<PAGE>

    AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2002
                                                          REGISTRATION NO. 333-

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM S-1

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                         ENDEAVOR PHARMACEUTICALS, INC.
             (Exact name of Registrant as specified in its charter)


<TABLE>
<S>                                    <C>                                 <C>
           DELAWARE                                2834                         56-1870006
(State or other jurisdiction of        (Primary standard industrial            (IRS employer
incorporation or organization)          classification code number)        identification number)
</TABLE>

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

                          127 RACINE DRIVE, SUITE 202
                        WILMINGTON, NORTH CAROLINA 28403
                                 (910) 790-9811
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

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

                              PARRIS J. SANZ, ESQ.
                                GENERAL COUNSEL
                         ENDEAVOR PHARMACEUTICALS, INC.
                          127 RACINE DRIVE, SUITE 202
                        WILMINGTON, NORTH CAROLINA 28403
                                 (910) 790-9811
           (Name, address, including zip code, and telephone number,
                  including area code, of agent for service)

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

                                   Copies to:
       THOMAS R. POLLOCK, ESQ.                     WINTHROP B. CONRAD, JR., ESQ.
         LEIGH P. RYAN, ESQ.                           DAVIS POLK & WARDWELL
PAUL, HASTINGS, JANOFSKY & WALKER LLP                   450 LEXINGTON AVENUE
         75 EAST 55TH STREET                          NEW YORK, NEW YORK 10017
       NEW YORK, NEW YORK 10022                            (212) 450-4000
           (212) 318-6000                               (212) 450-3800 (FAX)
        (212) 339-9150 (FAX)

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

         APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable 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, check the following box. [ ]

         If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) 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(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

<TABLE>
<CAPTION>
========================================================================================================================
          Title of each Class of                      Proposed Maximum                         Amount of
        Securities to be Registered             Aggregate Offering Price(1)                 Registration Fee
------------------------------------------------------------------------------------------------------------------------
<S>                                             <C>                                         <C>
Common Stock, par value $.01 per share                  $75,000,000                              $6,900
========================================================================================================================
</TABLE>

(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.

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

         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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.

================================================================================
<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Preliminary Prospectus

                 SUBJECT TO COMPLETION DATED       , 2002

                                        SHARES

                       (ENDEAVOR PHARMACEUTICALS LOGO)

                                  COMMON STOCK

         Endeavor Pharmaceuticals, Inc. is offering shares of stock in a firmly
underwritten offering. We anticipate that the initial public offering price
will be between $        and $        per share. This is Endeavor's initial
public offering, and no public market currently exists for our shares.

         We have applied for our common stock to be listed on the Nasdaq
National Market under the symbol "EDVR."

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

         INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6.

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

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
                                                     PER SHARE             TOTAL
                                                     ---------             -----
<S>                                                  <C>                   <C>
Offering Price                                       $                     $
Discounts and Commissions to Underwriters            $                     $
Offering Proceeds to Company                         $                     $
</TABLE>

         We have granted the underwriters the right to purchase up to an
additional        shares of common stock to cover any over-allotments. The
underwriters can exercise this right at any time within 30 days after the
offering. The underwriters expect to deliver the shares of common stock to
investors on or about       , 2002.

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

                          JOINT BOOK-RUNNING MANAGERS

BANC OF AMERICA SECURITIES LLC                          BEAR, STEARNS & CO. INC.

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

                               CIBC WORLD MARKETS

                                          , 2002.
<PAGE>

                               TABLE OF CONTENTS

<TABLE>
                                                                                                                PAGE
                                                                                                                ----
<S>                                                                                                             <C>
Forward-Looking Statements........................................................................               ii
Market Data.......................................................................................               ii
Prospectus Summary................................................................................                1
Risk Factors......................................................................................                6
Use of Proceeds...................................................................................               18
Dividend Policy...................................................................................               18
Dilution..........................................................................................               19
Capitalization....................................................................................               20
Selected Financial Data...........................................................................               21
Management's Discussion and Analysis of Financial Condition and Results of Operations.............               22
Business..........................................................................................               28
Management........................................................................................               49
Related Party Transactions........................................................................               58
Principal Stockholders............................................................................               60
Description of Capital Stock......................................................................               63
Shares Eligible for Future Sale...................................................................               66
Underwriting......................................................................................               68
Validity of Common Stock..........................................................................               71
Experts...........................................................................................               71
Where You Can Find More Information About Us......................................................               71
Index to Financial Statements.....................................................................              F-1
</TABLE>

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

         You should rely only on the information contained in this prospectus.
We have not, and the underwriters have not, authorized anyone to provide you
with information different from or additional to that contained in this
prospectus. We are offering to sell, and seeking offers to buy, shares of
common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of
this prospectus, regardless of the time of delivery of this prospectus or of
any sale of our common stock.

         Until       , 2002, 25 days after the date of this prospectus, all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealers' obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.

         In this prospectus, references to "Endeavor," "our company," "we,"
"us," and "our" refer to Endeavor Pharmaceuticals, Inc. Enjuvia(TM),
Projuvia(TM), Juviand(TM), and [ENDEAVOR LOGO] are our trademarks. All other
trademarks used in this prospectus are the property of their respective owners.


                                       i
<PAGE>

                           FORWARD-LOOKING STATEMENTS

         This prospectus contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 that address, among other things, our strategy,
the anticipated development of our product candidates, our anticipated use of
proceeds, our projected capital expenditures and liquidity, our development of
revenue sources, our development and expansion in international markets, and
market acceptance of our product candidates. We intend for these
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995, and we are including this statement for purposes of
complying with those safe harbor provisions. We have based these
forward-looking statements on our current expectations and projections about
future events. These statements are not guarantees of future performance and
are subject to certain risks, uncertainties and other factors, some of which
are beyond our control, are difficult to predict and could cause actual results
to differ materially from those expressed or forecasted in the forward-looking
statements. These risks and uncertainties include those described in "Risk
Factors" and elsewhere in this prospectus.

         We use words such as "believe," "expect," "anticipate," "intend,"
"plan," "estimate," "should," "likely," "potential," "seek" and variations of
these words and similar expressions to identify forward-looking statements. You
should not place undue reliance on these forward-looking statements, which
reflect our management's view only as of the date of this prospectus. Except as
required by law, we do not undertake any obligation to update these statements
or publicly release the result of any revision to the forward-looking
statements that we may make to reflect events or circumstances after the date
of this prospectus supplement or to reflect the occurrence of unanticipated
events.

                                  MARKET DATA

         Market data and forecasts used in this prospectus have been obtained
from independent industry sources, including IMS Health and the North American
Menopause Society. We have not independently verified the data obtained from
these sources, and we cannot assure you of the accuracy or completeness of the
data.


                                      ii
<PAGE>

                               PROSPECTUS SUMMARY

         This summary highlights information described more fully elsewhere in
this prospectus. This summary may not contain all information that you should
consider before investing in our common stock. You should read the entire
prospectus, including "Risk Factors" and the financial statements and related
notes, before making an investment decision.

                                  OUR COMPANY

         We are a specialty pharmaceutical company initially focused on
improving women's health by developing and marketing advanced hormone therapies
with competitive advantages over existing therapies. We are seeking to
commercialize, through our own marketing and sales organization, a portfolio of
hormone replacement therapy product candidates that we are developing based on
our proprietary, complex combination of multiple estrogens. Our product
candidates contain complex estrogens alone or in combination with a progestin
or with an androgen, two other hormones. These product candidates are designed
to alleviate the symptoms of, and reduce the health risks resulting from,
menopause-related hormone deficiencies, including vasomotor symptoms,
osteoporosis and female sexual dysfunction. We submitted a New Drug
Application, or NDA, for our estrogens-only product candidate, Enjuvia, in
March 2002.

         Hormone replacement therapy, or HRT, products generated total sales in
the United States of over $2.9 billion in 2001. We expect that the United States
HRT market will grow at least through the rest of this decade. This growth is
expected to be driven primarily by the large group of post-World War II "baby
boomers" entering their menopausal years and increasing awareness of the
benefits of HRT. We believe that our complex estrogens product candidates will
address several of the limitations of existing HRT products and will enable us
to compete successfully in the HRT market. We believe that all of our product
candidates will provide the following benefits:

         -        our product candidates are the only complex estrogens
                  products that contain the same ten essential active estrogens
                  as Premarin(R), the leading product franchise in the HRT
                  market;

         -        the complex estrogens in our product candidates are
                  synthesized principally from plant-derived material and are
                  free of the non-estrogenic urinary substances found in
                  Premarin(R), which is derived from the urine of pregnant
                  horses;

         -        our product candidates are manufactured using the same
                  estrogens mixture and other ingredients from batch to batch;
                  and

         -        each of our product candidates will use a proprietary,
                  stable, sustained-release delivery system that we expect will
                  provide a highly consistent delivery profile of hormones
                  throughout the day.

         Our first product candidate, Enjuvia, is a complex estrogens product
that will treat vasomotor symptoms of menopause and is being studied in the
prevention of osteoporosis in menopausal women. Vasomotor symptoms include hot
flashes, uncontrollable sweating, chills, burning or tingling sensations,
associated sleep disturbances and mood swings. Osteoporosis causes bones to
become brittle and weak, increasing the risk of fractures that can have very
serious health consequences. Enjuvia is targeted for women who have had a
hysterectomy or for use in combination with a progestin by women who have not
had a hysterectomy. We expect to offer Enjuvia in 0.3, 0.45, 0.625 and 1.25 mg
dosage strengths. This wide range of dosage strengths will enable physicians to
tailor their patients' therapies to the lowest effective dosage strength,
thereby maximizing the benefits of HRT while minimizing the unwanted side
effects. In March 2002, we submitted an NDA for Enjuvia to the United States
Food and Drug


                                       1
<PAGE>

Administration, or FDA, for the treatment of vasomotor symptoms and anticipate
FDA approval in the first half of 2003.

         Our second product candidate, Projuvia, combines the complex estrogens
in Enjuvia with a progestin and is being developed to treat vasomotor symptoms
and to assist in the prevention of osteoporosis in menopausal women with intact
uteruses. Projuvia will use a novel progestin dosing regimen that we expect will
reduce the incidence of breakthrough or unexpected bleeding and more quickly
stop menstrual-like bleeding altogether. We expect the progestin we have chosen
will reduce or eliminate the negative effects associated with progestins in
currently marketed estrogen/progestin combination products. We expect to offer
Projuvia in two dosage strengths of complex estrogens, which will enable
physicians to tailor treatment to accommodate the diverse and changing needs of
their patients as they move through menopause and beyond. Currently marketed
estrogen/progestin combination products only offer one dosage strength of
estrogens. We have commenced a pivotal Phase III clinical safety and efficacy
study of Projuvia.

         Our third product candidate, Juviand, combines the complex estrogens in
Enjuvia with an androgen and is being developed to treat female sexual
dysfunction, including diminished sexual desire, in menopausal women. Juviand
will use an androgen that we expect will avoid liver toxicity and other negative
side effects, such as acne, male pattern baldness, an increase in facial hair
and irreversible deepening of the voice. Androgens used in currently marketed
estrogen/androgen combination products have been shown to cause these side
effects. We plan to commence a Phase II clinical safety and efficacy study for
Juviand in the second quarter of 2002.

                                  OUR STRATEGY

         Our primary objective is to become a market leader in advanced hormone
products and complementary therapies, initially focusing on women's healthcare
products for the HRT market. Key elements of our strategy include the
following:

         -        REDUCE RISK AND DEVELOPMENT COSTS BY USING HORMONES WITH
                  KNOWN SAFETY AND EFFICACY PROFILES. The roles of estrogens,
                  progestins and androgens in the maintenance of women's health
                  are well established and extensively documented, and their
                  administration as therapeutic agents have a demonstrated
                  track record of safety and efficacy. Accordingly, our ability
                  to reference previous pre-clinical and clinical studies of
                  the hormones we are using minimizes our investment in early
                  stage discovery research, reduces overall product development
                  costs, reduces the risk of clinical failure, and shortens the
                  timeframe to receive FDA approval.

         -        DEVELOP HORMONE PRODUCTS WITH COMPETITIVE ADVANTAGES OVER
                  EXISTING PRODUCTS. We believe that currently existing HRT
                  products have safety and patient compliance issues that can
                  be mitigated with new product formulations, the use of
                  different hormones and the use of novel dosing regimens.
                  Enjuvia and Projuvia, our first two product candidates, are
                  designed to address some of the shortcomings of currently
                  marketed HRT products for the treatment of vasomotor symptoms
                  and the prevention of osteoporosis. In the development of
                  Juviand, we are striving to provide an FDA-approved product
                  for the treatment of female sexual dysfunction without the
                  negative side effects of currently marketed products that are
                  used off-label for this purpose.

         -        ESTABLISH OUR OWN MARKETING AND SALES ORGANIZATION TO
                  MAXIMIZE THE COMMERCIAL BENEFIT OF OUR PRODUCT PORTFOLIO. We
                  intend to establish our own marketing and sales organization
                  to commercialize our initial product portfolio in the United
                  States. We believe that establishing our own sales force,
                  rather than out-licensing product rights, will better enable
                  us to control the commercialization of our product candidates
                  and generate a higher return on investment. We also will
                  selectively consider co-promotion arrangements for our
                  product candidates in return for the rights to co-promote
                  other companies' products, in order to leverage our sales


                                       2
<PAGE>

                  force. To market our product candidates internationally, we
                  initially anticipate selectively out-licensing our product
                  candidates to strong distribution partners outside the United
                  States.

         -        LEVERAGE PROPRIETARY TECHNOLOGIES. We intend to leverage our
                  expertise in hormonal science and our proprietary
                  technologies developed in connection with our first three
                  product candidates to develop additional products and
                  therapeutic alternatives. Our expertise in complex hormone
                  identification, characterization, stabilization, delivery and
                  manufacturing should position us strategically to develop
                  additional complex hormone products.

         -        ACQUIRE OR IN-LICENSE PRODUCTS AND TECHNOLOGIES TO EXPAND OUR
                  PRODUCT PORTFOLIO. We are seeking to acquire or in-license
                  late stage and/or marketed products and technologies that
                  will leverage our current technology base and increase the
                  breadth and strength of our product portfolio. We are also
                  seeking to acquire or in-license products that are
                  complementary to our hormone portfolio. Acquiring or
                  in-licensing other products could add efficiencies to our
                  promotional and sales activities and could result in
                  increased profits from operations.

         Endeavor Pharmaceuticals, Inc. is a Delaware corporation incorporated
in 1994. Our main offices are located at 127 Racine Drive, Suite 202,
Wilmington, North Carolina 28403 and our telephone number is (910) 790-9811.


                                       3
<PAGE>

                                  THE OFFERING

<TABLE>
<S>                                                          <C>
Common stock we are offering...........................             shares

Common stock to be outstanding after the
offering...............................................             shares

Use of proceeds........................................      We intend to use the proceeds from this offering
                                                             for:

                                                             -        research and development;
                                                             -        building our marketing and sales capabilities;
                                                             -        and general corporate purposes, including working
                                                                      capital and the potential acquisition of other
                                                                      products or product candidates.

Proposed Nasdaq National Market symbol.................      EDVR
</TABLE>

The number of shares of common stock to be outstanding upon completion of this
offering is based on the number of shares of common stock outstanding as of
      , 2002. This number assumes the conversion into common stock of all our
convertible preferred stock outstanding on that date.

It excludes:

         -               shares of common stock issuable upon exercise of stock
                  options outstanding as of       , 2002 with a weighted
                  average exercise price of $       per share; and

         -               shares of common stock issuable upon exercise of
                  warrants outstanding as of       , 2002 with a weighted
                  average exercise price of $       per share.

Except as otherwise indicated, all information in this prospectus assumes:

         -        a        for        stock split immediately prior to the
                  closing of this offering;

         -        no exercise of the underwriters' over-allotment option,

         -        the conversion of all outstanding shares of our convertible
                  preferred stock into shares of common stock upon the closing
                  of this offering; and

         -        the filing of a restated certificate of incorporation
                  effective upon the closing of this offering.


                                       4
<PAGE>

         Historical net loss per common share is not presented in the data below
for periods where no common stock was issued and outstanding. Shares used in
computing pro forma net loss per common share (unaudited) give effect to the
conversion of all outstanding shares of convertible preferred stock into common
stock and excludes the effect of outstanding stock options and warrants.

                             SUMMARY FINANCIAL DATA

<TABLE>
<CAPTION>
                                                                                                                  THREE MONTHS
                                                            YEAR ENDED DECEMBER 31,                              ENDED MARCH 31,
                                        ----------------------------------------------------------------      ---------------------
                                           1997          1998         1999         2000          2001          2001          2002
                                        ---------      -------      -------      -------      ----------      -------      --------
                                                  (Dollars in thousands, except per share data)                    (Unaudited)
<S>                                     <C>            <C>          <C>          <C>          <C>             <C>          <C>
STATEMENT OF OPERATIONS
DATA:
Net Revenues sales ................     $   1,200      $   194      $   233      $   834      $       --

Operating Expenses:
   Cost of sales ..................            --          127          145           --              --
   Research and
     development ..................         3,734          223          494        1,092           9,887
   General and
     administrative ...............           368          338          630        1,020           3,009
                                        ---------      -------      -------      -------      ----------
   Total operating
     expenses .....................         4,102          688        1,269        2,112          12,896
                                        ---------      -------      -------      -------      ----------
Loss from operations ..............        (2,902)        (494)      (1,036)      (1,278)        (12,896)
                                        ---------      -------      -------      -------      ----------
Net loss ..........................        (3,218)      (1,046)      (1,814)        (876)        (11,650)
                                        ---------      -------      -------      -------      ----------
Net loss applicable to
   common stock ...................     $  (3,218)     $(1,046)     $(1,814)     $(1,019)     $  (12,080)
                                        =========      =======      =======      =======      ==========

Net loss per common share
   Basic and diluted ..............
Shares used in computing
   net loss per common
   share ..........................
Pro forma basic and
   diluted net loss per
   common share
   (unaudited) ....................                                                           $    (2.92)
                                                                                              ==========
Shares used in computing
   pro forma basic and
   diluted net loss per
   common share
   (unaudited) ....................                                                            4,131,890
                                                                                              ==========
</TABLE>

         The Pro Forma As Adjusted information presented below gives effect to
the conversion of all outstanding shares of convertible preferred stock into
common stock and reflects the net proceeds from the sale of shares of common
stock in this offering, at an assumed initial public offering price of
$       per share, after deducting underwriting discounts and commissions
and estimated offering expenses payable by us.

<TABLE>
<CAPTION>
                                                           DECEMBER 31, 2001
                                                                      PRO FORMA
                                                       ACTUAL        AS ADJUSTED
                                                      --------       -----------
                                                           (In thousands)
<S>                                                   <C>            <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................          $ 22,656       $
Working capital.............................            21,879
Total assets................................            23,799
Redeemable preferred stock..................            44,478
Total stockholders' (deficit) equity........           (21,834)
</TABLE>


                                       5
<PAGE>

                                  RISK FACTORS

         An investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained in this prospectus, before you decide
whether to buy our common stock. If any of the following risks actually occur,
our business and prospects could suffer significantly. In any of these cases,
the market price of our common stock could decline, and you could lose all or
part of your investment in our common stock.

WE ARE IN EARLY STAGES OF DEVELOPMENT AND MAY NEVER ACHIEVE PROFITABILITY.

         We have not yet completed the development, including obtaining
regulatory approvals, of our current product candidates and, consequently, have
not generated any revenues from the sale of these product candidates. Even if
we succeed in developing, obtaining FDA approval for and commercializing one or
more of our product candidates, we may never achieve significant sales revenue.

         Our ability to achieve profitability will depend, among other things,
on our successfully completing development of our product candidates, obtaining
regulatory approvals, contracting for the manufacture of our product candidates
on favorable terms, establishing marketing and sales capabilities, achieving
market acceptance for our product candidates and maintaining sufficient funds
to finance our activities. We expect to encounter risks, costs and difficulties
frequently encountered by companies in an early stage of development. Many of
these risks are unknown, but they include those associated with managing our
growth, the uncertain cycle of developing commercial pharmaceutical products
and the marketing and distribution of our product candidates in a competitive
market. Our failure to identify and successfully address these risks would harm
our business and prospects.

WE HAVE A HISTORY OF LOSSES AND EXPECT SUCH LOSSES TO CONTINUE IN THE
FORESEEABLE FUTURE.

         Our company was formed in 1994 and has incurred significant operating
expenses but has not generated significant revenues to date. We need to
generate significant revenue to achieve and maintain profitability. We may not
be able to generate sufficient revenue and we may never be able to achieve or
maintain profitability. As of December 31, 2001, we had an accumulated deficit
of $36.1 million, funded primarily by issuing preferred stock. For the fiscal
years ended December 31, 1999, 2000 and 2001, we had operating losses of
approximately $1.0 million, $1.3 million and $12.9 million, respectively,
resulting principally from research and development efforts and other costs of
operations, and we expect to incur operating losses for the foreseeable future.
We expect to continue to incur significant operating expenses and anticipate
that our expenses will increase substantially in the foreseeable future as we:

         -        conduct clinical trials;

         -        conduct research and development on existing and new product
                  candidates;

         -        seek regulatory approvals for our product candidates;

         -        build a marketing and sales infrastructure to commercialize
                  our product candidates;

         -        hire additional clinical, scientific and management
                  personnel; and

         -        add operational, financial and management information systems
                  and personnel.


                                       6
<PAGE>

WE MAY NOT RECEIVE REGULATORY APPROVALS FOR OUR PRODUCT CANDIDATES OR APPROVALS
MAY BE DELAYED, EITHER OF WHICH COULD PREVENT US FROM MARKETING OUR PRODUCT
CANDIDATES.

         None of our product candidates is currently approved for sale by the
FDA or by any other regulatory agency in the world, and our product candidates
may never be approved for sale or become commercially viable. If we fail to
obtain regulatory approval for a product candidate that we intend to market,
such failure could have a material adverse effect on our business, results of
operations, and financial condition. We cannot assure you that we will obtain
such approval. For example, the results of our Phase III efficacy study for
Enjuvia at the 0.3 mg dosage strength did not meet the FDA's threshold for
showing a statistically significant reduction in the frequency and severity of
vasomotor symptoms at all monitoring points during the study, and this may
hinder our ability to obtain FDA approval at this dosage strength. We are
seeking FDA approval of our 0.45 mg dosage strength based on data correlating
the 0.45 mg dosage strength to the 0.3 and 0.625 mg dosage strengths. The FDA
may require us to perform further pharmacokinetic or bioequivalence studies to
prove the correlation of dosage strengths. If we are unable to gain approval of
the 0.3 mg dosage strength, we will be unable to gain approval of the 0.45 mg
dosage strength for the vasomotor indication unless we conduct an additional
trial. We cannot assure you that, if we conduct the trial, the FDA will approve
the 0.45 mg dosage strength for the vasomotor indication.

         In addition, we currently do not plan to conduct any separate efficacy
studies for the treatment of vasomotor symptoms and prevention of osteoporosis
for Projuvia. As a result, if we fail to obtain approval for any of the
indications for which we are seeking approval with respect to Enjuvia, such
failure also would adversely affect our efforts to obtain approval of Projuvia.

         Any failure by us to comply with current or future laws, regulations
and procedures that apply to our product candidates could result in civil,
criminal and punitive liability, and such liability could have a material
adverse effect on our business, results of operations and financial condition.

         Before the marketing or commercial sale of a pharmaceutical product,
we must obtain regulatory approval generally based upon:

         -        pre-clinical and clinical testing, studies and trials
                  establishing the safety and efficacy of the product for each
                  target indication; and

         -        chemistry, manufacturing, and controls data.

         The drug approval process is generally time consuming, expensive and
subject to unexpected delays. Despite the expenditure of time, human resources
and capital by us, we cannot assure you when, if at all, any of our product
candidates will gain approval from the FDA and comparable foreign entities.
Even after submitting applications to the appropriate regulatory agencies, any
number of factors could delay the approval process, including the need to
generate and submit additional data, or adverse changes in approval
requirements. Delays or rejections may be encountered during any stage of the
regulatory approval process based upon the failure of clinical data to
demonstrate compliance with, or upon the failure of the product candidate to
meet, regulatory requirements for such factors as quality, safety and efficacy.

         The FDA and comparable foreign entities may change the approval
requirements for our product candidates or may require demonstration of
clinical endpoints that we may not be able to establish. Any change in approval
requirements or the establishment of unanticipated clinical endpoints could
increase the cost of our product candidates' clinical development beyond our
ability to pursue such study or product candidates, and may significantly
change the time to approval for one or more of such product candidates. In
particular, we believe that a sexual dysfunction indication for Juviand
involves a high degree of risk since the FDA has yet to establish the criteria
for effectiveness in treating female sexual dysfunction. Moreover, even if the
FDA does establish such criteria, it may do so without sufficient


                                       7
<PAGE>

specificity. Either event could make it difficult or impossible to design
clinical trials to show that Juviand is safe and effective for female sexual
dysfunction or obtain FDA approval for other therapeutic uses. Any such delay
or increase in cost due to an adverse decision by the FDA with respect to
approval requirements, clinical endpoints or effectiveness criteria would have
a material adverse effect on our business, results of operations and financial
condition.

WE ARE DEPENDENT ON THE SUCCESSFUL OUTCOME OF CLINICAL TRIALS FOR OUR PRODUCT
CANDIDATES.

         Before obtaining regulatory approval for the sale of our product
candidates, they must be subjected to extensive pre-clinical and clinical
testing to demonstrate their safety and efficacy for humans. Our success will
depend on the success of our currently ongoing clinical trials and subsequent
clinical trials that have not yet begun.

         There are a number of difficulties and risks associated with clinical
trials. The possibility exists that:

         -        trial patient recruitment may be slower than expected;

         -        patients may drop out of our clinical trials;

         -        results may not be statistically significant or predictive of
                  results that will be obtained from large-scale, advanced
                  clinical trials;

         -        we may discover that a product candidate does not exhibit the
                  expected therapeutic results in humans;

         -        we may discover that a product candidate may cause harmful or
                  undesirable side effects; or

         -        we or the FDA may suspend the clinical trials of our product
                  candidates.

         The results from pre-clinical studies and early clinical trials may
not accurately predict the results that will be obtained in large-scale
testing, and we can provide no assurance that the clinical trials we or our
contract research organizations conduct will demonstrate sufficient safety and
efficacy to obtain the required regulatory approvals or will result in
marketable products. If the results of the large-scale testing vary
significantly from the pre-clinical studies and early clinical trials, we will
have allocated resources to a product candidate that ultimately may fail to
obtain regulatory approval, which would have a material adverse effect on our
business, results of operations and financial condition.

         In addition, we depend on independent clinical investigators and
contract research organizations to conduct our clinical trials. If independent
investigators fail to devote sufficient resources to the development of our
product candidates, or if their performance is substandard, it will delay the
approval and commercialization of our product candidates. If our independent
clinical investigators and contract research organizations fail to comply with
the FDA's standards for good clinical practice, the results of our clinical
trials could be called into question and the clinical development of our
product candidates could be delayed.

EVEN IF WE OBTAIN REGULATORY APPROVAL, WE WILL BE SUBJECT TO ONGOING
REGULATION, AND ANY FAILURE BY US TO COMPLY WITH SUCH REGULATION COULD SUSPEND
OR ELIMINATE OUR ABILITY TO SELL OUR PRODUCTS.

         We have submitted an application for regulatory approval of Enjuvia
for the treatment of vasomotor symptoms, and we intend to seek regulatory
approval of our other product candidates and of Enjuvia for other indications.
Even if we obtain regulatory approvals, failure to comply with post-marketing
requirements, such as maintenance of current Good Manufacturing Practices, or
cGMPs, or


                                       8
<PAGE>

safety surveillance of such product candidates or lack of compliance with other
regulations could result in suspension or limitation of approvals or other
enforcement actions. Furthermore, the terms of any product candidate approval,
including the labeling content and advertising restrictions, may be so
restrictive that they could adversely affect the marketability of our product
candidates. Any such failure to comply or the application of such restrictions
could limit our ability to market our product candidates and have a material
adverse effect on our business, results of operations and financial condition.

WE SOURCE MANY OF THE PRINCIPAL COMPONENTS OF OUR PRODUCT CANDIDATES FROM
SINGLE OR LIMITED SOURCE SUPPLIERS AND THE FAILURE OF SUCH SUPPLIERS TO
CONTINUE TO SUPPLY SUCH COMPONENTS ON TERMS OR OF QUALITY ACCEPTABLE TO US
COULD MATERIALLY IMPACT OUR ABILITY TO PRODUCE OUR PRODUCT CANDIDATES.

         Many of the principal components of our product candidates are
available only from single or limited source suppliers. Berlex Laboratories,
Inc. has agreed to supply, through Berlichem, Inc., our requirements for
delta(8),(9) dehydroestrone which we have synthesized into delta(8),(9)
dehydroestrone sulfate, or delta(8),(9), a key estrogenic component of our
product candidates. In addition, the androgen we intend to use in Juviand is
only available from a limited number of suppliers. We can provide you no
assurance that such suppliers will be able to meet our requirements for
components, that we can establish or maintain good relationships with such
suppliers or that we will be able to find suitable replacements if the
relationships with any of our existing suppliers are terminated. In any such
case, our competitive advantage and results of operations could suffer.

         In addition, we can provide you no assurance that such suppliers will
continue to supply ingredients in conformity with regulatory requirements.
Regulatory authorities, such as the FDA, require that we contract only with
manufacturers that comply with cGMPs, as defined and prescribed by applicable
regulations, and other applicable laws. We can provide you no assurance that
our third-party suppliers will be able to supply our product candidate
components in conformity with such requirements. A failure by such suppliers to
comply with regulatory requirements could result in an interruption of the
availability of our product candidates. In addition, any failure by us or a
third-party provider to meet orders could damage our reputation and have a
material adverse effect on our business, results of operations and financial
condition. Since the marketing approval process requires manufacturers to
indicate their proposed suppliers of active pharmaceutical ingredients and
certain packaging materials in their applications to the FDA, regulatory
approval of any new supplier would be required if active pharmaceutical
ingredients or such packaging materials were no longer available from the
specified supplier. The qualification of a new supplier could delay our
development and marketing efforts and materially adversely affect our company.

WE CANNOT ASSURE YOU THAT OUR PRODUCT CANDIDATES WILL HAVE ADVANTAGES OVER
EXISTING HRT PRODUCTS OR, IF THEY DO, THAT WE WILL SUCCESSFULLY MARKET OUR
PRODUCT CANDIDATES, AND ANY SUCH FAILURE WOULD HAVE A MATERIAL ADVERSE EFFECT
ON US.

         Even if our product candidates obtain the required regulatory
approvals, we cannot assure you that they will compete effectively in the
market. The Premarin(R) family of products accounted for approximately 67% of
all HRT prescriptions in 2001. We cannot assure you that we can compete with
Premarin(R) or command a meaningful portion of the HRT market not accounted for
by Premarin(R).

         Our ability to compete with the Premarin(R) family of HRT products, or
with other currently marketed HRT products, will be significantly affected by
whether our product candidates are as safe and effective as, more safe and
effective than, or comparable or superior in other respects compared with, such
competing products by reason of the combination, doses, and regimens of the
hormones in our product candidates, the source and nature of the hormones we
use, and the absence of biological impurities in our product candidates. We
cannot claim that our product candidates have equivalent or


                                       9
<PAGE>

superior qualities unless such equivalence or superiority is shown in
comparative studies. We currently do not intend to conduct such studies. Even
if we were to do so, we cannot assure you that such studies would be successful
or that the FDA would agree that they are sufficient to enable us to make
equivalence or superiority claims in our marketplace promotion of our product
candidates. If such studies are not conducted or are unsuccessful, or if the
FDA does not permit us to make relevant claims about the equivalent or superior
qualities of our product candidates, our ability to compete effectively with
the Premarin(R) family of products, or other HRT products, will be adversely
affected.

         The class of products we currently are developing is known to carry
certain health risks, including an increased risk of certain types of cancer.
If our product candidates are approved by the FDA, we expect the labeling of
each of our approved product candidates to contain a warning regarding the
possible health risks associated with taking the product candidate. If a
warning label required by the FDA adversely affects the market acceptance of
our product candidates or if our product candidates are otherwise unable to
effectively compete in the market for this class of drugs, such inability to
compete would have a material adverse effect on our business, results of
operations and financial condition.

         In addition, there are current studies that question certain of the
potential collateral benefits of HRT. These studies are discussed in a recent
position paper financed by the National Institutes of Health, or NIH, and the
private Giovanni Loren Zini Medical Science Foundation of Italy. This paper, in
which 28 doctors and scientists review the results of existing studies,
questions certain of the claimed collateral benefits of HRT. We cannot assure
you that these studies or the NIH paper will not adversely affect the market
for HRT products and the commercialization of our product candidates.

WE FACE SIGNIFICANT COMPETITION, INCLUDING THE RISK THAT PRODUCTS OF
COMPETITORS WILL MAKE OUR PRODUCT CANDIDATES OBSOLETE.

         In the HRT market, many companies compete directly with our product
candidates, including Wyeth, Novartis, Pharmacia, Ortho-McNeil, Berlex, Solvay,
King Pharmaceuticals, Warner Chilcott, Barr and Procter & Gamble. These
companies possess far greater financial, technical and human resources than we
do. In addition, many of these companies possess greater experience handling
the FDA testing and approval process and marketing pharmaceutical products.

         Moreover, rapid improvements and technological advances characterize
the pharmaceutical and biotechnology industries. Even if we manage to
successfully develop our product candidates, obtain FDA approval, and
effectively market our product candidates, other companies may develop
technologies and products that are more effective or achieve greater market
acceptance than those developed by us. Such products could render our product
candidates and technologies less competitive or obsolete.

IF THERE IS LITTLE OR NO MARKET ACCEPTANCE OF OUR PRODUCT CANDIDATES, OUR
REVENUES WILL BE REDUCED.

         Even if our product candidates obtain FDA approval, they may not gain
market acceptance among physicians, patients, third-party payors and the
medical community. The degree of market acceptance of any of our product
candidates will depend on a number of factors, including:

         -        demonstration of their clinical efficacy and safety;

         -        their cost-effectiveness;

         -        their potential advantage over alternative existing and newly
                  developed treatment methods;

         -        the marketing and distribution support they receive; and


                                      10
<PAGE>

         -        reimbursement policies of government and third-party payors.

         Our product candidates, if successfully developed and approved by the
FDA, will compete with a number of drugs and therapies currently manufactured
and marketed by major pharmaceutical and other specialty pharmaceutical
companies. The Premarin(R) family accounted for approximately 67% of all HRT
prescriptions in 2001. We may not be able to successfully compete with the
Premarin(R) family of products or command a meaningful portion of the HRT
market not accounted for by the Premarin(R) family of products. Furthermore,
there currently does not exist an established market for female sexual
dysfunction products, and thus our Juviand product candidate will face the
challenges associated with entering an unestablished product market. Our
product candidates also may compete with new products currently under
development by others or with products that may cost less than our product
candidates. Physicians, patients, third-party payors and the medical community
may not accept or utilize our product candidates. If our product candidates do
not achieve significant market acceptance, there will be a material adverse
effect on our business, results of operation and financial condition.

