion and upon
terms and conditions established by the Committee, permit or require a
Participant to satisfy, in whole or in part, any withholding or
employment-related tax obligation described in Section 8.1 of the Plan by
electing to tender Previously Acquired Shares, a Broker Exercise Notice or a
promissory note (on terms acceptable to the Committee in its sole discretion),
or by a combination of such methods.

9.       CHANGE IN CONTROL.

         9.1 CHANGE IN  CONTROL.  For  purposes  of this  Section 9, a "Change
in  Control" of the Company will mean the following:

                  (a) the sale, lease, exchange or other transfer, directly or
         indirectly, of substantially all of the assets of the Company (in one
         transaction or in a series of related transactions) to a person or
         entity that is not controlled by the Company;

                  (b) the  approval by the  shareholders  of the  Company
         of any plan or proposal  for the liquidation or dissolution of the
         Company;

                  (c) any person becomes after the effective date of the Plan
         the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
         Act), directly or indirectly, of (i) 20% or more, but not 50% or more,
         of the combined voting power of the Company's outstanding securities
         ordinarily having the right to vote at elections of directors, unless
         the transaction resulting in such ownership has been approved in
         advance by the Continuity Directors (as defined in Section 9.2 below),
         or (ii) 50% or more of the

                                       8

         combined voting power of the Company's outstanding securities
         ordinarily having the right to vote at elections of directors
         (regardless of any approval by the Continuity Directors);

                  (d) a merger or consolidation to which the Company is a party
         if the shareholders of the Company immediately prior to effective date
         of such merger or consolidation have "beneficial ownership" (as defined
         in Rule 13d-3 under the Exchange Act), immediately following the
         effective date of such merger or consolidation, of securities of the
         surviving corporation representing (i) more than 50%, but less than
         80%, of the combined voting power of the surviving corporation's then
         outstanding securities ordinarily having the right to vote at elections
         of directors, unless such merger or consolidation has been approved in
         advance by the Continuity Directors, or (ii) 50% or less of the
         combined voting power of the surviving corporation's then outstanding
         securities ordinarily having the right to vote at elections of
         directors (regardless of any approval by the Continuity Directors);

                  (e) the Continuity  Directors  cease for any reason to
         constitute at least a majority of the Board; or

                  (f) any other change in control of the Company of a nature
         that would be required to be reported pursuant to Section 13 or 15(d)
         of the Exchange Act, whether or not the Company is then subject to such
         reporting requirement.

         9.2 CONTINUITY DIRECTORS. For purposes of this Section 9, "Continuity
Directors" of the Company will mean any individuals who are members of the Board
on the effective date of the Plan and any individual who subsequently becomes a
member of the Board whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the Continuity
Directors (either by specific vote or by approval of the Company's proxy
statement in which such individual is named as a nominee for director without
objection to such nomination).

         9.3 ACCELERATION OF EXERCISABILITY. Without limiting the authority of
the Committee under Sections 3.2 and 4.3 of the Plan, if a Change in Control of
the Company occurs, then, unless otherwise provided by the Committee in its sole
discretion either in the agreement evidencing an Option at the time of grant or
at any time after the grant of an Option, all outstanding Options will become
immediately exercisable in full and will remain exercisable for the remainder of
their terms, regardless of whether the Participant to whom such Options have
been granted remains in the employ or service of the Company or any Subsidiary.

10.      RIGHTS OF ELIGIBLE RECIPIENTS AND PARTICIPANTS; TRANSFERABILITY.

         10.1 EMPLOYMENT OR SERVICE. Nothing in the Plan will interfere with or
limit in any way the right of the Company or any Subsidiary to terminate the
employment or service of any Eligible Recipient or Participant at any time, nor
confer upon any Eligible Recipient or Participant any right to continue in the
employ or service of the Company or any Subsidiary.

         10.2 RIGHTS AS A SHAREHOLDER. As a holder of Options, a Participant
will have no rights as a shareholder unless and until such Options are exercised
for, or paid in the form of, shares of

                                      9

Common Stock and the Participant becomes the holder of record of such shares.
Except as otherwise provided in the Plan, no adjustment will be made for
dividends or distributions with respect to such Options as to which there is a
record date preceding the date the Participant becomes the holder of record of
such shares, except as the Committee may determine in its discretion.

         10.3 RESTRICTIONS ON TRANSFER. Except pursuant to testamentary will or
the laws of descent and distribution or as otherwise expressly permitted by the
Plan (unless approved by the Committee in its sole discretion and the CVE, if
necessary), no right or interest of any Participant in an Option prior to the
exercise of such Option will be assignable or transferable, or subjected to any
lien, during the lifetime of the Participant, either voluntarily or
involuntarily, directly or indirectly, by operation of law or otherwise. A
Participant will, however, be entitled to designate a beneficiary to receive an
Option upon such Participant's death, and in the event of a Participant's death,
payment of any amounts due under the Plan will be made to, and exercise of
Options (to the extent permitted pursuant to Section 7 of the Plan) may be made
by, the Participant's legal representatives, heirs and legatees.

         10.4 BREACH OF CONFIDENTIALITY OR NON-COMPETE AGREEMENTS.
Notwithstanding anything in the Plan to the contrary, in the event that a
Participant materially breaches the terms of any confidentiality or non-compete
agreement entered into with the Company or any Subsidiary, whether such breach
occurs before or after termination of such Participant's employment or other
service with the Company or any Subsidiary, the Committee in its sole discretion
may immediately terminate all rights of the Participant under the Plan and any
agreements evidencing an Option then held by the Participant without notice of
any kind.

         10.5 NON-EXCLUSIVITY OF THE PLAN. Nothing contained in the Plan is
intended to modify or rescind any previously approved compensation plans or
programs of the Company or create any limitations on the power or authority of
the Board to adopt such additional or other compensation arrangements as the
Board may deem necessary or desirable.

11.      SECURITIES LAW AND OTHER RESTRICTIONS.

         Notwithstanding any other provision of the Plan or any agreements
entered into pursuant to the Plan, the Company will not be required to issue any
shares of Common Stock under this Plan, and a Participant may not sell, assign,
transfer or otherwise dispose of shares of Common Stock issued pursuant to
Options granted under the Plan, unless (a) there is in effect with respect to
such shares a registration statement under the Securities Act and any applicable
state or foreign securities laws or an exemption from such registration under
the Securities Act and applicable state or foreign securities laws, and (b)
there has been obtained any other consent, approval or permit from any other
regulatory body which the Committee, in its sole discretion, deems necessary or
advisable. The Company may condition such issuance, sale or transfer upon the
receipt of any representations or agreements from the parties involved, and the
placement of any legends on certificates representing shares of Common Stock, as
may be deemed necessary or advisable by the Company in order to comply with such
securities law or other restrictions.

                                       10

12.      PLAN AMENDMENT, MODIFICATION AND TERMINATION.

         The Board may suspend or terminate the Plan or any portion thereof at
any time, and may amend the Plan from time to time in such respects as the Board
may deem advisable in order that Options under the Plan will conform to any
change in applicable laws or regulations or in any other respect the Board may
deem to be in the best interests of the Company; provided, however, that no
amendments to the Plan will be effective without approval of the shareholders of
the Company if shareholder approval of the amendment is then required pursuant
to Section 422 of the Code or the rules of any stock exchange or Nasdaq or
similar regulatory body. No termination, suspension or amendment of the Plan may
adversely affect any outstanding Option without the consent of the affected
Participant; provided, however, that this sentence will not impair the right of
the Committee to take whatever action it deems appropriate under Sections 3.2,
4.3 and 9 of the Plan.

13.      EFFECTIVE DATE AND DURATION OF THE PLAN.

         The Plan is effective as of December 8, 1998, the date it was adopted
by the Board. The Plan will terminate at midnight on December 8, 2008 and may be
terminated prior to such time to by Board action, and no Option will be granted
after such termination. Options outstanding upon termination of the Plan may
continue to be exercised in accordance with their terms.

14.      MISCELLANEOUS.

         14.1 GOVERNING LAW. The validity, construction, interpretation,
administration and effect of the Plan and any rules, regulations and actions
relating to the Plan will be governed by and construed exclusively in accordance
with the laws of the State of Wyoming, notwithstanding the conflicts of laws
principles of any jurisdictions.

         14.2     SUCCESSORS  AND  ASSIGNS.  The Plan  will be  binding  upon
and inure to the  benefit  of the successors and permitted assigns of the
Company and the Participants.

                                       11

                                                               Exhibit 10.20

                         BIOSANTE PHARMACEUTICALS, INC.

                             SUBSCRIPTION AGREEMENT

BioSante Pharmaceuticals, Inc.
175 Olde Half Day Road, Suite 247
Lincolnshire, IL  60069
Attn:    Mr. Stephen M. Simes

Ladies and Gentlemen:

         1. SUBSCRIPTION. The undersigned is hereby purchasing from BioSante
Pharmaceuticals, Inc., a Wyoming corporation, ______ units (must be at least
100,000 units, unless BioSante in its sole discretion otherwise agrees) for a
purchase price of $.50 per unit. Each unit consists of (i) one share of
BioSante's common stock, no par value, and (ii) a warrant to purchase .25 shares
of BioSante's common stock at an exercise price of $.625 per full share, in
substantially the form of warrant attached as ANNEX A hereto. This subscription
is being made in connection with BioSante's private placement of units to
certain "accredited investors" (within the meaning of Rule 501 under Regulation
D of the Securities Act of 1933, as amended) and existing accredited investors
in BioSante.

         2. CLOSING. The undersigned shall pay the purchase price for the units
by electronic wire transfer in accordance with the following instructions:

                  Bank Name:  HARRIS BANK, BARRINGTON
                  ABA #:  071919463 CODE 10
                  Account #:  7154100
                  Credit to the account of:  BIOSANTE PHARMACEUTICALS, INC.

or by delivery of a bank check or certified check made payable to "BioSante
Pharmaceuticals, Inc." All checks should be delivered, together with an executed
copy of this subscription agreement, to BioSante as follows:

                  BioSante Pharmaceuticals, Inc.
                  175 Olde Half Day Road, Suite 247
                  Lincolnshire, IL  60069
                  Attn:    Mr. Stephen M. Simes

In the event, BioSante does not receive subscriptions for the minimum placement
of $2,000,000, which may include a minimum of $500,000 from investors identified
by Sunrise Securities Corp., the Company will return the purchase price to the
undersigned, without any interest thereon.

         3. REPRESENTATIONS AND WARRANTIES OF BIOSANTE. To induce the
undersigned to enter into this subscription agreement and to purchase the units,
BioSante hereby represents and warrants to the undersigned the following:

                  (a) ORGANIZATION STANDING, ETC. BioSante is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Wyoming and has the requisite corporate power and authority to own or lease its
properties and to carry on its business as it is now being conducted. BioSante
has the requisite corporate power and authority to issue the units and to
perform its obligations under this subscription agreement.