IF WE ARE UNABLE TO CREATE MARKETING AND SALES CAPABILITIES, OR ENTER INTO
AGREEMENTS WITH THIRD PARTIES TO PERFORM THESE FUNCTIONS, WE WILL NOT BE ABLE
TO COMMERCIALIZE OUR PRODUCT CANDIDATES.

         We do not have the marketing or sales capabilities to support the
launch of our product candidates. To commercialize our product candidates we
must acquire or internally develop marketing and sales capabilities or make
arrangements with third parties to perform these services for us. We initially
intend to rely on the services of a contract sales organization to market our
first product candidate if it receives FDA approval. If we obtain FDA approval
for our other product candidates, we intend to internalize our sales function
and/or to rely on relationships with one or more pharmaceutical companies or
other third parties with established distribution systems and direct sales
forces to market our product candidates. If we decide to market any of our
product candidates directly and are not able to hire sales representatives from
contract sales organizations, we must either acquire or internally develop a
sales force. The acquisition or development of a sales infrastructure would
require significant costs and management involvement, which may divert the
attention of our management and key personnel. To the extent we enter into
co-promotion or other licensing agreements for our product candidates, our
product revenues may be lower than if we directly marketed and sold our product
candidates, and a portion of the revenue we receive will depend upon the
efforts of third parties, which may not be successful.

CHANGES IN THE REIMBURSEMENT RATES OF THIRD-PARTY PAYORS OR CURRENT LAWS
REGARDING SUCH RATES MAY REDUCE OUR ABILITY TO MAKE A REASONABLE RETURN ON
INVESTMENT AND INVESTORS MAY BE ADVERSELY AFFECTED.

         Our success will depend in part on the extent to which reimbursement
for the costs of therapeutic products and related treatments will be available
from third-party payors, such as government health administration authorities,
private health insurers, managed care programs and other organizations. We
cannot assure you that our product candidates will be included in certain key
formularies of such third-party payors. If generic versions of the Premarin(R)
family of products enter the HRT market, third-party payors would likely tailor
reimbursement policies to encourage patients to use these generic products to
the extent they are less expensive than other alternatives, such as our product
candidates.

         Over the past decade, as the cost of healthcare has risen
significantly, legislators, regulators and third-party healthcare payors have
attempted to curb these costs by limiting the amount of reimbursement for
certain products. In the future, federal and state legislatures may pass laws
limiting the amount of reimbursement for certain pharmaceutical products,
including our product candidates. In addition, third-party insurance payors
also may reduce the amount they are willing to reimburse for certain
pharmaceutical products. Any such actions by state or federal legislatures or
by third-party payors could hinder our ability to realize a significant return
on investment in product development and our business,


                                      11
<PAGE>

results of operations, and financial condition would be adversely affected.
Further, the threat of cost control measures might materially adversely affect
our stock price.

WE MAY NOT BE ABLE TO PROTECT, THROUGH PATENTS, THE PROPRIETARY TECHNOLOGIES
AND PROCESSES WE PLAN TO UTILIZE TO DEVELOP COMMERCIALLY VIABLE HORMONE-BASED
PRODUCT CANDIDATES.

         To a large extent, our future success will depend on our ability to
use our proprietary technologies and processes to develop commercially viable
hormone-based product candidates for the HRT and other therapeutic markets. Two
of our patent applications, which include claims directed to either the
composition of matter or the synthesis of the complex estrogens that we use in
our product candidates, are pending, and under review with the United States
Patent and Trademark Office, or USPTO. Obtaining patents for pharmaceuticals is
often difficult and sometimes requires an appeal within the USPTO. Many patent
applications initially receive "office actions" denying the grant of a patent
and there can be no guarantee a patent will issue once an application receives
an office action. We have received such an office action for our composition of
matter patent application, and no final determination has been made by the
USPTO examiners regarding either our composition of matter or our synthesis
patent applications. It is likely that an appeal within the USPTO will be
required with respect to our composition of matter application. If either of
such patents is not issued, any potential patent exclusivity period relative to
that technology will not be available, and if neither of such patents issues,
we will have no patent protection for our complex estrogens mixture used in our
first three product candidates. In addition, we can provide you no assurance
that such pending patent rights, if granted, will prevent competitors from
commercializing products that are similar or functionally equivalent to our
product candidates, or using technologies or processes for formulating or
manufacturing such similar or functionally equivalent products. More
specifically, we cannot assure you:

         -        if and when our pending patents will issue;

         -        the degree of protection any patents we obtain will afford us
                  against competitors with similar technologies or processes;

         -        whether or not others will obtain patents claiming properties
                  similar to those covered by our patent applications;

         -        the extent to which patents granted to others will affect our
                  patent applications and the use of our technologies or
                  processes; or

         -        the cost of potential patent litigation.

          Furthermore, we cannot assure you that any patent rights granted to
us will not be successfully challenged in the future or that any of our product
candidates, technologies or processes do not and will not infringe upon the
patent rights of third parties. In addition, our competitors may be able to
avoid our patent rights through design innovation. It is also possible that
third parties will obtain patent or other proprietary rights that might be
necessary or useful for the development, manufacture or sale of our product
candidates. In cases where third parties are the first to invent a particular
product or technology, it is possible that those parties will obtain patent
rights that will be sufficiently broad to prevent us from developing,
manufacturing or selling our product candidates. We may need to obtain licenses
for intellectual property rights from others to develop, manufacture and market
commercially viable product candidates. Such licenses may not be obtainable on
commercially reasonable terms, if at all, and any licensed patents or
proprietary rights we obtain may not be valid and enforceable. Failure to
obtain or maintain patent protection over our proprietary technologies or
processes, for any reason, would have a material adverse effect on our
business, results of operations and financial condition.


                                      12
<PAGE>

OUR NON-PATENTED, PROPRIETARY TECHNOLOGIES AND PROCESSES MAY NOT BE ADEQUATELY
PROTECTED FROM UNAUTHORIZED DISCLOSURE, AND UNAUTHORIZED DISCLOSURE MAY HAVE A
MATERIAL ADVERSE EFFECT ON US.

         In addition to patent protection we have or propose to obtain, we also
rely on confidentiality and non-disclosure agreements with our employees,
consultants, advisers and collaborators to protect certain trade secrets and
proprietary information relating to our technologies and processes. These
agreements may not effectively prevent disclosure of our confidential
information and may not provide us with an adequate remedy in the event of
unauthorized disclosure of such information. Failure to obtain or maintain
trade secret protection, for any reason, would have a material adverse effect
on our business, results of operations and financial condition.

WE MAY NOT BE ABLE TO ESTABLISH OWNERSHIP OF TECHNOLOGIES AND PROCESSES
DEVELOPED BY EMPLOYEES, CONSULTANTS AND SERVICE PROVIDERS, WHICH COULD DIMINISH
OUR COMPETITIVE POSITION AND HAVE A MATERIAL ADVERSE EFFECT ON US.

         We use our employees, consultants and service providers to develop our
technologies and processes, and disputes may arise about the ownership of
proprietary rights to those technologies and processes. We may be unable to
prove or establish proprietary rights to such technologies and processes.
Protracted and costly litigation could be necessary to enforce and determine
the scope of our proprietary rights. Failure to prove or establish such
proprietary rights, or the failure to do so in a cost effective manner, could
have a material adverse effect on our business, results of operations and
financial condition.

WE RELY ON THIRD PARTIES FOR RESEARCH, DEVELOPMENT AND MANUFACTURING NEEDS, AND
ANY FAILURE OF SUCH THIRD PARTIES TO PROVIDE APPROPRIATE SERVICES TO US WILL
HAVE A MATERIAL ADVERSE EFFECT ON US.

         We currently rely on third parties to provide almost all our research,
development and manufacturing resources. Upon expiration of the term, or upon
earlier termination, of any third-party agreement, we may not be able to renew
or extend any such agreement with the third party, or obtain an alternative,
for the necessary goods or services on commercially viable terms, if at all. In
addition, third-party manufacturers may not be able to meet the demand for our
product candidates and any such failure may adversely affect our business,
results of operations and financial condition.

WE DEPEND ON CERTAIN KEY PERSONNEL AND CANNOT ASSURE YOU THAT SUCH PERSONNEL
WILL CONTINUE TO SERVE OUR COMPANY IN THE FUTURE OR THAT WE WILL BE ABLE TO
RECRUIT AND RETAIN OTHER NEEDED PERSONNEL.

         We are dependent on the members of our senior management team. In
particular, we rely on the services of R. Forrest Waldon, our President and
CEO, and Thomas W. Leonard, Ph.D., our Vice President, Chief Science Officer.
We do not carry key man life insurance on the lives of any of our key
personnel. We cannot assure that we can retain the services of all or any of
these individuals and the loss of service of any of these individuals would
disrupt our operations.

         In addition, we may need to hire certain additional key officers and
staff, including a medical director and regional marketing and sales managers.
We cannot assure you that we will be able to hire or retain capable personnel
to fill these positions. Many of the companies with whom we compete for
employees have greater financial resources than we do. We may not be able to
compete successfully with these companies for qualified personnel and officers.


                                      13
<PAGE>

WE ARE SUBJECT TO REGULATION BY THE DRUG ENFORCEMENT ADMINISTRATION.

         Since our Juviand product candidate will contain an androgen, which is
an anabolic steroid, the Drug Enforcement Administration, or the DEA, will
require facility licenses, tracking records, secured storage and disposal
capabilities in facilities developing or manufacturing this product candidate.
Failure to comply with the DEA's facilities requirements for this type of
compound, or failure to comply with the DEA's requirements for tracking,
storing, or disposing of this compound, could result in revocation or
suspension of the facility license necessary to continue developing or
manufacturing the compound. Such suspension or revocation of the required DEA
license to develop or manufacture the Juviand product in a facility we use
could have a material adverse effect on our business, results of operations,
and financial condition. In addition, we may develop other product candidates
that fall under DEA jurisdiction and thus subject us to the same types of
risks.

WE FACE POTENTIAL LIABILITIES RELATING TO THE DEVELOPMENT AND SALE OF DRUGS AND
THE STORAGE OF POTENTIALLY HARMFUL MATERIALS.

         We develop, and hope to market, pharmaceutical product candidates that
involve human testing and expose us to the risk of liability for personal
injury or death to persons using such product candidates. We have obtained
liability insurance coverage at a level that we consider appropriate for our
current stage of development, which does not include comprehensive product
liability insurance. Our liability may exceed the limitations of our present
insurance coverage. As we commercialize our product candidates, we will need to
obtain more extensive insurance coverage. Such insurance may not be available
at an acceptable cost, if at all, and such coverage may not be sufficient to
shield us from liability. A successful product liability claim that exceeds our
insurance coverage could have a materially adverse effect on our business,
results of operations and financial condition.

         Our research and development involves the use of highly potent
hormones, which may result in serious injury and serious long-term health
problems to persons inappropriately exposed to such hormones. Currently, we do
not own adequate facilities to handle such hormone materials, and rely on third
parties for the processing, storage and destruction of such materials. Although
we believe that our service providers utilize adequate safety procedures for
handling and disposing of such materials that comply with the standards
prescribed by such laws and regulations, we cannot completely eliminate the
risk of accidental contamination or injury from these materials. In the event
of such an accident, we could be held liable for any damages that result and
any such liability could have a material adverse effect on our company. In
addition, we may be held liable in the event of third-party claims against our
manufacturers, suppliers, contract sales organizations, and third-party
research and development providers relating to our product candidates.

IF WE DECIDE TO ENTER THE GLOBAL PHARMACEUTICAL MARKET, WE WOULD CONFRONT MANY
RISKS ASSOCIATED WITH DOING BUSINESS IN MARKETS OUTSIDE THE UNITED STATES.

         Because the pharmaceutical and biotechnology industries are
increasingly competing in global markets, we may eventually market our product
candidates outside the United States. Doing business outside the United States
involves various risks and expenses. Non-U.S. regulatory agencies often require
different tests and applications than those required by the FDA. If we decide
to do business outside the United States, we may need to expend significant
resources to obtain non-U.S. regulatory approval. We cannot assure you that
such expenditures, if made, would result in regulatory approval.

         In addition, even if we obtain regulatory approval outside the United
States, we cannot assure you that we can successfully operate in non-U.S.
markets. International operations may be limited or disrupted by, among other
things, imposition of government controls, export license requirements,
political or economic instability, trade restrictions and changes in tariffs,
restrictions on repatriating


                                      14
<PAGE>

profits, taxation, difficulties in staffing and managing international
operations, and fluctuations in currency exchange rates.

CERTAIN PROVISIONS IN OUR RESTATED CERTIFICATE OF INCORPORATION AND RESTATED
BYLAWS AND DELAWARE STATE LAW MAY BE USED TO RESIST ACQUISITIONS AND
COMBINATIONS INVOLVING US THAT MIGHT OTHERWISE BENEFIT OUR STOCKHOLDERS.

         Provisions of our restated certificate of incorporation and restated
bylaws and Section 203 of the Delaware General Corporation Law give our board
of directors broad discretion in resisting or delaying proposed acquisitions of
our company. These provisions, in addition to the existence of several large
stockholders, may discourage possible acquisitions or combinations of our
company, even if such acquisitions or combinations would otherwise benefit our
stockholders. For more information, see "Description of Capital Stock."

WE RETAIN BROAD DISCRETION AS TO THE USE OF PROCEEDS AND AN INEFFECTIVE USE OF
PROCEEDS WOULD BE DETRIMENTAL TO OUR COMPANY.

         We retain significant flexibility in applying the net proceeds of this
offering. If we fail to effectively use the net proceeds of this offering, our
business, results of operations and financial condition could be materially
adversely affected.

WE MAY NOT SUCCESSFULLY MANAGE OUR GROWTH.

         Our success will depend upon the expansion of our operations and the
effective management of growth, which will place significant strains on our
management and on our administrative, operational and financial resources. To
manage our growth, we must expand our facilities, augment our operational,
financial and management systems and hire and train additional qualified
personnel. If we cannot manage our growth effectively, our business will be
harmed.

WE MAY EXPERIENCE DIFFICULTY RAISING NEEDED CAPITAL IN THE FUTURE.

         We have expended and will continue to expend substantial funds to
complete the research, development, clinical testing, manufacturing and
commercialization of our product candidates. We will require additional funds
for the research, development and testing of our product candidates, as well as
for the development of internal marketing and sales capacities and possibly
manufacturing capacities. If any of these activities takes longer or costs more
than we expect or if our existing agreements are terminated, we may seek to
raise additional funds through equity or debt financings, collaborative
arrangements or other sources, any of which may dilute your ownership in us.
Additional financing may not be available on acceptable terms, if at all. If
our operations require more funds than we anticipate or our sources of
financing do not produce adequate funds, we may have to delay, reduce the scope
of, or eliminate one or more of our development programs, which would
materially curtail our business and growth and harm our prospects.

THE MARKET PRICE OF OUR COMMON STOCK AFTER THIS OFFERING MAY FLUCTUATE WIDELY
AND RAPIDLY.

         There is currently no public market for our common stock, and an
active trading market may not develop or be sustained after this offering. We
and the underwriters' representatives will negotiate an initial public offering
price that may not be indicative of the market price for our common stock after
this offering. As a result, the market price of our stock could fall below the
initial public offering price.

         The market price of our common stock could fluctuate significantly as
a result of many factors including:


                                      15
<PAGE>

         -        the receipt and timing of FDA approval of our product
                  candidates, if granted;

         -        our financial performance;

         -        failure to meet analysts' or investors' expectations;

         -        economic and stock market conditions;

         -        changes in evaluation and recommendation by securities
                  analysts who follow our stock or our industry;

         -        earnings and other announcements by, and changes in market
                  evaluations of, other companies in our industry;

         -        changes in business or regulatory conditions;

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

         -        the trading volume of our common stock; or

         -        other factors unrelated to our company or industry.

         The securities of many technology and pharmaceutical companies have
experienced extreme price and trading volume fluctuations in recent years,
often unrelated or disproportionate to the companies' operating performances.
Following periods of volatility in the market price of a company's securities,
stockholders often have instituted securities class action litigation against
that company. If we become involved in a class action suit, it could divert the
attention of management, and, if adversely determined, could have a material
adverse impact on our financial condition.

SUBSTANTIAL SALES OF OUR COMMON STOCK AFTER THE OFFERING COULD CAUSE OUR STOCK
PRICE TO FALL.

         Our sale or the resale by our stockholders of shares of our common
stock after this offering could cause the market price of our common stock to
decline. After this offering, we will have     shares of common stock
outstanding. Of these shares, the      shares sold in this offering will
be freely transferable without restriction.

         As of May     , 2002, options to purchase     shares of
our common stock were outstanding. These options are subject to vesting that
generally occurs over a period of up to three years following the date of
grant. In addition, we have established a new stock option plan, under which
      shares will be available for option grants. We intend to file a
registration statement following this offering to register the shares
underlying all such options. In addition, as of May      , 2002, warrants
to purchase       shares of our common stock were outstanding and were
fully vested with respect to      of such shares. The shares received upon
exercise of these warrants may become freely tradable at various points over
the next few years, depending upon the method of exercise.

         Certain of our stockholders, optionholders and warrantholders signed
lock-up agreements before the commencement of this offering. Under these lock-up
agreements, these stockholders, optionholders and warrantholders have agreed,
subject to limited exceptions, not to sell any shares owned by them as of the
date of this prospectus for a period of 180 days thereafter, unless they first
obtain the written consent of Banc of America Securities LLC and Bear, Stearns &
Co. Inc. At the end of 180 days, unless earlier waived by Banc of America
Securities LLC and Bear, Stearns & Co. Inc., the lock-up restrictions will end
and the stockholders, optionholders and warrantholders will be able to sell such
shares.


                                      16
<PAGE>

YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.

         If you purchase common stock in this offering, you will pay more for
your shares than the amounts paid by existing stockholders for their shares. As
a result, you will experience immediate and substantial dilution of
approximately $      per share, representing the difference between our
net tangible book value per share after giving effect to this offering and the
initial public offering price. For more information, see "Dilution."


                                      17
<PAGE>

                                USE OF PROCEEDS

         We estimate that we will receive net proceeds from this offering of
approximately $        million, at an assumed initial public offering price of
$       per share, net of estimated underwriting discounts and commissions and
estimated offering expenses payable by us. If the underwriters exercise
their over-allotment option in full, we estimate our net proceeds will
be $       million.

         We expect to use these proceeds as follows:

         -        approximately 35% to 40% for research and development;

         -        approximately 40% to 45% to build our marketing and sales
                  capabilities; and

         -        the balance for general corporate purposes, including working
                  capital and the potential acquisition of other products or
                  product candidates.

         The amount and timing of our actual expenditures will depend upon
numerous factors, including the progress of our product candidate development
programs, future revenue, if any, and the amount of cash, if any, generated by
our operations. The amounts above are only broad estimates and we have not
determined with certainty the amounts we plan to spend on any of the areas
listed above or other areas or the timing of such expenditures. Accordingly,
our management will have broad discretion in the application of the net
proceeds. Pending these uses, we intend to invest the net proceeds in
interest-bearing, investment-grade instruments, certificates of deposit, or
direct or guaranteed obligations of the United States.

         We expect the proceeds of this offering to fund our operations through
the initial launch period for Enjuvia. We anticipate that cash flow from
operations and short-term borrowings will fund the launch of Projuvia and
Juviand. If any of our product candidates' anticipated launch dates are delayed
or if the launches are more costly than we anticipate, we may require
additional financing. In addition, one of our strategies is to acquire products
or product candidates. Any such acquisition, depending on its size and scope,
may require additional financing.

                                DIVIDEND POLICY

         We have never declared or paid dividends on our capital stock and do
not anticipate declaring or paying any dividends in the foreseeable future. We
currently intend to retain any future earnings for the expansion of our
business.


                                      18
<PAGE>

                                    DILUTION

         Our pro forma net tangible book value as of March 31, 2002 was
$      , or $       per share, assuming conversion of all outstanding
shares of convertible preferred stock into shares of our common stock on the
closing of this offering. Pro forma net tangible book value per share
represents the amount of our total tangible assets, reduced by the amount of
our total liabilities, and then divided by the total number of shares of common
stock outstanding after giving effect to the automatic conversion of all shares
of outstanding convertible preferred stock upon closing of this offering.
Dilution in pro forma net tangible book value per share represents the
difference between the amount paid per share by purchasers of shares of common
stock in this offering and the pro forma net tangible book value per share of
common stock immediately after the completion of this offering. After giving
effect to the sale of the shares of common stock offered by us at an assumed
initial public offering price of $       per share, and after deducting the
underwriting discounts and commissions and estimated offering expenses payable,
our pro forma net tangible book value would have been $       million or
$       per share of common stock. This represents an immediate increase in
pro forma net tangible book value of $       per share to existing
stockholders and an immediate dilution of $       per share to new
investors purchasing shares at the initial public offering price. The
following table illustrates this dilution on a per share basis:

<TABLE>
       <S>                                                                               <C>
       Assumed public offering price...............................................      $
           Pro forma net tangible book value per share as of.......................      $
           Increase attributable to new investors..................................      $
       Pro forma net tangible book value per share after this offering.............      $
                                                                                         ----------
       Dilution to new investors...................................................      $
                                                                                         ==========
</TABLE>

         The following table summarizes, as of March 31, 2002, the differences
between the existing stockholders and new investors with respect to the number
of shares of common stock purchased from us, the total consideration paid to us
and the average price paid per share:

<TABLE>
<CAPTION>
                                                  SHARE PURCHASED            TOTAL CONSIDERATION
                                               ---------------------        ---------------------    AVERAGE PRICE
                                               NUMBER        PERCENT        AMOUNT        PERCENT      PER SHARE
                                               ------        -------        ------        -------    -------------
<S>                                            <C>           <C>            <C>           <C>        <C>
Existing stockholders.................                             %        $                   %    $
New investors.........................                             %                            %    $
                                               ------        ------         ------        ------
         Totals.......................                             %        $                   %
                                               ======        ======         ======        ======
</TABLE>

         The preceding tables assume no issuance of shares of common stock
under our stock option or warrant plans after March 31, 2002. As of March 31,
2002,        shares were subject to outstanding options at a weighted average
exercise price of $       per share. This table also assumes no exercise of
the warrants outstanding as of March 31, 2002 for        shares of common
stock at a weighted average exercise price of $       per share. If all of
these options and warrants were exercised, then the total dilution per share
to new investors would be $      .


                                      19
<PAGE>

                                 CAPITALIZATION

The table below sets forth the following information as of December 31, 2001:

         -        our actual capitalization and our cash position, and

         -        our pro forma as adjusted capitalization and cash position
                  after giving effect to:

                  -        the filing of a restated certificate of
                           incorporation effective upon the closing of
                           this offering to authorize       shares of
                           common stock and a        for       stock split for
                           holders of record as of       ;

                  -        the elimination of all existing series of preferred
                           stock and authorization of       shares of
                           undesignated preferred stock, and the conversion of
                           all outstanding convertible preferred stock into
                           common stock; and

                  -        the sale of       shares of common stock in
                           this offering at an assumed initial public offering
                           price of $       per share, after deducting the
                           underwriting discounts and commissions and estimated
                           offering expenses.

You should read this table in conjunction with "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and related notes included elsewhere
in this prospectus.

<TABLE>
<CAPTION>
                                                                              PRO FORMA
                                                                  ACTUAL     AS ADJUSTED
                                                                 --------    -----------
                                                                     (In thousands)
<S>                                                              <C>           <C>
Cash and cash equivalents ..................................     $ 22,656      $
                                                                 ========      ========

Redeemable Series E convertible preferred stock ............     $ 44,478      $     --

Stockholders' (deficit) equity:
   Series A convertible preferred stock ....................            6            --
   Series B convertible preferred stock ....................            2            --
   Series C convertible preferred stock ....................            7            --
   Series D convertible preferred stock ....................            1            --
   Undesignated preferred stock ............................           --            --
   Common stock ............................................           --
   Additional paid-in capital ..............................       14,650
   Deferred compensation ...................................         (359)         (359)
   Accumulated deficit .....................................      (36,141)      (36,141)
                                                                 --------      --------
     Total stockholders' (deficit) equity ..................      (21,834)
                                                                 --------      --------
Total capitalization .......................................     $ 22,644      $
                                                                 ========      ========
</TABLE>

The above table excludes:

         -               shares of common stock issuable upon exercise of stock
                  options outstanding as of       , 2002 with a weighted
                  average exercise price of $       per share, and

         -               shares of common stock issuable upon exercise of
                  warrants outstanding as of       , 2002 with a
                  weighted average exercise price of $       per share.


                                      20
<PAGE>

                            SELECTED FINANCIAL DATA

         You should read the selected historical financial data set forth below
in conjunction with our financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus. The statement of operations data for the
years ended December 31, 1999, 2000 and 2001, and the balance sheet data at
December 31, 2000 and 2001 are derived from financial statements included
elsewhere in this prospectus that have been audited by Ernst & Young LLP,
independent auditors. The statement of operations data for the years ended
December 31, 1997 and 1998, and the balance sheet data at December 31, 1997,
1998 and 1999 are derived from financial statements that have been audited by
Ernst & Young LLP, independent auditors, and are not included in this
prospectus. Historical net loss per common share is not presented for periods
where no common stock was issued and outstanding. Shares used in computing pro
forma net loss per common share (unaudited) give effect to the conversion of all
outstanding shares of convertible preferred stock into common stock and excludes
the effect of outstanding stock options and warrants. Historical results are not
necessarily indicative of results to be expected for any future period.

<TABLE>
<CAPTION>
                                                                                                                    THREE MONTHS
                                                                YEAR ENDED DECEMBER 31,                            ENDED MARCH 31,
                                             --------------------------------------------------------------      -------------------
                                               1997         1998         1999         2000          2001          2001        2002
                                             -------      -------      -------      -------      ----------      -------     -------
                                                     (Dollars in thousands, except per share data)                   (Unaudited)
<S>                                          <C>          <C>          <C>          <C>          <C>             <C>         <C>
STATEMENT OF OPERATIONS DATA:
Net revenues ...........................     $ 1,200      $   194      $   233      $   834      $       --

Operating Expenses:
   Cost of sales .......................          --          127          145           --              --
   Research and development ............       3,734          223          494        1,092           9,887
   General and administrative ..........         368          338          630        1,020           3,009
                                             -------      -------      -------      -------      ----------
   Total operating expenses ............       4,102          688        1,269        2,112          12,896
                                             -------      -------      -------      -------      ----------
Loss from operations ...................      (2,902)        (494)      (1,036)      (1,278)        (12,896)
                                             -------      -------      -------      -------      ----------
Net loss ...............................      (3,218)      (1,046)      (1,814)        (876)        (11,650)
                                             -------      -------      -------      -------      ----------
Net loss applicable to common stock ....     $(3,218)     $(1,046)     $(1,814)     $(1,019)     $  (12,080)
                                             =======      =======      =======      =======      ==========

Net loss per common share:
   Basic and diluted................
Shares used in computing net loss
   per common share.................
Pro forma basic and diluted net loss
   per common share (unaudited).....                                                             $    (2.92)
                                                                                                 ==========
Shares used in computing pro forma
   basic and diluted net loss per
   common share (unaudited).........                                                              4,131,890
                                                                                                 ==========

<CAPTION>

                                                                                                                    THREE MONTHS
                                                                     DECEMBER 31,                                  ENDED MARCH 31,
                                             --------------------------------------------------------------      -------------------
                                               1997         1998         1999         2000          2001          2001        2002
                                             -------      -------      -------      -------      ----------      -------     -------
                                                                    (In thousands)                                   (Unaudited)
<S>                                          <C>          <C>          <C>          <C>          <C>             <C>         <C>
BALANCE SHEET DATA:
Cash and cash equivalents ..............     $ 2,611      $   138      $   881      $34,249      $ 22,656
Working capital ........................         301         (122)      (8,792)      34,153        21,879
Total assets ...........................       2,715          932        1,123       34,897        23,799
Debt and accrued interest
    to stockholders ....................       6,316        6,886        7,676           --            --
Redeemable preferred stock .............          --           --           --       44,048        44,478
Total stockholders' (deficit) equity ...      (5,916)      (6,962)      (8,776)      (9,795)      (21,834)
</TABLE>


                                      21
<PAGE>

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

         You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with "Selected Financial
Data" and our financial statements and related notes appearing elsewhere in
this prospectus.

OVERVIEW

         We are initially focused on improving women's health by developing,
manufacturing and marketing advanced hormone therapies with competitive
advantages over existing therapies. Our first product candidates are Enjuvia,
Projuvia and Juviand, three proprietary HRT products designed to address
several limitations of existing HRT products. Enjuvia, a complex estrogens-only
product, and Projuvia, a complex estrogens/progestin combination product, are
designed to treat vasomotor symptoms of menopause and to assist in the
prevention of osteoporosis. Juviand is a complex estrogens/androgen combination
product designed to treat female sexual dysfunction, including diminished
sexual desire. We submitted an NDA for Enjuvia in March 2002 for the treatment
of vasomotor symptoms and expect approval in the first half of 2003. We are
currently enrolling participants in our pivotal Phase III study using Enjuvia
for the prevention of osteoporosis. A pivotal Phase III clinical safety and
efficacy study is currently underway for Projuvia, and we plan to initiate a
Phase II clinical study for Juviand in the second quarter of 2002.

         Because we have not yet completed the development of our current three
product candidates, we have not generated any significant product revenues. Our
revenues to date have primarily consisted of license fees and milestone
payments from collaborative partners. Since our inception in 1994 we have
incurred significant operating losses that we expect will continue for the next
several years. As of December 31, 2001, we had an accumulated deficit of $36.1
million and have primarily depended upon equity financings to fund our
operations.

         Our operating expenses consist primarily of costs associated with
research and development and general and administrative costs associated with
our operations. Research and development expenses consist of outside
professional fees related to pre-clinical studies and clinical trials, as well
as compensation and other related costs of our personnel dedicated to research
and development activities. General and administrative expenses consist
primarily of the costs of our senior management, finance, marketing and sales,
and administrative staff, business insurance and professional fees. We expect
marketing and sales expenses to increase significantly as we hire marketing and
sales managers and prepare for our product candidate launches. In addition,
expansion of our operations and costs associated with being a public reporting
entity will increase our general and administrative expenses.

         We expect our research and development expenses to increase
substantially in the foreseeable future as we continue to grow. We expect a
large percentage of our research and development expenses will be incurred in
support of our clinical trial programs for our current three product candidates
and other future products. The time and cost of completing the clinical
development of product candidates depend on a number of factors, including
medical condition to be treated, clinical trial design and endpoints,
availability of patients to participate in trials, the results of clinical
trials, the number of clinical trials required to be conducted, the need to
conduct unanticipated trials, and the length of time of the regulatory review
process. Due to these uncertainties, we are unable to assure you of the length
of time or the costs that will be required to complete the development of our
first three product candidates.


                                      22
<PAGE>

CRITICAL ACCOUNTING POLICIES

         Our critical accounting policies are described in the notes to our
financial statements appearing elsewhere in this prospectus.

         We had no revenue in 2001 because we were not selling any products and
had no licensing agreements. We do not expect to have revenue until after we
launch our Enjuvia product candidate, which we expect to occur in the middle of
2003.

         Licensing fees and royalties are recognized as revenue as earned,
which is generally determined by the achievement of contractual milestones.
Contractual payments based on cost reimbursement are reflected as a reduction
to research and development expense. Product sales are recognized when
ownership and risk of loss transfers to the customer.

         Deferred Compensation from Stock Options

         We recorded $400,000 of deferred compensation related to stock options
granted to employees after May 1, 2001. This deferred compensation is being
amortized to expense on a straight-line basis over three years, which is the
vesting period of the underlying options. We recognized $41,000 of stock
compensation expense in 2001. The deferred compensation was calculated using
the guidelines of the Securities and Exchange Commission, which generally
require a more stringent approach to the valuation of the options than may be
used for other valuation purposes.

RESULTS OF OPERATIONS

         We believe that full year-to-year comparisons of our operations are
not meaningful because we have been primarily involved in development activities
that are and will be different over different time periods and are not
generally repetitive in nature. Our past performance will not necessarily
predict our future performance.

YEARS ENDED DECEMBER 31, 2001 AND 2000

         Revenues

         In early 2000, we made a strategic decision not to develop any generic
products for our product portfolio and sold the rights to a generic estradiol
product to aaiPharma Inc., or aaiPharma. We recognized this sale as licensing
revenues. This product was manufactured for us by aaiPharma and marketed for us
by a third party. We had no revenue in 2001 since we no longer had the generic
estradiol product.

         Research and Development

         Our research and development costs were $9.9 million in 2001 compared
to $1.1 million in 2000.

         Our research and development activities are managed internally with a
large portion of the work conducted by third parties. At the end of 2001, we
had ten staff members devoted to research and development activities compared
to four at the end of 2000. Our internal staff consists of people with
backgrounds in science, product development, regulatory affairs, quality
assurance and project management. We expect to add to this staff as we grow our
company. Our internal costs are not allocated to the various projects.

         In 2001, we advanced the development of Enjuvia through the
continuation of the pivotal Phase III clinical study for the vasomotor
indication and the start of a pivotal Phase III clinical study for an


                                      23
<PAGE>

osteoporosis indication. The first Phase III study was completed in January
2002 and we submitted a new drug application, or NDA, for Enjuvia, which
incorporated the Phase III clinical study for the vasomotor indication, in
March 2002. The osteoporosis Phase III study is expected to continue for the
next few years because it requires two years of patient dosing. Our research
and development costs, excluding internal costs, directly attributable to
Enjuvia were $7.1 million in 2001 compared to $0.9 million in 2000.

         We completed pre-clinical work and a Phase II dose-ranging study for
Projuvia in 2001. We began a pivotal Phase III clinical study in the second
quarter of 2002, which should last for 18 to 24 months. Our research and
development costs, excluding internal costs, directly attributable to Projuvia
were $1.4 million in 2001 compared to $17,000 in 2000.

         We advanced the development of Juviand with pre-clinical work and the
production of clinical supplies for a Phase II dose-ranging study that we
expect to begin in the second quarter of 2002. Most of our work on this product
over the last two years has been carried out internally and with our Medical
Advisory Board. Our research and development costs, excluding internal and
Medical Advisory Board costs, directly attributable to Juviand were $453,000 in
2001 compared to none in 2000.

         We expect to incur approximately $20 million of total research and
development expense in 2002.

         General and Administrative

         Our general and administrative expenses were $3.0 million in 2001
compared to $1.0 million in 2000. The increase in general and administrative
expenses related to increased staffing costs (including payroll, benefits,
office space and travel) and increased consulting expenses. We opened our
marketing and sales office, located in New Jersey, midway through 2001. At the
end of 2001, we had 11 general and administrative staff members compared to
five at the end of 2000.