                  (b) VALID ISSUANCE. The units, when issued and delivered
pursuant to terms of this subscription agreement, will be duly and validly
authorized, validly issued, fully paid and nonassessable, and free of preemptive
rights and no personal liability will attach to the ownership thereof. The
shares of BioSante common stock underlying the units and issuable upon exercise
of the warrants underlying the units, when issued and delivered pursuant to
terms of this subscription agreement and the warrants, will be duly and validly
authorized, validly issued, fully paid and nonassessable, and free of preemptive
rights and no personal liability will attach to the ownership thereof.

                  (c) CORPORATE ACTS AND PROCEEDINGS. This subscription
agreement and this offering have been duly authorized by all necessary corporate
action on behalf of BioSante. This subscription agreement has been duly executed
and delivered by authorized officers of BioSante, is a valid and binding
agreement on the part of BioSante and is enforceable against BioSante in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency or other laws affecting the rights of creditors generally
or by general equitable principles. All corporate actions necessary to the
authorization, creation, issuance and delivery of the units and the conducting
of this offering have been taken by BioSante.

                  (d) COMPLIANCE WITH APPLICABLE LAWS AND OTHER INSTRUMENTS.
Neither the execution or delivery of, nor the performance of or compliance with
this subscription agreement, nor the issuance of the units, nor the consummation
of the transactions contemplated hereby will, with or without the giving of
notice or passage of time, result in any material breach of, or constitute a
material default under, or result in the imposition of any material lien or
encumbrance upon any asset or property of BioSante pursuant to any material
agreement or other instrument to which BioSante is a party or by which it or any
of its properties, assets or rights is bound or affected, and will not violate
BioSante's Articles of Incorporation or Bylaws.

                  (e) SECURITIES LAWS. Based in part upon the representations of
the undersigned in SECTION 5 hereof, no consent, authorization, approval, permit
or order of or filing with any governmental or regulatory authority is required
under current laws and regulations in connection with the execution and delivery
of this subscription agreement or the offer, issuance, sale or delivery of the
units other than (i) the filing of a Form D pursuant to Regulation D under the
Securities Act of 1933, as amended, (ii) the filing, if required, of any notice
with any state whose laws require such filing, (iii) the qualification thereof,
if required, under other applicable state laws, which qualification has been or
will be effected as a condition of this offering, and (iv) the filing, if
required, of any notice or other document with the Canadian Venture Exchange.
Under the circumstances contemplated by this subscription agreement, the offer,
issuance, sale and delivery of the units will not, under current laws and
regulations, require compliance with the prospectus delivery or registration
requirements in the Securities Act.

                                       2

                  (f) CAPITAL STOCK. As of February 15, 2001, the authorized and
issued capital stock of BioSante is correctly set forth in the term sheet
attached as ANNEX B hereto. All of the outstanding shares of BioSante capital
stock were duly authorized and validly issued and are fully paid and
nonassessable. Except as set forth in the term sheet attached as ANNEX B hereto,
there are no outstanding subscriptions, options, warrants, calls, contracts,
demands, commitments, convertible securities or other agreements or arrangements
of any character or nature whatever, other than in connection with this
offering, pursuant to which BioSante is obligated to issue any securities of any
kind representing an ownership interest in BioSante. Neither the offer nor the
issuance or sale of the units constitutes an event under any anti-dilution
provisions of any securities issued (or issuable pursuant to outstanding rights,
warrants or options) by BioSante or any agreements with respect to the issuance
of securities by BioSante, which will either increase the number of securities
issuable pursuant to such provisions or decrease the consideration per share to
be received by BioSante pursuant to such provisions. No holder of any securities
of BioSante is entitled to any preemptive or similar rights to purchase any
securities of BioSante in connection with this offering, other than the
investors in BioSante's private placement completed in May 1999, which
pre-emptive rights have been waived with respect to this offering.

                  (g) SEC FILINGS. BioSante has furnished the undersigned true
and complete copies of BioSante's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1999, Quarterly Reports on Form 10-QSB for the quarters
ended March 31, June 30 and September 30, 2000, and a Current Report on Form 8-K
dated June 13, 2000 and all subsequent filings, if any, made by BioSante with
the SEC. As of their respective filing dates, the SEC filings complied in all
material respects with the applicable requirements of the Securities Exchange
Act of 1934, as amended. None of the SEC filings as of their respective dates
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading, except to the extent amendments thereto were made in compliance with
SEC rules and regulations subsequent to the date thereof.

         4.       TRANSFER RESTRICTIONS.

                  (a) The undersigned realizes that the units, the shares of
BioSante common stock and warrants underlying the units and the shares of
BioSante common stock issuable upon exercise of the warrants, are not registered
under the Securities Act or any foreign or state securities laws. The
undersigned agrees that the units, the shares of BioSante common stock and
warrants underlying the units and the shares of BioSante common stock issuable
upon exercise of the warrants will not be sold, offered for sale, pledged,
hypothecated or otherwise transferred, except in compliance with the Securities
Act and applicable foreign and state securities laws. The undersigned
understands that the undersigned can only transfer the units, the shares of
BioSante common stock and warrants underlying the units and the shares of
BioSante common stock issuable upon exercise of the warrants pursuant to
registration under the Securities Act or pursuant to an exemption therefrom. The
undersigned understands that to transfer the units, the shares of BioSante
common stock and warrants underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants may require in certain
jurisdictions specific approval by the appropriate governmental agency or
commission in such jurisdiction. The undersigned has been advised that, except
as set forth in SECTION 6 hereof, BioSante has no

                                       3

obligation, and does not intend, to cause the units, the shares of BioSante
common stock and warrants underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants to be registered under the
Securities Act or the securities law of any other jurisdiction or to comply with
the requirements for any exemption under the Securities Act, including but not
limited to, those provided by Rule 144 and Rule 144A promulgated under the
Securities Act, or under the securities law of any other jurisdiction.

                  (b) To enable BioSante to enforce the transfer restrictions
contained in SECTION 4(a) hereof, the undersigned hereby consents to the placing
of legends upon, and stop-transfer orders with the transfer agent of the common
stock with respect to, the units, the shares of BioSante common stock and
warrants underlying the units and the shares of BioSante common stock issuable
upon exercise of the warrants.

         5. REPRESENTATIONS AND WARRANTIES OF THE UNDERSIGNED. To induce
BioSante to accept the undersigned's subscription, the undersigned hereby
represents and warrants to BioSante that:

                  (a) The undersigned, if an individual, has reached the age of
majority in the jurisdiction in which the undersigned resides, is a bona fide
resident of the jurisdiction contained in the address set forth on the signature
page of this subscription agreement, is legally competent to execute this
subscription agreement, and does not intend to change residence to another
jurisdiction;

                  (b) The undersigned, if an entity, was not formed solely for
purposes of making this investment and is duly authorized to execute this
subscription agreement and this subscription agreement, when executed and
delivered by the undersigned, will constitute a legal, valid and binding
obligation enforceable against the undersigned in accordance with its terms; and
the execution, delivery and performance of this subscription agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all requisite corporate or other necessary action on the part of the
undersigned;

                  (c) The units subscribed for hereby are being acquired by the
undersigned for investment purposes only, for the account of the undersigned and
not with the view to any resale or distribution thereof, and the undersigned is
not participating, directly or indirectly, in a distribution of such units and
will not take, or cause to be taken, any action that would cause the undersigned
to be deemed an "underwriter" of such units as defined in Section 2(11) of the
Securities Act;

                  (d) The undersigned has had access to all materials, books,
records, documents and information relating to BioSante which the undersigned
has requested, including the SEC filings, and has been provided the opportunity
to verify the accuracy of the information contained therein;

                  (e) The undersigned acknowledges and understands that
investment in the units involves a high degree of risk, has read and understood
the risk factors contained in Annex C attached hereto and in the SEC filings
made by BioSante and provided to the undersigned;

                                       4

                  (f) The undersigned acknowledges that the undersigned has been
offered an opportunity to ask questions of, and receive answers from, officers
of BioSante concerning all material aspects of BioSante and its business and
this offering, and that any request for such information has been fully complied
with to the extent BioSante possesses such information or can acquire it without
unreasonable effort or expense;

                  (g) The undersigned has such knowledge and experience in
financial and business matters that the undersigned is capable of evaluating the
merits and risks of an investment in BioSante and can afford a complete loss of
the undersigned's investment in BioSante;

                  (h) The undersigned has, in connection with the undersigned's
decision to purchase the units, relied solely upon this subscription agreement
and the SEC filings;

                  (i) The undersigned represents and warrants to and covenants
with BioSante that the undersigned has not engaged and will not engage in any
sales of the units, including a short sale covered by the units, prior to the
effectiveness of a resale registration statement (as defined in SECTION 6),
except to the extent that any such short sale is fully covered by shares of
BioSante's common stock other than the units, or such sale is otherwise exempt
from registration under the Securities Act;

                  (j) The undersigned recognizes that no governmental agency has
passed upon the issuance of the units or made any finding or determination as to
the fairness of this offering;

                  (k) If the undersigned is purchasing the units subscribed for
hereby in a representative or fiduciary capacity, the representations and
warranties contained herein shall be deemed to have been made on behalf of the
person or persons for whom such units are being purchased;

                  (l) The undersigned has not entered into any agreement to pay
commissions to any persons with respect to the purchase or sale of the units,
except commissions for which the undersigned will be responsible;

                  (m) The undersigned acknowledges that BioSante will pay to
Sunrise Securities Corp. a commission with respect to the sale of the units by
BioSante to the undersigned of (i) 7.0% of the gross sales price of the units
sold by BioSante in this offering to investors introduced to BioSante by
Sunrise, payable at the option of Sunrise in cash or in units valued at the unit
sales prices less the cash commission, and (ii) a five-year warrant to purchase
units covering a number of units equal to 7.0% of the total number of units sold
by BioSante in this offering to investors introduced to BioSante by Sunrise,
inclusive of the commission units, if any, issued to Sunrise at an exercise
price of $.625 and the cash commission and five-year warrant will also be
payable with respect to (x) all securities subscribed to by bona fide
"Accredited Investors" introduced to BioSante by Sunrise who are ready willing
and able to close but whose subscriptions are rejected by BioSante other than
due to over-subscription, and (y) any purchase of BioSante securities by any
investor introduced by Sunrise to BioSante taking place at any time within 12
months, as long as such introduction occurred before the closing of this
offering;