         We increased consulting expenses in the marketing and sales area to
begin preparing for the launch of Enjuvia and in the legal area to protect our
intellectual property. While the cost of filing patents is generally
capitalized, we expense the cost of keeping abreast of the patent landscape of
our competitors.

         Interest Income and Expense

         We had higher interest income in 2001 compared to 2000 because of
higher average balances in cash and cash equivalents during the year. Our
interest expense was significantly reduced in 2001 compared to 2000 because of
the August 2000 conversion of all outstanding debt and accrued interest to
Series E convertible preferred stock.

         Other, Net

         We had no transactions in 2001 compared to a sale of laboratory
equipment to aaiPharma that generated other income of approximately $300,000 in
2000.

         Income Taxes

         We had net losses in both 2001 and 2000 and did not have a provision
for income taxes in either year. At the end of 2001, we had accumulated net
operating loss carryforwards for federal and state income tax purposes of
approximately $28.8 million and federal tax credit carryforwards of


                                      24
<PAGE>

approximately $1.7 million. We provided a full valuation allowance against the
net deferred tax assets generated by the above items because of the uncertainty
of realizing such assets.

YEARS ENDED DECEMBER 31, 2000 AND 1999

         Revenues

         Our 1999 net product sales were generated from the sale of a generic
estradiol product to a third party under a marketing agreement. As discussed
above, we sold the estradiol product rights to aaiPharma in early 2000 and
recognized such sale as licensing revenues.

         Cost of Sales

         The 1999 cost of sales were attributable to the generic estradiol
product sales during 1999. As discussed above, the rights to this product were
sold in 2000. We had no cost of sales in 2000 because we did not have any
product sales.

         Research and Development

         Our research and development costs were $1.1 million in 2000 compared
to $1.2 million in 1999, before the reduction of approximately $704,000 for
cost reimbursement payments made to us by Berlex as part of a development
agreement. This development agreement was terminated in 1999 and replaced with
a new supply agreement with Berlichem and Berlex.

         The research and development costs in both 2000 and 2001 were mostly
attributable to the development of our Enjuvia product candidate. We started
the pivotal Phase III clinical study for vasomotor indications in the fourth
quarter of 2000. The 1999 costs were mostly pre-clinical with some preparation
for the Phase III clinical study.

         General and Administrative

         Our general and administrative expenses were $1.0 million in 2000
compared to $0.6 million in 1999. The increase in general and administrative
expenses mostly related to increased staffing costs (payroll, benefits, office
space, travel, etc.). We opened our new headquarters office, located in North
Carolina, in the third quarter of 1999 so we had greater office costs in 2000
compared to 1999. At the end of 2000, we had five general and administrative
staff members compared to three at the end of 1999.

         Interest Income and Expense

         We had higher interest income in 2000 compared to 1999 because of
higher average balances in cash and cash equivalents during the year. In August
and November of 2000, we generated net cash proceeds of $35.6 million from the
private placement of Series E convertible preferred stock. This same
transaction also eliminated our outstanding debt, including accrued interest,
and reduced our interest expense in 2000 compared to 1999.

         Other, Net

         In 2000, we sold laboratory equipment to aaiPharma that generated
other income compared to a minimal other expense in 1999.


                                      25
<PAGE>
         Income Taxes

         We had net losses in both 2000 and 1999 and did not have a provision
for income taxes in either year. We provided a full valuation allowance against
the net deferred tax assets generated by net operating loss carryforwards and
federal tax credit carryforwards because of the uncertainty of realizing such
assets.

         LIQUIDITY AND CAPITAL RESOURCES

         We had cash of approximately $22.7 million and working capital of
approximately $21.9 million as of December 31, 2001. We have mainly funded our
business through the issuance of preferred stock. Our most recent financing
activity was the sale of Series E convertible preferred stock in 2000, which
raised approximately $35.6 million of net cash proceeds and converted
approximately $8.3 million of debt and accrued interest to Series E convertible
preferred stock. We also have funded a portion of our operating activities
through licensing agreement payments and product revenues; however, we have
generally had negative cash flows from operating activities.

         We will need a significant amount of funding to complete our
development plans and launch our product candidates as discussed in this
prospectus. We plan on spending approximately $20 million annually on research
and development activities and plan on expanding our marketing and
administrative activities over the next three years. We expect to fund such
activities and our other operations through the sale of equity, including this
offering or proceeds from borrowings until we can generate enough cash flow
from operating activities. We do not have any committed lines of credit, loans
or other methods of financing and cannot provide any assurance that credit will
be available in the future at acceptable terms, if at all.

         We expect the proceeds of this offering to fund our operations through
the initial launch period for Enjuvia. We anticipate that cash flow from
operations and short-term borrowings will fund the launches of Projuvia and
Juviand. If any of our product candidates' anticipated launch dates are delayed
or if our launches are more costly than we anticipate, we may require
additional financing. In addition, one of our strategies is to acquire products
or product candidates. Any such acquisition, depending on size and scope, may
require additional financing.

         If adequate funding is not obtained from this offering or future
funding sources, we will have to change our strategy for product development,
approval and commercialization by delaying the timing of certain clinical
studies and development activities, or we may have to seek out a strategic
partner for some of our development or marketing activities. For further
discussion, see "Risk Factors."

DISCLOSURE ABOUT MARKET RISK

         Our exposure to market risk is principally confined to our cash and
cash equivalents, which consist of money market accounts. We do not use
derivative instruments to hedge interest rate exposure. Due to the nature of
our investments, we believe we are not subject to material market risk.

NEW ACCOUNTING PRONOUNCEMENTS

         In 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, "Business Combinations," No. 142,
"Goodwill and Other Intangible Assets," No. 143, "Accounting for Asset
Retirement Obligations" and No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets." We adopted Statement No. 144 as of December 31, 2001
with no significant impact on our financial position or results of operations.
Statements No. 141, No. 142 and No. 143 are presently not applicable to our
company.


                                      27

<PAGE>

                                    BUSINESS

         We are a specialty pharmaceutical company initially focused on
improving women's health by developing and marketing advanced hormone therapies
with competitive advantages over existing therapies. We are seeking to
commercialize, through our own marketing and sales organization, a portfolio of
hormone replacement therapy product candidates that we are developing based on
our proprietary, complex combination of multiple estrogens. Our product
candidates contain complex estrogens alone or in combination with a progestin
or an androgen, two other hormones. These product candidates are designed to
alleviate the symptoms of, and reduce the health risks resulting from,
menopause-related hormone deficiencies, including vasomotor symptoms,
osteoporosis and female sexual dysfunction.

         Hormone replacement therapy, or HRT, products generated total sales in
the United States of over $2.9 billion in 2001. We expect that the United States
HRT market will grow at least through the rest of this decade. This growth is
expected to be driven primarily by the large group of post-World War II "baby
boomers" entering their menopausal years and increasing awareness of the
benefits of HRT. We believe that our complex estrogens product candidates will
address several of the limitations of existing HRT products and will enable us
to compete successfully in the HRT market.

         Our first product candidate, Enjuvia, is a complex estrogens product
that will treat the vasomotor symptoms associated with menopause and assist in
the prevention of osteoporosis in menopausal women. Estrogens are a
naturally-occurring group of hormones which, among other things, regulate a
woman's monthly cycles of ovulation and menstruation during her reproductive
years. Vasomotor symptoms include hot flashes, uncontrollable sweating, chills,
burning or tingling sensations, associated sleep disturbances and mood swings.
Osteoporosis causes bones to become brittle and weak, increasing the risk of
fractures that can have serious health consequences. Enjuvia is targeted for
women who have had a hysterectomy or for use in combination with a progestin by
women who have not had a hysterectomy. In March 2002, we submitted a New Drug
Application, or NDA, for Enjuvia to the FDA for the treatment of vasomotor
symptoms and anticipate FDA approval of Enjuvia in the first half of 2003.

         Our second product candidate, Projuvia, combines the complex estrogens
in Enjuvia with a progestin and is being developed to treat vasomotor symptoms
and to assist in the prevention of osteoporosis in menopausal women with intact
uteruses. Progestins are hormones which, among other things, can counteract
endometrial hyperplasia, a side effect of estrogen replacement on the uterus. We
completed a Phase II dose-ranging study and have commenced a pivotal Phase III
clinical safety and efficacy study for Projuvia.

         Our third product candidate, Juviand, combines the complex estrogens in
Enjuvia with an androgen and is being developed to treat female sexual
dysfunction, including diminished sexual desire, in menopausal women. Androgens
are hormones which, among other things, have been shown to have beneficial
effects on sexual desire. We plan to commence a Phase II clinical safety and
efficacy study for Juviand in the second quarter of 2002.

         We believe our portfolio of product candidates will address several
limitations of existing hormone replacement therapies. We believe all our
product candidates will provide the following benefits:

         -        Our product candidates are the only complex estrogens
                  products that contain the same ten essential active estrogens
                  as Premarin(R), the leading product franchise in the HRT
                  market.


                                      28

<PAGE>

         -        The complex estrogens in our product candidates are
                  synthesized principally from plant-derived material and are
                  free of the non-estrogenic urinary substances found in
                  Premarin(R), which is derived from the urine of pregnant
                  horses.

         -        Our product candidates are manufactured using the same
                  estrogens mixture and other ingredients from batch to batch.

         -        Each of our product candidates will use a proprietary,
                  stable, sustained-release delivery system that we expect will
                  provide a highly consistent delivery profile of hormones
                  throughout the day.

         Our Enjuvia product candidate:

         -        Is expected to be offered in 0.3, 0.45, 0.625 and 1.25 mg
                  dosage strengths. This wide range will enable physicians to
                  tailor patients' therapies to the lowest effective dosage
                  strength, thereby maximizing the benefits associated with HRT
                  while minimizing unwanted side effects.

         Our Projuvia product candidate:

         -        Will use a novel progestin dosing regimen that we expect will
                  reduce the incidence of breakthrough or unexpected bleeding
                  and more quickly stop menstrual-like bleeding altogether.

         -        Is expected to have fewer of the negative side effects, such
                  as painful vaginal bleeding, breast tenderness and bloating,
                  associated with currently marketed estrogen/progestin
                  combination products.

         -        Will use a progestin that we expect will eliminate the
                  negative effect associated with progestins in currently
                  marketed estrogen/progestin combination products which limit
                  the estrogens' ability to raise HDL cholesterol, known as the
                  good cholesterol, and lower LDL cholesterol, known as the bad
                  cholesterol.

         -        Will offer two dosage strengths of complex estrogens that
                  will enable physicians to tailor treatment to accommodate the
                  diverse and changing needs of their patients as they move
                  through menopause and beyond. Currently marketed
                  estrogen/progestin combination products only offer one dosage
                  strength of estrogens.

         Our Juviand product candidate:

         -        Will use an androgen that we expect will avoid liver toxicity
                  and other negative side effects, such as acne, male pattern
                  baldness, increase in facial hair and irreversible deepening
                  of the voice. Androgens used in currently marketed
                  estrogen/androgen combination products have been shown to
                  cause these side effects.

OUR STRATEGY

         Our primary objective is to become a market leader in advanced hormone
products and complementary therapies, initially focusing on women's healthcare
products for the HRT market. Key elements of our strategy include the
following:


                                      29

<PAGE>

REDUCE RISK AND DEVELOPMENT COSTS BY USING HORMONES WITH KNOWN SAFETY AND
EFFICACY PROFILES

         We seek to minimize product development risk and costs by using
hormones with known safety and efficacy profiles. The roles of estrogens,
progestins and androgens in the maintenance of women's health are well
established and extensively documented, and their administration as therapeutic
agents have a demonstrated track record of safety and efficacy. Accordingly, in
developing our advanced HRT product candidates, we are able to reference
pre-clinical and clinical studies that were used in the approval of marketed
drugs or that are otherwise publicly available. This approach enables us to
minimize our investment in early stage discovery research, reduce overall
product development costs, reduce the risk of clinical failure, and shorten the
timeframe to receive FDA approval.

DEVELOP HORMONE PRODUCTS WITH COMPETITIVE ADVANTAGES OVER EXISTING PRODUCTS

         We intend to compete in the HRT market by developing hormone products
with competitive advantages over currently marketed products, as well as by
developing new therapeutic alternatives. We believe that currently marketed HRT
products have safety and patient compliance issues that can be mitigated with
new product formulations and the use of different hormones. Enjuvia and
Projuvia, our first two product candidates, are designed to address some of the
shortcomings of currently marketed HRT products for the treatment of vasomotor
symptoms and the prevention of osteoporosis. In the development of our Juviand
product candidate, we are striving to provide an FDA-approved product for the
treatment of female sexual dysfunction without the negative side effects of
currently marketed products used off-label for this indication.

ESTABLISH OUR OWN MARKETING AND SALES ORGANIZATION TO MAXIMIZE THE COMMERCIAL
BENEFIT OF OUR PRODUCT PORTFOLIO

         We intend to establish our own marketing and sales organization to
commercialize our initial product portfolio in the United States. We believe
that establishing our own sales force, rather than outlicensing product rights,
will enable us to better control the commercialization of our product
candidates and generate a higher return on investment. We plan to hire
additional marketing and sales managers who initially will use a contract sales
organization to provide sales representatives for the launch of Enjuvia. As our
product portfolio expands, we plan to develop our own sales force. We expect
significant marketing and sales synergies among our first three product
candidates because we will be targeting the same physician, patient and managed
care audiences. In addition, marketing our complementary product candidates to
these overlapping audiences will help us build recognized corporate and product
brands. We believe that brand recognition of our first product candidate and
our company will enhance market acceptance for each successive product
candidate. We will also selectively consider co-promotion arrangements for our
product candidates, in return for the rights to co-promote other companies'
products, in order to leverage our sales force. To market our product
candidates internationally, we initially anticipate selectively out-licensing
them to strong distribution partners outside the United States.

LEVERAGE PROPRIETARY TECHNOLOGIES

         We intend to leverage our expertise in hormonal science and our
proprietary technologies developed in connection with our first three product
candidates to develop additional product candidates and therapeutic
alternatives. Our expertise in complex hormone identification,
characterization, stabilization, delivery and manufacturing should position us
strategically to develop additional complex hormone product candidates. In
addition, our experience in hormone regimen development and clinical research
provides us with the expertise necessary to bring innovative product
alternatives to the market. Based on our expertise in complex hormone
compositions, we expect to be well-positioned to pursue


                                      30

<PAGE>

future product candidates as scientific advances occur in the understanding of
how hormones work in the body.

ACQUIRE OR IN-LICENSE PRODUCTS AND TECHNOLOGIES TO EXPAND OUR PRODUCT PORTFOLIO

         We are seeking to acquire or in-license late stage and/or marketed
products and technologies that will leverage our current technology base and
increase the breadth and strength of our product portfolio. Examples of such
potential opportunities include new and improved HRT products and other
low-dose hormone products that may benefit from the application of our
specialized hormone formulations and analytical and manufacturing technologies.
We also are seeking to acquire or in-license products that are complementary to
our hormone portfolio. Acquiring or in-licensing other products could add
efficiencies to our promotional and sales activities and could result in
increased profits from operations.

HRT MARKET OVERVIEW

MENOPAUSE

         Menopause is the time when a woman's menstrual periods cease. The
average age of a woman entering natural menopause is approximately 51. However,
approximately 27% of women enter menopause earlier due to the surgical removal
of both ovaries, chemotherapy or radiation therapy. Natural menopause is not a
single event but a series of physiological changes that a woman goes through
over a number of years and is typically divided into two stages: perimenopause
and postmenopause. Perimenopause is the time when a woman begins experiencing
vasomotor symptoms, such as hot flashes, even though she is still ovulating,
and her menstrual cycles may become irregular. Perimenopause may last anywhere
from two to eight years. A woman is considered to be postmenopausal once 12
months have passed since her last period. At that point, a woman's ovaries no
longer produce estrogens or progesterone and ovulation ceases.

         The North American Menopause Society estimates that approximately
4,900 women in the United States enter menopause each day. Due to the large
group of "baby boomers" now entering into their menopausal years, the female
population demographics are expected to change dramatically, increasing the
potential patient population and demand for products that address conditions
associated with menopause. It is estimated that by the end of 2002,
approximately 62 million women in North America will be 50 years old or older.
By the end of 2010, this potential patient base is expected to reach
approximately 76.5 million women in North America, representing more than 28%
of the total female population and approximately a 23% increase over the number
of women age 50 or older in 2002. Moreover, given that the average life
expectancy for women in the United States is approximately 80 years, the
postmenopausal period now makes up more than one-third of an average American
woman's life span.

MENOPAUSE LEADS TO DEBILITATING SYMPTOMS AND INCREASED HEALTH RISKS

         With the onset of menopause, a woman's body produces significantly
lower amounts of estrogens and progesterone, hormones which regulate monthly
cycles of ovulation and menstruation. Other hormones, such as androgens (e.g.,
testostorone) also continue to decline as a woman ages. These changes have
important consequences for a woman's quality of life and overall health. The
symptoms and health risks include vasomotor symptoms, osteoporosis and female
sexual dysfunction. Increased risks of heart disease, neurodegenerative
diseases and colon cancer also are associated with menopause.

         Vasomotor symptoms. Approximately 80% of menopausal women suffer from
vasomotor symptoms, such as hot flashes, uncontrollable sweating, chills,
burning or tingling sensations, associated sleep disturbances and mood swings.
An estimated 25% of menopausal women will suffer from these


                                      31

<PAGE>

symptoms for more than five years. The onset of hot flashes occurs when a
woman's body begins producing less estrogen, causing deregulation of her
hypothalmus gland. This deregulation can result in her blood vessels repeatedly
and unexpectedly expanding rapidly, causing her skin temperature to rise
dramatically. A woman experiencing a hot flash may sweat profusely and
uncontrollably even though she is not physically exerting herself and the
temperature is moderate. Hot flashes can be very intense and debilitating. They
can last from 30 seconds to 30 minutes or more, and can occur as often as once
an hour or more in severe cases. The combination of hot flashes and other
vasomotor symptoms lead many women to complain of a general and sometimes
debilitating decrease in their quality of life.

         Osteoporosis. Osteoporosis causes bones to become brittle and weak,
which increases the risk of fractures. Osteoporosis is a serious disease that is
expected to affect eight million women in the United States in 2002. Estrogens
have positive effects on maintaining bone strength and integrity. Decreases in
estrogen production during and after menopause cause women to lose calcium from
their bones at an accelerated rate, increasing the risk of osteoporosis. The
North American Menopause Society estimates that, among caucasian women over age
50 in the United States, nearly 40% will experience an osteoporotic fracture in
their remaining lifetime. Bone fractures resulting from osteoporosis can be
devastating, especially hip fractures, which result in greater disability and
mortality than all other osteoporotic fracture types combined. It is estimated
that hip fractures cause up to a 20% increase in mortality within a year of the
occurrence of such fractures. It is also estimated that approximately 25% of
women need long-term care after a hip fracture and 50% will experience a
long-term loss of mobility.

         Female Sexual Dysfunction. Menopause also is associated with various
forms of female sexual dysfunction. Menopause-related hormonal changes can
result in a recurrent inability to attain or maintain lubrication in response to
sexual excitement, painful intercourse, a decrease in sexual pleasure and orgasm
and diminished sexual desire. The emotional and psychological changes that women
experience during and after menopause also may diminish sexual desire.
Diminished sexual desire is the most prevalent female sexual disorder. Among the
approximately 14 million menopausal women between the ages of 50 and 59, an
estimated 27% experience diminished sexual desire and approximately 23% do not
experience orgasm following normal sexual excitement.

EXISTING THERAPIES AND TRENDS

         Existing therapies for vasomotor symptoms, osteoporosis, and female
sexual dysfunction fall principally into the following two categories:

         -        HRT products, including estrogen replacement therapy and
                  estrogen/progestin combination products prescribed to treat
                  vasomotor symptoms and assist in the prevention of
                  osteoporosis, and estrogen/androgen combination products
                  prescribed to treat vasomotor symptoms and used off-label to
                  treat female sexual dysfunction; and

         -        Non-HRT products, including bisphosphonates, selective
                  estrogen receptor modulators, or SERMs, and calcitonins, each
                  of which prevents and/or treats only osteoporosis.

HRT Products

         In 2001, HRT was the fourth most prescribed drug category in the
United States, with more than 100 million prescriptions dispensed. These
prescriptions, for either treatment of menopause symptoms or prevention of
osteoporosis, generated total sales of over $2.9 billion. Oral, once-daily
hormone replacement therapy accounted for 89% of HRT prescriptions in 2001. The
Premarin(R) family of products accounted for 67% of all HRT prescriptions in
2001 and 72% of total HRT market sales.


                                      32

<PAGE>

         We expect that the domestic HRT market will continue to grow, at least
through the rest of this decade. Key drivers for this expected HRT sales
growth include:

         -        the "baby boomers" entering menopause;

         -        patient and physician education on the benefits of HRT;

         -        standardized osteoporosis screening; and

         -        evidence of potential collateral benefits of HRT, including
                  prevention of heart disease and neurodegenerative diseases.

         Estrogen-Only Therapies

         Estrogen replacement therapy is the only FDA-approved therapy that
treats vasomotor symptoms and is the first line cost effective therapy
recommended by the National Osteoporosis Foundation for prevention of
osteoporosis. The estrogen-only category of the oral HRT market totaled $1.4
billion in sales in the United States in 2001, with sales of Premarin(R)
accounting for 87% of total sales in that category.

         Estrogens have been used to treat vasomotor symptoms for more than 50
years. It is estimated that approximately 70% to 80% of estrogen usage is for
the treatment of vasomotor symptoms, with the other 20% to 30% being prescribed
for the prevention of osteoporosis. Because the vasomotor symptoms of menopause
are a direct result of the decline in estrogen levels associated with ovarian
shutdown, estrogen replacement directly remediates these symptoms. Multiple
studies have demonstrated the positive effects of estrogens on vasomotor
symptoms.

         Estrogen replacement therapy is approved for the prevention of
osteoporosis, and we believe no other osteoporosis therapy has been shown to be
more effective; only bisphosphonates have been shown to be comparably
effective. Estrogen replacement therapy is the only osteoporosis therapy with
long-term clinical experience. Multiple studies have been conducted on various
estrogen compositions that demonstrate efficacy based on increases in bone
mineral density. Epidemiological and some fracture prevention studies also have
demonstrated a decrease in fractures resulting from increases in bone density
associated with HRT. Estrogen replacement therapy also improves sexual
functioning by reducing vaginal dryness and painful intercourse.

         Numerous studies indicate that estrogen replacement therapy lowers
levels of LDL cholesterol (the bad cholesterol) and raises levels of HDL
cholesterol (the good cholesterol). Studies also indicate a beneficial
effect of estrogen replacement therapy on the prevention of heart disease,
although not all studies are consistent. In addition, certain studies show that
women using estrogen replacement therapy have a lower risk of colon cancer and
neurodegenerative disorders. While long-term estrogen use is associated with
increased risk of endometrial cancer for women with intact uteruses who use
estrogen-only therapies and an increased risk of breast cancer, it is not
associated with a higher breast cancer mortality rate. Accordingly, although
some concern exists regarding increased risk of breast cancer associated with
long-term estrogen use, we believe that, for many women, the established and
potential collateral benefits from estrogen therapy significantly outweigh the
associated risks.

         Limitations of Existing Estrogen-Only Therapies. The market leader of
estrogen-only replacement therapy, Premarin(R), is an extracted estrogen
product derived from the urine of a pregnant horse and contains numerous
non-estrogenic urinary substances. No existing synthetic estrogens-only product
contains delta(8),(9), which is one of the ten essential active estrogens in
Premarin(R). Delta(8),(9) is


                                      33

<PAGE>

believed to be an important contributor in reducing hot flashes and preventing
osteoporosis when used in complex estrogen mixtures.

         Estrogen/Progestin Combination Products

         Progestins are used in combination with estrogen in women with
uteruses to avoid an increase in the incidence of endometrial hyperplasia. This
is a condition caused by chronic use of estrogen alone by a woman with a uterus
and is associated with an increased incidence of uterine, or endometrial,
cancer. Many studies have shown that after one year, the incidence of
endometrial hyperplasia is less than 1% in women taking estrogen/progestin
combinations, in contrast to up to 20% in women taking estrogen alone. Also, a
woman's risk of uterine cancer has been shown to be lower if she takes
estrogen/progestin products than if she does not. Doctors typically recommend
that a menopausal or postmenopausal woman who has a uterus take estrogen plus a
progestin, either as a combination drug or as two separate drugs. Sales of
estrogen/progestin combinations were approximately $900 million in the United
States in 2001, of which products in the Premarin(R) family constituted 88%.

         Limitations of Existing Estrogen/Progestin Therapies. Current
estrogen/progestin combination therapies vary the progestin, but not the
estrogen, dose. Menopausal women suffering from vasomotor symptoms may require
a higher dose of estrogen to control the symptoms but postmenopausal women may
require only low doses to prevent osteoporosis. As a result, current therapies
may cause postmenopausal women to take more estrogen than they need, possibly
leading to adverse side effects and health risks. In addition, the most
commonly prescribed progestin (medroxyprogesterone acetate) causes some women
to experience painful vaginal bleeding, breast tenderness and bloating, and may
reduce the cardio-protective benefits potentially associated with estrogen
therapy by limiting the estrogen's ability to raise HDL cholesterol and lower
LDL cholesterol. Furthermore, current estrogen/progestin regimens do not
sufficiently control unexpected bleeding, especially during the first year of
therapy. Most women on cyclic progestin regimens continue to experience
menstrual-like cycles for the duration of the therapy. Innovative regimens are
needed that can better control unexpected bleeding and more quickly stop
bleeding altogether.

         Estrogen/Androgen Combination Products

         We believe the primary use of estrogen/androgen combinations is to
address female sexual dysfunction in menopausal women. These products also have
most of the same benefits and limitations of estrogen-only therapy.
Estratest(R) and Estratest(R) HS from Solvay Pharmaceuticals are the only two
currently marketed estrogen/androgen combination products in the United States.
These products lack FDA approval, but remain on the market pending submission
of studies to gain FDA approval. In addition, neither is indicated for the
treatment of female sexual dysfunction. Sales of Estratest(R) and Estratest(R)
HS were approximately $211 million in 2001, a 32% increase over sales in 2000.

         Limitations of Existing Estrogen/Androgen Therapies. The androgen used
in Estratest(R) and Estratest(R) HS has been found to result, in some cases, in
liver toxicity and masculinizing side effects, such as acne, male pattern
baldness, an increase in facial hair and an irreversible deepening of the
voice. A combination estrogen/androgen is needed that can treat female sexual
dysfunction with fewer or less severe negative side effects.

         Non-HRT Osteoporosis Treatments

         Non-HRT treatments for osteoporosis include bisphosphonates, SERMs and
calcitonins. In 2001, non-HRT drugs approved for the treatment or prevention of
osteoporosis generated total sales in the United States of approximately $2.3
billion. Bisphosphonates and SERMs have been approved by the FDA and are
currently being marketed for both the treatment and prevention of osteoporosis,
while


                                      34

<PAGE>

calcitonins are approved for the treatment, but not prevention, of
osteoporosis. These products do not address vasomotor symptoms or female sexual
dysfunction and, in some cases, may be used as adjunctive therapy to HRT.

         Limitations of Non-HRT Osteoporosis Treatments. Bisphosphonates can
cause gastrointestinal irritation and erosion of the esophagus. In addition,
the long-term safety of bisphosphonates is a concern because they reside in the
body for many years. The only SERM currently marketed in the United States is
Evista(R). Studies have shown that Evista(R) is less effective in protecting
against bone loss than HRT. In addition, one of the negative side effects of
Evista(R) is that it causes, and may exacerbate, hot flashes in approximately
25% of women taking it for osteoporosis prevention. Calcitonins are considered
to be less effective than other therapies in treating osteoporosis. Studies
have shown that calcitonins reduce the risk of vertebral fractures, but have no
significant effect on the prevention of hip fractures. Calcitonins have few
adverse side effects, but may cause nausea, local inflammation, flushing of the
face or hands when given as an injection, and local nasal irritation when used
as a nasal spray. In addition, all non-HRT treatments are significantly more
expensive than HRT treatments.

OUR PRODUCT PORTFOLIO

         We are developing three proprietary HRT product candidates to address
several of the limitations of existing hormone replacement therapies. Enjuvia,
a complex estrogens-only product, and Projuvia, a complex estrogens/progestin
combination product, are designed to treat vasomotor symptoms of menopause and
to assist in the prevention of osteoporosis. Juviand is a complex
estrogens/androgen combination product, designed to treat female sexual
dysfunction, including diminished sexual desire.

         Our product candidates are oral, once-daily, sustained-release
tablets, based on proprietary formulations that stabilize a synthetic, complex
estrogens mixture, alone and in combination with a progestin or an androgen. We
have state-of-the-art analytical methodologies for the analysis and control of
these hormonal substances. All our product candidates are based on a
synthetically derived, novel active pharmaceutical ingredient that combines ten
synthetic, plant-derived, complex estrogens that contain the same ten essential
active estrogens as Premarin(R). All of the compounds contained in our product
candidates have been in FDA-approved products. As a result, we believe we will
have substantially fewer safety and clinical risks compared to unproven, new
chemical entities. We expect this prior use to result in the FDA imposing lower
toxicity and safety requirements for our product candidates prior to clinical
trials, and to result in substantially reduced clinical development risk with
respect to the estrogen components.

         We believe that our product candidates will be the second family of
complex estrogens products marketed in the United States to contain
delta(8),(9). Data are available demonstrating that delta(8),(9) contributes to
the reduction of hot flashes and the maintenance of bone integrity. A hot flash
study in postmenopausal women demonstrated similar efficacy as estrone sulfate
(the predominant estrogen in complex estrogen mixtures) when delta(8),(9) was
administered at one-tenth the dose of estrone sulfate. A study in
postmenopausal women demonstrated that delta(8),(9) significantly lowered levels
of a bone resorption marker, indicating maintenance of bone integrity in these
women. Delta(8),(9) is also an antioxidant which leads to positive effects on
cholesterol.


                                      35

<PAGE>

         The following table sets forth certain information about our product
candidates:

<TABLE>
<CAPTION>
PRODUCT CANDIDATE            ACTIVE INGREDIENTS           INDICATION(S)              REGULATORY STATUS
-----------------            ------------------           -------------              -----------------
<S>                          <C>                          <C>                        <C>
Enjuvia                      Ten Essential Active         Vasomotor Symptoms         NDA filed March 2002
                             Estrogens
                                                          Osteoporosis               Phase III

Projuvia                     Ten Essential Active         Vasomotor Symptoms         Phase III
                             Estrogens and a Progestin    Osteoporosis

Juviand                      Ten Essential Active         Female Sexual Dysfunction  Entering Phase II
                             Estrogens and an Androgen
</TABLE>

For an explanation of the terms NDA, Phase II and Phase III, please refer to "
-- Government Regulation" below.

ENJUVIA(TM)

         Enjuvia will target the treatment of vasomotor symptoms and the
prevention of osteoporosis in women who have had a hysterectomy or for use in
combination with a progestin by women who have not had a hysterectomy. Enjuvia
is a chemically synthesized complex combination of estrogens and is the only
HRT with the same ten essential active estrogens as Premarin(R), including
delta(8),(9). Unlike Premarin(R), which is derived from urine collected from
pregnant horses, the estrogens in Enjuvia are chemically derived from compounds
obtained from plant-derived material and free of non-estrogenic urinary
substances. In contrast, the estrogens obtained from horse urine contain
significant amounts of non-estrogenic urinary substances such as hippuric acid,
indican and benzoic acid. Enjuvia is a sustained-release product formulated in
0.3, 0.45, 0.625 and 1.25 mg dosage strengths.

Treatment of Vasomotor Symptoms

         We completed a pivotal Phase III clinical trial in the treatment of
moderate to severe vasomotor symptoms associated with menopause. The trial
randomized 281 menopausal women at 22 sites across the United States to
compare, in a double-blind fashion, the safety and efficacy of Enjuvia versus
placebo in reducing the frequency and severity of vasomotor symptoms over a
12-week period. The trial was conducted using dosage strengths of 0.3, 0.625
and 1.25 mg. All three dosage strengths were demonstrated to be effective in
the reduction of both the frequency and severity of vasomotor symptoms.

         Frequency. Groups treated with the 0.625 and 1.25 mg dosage strengths
had a statistically significant reduction, measured against the FDA threshold,
in the frequency of vasomotor symptoms at four, eight and 12 weeks. The 0.3 mg
group had a statistically significant reduction in frequency at eight and 12
weeks, and showed effective results at four weeks, although the reduction at
four weeks did not meet the FDA threshold. Because of these results, we cannot
assure you that the FDA will approve the 0.3 mg dosage strength. However, the
FDA did approve Cenestin(R), a synthetic, estrogen-only HRT product, at 0.625
and 0.9 mg dosage strengths without requiring a showing of a statistically
significant reduction in the frequency of vasomotor symptoms at such doses at
four weeks.

         Severity. Groups treated with the 0.625 and 1.25 mg strengths had a
statistically significant reduction in the severity of vasomotor symptoms at
four, eight and 12 weeks. The 0.3 mg group had a statistically significant
reduction in severity at 12 weeks, and showed effective results at four and
eight


                                      36

<PAGE>

weeks, although the reduction at four and eight weeks did not meet the FDA
threshold. The FDA approved Cenestin(R) at 0.625 and 0.9 mg dosage strengths
without requiring a showing of a statistically significant reduction in the
severity of vasomotor symptoms.

Application for Approval

         We submitted an NDA for Enjuvia to the FDA on March 22, 2002 for
approval for the treatment of vasomotor symptoms for all four dosage strengths.
The NDA was filed under Section 505(b)(2) of the Federal Food, Drug, and
Cosmetic Act, or FDCA, under which previously available data in support of a
product's approval is referenced and new studies, such as animal toxicity and
other pre-clinical trials, are not required. We anticipate approval in the first
half of 2003 of all four strengths of Enjuvia for the treatment of vasomotor
symptoms associated with menopause. We are seeking FDA approval of our
0.45 mg dosage strength based upon data correlating the 0.45 mg dosage strength
to the 0.3 and 0.625 mg dosage strengths. The FDA may require us to perform
further pharmacokinetic or bioequivalence studies to prove the correlation of
dosage strengths. If these studies are required, we expect to be able to
complete them without significant delay. If the FDA does not approve the 0.3 mg
dosage strength, it will not approve the 0.45 mg dosage strength for the
vasomotor indication unless we conduct an additional trial. In that case, we
intend to conduct the additional trial and seek FDA approval of the 0.45 mg
dosage strength for the vasomotor indication on the basis of that trial.



Osteoporosis Prevention

         We currently are enrolling participants in our pivotal Phase III study
using Enjuvia in the prevention of osteoporosis. This study is a two-year,
randomized, double-blind, placebo-controlled trial of 0.3, 0.45 and 0.625 mg
dosage strengths of Enjuvia in 352 hysterectomized postmenopausal women. The
primary endpoint is an increase in bone mineral density. The NDA filing for the
osteoporosis indication for Enjuvia will rely upon this single pivotal safety
and efficacy trial. We expect enrollment for the Phase III study to be
completed by early 2003, although we cannot assure you that enrollment will be
completed by that date.

PROJUVIA(TM)

         Projuvia will target the treatment of vasomotor symptoms and the
prevention of osteoporosis in women with intact uteruses for whom there is a
risk of endometrial hyperplasia associated with the use of estrogen-only HRT.
Projuvia combines the ten essential complex estrogens in Enjuvia with a
progestin that has not previously been approved by the FDA for HRT use.

         We are evaluating Projuvia using 0.45 and 0.625 mg dosage strengths of
complex estrogens in combination with the progestin at doses designed to
minimize uncontrolled bleeding and achieve uterine protection. We believe that
menopausal women may require a higher dose of estrogens (0.625 mg) to control
vasomotor symptoms, while most postmenopausal women may only require a lower
dose of estrogens (0.45 mg) to prevent osteoporosis. These strengths of our
complex estrogens are being combined with the lowest effective doses of our
selected progestin. We expect this strategy, in concert with a novel, improved
dosing regimen, should maximize the potential lipid-enhancing profile of the
estrogens, reduce the incidence of breakthrough or unexpected bleeding more
quickly stop menstrual-like bleeding, altogether and eliminate or reduce the
negative side effects associated with current estrogen/progestin therapies. The
new estrogen dosage strengths and regimen provided by Projuvia will allow
physicians to precisely tailor the therapy to the changing needs of women as
they move through menopause and beyond.

Regulatory Strategy

         We have completed a Phase II dose-ranging study evaluating the effects
of the progestin on endometrial hyperplasia and bleeding, which assisted us in
identifying the lowest effective dose of the progestin for each estrogen dosage
strength. In April 2002, we initiated a pharmacokinetics trial to demonstrate
the bioequivalence of the estrogens in Projuvia and Enjuvia at each estrogen
dosage strength.


                                      37

<PAGE>

By demonstrating bioequivalence, we will be able to seek FDA approval for the
same indications for Projuvia that we are seeking for Enjuvia.

         We have commenced a pivotal Phase III clinical safety and efficacy
trial studying Projuvia in the prevention of endometrial hyperplasia in
postmenopausal women. This pivotal study will be a one-year, randomized,
double-blind, parallel-group, controlled trial of four regimens of Projuvia in
624 non-hysterectomized, postmenopausal women in the suppression of endometrial
hyperplasia. During the course of this trial, we also will monitor cholesterol
levels, bleeding patterns and adrenal hormone production. The NDA filing will
rely upon the findings of this single pivotal safety and efficacy trial,
supported by the dose-ranging study already completed and the pharmacokinetics
trials currently underway. We will conduct multiple pharmokinetics studies to
support the filing.

JUVIAND(TM)

         Juviand will target the treatment of female sexual dysfunction in
menopausal women. Juviand combines the ten essential complex estrogens in
Enjuvia with an androgen that we expect will have a competitive safety and
efficacy profile compared to the currently marketed HRT product, Estratest(R),
which is an unapproved estrogen/testosterone combination product labeled for
vasomotor symptoms but prescribed off-label for female sexual dysfunction. We
expect our androgen to avoid liver toxicity and other negative side effects
associated with the use of most androgens, such as acne, male pattern baldness,
an increase in facial hair and an irreversible deepening of the voice.

Regulatory Strategy

         We intend to conduct two Phase II trials. The first will be a small,
single-dose, proof of concept trial with the androgen only to determine the
effect of the androgen on arousal within a confined laboratory setting. The
second will be a six-month, randomized, double-blind, parallel-group,
placebo-controlled trial of three different estrogen/androgen regimens in 160
women. We have completed the manufacture of clinical trial materials for this
second trial and it is scheduled to begin in the second quarter of 2002. This
trial will evaluate the safety and efficacy of our estrogen/androgen
combination as a function of dose. Two pivotal Phase III safety and efficacy
trials of Juviand in treating female sexual dysfunction will be required for
NDA filing and product approval. We expect the Phase III trials to take
approximately two years.

         In addition to the clinical development program for Juviand, we also
have discussed with the FDA the safety profile of the androgen and the need to
conduct pre-clinical studies. Based on these discussions, we have begun general
pharmacology and mutagenicity studies and plan chronic toxicity and
carcinogenicity studies to support the androgen's long-term, chronic use.
Supportive pharmacokinetic trials also are planned to document the absorption,
distribution, metabolism and excretion of the androgen in patients.

EARLY-STAGE RESEARCH

         In an effort to expand our product pipeline, we are continuing our
research in the fields of hormone discovery, characterization, and
pharmacology. The foundation of our research is the discovery, identification,
and characterization of new hormones with structural characteristics indicating
activity at certain hormone receptors. These receptors, found in both men and
women, are estrogen receptors and androgen receptors.

         Estrogen receptors are located primarily in the female reproductive
system and breasts. However, they are also found in concentrations in many
other body tissues, including the skin, lining of the intestines and colon,
vascular walls, heart, bone and brain. Androgens also play an important role in
the


                                      38

<PAGE>

functioning and maintenance of the female reproductive system and reproductive
cycle, as well as many other functions of the female body not directly related
to sexual function. Androgen receptors are located in the cells of many tissues
in a woman's body, including reproductive organs, muscle, skin, hair follicles,
and bone.

         Our program has identified naturally and synthetically derived new
compositions of matter whose structure indicates they are potential estrogen
agonists (i.e., they activate receptors), partial estrogen agonists (also known
as SERMs), or estrogen antagonists (i.e., they block receptor activity). Two of
our new compounds have been shown to be highly active at estrogen receptors and
are the subject of composition of matter patent applications. We are continuing
to characterize a series of compounds that we believe will show activity at one
or more of the sex hormone receptors due to their structural relationships. We
expect to continue screening these compounds for activity and to aggressively
protect these compounds through appropriate patent filings. We expect to
identify other compounds with advantageous pharmacological profiles and, if we
do, we will consider them for further development as product candidates.

         We also are continuing our hormone research work in animal models and
human models to understand the pharmacological profiles of known hormones,
alone or in combination. This research is focused on identifying therapeutic
advantages associated with hormone regimens, lowest effective doses, and
synergistic hormone combinations. These studies have identified three
opportunities for therapeutic advantages in HRT. We have filed patent
applications to protect these therapeutic concepts.

MARKETING AND SALES

         We have retained worldwide marketing rights for all three of our
product candidates. We intend to market and sell them in the United States,
initially concentrating on the women's health community. We plan to focus our
marketing effort on three constituencies which we believe will be critical to
the success of our products candidates:

         -        high-prescribing physicians (principally gynecologists) and
                  the allied healthcare professionals who influence
                  prescribing;

         -        patients, who are increasingly involved in treatment
                  decisions relating to HRT; and

         -        managed care organizations which influence physicians'
                  prescribing behavior and patient use.

         The target audience of physicians who prescribe HRT is very
concentrated. Fewer than 25,000 physicians account for approximately 50% of HRT
prescriptions in the United States. This concentration should allow a small
sales force to have a large impact on prescribing patterns. Our
physician-directed activities will concentrate on attaining a high frequency of
interactions within the pool of actively prescribing physicians, rather than on
reaching a wide audience. We expect to expand our target audience as we launch
successive products.

         In April 2001, we hired a Vice President of Marketing and Sales who
has extensive experience in managing pharmaceutical marketing organizations,
and has led several successful product introductions. We also recently hired a
Senior Director of Marketing with significant product management and marketing
communications experience, and an Executive Sales Director with extensive
experience in managing both large and small sales forces. Prior to the launch
of our first product candidate, we plan to hire marketing and sales managers,
primarily in the areas of trade and managed care account management and
regional and divisional sales management.


                                      39

<PAGE>

         We are exploring the potential of entering into co-promotion
arrangements with other pharmaceutical companies. Possible co-promotion
strategies include utilizing our partner's sales force to market and sell our
product candidates, with the aim of increasing our reach and/or frequency of
contact, and employing our sales force to market and sell our partner's
products in exchange for a share of revenues.

         In geographic markets outside the United States, we may establish
relationships with marketing partners for the sale of our product candidates.
As part of this strategy, we may enter into marketing and collaborative
arrangements which include granting marketing rights with respect to selected
products and markets.

PATENT PROTECTION, REGULATORY EXCLUSIVITY AND INTELLECTUAL PROPERTY

         We are aggressively pursuing several patents which, if issued, would
provide long-term protection for our HRT products. In addition, we believe that
each of our current product candidates, if approved by the FDA, would enjoy a
three-year exclusive marketing period during which the FDA could not approve
generic versions of these product candidates for the same indications. Further,
we believe that there are technological barriers inherent in the replication of
our products.

PATENTS AND PATENT APPLICATIONS

         Our ability to ensure long-term market exclusivity will depend on our
ability to obtain patent protection in the United States and elsewhere. We have
filed, and continue to file, patent applications with respect to multiple
aspects of our technologies, products and processes. We believe that many of
these patent applications will enhance our competitive position.

         We believe that our patent applications cover novel technologies of
potential commercial significance. However, due to the extended period of time
for review of patent applications in the pharmaceutical field, we cannot be
certain as to when decisions regarding our patent applications will be made.
Moreover, we do not know whether any pending patents will be granted to us or
whether any issued patents will be sufficiently broad to provide a competitive
advantage. The validity of any patent granted to us may be challenged by a
competitor or a competitor may claim that its products do not infringe on our
patents.

         We have filed a composition of matter patent application including,
among other things, the complex estrogens that we use in our product
candidates. In addition, we have filed a synthesis patent application
including, among other things, the inclusion of delta(8),(9) in our complex
estrogens composition. We believe that either of these patents, if issued,
would prohibit generic competition and provide substantial protection against
competitive products that use the same ten essential estrogens for at least 20
years from the respective filing dates of the patent applications. Many patent
applications initially receive "office actions" denying the grant of a patent
but later are approved based on the submission of supplemental information or
arguments to the patent office on appeal. Although we have received an initial
office action denying our composition of matter patent application, it is
possible that this application will be allowed without an appeal. If an appeal
is required, we believe our legal and scientific bases for this application are
sound and that the patent will ultimately be issued through the appeal process.

         We have filed a patent application for our Projuvia dosing regimen
which is designed to reduce unexpected bleeding. This patent, if issued, would
prohibit any competitors from using our regimen with any estrogen or progestin
combination.


                                      40

<PAGE>

         Juviand is covered under our patent applications that include the
class of androgens we are using in hormone replacement therapy in
postmenopausal women and that include the use of our class of androgens as a
female sexual dysfunction therapy. These patents, if issued, would prohibit any
competitors from using our class of androgens to treat female sexual
dysfunction and from using our class of androgens in combination with estrogens
for postmenopausal HRT.

         As of April 5, 2002, we had two United States and foreign patents. The
first covers methods for dry blend compression of medicaments. The second
covers a method for preparing low dose pharmaceutical products. While neither
of these patents directly relates to our current product portfolio, we believe
they will be valuable to the extent that they afford products in our research
pipeline protection that may use these processes against infringing products.
In addition to the two issued patents, we have 13 patent applications pending
in the United States and 13 patent applications pending in foreign countries.

REGULATORY EXCLUSIVITY PERIODS

         We believe that each of our product candidates, if approved by the FDA,
would enjoy a three-year exclusive marketing period during which the FDA could
not approve a generic version of the product for the same indications. This
exclusivity is provided under the Drug Price Competition and Patent Term
Restoration Act of 1984, commonly referred to as the Waxman-Hatch Amendment, and
is available to NDAs for which new clinical studies were conducted or sponsored
by the applicant and which were essential to approval. We believe our vasomotor
trial for Enjuvia qualifies as a new clinical study eligible for exclusivity
under the Waxman-Hatch Amendment. In addition, upon the completion of our
osteoporosis trial and approval of our application for the addition of the
prevention of osteoporosis claim to Enjuvia's labeling, we believe an additional
three-year exclusive marketing period would be granted for that indication. We
also believe our Phase III clinical trial of Projuvia in the prevention of
endometrial hyperplasia in postmenopausal women will qualify as a new clinical
study for purposes of the Waxman-Hatch Amendment. If the trial does so qualify
and if Projuvia is approved by the FDA, then it will enjoy a three-year
exclusive marketing period during which the FDA could not approve a generic
version of Projuvia for any indication. If approved by the FDA, our Juviand
product candidate also would enjoy a three-year exclusive marketing period for
the female sexual dysfunction indication based on our clinical trials for that
product candidate.

TECHNOLOGICAL SOPHISTICATION

         Our product candidates contain a complex combination of ten essential
estrogens, either alone or combined with a progestin or an androgen. All our
product candidates utilize a sophisticated drug delivery system providing a
sustained release of their component parts. This system stabilizes the
inherently unstable complex hormonal blends. We believe few companies, if any,
currently have the ability to independently source and replicate our product
candidates. Our ability to develop, manufacture, and control our product
candidates is based on hormone technology platforms developed over a period of
years which include proprietary capabilities in the identification,
characterization, control, and manufacturing of hormones.

         Even if our pending patents do not issue, a competitor could not
utilize the streamlined FDA approval process for generics afforded under the
Waxman-Hatch Amendment unless it could establish that its generic versions were
"bioequivalent" to our product candidates. A drug is bioequivalent to another
drug if it possesses the same active ingredients, and approximately the same
amount of each active ingredient remains in the body for approximately the same
time and disperses in the body at approximately the same rate. For example, a
competitor's generic version of Enjuvia would have to contain each of the ten
complex estrogens present in Enjuvia, including delta(8),(9), and each estrogen
would have to be as effectively absorbed into, and metabolized by, the body at
the same rate and to the same


                                      41

<PAGE>

extent. We do not believe that a competitor could easily produce a
bioequivalent generic version of Enjuvia, or any of our other product
candidates, in the near future.

OTHER PROPRIETARY RIGHTS

         Some elements of our pharmaceutical composition, formulation,
delivery, processes or methods of manufacturing involve unpatented, proprietary
technology, processes, know-how or data. With respect to proprietary
technology, know-how and data that are not patentable or potentially
patentable, or processes other than production processes for which patents are
difficult to enforce, we rely on trade secret protection and confidentiality
agreements with our employees, consultants and contractors. To maintain the
confidentiality of trade secrets and proprietary information, we maintain a
policy of requiring employees, scientific advisors, consultants and
collaborators to execute confidentiality and invention assignment agreements
upon commencement of a relationship with us. These agreements are designed both
to enable us to protect our proprietary information by controlling the
disclosure and use of technology to which we have rights, and to provide for
our ownership of proprietary technology that we develop. However, we cannot
assure you that these agreements will provide meaningful protection for our
trade secrets in the event of unauthorized use or disclosure of such
information. We also have several United States and foreign trademark and
service mark applications pending for registrations of our name, logo, tag
lines and product names.

MANUFACTURING AND SUPPLY ARRANGEMENTS

         Our manufacturing strategy is designed to achieve the following goals:

         -        Support clinical supply needs on a timely basis;

         -        Provide uninterrupted supply of commercial products to the
                  marketplace;

         -        Produce products that meet cGMP requirements in a
                  cost-effective manner; and

         -        Protect our intellectual property.

Initially, we plan to use third-party contractors to source key raw materials
and manufacture and package our commercial products. The FDA must issue
marketing clearance and deem a manufacturer acceptable under cGMP regulations
before production of bulk proprietary or finished pharmaceuticals for
commercial sale may begin. Accordingly, we intend to engage only those
third-party contract manufacturers that have consistently shown the ability to
satisfy these requirements.

CONTRACT MANUFACTURING

         Our Enjuvia NDA was filed with two contract manufacturers qualified to
produce that product candidate. These manufacturers satisfy the cGMP
requirements as well as our capacity and cost of manufacturing requirements. We
will use several contract-packaging suppliers to support our packaging needs
for both commercial and promotional products. We will seek to maintain quality
control over manufacturing through ongoing inspections, rigorous review,
control over documented operating procedures and thorough analytical testing.
We believe that our current strategy of outsourcing manufacturing is a
cost-effective measure that will enable us to avoid the fixed costs of plant,
equipment and manufacturing staffs and conserve our resources. We will continue
to evaluate our manufacturing requirements and may establish or acquire our own
facilities to manufacture our products for clinical trials or commercial
distribution if we determine that doing so would reduce costs or improve
control and flexibility of product supply. Because our HRT production process
uses conventional equipment, we


                                      42

<PAGE>

believe that we may have the opportunity to acquire existing, high quality
production facilities with sufficient capacity at a significantly lower cost
than building such facilities.

ESTROGEN SUPPLY ARRANGEMENTS

         We have agreements in place with suppliers to provide our complex
estrogens drug substance, which we use to produce tablets for the product
candidates in our HRT product portfolio. In particular, we have an agreement
with Berlichem, Inc. and Berlex Laboratories, Inc. to provide the delta(8),(9)
dehydroestrone that is synthesized into delta(8),(9) dehydroestrone sulfate by
Organics/LaGrange for inclusion in our complex estrogens mixture. Throughout
this prospectus, we use delta(8),(9) to refer to delta(8),(9) dehydroestrone
sulfate.

         Berlichem/Berlex. We have a supply agreement with Berlichem and Berlex,
affiliates of Schering AG, to supply our requirements of delta(8),(9)
dehydroestrone. Under this agreement, Berlex is prohibited from supplying
delta(8),(9) dehydroestrone to any purchaser in the United States for inclusion
in the manufacture of an HRT product (other than our products), but may use the
compound in products for sale in the United States only by Berlex or its
affiliates. If Berlex decides to market an oral, synthetic estrogens product for
the HRT market in the United States, our agreement with Berlex provides that
Berlex cannot file an Abbreviated New Drug Application referencing any of our
NDAs until three years after our NDA is initially approved by the FDA. Berlex's
limited exclusivity obligations terminate on December 31, 2010, but thereafter
renew automatically for periods of two years unless Berlex provides written
notice of non-renewal to us at least six months prior to December 31, 2007 or
six months prior to the end of any of the two-year renewal periods. Berlex's
limited exclusivity obligations would terminate before December 31, 2010 upon
the occurrence of any of the following events:

         -        The FDA does not accept an NDA filing for an oral synthetic
                  estrogens product for any indication by December 31, 2003;

         -        We do not satisfy certain delta(8),(9) dehydroestrone minimum
                  annual purchase requirements beginning in 2006; or

         -        The agreement is terminated with cause prior to December 31,
                  2006 or without cause after such date.

         Under the agreement, Berlex has an option to acquire co-promotion
rights for Enjuvia in the United States. If Berlex exercises the option and we
and Berlex are able to negotiate a definitive co-promotion agreement, then,
among other things, we and Berlex will share in the profits resulting from the
sale of Enjuvia and Berlex will be prohibited from selling delta(8),(9)
dehydroestrone, or any product containing delta(8),(9) dehydroestrone, to any
person in the United States for use in an HRT product for the duration of the
agreement. If Berlex exercises the option and we and Berlex are unable to
negotiate a definitive co-promotion agreement, then we will be prohibited from
granting co-promotion rights for Enjuvia to a third party on more favorable
terms than those offered to Berlex. If Berlex does not exercise the option, the
limited exclusivity provisions will remain unchanged.

         Organics/LaGrange. We also have a supply and manufacturing agreement
with Organics/LaGrange, Inc. under which Organics supplies and manufactures our
requirements of complex estrogens products containing delta(8),(9). Under the
agreement, Organics is prohibited from preparing for, or selling to, a third
party (other than Berlex) any complex estrogens product containing delta(8),(9),
as long as, among other things, we satisfy a minimum annual purchase or fee
requirement through 2007. If we fail to comply with this or other requirements,
Organics may sell or transfer complex estrogens products containing delta(8),(9)
to any other party for any use and without affecting its remaining obligations
under the agreement. With certain limited exceptions, the agreement terminates
no earlier than November 1, 2010.


                                      43

<PAGE>

PROGESTIN AND ANDROGEN SUPPLY ARRANGEMENTS

         The progestin we are using in Projuvia is available from several
different sources. We have evaluated material from more than one source, and
have confirmed suitability of use in our product candidate. We believe our
current arrangements with suppliers for this product candidate are sufficient
to cover our needs for the foreseeable future. We have agreements in place for
the supply of the androgen we use, which is available from a limited number of
suppliers. The androgen we are using is a potent compound, and is used in low
doses. Our agreements cover a sufficient supply of this material for all our
clinical work and foreseeable commercial needs.

         We believe that the foregoing supply arrangements, in addition to
arrangements we have with other suppliers, provide us with access, on
competitive terms, to the raw materials we need to manufacture our product
candidates. Moreover, we believe that our dependence on each supply arrangement
is reduced by the existence of one or more other suppliers of the raw materials
we require, and our current inventory of raw materials.

COMPETITION

         The pharmaceutical industry is highly competitive with a number of
established, large companies, as well as smaller emerging companies, whose
activities are directly focused on our target markets and areas of expertise.
Many of our competitors possess greater financial, managerial and technical
resources and have established reputations for successfully developing and
marketing drugs, all of which put us at a competitive disadvantage. We face,
and will continue to face, competition in the discovery, in-licensing,
development and commercialization of HRT products, which could severely impact
our ability to generate revenue or achieve significant market acceptance of our
product candidates. Furthermore, the development of other drug technologies
occur at a rapid pace in the pharmaceutical industry. These developments may
render our product candidates or technologies obsolete or noncompetitive.

         Our first product candidate, Enjuvia, if approved by the FDA, would
face competition from the dominant market leader, Premarin(R). We expect that
all our product candidates, if approved by the FDA, would compete with existing
therapies for our targeted indications, as well as new drugs, therapies, drug
delivery systems or technological approaches that may be developed to treat our
targeted indications. Any of these drugs, therapies or systems may receive
government approval or gain market acceptance more rapidly than our product
candidates or may offer therapeutic or cost advantages.

         We believe that pharmaceutical, drug delivery and biotechnology
companies, as well as others, are seeking to develop therapies for our targeted
indications. For all our targeted indications, competitors have already
commercialized, or are in advanced stages of development of, alternative
therapies. Our direct competitors include Wyeth, Novartis, Pharmacia,
Ortho-McNeil, Berlex, Solvay, King Pharmaceuticals, Warner Chilcott, Barr and
Procter & Gamble. These competitors may succeed in developing pharmaceutical
products that are more effective or less costly than any we may develop or
market.

         Our competitive position also depends on our ability to attract and
retain qualified scientific and other personnel, develop effective proprietary
products, implement development and marketing plans, obtain patent protection
and secure adequate capital resources.

GOVERNMENT REGULATION

         The pharmaceutical products, or pharmaceuticals, that we are
developing and intend to have manufactured by third parties are subject to
rigorous domestic regulatory requirements designed to ensure the safety,
effectiveness, quality and integrity of pharmaceuticals, primarily under the
FDCA. Some of


                                      44

<PAGE>

our products, because they contain an anabolic steroid, also will be subject to
regulation by the U.S. Drug Enforcement Administration, or DEA, under the
Controlled Substances Act, relating to requirements for and restrictions on the
manufacture, sale, and distribution of drugs with a potential for abuse. Our
development efforts performed outside the United States and pharmaceuticals
intended to be sold outside the United States are also subject to additional
regulatory requirements and government agencies.

         United States laws and regulations apply to all phases of the
development, manufacturing, testing, promotion and distribution of
pharmaceuticals, including with respect to our personnel, record keeping,
facilities, equipment, control of materials, processes, laboratories,
packaging, labeling, storage, and advertising. In particular, our manufacturing
operations, and those of our contractors, are subject to the FDA's cGMP
regulations which are administered by the FDA in accordance with current
industry standards.

         All our pharmaceuticals must be manufactured in conformity with the
FDA's cGMP regulations, and pharmaceuticals subject to an approved FDA
application must be manufactured, processed, packaged, held and labeled in
accordance with information contained in the application. Additionally,
modifications, enhancements, or changes in manufacturing sites of, or the
manufacturing procedures for, approved pharmaceuticals are in many
circumstances subject to FDA inspections and prior approval that we may not be
able to obtain and that may be subject to a lengthy application process. Our
facilities, including the facilities of third-party manufacturers of our
product candidates, are periodically subject to inspection by the FDA and other
governmental agencies, and operations at these facilities could be interrupted
or halted for lengthy periods of time if such inspections prove unsatisfactory.

         Failure to comply with FDA, DEA, or other governmental regulations can
result in fines, unanticipated compliance expenditures, recall or seizure of
products, total or partial suspension of production or distribution, suspension
of the FDA's review of our drug approval applications, termination of ongoing
research, disqualification of data for submission to regulatory authorities,
enforcement actions, injunctions and criminal prosecution. Under certain
circumstances, the FDA also has the authority to revoke previously granted drug
approvals. Although we intend to institute internal compliance programs, if
these programs do not meet regulatory agency standards or if compliance is
deemed deficient in any significant way, it could have a material adverse
effect on us.

         In connection with our products to be sold outside the United States,
we are also subject to foreign regulatory requirements governing the testing,
approval, manufacture, labeling, marketing and sale of pharmaceutical products,
which requirements vary from country to country. Whether or not FDA approval
has been obtained for a product, approval by comparable regulatory authorities
of foreign countries must be obtained prior to marketing the product in those
countries. The approval process may be more or less rigorous from country to
country, and the time required for approval may be longer or shorter than that
required in the United States. No assurance can be given that clinical studies
conducted outside of any country will be accepted by that particular country,
and the approval of a pharmaceutical product in one country does not assure
that the product will be approved in another country. In addition, regulatory
agency approval of pricing is required in many countries and may be required
for the marketing in those countries of any drug that we develop.

         Of particular importance to our proposed product candidates is the
process mandated by the FDA under the new drug approval provisions of the FDCA
to enable pharmaceuticals to be marketed in the United States. This process
generally involves the following:

         -        pre-clinical laboratory and animal tests;

         -        submission to the FDA of an Investigational New Drug
                  Application, or IND, which must become effective before
                  certain clinical trials may begin;


                                      45

<PAGE>

         -        adequate and well controlled clinical trials to establish the
                  safety and efficacy of the proposed pharmaceutical for its
                  use;

         -        submission to the FDA of an NDA; and

         -        FDA review and approval of the NDA.

Pre-clinical tests include laboratory evaluation of the pharmaceutical product,
its chemistry, formulation and stability, as well as animal studies to assess
its potential safety and efficacy. The results of the pre-clinical tests,
together with manufacturing information and analytical data, are submitted by
the applicant to the FDA as part of an IND. The IND must become effective
before human clinical trials may begin. The IND automatically becomes effective
30 days after receipt by the FDA, unless the FDA, within the 30-day time
period, raises concerns or questions about the conduct of the trials as
outlined in the IND and imposes a clinical hold.

         Clinical trials involve the administration of the pharmaceutical to
human subjects under the supervision of a qualified principal investigator.
Clinical trials are conducted in accordance with protocols that detail the
objectives of the study, the parameters to be used to monitor safety, and the
efficacy criteria to be used to evaluate the trial results. Each protocol must
be submitted to the FDA as part of the IND. Further, each clinical study must
be conducted under the auspices of an independent institutional review board,
usually at the institution where the study will be conducted. The institutional
review board considers, among other things, ethical factors, the safety of
human subjects, the adequacy of the informed consent form, and the possible
liability of the institution.

         Human clinical trials are typically conducted in three sequential
phases which may overlap:

Phase I    Refers typically to closely monitored clinical trials and includes
           the initial introduction of the pharmaceutical into human patients or
           normal volunteer subjects. Phase I clinical trials are designed to
           determine the metabolism and pharmacologic actions of the
           pharmaceutical in humans, the side effects associated with increasing
           dosage and, if possible, to gain early evidence on effectiveness. The
           total number of subjects and patients included in Phase I clinical
           trials varies, but is generally in the range of 20 to 80 people.

Phase II   Refers to controlled clinical trials conducted to evaluate the
           effectiveness of the pharmaceutical for a particular indication or
           indications in patients with a disease or condition under study and
           to determine the common short-term side effects and risks associated
           with the pharmaceutical. These clinical trials are typically well
           controlled, closely monitored and conducted in a relatively small
           number of patients, usually involving no more than several hundred
           subjects.

Phase III  Refers to expanded controlled and uncontrolled clinical trials. These
           clinical trials are performed after preliminary evidence suggesting
           effectiveness of the pharmaceutical has been obtained. They are
           intended to gather additional information about the effectiveness and
           safety that is needed to evaluate the overall benefit-risk
           relationship of the pharmaceutical and to provide an adequate basis
           for physician labeling containing adequate information for use of the
           pharmaceutical in treating patients. Phase III trials usually include
           from several hundred to several thousand subjects.

The FDA reviews the progress of each of the three phases of clinical trials that
are conducted pursuant to an IND. The FDA may, at its discretion, reevaluate,
alter, suspend or terminate the testing based upon the data accumulated to that
point and the FDA's assessment of the risk/benefit ratio to the subjects.


                                      46

<PAGE>

         Once Phase III trials are completed, an applicant submits the results
of the pre-clinical studies and clinical trials to the FDA in the form of an
NDA for approval to commence commercial sales. Before approving a drug, the FDA
also requires that manufacturing and related procedures and operations conform
to the cGMP regulations. In response to the NDA, the FDA may grant marketing
approval, request additional information or deny the application if the FDA
determines that the application does not meet regulatory approval criteria.

         The FDA also permits an applicant to submit NDAs that rely on the
FDA's approval of another company's pharmaceutical, or on safety and efficacy
studies that the applicant has not conducted and to which the applicant has not
obtained a right of reference, such as published scientific studies. These
505(b)(2) applications may, in certain cases, permit the applicant to meet NDA
approval requirements with less original scientific data than would normally be
required, thus allowing the applicant to begin drug development in a later
phase, or to reduce the time and expense involved in any particular phase, for
any new products the applicant chooses to develop.

         As a condition to initial FDA approval for the marketing of a
pharmaceutical, further studies, including so-called Phase IV post-approval
studies, may be required to provide additional data on safety or effectiveness.
Also, the FDA requires post-approval reporting to monitor the adverse effects
of the pharmaceutical. Results of post-approval programs may limit or expand
the further marketing of the pharmaceutical. Further, if there are any
modifications to the pharmaceutical, including changes in indication,
manufacturing process or manufacturing facility, an application seeking
approval of the modifications must be submitted to the FDA or other regulatory
authority before the change is implemented. Additionally, the FDA regulates
post-approval promotional labeling and advertising activities to assure that
such activities are being conducted in conformity with statutory and regulatory
requirements. Moreover, we must follow the cGMP regulations at all times during
the manufacture of our products. To help ensure compliance with these
regulations, we must continue to spend time, money and effort in the areas of
production and quality control. If the FDA believes a company is not in
compliance with cGMP, sanctions may be imposed upon that company including:

         -        Withholding new drug approvals as well as approvals for
                  supplemental changes to existing approvals;

         -        Preventing the company from exporting its products; and

         -        Classifying the company as an unacceptable supplier and
                  thereby disqualifying the company from selling products to
                  federal agencies.

         The testing and approval process requires substantial time, effort and
financial resources. We cannot be certain that we will successfully complete
Phase I, Phase II or Phase III testing of our product candidates within any
specific time period, if at all. Furthermore, we, the FDA or an institutional
review board may suspend clinical trials at any time on various grounds,
including a finding that the subjects or patients are being exposed to an
unacceptable health risk.

         We are also subject to numerous other federal, state and local laws
relating to such matters as safe working conditions, manufacturing practices,
environmental protection, fire hazard control, and disposal of hazardous or
potentially hazardous substances. We may incur significant costs to comply with
such laws and regulations now or in the future. In addition, we cannot predict
what adverse governmental regulations may arise from future United States or
foreign governmental action.


                                      47

<PAGE>

EMPLOYEES

         As of May 1, 2002, we had 29 full-time employees, 11 of which were in
research and development and 18 of which were in marketing and sales and general
and administrative roles. Of our 29 full-time employees, eight hold either a
Ph.D. or a masters degree. None of our employees is represented by a collective
bargaining unit, and we have never experienced a work stoppage. We believe our
relations with our employees are good.

FACILITIES

         Our headquarters are located in Wilmington, North Carolina, where we
currently lease approximately 10,600 square feet under a lease that expires in
September 2005. Our marketing and sales team is located in Parsippany, New
Jersey, where we currently sublease approximately 4,500 square feet under a
sublease that expires in March 2004.

OUR MEDICAL ADVISORY BOARD

         We have established a Medical Advisory Board, consisting of
individuals with recognized expertise in fields relating to menopause. The
members of our Medical Advisory Board typically meet with us three to four
times per year, formally and informally, to review our clinical progress, to
identify potential applications of our technologies and processes and to advise
us concerning long-term product planning, research and development. Several of
the members of our Medical Advisory Board are employed by academic institutions
and may have commitments to or agreements with other entities that may limit
their availability to us. Members also may serve as consultants to other
pharmaceutical companies. Certain members of our Medical Advisory Board are
associated with institutions which conduct our clinical trials and such
institutions are compensated by us for performing such services. In addition,
all but one member of our Medical Advisory Board hold stock options in our
company. The members of our Medical Advisory Board have agreed to maintain the
confidentiality of all proprietary information we disclose to them, and each
member has executed a confidentiality and assignment of inventions agreement
with us. At present, the following persons compose our Medical Advisory Board:

Wulf Utian, M.D., Ph.D., has served as Chairman of our Medical Advisory Board
since its beginning in November 1999. Dr. Utian is a Professor Emeritus at Case
Western. He has served on the faculty of Case Western for more than 20 years,
and through 1999, served as the Arthur H. Bill Professor in Obstetrics and
Gynecology, the Chairman of the Department of Reproductive Biology, Director of
the Department of Obstetrics and Gynecology at the University Hospitals of
Cleveland, President of University Ob/Gyn Specialties, Inc., and Director of
the Cleveland Menopause Clinic. He founded, and currently is the Executive
Director of, the North American Menopause Society, and is the President of
Rapid Medical Research, Inc., a site management organization engaged in
clinical trials. He is an internationally recognized expert in menopause with
more than 140 research publications and eight books to his credit.

Julia R. Heiman, Ph.D., has served on our Medical Advisory Board since October
2000. She has served on the faculty of the University of Washington, Seattle
for over 15 years where she is currently a Professor in the Department of
Psychiatry and Behavioral Sciences and an Adjunct Professor in the Department
of Psychology. Since 1992, she has served as Associate Director for
Psychotherapy Programs at the University of Washington Outpatient Psychiatry
Center and as Special Reviewer for the National Institute of Health. She has
served as an Expert Panel Member on Female Sexual Dysfunction for Pfizer, Inc.,
on the Advisory Panel on Female Sexual Dysfunction for Lilly-ICOS and on
numerous other national and international committees.