                                       5

                  (n) The undersigned acknowledges and understands that the
units, the shares of BioSante common stock and warrants underlying the units and
the shares of BioSante common stock issuable upon exercise of the warrants may
not be resold or otherwise transferred except in a transaction registered under
the Securities Act or unless an exemption from such registration is available.
The undersigned understands that the certificate(s) evidencing the units, the
shares of BioSante common stock and warrants underlying the units and the shares
of BioSante common stock issuable upon exercise of the warrants will be
imprinted with a legend that prohibits the transfer of such shares unless (i)
they are registered or such registration is not required, and (ii) if the
transfer is pursuant to an exemption from registration other than Rule 144 under
the Securities Act and, if BioSante shall so request in writing, an opinion of
counsel reasonably satisfactory to BioSante is obtained to the effect that the
transaction is so exempt; and

                  (o) The undersigned is an "accredited investor" within the
meaning of Section 501(a) of Regulation D promulgated under the Securities Act.
Specifically the undersigned is (check appropriate item(s)):

                   / /     a bank as defined in Section 3(a)(2) of the
                           Securities Act, or a savings and loan association or
                           other institution as defined in Section 3(a)(5)(A) of
                           the Securities Act whether acting in its individual
                           or fiduciary capacity; a broker or dealer registered
                           pursuant to Section 15 of the Exchange Act; an
                           insurance company as defined in Section 2(13) of the
                           Securities Act; an investment company registered
                           under the Investment Company Act of 1940 or a
                           business development company as defined in Section
                           2(a)(48) of that Securities Act; a Small Business
                           Investment Company licensed by the U.S. Small
                           Business Administration under Section 301(c) of (d)
                           of the Small Business Investment Act of 1958; a plan
                           established and maintained by a state, its political
                           subdivisions, for the benefit of its employees, if
                           such plan has total assets in excess of $5,000,000;
                           any employee benefit plan within the meaning of the
                           Employment Retirement Income Security Act of 1974, if
                           the investment decision is made by a plan fiduciary,
                           as defined in Section 3(21) of such Act, which is
                           either a bank, savings and loan association,
                           insurance company, or registered investment advisor,
                           or if the employee benefit plan has total assets in
                           excess of $5,000,000, or if a self-directed plan,
                           with investment decisions made solely by persons that
                           are Accredited Investors;

                   / /     a private  business  development  company as defined
                           in Section  202(a)(22)  of the Investment Advisers
                           Act of 1940;

                   / /     an organization described in Section 501(c)(3) of the
                           Internal Revenue Code of 1986, as amended,
                           corporation, Massachusetts or similar business trust,
                           or partnership, not formed for the specific purpose
                           of acquiring Shares, with total assets in excess of
                           $5,000,000;

                   / /     a director or executive officer of BioSante;

                                       6

                   / /     a natural person whose individual net worth, or joint
                           net worth with that person's spouse, at the time of
                           his or her purchase exceeds $1,000,000;

                   / /     a natural person who had an individual income (not
                           including his or her spouse's income) in excess of
                           $200,000 in 1999 and 2000 or joint income with his or
                           her spouse in excess of $300,000 in each of those
                           years and has a reasonable expectation of reaching
                           such income level in 2001;

                   / /     a trust, with total assets in excess of $5,000,000,
                           not formed for the specific purpose of acquiring
                           Shares, whose purchase is directed by a person having
                           such knowledge and experience in financial and
                           business matters that he or she is capable of
                           evaluating the merits and risks entailed in the
                           purchase of units; or

                   / /     an entity in which all of the equity owners are
                           accredited investors, within the meaning of Rule 501
                           under Regulation D of the Securities Act. (If this
                           alternative is checked, the undersigned must identify
                           each equity owner and provide statements signed by
                           each demonstrating how each is qualified as an
                           accredited investor.)

         6.       REGISTRATION OF SHARES UNDER THE SECURITIES ACT.

                  (a) By its acceptance hereof, BioSante agrees that it shall,
at its expense, (i) not later than 90 days after the final closing of this
offering file a registration statement to register under the Securities Act the
resale by the undersigned of the shares of BioSante common stock underlying the
units and the shares of BioSante common stock issuable upon exercise of the
warrants, (ii) use its reasonable best efforts to cause the resale registration
statement to become effective under the Securities Act as promptly as
practicable, (iii) after the resale registration statement is declared effective
under the Securities Act, furnish the undersigned with such number of copies of
the final prospectus included in the resale registration statement as the
undersigned may reasonably request to facilitate the resale of the shares of
BioSante common stock underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants, and (iv) use its reasonable best
efforts to cause such registration statement to remain effective until the
earlier of: (a) the sale of all the shares of BioSante common stock covered by
the resale registration statement; or (b) such time as the selling shareholders
named in the registration statement become eligible to resell the shares of
BioSante common stock underlying the units and the shares of BioSante common
stock issuable upon exercise of the warrants pursuant to Rule 144(k) under the
Securities Act.

                  (b) BioSante will prepare and file with the SEC such
amendments and Prospectus supplements, including post-effective amendments to
the resale registration statement, as BioSante determines may be necessary or
appropriate, and use its reasonable best efforts to have such post-effective
amendments declared effective as promptly as practicable; cause the prospectus
to be supplemented by any prospectus supplement, and as so supplemented, to be
filed with the SEC; and promptly notify the undersigned when a prospectus, and
any prospectus supplement or post-effective amendment must be filed or has been
filed (including

                                       7

any filing in response to a sale notice) and, with respect to any post-effective
amendment, when the same has become effective.

                  (c) In connection with the resale registration statement, the
undersigned shall furnish BioSante such information regarding the distribution
of the shares of BioSante common stock covered by the registration statement as
BioSante may, from time to time, reasonably request in writing and BioSante may
exclude from such registration the shares of BioSante common stock of any
investor if such investor unreasonably fails to furnish such information in
writing within a reasonable time after receiving such request. The undersigned
agrees promptly to furnish to BioSante all information required to be disclosed
in the registration statement in order to make the information previously
furnished to BioSante by the undersigned not misleading. The undersigned
understands, acknowledges and agrees that the undersigned will be entitled to
liquidated damages pursuant to SECTION 6(d) hereof unless and until the
undersigned shall have provided all such information. Any sale of any shares of
BioSante common stock under the registration statement by the undersigned will
constitute a representation and warranty by the undersigned that the required
information relating to the undersigned and its plan of distribution is as set
forth in the prospectus delivered by the undersigned in connection with such
disposition, that such prospectus does not as of the time of such sale contain
any untrue statement of a material fact relating to the undersigned or its plan
of distribution and that such prospectus does not as of the time of such sale
omit to state any material fact relating to the undersigned or its plan of
distribution necessary to make the statements in such prospectus, in the light
of the circumstances under which they were made, not misleading.

                  (d) BioSante acknowledges that the undersigned and other
purchasers of units will suffer damages if BioSante fails to fulfill its
obligation to cause the resale registration statement to become effective under
the Securities Act in a timely fashion, and that it would not be feasible to
ascertain the extent of such damages. Accordingly, in the event that BioSante
fails to cause the resale registration statement to be declared effective within
90 days of the filing of the resale registration statement, other than as a
result of events beyond BioSante's control, BioSante will issue to the
undersigned, as compensation therefor, shares of BioSante common stock equal to
1% of the shares of BioSante common stock underlying the units purchased by the
undersigned for each 30 days or part thereof effectiveness is delayed.

                  (e) At any time BioSante may refuse to permit the undersigned
to resell any units pursuant to the resale registration statement; PROVIDED,
HOWEVER, that in order to exercise this right, BioSante must deliver a
certificate in writing to the undersigned to the effect that a sale pursuant to
the resale registration statement in its then-current form could constitute a
violation of the federal securities laws or would result in a material adverse
effect on BioSante (i.e., pending corporate developments such as negotiation of
a material transaction which BioSante in its sole discretion after consultation
with legal counsel, determines it would be obligated to disclose in the
registration statement, which disclosure BioSante believes would be premature or
otherwise inadvisable at such time). In such an event, BioSante will use its
reasonable best efforts to amend the resale registration statement if necessary
and take all other actions reasonably necessary to allow such sale under the
federal securities laws, and will notify the undersigned promptly after it has
determined that such sale has become permissible under the federal securities
laws. In any calendar year, BioSante may exercise this right no more than two
times, for not more than 30 days in each instance. The undersigned hereby
covenants and agrees

                                      8

that it will not sell any shares of BioSante common stock pursuant to the resale
registration statement during the periods the resale registration statement is
unable to be used by the undersigned as set forth in this SECTION 6(e).

         7. MARKET FOR REGISTRABLE COMMON STOCK. BioSante will use commercially
reasonable efforts to list its common stock on the American Stock Exchange,
Nasdaq Small Market System or other comparable exchange or quotation system,
including without limitation effecting a reverse split of its common stock, if
necessary.

         8.       INDEMNIFICATION.

                  (a) The undersigned understands the meaning and legal
consequences of the representations and warranties made by the undersigned in
this subscription agreement, and agrees to indemnify and hold harmless BioSante
and each of BioSante's directors, officers, shareholders, employees, counsel,
agents, successors and assignees from and against any and all loss, damage,
liability or expenses (including, without limitation, reasonable and documented
attorneys' fees), as and when incurred, due to or arising out of (in such case
in whole or in part) any breach of any representation or warranty made by the
undersigned set forth herein or in any other agreement or other document
furnished by the undersigned to any of the foregoing in connection with this
offering, any failure by the undersigned to fulfill any of its covenants or
agreements set forth herein, or arising out of the resale or distribution by the
undersigned of the units, the shares of BioSante common stock and warrants
underlying the units and the shares of BioSante common stock issuable upon
exercise of the warrants or any portion thereof in violation of the Securities
Act or any applicable foreign or state securities or "blue sky" law.

                  (b) BioSante understands the meaning and legal consequences of
the representations and warranties made by it in this subscription agreement,
and agrees to indemnify and hold harmless the undersigned and each of the
undersigned's directors, officers, stockholders, employees, counsel, agents,
successors and assigns from and against any and all loss, damage, liability or
expense (including, without limitation, reasonable and documented attorneys'
fees), as and when incurred, due to or arising out of (in each case in whole or
in part) any breach of any representation or warranty made by BioSante set forth
herein, or any failure by BioSante to fulfill any of its covenants or agreements
set forth herein.

                  (c) To the extent permitted by law, BioSante will indemnify
and hold harmless each selling shareholder named in the resale registration
statement, the directors, if any, of such holder, the officers, if any, of such
holder, and each person, if any, who controls such holder within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages,
expenses or liabilities to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions or proceedings, whether commenced
or threatened, in respect thereof) arise out of or are based upon any of the
following statements, omissions or violation: (i) any untrue statement or
alleged untrue statement of a material fact contained in the resale registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or (iii) any violation or alleged

                                       9

violation by BioSante of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; and BioSante will reimburse the
holders and each such controlling person, promptly as such expenses are
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding.