                                      48

<PAGE>

J. Christopher Gallagher, M.D., has served on our Medical Advisory Board since
May 2000. He has served on the faculty of the Creighton University School of
Medicine for over 23 years where he has been a Professor of Medicine in the
Endocrinology Department since 1985. He is a member of the American Federation
of Clinical Research, the Endocrine Society, the North American Bone and
Mineral Society and the North American Menopause Society.

Philip M. Sarrel, M.D., has served on our Medical Advisory Board since October
2001. He has been a Professor of Obstetrics, Gynecology and Psychiatry at Yale
University School of Medicine since 1989. He has been an attending physician,
OB/GYN at Yale-New Haven Hospital in New Haven, Connecticut since 1966 and at
Waterbury Hospital in Waterbury, Connecticut since 1984. He has been a Director
of the Waterbury Menopause Program since 1984.

Regine Sitruk-Ware, Ph.D., has served on our Medical Advisory Board since March
2000. For the past two years, she has been an Adjunct Professor at Rockefeller
University in New York, New York and the Executive Director of Contraceptive
Development for the Population Council in New York, New York. From 1997 to
2000, Dr. Sitruk-Ware was Head of Medicine, Research and Development at Exelgyn
in Paris, France and from 1995 to 2000, she was a Senior Consultant of
Reproductive Endocrinology at St. Antoine Hospital in Paris, France. For over
15 years, she was President of the Association for Contraceptive Research in
Paris, France. Dr. Sitruk-Ware is also the Founding and Executive Committee
Member of the International Menopause Society.

LEGAL PROCEEDINGS

         We are unaware of any claims or actions currently pending against us.

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

         The following table sets forth information regarding our executive
officers and directors as of May 1, 2002.

<TABLE>
<CAPTION>
NAME                                         AGE                              POSITION
----                                         ---                              --------
<S>                                          <C>     <C>
R. Forrest Waldon, Esq................        40     Chairman of the Board, President and Chief Executive
                                                     Officer
Thomas W. Leonard, Ph.D...............        49     Vice President and Chief Science Officer
Stephen F. Rizzo......................        49     Vice President, Chief Financial Officer and Assistant
                                                     Secretary
Christopher Smith.....................        51     Vice President, Regulatory Affairs and Quality Assurance
Kathleen M. Milligan..................        45     Vice President, Marketing and Sales
Richard F. Moldin.....................        54     Vice President, Manufacturing and Business Development
Parris J. Sanz, Esq...................        33     General Counsel and Secretary
Ansbert K. Gadicke, M.D...............        44     Director
Daniel Janney.........................        36     Director
Garry E. Menzel, Ph.D.................        37     Director
Thomas C. Nelson......................        39     Director
David M. Stack........................        50     Director
</TABLE>

R. Forrest Waldon, Esq. has served as our Chairman of the Board since February
2000 and as our President and Chief Executive Officer since March 1999. Before
joining Endeavor, Mr. Waldon held


                                      49

<PAGE>

several management positions at aaiPharma, a specialty pharmaceutical company.
At aaiPharma, Mr. Waldon served as Executive Vice President from May 1997
through 1998, General Counsel and Secretary from 1989 through 1998, and Vice
President from 1993 through 1997. Prior to his employment with aaiPharma, Mr.
Waldon practiced law with Thrasher & Whitley, P.C. in Atlanta, Georgia. Mr.
Waldon received his B.S. from the University of North Carolina at Chapel Hill,
Phi Beta Kappa, where he also received his J.D.

Thomas W. Leonard, Ph.D. has served as our Vice President and Chief Science
Officer since March 1999. Before joining Endeavor, Dr. Leonard held several
management positions with aaiPharma, including serving as Senior Director of
Research and Development from 1998 to 1999, Senior Director of Product
Development from 1997 to 1998, and Director of Formulation Development from
1994 to 1997. Prior to his tenure with aaiPharma, Dr. Leonard held various
positions in development at Wyeth, formerly Wyeth-Ayerst, including Associate
Director of Liquid Formulation and Parenteral Development and Section Head of
Biopharmacy and Experimental Formulations. Dr. Leonard holds 14 patents in the
area of novel drug delivery. He received his Ph.D. from the Medical College of
Virginia, Virginia Commonwealth University and his B.S. in Pharmacy from the
University of South Carolina.

Stephen F. Rizzo has served as our Vice President, Chief Financial Officer, and
Assistant Secretary since March 1999. He previously held the position of Vice
President and Controller for aaiPharma from 1996 to 1998. Prior to joining
aaiPharma Mr. Rizzo held financial management positions with Federal Paper
Board Company from 1990 to 1996 and with International Paper from 1984 to 1990.
Mr. Rizzo also worked as a certified public accountant with Touche Ross & Co.,
a predecessor of Deloitte & Touche LLP, from 1979 to 1984. Mr. Rizzo received
his B.B.A. from Hofstra University.

Christopher Smith has served as our Vice President, Regulatory Affairs and
Quality Assurance since December 2000. Mr. Smith has more than 25 years of
experience in the pharmaceutical industry. Prior to joining Endeavor, Mr. Smith
was Vice President of Regulatory Affairs and Quality Assurance Worldwide at
aaiPharma. He joined aaiPharma in 1992 after five years as Associate Director
of Regulatory Affairs in Abbott Laboratories' Pharmaceutical Products Division.
Mr. Smith began his regulatory career as an Investigator with the FDA and spent
more than 11 years with the FDA holding positions including Assistant Director
of Congressional Operations and Deputy Associate Commissioner for Public
Affairs. Mr. Smith received his B.A. from Oakland University and his M.S. from
Wayne State University.

Kathleen M. Milligan has served as our Vice President, Marketing and Sales
since May 2001. Ms. Milligan served as Executive Director, Strategy and
Planning for the Primary Care Products division of Roche Laboratories, Inc.
from 1999 to 2001. Prior to joining Roche, Ms. Milligan was Vice President of
Marketing for Solvay Pharmaceuticals from 1995 to 1999. Ms. Milligan's tenure
at Solvay was preceded by almost 15 years at Bristol-Myers Squibb in marketing,
marketing research and sales. Ms. Milligan received her B.A. from Bryn Mawr
College.

Richard F. Moldin has served as our Vice President, Manufacturing and Business
Development since February 2002. Mr. Moldin has more than 30 years experience
within the pharmaceutical industry. Mr. Moldin served as President and Chief
Operating Officer for Mylan Laboratories, a specialty pharmaceutical company,
from 2000 to 2001. From 1995 to 2000, he was President and Chief Executive
Officer of Faulding Inc., a generic pharmaceutical company. Mr. Moldin also
held a number of senior positions with Burroughs Wellcome, a pharmaceutical
company, from 1971 to 1995. Mr. Moldin received his B.S. and M.S. in Chemistry
as well as his M.B.A. from East Carolina University.

Parris J. Sanz, Esq. became our General Counsel and Secretary in March 2002.
Prior to joining us, Mr. Sanz practiced law in the Corporate Finance Practice
Group of Paul, Hastings, Janofsky & Walker LLP in San Francisco, California
from 2000 to 2002. Before joining Paul Hastings, Mr. Sanz was a consultant with
PricewaterhouseCoopers in San Francisco, California from 1998 to 2000, and
practiced law with


                                      50

<PAGE>

Latham & Watkins in Los Angeles, California from 1993 to 1997. Mr. Sanz
received his A.B. from the University of California, Berkeley, magna cum laude
and Phi Beta Kappa, and his J.D. from Harvard Law School.

Ansbert K. Gadicke, M.D. has been a member of our board of directors since
2000. Dr. Gadicke is President and Chairman of the MPM Group, a management
consulting firm which he founded in 1992 assisting the food service, retail and
hospitality industries. Dr. Gadicke is also a General Partner of the MPM
Capital, L.P., a private investment partnership. Dr. Gadicke was formerly
employed by The Boston Consulting Group where he worked with the senior
management of pharmaceutical, biotechnology and health insurance companies in
the areas of business strategy, product development, marketing, company
valuation and acquisitions. Dr. Gadicke received an M.D. from J.W. Goethe
University in Frankfurt, Germany. He subsequently held research positions at
the Whitehead Institute at M.I.T., Harvard University, and the German Cancer
Research Center. He is a member of the Advisory Councils for Harvard Medical
School, the Human Science and Technology Program of Harvard University and
M.I.T., as well as the Whitehead Institute at M.I.T.

Daniel S. Janney has been a member of our board of directors since 2000. Mr.
Janney currently serves as a Managing Director at Alta Partners, an investment
adviser to several limited partnerships, where he has been since 1996. Prior to
joining Alta Partners, Mr. Janney was a Vice President of Montgomery
Securities' healthcare and biotechnology investment banking group. Previously,
Mr. Janney was an Associate at Bankers Trust Company in the leveraged
buyout/private equity group. Mr. Janney sits on the board of directors of
several companies including Dynavax Technologies, Endonetics,
CornerHardware.com, and LJL BioSystems. He holds a B.A. from Georgetown
University and an M.B.A. from the Anderson School at the University of
California, Los Angeles.

Garry E. Menzel, Ph.D. has been a member of our board of directors since 2001.
Dr. Menzel is a Senior Vice President and Head of Global Biotechnology
Investment Banking at Goldman Sachs, which he joined in 1994. Previously, he
was a consultant with Bain & Company. Dr. Menzel earned a BSc with honors in
Biochemistry from Imperial College, a Ph.D. in Molecular Biology from the
University of Cambridge, and an M.B.A. from the Stanford Graduate School of
Business. He is an Associate of the Royal College of Science.

Thomas C. Nelson has been a member of our board of directors since 1994. Mr.
Nelson also serves as Vice Chairman and Chief Executive Officer of the National
Gypsum Company, the nation's second largest wallboard manufacturer. He is a
General Partner and Co-Founder of the Wakefield Group, a Charlotte, North
Carolina based venture capital firm. Prior to forming the Wakefield Group, Mr.
Nelson worked in the High Technology Group at Morgan Stanley & Co. in New York
and San Francisco. Selected as a White House Fellow, Mr. Nelson has also served
as Assistant to the Secretary of Defense for Special Projects from 1992 to
1993. Mr. Nelson received a B.S. from Stanford University and an M.B.A. from
the Harvard Graduate School of Business Administration.

David M. Stack became a member of our board of directors in April 2002. Mr.
Stack currently serves as the President, Chief Executive Officer, and a
Director of The Medicines Company, a specialty pharmaceutical company. Mr.
Stack also currently serves on the board of directors of Bio-Imaging
Technologies, Inc., a pharmaceutical contract service organization. From 2000
to 2001, Mr. Stack served as President and General Partner of Stack
Pharmaceuticals, Inc. From 1995 to 1999, Mr. Stack served as the President and
General Manager of Innovex Inc., a commercial solutions company offering
marketing, sales, and clinical research capabilities to pharmaceutical and
biotechnology customers. From 1993 to 1995, he was the Vice President of
Business Development and Marketing for Immunomedics, Inc., a specialty
biopharmaceutical company. From 1992 to 1993, he was the Director of Business
Development and Planning for Infections Disease, Oncology, and Virology of
Roche Laboratories. Mr. Stack is a


                                      51

<PAGE>

graduate of Siena College where he received a B.S. in Biology and Albany
College of Pharmacy where he received a B.S. in Pharmacy.

EXECUTIVE OFFICERS

         Each executive officer serves at the discretion of the board of
directors and holds office until his successor is elected and qualified or
until his earlier resignation or removal. There are no family relationships
among any of our directors or executive officers.

BOARD COMPOSITION

         Our board of directors currently consists of six directors. Certain
directors serve on the board of directors pursuant to the terms of an agreement
that will terminate with respect to such board seats upon the closing of this
offering. Following this offering, the board of directors will be divided into
three classes, each of whose members will serve for a three-year term. Messrs.
Gadicke, Janney and Menzel will serve in the class whose term expires in 2003,
Messrs. Nelson and Stack will serve in the class whose term expires in 2004,
and Mr. Waldon will serve in the class whose term expires in 2005. At each
annual meeting of stockholders, a class of directors will be elected for a
three-year term to succeed the directors of the same class whose terms are then
expiring.

BOARD COMMITTEES

         Our board of directors has established an audit committee and a
compensation committee. The audit committee, consisting of Messrs.       ,
       and       , reviews our internal accounting procedures and consults with
and reviews the services provided by our independent accountants. The
compensation committee, consisting of Messrs. Gadicke, Janney and Menzel,
reviews and determines the compensation and benefits of all of our officers,
establishes and reviews general policies relating to the compensation and
benefits of all of our employees, and administers our 1999 Stock Option Plan,
2002 Stock Incentive Plan, 2000 Warrant Plan for Consultants and our Stock
Option Plan for Employees and Consultants.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         Prior to establishing the compensation committee, the board of
directors as a whole performed the functions delegated to the compensation
committee. No member of our current compensation committee serves or has ever
served as one of our officers or employees. None of our executive officers
serves or has ever served as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving on our
board of directors or compensation committee.

DIRECTOR COMPENSATION

         Our directors currently do not receive any cash compensation from us
for their services as members of the board of directors. We reimburse our
directors for out-of-pocket expenses in connection with attendance at board and
committee meetings. All of our directors, including non-employee directors, are
eligible to participate in our stock incentive plans. In April 2002 we issued
to David Stack, one of our directors, options to purchase 3,500 shares of our
common stock with an exercise price of $2.50 per share.

EXECUTIVE COMPENSATION

         The following table sets forth a summary of the compensation paid
during the fiscal year ended December 31, 2001 to our Chief Executive Officer
and to all of our other executive officers whose salary and bonus exceeded
$100,000. We refer to these persons as the named executive officers. Unless
noted


                                      52

<PAGE>

otherwise, the number of shares of common stock and the number of shares of
common stock underlying and exercise prices for all the options and warrants
referred to herein under "Executive Compensation," "Stock Option Grants,"
"Stock Plans," "Warrant Plans," and "Description of Capital Stock" will be
proportionately adjusted upon the closing of the offering to reflect the
for       stock split to occur upon the filing of the restated certificate of
incorporation and the closing of this offering.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                        LONG-TERM
                                                                                       COMPENSATION
                                                            ANNUAL COMPENSATION        ------------
                                                           ----------------------       SECURITIES
                                                                                        UNDERLYING          ALL OTHER
    NAME AND PRINCIPAL POSITION            YEAR             SALARY        BONUS          OPTIONS         COMPENSATION (1)
    ---------------------------            ----            --------       -------      ------------      ----------------
<S>                                        <C>             <C>            <C>          <C>               <C>
R. Forrest Waldon (2)...............       2001            $240,250            --              --             $5,208
Chairman, President and CEO                2000             228,462            --          76,261                108
                                           1999             136,058            --          67,776                 65

Thomas W. Leonard (3)...............       2001            $180,250            --              --             $5,208
Vice President and Chief Science           2000             165,538            --          38,130                180
Officer                                    1999              86,800            --          33,888                106

Stephen F. Rizzo (4)................       2001            $110,250            --              --             $3,416
Vice President, Chief Financial            2000             102,308            --          38,130                 94
Officer and Assistant Secretary            1999              58,038            --          33,888              1,803

Christopher Smith (5)...............       2001            $160,250            --              --             $5,084
Vice President, Regulatory Affairs         2000              16,615            --          18,000                 24
and Quality Assurance

Kathleen M. Milligan (6)............       2001            $141,654       $15,000          40,000             $4,811
Vice President, Marketing & Sales
</TABLE>

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

(1)      Represents the cost of group life insurance coverage in excess of
         $50,000 unless indicated otherwise below.
(2)      Mr. Waldon's 2001 other compensation includes a company contribution to
         the 401(k) Plan of $5,100 and excess group life coverage of $108.
(3)      Mr. Leonard's 2001 other compensation includes a company contribution
         to the 401(k) Plan of $5,100 and excess group life coverage of $108.
(4)      Mr. Rizzo's 1999 other compensation includes a company contribution to
         the 401(k) Plan of $1,743 and excess group life coverage of $60.
(5)      Mr. Smith's 2001 other compensation includes a company contribution to
         the 401(k) Plan of $4,808 and excess group life coverage of $276.
(6)      Ms. Milligan's 2001 other compensation includes a company contribution
         to the 401(k) Plan of $4,700 and excess group life coverage of $111.

STOCK OPTION GRANTS

         The following table contains summary information regarding stock
option grants made during the year ended December 31, 2001 by us to the named
executive officers. We granted these options at an exercise price equal to
$2.50 on the date of grant as determined by the compensation committee of our
board of directors. The options granted to Ms. Milligan vest ratably over three
years on the yearly anniversary of the date of grant.

         We calculated the potential realizable value of options in the table
assuming our initial public offering price appreciates at the indicated rate
for the entire term of the option and that the option holder exercises his
option on the last day of its term at the appreciated price. All options listed
have a term of ten years. We assumed stock price appreciation of 5% and 10%
pursuant to the rules of the Securities and


                                      53

<PAGE>

Exchange Commission. We cannot assure you that our actual stock price will
appreciate over the ten-year option term at the assumed 5% and 10% levels, or
at any other rate.

                       OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                      % OF TOTAL
                                                        OPTIONS                                POTENTIAL REALIZABLE VALUE AT
                                    NUMBER OF          GRANTED TO                              ASSUMED RATES OF STOCK PRICE
                                   SECURITIES         EMPLOYEES IN    EXERCISE                APPRECIATION FOR OPTION TERM(2)
                                   UNDERLYING            FISCAL      PRICE PER   EXPIRATION   -------------------------------
        NAME                    OPTIONS GRANTED          YEAR(1)       SHARE        DATE          5%                   10%
--------------------            ---------------       ------------   ---------   ----------   --------             ----------
<S>                             <C>                   <C>            <C>         <C>          <C>                  <C>
Kathleen M. Milligan                 40,000               52.6%        $2.50      4/27/11
</TABLE>

(1)      Based on a total of 76,000 options granted in 2001.
(2)      The dollar amounts under these columns are a result of calculations
         mandated by the Securities and Exchange Commission and are based on
         the term of the option at the time of grant and the initial public
         offering price of $       per share. These dollar amounts do not
         represent our estimate or projection of future common stock prices.
         Actual gains, if any, on stock option exercises depend on the future
         performance of the common stock and overall stock market conditions,
         as well as the optionee's continued employment through the vesting
         period. The amounts reflected in these columns may not be achieved.

YEAR-END OPTION VALUES

         The following table provides information about the number and value of
unexercised options to purchase common stock held on December 31, 2001 by the
named executive officers. There was no public market for our common stock on
December 31, 2001. Accordingly, we have calculated the values of the
unexercised options on the basis of our initial public offering price of $
per share, less the applicable exercise price, multiplied by the number of
shares acquired upon exercise. None of the named executive officers exercised
any stock options in 2001.

                         FISCAL YEAR END OPTION VALUES

<TABLE>
<CAPTION>
                                             NUMBER OF SECURITIES             VALUE OF UNEXERCISED
                                         UNDERLYING UNEXERCISED OPTIONS      IN-THE-MONEY OPTIONS AT
                                               AT FISCAL YEAR END(1)            FISCAL YEAR END(2)
                                         ------------------------------   ----------------------------
                 NAME                     EXERCISABLE     UNEXERCISABLE   EXERCISABLE    UNEXERCISABLE
-----------------------------------      ------------     -------------   -----------    -------------
<S>                                       <C>             <C>             <C>            <C>
R. Forrest Waldon..................          70,604           73,433
Thomas W. Leonard..................          35,302           36,716
Stephen F. Rizzo...................          35,302           36,716
Christopher Smith..................           6,400           12,000
Kathleen M. Milligan...............              --           40,000
</TABLE>

(1)      No shares were acquired through exercise of stock options during 2001.
(2)      The value of each unexercised in-the-money option at fiscal year-end
         represents an amount equal to the initial public offering price of
         $       per share, minus the per share option exercise price,
         multiplied by the number of option shares.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION ON LIABILITY

         Prior to this offering, we will have entered into indemnification
agreements with each of our directors and officers. The form of indemnification
agreement provides that we will indemnify our directors and officers for
expenses incurred by them in connection with their service to our company to
the fullest extent permitted by Delaware law, our restated certificate of
incorporation and our restated bylaws.


                                      54

<PAGE>

         Our restated certificate of incorporation and restated bylaws to be
filed upon completion of this offering provides that our directors will not be
liable to us or our stockholders for monetary damages for any breach of
fiduciary duty, except to the extent otherwise required by the Delaware General
Corporation Law. This provision will not prevent our stockholders from
obtaining injunctive or other relief against our directors nor does it shield
our directors from liability under federal or state securities laws.

         Our restated certificate of incorporation and our restated bylaws also
require us to indemnify our directors and officers to the fullest extent
permitted by the Delaware General Corporation Law, subject to a few very
limited exceptions where indemnification is not permitted by applicable law.
Our restated certificate of incorporation and restated bylaws also require us
to advance expenses, as incurred, to our directors and officers in connection
with any legal proceeding to the fullest extent permitted by the Delaware
General Corporation Law. These rights are not exclusive.

STOCK PLANS

2002 STOCK INCENTIVE PLAN

         Our 2002 Stock Incentive Plan was adopted by our board of directors in
April 2002 and will be submitted to our stockholders for approval before
completion of this offering. We have reserved 400,000 shares of common stock
for issuance under the plan. The plan terminates in April 2012, unless
terminated earlier by our board of directors.

         The compensation committee of our board of directors administers the
plan. The compensation committee has authority to interpret the plan, grant
awards and make all other determinations necessary to administer the plan.

         The plan provides for the grant of stock options, stock appreciation
rights, restricted stock awards, deferred stock awards and phantom rights to
employees, directors and consultants. Stock awards may be granted with or
without vesting restrictions. Stock options may be issued either as incentive
stock options, commonly called ISOs, that qualify under Section 422 of the
Internal Revenue Code of 1986, as amended, or as nonqualified stock options,
commonly called NQSOs. ISOs may be granted only to our employees. Generally,
the exercise price of ISOs and NQSOs must be at least equal to the fair market
value of our common stock on the date of grant. Any grant of an ISO to a holder
of 10% or more of our outstanding shares of common stock must have an exercise
price of at least 110% of the fair market value of our common stock on the date
of grant. Options granted under the plan generally have a maximum term of 10
years, except that any ISO held by a holder of 10% or more of our outstanding
shares of common stock shall have a maximum term of 5 years. ISOs granted under
the plan may not be transferred other than by will or by the laws of descent
and distribution. They generally also must be exercised during the lifetime of
the optionee and only by the optionee. NQSOs and other stock awards that are
not ISOs may be transferred to immediate family members, to a trust or
partnership solely benefiting the participant or immediate family members, or
to an inter vivos or testamentary trust from which the award will be
transferred following the participant's death.

         Options granted under the plan generally expire three months after the
termination of the optionee's service with the Company, except in the case of
death or disability, in which case the options generally may be exercised up to
12 months following the date of death or disability. If we experience a change
in control, all outstanding awards become fully vested, unless otherwise stated
in an award agreement or employment agreement.


                                      55
<PAGE>
1999 STOCK OPTION PLAN

         Our board of directors and shareholders adopted our 1999 Stock Option
Plan in April 1999 and approved amendments in 2000 and 2002. We have reserved
605,000 shares of common stock for issuance under the plan. The plan terminates
in April 2009, unless terminated earlier by our board of directors.

         The compensation committee of our board of directors administers the
plan. The compensation committee has authority to interpret the plan, grant
awards and make all other determinations necessary to administer the plan.

         The plan provides for the grant of restricted stock awards, deferred
share awards and both ISOs and NQSOs, which are subject to the same restrictions
as ISOs and NQSOs granted under our 2002 Stock Incentive Plan. Awards may be
granted to employees, directors and consultants.

         Options granted under the plan generally expire 30 days after the
termination of the optionee's service with the Company, except in the case of
death or disability, in which case the options generally may be exercised up to
12 months following the date of death or disability. If we experience a change
in control, all outstanding awards become fully vested, unless otherwise stated
in an award agreement or employment agreement.

WARRANT PLANS

2000 WARRANT PLAN FOR CONSULTANTS

         Our board of directors and stockholders adopted our 2000 Warrant Plan
for Consultants in October 2000. We have reserved 75,000 shares of common stock
for issuance under the plan. The plan terminates in October 2005.

         The compensation committee of our board of directors administers the
plan. The compensation committee has authority to interpret the plan, grant
awards and make all other determinations necessary to administer the plan.

         The plan provides for the grant of warrants to consultants of our
company. Warrants may be granted with or without vesting restrictions, and to
date we have granted fully vested warrants as well as warrants with vesting
provisions. Warrants granted under the plan generally have a maximum term of
five years. Warrants generally may not be transferred other than by will, by the
laws of descent and distribution or pursuant to a qualified domestic relations
order.

         Warrants granted under the plan generally expire 30 days after the
termination of the consultant's service with our company, except in the case of
death or disability, in which case the warrants generally may be exercised up to
12 months following the date of death or disability. If we experience a change
in control, all outstanding warrants issued pursuant to the plan become fully
vested.

STOCK OPTION PLAN FOR EMPLOYEES AND CONSULTANTS

         Our board of directors adopted our Stock Option Plan for Employees and
Consultants in July 1999. We have reserved 55,000 shares of common stock for
issuance under the plan. No awards may be made under the plan after April 25,
2004.

         The compensation committee of our board of directors administers the
plan. The compensation committee has authority to interpret the plan, grant
awards and make all other determinations necessary to administer the plan.


                                       56
<PAGE>

         The plan provides for the grant of options to purchase common stock in
the form of warrants to employees and consultants of our company and employees
of aaiPharma who work on projects on behalf of our company or provide consulting
services to our company. Awards granted under the plan generally have a maximum
term of the earlier of ten years from the date of issuance or the sale of all
our outstanding capital stock to one person. Awards generally may not be
transferred other than by will, by the laws of descent and distribution or
pursuant to a qualified domestic relations order.

         Awards granted under the plan generally expire 30 days after the
termination of the recipient's service with our company, except in the case of
death or disability, in which case the award generally may be exercised up to 12
months following the date of death or disability. If we experience a change in
control, all outstanding awards issued pursuant to the plan become fully vested.

401(K) PLAN

         We sponsor a 401(k) savings plan covering our employees who are at
least 21 years of age and have completed three months of service following their
date of hire. The 401(k) savings plan is intended to qualify under Section
401(a) and 401(k) of the Internal Revenue Code. Contributions to the 401(k)
savings plan and income earned on such contributions are not taxable to
employees until withdrawn from the 401(k) savings plan. Subject to restrictions
imposed by the Internal Revenue Code on highly compensated employees, employees
generally may defer their compensation up to the statutorily prescribed annual
limit, which is $11,000 for the 2002 calendar year, and have the amount of such
reduction contributed to the 401(k) savings plan. The 401(k) savings plan
permits, but does not require, employer contributions to the 401(k) savings
plan. The 401(k) savings plan may be amended or terminated by us at any time, in
our sole discretion.

EMPLOYMENT AGREEMENTS

         We have entered into employment agreements with some of our employees.
The material terms of the employment agreements are summarized as follows:

         R. Forrest Waldon. We have entered into an employment agreement with
Mr. Waldon, effective April 2002, pursuant to which he will be employed as our
President and Chief Executive Officer. The agreement has a three-year term,
unless otherwise terminated or extended. The agreement will automatically renew
for additional one-year periods unless either party gives notice of non-renewal
at least 12 months before its then-scheduled expiration date. Mr. Waldon's
salary is $253,440 annually and may be increased at the discretion of the Board
of Directors in light of his performance and other factors, including how much
our competitors are paying their top officers. The agreement also provides Mr.
Waldon with performance-based bonuses (targeted at 50% of his salary), and other
incentive compensation, reimbursement of reasonable expenses, fringe benefits,
retirement benefits, health coverage, life and disability insurance, vacation
pay, and other employee benefits maintained by us.

         The agreement will terminate early upon the death or disability of Mr.
Waldon. We may terminate the employment agreement for cause at any time. Mr.
Waldon will not receive severance benefits if his employment terminates for the
preceding reasons, but he will receive severance benefits if he terminates the
employment agreement pursuant to constructive discharge, as well as if we
terminate his employment without cause. In these events, he will be entitled to:
(a) his base salary through his date of termination plus an additional year of
salary, paid in 12 monthly installments after his termination; (b) any unpaid
bonuses for fiscal years ending before his employment terminates plus a
prorated bonus for the fiscal year in which his employment terminates equal to
the target bonus described above times a fraction, the numerator of which is
the number of days in the calendar year of termination that precede the date
of termination and the denominator is 365; (c) two years of


                                       57
<PAGE>
medical benefits for his beneficiaries and dependants; and (d) his stock
options will become fully vested and will be exercisable for 24 months after
this termination, subject to his obligation to waive accelerated vesting of his
stock options to the extent necessary to avoid excise taxes under the Internal
Revenue Code (or applicable regulations).

         The agreement prohibits Mr. Waldon from competing with us for 24 months
after the date his employment terminates for any reason. We have retained the
right to unconditionally protect and secure all intellectual property conceived
by Mr. Waldon, by himself or with others, during his employment.

         Other Executives. We have entered into similar employment agreements
with the following executive officers: Thomas Leonard, Stephen Rizzo, Richard
Moldin, Christopher Smith, Kathleen Milligan and Parris Sanz. These agreements
took effect in April, 2002, and have a term of one year for each officer, unless
otherwise terminated or extended. The agreements provide for a minimum annual
salary of $190,080 for Mr. Leonard, $116,160 for Mr. Rizzo, $110,000 for Mr.
Moldin, $168,000 for Mr. Smith, $221,665 for Ms. Milligan and $160,000 for Mr.
Sanz. In addition, the agreements entitle these officers to participation in the
company's stock option plans and other incentive plans, reimbursement for
reasonable expenses, retirement benefits, health coverage, life and disability
insurance, vacation pay, and participation in other employee benefits we
maintain.

         Each officer's employment agreement will terminate early upon the
officer's death or disability. We may terminate each employment agreement for
cause at any time. Each officer will not receive severance benefits if his or
her employment terminates for the preceding reasons, but he or she will receive
severance benefits if we terminate his or her employment without cause. If an
officer's employment is terminated without cause, he or she will be entitled to:
(a) his or her base salary through the date of termination plus additional
salary, paid in monthly installments, for the greater of six months or the
remaining term of the officer's employment agreement; and (b) company-paid COBRA
premiums for the duration of such salary payments.

         If, on or after an "accelerating event" within the meaning of our 2002
Stock Option Plan, we terminate an officer's employment for a reason other than
cause or his or her death or disability, or if the officer resigns for good
reason the officer instead will receive the following severance benefits: (a) 24
months of salary; (b) company-paid COBRA premiums for the duration of such
salary payments; and (c) accelerated vesting on stock options and other stock
awards, subject to the officer's obligation to waive accelerated vesting of his
or her stock options to the extent necessary to avoid excise taxes under the
Internal Revenue Code (or applicable regulations).

         The employment agreements prohibit the officers from disclosing
confidential information at any time during employment or thereafter and from
competing with us during employment and for one year after the date employment
terminates for any reason. We have retained the right to unconditionally protect
and secure all inventions conceived by the officers during their employment with
us.

                           RELATED PARTY TRANSACTIONS

         Company History. Our company was founded in 1994 to exploit analytical
and formulation hormone technologies previously developed and contributed to our
company by aaiPharma in exchange for shares of our convertible preferred stock.
Upon our founding, other investors, including Schering Berlin Venture
Corporation, a wholly-owned subsidiary of Schering AG, purchased shares of our
convertible preferred stock. We originally commenced development of three HRT
products intended to


                                       58

<PAGE>
be generically equivalent to Ogen(R)(estropipate), Estrace(R)(estradiol) and
Premarin(R)(estrogens). Our Estradiol product was approved for marketing in
January 1998 and was originally licensed to and marketed by Teva Phamaceuticals
USA. We terminated the license with Teva Phamaceuticals USA and subsequently
re-licensed the estradiol marketing rights to Zenith Goldline in late 1999. In
January 2000 we sold our rights to estradiol, including our rights under the
license agreement with Zenith Goldline, to aaiPharma in exchange for research
and development credits. We suspended our estropipate development project in
1996 due to eroding market conditions for estropipate generics.

         Prior to 1999, we focused much of our efforts on gaining approval for a
synthetic-based generic equivalent to Premarin(R). We filed an ANDA for an
estrogens-only generic product in December 1996. To accept the application, the
FDA requested that the application be amended with results from an ongoing food
effects study. In February 1997, we amended our ANDA to include the food effects
study results and the FDA accepted the ANDA for filing in March 1997. In May
1997, we received a non-approvable letter from the FDA stating that no generic
equivalent for Premarin(R) could be approved because the active components of
Premarin(R) had not been fully characterized. This letter and many subsequent
discussions with the FDA through April 1999 led us to recognize the protective
barriers the FDA established for the class of complex estrogens products. As a
result, we made the strategic decision to convert our generic estrogens program
to a program designed to develop proprietary complex estrogens products. Since
that time, we have focused our efforts on developing our current product
candidates.

         aaiPharma. One of our stockholders, aaiPharma, has provided, and
continues to provide research and development services to us. In 2001, we
incurred approximately $383,000 in research and development costs for services
performed by aaiPharma. We expect that aaiPharma will continue to provide
research and development services to us in the future.

         Stack Pharmaceuticals. Prior to the time that David Stack was nominated
and became one of our directors, we entered into a consulting agreement with
Stack Pharmaceuticals, Inc., a company of which David Stack is the president and
sole stockholder. Pursuant to that agreement, Stack Pharmaceuticals agreed to
provide us with consulting services in the areas of marketing, sales, and
strategic business planning in exchange for cash compensation and the issuance
of warrants to David Stack and other employees of Stack Pharmaceuticals under
our 2000 Warrant Plan. In 2001, we paid approximately $40,000 to Stack
Pharmaceuticals in cash compensation for consulting services. As of April 2002,
we have issued warrants to employees of Stack Pharmaceuticals under the 2000
Warrant Plan to purchase a total of 4,834 shares of our common stock, of which
David Stack holds warrants to purchase 2,418 shares. Of the total issued
warrants, warrants to purchase 2,159 shares currently are unvested, 1,063 of
which will vest upon the closing of this offering and 1,096 of which will vest
upon our company achieving $50 million of sales revenue from one of our complex
estrogens products. We no longer receive consulting services from Mr. Stack or
Stack Pharmaceuticals. Consequently, we will not be making additional cash
payments to Stack Pharmaceuticals or issuing additional warrants to employees of
Stack Pharmaceuticals. In April 2002, we issued to Mr. Stack options to purchase
3,500 shares of our common stock with an exercise price of $2.50 per share
pursuant to our 1999 Stock Option Plan.


                                       59
<PAGE>

                             PRINCIPAL STOCKHOLDERS

         The following table sets forth information known to us with respect to
the beneficial ownership of our common stock as of May 1, 2002 by the
following persons:

         -        each stockholder known by us to own beneficially more than 5%
                  of our common stock,

         -        each of our directors,

         -        each of the named executive officers, and

         -        all directors and executive officers as a group.