                  (d) To the extent permitted by law, each holder, severally and
not jointly, will indemnify and hold harmless, to the same extent and in the
same manner set forth in SECTION 8(c), BioSante, each of its directors and
officers who have signed the resale registration statement, and each person, if
any, who controls BioSante within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities to which any of
them may become subject, under the Securities Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions or
proceedings, whether commenced or threatened in respect thereof) arise out of or
are based upon any violation, in each case to the extent (and only to the
extent) that such violation occurs in reliance upon and in conformity with
written information furnished by such holder expressly for use in connection
with the resale registration statement; and such holder will reimburse such
persons for any legal or other expenses reasonably incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability or action.

                  (e) With respect to the indemnification set forth in SECTIONS
8(c) or (d) above, to the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under said SECTIONS 8(c) or (d) to the extent permitted by law; PROVIDED that
(i) no contribution shall be made under circumstances where the maker would not
have been liable for indemnification under the fault standards set forth in said
SECTIONS 8(c) or (d), and (ii) no party guilty of fraudulent misrepresentation
(within the meaning of Section 11 of the Securities Act) shall be entitled to
contribution from any party who was not guilty of such fraudulent
misrepresentation.

         9. FURTHER DOCUMENTS. The undersigned agrees that it will execute such
other documents as may be necessary or desirable in connection with the
transactions contemplated hereby.

         10. MODIFICATION. Neither this subscription agreement nor any
provisions hereof shall be waived, modified, discharged or terminated except by
an instrument in writing signed by the party against whom any such waiver,
modification, discharge or termination is sought.

         11. NOTICES. Any notice or other communication required or permitted to
be given hereunder shall be in writing and shall be mailed by certified mail,
return receipt requested, or by Federal Express, Express Mail or similar
overnight delivery or courier service and delivered against receipt to the party
to whom it is to be given, (i) if to BioSante, at the address set forth on the
first page hereof, (ii) if to the undersigned, at its address set forth on the
signature page hereto, or (iii) in either case, to such other address as the
party shall have furnished in writing in accordance with the provisions of this
SECTION 11. Notice to the estate of any party shall be sufficient if addressed
to the party as provided in SECTION 11. Any notice or other communication given
by certified mail shall be deemed given at the time of certification thereof,

                                       10

except for a notice changing a party's address which shall be deemed given at
the time of receipt thereof. Any notice given by other means permitted by this
SECTION 11 shall be deemed given at the time of receipt thereof.

         12. COUNTERPARTS. This subscription agreement may be executed through
the execution of separate signature pages or in any number of counterparts, and
each such counterpart shall, for all purposes, constitute one agreement binding
on all parties, notwithstanding that all parties are not signatories to the same
counterpart.

         13. ENTIRE AGREEMENT. This subscription agreement contains the entire
agreement of the parties with respect to the subject matter hereof and there are
no representations, covenants or other agreements except as stated or referred
to herein.

         14. SEVERABILITY. Each provision of this subscription agreement is
intended to be severable from every other provision, and the invalidity or
illegality of any portion hereof shall not affect the validity or legality of
the remainder hereof.

         15. ASSIGNABILITY. This subscription agreement is not transferable or
assignable by the undersigned.

         16. APPLICABLE LAW. This subscription agreement has been negotiated and
consummated in the State of Illinois and shall be governed by and construed in
accordance with the laws of the State of Illinois, without giving effect to
conflict of laws.

         17. CHOICE OF JURISDICTION. Any action or proceeding arising directly,
indirectly or otherwise, in connection with, out of or from this subscription
agreement, any breach hereof or any transaction covered hereby shall be resolved
in Chicago, Illinois. Accordingly, the parties consent and submit to the
jurisdiction of the United States federal and state courts located in Chicago,
Illinois.

         18. TAXPAYER IDENTIFICATION NUMBER. The undersigned verifies under
penalties of perjury that any taxpayer identification number or social security
number shown on the signature page hereto is true, correct and complete.

         19. PRONOUNS. Any personal pronoun shall be considered to mean the
corresponding masculine, feminine or neuter personal pronoun, as the context
requires.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       11

         IN WITNESS WHEREOF, the undersigned has executed this subscription
agreement this ____ day of ________________, 2001.

Number of units subscribed for: __________________ units.

INDIVIDUAL SUBSCRIBER:                      ENTITY SUBSCRIBER:

- ------------------------                    -------------------------
(Signature of Subscriber)                   (Print Name of Subscriber)

                                            By:
- ------------------------                    -------------------------
(Typed or Printed Name)
                                            Name:
                                            -------------------------
                                            Title:
                                            -------------------------

- ------------------------                    -------------------------
(Residence Address)                         (Address)

- ------------------------                    -------------------------
(City, State and Zip Code)                  (City, State and Zip Code)

- ------------------------                    -------------------------
(Telephone Number)                          (Telephone Number)

- ------------------------                    -------------------------
(Telecopier Number)                         (Telecopier Number)

- ------------------------                    -------------------------
(Social Security Number)                    (Tax I.D. or Social Security Number)

ACCEPTED:

                                                
BIOSANTE PHARMACEUTICALS, INC.                     FOR ENTITIES DESIRING THAT CERTIFICATES
                                                   FOR UNITS BE DELIVERED TO AN ADDRESS
By:                                                OTHER THAN THAT SET FORTH ABOVE, SET
   ----------------------------------------------  FOR THE DELIVERY ADDRESS:
Name:      Stephen M. Simes
Title:     President and Chief Executive Officer
Dated:     ________________, 2001
                                                   ----------------------------------------
                                                   (Address)

                                                   ----------------------------------------
                                                   (City, State and Zip Code)

                                       12

                                                                       ANNEX A

                                 FORM OF WARRANT

                            Warrant to Purchase Up To
                    ______________ Shares Of Common Stock of
                         BioSante Pharmaceuticals, Inc.

         THIS CERTIFIES that, for value received, ________________ ("Investor")
or any transferee of Investor (Investor or such transferee being hereinafter
referred to as the "Holder"), is entitled, upon the terms and subject to the
conditions hereinafter set forth, to purchase from BioSante Pharmaceuticals,
Inc., a Wyoming corporation (the "Company"), that number of fully paid and
nonassessable shares of common stock, no par value (the "Warrant Shares") of the
Company (the "Common Stock") at the purchase price per share as set forth in
Section 1 below (the "Exercise Price"). The number of Warrant Shares purchasable
and Exercise Price are subject to adjustment as provided in Section 10 hereof.

         1. NUMBER OF WARRANT SHARES; EXERCISE PRICE; TERM.

                  (a) Subject to adjustments as provided herein, the Holder of
         this Warrant may, at the Holder's option, exercise this Warrant in
         whole at any time or in part from time to time for
         _____________________________ (__________) Warrant Shares at an
         Exercise Price of $0.625 per Warrant Share.

                  (b) Subject to the terms and conditions set forth herein, this
         Warrant and all rights and options hereunder shall expire at 5:00 p.m.
         central standard time on __________________, 2006. This Warrant and all
         options and rights hereunder shall be wholly void to the extent this
         Warrant is not exercised before it expires.

         2. TRANSFERABILITY OF WARRANT. The Warrant and all rights hereunder are
not transferable, in whole or in part.

         3. EXERCISE OF WARRANT. The Warrant is exercisable by the Holder, in
whole or in part, at any time, or from time to time, during the term hereof as
described in Section l above, by the surrender of the Warrant and the Notice of
Exercise annexed hereto duly completed and executed on behalf of the Holder
hereof, at the office of the Company in Lincolnshire, Illinois (or such other
office or agency of the Company as it may designate by notice in writing to the
Holder hereof at the address of the Holder appearing on the books of the
Company), and subject to Section 4 hereof, upon payment of the Exercise Price in
cash or check, whereupon the Holder of the Warrant shall be entitled to receive
shares of Common Stock of the Company for the number of Warrant Shares so
purchased and, if the Warrant is exercised for fewer than all of the Warrant
Shares, a new Warrant representing the right to acquire the number of Warrant
Shares in respect of which this Warrant shall not have been exercised.
Notwithstanding the foregoing, payment of the Exercise Price may also be made by
(a) delivering shares of Common Stock already owned by the Holder having a total
Fair Market Value (as defined in Section 4) on the date of delivery equal to the
aggregate Exercise Price; (b) authorizing the Company to return Warrant Shares
which would otherwise be issuable upon exercise of this Warrant having a total
Fair Market Value on the date of exercise equal to the aggregate Exercise Price;
or (c) any

                                      13

combination of the foregoing. The Company agrees that, upon exercise
of the Warrant in accordance with the terms hereof, the Warrant Shares so
purchased shall be deemed to be issued to the Holder as the record owner of such
Warrant Shares as of the close of business on the date on which the Warrant
shall have been exercised.

         Certificates for Warrant Shares purchased hereunder and, on exercise of
fewer than all of the Warrant Shares purchasable hereunder, a new Warrant
representing the right to acquire Warrant Shares not so purchased shall be
delivered to the Holder hereof as promptly as practicable after the date on
which the Warrant shall have been exercised.

         The Company covenants that all Warrant Shares which may be issued upon
the exercise of the Warrant shall, upon exercise of the Warrant and payment of
the Exercise Price, be fully paid and nonassessable and free from all taxes,
liens and charges in respect of the issue thereof (other than taxes in respect
of any transfer occurring contemporaneously or otherwise specified herein).

         4. NO FRACTIONAL WARRANT SHARES OR SCRIP. No fractional Warrant Shares
or scrip representing fractional shares shall be issued upon the exercise of the
Warrant. In lieu of any fractional Warrant Share to which the Holder would
otherwise be entitled, such Holder shall be entitled, at its option, to receive
either (a) a cash payment equal to the excess of Fair Market Value (as defined
herein) for such fractional Warrant Share above the Exercise Price for such
fractional share or (b) a whole share if the Holder tenders the Exercise Price
for one whole Warrant Share. For purposes hereof, the term "Fair Market Value"
shall mean an amount determined as follows: (A) if the Common Stock is listed on
a national or regional securities exchange or admitted to unlisted trading
privileges on such exchange or listed for trading on the Nasdaq National Market
System or the Nasdaq Small Cap Market (collectively, "Nasdaq"), the Fair Market
Value on a particular day shall be the last reported sale price of a share of
Common Stock on such exchange or on Nasdaq, on the last business day prior to
such day or, if no such sale is made on such business day, the business day
before such business day, or (B) if the Common Stock is not listed or admitted
to unlisted trading privileges on an exchange or on Nasdaq, the fair market
value on a particular day shall be the mean of the last reported bid and asked
prices reported by the National Quotation Bureau, Inc., or the National
Association of Securities Dealers, Inc. OTC Bulletin Board on the last business
day prior to such day, or (C) if the Common Stock is not so listed or admitted
to unlisted trading privileges on an exchange or on Nasdaq and bid and asked
prices are not so reported, the Fair Market Value on a particular day shall be
an amount determined in such reasonable manner as may be prescribed by the board
of directors of the Company.