         This table lists applicable percentage ownership based on 4,488,180
shares of common stock outstanding as of May 1, 2002 (including options and
warrants exercisable within 60 days of May 1, 2002), and also lists applicable
percentage ownership based on        shares of common stock outstanding after
completion of this offering. Percentage ownership assumes conversion of all
shares of preferred stock outstanding as of May 1, 2002, into shares of
common stock, which will occur upon the closing of this offering.

         We have determined beneficial ownership in the table in accordance with
the rules of the Securities and Exchange Commission. In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, we have deemed shares of common stock subject to options or warrants
held by that person that are currently exercisable or will become exercisable
within 60 days of May 1, 2002 to be outstanding, but we have not deemed these
shares to be outstanding for computing the percentage ownership of any other
person. To our knowledge, except as set forth in the footnotes below, each
stockholder identified in the table possesses sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by that
stockholder. Unless otherwise indicated, the address of all listed stockholders
is c/o Endeavor Pharmaceuticals, Inc., 127 Racine Drive, Suite 202, Wilmington,
NC 28403.


                                       60
<PAGE>

<TABLE>
<CAPTION>
                                                                                PERCENTAGE OF SHARES
                                                                                   OUTSTANDING(1)
                                                                              ------------------------
                                                      NUMBER OF SHARES         BEFORE          AFTER
         NAME OF BENEFICIAL OWNER                   BENEFICIALLY OWNED(1)     OFFERING        OFFERING
---------------------------------------------       ---------------------     --------        --------
<S>                                                 <C>                       <C>             <C>
MPM Capital LP (2)(3) .......................             1,010,609            22.5%
   111 Huntington Avenue, 31st Floor
   Boston, MA 02199
aaiPharma Inc. (2)(4) .......................               722,504            16.1%
   2320 Scientific Park Drive
   Wilmington, NC 28405
The Goldman Sachs Group, Inc. (2)(5) ........               689,756            15.4%
   85 Broad Street
   New York, NY 10004
Alta Partners (2)(6) ........................               378,977             8.4%
   One Embarcadero Center, Suite 4050
   San Francisco, CA 94111
Wakefield Group, L.P.(2) ....................               270,938             6.0%
   1110 East Morehead Street
   Charlotte, NC 28204
Noro-Moseley Partners II, L.P.(2) ...........               270,938             6.0%
   4200 Northside Parkway, Building 9
   Atlanta, GA 30327
Quantum Partners LDC(2)(7) ..................               227,893             5.1%
   Kaya Flamboyan 9
   Willemstad, Curacao
   Netherlands Antilles
R. Forrest Waldon (8) .......................               110,383             2.5%              *
Thomas W. Leonard (9) .......................                55,191             1.2%              *
Stephen F. Rizzo (9) ........................                55,191             1.2%              *
Richard F. Moldin ...........................                    --               *               *
Christopher Smith (9) .......................                 6,400               *               *
Kathleen M. Milligan (9) ....................                13,333               *               *
Parris J. Sanz ..............................                    --               *               *
Ansbert K. Gadicke, M.D .....................                    --               *               *
Garry E. Menzel, Ph.D .......................                    --               *               *
Daniel Janney (10) ..........................                    --               *               *
Thomas C. Nelson (11) .......................                    --               *               *
David M. Stack (12) .........................                 1,886               *               *
All directors and officers as a group .......               242,384             5.4%
</TABLE>
-----------------
*        Less than 1% of the outstanding shares of common stock.

(1)      The number of shares owned and percentage of shares outstanding does
         not reflect the        for        stock split to occur immediately upon
         the closing of this offering. Unless otherwise indicated below, the
         persons and entities named in the table have sole voting and sole
         investment power with respect to all shares beneficially owned, subject
         to community property laws where applicable.

(2)      Represents outstanding shares of convertible preferred stock which
         are convertible to common stock as if converted to common stock.

(3)      Includes 75,088 shares held of record by MPM BioVentures II, L.P.;
         680,343 shares held of record by MPM BioVentures II-QP, L.P.; 239,514
         shares held of record by MPM BioVentures GmbH & Co.
         Parallel-Beteiligungs KG and 15,664 shares held of record by MPM Asset
         Management Investors 2000 B LLC. MPM Capital is a direct or indirect
         parent and/or control person of MPM Asset Management II LLC, funds
         managed or advised by it (including MPM BioVentures II, L.P., MPM
         BioVentures II-QP, L.P., MPM BioVentures GmbH & Co.
         Parallel-Beteiligungs KG, and MPM Asset Management Investors 2000 B
         LLC) and the general partners of such funds, and may be deemed to
         beneficially hold the securities owned by such entities.

(4)      Includes 38,927 shares of common stock beneficially owned by Fred
         Sancilio, the chief executive officer, a director and a stockholder of
         aaiPharma, and 31,849 shares of common stock beneficially owned by The
         Waters Foundation, the trustee of which is a director of aaiPharma.


                                       61
<PAGE>

(5)      Represents shares owned by investment partnerships, of which affiliates
         of The Goldman Sachs Group, Inc., or GS Group, are the general partner,
         managing general partner or investment manager. Includes 432,779 shares
         held of record by GS Capital Partners II, L.P.; 172,045 shares held of
         record by GS Capital Partners II Offshore, L.P.; 36,520 shares held of
         record by Bridge Street Fund 1995, L.P.; 32,452 shares held of record
         by Stone Street Fund 1995, L.P.; and 15,960 shares held of record by
         Goldman, Sachs & Co. Verwaltungs GmbH, as nominee for GS Capital
         Partners (Germany) Civil Law Partnership. GS Group disclaims beneficial
         ownership of the shares owned by such investment partnerships to the
         extent attributable to partnership interests therein held by persons
         other than GS Group and its affiliates. Each of such investment
         partnerships shares voting and investment power with certain of its
         respective affiliates.

(6)      Represents shares owned by investment partnerships, of which affiliates
         of Alta Partners are the general partner, managing general partner or
         general manager. Includes 235,567 shares held of record by Alta
         BioPharma Partners, L.P.; 134,531 shares held of record by Endeavor
         Pharma. Chase Partners (AltoBio), LLC; and 8,879 shares held of record
         by Alta Embarcadero BioPharma, LLC. Alta Partners disclaims beneficial
         ownership of the shares owned by such investment partnerships to the
         extent attributable to partnership interests therein held by persons
         other than Alta Partners and its affiliates. Each of such investment
         partnerships shares voting and investment power with certain of its
         respective affiliates.

(7)      Soros Fund Management LLC, or SFM, serves as principal investment
         manager to Quantum Partners LDC, or Quantum. The Chairman of SFM is
         George Soros. SFM has delegated investment discretion over a portion of
         the portfolio of Quantum, including the shares, to Origin Capital
         Management LLC. Each of SFM and Mr. Soros may be deemed to have voting
         and dispositive power over the shares by virtue of SFM's right to
         obtain investment discretion over such shares within 60 days (even
         though it does not currently exercise such investment discretion).

(8)      Represents 35,000 shares of common stock owned and 75,383 shares of
         common stock that Mr. Waldon has the right to acquire through the
         exercise of stock options within 60 days.

(9)      Represents shares of common stock that may be acquired through the
         exercise of stock options within 60 days.

(10)     Does not include 378,977 shares of common stock beneficially owned by
         Alta Partners. Mr. Janney disclaims beneficial ownership of such
         shares.

(11)     Does not include 270,938 shares of common stock beneficially owned by
         Wakefield Group, L.P. Mr. Nelson disclaims beneficial ownership of such
         shares.

(12)     Represents shares of common stock that may be acquired through the
         exercise of warrants within 60 days.


                                       62
<PAGE>

                          DESCRIPTION OF CAPITAL STOCK

GENERAL

         Upon the completion of this offering, we will be authorized to issue
       shares of common stock, $0.01 par value per share, and       shares of
undesignated preferred stock, $0.01 par value per share. The following
description of our capital stock does not purport to be complete and is subject
to, and qualified in its entirety by, our restated certificate of incorporation
and restated bylaws, which we have included as exhibits to the registration
statement of which this prospectus forms a part.

PREFERRED STOCK

         As of May       , 2002, there were 578,402 shares of Series A
convertible preferred stock outstanding, 162,932 shares of Series B convertible
preferred stock outstanding, 651,728 shares of Series C convertible preferred
stock outstanding, 117,216 shares of Series D convertible preferred stock
outstanding and 2,327,180 shares of Series E convertible preferred stock
outstanding. Upon the closing of this offering and the filing of our restated
certificate of incorporation, all outstanding shares of convertible preferred
stock will convert into an aggregate of         shares of common stock. The
board of directors will have the authority, without further action by the
stockholders, to issue up to         shares of preferred stock in one or more
series and to designate the rights, preferences, privileges and restrictions of
each series. The issuance of preferred stock could have the effect of
restricting dividends on the common stock, diluting the voting power of the
common stock, impairing the liquidation rights of the common stock or delaying
or preventing a change in control without further action by the stockholders. We
have no present plans to issue any shares of preferred stock after the
completion of this offering.

COMMON STOCK

         As of May 1, 2002, there were 35,000 shares of common stock
outstanding. In addition, as of May 1, 2002, there were 620,328 shares of
common stock subject to outstanding options and warrants. Upon completion of
this offering, there will be         shares of common stock outstanding,
assuming no exercise of outstanding stock options or warrants and conversion of
all outstanding shares of convertible preferred stock into common stock.

         Each share of common stock entitles its holder to one vote on all
matters to be voted upon by stockholders. Subject to preferences that may apply
to any outstanding preferred stock, holders of common stock will receive ratably
any dividends that the board of directors may declare out of funds legally
available for that purpose. In the event of our liquidation, dissolution or
winding up, the holders of common stock are entitled to share ratably in all
assets remaining after payment of liabilities and any liquidation preference of
preferred stock that may be outstanding. The common stock has no preemptive
rights, conversion rights or other subscription rights or redemption or sinking
fund provisions. All outstanding shares of common stock are fully paid and
non-assessable, and the shares of common stock that we will issue upon
completion of this offering will be fully paid and non-assessable.

REGISTRATION RIGHTS

         We have granted registration rights to holders of all our series of
convertible preferred stock and outstanding warrants. Beginning 180 days after
this offering, former holders of at least a majority of the shares of former
Series E convertible preferred stock or eight percent of all other stock or
stock equivalents entitled to registration rights may require that we register
their shares of common stock. With respect to the holders of Series E
convertible preferred stock, we are not obligated to effect more than two
required registrations, and with respect to the other stockholders entitled to
registration rights we are not


                                       63
<PAGE>

obligated to effect more than three required registrations. We are not obligated
to effect more than two required registrations in any 12-month period. We have
the right to decrease the number of shares included in a required registration
if market conditions prevent the registration of all shares that requested
registration. Holders of registration rights also may require us to register
their shares any time we propose a registered offering of Company shares,
subject to our right to decrease the number of shares included if market
conditions prevent the registration of all shares. Twelve months after this
offering, holders of registration rights may request that we register their
shares on Form S-3, provided that each proposed registration exceeds $5.0
million. Holders of registration rights may not require us to register shares on
Form S-3 more than twice in any 12-month period and under certain other
conditions.

         If our board of directors determines that a registration would be
materially detrimental to us, we may suspend these rights for up to 90 days, but
we may not do so more than once in any 12-month period. We must bear all
expenses associated with the filing of registration statements on behalf of
holders of registration rights, except for underwriting discounts and selling
commissions, and must indemnify stockholders who sell shares of our common stock
pursuant to the foregoing registration rights. We are prohibited from granting
registration rights to any person, other than registration rights that are
subordinate to the registration rights described above, without the written
consent of certain holders of the above registration rights.

ANTI-TAKEOVER PROVISIONS

         DELAWARE LAW

         We are subject to Section 203 of the Delaware General Corporation Law,
which regulates acquisitions of some Delaware corporations. 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 becomes an interested stockholder, unless:

         -        the corporation's board of directors approved the business
                  combination or the transaction in which the person became an
                  interested stockholder prior to the time the person attained
                  this status;

         -        upon consummation of the transaction that resulted in the
                  person becoming an interested stockholder, the person owned at
                  least 85% of the voting stock of the corporation outstanding
                  at the time the transaction commenced, excluding shares owned
                  by persons who are directors and also officers and certain
                  employee stock plans; or

         -        at or subsequent to the time the person became an interested
                  stockholder, the corporation's board of directors approved the
                  business combination and the stockholders (other than the
                  interested stockholder) authorized the transaction at an
                  annual or special meeting of stockholders by the affirmative
                  vote of at least 66 2/3% of the outstanding voting stock not
                  owned by the interested stockholder.

         A "business combination" generally includes a merger, asset or stock
sale or other transaction with or caused by the interested stockholder. In
general, an "interested stockholder" is a person who, together with the person's
affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status did own, 15% or more of a
corporation's voting stock.

         This statute could prohibit or delay mergers or other takeover or
change-in-control attempts with respect to us and, accordingly, may discourage
attempts to acquire us.


                                       64
<PAGE>

CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS

         Board of Directors.

         Our restated certificate of incorporation will divide our board of
directors into three classes with staggered three-year terms. In addition, our
certificate of incorporation provides that directors may be removed only for
cause by the affirmative vote of the holders of 80% of our shares of capital
stock entitled to vote. Under our certificate of incorporation, any vacancy on
our board of directors, including a vacancy resulting from an enlargement of our
board of directors, may only be filled by vote of a majority of our directors
then in office. The classification of our board of directors and the limitations
on the removal of directors and filling of vacancies could make it more
difficult for a third-party to acquire, or discourage a third party from
acquiring, control of us.

         Stockholder Meetings. Under our restated bylaws to be effective upon
the closing of this offering, special meetings of the stockholders may be called
only by the board of directors, the chairman of the board or the committee of
the board that has been duly designated by the board and whose power and
authority include the power to call such meetings. Our restated bylaws also will
provide that stockholders wishing to propose business to be brought before a
meeting of stockholders will be required to comply with various advance notice
requirements. Finally, our restated certificate of incorporation and restated
bylaws will provide that any action required or permitted to be taken by our
stockholders at an annual or special meeting may be taken only if properly
brought before the meeting, and may not be taken by written consent in lieu of a
meeting. These provisions could have the effect of delaying until the next
stockholders' meeting stockholder actions which are favored by the holders of a
majority of our outstanding voting securities. These provisions may also
discourage a third party from making a tender offer for our common stock,
because even if it acquired a majority of our outstanding voting securities, the
third party would be able to take action as a stockholder (such as electing new
directors or approving a merger) only at a duly called stockholders' meeting,
and not by written consent.

         Undesignated Preferred Stock. The authorization of undesignated
preferred stock makes 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 acquire us. These and other provisions of our restated
certificate of incorporation and restated bylaws may have the effect of
deterring hostile takeovers or delaying changes in control of us.

         Our restated certificate of incorporation and restated bylaws provide
that our restated bylaws may be amended only by a vote of the majority of the
members of the board of directors or a vote of the holders of 80% of our shares
of capital stock entitled to vote in the election of directors.

TRANSFER AGENT AND REGISTRAR

         The transfer agent and registrar for the common stock is      . The
transfer agent's address is      .


                                       65
<PAGE>

                         SHARES ELIGIBLE FOR FUTURE SALE

         Prior to this offering, there has been no public market for our common
stock, and we cannot predict the effect, if any, that market sales of shares or
the availability of any shares for sale will have on the market price of the
common stock prevailing from time to time. Sales of substantial amounts of
common stock (including shares issued on the exercise of outstanding options and
warrants), or the perception that such sales could occur, could adversely affect
the market price of our common stock (including shares issued on the exercise of
outstanding options and warrants) and our ability to raise capital through a
future sale of our securities.

         Upon completion of this offering, we will have       shares of common
stock outstanding (or shares if the underwriters' over-allotment option is
exercised in full), assuming no exercise of outstanding options or warrants. The
      shares (or       shares if the underwriters' over-allotment option is
exercised in full) of common stock sold in this offering will be freely
tradable without further restriction or further registration under the
Securities Act, except for shares purchased by an affiliate (as this term is
defined in the Securities Act) of ours, which will be subject to the
limitations of Rule 144 under the Securities Act. Subject to certain
contractual limitations, holders of restricted shares will be entitled to sell
these shares in the public securities market without registration if they
qualify for an exemption from registration under Rule 144 or any other
applicable exemption under the Securities Act.

SALES OF RESTRICTED SHARES AND SHARES HELD BY OUR AFFILIATES

         In general, under Rule 144 under the Securities Act, beginning 90 days
after the date of this prospectus, a person (or persons whose shares are
aggregated) who has beneficially owned restricted securities within the meaning
of Rule 144 for at least one year, and including the holding period of any prior
owner except an affiliate, would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of one percent of the
then outstanding shares of our common stock or the average weekly trading volume
of our common stock on the Nasdaq National Market during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about our company. Any person (or persons whose shares are
aggregated) who is not deemed to have been our affiliate at any time during the
three months preceding a sale, and who has beneficially owned shares for at
least two years (including any period of ownership of preceding non-affiliated
holders), would be entitled to sell such shares under Rule 144(k) without regard
to the volume limitations, manner of sale provisions, public information
requirements or notice requirements. Therefore, unless otherwise restricted,
"144(k)" shares may be sold immediately on completion of this offering. An
"affiliate" is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
an issuer.

OPTIONS

         After the date of this prospectus, we intend to file one or more
registration statements on Form S-8 under the Securities Act to register shares
of common stock subject to outstanding stock options or reserved for issuance
under our equity compensation plans. Subject to certain conditions, Rule 701
under the Securities Act may be relied upon with respect to the resale of
securities originally purchased from us by our employees, directors, officers,
consultants or advisors prior to the closing of this offering, under written
compensatory benefit plans or written contracts relating to the compensation of
these persons. This also applies to stock options we granted prior to this
offering, along with the shares acquired upon exercise of those options after
the closing of this offering. Unless subject to lock-up agreements or other
contractual restrictions, these shares may be sold, beginning 90 days after the
date of this prospectus, by persons other than affiliates subject only to the
manner of sale provisions of Rule 144


                                       66
<PAGE>

and by affiliates under Rule 144 without compliance with the one-year minimum
holding period requirement.

LOCK-UP

         We, our directors, executive officers, most of our existing
stockholders and selected option and warrant holders have entered into lock-up
agreements pursuant to which we and such holders of stock, options and warrants
have agreed not to sell, directly or indirectly, any shares of common stock
without the prior written consent of Banc of America Securities LLC and Bear,
Stearns & Co. Inc. for a period of 180 days from the date of this prospectus.

         Shares eligible for future sale in the public market based on shares
outstanding at the time we close this offering is as follows:

<TABLE>
<CAPTION>
NUMBER OF SHARES                    DATE
----------------                    ----
<S>                                 <C>
      (or up to       if            After the date of this prospectus. Freely tradable
the underwriters'                   shares sold in this offering.
over-allotment option is
exercised in full)
                                    After the date of this prospectus or 90 days after
                                    the date of this prospectus. Shares not locked up and
                                    eligible for resale under Rule 144 or 701.

                                    180 days after the date of this prospectus when the
                                    lock-up expires. Shares eligible for resale under
                                    Rule 144, Rule 144(k) or Rule 701.

                                    Various dates as these shares qualify for an
                                    exemption from registration under Rule 144 or 701.
</TABLE>


                                       67
<PAGE>

                                  UNDERWRITING

         We are offering the shares of common stock described in this prospectus
through a number of underwriters. Banc of America Securities LLC and Bear,
Stearns & Co. Inc. are acting as joint book- running managers of the offering
and together with CIBC World Markets Corp. are acting as representatives of the
underwriters. We have entered into a firm commitment underwriting agreement with
the representatives. Subject to the terms and conditions of the underwriting
agreement, we have agreed to sell to the underwriters, and each underwriter has
agreed to purchase, at the public offering price less the underwriting discounts
and commissions set forth on the cover page of this prospectus, the number of
shares of common stock listed next to its name in the following table:

<TABLE>
<CAPTION>
                          UNDERWRITER                                 NUMBER OF SHARES
                          -----------                                 ----------------
<S>                                                                   <C>
Banc of America Securities LLC................................
Bear, Stearns & Co. Inc. .....................................
CIBC World Markets Corp. .....................................
                                                                         -----------
Total.........................................................
                                                                         ===========
</TABLE>

         The underwriters initially will offer shares to the public at the price
specified on the cover page of this prospectus. The underwriters may allow to
some dealers a concession of not more than $      per share. The underwriters
also may allow, and any dealers may reallow, a concession of not more than $
per share to some other dealers. If all the shares are not sold at the initial
public offering price, the underwriters may change the offering price and other
selling terms. The common stock is offered subject to a number of conditions,
including:

         -        receipt and acceptance of our common stock by the
                  underwriters; and

         -        the right to reject orders in whole or in part.

         The underwriters have an option to buy up to      additional shares of
common stock from us to cover sales of shares by the underwriters which exceed
the number of shares specified in the table above at the public offering price
less the underwriting discounts and commissions set forth on the cover page of
this prospectus. The underwriters have 30 days from the date of this prospectus
to exercise this option. If the underwriters exercise this option, they will
each be obligated, subject to certain conditions, to purchase additional shares
approximately in proportion to the amounts specified in the table above. If any
additional shares of common stock are purchased, the underwriters will offer the
additional shares on the same terms as those on which the shares are being
offered.

         The underwriting fee is equal to the public offering price per share of
common stock less the amount paid by the underwriters to us per share of common
stock. The underwriting fee is      % of the initial public offering price. The
following table shows the per share and total underwriting discounts and
commissions to be paid to the underwriters assuming both no exercise and full
exercise of the underwriters' option to purchase additional shares.

<TABLE>
<CAPTION>
                                                                       PAID BY ENDEAVOR
                                                       ---------------------------------------------
                                                          NO EXERCISE                FULL EXERCISE
                                                       ------------------         ------------------
<S>                                                    <C>                        <C>
Per Share .........................................    $                          $
Total .............................................    $                          $
</TABLE>

         In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $     .


                                       68
<PAGE>
         Our directors, executive officers, most of our existing stockholders
and selected option and warrant holders have entered into lock-up agreements
with the underwriters pursuant to which such holders of stock, options and
warrants have agreed not to sell, directly or indirectly, any shares of common
stock without the prior written consent of Banc of America Securities LLC and
Bear, Stearns & Co. Inc. for a period of 180 days from the date of this
prospectus. This consent may be given at any time without public notice. We have
entered into a similar agreement with the representatives of the underwriters,
except that we may grant options and sell shares pursuant to our stock plans
without such consent. There are no agreements between the representatives and
any of our stockholders or affiliates releasing them from these lock-up
agreements prior to the expiration of the 180-day period.

         We have applied for our common stock to be quoted on the Nasdaq
National Market under the symbol "EDVR."

         We will indemnify the underwriters against some specified types of
liabilities, including liabilities under the Securities Act. If we are unable to
provide this indemnification, we will contribute to payments the underwriters
may be required to make in respect of those liabilities. In connection with this
offering, the underwriters may purchase and sell shares of common stock in the
open market. These transactions may include:

         -        short sales;

         -        stabilizing transactions; and

         -        purchases to cover positions created by short sales.

         Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the common stock while this offering
is in progress.

         The underwriters may also impose a penalty bid. This means that if the
representatives purchase shares in the open market in stabilizing transactions
or to cover short sales, the representatives can require the underwriters that
sold those shares as part of this offering to repay the underwriting discount
received by them.

         The underwriters may engage in activities that stabilize, maintain or
otherwise affect the price of the common stock, including:

         -        over-allotment;

         -        stabilization;

         -        syndicate covering transactions; and

         -        imposition of penalty bids.

         As a result of these activities, the price of the common stock may be
higher than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter-market or otherwise.


                                       69
<PAGE>

         The underwriters do not expect sales to discretionary accounts to
exceed five percent of the total number of shares of common stock offered by
this prospectus.

         Prior to this offering, there has been no public market for our common
stock. The initial public offering price has been negotiated between us and the
representatives of the underwriters. Among the factors considered in these
negotiations were:

         -        the history of, and prospects for, our company and the
                  industry in which we compete;

         -        the past and present financial performance of our company;

         -        an assessment of our management;

         -        the present state of our development;

         -        the prospects for our future earnings;

         -        the prevailing market conditions of the applicable United
                  States securities market at the time of this offering,

         -        market valuations of publicly traded companies that we and the
                  representatives of the underwriters believe to be comparable
                  to our company; and

         -        other factors deemed relevant.

         The underwriters, at our request, have reserved for sale to our
employees, family members of employees, business associates and other third
parties at the initial public offering price up to five percent of the shares
being offered by this prospectus. The sale of shares to our employees and
affiliates will be made by Banc of America Securities LLC. We do not know if our
employees or affiliates will choose to purchase all or any portion of these
reserved shares, but any purchases they do make will reduce the number of shares
available to the general public. Reserved shares purchased by our employees and
affiliates will not be subject to a lock-up except as may be required by the
Conduct Rules of the National Association of Securities Dealers. These rules
require that some purchasers of reserved shares be subject to three-month
lock-ups if they are affiliated with or associated with NASD members or if they
or members of their immediate families hold senior positions at financial
institutions. If all of these reserved shares are not purchased, the
underwriters will offer the remainder to the general public on the same terms as
the other shares offered by this prospectus.


                                       70
<PAGE>

                            VALIDITY OF COMMON STOCK

         The validity of the common stock offered hereby will be passed upon for
us by Paul, Hastings, Janofsky & Walker LLP, New York, New York. Davis Polk &
Wardwell, New York, New York, has represented the underwriters in this offering.

                                     EXPERTS

         Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 2001 and 2000, and for each of the three years in the
period ended December 31, 2001, as set forth in their report. We have included
our financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.

                  WHERE YOU CAN FIND MORE INFORMATION ABOUT US

         We have filed with the Securities and Exchange Commission a
registration statement on Form S-1 under the Securities Act for the common stock
offered in this offering. This prospectus constitutes part of that registration
statement. This prospectus does not contain all of the information set forth in
the registration statement or its exhibits and schedules. For further
information about us and our common stock, we refer you to the registration
statement and to its attached exhibits and schedules. Statements made in this
prospectus concerning the contents of any document are not necessarily complete.
With respect to each document filed as an exhibit to the registration statement,
we refer you to the exhibit for a more complete description of the matter
involved.

         You may read and copy our registration statement and the attached
exhibits and schedules without charge at the public reference room maintained by
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at 233 Broadway, New York, New York
10279 and at 500 West Madison Street, Suite 1400, Chicago, IL 60661. You may
obtain information on the operation of these reference facilities by calling the
Commission at 1 (800) SEC-0330. You may also inspect reports, proxy and
information statements and other information that we file electronically with
the Commission without charge at the Commission's Internet site,
http://www.sec.gov.

         We intend to furnish our stockholders with annual reports containing
financial statements audited by our independent auditors.


                                       71
<PAGE>

                          INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                                                          PAGE
                                                                                                          ----
<S>                                                                                                       <C>
Report of Independent Auditors..................................................................           F-2

Balance Sheets as of December 31, 2001 and 2000.................................................           F-3

Statements of Operations for the years ended December 31, 2001, 2000 and 1999...................           F-4

Statements of Stockholders' Deficit for the years ended December 31,
2001, 2000 and 1999.............................................................................           F-5

Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999...................           F-6

Notes to Financial Statements..................................................................            F-7
</TABLE>


                                       F-1
<PAGE>


                         Report of Independent Auditors


Board of Directors and Stockholders
Endeavor Pharmaceuticals, Inc.

We have audited the accompanying balance sheets of Endeavor Pharmaceuticals,
Inc. as of December 31, 2001 and 2000, and the related statements of operations,
stockholders' deficit, and cash flows for each of the three years in the period
ended December 31, 2001. 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. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Endeavor Pharmaceuticals, Inc.
at December 31, 2001 and 2000, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States.


                                                           /s/ ERNST & YOUNG LLP

Raleigh, North Carolina
February 12, 2002




                                      F-2
<PAGE>


                         ENDEAVOR PHARMACEUTICALS, INC.
                                 BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                            December 31,
                                                                                       2001             2000
                                                                                     --------         --------
                                                                                       (Dollars in thousands)
<S>                                                                                  <C>              <C>
ASSETS
Current assets:
    Cash and cash equivalents                                                        $ 22,656         $ 34,249
    Prepaid and other current assets                                                      378              548
                                                                                     --------         --------
Total current assets                                                                   23,034           34,797

Property and equipment, net                                                               250               64
Patents                                                                                   179               36
Other assets                                                                              336               --
                                                                                     --------         --------
Total assets                                                                         $ 23,799         $ 34,897
                                                                                     ========         ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable and accrued liabilities                                          $    950         $    400
   Due to related party                                                                   205              244
                                                                                     --------         --------
Total current liabilities                                                               1,155              644
                                                                                     --------         --------

Series E redeemable convertible preferred stock, $0.01 par
   value, 2,327,188 shares authorized; 2,327,180 issued and
   outstanding, aggregate liquidation preference of $46,054,892                        44,478           44,048

Stockholders' deficit:
   Convertible preferred stock, $0.01 par value:
     Series A, 578,402 shares authorized, issued and outstanding,
       aggregate liquidation preference of $5,784,020                                       6                6
     Series B, 162,932 shares authorized, issued and outstanding,
       aggregate liquidation preference of $1,629,320                                       2                2
     Series C, 651,728 shares authorized, issued and outstanding,
       aggregate liquidation preference of $6,517,280                                       7                7
     Series D, 117,216 shares authorized, issued and outstanding,
       aggregate liquidation preference of $8,146,512                                       1                1
   Common stock, $0.01 par value; 5.0 million shares
     authorized, none issued and outstanding                                               --               --
   Paid-in capital                                                                     14,650           14,680
   Deferred compensation                                                                 (359)              --
   Accumulated deficit                                                                (36,141)         (24,491)
                                                                                     --------         --------
Total stockholders' deficit                                                           (21,834)          (9,795)
                                                                                     --------         --------
Total liabilities and stockholders' deficit                                          $ 23,799         $ 34,897
                                                                                     ========         ========
</TABLE>


See accompanying notes.


                                      F-3
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                            STATEMENTS OF OPERATIONS
                  (Dollars in thousands, except per share data)

<TABLE>
<CAPTION>
                                                                 Year ended December 31,
                                                       -------------------------------------------
                                                          2001              2000            1999
                                                       -----------         -------         -------
<S>                                                    <C>                 <C>             <C>
 Revenues:
    Licensing                                          $        --         $   834         $    --
    Product sales, net                                          --              --             233
                                                       -----------         -------         -------
                                                                --             834             233
                                                       -----------         -------         -------
 Operating costs and expenses:
   Cost of sales                                                --              --             145
   Research and development                                  9,887           1,092             494
   Selling, general and administrative                       3,009           1,020             630
                                                       -----------         -------         -------
                                                            12,896           2,112           1,269
                                                       -----------         -------         -------

Loss from operations                                       (12,896)         (1,278)         (1,036)

Other income (expense):
   Interest expense                                             --            (505)           (790)
   Interest income                                           1,246             731              19
   Other, net                                                   --             299              (7)
                                                       -----------         -------         -------
                                                             1,246             525            (778)
                                                       -----------         -------         -------

Loss before extraordinary item                             (11,650)           (753)         (1,814)
Extraordinary loss from early extinguishment of
   debt                                                         --            (123)             --
                                                       -----------         -------         -------
Net loss                                                   (11,650)           (876)         (1,814)
Accretion of redeemable preferred stock
   liquidation preference                                     (430)           (143)             --
                                                       -----------         -------         -------
Net loss applicable to common stock                    $   (12,080)        $(1,019)        $(1,814)
                                                       ===========         =======         =======

Pro forma basic and diluted net loss per
   common share (unaudited)                            $     (2.92)
                                                       ===========
 Shares used in computing pro forma
   basic and diluted net loss per
   common share (unaudited)                              4,131,890
                                                       ===========
</TABLE>


See accompanying notes.



                                      F-4
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                             (Dollars in thousands)

<TABLE>
<CAPTION>
                                         CONVERTIBLE PREFERRED STOCK
                     ------------------------------------------------------------------
                         SERIES A         SERIES B        SERIES C          SERIES D                DEFERRED     ACCU-
                     ---------------  ---------------  ---------------  ---------------  PAID-IN    COMPEN-     MULATED
                     SHARES   AMOUNT  SHARES   AMOUNT  SHARES   AMOUNT  SHARES   AMOUNT  CAPITAL     SATION     DEFICIT     TOTAL
                     -------  ------  -------  ------  -------  ------  -------  ------  --------   --------   --------   --------
<S>                  <C>      <C>     <C>      <C>     <C>      <C>     <C>      <C>     <C>        <C>        <C>        <C>
Balance at
 December 31, 1998   578,402  $    6  162,932  $    2  651,728  $    7  117,216  $    1  $ 14,823   $     --   $(21,801)  $ (6,962)
  Net loss for 1999       --      --       --      --       --      --       --      --        --         --     (1,814)    (1,814)
                     -------  ------  -------  ------  -------  ------  -------  ------  --------   --------   --------   --------
Balance at
 December 31, 1999   578,402  $    6  162,932  $    2  651,728  $    7  117,216  $    1  $ 14,823         --   $(23,615)  $ (8,776)
  Net loss for 2000       --      --       --      --       --      --       --      --        --         --       (876)      (876)
  Accretion of
   redeemable
   preferred stock
   liquidation
   preference             --      --       --      --       --      --       --      --      (143)        --         --       (143)
                     -------  ------  -------  ------  -------  ------  -------  ------  --------   --------   --------   --------
Balance at
 December 31, 2000   578,402  $    6  162,932  $    2  651,728  $    7  117,216  $    1  $ 14,680         --   $(24,491)  $ (9,795)
  Stock based
   compensation           --      --       --      --       --      --       --      --       400       (359)        --         41
  Net loss for 2001       --      --       --      --       --      --       --      --        --         --    (11,650)   (11,650)
  Accretion of
   redeemable
   preferred stock
   liquidation
   preference             --      --       --      --       --      --       --      --      (430)        --         --       (430)
                     -------  ------  -------  ------  -------  ------  -------  ------  --------   --------   --------   --------
Balance at
 December 31, 2001   578,402  $    6  162,932  $    2  651,728  $    7  117,216  $    1  $ 14,650   $   (359)  $(36,141)  $(21,834)
                     =======  ======  =======  ======  =======  ======  =======  ======  ========   ========   ========   ========
</TABLE>


See accompanying notes.



                                      F-5
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                      Year ended December 31,
                                                                              -------------------------------------
                                                                                2001           2000          1999
                                                                              --------       --------       -------
<S>                                                                           <C>            <C>            <C>
OPERATING ACTIVITIES
Net loss                                                                      $(11,650)      $   (876)      $(1,814)
Adjustments to reconcile net loss to net cash (used in) provided by
   operating activities:
     Depreciation and amortization                                                  31              6            45
     Stock based compensation                                                       41             --            --
     Debt discount amortization                                                     --            280           415
     Extraordinary loss on extinguishment of debt                                   --            123            --
     Changes in operating assets and liabilities:
       Accounts receivable                                                          --             21           635
       Prepaid and other current assets                                            170           (343)         (113)
       Accounts payable and accrued liabilities                                    550            269            85
       Due to related party                                                        (39)        (1,846)        1,130
       Accrued interest on debt to stockholders                                     --            225           375
                                                                              --------       --------       -------
Net cash (used in) provided by operating activities                            (10,897)        (2,141)          758
                                                                              --------       --------       -------
INVESTING ACTIVITIES
Purchase of property and equipment                                                (217)           (55)          (15)
Patent development                                                                (143)           (36)           --
Other, net                                                                        (336)            --            --
                                                                              --------       --------       -------
Net cash used in investing activities                                             (696)           (91)          (15)
                                                                              --------       --------       -------
FINANCING ACTIVITIES
Issuance of redeemable convertible preferred stock                                  --         35,600            --
                                                                              --------       --------       -------
Net cash provided by financing activities                                           --         35,600            --
                                                                              --------       --------       -------
Net (decrease) increase in cash and cash equivalents                           (11,593)        33,368           743
Cash and cash equivalents at beginning of year                                  34,249            881           138
                                                                              --------       --------       -------
Cash and cash equivalents at end of year                                      $ 22,656       $ 34,249       $   881
                                                                              ========       ========       =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                                        $     --       $     --       $    --
                                                                              ========       ========       =======
Cash paid for income taxes                                                    $     --       $     --       $    --
                                                                              ========       ========       =======
NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of redeemable convertible preferred stock in exchange for
   notes payable and accrued interest                                         $     --       $  8,305       $    --
                                                                              ========       ========       =======
</TABLE>

See accompanying notes.


                                      F-6
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2001


1.  DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Endeavor Pharmaceuticals, Inc. (referred to as "We", "Endeavor" or the
"Company") is a specialty pharmaceutical company initially focused on improving
women's health by developing and marketing advanced hormone therapies with
competitive advantages over existing therapies. We are seeking to commercialize,
through our own marketing and sales organization, a portfolio of proprietary
hormone replacement therapy, or HRT, product candidates that we are developing
based on our proprietary, complex combination of multiple estrogens. In
addition, we have product candidates that combine our complex estrogens with a
progestin and an androgen, two other hormones. These product candidates are
designed to alleviate the symptoms and reduce the health risks resulting from
menopause-related hormone deficiencies, which have significant negative effects
on the quality of life of many women.

Endeavor is a Delaware corporation with operations in North Carolina and New
Jersey. We have no subsidiaries or equity investments in other entities.

REVENUE RECOGNITION

Licensing fees and royalties are recognized as revenue as earned, which is
generally determined by the achievement of contractual milestones. Contractual
payments based on cost reimbursement are reflected as a reduction to research
and development expense. Product sales are recognized when ownership and risk of
loss transfers to the customer.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred.

CASH AND CASH EQUIVALENTS

All highly liquid investments purchased with a maturity of three months or less
are considered to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. Depreciation is recognized using the
straight-line method over the estimated useful lives of the assets which ranges
from five to seven years.

PATENTS

The costs of filing patent applications are capitalized and then amortized using
the straight-line method over the life of the patents. The Company performs an
annual evaluation of these capitalized costs and, if necessary, expenses any
patents that are impaired.



                                      F-7
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from such estimates and changes
in such estimates may affect amounts reported in future periods.

The Company reviews long-lived assets, including intangible assets and property
and equipment, for impairment whenever events or changes in business
circumstances indicate that the carrying amounts of the assets may not be fully
recoverable. An impairment loss will be recognized when estimated undiscounted
future cash flows expected to result from the use of an asset and its eventual
disposition are less than its carrying amount. In that event, a loss would be
recognized based on the amount by which the carrying value exceeds the fair
value of the long-lived asset. While the Company's current operating and cash
flow losses are indicators of impairment, the Company believes the future cash
flows to be received from the long-lived assets will exceed the assets' carrying
value, and accordingly, the Company has not recognized any impairment losses
through December 31, 2001.

STOCK-BASED COMPENSATION

The Company accounts for stock option grants in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
related Interpretations ("APB 25") because the Company believes the alternative
fair value accounting provided for under the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123") requires the use of option valuation
models that were not developed for use in valuing employee stock options. Under
APB 25, no compensation expense is recognized for stock options issued to
employees with an exercise price equal to the fair value of the underlying
stock. For stock options granted at exercise prices below the deemed fair value,
the Company records deferred compensation expense for the difference between the
exercise price of the shares and the deemed fair market value. The deferred
compensation expense is amortized ratably over the vesting period of the related
options. SFAS 123 provides for a fair value-based method of accounting for
employee stock options and similar equity instruments. However, companies that
continue to account for stock-based compensation arrangements under APB 25 are
required by SFAS 123 to disclose the pro forma effect on net income (loss) as if
the fair value-based method prescribed by SFAS 123 had been applied. The Company
has continued to account for stock-based compensation using the provisions of
APB 25 and presents the pro forma disclosure requirements of SFAS 123 in Note 7.

NEW ACCOUNTING PRONOUNCEMENTS

In 2001, the Financial Accounting Standards Board issued Statements of Financial
Accounting Standards No. 141, "Business Combinations," No. 142, "Goodwill and
Other Intangible Assets," No. 143, "Accounting for Asset Retirement Obligations"
and No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets".
Endeavor adopted Statement No. 144 as of December 31, 2001 with no significant
impact on the Company's financial position or results of operations. Statements
No. 141, No. 142 and No. 143 are presently not applicable to the Company.



                                      F-8
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


2.   NET LOSS PER COMMON SHARE

Historical net loss per common share information is not presented for periods
where there was no common stock issued or outstanding. Pro forma net loss per
common share is presented for 2001 to give effect to the conversion of
convertible preferred stock that will automatically convert to common stock, at
the completion of the Company's planned initial public offering, as if it were
converted as of January 1, 2001. Common stock equivalents, stock options and
warrants, are not included in the calculation of pro forma net loss per common
share because the effect would be anti-dilutive.

3.   LEASES

The Company has entered into various facility operating leases. The Company
currently maintains a facility lease with an initial expiration of September
2005 and a facility sub-lease with an expiration of March 2004. The Company may
cancel one of these leases with six months notice beginning in March 2002. Rent
expense for the years ended December 31, 2001, 2000 and 1999 was $132,500,
$52,000 and $13,000, respectively.

Minimum lease payments in future years under operating leases having an initial
or remaining non-cancelable terms of one year or more at December 31, 2001 are
as follows: $128,000 in 2002, $128,000 in 2003, $32,000 in 2004 and none
thereafter.


4.   RELATED PARTY TRANSACTIONS

Berlichem, Inc., an affiliate of Schering Berlin Venture Corporation ("SBVC", a
preferred stockholder), and Endeavor have entered into a supply agreement for
one of the components used to make the Company's synthetic complex estrogen
mixture.

Berlex Laboratories, Inc. ("Berlex"), also an affiliate of SBVC, had an
exclusive licensing agreement to market a product that was being developed by
Endeavor. The licensing agreement, as amended, provided for milestone payments
by Berlex as certain defined development criteria were met. For the year ended
December 31, 1999, Endeavor recognized approximately $704,000, as a reduction to
research and development expense for cost reimbursement payments from Berlex.
The development project with Berlex was terminated during 1999 and Berlex made
all anticipated payments under the agreement as of December 31, 1999.

Certain research and development activities of Endeavor were completed under
contracts with aaiPharma, Inc. ("aaiPharma", a preferred stockholder). Endeavor
incurred approximately $383,000, $525,000 and $1,180,000 in research and
development costs for services performed by aaiPharma, for the years ended
December 31, 2001, 2000 and 1999, respectively. Endeavor and aaiPharma also
entered into a manufacturing agreement, whereby aaiPharma manufactured a
commercial product, which Endeavor marketed through an unrelated third party.
The costs associated with the manufacturing agreement were reported in 1999 as
cost of sales in the statement of operations.

On February 22, 2000, the Company and aaiPharma finalized an accord and
satisfaction agreement whereby Endeavor agreed to pay aaiPharma $950,000 from
the proceeds of the Company's Series E Preferred Stock financing and transfer
its estradiol product and certain other assets valued at $1,131,000 to aaiPharma
as full satisfaction for all invoices outstanding and all work in progress
through January 31, 2000. During 2000, the Company recorded revenues of $834,000
related to the sale of its estradiol product and a gain of $297,000 on the
transfer of fixed assets. The fair value of Endeavor's estradiol product was
estimated by management based on an analysis of expected discounted future cash
flows. The Company estimated the fair value of its transferred assets based on
current replacement costs.



                                      F-9
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


5.  INCOME TAXES

The Company uses the asset and liability method to account for income taxes.
This method requires the recognition of deferred tax assets or liabilities for
the temporary differences between the financial reporting and tax reporting of
assets and liabilities. The tax benefit for tax loss carryforwards are presented
at current statutory rates. The effect of future changes in statutory rates
would be recognized in the period such changes are enacted.

Endeavor has not provided for income taxes in any of the three years ended
December 31, 2001 because it has had net losses. The Company has provided a full
valuation allowance against its net deferred tax assets because of the
uncertainty of realizing such assets. A reconciliation of the Company's
provision for income taxes to a provision using the Federal statutory rate of
35% is presented below.

<TABLE>
<CAPTION>
                                                2001           2000           1999
                                              --------       --------       -------
                                                         (In thousands)
         <S>                                  <C>            <C>            <C>
         Tax provision at statutory rate      $ (4,077)      $   (307)      $  (635)
         State taxes                              (582)           (44)          (91)
         Research tax credits                     (716)           (58)          (45)
         Other, net                                310            186           192
         Change in valuation allowance           5,065            223           579
                                              --------       --------       -------
         Provision for income taxes           $     --       $     --       $    --
                                              ========       ========       =======
</TABLE>


The significant components of the net deferred tax assets are presented below.

<TABLE>
<CAPTION>
                                                            DECEMBER 31,
                                                     -------------------------
                                                       2001             2000
                                                     --------         --------
                                                          (In thousands)
         <S>                                         <C>              <C>
         Deferred tax assets, resulting from:
           Net operating losses                      $ 11,528         $  7,179
           Research tax credits                         1,677              961
                                                     --------         --------
                                                       13,205            8,140
           Valuation allowance on tax assets          (13,205)          (8,140)
                                                     --------         --------
         Net deferred tax assets                     $     --         $     --
                                                     ========         ========
</TABLE>

Endeavor had Federal and state tax loss carryforwards of approximately $28.8
million for income tax purposes that begin to expire in the year 2010 and
research tax credits of approximately $1.7 million that also begin to expire in
the year 2010. Future use of these tax loss and tax credit carryforwards may be
limited if certain change in ownership transactions occur.



                                      F-10
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


6.   PROPERTY AND EQUIPMENT

The following table presents the components of property and equipment as of
December 31:

<TABLE>
<CAPTION>
                                                  2001             2000
                                                --------         --------
                                                     (In thousands)
          <S>                                   <C>              <C>
          Computer equipment                    $    142         $     39
          Furniture and fixtures                     151               37
                                                --------         --------
                                                     293               76
          Less accumulated depreciation              (43)             (12)
                                                --------         --------
          Property and equipment, net           $    250         $     64
                                                ========         ========
</TABLE>


7.  PREFERRED STOCK

The Company has authorized 3,837,466 shares of preferred stock, $0.01 par value,
of which 578,402, 162,932, 651,728, 117,216 and 2,327,188 shares were designated
as Series A, B, C, D and E convertible preferred stock, respectively, of which
578,402, 162,932, 651,728, 117,216 and 2,327,180 shares are issued and
outstanding, respectively, at December 31, 2001.

During 2000, the Company issued 2,327,180 shares of Series E redeemable
convertible preferred stock at $19.79 per share of which $7,500,000 in debt and
$805,000 of accrued interest to stockholders was extinguished in exchange for
419,661 shares of Series E preferred stock to the debt holders. This early
extinguishment of debt resulted in an extraordinary loss of $123,000 for the
write-off of unamortized discount.

CONVERSION

The all outstanding series of preferred stock are convertible at the option of
the holder into fully paid and nonassessable shares of common stock based on a
calculated ratio at the time of conversion determined by the original purchase
of the preferred stock as adjusted for certain anti-dilution provisions.
Additionally, all outstanding shares of preferred stock will automatically
convert into common stock upon the closing of a public offering of the Company's
common stock when certain requirements are met. The conversion price per share
at December 31, 2001 was $10.00 for series A, B and C preferred stock and $19.79
for series D and E preferred stock.

VOTING

Each holder of outstanding preferred stock is entitled to the number of votes
equal to the number of whole shares of common stock into which the preferred
shares are convertible.

DIVIDENDS

The preferred stock holders are entitled to receive their proportionate share of
dividends as declared by the Board of Directors.


                                      F-11
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


LIQUIDATION

Upon liquidation, dissolution, or winding up of the Company, holders of the
Series E preferred stock shall be entitled to receive, prior and in preference
to, any distribution of any of the assets to holders of all other preferred
stock and holders of common stock an amount equal to $19.79 per share (as
adjusted for any combinations, consolidations, stock distribution or stock
dividends). If the assets and funds of the Company are insufficient to pay the
full liquidation preference amount to holders of Series E preferred stock, the
available assets and funds shall be distributed ratably among the holders of
Series E preferred stock based upon the number of shares held.

Upon liquidation, dissolution, or winding up of the Company, holders of the
Series A and D preferred stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets to holders of series B and C
preferred stock and holders of common stock, an amount equal to $10 and $69.50
per share (as adjusted for any combinations, consolidations, stock distribution
or stock dividends) for series A and D, respectively. If the assets and funds of
the Company are insufficient to pay the full liquidation preference amount to
holders of series A and D preferred stock after paying the full liquidation
preference to holders of Series E preferred stock, the available assets and
funds shall be distributed ratably among the holders of series A and D preferred
stock based upon the number of shares held.

Upon liquidation, dissolution, or winding up of the Company, holders of the
Series B and C preferred stock shall be entitled to receive, prior and in
preference to, any distribution of any of the assets to holders of common stock
an amount equal to $10 per share (as adjusted for any combinations,
consolidations, stock distribution or stock dividends). If the assets and funds
of the Company are insufficient to pay the full liquidation preference amount to
holders of Series B and C preferred stock, after paying the full liquidation
preference to holders of series A, D and E preferred stock, the available assets
and funds shall be distributed ratably among the holders of series B and C
preferred stock based upon the number of shares held.

Upon liquidation, dissolution or winding up of the Company, holders of the
Series A, B, C, D, and E preferred stock shall be entitled to share in the
remaining assets and funds with common shareholders on a pro rata basis as if
fully diluted.

REDEEMABLE PREFERRED STOCK

On or after August 9, 2005 any holder or holders of Series E preferred stock
owning shares representing, in the aggregate, at least fifty percent (50%) of
the then outstanding shares of Series E preferred stock, may request the Company
to redeem all shares of Series E preferred stock. Any such redemption of Series
E preferred stock shall be redeemable at a price per share equal to the Series E
liquidation preference ($19.79 at December 31, 2001) and shall be payable in
five annual installments. The potential redemption requirements would be zero
for 2002 through 2004, and $9,210,978, annually, for 2005 through 2009. As
discussed above, all of the preferred stock will automatically convert into
common stock upon the closing of a public offering of the Company's common stock
when certain requirements are met. In this event the redemption features would
no longer exist.

The Company is accreting the difference between the net proceeds received on the
issuance of Series E preferred stock and its aggregate liquidation preference
over the period from the issue date to the earliest redemption date using the
straight-line method, which approximates the effective interest method.


                                      F-12
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


8.   STOCK OPTIONS AND WARRANTS

STOCK OPTIONS

The Amended and Restated 1999 Stock Option Plan (the "Plan"), originally adopted
in 1999, was amended in both 2000 and 2001.). The Plan provides for the granting
of options to purchase common stock to employees, directors and also
consultants, advisors, and contractors in the service of the Company. The Plan
permits the granting of both incentive stock options and nonqualified stock
options. The maximum shares of common stock that may be issued under the Plan
are 605,000, subject to adjustment upon occurrence of certain events affecting
the Company's capitalization.

The Board of Directors' Compensation Committee determines the terms of the stock
option grants, including the exercise price per share and vesting periods. The
exercise price of the options generally shall not be less than 100% percent of
the fair market value of a share of common stock on the date of grant. The
maximum term of the options granted generally is ten years.

A summary of the Company's stock option activity is as follows:

<TABLE>
<CAPTION>
                                                                                  Weighted
                                                                 Number of        Average
                                                                  Options         Exercise
                                                                Outstanding         Price
                                                                -----------       --------
                <S>                                             <C>               <C>
                Granted during 1999                               145,552          $ 1.00
                                                                  -------
                Balance at December 31, 1999                      145,552          $ 1.00
                Granted during 2000                               175,765          $ 2.50
                                                                  -------
                Balance at December 31, 2000                      321,317          $ 1.82
                Granted during 2001                                76,000          $ 2.50
                Forfeited                                          (1,100)         $ 2.50
                                                                  -------
                Balance at December 31, 2001                      396,217          $ 1.95
                                                                  =======
                Exercisable options at:
                  December 31, 1999                                    --          $   --
                  December 31, 2000                                48,517          $ 1.00
                  December 31, 2001                               155,255          $ 1.56
</TABLE>


The Company follows APB 25 to account for its stock option plan. Pro forma
information regarding net loss is required by SFAS 123 and has been determined
as if the Company accounted for its stock options under the fair value method of
SFAS 123. The fair value of these options was estimated at the date of grant
using the minimum value method for employees and the Black Scholes model for
non-employees with the following weighted-average assumptions for the year ended
December 31, 2001: risk free interest rate of 4.5%, no expected dividends, a
volatility factor of 80% and a weighted average expected life of 10 years. The
weighted average grant date fair value per share for options granted during the
periods presented was $1.00, $.92 and $.39 for 2001, 2000 and 1999,
respectively. For purposes of pro forma disclosure, the estimated fair value of
the options is amortized over the options' vesting period. The Company's pro
forma net loss for the years ended December 31, 2001 and 2000 would have been
$11,700,000 and $907,000, respectively.



                                      F-13
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


Summarized information about stock options outstanding as of December 31, 2001
is as follows:

<TABLE>
<CAPTION>
                                                                              Exercisable Options
                                                                            ----------------------
                                        Average
                       Number of     Remaining Life                         Number of     Exercise
   Exercise Price       Options         in Years        Exercise Price       Options        Price
   --------------      ---------     --------------     --------------      ---------     --------
   <S>                 <C>           <C>                <C>                 <C>           <C>
       $1.00            145,552           7.5                $1.00            97,034        $1.00
       $2.50            250,665           9.1                $2.50            58,221        $2.50
</TABLE>



DEFERRED COMPENSATION FROM STOCK OPTIONS

The Company recorded $400,000 of deferred compensation related to stock options
granted to employees after May 1, 2001. This deferred compensation is being
amortized to expense on a straight-line basis over three years, which is the
vesting period of the underlying options. The Company recognized $41,000 of
stock compensation expense in 2001. The deferred compensation was calculated
using the guidelines of the Securities and Exchange Commission which generally
requires a more stringent approach to the value of the options than may be used
for other valuation purposes.

WARRANTS

The Company may issue third party warrants for the purchase of up to 75,000
shares of common stock at an exercise price of no less than $10 per share to any
person that provides goods or services to the Company. In December 2000, the
Company entered into an agreement with a consulting firm that allows for certain
compensation and the issuance of warrants. The Company issued warrants to
purchase 4,834 shares of common stock during 2001, 1,612 shares of which are
exercisable at the discretion of the holder at $20.00 per share and 3,222 shares
of which become exercisable upon the achievement of certain milestones at $10.00
per share. Milestones were achieved to make 1,063 shares of the $10.00 warrants
exercisable as of December 31, 2001. No value was assigned to these warrants as
they were considered to have only a nominal value upon issuance.

The Company is authorized to issue warrants to purchase up to 55,000 shares of
common stock at a minimum exercise price of $5 per share, subject to adjustment,
to Endeavor employees or employees, directors or affiliates of aaiPharma. In
2000 and 2001, warrants for the purchase of 3,200 shares and 1,700 shares,
respectively, of common stock at $5 per share were issued to employees of
aaiPharma. No value was assigned to these warrants as they were considered to
have only a nominal value upon issuance.

In 2000, the Company issued warrants to purchase 76,427 shares of common stock
at an exercise price of $21.77 per share for services provided by the placement
agent for the Series E preferred stock financing. These warrants are exercisable
at the discretion of the holder and expire August 9, 2005. No value was assigned
to these warrants as they were considered to have only a nominal value upon
issuance.

In 1994, the Company issued warrants to purchase 13,500 shares of common stock
at an exercise price of $12.00 per share with the issuance of the Series A, B,
and C preferred stock. These warrants are exercisable at the discretion of the
holder and expire on April 25, 2004. No value was assigned to these warrants as
they were considered to have only nominal value upon issuance.



                                      F-14
<PAGE>

                         ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)


In 1995, the Company issued warrants in connection with the $5 million,
non-interest bearing debt issued to the Series D Preferred stockholders. The
warrants were exercisable for up to 71,943 shares of common stock or Series D
Preferred Stock at an aggregate exercise price of $5 million or $69.50 per
share. The warrants had certain anti-dilution rights, were exercisable at the
discretion of the holder, and expired on November 17, 2000. The $1,892,000 value
of these warrants was recorded as a debt discount and charged to paid-in
capital. The warrants were terminated with the issuance of new Series E
preferred stock, previously discussed.

COMMON STOCK RESERVED FOR FUTURE ISSUANCE

At December 31, 2001, the Company had reserved a total of 4,956,817 of its five
million authorized shares of common stock for future issuance is presented
below.

<TABLE>
         <S>                                                     <C>
         Conversion of Series A preferred                          578,402
         Conversion of Series B preferred                          162,932
         Conversion of Series C preferred                          651,728
         Conversion of Series D preferred                          411,648
         Conversion of Series E preferred                        2,327,180
         Stock options outstanding                                 396,217
         Possible future issuance of stock options                 208,783
         Warrants outstanding                                       99,661
         Possible future issuance of warrants                      120,266
                                                                 ---------
                                                                 4,956,817
                                                                 =========
</TABLE>


9.  EMPLOYEE BENEFIT PLAN

The Company has a plan to allow salary deferrals and provide retirement benefits
for its employees with at least three months of service through a defined
contribution plan qualified under section 401(k) of the Internal Revenue Code of
1986, as amended (the "401(k) Plan"). The 401(k) Plan does not require the
Company to make matching or other contributions. In 2001, 2000 and 1999,
Endeavor accrued for company contributions of approximately $32,000, $2,000 and
$2,300, respectively, which were required to keep the 401(K) Plan qualified.


10.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                 Quarter
                                                         -------------------------------------------------
                                                           First       Second         Third        Fourth
                                                         --------     --------      --------      --------
                                                                           (In thousands)
    <S>                                                  <C>          <C>           <C>           <C>
                           2001
    Net revenues                                         $     --     $     --      $     --      $     --
    Net loss                                               (1,337)      (3,717)       (3,994)       (2,602)

                           2000
    Net revenues                                         $    834     $     --      $     --      $     --
    Income (loss) before extraordinary item                   677         (558)         (400)         (472)
    Net income (loss)                                         677         (558)         (523)         (472)
</TABLE>



                                      F-15
<PAGE>
================================================================================
                                     Shares

                                [ENDEAVOR LOGO]

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

                                   Prospectus

                                     , 2002

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

                           Joint Book-Running Managers

BANC OF AMERICA SECURITIES LLC                          BEAR, STEARNS & CO. INC.

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

                               CIBC WORLD MARKETS

          Until   , 2002, all dealers that buy, sell or trade the common stock
may be required to deliver a prospectus, regardless of whether they are
participating in the offering. This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
================================================================================
<PAGE>
                                     PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

         The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the sale of the securities being registered. All amounts are estimates
except the SEC registration fee, the NASD fee and the Nasdaq National Market
listing fee.

<TABLE>
<S>                                                                                        <C>
        SEC Registration fee........................................................       $   6,900
        NASD filing fee.............................................................         100,000
        Nasdaq National Market listing fee..........................................               *
        Printing....................................................................               *
        Legal fees and expenses.....................................................               *
        Accounting fees and expenses................................................               *
        Transfer agent and registrar fees...........................................               *
        Miscellaneous...............................................................               *
                                                                                           ---------
               Total................................................................       $       *
                                                                                           =========
</TABLE>
-----------------
*        To be provided by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act").

         As permitted by the Delaware General Corporation Law, the restated
certificate of incorporation and the restated bylaws of the Registrant provide
that its directors shall not be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director, except to the
extent that the exculpation from liabilities is not permitted under the Delaware
General Corporation Law as in effect at the time the liability is determined. As
permitted by the Delaware General Corporation Law, the restated certificate of
incorporation and the restated bylaws of the Registrant also provide that the
Registrant shall indemnify its directors to the full extent permitted by the
laws of the State of Delaware.

         The Registrant is in the process of obtaining policies of insurance
under which coverage will be provided (a) to its directors and officers against
loss arising from claims made by reason of breach of fiduciary duty or other
wrongful acts, including claims relating to public securities matters and (b) to
the Registrant with respect to payments which may be made by the Registrant to
these officers and directors pursuant to the above indemnification provision or
otherwise as a matter of law.

         The Underwriting Agreement provides for the indemnification of officers
and directors of the Registrant by the Underwriters against some types of
liability.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

         Set forth below in reverse chronological order is information regarding
the number of shares of capital stock, options and warrants issued by us since
1999. Also included is the consideration if any received by us for the
securities.


                                      II-1
<PAGE>

         There was no public offering in any such transaction and we believe
that each transaction was exempt from the registration requirements of the
Securities Act of 1933 by reason of Regulation D and Section 4(2) of the 1933
Act, based on the private nature of the transactions and the financial
sophistication of the purchasers, all of whom had access to complete information
concerning us and acquired the securities for investment and not with a view to
the distribution thereof. In addition, we believe that the transactions
described below with respect to the issuance of option grants to our employees
and directors were exempt from registration requirements of the 1933 Act by
reason of Section 4(2) or Rule 701 promulgated thereunder.

(a)      Issuance of Preferred Stock. The Series E convertible preferred stock
         listed in this section will automatically convert into common stock
         upon completion of this offering.

         (i)      On August 9, 2000, we issued 1,603,873 shares of our Series E
                  convertible preferred stock for an aggregate purchase price of
                  $36,055,065 and the conversion of $8,305,107 of principal
                  amount of outstanding indebtedness and accrued interest. We
                  subsequently issued 218,002 shares of Series E convertible
                  preferred stock to account for the sale of Series E
                  convertible preferred stock described in paragraph (ii) below
                  and $159 was refunded as a cash payment in lieu of issuing
                  fractional shares.

         (ii)     On November 22, 2000, we issued 505,305 shares of our Series E
                  convertible preferred stock for an aggregate purchase price of
                  $9,999,986.

(b)      Issuance of Stock Options

         (i)      In the period from January 1, 1999 through May 1, 2002, we
                  granted options to purchase an aggregate of 555,667 shares of
                  common stock, net of forfeitures, to a number of our
                  employees, directors and consultants. We have not received
                  consideration from any grantee relating to the issuance of any
                  of such options. All such options were granted pursuant to our
                  1999 Stock Option Plan, as amended. As of this date, options
                  to purchase 35,000 shares have been exercised for an aggregate
                  consideration of $35,000.

(c)      Issuance of Warrants

         (i)      On August 9, 2000, we issued a warrant to purchase 61,721
                  shares of our common stock at an initial exercise price of
                  $24.73 per share to a financial advisor in exchange for
                  services rendered. The foregoing number of shares and exercise
                  price was adjusted by increasing the number of shares
                  underlying the warrant by 8,390 shares and decreasing the
                  exercise price for all underlying shares to $21.77, each to
                  reflect the sale of Series E convertible preferred stock
                  described in paragraph (a)(ii) above.

         (ii)     On November 22, 2000, we issued a warrant to purchase 6,316
                  shares of our common stock at an initial exercise price of
                  $21.77 per share to a financial advisor in exchange for
                  services rendered.

         (iii)    In the period from January 1, 1999 through May 1, 2002, we
                  issued warrants to purchase an aggregate of 4,834 shares of
                  our common stock to David Stack, one of our directors, and
                  certain employees of Stack Pharmaceuticals. We have not
                  received consideration from any recipient of such warrants and
                  as of this date none of such warrants have been exercised. All
                  such warrants were issued pursuant to our 2000 Warrant Plan
                  for Consultants.


                                      II-2
<PAGE>

         (iv)     In the period from January 1, 1999 through May 1, 2002, we
                  issued warrants to purchase an aggregate of 4,900 shares of
                  our common stock to certain employees of aaiPharma. Two of
                  such persons are currently employees of our company. We have
                  not received consideration from any recipient of such warrants
                  and as of this date none of such warrants have been exercised.
                  All such warrants were issued under our Stock Option Plan
                  for Employees and Consultants.


                                      II-3
<PAGE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

         (a)      Exhibits. The following exhibits are filed as part of this
                  registration statement:

<TABLE>
<CAPTION>
  Exhibit No.                                                      Description
  -----------                                                      -----------
<S>                          <C>
       1.1                   Form of Underwriting Agreement.*

       3.1                   Form of Restated Certificate of Incorporation of the Registrant.

       3.2                   Form of Restated Bylaws of the Registrant.

       4.1                   See Exhibits 3.1 and 3.2 for provisions of Form of Restated Certificate of
                             Incorporation and Form of Restated Bylaws of the Registrant defining rights
                             of the holders of common stock of the Registrant.

       4.2                   Specimen certificate for shares of common stock, $.01 par value, of the Registrant.*

       5.1                   Opinion of Paul, Hastings, Janofsky & Walker LLP.*

      10.1                   Securityholders Agreement dated as of August 8, 2000, among the Registrant and the
                             Securityholders named therein.

      10.2                   Amendment to Securityholders Agreement dated as of November 21, 2000.

      10.3                   Second Amendment to Securityholders Agreement dated as of April 22, 2002.

      10.4                   Stack Pharmaceuticals Consulting Agreement dated December 23, 2000, by and between the
                             Registrant and Stack Pharmaceuticals, Inc.

      10.5                   Pharmaceutical Services Agreement made and entered into February 4, 2002 between the
                             Registrant and aaiPharma, Inc.

      10.6                   Component Supply Agreement made as of July 28, 2000, by and among the Registrant,
                             Berlex Laboratories, Inc. and Berlichem, Inc. (+)

      10.7                   Supply Agreement, dated November 1, 2000, by and between the Registrant and
                             Organics/LaGrange, Inc. (+)

      10.8                   Advertising Agency Agreement, dated October 1, 2001, by and between the Registrant and
                             Accel Healthcare Communications LLC.

      10.9                   Lease Agreement dated September 20, 1999, by and between University Corporate Center, LLC and the
                             Registrant for commercial premises located at 127 Racine Drive, Wilmington, North Carolina.

     10.10                   Amendment to Lease Agreement dated December 20, 2000.

     10.11                   Modification to Lease Agreement dated January 9, 2002.
</TABLE>


                                      II-4
<PAGE>

<TABLE>
<Caption>
   EXHIBIT NO.                                                      DESCRIPTION
----------------             -------------------------------------------------------------------------------------------
<S>                          <C>
     10.12                   Consent to Sub-Sublet Agreement, dated July 3, 2001, by and among Mack-Cali Campus Realty
                             LLC, The Ayco Company LP, Parson Group LLC and the Registrant for commercial premises
                             located at 8 Campus Drive, Parsippany, New Jersey.

     10.13                   Sub-Sublease Agreement, dated July 3, 2001, by and between the Registrant and Parson Group
                             LLC for commercial premises located at 8 Campus Drive, Parsippany, New Jersey.

     10.14                   Amended and Restated 1999 Stock Option Plan.

     10.15                   2002 Stock Incentive Plan.

     10.16                   2000 Warrant Plan for Consultants.

     10.17                   Stock Option Plan for Employees and Consultants.

     10.18                   Employment Agreement between the Registrant and R. Forrest Waldon.*

     10.19                   Form of Employment Agreement between the Registrant and each of Thomas W. Leonard,
                             Stephen F. Rizzo, Christopher Smith and Kathleen M. Milligan.*

     10.20                   Form of Indemnification Agreement.*

      23.1                   Consent of Ernst & Young LLP.

      23.2                   Consent of Paul Hastings, Janofsky & Walker LLP (included in Exhibit 5.1).*

      24.1                   Power of Attorney (included on signature page).
</TABLE>
-------------
*        To be filed by amendment.

(+)      The Registrant requests confidential treatment for portions of this
         exhibit.

                                      II-5
<PAGE>

ITEM 17. UNDERTAKINGS.

         The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.

         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 foregoing provisions, 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.

         The undersigned registrant hereby undertakes that:

         (1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

         (2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.


                                      II-6
<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Wilmington,
North Carolina, on the 3rd of May, 2002.

                                    ENDEAVOR PHARMACEUTICALS, INC.



                                    By:  /s/ R. Forrest Waldon
                                         ---------------------------------------
                                         R. Forrest Waldon
                                         Chairman and Chief Executive Officer

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears immediately below constitutes and appoints R. Forrest Waldon, Stephen F.
Rizzo and Parris J. Sanz, and each of them, his true and lawful attorney-in-fact
and agents, each with full power of substitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and any and all
additional registration statements pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and all post-effective amendments thereto, in
connection with or related to the offering contemplated by this Registration
Statement and its amendments, if any, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
                SIGNATURE                                         TITLE                                      DATE
                ---------                                         -----                                      ----
<S>                                                <C>                                                     <C>
/s/ R. Forrest Waldon
--------------------------------------------       Chairman of the Board, President and Chief              May 3, 2002
R. Forrest Waldon                                  Executive Officer (Principal Executive
                                                   Officer)


/s/ Stephen F. Rizzo
--------------------------------------------       Vice President, Chief Financial Officer,                May 3, 2002
Stephen F. Rizzo                                   Assistant Secretary (Principal Financial
                                                   Officer and Principal Accounting Officer)
</TABLE>

                                      II-7

<PAGE>
<TABLE>
<CAPTION>
                SIGNATURE                                         TITLE                                     DATE
                ---------                                         -----                                     ----
<S>                                                <C>                                                   <C>
/s/ Ansbert Gadicke                                                  Director                            May 3, 2002
--------------------------------------------
Ansbert Gadicke


/s/ Daniel Janney                                                    Director                            May 3, 2002
--------------------------------------------
Daniel Janney


/s/ Garry E. Menzel                                                  Director                            May 3, 2002
--------------------------------------------
Garry E. Menzel


/s/ Thomas C. Nelson                                                 Director                            May 3, 2002
--------------------------------------------
Thomas C. Nelson


/s/ David M. Stack                                                   Director                            May 3, 2002
--------------------------------------------
David M. Stack
</TABLE>


                                      II-8
<PAGE>

                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
  Exhibit No.                                                      Description
  -----------                                                      -----------
<S>                          <C>
       1.1                   Form of Underwriting Agreement.*

       3.1                   Form of Restated Certificate of Incorporation of the Registrant.

       3.2                   Form of Restated Bylaws of the Registrant.

       4.1                   See Exhibits 3.1 and 3.2 for provisions of Form of Restated Certificate of
                             Incorporation and Form of Restated Bylaws of the Registrant defining rights
                             of the holders of common stock of the Registrant.