         5. CHARGES, TAXES AND EXPENSES. Issuance of certificates for Warrant
Shares upon the exercise of the Warrant shall be made without charge to the
Holder hereof for any issue or transfer tax or other incidental expense in
respect of the issuance of such certificates, all of which taxes and expenses
shall be paid by the Company, and such certificates shall be issued in the name
of the Holder of the Warrant or in such name or names as may be directed by the
Holder of the Warrant; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder of
the Warrant, the Warrant when surrendered for exercise shall be accompanied by
the Assignment Form attached hereto duly executed by the Holder and the Notice
of Exercise duly completed and executed and stating in whose name the

                                       14

certificates are to be issued; and provided further, that such assignment shall
be subject to applicable laws and regulations.

         6. NO RIGHTS AS WARRANT SHAREHOLDERS. The Warrant does not entitle the
Holder hereof to any voting rights, dividend rights or other rights as a
shareholder of the Company prior to the exercise thereof.

         7. EXCHANGE AND REGISTRY OF WARRANT. The Company shall maintain a
registry showing the name and address of the Holder of the Warrant. The Warrant
may be surrendered for exchange, transfer or exercise, in accordance with the
terms hereof, at the office of the Company, and the Company shall be entitled to
rely in all respects, prior to written notice to the contrary, upon such
registry.

         8. LOSS, THEFT, DESTRUCTION OR MUTILATION OF WARRANT. Upon receipt by
the Company of evidence reasonably satisfactory to it of the loss, theft,
destruction or mutilation of the Warrant, and in case of loss, theft or
destruction, of indemnity or security reasonably satisfactory to it, and upon
reimbursement to the Company of all reasonable expenses incidental thereto, and
upon surrender and cancellation of the Warrant, if mutilated, the Company will
make and deliver a new Warrant of like tenor and dated as of such cancellation,
in lieu of the Warrant.

         9. SATURDAYS, SUNDAYS, HOLIDAYS, ETC. If the last or appointed day for
the taking of any action or the expiration of any right required or granted
herein shall be a Saturday or a Sunday or shall be a legal holiday, then such
action may be taken or such right may be exercised on the next succeeding day
not a Saturday or a Sunday or a legal holiday.

         10. ADJUSTMENTS. The above provisions are, however, subject to the
following:

                  (a) The Exercise Price shall be subject to adjustment from
         time to time as hereinafter provided. Upon each adjustment of the
         Exercise Price, the Holder shall thereafter be entitled to purchase, at
         the Exercise Price resulting from such adjustment, the number of shares
         obtained by multiplying the Exercise Price in effect immediately prior
         to such adjustment by the number of shares purchasable pursuant to this
         Warrant immediately prior to such adjustment and dividing the product
         thereof by the Exercise Price resulting from such adjustment.

                  (b) Except for (i) shares of capital stock of the Company
         issued to employees, directors, advisors and consultants of the
         Company, vendors and other similar persons to whom the Company owes
         money, (ii) options and warrants granted to employees, directors,
         advisors and consultants of the Company, (iii) shares of Common Stock
         of the Company issuable upon the exercise of options and warrants
         granted to employees, directors, advisors and consultants, (iv) shares
         of Common Stock issuable upon the exercise of all currently outstanding
         warrants and other convertible securities and (v) shares of capital
         stock issuable upon the conversion of all currently outstanding shares
         of preferred stock of the Company, if the Company shall issue or sell
         any shares of Common Stock during the next twelve months for a
         consideration per share less than $0.50, then, forthwith upon such
         issue or sale, the Exercise Price shall be reduced to the price
         (calculated to the nearest cent) determined by dividing (A) an amount
         equal to the

                                       15

         sum of (1) the number of shares of Common Stock outstanding immediately
         prior to such issue or sale multiplied by the then existing Exercise
         Price, and (2) the consideration, if any, received by the Company upon
         such issue or sale by (B) an amount equal to the sum of (1) the number
         of shares of Common Stock outstanding immediately prior to such issue
         or sale and (2) the number of shares of Common Stock thus issued or
         sold.

                  (c) For the purposes of paragraph (b), the following
         provisions (i) to (vi), inclusive, shall also be applicable:

                           (i) In case at any time the Company shall grant
                  (whether directly or by assumption in a merger or otherwise)
                  any rights to subscribe for or to purchase, or any options for
                  the purchase of, Common Stock or any obligations, stock or
                  securities convertible into or exchangeable for Common Stock
                  (such convertible or exchangeable stock or securities being
                  herein called "Convertible Securities") whether or not such
                  rights or options or the right to convert or exchange any such
                  Convertible Securities are immediately exercisable, and the
                  price per share at which shares of Common Stock are issuable
                  upon the exercise of such rights or options or upon conversion
                  or exchange of such Convertible Securities (determined by
                  dividing (A) the total amount, if any, received or receivable
                  by the Company as consideration for the granting of such
                  rights or options, plus the minimum aggregate amount of
                  additional consideration payable to the Company upon the
                  exercise of such rights or options, plus, in the case of such
                  rights or options which relate to Convertible Securities, the
                  minimum aggregate amount of additional consideration, if any,
                  payable upon the issue or sale of such Convertible Securities
                  and upon the conversion or exchange thereof, by (B) the total
                  maximum number of shares of Common Stock issuable upon the
                  exercise of such rights or options or upon the conversion or
                  exchange of all such Convertible Securities issuable upon the
                  exercise of such rights or options) shall be less than the
                  Exercise Price in effect immediately prior to the time of the
                  granting of such rights or options, then the total maximum
                  number of shares of Common Stock issuable upon the exercise of
                  rights or options or upon conversion or exchange of the total
                  maximum amount of such Convertible Securities issuable upon
                  the exercise of such rights or options shall (as of the date
                  of granting of such rights or options) be deemed to have been
                  issued for such price per share. Except as provided in
                  paragraph (f) below, no further adjustments of the Exercise
                  Price shall be made upon the actual issue of such Common Stock
                  or of such Convertible Securities upon exercise of such rights
                  or options or upon the actual issue of such Common Stock upon
                  conversion or exchange of such Convertible Securities.

                           (ii) In case the Company shall issue or sell (whether
                  directly or by assumption in a merger or otherwise) any
                  Convertible Securities, whether or not the rights to exchange
                  or convert thereunder are immediately exercisable, and the
                  price per share for which Common Stock is issuable upon such
                  conversion or exchange (determined by dividing (A) the total
                  amount received or receivable by the Company as consideration
                  for the issue or sale of such Convertible Securities, plus the
                  minimum aggregate amount of additional consideration, if any,
                  payable to the Company upon the conversion or exchange
                  thereof, by (B) the total

                                       16

                  maximum number of shares of Common Stock issuable upon the
                  conversion or exchange of all such Convertible Securities)
                  shall be less than the Exercise Price in effect immediately
                  prior to the time of such issue or sale, then the total
                  maximum number of shares of Common Stock issuable upon
                  conversion or exchange of all such Convertible Securities
                  shall (as of the date of the issue or sale of such Convertible
                  Securities) be deemed to be outstanding and to have been
                  issued for such price per share, provided that (x) except as
                  provided in paragraph (f) below, no further adjustments of the
                  Exercise Price shall be made upon the actual issue of such
                  shares of Common Stock upon conversion or exchange of such
                  Convertible Securities, and (y) if any such issue or sale of
                  such Convertible Securities is made upon exercise of any
                  rights to subscribe for or to purchase or any option to
                  purchase any such Convertible Securities for which adjustments
                  of the Exercise Price have been or are to be made pursuant to
                  other provisions of this paragraph (c), no further adjustment
                  of the Exercise Price shall be made by reason of such issue or
                  sale.

                           (iii) In case the Company shall declare a dividend or
                  make any other distribution upon any stock of the Company
                  payable in Common Stock or Convertible Securities, or in any
                  rights or options to purchase any Common Stock or Convertible
                  Securities, any Common Stock or Convertible Securities, or any
                  such rights or options, as the case may be, issuable in
                  payment of such dividend or distribution shall be deemed to
                  have been issued or sold without consideration.

                           (iv) In case any shares of Common Stock or
                  Convertible Securities or any rights or options to purchase
                  any shares of Common Stock or Convertible Securities shall be
                  issued or sold for cash, the consideration received therefor
                  shall be deemed to be the amount received by the Company
                  therefor, without deduction therefrom of any expenses incurred
                  or any underwriting commissions, discounts or concessions paid
                  or allowed by the Company in connection therewith. In case any
                  shares of Common Stock or Convertible Securities or any rights
                  or options to purchase any shares of Common Stock or
                  Convertible Securities shall be issued or sold for a
                  consideration other than cash, the amount of the consideration
                  other than cash received by the Company shall be deemed to be
                  the fair value of such consideration as determined by the
                  Board of Directors of the Company, without deduction of any
                  expenses incurred or any underwriting commissions, discounts
                  or concessions paid or allowed by the Company in connection
                  therewith. In case any shares of Common Stock or Convertible
                  Securities or any rights or options to purchase shares of
                  Common Stock or Convertible Securities shall be issued in
                  connection with any merger or consolidation in which the
                  Company is the surviving corporation, the amount of
                  consideration therefor shall be deemed to be the fair value as
                  determined by the Board of Directors of the Company of such
                  portion of the assets and business of the non-surviving
                  corporation or corporations as such Board shall have
                  determined to be attributable to such shares of Common Stock,
                  Convertible Securities, rights or options, as the case may be.
                  In the event of any consolidation or merger of the Company in
                  which the Company is not the surviving corporation or in the
                  event of any sale of all or substantially all of the assets of
                  the Company

                                       17

                  for stock or other securities of any other corporation, the
                  Company shall be deemed to have issued a number of shares of
                  its Common Stock for stock or securities of the other
                  corporation computed on the basis of the actual exchange ratio
                  on which the transaction was predicated and for a
                  consideration equal to the fair market value on the date of
                  such transaction of such stock or securities of the other
                  corporation, and if any such calculation results in adjustment
                  of the Exercise Price, the determination of the number of
                  shares of Common Stock issuable upon exercise immediately
                  prior to such merger, consolidation or sale, for purposes of
                  paragraph (f) below, shall be made after giving effect to such
                  adjustment of the Exercise Price.

                           (v) In case the Company shall take a record of the
                  holders of its Common Stock for the purpose of entitling them
                  (A) to receive a dividend or other distribution payable in
                  shares of Common Stock or in Convertible Securities, or in any
                  rights or options to purchase any shares of Common Stock or
                  Convertible Securities, or (B) to subscribe for or purchase
                  shares of Common Stock or Convertible Securities, then such
                  record date shall be deemed to be the date of the issue or
                  sale of the shares of Common Stock deemed to have been issued
                  or sold upon the declaration of such dividend or the making of
                  such other distribution or the date of the granting of such
                  rights of subscription or purchase, as the case may be.

                           (vi) The number of shares of Common Stock outstanding
                  at any given time shall not include shares owned or held by or
                  for the account of the Company, and the disposition of any
                  such shares shall be considered an issue or sale of Common
                  Stock for the purposes of this paragraph (c).

                  (d) In case the Company shall at any time subdivide its
         outstanding shares of Common Stock into a greater number of shares, the
         Exercise Price in effect immediately prior to such subdivision shall be
         proportionately reduced, and conversely, in case the outstanding shares
         of Common Stock of the Company shall be combined into a smaller number
         of shares, the Exercise Price in effect immediately prior to such
         combination shall be proportionately increased.

                  (e) Upon the happening of any of the following events, namely,
         if the purchase price provided for in any rights or options referred to
         in clause (i) of paragraph (c), the additional consideration, if any,
         payable upon the conversion or exchange of Convertible Securities
         referred to in clause (i) or clause (ii) of paragraph (c), or the rate
         at which any Convertible Securities referred to in clause (i) or clause
         (ii) of paragraph (c) are convertible into or exchangeable for Common
         Stock shall change (other than under or by reason of provisions
         designed to protect against dilution), the Exercise Price in effect at
         the time of such event shall forthwith be increased or decreased to the
         Exercise Price which would have obtained had the adjustments made upon
         the issuance of such rights, options or Convertible Securities been
         made upon the basis of (i) the issuance of the number of shares of
         Common Stock theretofore actually delivered upon the exercise of such
         options or rights or upon the conversion or exchange of such
         Convertible Securities, and the total consideration received therefor,
         and (ii) the issuance at the time of such

                                       18

         change of any such options, rights or Convertible Securities then still
         outstanding for the consideration, if any, received by the Company
         therefor and to be received on the basis of such changed price; and on
         the expiration of any such option or right or the termination of any
         such right to convert or exchange such Convertible Securities, the
         Exercise Price then in effect hereunder shall forthwith be increased to
         the Exercise Price which would have obtained had the adjustments made
         upon the issuance of such rights or options or Convertible Securities
         been made upon the basis of the issuance of the shares of Common Stock
         theretofore actually delivered (and the total consideration received
         therefor) upon the exercise of such rights or options or upon the
         conversion or exchange of such Convertible Securities. If the purchase
         price provided for in any such right or option referred to in clause
         (i) of paragraph (c) or the rate at which any Convertible Securities
         referred to in clause (i) or clause (ii) of paragraph (c) are
         convertible into or exchangeable for Common Stock shall decrease at any
         time under or by reason of provisions with respect thereto designed to
         protect against dilution, then in case of the delivery of Common Stock
         upon the exercise of any such right or option or upon conversion or
         exchange of any such Convertible Securities, the Exercise Price then in
         effect hereunder shall forthwith be decreased to such Exercise Price as
         would have obtained had the adjustments made upon the issuance of such
         right, option or Convertible Securities been made upon the basis of the
         issuance of (and the total consideration received for) the shares of
         Common Stock delivered as aforesaid.

                  (f) If any capital reorganization or reclassification of the
         capital stock of the Company, or consolidation or merger of the Company
         with another corporation, or the sale of all or substantially all of
         its assets to another corporation shall be effected in such a way that
         holders of Common Stock shall be entitled to receive stock, securities
         or assets with respect to or in exchange for shares of Common Stock
         (such stock, securities or assets being hereinafter referred to as
         "substituted property"), then, as a condition of such reorganization,
         reclassification, consolidation, merger or sale, lawful and adequate
         provision shall be made whereby the holder of this Warrant shall
         thereafter have the right to purchase and receive upon the basis and
         upon the terms and conditions specified herein and in lieu of the
         shares of the Common Stock of the Company immediately theretofore
         purchasable and receivable upon the exercise of this Warrant, such
         substituted property as may be issued or payable with respect to or in
         exchange for a number of outstanding shares of such Common Stock equal
         to the number of shares of such stock immediately theretofore
         purchasable and receivable upon the exercise of this Warrant had such
         reorganization, reclassification, consolidation, merger or sale not
         taken place, and in any such case appropriate provision shall be made
         with respect to the rights and interests of the holder of this Warrant
         to the end that the provisions hereof (including without limitation
         provisions for adjustments of the Exercise Price and of the number of
         shares purchasable upon the exercise of this Warrant) shall thereafter
         be applicable, as nearly as may be, in relation to any substituted
         property thereafter purchasable and receivable upon the exercise of
         this Warrant. The Company shall not effect any such consolidation,
         merger or sale, unless prior to the consummation thereof the successor
         corporation (if other than the Company) resulting from such
         consolidation or merger or the corporation purchasing such assets shall
         assume by written instrument executed and mailed to the holder of this
         Warrant at the last address of such holder appearing on the books of
         the Company, the obligation to deliver to such holder such substituted
         property as, in

                                       19

         accordance with the foregoing provisions, such holder may be entitled
         to purchase and receive.

                  (g) If the Company takes any other action, or if any other
         event occurs, which does not come within the scope of the provisions of
         Paragraphs (a) through (f) of this Section 10 but which should result
         in adjustment in the Exercise Price and/or the number of shares subject
         to the Warrant in order to fairly protect the purchase rights of the
         holder of this Warrant, an appropriate adjustment of such Exercise
         Price shall be made by the Company.

                  (h) Upon any adjustment of the Exercise Price, then and in
         each such case, the Company shall give written notice thereof, by
         first-class mail, postage prepaid, addressed to the holder of this
         Warrant at the address of such holder as shown on the books of the
         Company, which notice shall state the Exercise Price resulting from
         such adjustment and the increase or decrease, if any, in the number of
         shares purchasable at such price upon the exercise of this Warrant,
         setting forth in reasonable detail the method of calculation and the
         facts upon which such calculation is based.

                  (i)      In case any time:

                           (i) the Company shall pay any dividend payable in
                  stock upon its Common Stock or make any distribution (other
                  than regular cash dividends) to the holders of its Common
                  Stock;

                           (ii) the Company shall offer for subscription pro
                  rata to the holders of its Common Stock any additional shares
                  of stock of any class or other rights;

                           (iii) there shall be any capital reorganization,
                  reclassification of the capital stock of the Company, or
                  consolidation or merger of the Company with, or sale of all or
                  substantially all of its assets to, another corporation; or

                           (iv) there shall be a voluntary or involuntary
                  dissolution, liquidation or winding up of the Company;

         then, in any one or more of said cases, the Company shall give written
         notice, by first-class mail, postage prepaid, addressed to the holder
         of this Warrant at the address of such holder as shown on the books of
         the Company, of the date on which (A) the books of the Company shall
         close or a record shall be taken for such dividend, distribution or
         subscription rights, or (B) such reorganization, reclassification
         consolidation, merger, sale, dissolution, liquidation or winding up
         shall take place, as the case may be. Such notice shall also specify
         the date as of which the holders of Common Stock of record shall
         participate in such dividend distribution or subscription rights, or
         shall be entitled to exchange their Common Stock for securities or
         other property deliverable upon such reorganization, reclassification,
         consolidation, merger, sale, dissolution, liquidation or winding up, as
         the case may be. Such written notice shall be at least 20 days prior to
         the action in question and not less than 20 days prior to the record
         date or the date on which the Company's transfer books are closed in
         respect thereto.

                                       20

                  (j) Notwithstanding anything in this Warrant to the contrary,
         no adjustment will be made to the Exercise Price as a result of the
         issuance of securities by the Company after twelve months after the
         date of this Warrant.

         11.      MISCELLANEOUS.

                  (a) GOVERNING LAW. The Warrant shall be binding upon any
         successors or assigns of the Company. The Warrant shall constitute a
         contract under the laws of Illinois and for all purposes shall be
         construed in accordance with and governed by the laws of said state,
         without giving effect to the conflict of laws principles.

                  (b) RESTRICTIONS. THIS WARRANT AND THE COMMON STOCK TO BE SOLD
         UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
         OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS. THEY MAY NOT
         BE SOLD, OFFERED FOR SALE, PLEDGED, OR HYPOTHECATED IN THE ABSENCE OF
         AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN EXEMPTION
         THEREFROM.

                  (c) AMENDMENTS. The Warrant may be amended and the observance
         of any term of the Warrant may be waived with the written consent of
         the Company and the Holder.

                  (d) SECTION HEADINGS. The section headings used herein are
         for convenience of reference only, are not part of this Warrant and
         are not to affect construction of or be taken into consideration in
         interpreting this Warrant.

                  (e) NOTICES. Any notice required or permitted hereunder shall
         be deemed effectively given upon personal delivery to the party to be
         notified upon deposit with the United States Post Office, by certified
         mail, postage prepaid and addressed to the party to be notified at the
         address: with respect to the Company, at its principal address in
         Lincolnshire, Illinois (or such other office or agency of the Company
         as it may designate by notice in writing to the Holder); and with
         respect to the Holder, at the address of the Holder appearing on the
         books of the Company.

                                     * * * *

THIS WARRANT AND THE COMMON STOCK TO BE SOLD UPON EXERCISE HEREOF HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE
SECURITIES LAWS. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, OR
HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN EXEMPTION THEREFROM.

                                       21

         IN WITNESS WHEREOF, BioSante Pharmaceuticals, Inc. has caused this
Warrant to be executed by its officer thereunto duly authorized.

Dated:  _______________________, 2001

                      BIOSANTE PHARMACEUTICALS, INC.

                      By:
                               --------------------------------------------
                      Title:
                               --------------------------------------------

                                       22

                               NOTICE OF EXERCISE

To:      BioSante Pharmaceuticals, Inc.

         1. The undersigned hereby elects to exercise the right to purchase
represented by the attached Warrant for, and to purchase thereunder, _______
shares of common stock, no par value (the "Warrant Shares") of BioSante
Pharmaceuticals, Inc. (the "Company") and tenders herewith payment of the
purchase price and any transfer taxes payable pursuant to the terms of the
Warrant.

         2. The Warrant Shares to be received by the undersigned upon exercise
of the Warrant are being acquired for its own account, not as a nominee or
agent, and not with a view to resale or distribution of any part thereof, and
the undersigned has no present intention of selling, granting any participation
in, or otherwise distributing the same. The undersigned further represents that
it does not have any contract, undertaking, agreement or arrangement with any
person to sell, transfer or grant participation to such person or to any third
person, with respect to the Warrant Shares. The undersigned believes it has
received all the information it considers necessary or appropriate for deciding
whether to purchase the Warrant Shares.

         3. Please issue a certificate or certificates representing said Warrant
Shares in the name set forth below:

                                              ---------------------------------
                                              [Name]

         4. If said number of Warrant Shares are not all the Warrant Shares
purchasable under the Warrant, please issue a new Warrant for the balance of
such Warrant Shares in the name set forth below:

                                              ---------------------------------
                                              [Name]

Executed on __________________________ (date).

- --------------------------------------------------------------
[NAME OF HOLDER]

By:
   -----------------------------------------------------------
Printed Name:
             -------------------------------------------------
Title (if applicable):
                      ----------------------------------------

                                       23

                                                                      ANNEX B

                         BIOSANTE PHARMACEUTICALS, INC.

                                 2001 FINANCING

                     SUMMARY OF PRINCIPAL TERMS OF OFFERING

The following is a summary of the basic terms and conditions of the private
placement of up to 15,000,000 units, each unit consisting of one share of common
stock of BioSante Pharmaceuticals, Inc. and a warrant to purchase 0.25 shares of
BioSante common stock. This summary is intended as an outline and does not
purport to include all of the terms and conditions which will be contained in a
definitive securities purchase agreement. This summary is provided for
discussion purposes only and is not intended as an offer or commitment to
purchase, or an offer or commitment to sell, the securities described herein.
The terms are not intended to be binding on any of the parties unless and until
definitive documents for the transaction are executed.

ISSUER:                                   BioSante Pharmaceuticals, Inc.
                                          ("BioSante" or the "Company")

INVESTORS:                                Certain accredited investors within
                                          the meaning of Rule 501 under
                                          Regulation D of the Securities Act of
                                          1933 and existing investors in
                                          BioSante (the "Investors")

SECURITIES OFFERED:                       Up to 15,000,000 units (the
                                          "Units"), each unit consisting of one
                                          share of BioSante common stock (the
                                          "Investor Shares") and a five-year
                                          warrant to purchase 0.25 shares of
                                          BioSante common stock (the "Investor
                                          Warrants").

                                          The Investor Warrants will have an
                                          exercise price of $0.625 per full
                                          share. The exercise price of the
                                          Investor Warrants will be subject to
                                          proportional adjustment for stock
                                          splits and stock dividends and will be
                                          adjusted on a weighted average basis
                                          in the event of the sale of BioSante
                                          securities within 12 months at a price
                                          less than $0.50 per share, other than
                                          as a result of the issuance of shares
                                          of BioSante common stock to employees,
                                          consultants and directors and upon the
                                          exercise of stock options and
                                          outstanding warrants and other
                                          customary exceptions. In no event will
                                          the number of shares subject to an
                                          Investors Warrant be increased as a
                                          result of the anti-dilution protection
                                          for issuance of BioSante securities at
                                          a price less than $0.50 per share.

                                      24

PURCHASE PRICE:                           $0.50 per Unit, up to an aggregate of
                                          $7,500,000

MINIMUM SUBSCRIPTION:                     100,000 Units, or $50,000, unless
                                          BioSante in its sole discretion agrees
                                          to a lesser amount

MINIMUM AGGREGATE                         In the event BioSante does
                                          not receive subscriptions for the
                                          minimum OFFERING AMOUNT: placement of
                                          $2,000,000, which may include a
                                          minimum of $500,000 from investors
                                          identified by Sunrise Securities
                                          Corp., BioSante will return the
                                          purchase price to the Investors,
                                          without any interest thereon.

INFORMATION ABOUT BIOSANTE:               Enclosed with this term sheet is a
                                          copy of BioSante's Annual Report on
                                          Form 10-KSB for the year ended
                                          December 31, 1999, Quarterly Reports
                                          on Form 10-QSB for the quarters ended
                                          March 31, June 30 and September 30,
                                          2000, a Current Report on Form 8-K
                                          dated June 13, 2000 and recent press
                                          releases issued by BioSante.

USE OF PROCEEDS:                          The proceeds of the Units will be used
                                          to fund clinical development, acquire
                                          or license technology or products, and
                                          for working capital and other general
                                          corporate purposes.

PRO FORMA CAPITALIZATION:                 The  following  sets forth the fully
                                          diluted  capitalization  of BioSante
                                          currently and pro forma after giving
                                          effect to the issuance of the Units:

                                                 10 Million    15 Million
                                                Units Issued  Units Issued
                               Pre-Issuance      Pro-Forma      Pro-Forma
                               ------------      ----------     ---------
                                                       
           Co mmon Stock*        52,952,943     62,952,943      67,952,943
           Class C Stock**        4,687,684      4,687,684       4,687,684
           Warrants              11,822,500     14,847,500      16,447,500
           Options                6,025,125      6,025,125       6,025,125
                                -----------    -----------     -----------
           Total Equivalents     75,488,252     88,513,252      95,113,252
                                 ==========     ==========      ==========

                                          * Does not include shares of common
                                          stock issuable to Paladin pursuant to
                                          that certain sub-license agreement
                                          dated September 1, 2000.

                                          ** Class C shares are convertible to
                                          common stock on the basis of one Class
                                          C share and $0.25. These shares,
                                          similar to common shares, carry one
                                          vote per share, but are not entitled
                                          to a dividend.

ANTICIPATED CLOSING DATE:                 February 28, 2001

TERMINATION DATE:                         April 9, 2001,  unless  extended by
                                          the mutual  agreement of BioSante and
                                          Sunrise Securities Corp.

                                      25

              PRINCIPAL TERMS OF THE SECURITIES PURCHASE AGREEMENT

REPRESENTATIONS
AND WARRANTIES OF BIOSANTE:         Customary for transactions of this type,
                                    including:

                                    o        Due organization, good standing,
                                             corporate power and authority

                                    o        Valid issuance of Units

                                    o        Exchange Act reports do not contain
                                             any material misstatements or
                                             omissions

                                    o        BioSante has complied with all blue
                                             sky laws in connection with the
                                             issuance of the Units

                                    o        Sale of the Units will not require
                                             compliance with the prospectus
                                             delivery or registration
                                             requirements of the Securities Act

REGISTRATION RIGHTS:                BioSante will covenant to use its reasonable
                                    best efforts to:

                                    o        promptly file after the closing of
                                             the offering a registration
                                             statement (the "Registration
                                             Statement") with the Securities and
                                             Exchange Commission, but in no
                                             event later than a date 90 days
                                             after the final closing of the
                                             Offering, to register under the
                                             Securities Act the resale of the
                                             Shares and the shares of BioSante
                                             common stock underlying the
                                             Investor Warrants;

                                    o        use its reasonable best efforts to
                                             cause the Registration Statement to
                                             be declared effective under the
                                             Securities Act as promptly as
                                             reasonably practicable;

                                    o        after the Registration Statement
                                             is declared effective under the
                                             Securities Act, furnish holders
                                             with such number of copies of the
                                             prospectus included in the
                                             Registration Statement as the
                                             holders may reasonably request to
                                             facilitate the resale of shares;
                                             and

                                     o        use its reasonable best efforts to
                                              cause such Registration Statement
                                              to remain effective until the
                                              earlier of: (a) the sale of all
                                              the shares of BioSante common
                                              stock covered by the Registration
                                              Statement; or (b) such time as the
                                              holders become eligible to resell
                                              the shares pursuant to Rule
                                              144(k).

                                     In the event that BioSante fails to cause
                                     the Registration Statement to be declared
                                     effective within 90 days of the filing

                                      26

                                     of the Registration Statement, BioSante
                                     will issue to the Investors shares of
                                     BioSante common stock equal to 1% of the
                                     Shares for each 30 days or part thereof
                                     effectiveness is delayed.

OTHER COVENANTS OF THE               BioSante will covenant that it will use
COMPANY:                             commercially reasonable efforts to list of
                                     its common stock on the American Stock
                                     Exchange, Nasdaq or other comparable stock
                                     exchange or quotation system, and will take
                                     such steps necessary to meet the
                                     requirements for such listing.

PLACEMENT AGENT:                     Sunrise Securities Corp.

AGENT COMMISSION:                    BioSante will pay a commission to Sunrise
                                     of 7.0% of the gross sales price of the
                                     Units sold by BioSante in the offering to
                                     investors introduced to BioSante by Sunrise
                                     (the "Cash Commission"), which Cash
                                     Commission may be paid, at Sunrise's
                                     option, in Units valued at the Unit sales
                                     price less the Cash Commission. In
                                     addition, BioSante will sell to Sunrise
                                     (or its designees) a five-year warrant to
                                     purchase Units (the "Agent's Warrants")
                                     covering a number of Units equal to 7.0% of
                                     the total number of Units sold by BioSante
                                     in the offering to investors introduced to
                                     BioSante by Sunrise, inclusive of the
                                     Commission Units, if any, issued to
                                     Sunrise.

                                     The Cash Commission and Agent's Warrants
                                     will also be payable with respect to (i)
                                     all securities subscribed to by bona fide
                                     accredited investors introduced to BioSante
                                     by Sunrise who are ready willing and able
                                     to close but whose subscriptions are
                                     rejected by BioSante other than due to
                                     over-subscription and (ii) any purchase of
                                     BioSante securities by any investor
                                     introduced by Sunrise to BioSante taking
                                     place at any time within 12 months, as
                                     long as such introduction occurred before
                                     the closing of the offering.

EXPENSES:                            BioSante will bear all reasonable and
                                     documented out-of-pocket expenses incurred
                                     by Sunrise in connection with the offering
                                     including fees of Sunrise's counsel,
                                     printing, postage, overnight delivery,
                                     escrow agent fees and pre-approved travel,
                                     up to a maximum of $20,000.

DRAFTING:                           The transaction documents will be drafted by
                                    counsel for BioSante.

                                      27

                                                                   ANNEX C

                                  RISK FACTORS

         AN INVESTMENT IN BIOSANTE'S UNITS INVOLVES A HIGH DEGREE OF RISK.
PLEASE SEE THE RISK FACTORS IN BIOSANTE'S ANNUAL REPORT ON FORM 10-KSB FOR THE
YEAR ENDED DECEMBER 31, 1999 AND QUARTERLY REPORTS ON FORM 10-QSB FOR THE
QUARTERS ENDED MARCH 31, JUNE 30 AND SEPTEMBER 30, 2000.

         YOU SHOULD ALSO CAREFULLY CONSIDER THE FOLLOWING RISKS BEFORE INVESTING
IN THE UNITS.

RISKS RELATING TO OUR COMMON STOCK

BECAUSE OUR COMMON STOCK IS TRADED ON THE OVER-THE-COUNTER BULLETIN BOARD AND
THE CANADIAN VENTURE EXCHANGE, YOUR ABILITY TO SELL YOUR SHARES IN THE SECONDARY
TRADING MARKET MAY BE LIMITED.

         Our common stock is currently traded on the Over-the-Counter Bulletin
Board and the Canadian Venture Exchange. Consequently, the liquidity of our
common stock is impaired, not only in the number of shares that are bought and
sold, but also through delays in the timing of transactions, and coverage by
security analysts and the news media, if any, of our company. As a result,
prices for shares of our common stock may be lower than might otherwise prevail
if our common stock was traded on Nasdaq or a national securities exchange
(i.e., the American Stock Exchange)

BECAUSE OUR SHARES ARE "PENNY STOCKS," YOU MAY HAVE DIFFICULTY SELLING THEM IN
THE SECONDARY TRADING MARKET.

         Federal regulations under the Securities Exchange Act of 1934 regulate
the trading of so-called "penny stocks," which are generally defined as any
security not listed on a national securities exchange or Nasdaq, priced at less
than $5.00 per share and offered by an issuer with limited net tangible assets
and revenues. Since our common stock currently trades on the OTC Bulletin Board
at less than $5.00 per share, our shares are "penny stocks" and may not be
traded unless a disclosure schedule explaining the penny stock market and the
risks associated therewith is delivered to a potential purchaser prior to any
trade.

         In addition, because our common stock is not listed on Nasdaq or any
national securities exchange and currently trades at less than $5.00 per share,
trading in our common stock is subject to Rule 15g-9 under the Exchange Act.
Under this rule, broker-dealers must take certain steps prior to selling a
"penny stock," which steps include:

         o    obtaining financial and investment information from the investor;

         o    obtaining a written suitability questionnaire and purchase
              agreement signed by the investor; and

         o    providing the investor a written identification of the shares
              being offered and the quantity of the shares.

                                      28

         If these penny stock rules are not followed by the broker-dealer, the
investor has no obligation to purchase the shares. The application of these
comprehensive rules will make it more difficult for broker-dealers to sell our
common stock and our shareholders, therefore, may have difficulty in selling
their shares in the secondary trading market.

OUR STOCK PRICE MAY BE VOLATILE AND YOUR INVESTMENT IN OUR COMMON STOCK COULD
SUFFER A DECLINE IN VALUE.

         Our common stock is listed on the Over-the-Counter Bulletin Board in
the United States and on the Canadian Venture Exchange in Canada. The market
price of our common stock may fluctuate significantly in response to a number of
factors, some of which are beyond our control. These factors include:

         o    progress of our products through the regulatory process;

         o    results of preclinical studies and clinical trials;

         o    announcements of technological innovations or new products by us
              or our competitors;

         o    government  regulatory  action  affecting our products or our
              competitors'  products in both the United States and foreign
              countries;

         o    developments or disputes concerning patent or proprietary rights;

         o    general market conditions for emerging growth and pharmaceutical
              companies;

         o    economic conditions in the United States or abroad;

         o    actual or anticipated fluctuations in our operating results;

         o    broad market fluctuations; and

         o    changes in financial estimates by securities analysts.

         In addition, the value of our common stock may fluctuate because it is
listed on both the OTC Bulletin Board and the Canadian Venture Exchange. We do
not know what effect, if any, the dual listing will have on the price of our
common stock in either market. Listing on both the Canadian Venture Exchange and
the OTC Bulletin Board may increase our stock price volatility due to:

         o    trading in different time zones;

         o    different ability to buy or sell our stock; and

         o    different trading volume.

                                      29

WE MAY INCUR SIGNIFICANT COSTS FROM CLASS ACTION LITIGATION DUE TO OUR EXPECTED
STOCK VOLATILITY.

         In the past, following periods of large price declines in the public
market price of a company's stock, holders of that stock have occasionally
instituted securities class action litigation against the company that issued
the stock. If any of our shareholders were to bring this type of lawsuit against
us, even if the lawsuit is without merit, we could incur substantial costs
defending the lawsuit. The lawsuit could also divert the time and attention of
our management, which would hurt our business. Any adverse determination in
litigation could also subject us to significant liabilities.

PROVISIONS IN OUR CORPORATE DOCUMENTS AND WYOMING LAW COULD DISCOURAGE OR
PREVENT A TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR
SHAREHOLDERS.

         Provisions of our articles of incorporation and bylaws, as well as
provisions of Wyoming law, could make it more difficult for a third party to
acquire us, even if doing so would be beneficial to our shareholders. These
provisions include:

         o    authorizing the issuance of "blank check" preferred that could be
              issued by our board of directors to increase the number of
              outstanding shares and thwart a takeover attempt; and

         o    prohibiting cumulative voting in the election of directors, which
              would otherwise allow less than a majority of shareholders to
              elect director candidates.

         In addition, the laws of the State of Wyoming, our state of
incorporation, contain certain provisions that could have the effect of making
it more difficult for a third party to acquire, or of discouraging a third party
from attempting to acquire, control of our company. Such provisions could limit
the price that certain investors might be willing to pay in the future for
shares of our common stock. These provisions could also make it more difficult
for shareholders to change the management of our company or to effect certain
transactions.

OUR DIRECTORS AND EXECUTIVE OFFICERS OWN A SUFFICIENT NUMBER OF SHARES OF OUR
COMMON STOCK TO CONTROL OUR COMPANY, WHICH COULD DISCOURAGE OR PREVENT A
TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR SHAREHOLDERS.

         Our directors and executive officers own or control approximately 50.5%
of our outstanding voting power. Accordingly, these shareholders, individually
and as a group, may be able to influence the outcome of shareholder votes,
involving votes concerning the election of directors, the adoption or amendment
of provisions in our articles of incorporation and bylaws and the approval of
certain mergers or other similar transactions, such as sales of substantially
all of our assets. Such control by existing shareholders could have the effect
of delaying, deferring or preventing a change in control of our company. In
addition, under a shareholders agreement entered into in connection with our May
1999 private placement, several of our shareholders entered into a voting
agreement with respect to the election of directors.

                                      30

WE DO NOT INTEND TO PAY ANY CASH DIVIDENDS IN THE FORESEEABLE FUTURE AND,
THEREFORE, ANY RETURN ON YOUR INVESTMENT IN OUR CAPITAL STOCK MUST COME FROM
INCREASES IN THE FAIR MARKET VALUE AND TRADING PRICE OF THE CAPITAL STOCK.

         We do not intend to pay any cash dividends in the foreseeable future
and, therefore, any return on your investment in our capital stock must come
from increases in the fair market value and trading price of the capital stock.

WE WILL LIKELY ISSUE ADDITIONAL EQUITY SECURITIES THAT WILL DILUTE YOUR SHARE
OWNERSHIP.

         We will likely issue additional equity securities to raise capital and
through the exercise of options and warrants that are outstanding or may be
outstanding. These additional issuances will dilute your share ownership.

                                      31

                    AMENDMENT NO. 1 TO SUBSCRIPTION AGREEMENT

         This Amendment No. 1 (this "Amendment") amends the attached
Subscription Agreement (the "Subscription Agreement") between the undersigned
and BioSante Pharmaceuticals, Inc. ("BioSante"), relating to the offer and sale
of up to 15,000,000 units to certain "accredited investors" (within the meaning
of Rule 501 under Regulation D of the Securities Act of 1933, as amended) and
existing accredited investors in BioSante. Except as otherwise provided herein,
all capitalized terms used herein are as defined in the attached Subscription
Agreement.

         WHEREAS, BioSante has agreed to change the terms of the units being
sold under the Subscription Agreement as provided herein, and the undersigned
agrees to such changes.

         NOW, THEREFORE, in consideration of the forgoing premises and the
mutual covenants and agreements contained herein, the parties hereby amend the
Subscription Agreement as follows:

         1.       AMENDMENT.  The  first  sentence  of  paragraph  1 of the
Subscription  Agreement  is hereby amended in its entirety to state as follows:

                  1. SUBSCRIPTION. The undersigned is hereby purchasing from
BioSante Pharmaceuticals, Inc., a Wyoming corporation, ______ units (must be at
least 100,000 units, unless BioSante in its sole discretion otherwise agrees)
for a purchase price of $0.40 per unit, or an aggregate or total purchase price
of $_____________. Each unit consists of (i) one share of BioSante's common
stock, no par value, and (ii) a warrant to purchase .50 shares of BioSante's
common stock at an exercise price of $0.50 per full share, in substantially the
form of warrant attached as ANNEX A hereto.

         2.       AMENDMENT.  The first  sentence of  paragraph  3(g) of the
Subscription  Agreement is hereby amended in its entirety to state as follows:

                  (g) SEC FILINGS. BioSante has furnished the undersigned true
and complete copies of the latest draft of BioSante's Annual Report on Form
10-KSB for the fiscal year ended December 31, 2000 (which the undersigned
understands and acknowledges will be filed by BioSante with the SEC on or before
April 2, 2001), BioSante's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1999, Quarterly Reports on Form 10-QSB for the quarters ended
March 31, June 30 and September 30, 2000, and a Current Report on Form 8-K dated
June 13, 2000 and all subsequent filings, if any, made by BioSante with the SEC.

         3.       AMENDMENT.  A new  paragraph 20 of the  Subscription
Agreement is hereby added and states in its entirety as follows:

                  20. The undersigned agrees not to disclose any of the
material, non-public information contained in the latest draft of BioSante's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000 until
such time as such Annual Report has been filed with the SEC.

         4.       CONTINUING EFFECT OF SUBSCRIPTION AGREEMENT.   Except as
modified hereunder, the Subscription Agreement continues in full force and
effect.

         BioSante and the undersigned have caused this Amendment No. 1 to be
duly executed on their behalf by their respective duly authorized
representatives as of the date first written above.

BIOSANTE PHARMACEUTICALS, INC.              SUBSCRIBER
By:
- -----------------------------               -----------------------------
                                            [Print Name]
Its:
- -----------------------------

                                      32

                                                                Exhibit 23.1
INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of BioSante
Pharmaceuticals, Inc. on Form SB-2 of our report dated February 16, 2001,
appearing in the Prospectus, which is part of this Registration Statement. We
also consent to the reference to us under the heading "Experts" in such
Prospectus.

/s/ Deloitte & Touche LLP

Chicago, Illinois
June 27, 2001

INDEPENDENT AUDITORS' CONSENT

We consent to the use in this Registration Statement of BioSante
Pharmaceuticals, Inc. (formerly Ben-Abraham Technologies Inc.) on Form SB-2
of our report dated February 19, 1999, appearing in the Prospectus, which is
part of this Registration Statement. We also consent to the reference to us
under the heading "Experts" in such Prospectus.

/s/ Deloitte & Touche LLP

Toronto, Ontario
June 27, 2001