       4.2                   Specimen certificate for shares of common stock, $.01 par value, of the Registrant.*

       5.1                   Opinion of Paul, Hastings, Janofsky & Walker LLP.*

      10.1                   Securityholders Agreement dated as of August 8, 2000, among the Registrant and the
                             Securityholders named therein.

      10.2                   Amendment to Securityholders Agreement dated as of November 21, 2000.

      10.3                   Second Amendment to Securityholders Agreement dated as of April 22, 2002.

      10.4                   Stack Pharmaceuticals Consulting Agreement dated December 23, 2000, by and between the
                             Registrant and Stack Pharmaceuticals, Inc.

      10.5                   Pharmaceutical Services Agreement made and entered into February 4, 2002 between the
                             Registrant and aaiPharma, Inc.

      10.6                   Component Supply Agreement made as of July 28, 2000, by and among the Registrant,
                             Berlex Laboratories, Inc. and Berlichem, Inc. (+)

      10.7                   Supply Agreement, dated November 1, 2000, by and between the Registrant and
                             Organics/LaGrange, Inc. (+)

      10.8                   Advertising Agency Agreement, dated October 1, 2001, by and between the Registrant and
                             Accel Healthcare Communications LLC.

      10.9                   Lease Agreement dated September 20, 1999, by and between University Corporate Center, LLC
                             and the Registrant for commercial premises located at 127 Racine Drive, Wilmington,
                             North Carolina.

     10.10                   Amendment to Lease Agreement dated December 20, 2000.

     10.11                   Modification to Lease Agreement dated January 9, 2002.
</TABLE>


                                      II-9
<PAGE>

<TABLE>
<CAPTION>
  Exhibit No.                                                      Description
  -----------                                                      -----------
<S>                          <C>
     10.12                   Consent to Sub-Sublet Agreement, dated July 3, 2001, by and among Mack-Cali Campus
                             Realty LLC, The Ayco Company LP, Parson Group LLC and the Registrant for commercial
                             premises located at 8 Campus Drive, Parsippany, New Jersey.

     10.13                   Sub-Sublease Agreement, dated July 3, 2001, by and between the Registrant and Parson
                             Group LLC for commercial premises located at 8 Campus Drive, Parsippany, New Jersey.

     10.14                   Amended and Restated 1999 Stock Option Plan.

     10.15                   2002 Stock Incentive Plan.

     10.16                   2000 Warrant Plan for Consultants.

     10.17                   Stock Option Plan for Employees and Consultants.

     10.18                   Employment Agreement between the Registrant and R. Forrest Waldon. *

     10.19                   Form of Employment Agreement between the Registrant and each of Thomas W. Leonard,
                             Stephen F. Rizzo, Christopher Smith and Kathleen M. Milligan. *

     10.20                   Form of Indemnification Agreement. *

      23.1                   Consent of Ernst & Young LLP.

      23.2                   Consent of Paul Hastings, Janofsky & Walker LLP (included in Exhibit 5.1).*

      24.1                   Power of Attorney (included on signature page).
</TABLE>
-------------
*        To be filed by amendment.

(+)      The Registrant requests confidential treatment for portions of this
         exhibit.


                                     II-10
[{"type": "S-1", "sequence": "1", "filename": "g75522s-1.txt", "description": "ENDEAVOR PHARMACEUTICALS INC.", "secsgml_size_bytes": 356943}]
{"company-data": {"conformed-name": "ENDEAVOR PHARMACEUTICALS INC", "cik": "0001123624", "state-of-incorporation": "DE"}, "filing-values": {"form-type": "S-1", "act": "33", "file-number": "333-87580", "film-number": "02634025"}, "business-address": {"street1": "127 RACINE DR", "street2": "STE 202", "city": "WILMINGTON", "state": "NC", "zip": "28403", "phone": "9107909811"}}
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 3, 2002
                                                          REGISTRATION NO. 333-

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

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM S-1

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                         ENDEAVOR PHARMACEUTICALS, INC.
             (Exact name of Registrant as specified in its charter)
DELAWARE                                2834                         56-1870006
(State or other jurisdiction of        (Primary standard industrial            (IRS employer
incorporation or organization)          classification code number)        identification number)
---------------

                          127 RACINE DRIVE, SUITE 202
                        WILMINGTON, NORTH CAROLINA 28403
                                 (910) 790-9811
  (Address, including zip code, and telephone number, including area code, of
                   registrant's principal executive offices)

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

                              PARRIS J. SANZ, ESQ.
                                GENERAL COUNSEL
                         ENDEAVOR PHARMACEUTICALS, INC.
                          127 RACINE DRIVE, SUITE 202
                        WILMINGTON, NORTH CAROLINA 28403
                                 (910) 790-9811
           (Name, address, including zip code, and telephone number,
                  including area code, of agent for service)

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

                                   Copies to:
       THOMAS R. POLLOCK, ESQ.                     WINTHROP B. CONRAD, JR., ESQ.
         LEIGH P. RYAN, ESQ.                           DAVIS POLK & WARDWELL
PAUL, HASTINGS, JANOFSKY & WALKER LLP                   450 LEXINGTON AVENUE
         75 EAST 55TH STREET                          NEW YORK, NEW YORK 10017
       NEW YORK, NEW YORK 10022                            (212) 450-4000
           (212) 318-6000                               (212) 450-3800 (FAX)
        (212) 339-9150 (FAX)

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

         APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable 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, check the following box. [ ]

         If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) 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(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                      Proposed Maximum                         Amount of
        Securities to be Registered             Aggregate Offering Price(1)                 Registration Fee
------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.01 per share                  $75,000,000                              $6,900
========================================================================================================================
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(o) under the Securities Act of 1933.

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

         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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID 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 REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND WE ARE NOT SOLICITING OFFERS TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

Preliminary Prospectus

                 SUBJECT TO COMPLETION DATED       , 2002

                                        SHARES

                       (ENDEAVOR PHARMACEUTICALS LOGO)

                                  COMMON STOCK

         Endeavor Pharmaceuticals, Inc. is offering shares of stock in a firmly
underwritten offering. We anticipate that the initial public offering price
will be between $        and $        per share. This is Endeavor's initial
public offering, and no public market currently exists for our shares.

         We have applied for our common stock to be listed on the Nasdaq
National Market under the symbol "EDVR."

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

         INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 6.

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

         NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
PER SHARE             TOTAL
                                                     ---------             -----
Offering Price                                       $                     $
Discounts and Commissions to Underwriters            $                     $
Offering Proceeds to Company                         $                     $
We have granted the underwriters the right to purchase up to an
additional        shares of common stock to cover any over-allotments. The
underwriters can exercise this right at any time within 30 days after the
offering. The underwriters expect to deliver the shares of common stock to
investors on or about       , 2002.

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

                          JOINT BOOK-RUNNING MANAGERS

BANC OF AMERICA SECURITIES LLC                          BEAR, STEARNS & CO. INC.

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

                               CIBC WORLD MARKETS

                                          , 2002.
TABLE OF CONTENTS

                                                                                                                PAGE
                                                                                                                ----
Forward-Looking Statements........................................................................               ii
Market Data.......................................................................................               ii
Prospectus Summary................................................................................                1
Risk Factors......................................................................................                6
Use of Proceeds...................................................................................               18
Dividend Policy...................................................................................               18
Dilution..........................................................................................               19
Capitalization....................................................................................               20
Selected Financial Data...........................................................................               21
Management's Discussion and Analysis of Financial Condition and Results of Operations.............               22
Business..........................................................................................               28
Management........................................................................................               49
Related Party Transactions........................................................................               58
Principal Stockholders............................................................................               60
Description of Capital Stock......................................................................               63
Shares Eligible for Future Sale...................................................................               66
Underwriting......................................................................................               68
Validity of Common Stock..........................................................................               71
Experts...........................................................................................               71
Where You Can Find More Information About Us......................................................               71
Index to Financial Statements.....................................................................              F-1
---------------

         You should rely only on the information contained in this prospectus.
We have not, and the underwriters have not, authorized anyone to provide you
with information different from or additional to that contained in this
prospectus. We are offering to sell, and seeking offers to buy, shares of
common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of
this prospectus, regardless of the time of delivery of this prospectus or of
any sale of our common stock.

         Until       , 2002, 25 days after the date of this prospectus, all
dealers that effect transactions in these securities, whether or not
participating in this offering, may be required to deliver a prospectus. This
is in addition to the dealers' obligation to deliver a prospectus when acting
as underwriters and with respect to their unsold allotments or subscriptions.

         In this prospectus, references to "Endeavor," "our company," "we,"
"us," and "our" refer to Endeavor Pharmaceuticals, Inc. Enjuvia(TM),
Projuvia(TM), Juviand(TM), and [ENDEAVOR LOGO] are our trademarks. All other
trademarks used in this prospectus are the property of their respective owners.

                                       i
FORWARD-LOOKING STATEMENTS

         This prospectus contains "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934 that address, among other things, our strategy,
the anticipated development of our product candidates, our anticipated use of
proceeds, our projected capital expenditures and liquidity, our development of
revenue sources, our development and expansion in international markets, and
market acceptance of our product candidates. We intend for these
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995, and we are including this statement for purposes of
complying with those safe harbor provisions. We have based these
forward-looking statements on our current expectations and projections about
future events. These statements are not guarantees of future performance and
are subject to certain risks, uncertainties and other factors, some of which
are beyond our control, are difficult to predict and could cause actual results
to differ materially from those expressed or forecasted in the forward-looking
statements. These risks and uncertainties include those described in "Risk
Factors" and elsewhere in this prospectus.

         We use words such as "believe," "expect," "anticipate," "intend,"
"plan," "estimate," "should," "likely," "potential," "seek" and variations of
these words and similar expressions to identify forward-looking statements. You
should not place undue reliance on these forward-looking statements, which
reflect our management's view only as of the date of this prospectus. Except as
required by law, we do not undertake any obligation to update these statements
or publicly release the result of any revision to the forward-looking
statements that we may make to reflect events or circumstances after the date
of this prospectus supplement or to reflect the occurrence of unanticipated
events.

                                  MARKET DATA

         Market data and forecasts used in this prospectus have been obtained
from independent industry sources, including IMS Health and the North American
Menopause Society. We have not independently verified the data obtained from
these sources, and we cannot assure you of the accuracy or completeness of the
data.

                                      ii
PROSPECTUS SUMMARY

         This summary highlights information described more fully elsewhere in
this prospectus. This summary may not contain all information that you should
consider before investing in our common stock. You should read the entire
prospectus, including "Risk Factors" and the financial statements and related
notes, before making an investment decision.

                                  OUR COMPANY

         We are a specialty pharmaceutical company initially focused on
improving women's health by developing and marketing advanced hormone therapies
with competitive advantages over existing therapies. We are seeking to
commercialize, through our own marketing and sales organization, a portfolio of
hormone replacement therapy product candidates that we are developing based on
our proprietary, complex combination of multiple estrogens. Our product
candidates contain complex estrogens alone or in combination with a progestin
or with an androgen, two other hormones. These product candidates are designed
to alleviate the symptoms of, and reduce the health risks resulting from,
menopause-related hormone deficiencies, including vasomotor symptoms,
osteoporosis and female sexual dysfunction. We submitted a New Drug
Application, or NDA, for our estrogens-only product candidate, Enjuvia, in
March 2002.

         Hormone replacement therapy, or HRT, products generated total sales in
the United States of over $2.9 billion in 2001. We expect that the United States
HRT market will grow at least through the rest of this decade. This growth is
expected to be driven primarily by the large group of post-World War II "baby
boomers" entering their menopausal years and increasing awareness of the
benefits of HRT. We believe that our complex estrogens product candidates will
address several of the limitations of existing HRT products and will enable us
to compete successfully in the HRT market. We believe that all of our product
candidates will provide the following benefits:

         -        our product candidates are the only complex estrogens
                  products that contain the same ten essential active estrogens
                  as Premarin(R), the leading product franchise in the HRT
                  market;

         -        the complex estrogens in our product candidates are
                  synthesized principally from plant-derived material and are
                  free of the non-estrogenic urinary substances found in
                  Premarin(R), which is derived from the urine of pregnant
                  horses;

         -        our product candidates are manufactured using the same
                  estrogens mixture and other ingredients from batch to batch;
                  and

         -        each of our product candidates will use a proprietary,
                  stable, sustained-release delivery system that we expect will
                  provide a highly consistent delivery profile of hormones
                  throughout the day.

         Our first product candidate, Enjuvia, is a complex estrogens product
that will treat vasomotor symptoms of menopause and is being studied in the
prevention of osteoporosis in menopausal women. Vasomotor symptoms include hot
flashes, uncontrollable sweating, chills, burning or tingling sensations,
associated sleep disturbances and mood swings. Osteoporosis causes bones to
become brittle and weak, increasing the risk of fractures that can have very
serious health consequences. Enjuvia is targeted for women who have had a
hysterectomy or for use in combination with a progestin by women who have not
had a hysterectomy. We expect to offer Enjuvia in 0.3, 0.45, 0.625 and 1.25 mg
dosage strengths. This wide range of dosage strengths will enable physicians to
tailor their patients' therapies to the lowest effective dosage strength,
thereby maximizing the benefits of HRT while minimizing the unwanted side
effects. In March 2002, we submitted an NDA for Enjuvia to the United States
Food and Drug

                                       1
Administration, or FDA, for the treatment of vasomotor symptoms and anticipate
FDA approval in the first half of 2003.

         Our second product candidate, Projuvia, combines the complex estrogens
in Enjuvia with a progestin and is being developed to treat vasomotor symptoms
and to assist in the prevention of osteoporosis in menopausal women with intact
uteruses. Projuvia will use a novel progestin dosing regimen that we expect will
reduce the incidence of breakthrough or unexpected bleeding and more quickly
stop menstrual-like bleeding altogether. We expect the progestin we have chosen
will reduce or eliminate the negative effects associated with progestins in
currently marketed estrogen/progestin combination products. We expect to offer
Projuvia in two dosage strengths of complex estrogens, which will enable
physicians to tailor treatment to accommodate the diverse and changing needs of
their patients as they move through menopause and beyond. Currently marketed
estrogen/progestin combination products only offer one dosage strength of
estrogens. We have commenced a pivotal Phase III clinical safety and efficacy
study of Projuvia.

         Our third product candidate, Juviand, combines the complex estrogens in
Enjuvia with an androgen and is being developed to treat female sexual
dysfunction, including diminished sexual desire, in menopausal women. Juviand
will use an androgen that we expect will avoid liver toxicity and other negative
side effects, such as acne, male pattern baldness, an increase in facial hair
and irreversible deepening of the voice. Androgens used in currently marketed
estrogen/androgen combination products have been shown to cause these side
effects. We plan to commence a Phase II clinical safety and efficacy study for
Juviand in the second quarter of 2002.

                                  OUR STRATEGY

         Our primary objective is to become a market leader in advanced hormone
products and complementary therapies, initially focusing on women's healthcare
products for the HRT market. Key elements of our strategy include the
following:

         -        REDUCE RISK AND DEVELOPMENT COSTS BY USING HORMONES WITH
                  KNOWN SAFETY AND EFFICACY PROFILES. The roles of estrogens,
                  progestins and androgens in the maintenance of women's health
                  are well established and extensively documented, and their
                  administration as therapeutic agents have a demonstrated
                  track record of safety and efficacy. Accordingly, our ability
                  to reference previous pre-clinical and clinical studies of
                  the hormones we are using minimizes our investment in early
                  stage discovery research, reduces overall product development
                  costs, reduces the risk of clinical failure, and shortens the
                  timeframe to receive FDA approval.

         -        DEVELOP HORMONE PRODUCTS WITH COMPETITIVE ADVANTAGES OVER
                  EXISTING PRODUCTS. We believe that currently existing HRT
                  products have safety and patient compliance issues that can
                  be mitigated with new product formulations, the use of
                  different hormones and the use of novel dosing regimens.
                  Enjuvia and Projuvia, our first two product candidates, are
                  designed to address some of the shortcomings of currently
                  marketed HRT products for the treatment of vasomotor symptoms
                  and the prevention of osteoporosis. In the development of
                  Juviand, we are striving to provide an FDA-approved product
                  for the treatment of female sexual dysfunction without the
                  negative side effects of currently marketed products that are
                  used off-label for this purpose.

         -        ESTABLISH OUR OWN MARKETING AND SALES ORGANIZATION TO
                  MAXIMIZE THE COMMERCIAL BENEFIT OF OUR PRODUCT PORTFOLIO. We
                  intend to establish our own marketing and sales organization
                  to commercialize our initial product portfolio in the United
                  States. We believe that establishing our own sales force,
                  rather than out-licensing product rights, will better enable
                  us to control the commercialization of our product candidates
                  and generate a higher return on investment. We also will
                  selectively consider co-promotion arrangements for our
                  product candidates in return for the rights to co-promote
                  other companies' products, in order to leverage our sales

                                       2
force. To market our product candidates internationally, we
                  initially anticipate selectively out-licensing our product
                  candidates to strong distribution partners outside the United
                  States.

         -        LEVERAGE PROPRIETARY TECHNOLOGIES. We intend to leverage our
                  expertise in hormonal science and our proprietary
                  technologies developed in connection with our first three
                  product candidates to develop additional products and
                  therapeutic alternatives. Our expertise in complex hormone
                  identification, characterization, stabilization, delivery and
                  manufacturing should position us strategically to develop
                  additional complex hormone products.

         -        ACQUIRE OR IN-LICENSE PRODUCTS AND TECHNOLOGIES TO EXPAND OUR
                  PRODUCT PORTFOLIO. We are seeking to acquire or in-license
                  late stage and/or marketed products and technologies that
                  will leverage our current technology base and increase the
                  breadth and strength of our product portfolio. We are also
                  seeking to acquire or in-license products that are
                  complementary to our hormone portfolio. Acquiring or
                  in-licensing other products could add efficiencies to our
                  promotional and sales activities and could result in
                  increased profits from operations.

         Endeavor Pharmaceuticals, Inc. is a Delaware corporation incorporated
in 1994. Our main offices are located at 127 Racine Drive, Suite 202,
Wilmington, North Carolina 28403 and our telephone number is (910) 790-9811.

                                       3
THE OFFERING
Common stock we are offering...........................             shares

Common stock to be outstanding after the
offering...............................................             shares

Use of proceeds........................................      We intend to use the proceeds from this offering
                                                             for:

                                                             -        research and development;
                                                             -        building our marketing and sales capabilities;
                                                             -        and general corporate purposes, including working
                                                                      capital and the potential acquisition of other
                                                                      products or product candidates.

Proposed Nasdaq National Market symbol.................      EDVR
The number of shares of common stock to be outstanding upon completion of this
offering is based on the number of shares of common stock outstanding as of
      , 2002. This number assumes the conversion into common stock of all our
convertible preferred stock outstanding on that date.

It excludes:

         -               shares of common stock issuable upon exercise of stock
                  options outstanding as of       , 2002 with a weighted
                  average exercise price of $       per share; and

         -               shares of common stock issuable upon exercise of
                  warrants outstanding as of       , 2002 with a weighted
                  average exercise price of $       per share.

Except as otherwise indicated, all information in this prospectus assumes:

         -        a        for        stock split immediately prior to the
                  closing of this offering;

         -        no exercise of the underwriters' over-allotment option,

         -        the conversion of all outstanding shares of our convertible
                  preferred stock into shares of common stock upon the closing
                  of this offering; and

         -        the filing of a restated certificate of incorporation
                  effective upon the closing of this offering.

                                       4
Historical net loss per common share is not presented in the data below
for periods where no common stock was issued and outstanding. Shares used in
computing pro forma net loss per common share (unaudited) give effect to the
conversion of all outstanding shares of convertible preferred stock into common
stock and excludes the effect of outstanding stock options and warrants.

                             SUMMARY FINANCIAL DATA
THREE MONTHS
                                                            YEAR ENDED DECEMBER 31,                              ENDED MARCH 31,
                                        ----------------------------------------------------------------      ---------------------
                                           1997          1998         1999         2000          2001          2001          2002
                                        ---------      -------      -------      -------      ----------      -------      --------
                                                  (Dollars in thousands, except per share data)                    (Unaudited)
STATEMENT OF OPERATIONS
DATA:
Net Revenues sales ................     $   1,200      $   194      $   233      $   834      $       --

Operating Expenses:
   Cost of sales ..................            --          127          145           --              --
   Research and
     development ..................         3,734          223          494        1,092           9,887
   General and
     administrative ...............           368          338          630        1,020           3,009
                                        ---------      -------      -------      -------      ----------
   Total operating
     expenses .....................         4,102          688        1,269        2,112          12,896
                                        ---------      -------      -------      -------      ----------
Loss from operations ..............        (2,902)        (494)      (1,036)      (1,278)        (12,896)
                                        ---------      -------      -------      -------      ----------
Net loss ..........................        (3,218)      (1,046)      (1,814)        (876)        (11,650)
                                        ---------      -------      -------      -------      ----------
Net loss applicable to
   common stock ...................     $  (3,218)     $(1,046)     $(1,814)     $(1,019)     $  (12,080)
                                        =========      =======      =======      =======      ==========

Net loss per common share
   Basic and diluted ..............
Shares used in computing
   net loss per common
   share ..........................
Pro forma basic and
   diluted net loss per
   common share
   (unaudited) ....................                                                           $    (2.92)
                                                                                              ==========
Shares used in computing
   pro forma basic and
   diluted net loss per
   common share
   (unaudited) ....................                                                            4,131,890
                                                                                              ==========
The Pro Forma As Adjusted information presented below gives effect to
the conversion of all outstanding shares of convertible preferred stock into
common stock and reflects the net proceeds from the sale of shares of common
stock in this offering, at an assumed initial public offering price of
$       per share, after deducting underwriting discounts and commissions
and estimated offering expenses payable by us.
DECEMBER 31, 2001
                                                                      PRO FORMA
                                                       ACTUAL        AS ADJUSTED
                                                      --------       -----------
                                                           (In thousands)
BALANCE SHEET DATA:
Cash and cash equivalents...................          $ 22,656       $
Working capital.............................            21,879
Total assets................................            23,799
Redeemable preferred stock..................            44,478
Total stockholders' (deficit) equity........           (21,834)
5
RISK FACTORS

         An investment in our common stock involves a high degree of risk. You
should consider carefully the following information about these risks, together
with the other information contained in this prospectus, before you decide
whether to buy our common stock. If any of the following risks actually occur,
our business and prospects could suffer significantly. In any of these cases,
the market price of our common stock could decline, and you could lose all or
part of your investment in our common stock.

WE ARE IN EARLY STAGES OF DEVELOPMENT AND MAY NEVER ACHIEVE PROFITABILITY.

         We have not yet completed the development, including obtaining
regulatory approvals, of our current product candidates and, consequently, have
not generated any revenues from the sale of these product candidates. Even if
we succeed in developing, obtaining FDA approval for and commercializing one or
more of our product candidates, we may never achieve significant sales revenue.

         Our ability to achieve profitability will depend, among other things,
on our successfully completing development of our product candidates, obtaining
regulatory approvals, contracting for the manufacture of our product candidates
on favorable terms, establishing marketing and sales capabilities, achieving
market acceptance for our product candidates and maintaining sufficient funds
to finance our activities. We expect to encounter risks, costs and difficulties
frequently encountered by companies in an early stage of development. Many of
these risks are unknown, but they include those associated with managing our
growth, the uncertain cycle of developing commercial pharmaceutical products
and the marketing and distribution of our product candidates in a competitive
market. Our failure to identify and successfully address these risks would harm
our business and prospects.

WE HAVE A HISTORY OF LOSSES AND EXPECT SUCH LOSSES TO CONTINUE IN THE
FORESEEABLE FUTURE.

         Our company was formed in 1994 and has incurred significant operating
expenses but has not generated significant revenues to date. We need to
generate significant revenue to achieve and maintain profitability. We may not
be able to generate sufficient revenue and we may never be able to achieve or
maintain profitability. As of December 31, 2001, we had an accumulated deficit
of $36.1 million, funded primarily by issuing preferred stock. For the fiscal
years ended December 31, 1999, 2000 and 2001, we had operating losses of
approximately $1.0 million, $1.3 million and $12.9 million, respectively,
resulting principally from research and development efforts and other costs of
operations, and we expect to incur operating losses for the foreseeable future.
We expect to continue to incur significant operating expenses and anticipate
that our expenses will increase substantially in the foreseeable future as we:

         -        conduct clinical trials;

         -        conduct research and development on existing and new product
                  candidates;

         -        seek regulatory approvals for our product candidates;

         -        build a marketing and sales infrastructure to commercialize
                  our product candidates;

         -        hire additional clinical, scientific and management
                  personnel; and

         -        add operational, financial and management information systems
                  and personnel.

                                       6
WE MAY NOT RECEIVE REGULATORY APPROVALS FOR OUR PRODUCT CANDIDATES OR APPROVALS
MAY BE DELAYED, EITHER OF WHICH COULD PREVENT US FROM MARKETING OUR PRODUCT
CANDIDATES.

         None of our product candidates is currently approved for sale by the
FDA or by any other regulatory agency in the world, and our product candidates
may never be approved for sale or become commercially viable. If we fail to
obtain regulatory approval for a product candidate that we intend to market,
such failure could have a material adverse effect on our business, results of
operations, and financial condition. We cannot assure you that we will obtain
such approval. For example, the results of our Phase III efficacy study for
Enjuvia at the 0.3 mg dosage strength did not meet the FDA's threshold for
showing a statistically significant reduction in the frequency and severity of
vasomotor symptoms at all monitoring points during the study, and this may
hinder our ability to obtain FDA approval at this dosage strength. We are
seeking FDA approval of our 0.45 mg dosage strength based on data correlating
the 0.45 mg dosage strength to the 0.3 and 0.625 mg dosage strengths. The FDA
may require us to perform further pharmacokinetic or bioequivalence studies to
prove the correlation of dosage strengths. If we are unable to gain approval of
the 0.3 mg dosage strength, we will be unable to gain approval of the 0.45 mg
dosage strength for the vasomotor indication unless we conduct an additional
trial. We cannot assure you that, if we conduct the trial, the FDA will approve
the 0.45 mg dosage strength for the vasomotor indication.

         In addition, we currently do not plan to conduct any separate efficacy
studies for the treatment of vasomotor symptoms and prevention of osteoporosis
for Projuvia. As a result, if we fail to obtain approval for any of the
indications for which we are seeking approval with respect to Enjuvia, such
failure also would adversely affect our efforts to obtain approval of Projuvia.

         Any failure by us to comply with current or future laws, regulations
and procedures that apply to our product candidates could result in civil,
criminal and punitive liability, and such liability could have a material
adverse effect on our business, results of operations and financial condition.

         Before the marketing or commercial sale of a pharmaceutical product,
we must obtain regulatory approval generally based upon:

         -        pre-clinical and clinical testing, studies and trials
                  establishing the safety and efficacy of the product for each
                  target indication; and

         -        chemistry, manufacturing, and controls data.

         The drug approval process is generally time consuming, expensive and
subject to unexpected delays. Despite the expenditure of time, human resources
and capital by us, we cannot assure you when, if at all, any of our product
candidates will gain approval from the FDA and comparable foreign entities.
Even after submitting applications to the appropriate regulatory agencies, any
number of factors could delay the approval process, including the need to
generate and submit additional data, or adverse changes in approval
requirements. Delays or rejections may be encountered during any stage of the
regulatory approval process based upon the failure of clinical data to
demonstrate compliance with, or upon the failure of the product candidate to
meet, regulatory requirements for such factors as quality, safety and efficacy.

         The FDA and comparable foreign entities may change the approval
requirements for our product candidates or may require demonstration of
clinical endpoints that we may not be able to establish. Any change in approval
requirements or the establishment of unanticipated clinical endpoints could
increase the cost of our product candidates' clinical development beyond our
ability to pursue such study or product candidates, and may significantly
change the time to approval for one or more of such product candidates. In
particular, we believe that a sexual dysfunction indication for Juviand
involves a high degree of risk since the FDA has yet to establish the criteria
for effectiveness in treating female sexual dysfunction. Moreover, even if the
FDA does establish such criteria, it may do so without sufficient

                                       7
specificity. Either event could make it difficult or impossible to design
clinical trials to show that Juviand is safe and effective for female sexual
dysfunction or obtain FDA approval for other therapeutic uses. Any such delay
or increase in cost due to an adverse decision by the FDA with respect to
approval requirements, clinical endpoints or effectiveness criteria would have
a material adverse effect on our business, results of operations and financial
condition.

WE ARE DEPENDENT ON THE SUCCESSFUL OUTCOME OF CLINICAL TRIALS FOR OUR PRODUCT
CANDIDATES.

         Before obtaining regulatory approval for the sale of our product
candidates, they must be subjected to extensive pre-clinical and clinical
testing to demonstrate their safety and efficacy for humans. Our success will
depend on the success of our currently ongoing clinical trials and subsequent
clinical trials that have not yet begun.

         There are a number of difficulties and risks associated with clinical
trials. The possibility exists that:

         -        trial patient recruitment may be slower than expected;

         -        patients may drop out of our clinical trials;

         -        results may not be statistically significant or predictive of
                  results that will be obtained from large-scale, advanced
                  clinical trials;

         -        we may discover that a product candidate does not exhibit the
                  expected therapeutic results in humans;

         -        we may discover that a product candidate may cause harmful or
                  undesirable side effects; or

         -        we or the FDA may suspend the clinical trials of our product
                  candidates.

         The results from pre-clinical studies and early clinical trials may
not accurately predict the results that will be obtained in large-scale
testing, and we can provide no assurance that the clinical trials we or our
contract research organizations conduct will demonstrate sufficient safety and
efficacy to obtain the required regulatory approvals or will result in
marketable products. If the results of the large-scale testing vary
significantly from the pre-clinical studies and early clinical trials, we will
have allocated resources to a product candidate that ultimately may fail to
obtain regulatory approval, which would have a material adverse effect on our
business, results of operations and financial condition.

         In addition, we depend on independent clinical investigators and
contract research organizations to conduct our clinical trials. If independent
investigators fail to devote sufficient resources to the development of our
product candidates, or if their performance is substandard, it will delay the
approval and commercialization of our product candidates. If our independent
clinical investigators and contract research organizations fail to comply with
the FDA's standards for good clinical practice, the results of our clinical
trials could be called into question and the clinical development of our
product candidates could be delayed.

EVEN IF WE OBTAIN REGULATORY APPROVAL, WE WILL BE SUBJECT TO ONGOING
REGULATION, AND ANY FAILURE BY US TO COMPLY WITH SUCH REGULATION COULD SUSPEND
OR ELIMINATE OUR ABILITY TO SELL OUR PRODUCTS.

         We have submitted an application for regulatory approval of Enjuvia
for the treatment of vasomotor symptoms, and we intend to seek regulatory
approval of our other product candidates and of Enjuvia for other indications.
Even if we obtain regulatory approvals, failure to comply with post-marketing
requirements, such as maintenance of current Good Manufacturing Practices, or
cGMPs, or

                                       8
safety surveillance of such product candidates or lack of compliance with other
regulations could result in suspension or limitation of approvals or other
enforcement actions. Furthermore, the terms of any product candidate approval,
including the labeling content and advertising restrictions, may be so
restrictive that they could adversely affect the marketability of our product
candidates. Any such failure to comply or the application of such restrictions
could limit our ability to market our product candidates and have a material
adverse effect on our business, results of operations and financial condition.

WE SOURCE MANY OF THE PRINCIPAL COMPONENTS OF OUR PRODUCT CANDIDATES FROM
SINGLE OR LIMITED SOURCE SUPPLIERS AND THE FAILURE OF SUCH SUPPLIERS TO
CONTINUE TO SUPPLY SUCH COMPONENTS ON TERMS OR OF QUALITY ACCEPTABLE TO US
COULD MATERIALLY IMPACT OUR ABILITY TO PRODUCE OUR PRODUCT CANDIDATES.

         Many of the principal components of our product candidates are
available only from single or limited source suppliers. Berlex Laboratories,
Inc. has agreed to supply, through Berlichem, Inc., our requirements for
delta(8),(9) dehydroestrone which we have synthesized into delta(8),(9)
dehydroestrone sulfate, or delta(8),(9), a key estrogenic component of our
product candidates. In addition, the androgen we intend to use in Juviand is
only available from a limited number of suppliers. We can provide you no
assurance that such suppliers will be able to meet our requirements for
components, that we can establish or maintain good relationships with such
suppliers or that we will be able to find suitable replacements if the
relationships with any of our existing suppliers are terminated. In any such
case, our competitive advantage and results of operations could suffer.

         In addition, we can provide you no assurance that such suppliers will
continue to supply ingredients in conformity with regulatory requirements.
Regulatory authorities, such as the FDA, require that we contract only with
manufacturers that comply with cGMPs, as defined and prescribed by applicable
regulations, and other applicable laws. We can provide you no assurance that
our third-party suppliers will be able to supply our product candidate
components in conformity with such requirements. A failure by such suppliers to
comply with regulatory requirements could result in an interruption of the
availability of our product candidates. In addition, any failure by us or a
third-party provider to meet orders could damage our reputation and have a
material adverse effect on our business, results of operations and financial
condition. Since the marketing approval process requires manufacturers to
indicate their proposed suppliers of active pharmaceutical ingredients and
certain packaging materials in their applications to the FDA, regulatory
approval of any new supplier would be required if active pharmaceutical
ingredients or such packaging materials were no longer available from the
specified supplier. The qualification of a new supplier could delay our
development and marketing efforts and materially adversely affect our company.

WE CANNOT ASSURE YOU THAT OUR PRODUCT CANDIDATES WILL HAVE ADVANTAGES OVER
EXISTING HRT PRODUCTS OR, IF THEY DO, THAT WE WILL SUCCESSFULLY MARKET OUR
PRODUCT CANDIDATES, AND ANY SUCH FAILURE WOULD HAVE A MATERIAL ADVERSE EFFECT
ON US.

         Even if our product candidates obtain the required regulatory
approvals, we cannot assure you that they will compete effectively in the
market. The Premarin(R) family of products accounted for approximately 67% of
all HRT prescriptions in 2001. We cannot assure you that we can compete with
Premarin(R) or command a meaningful portion of the HRT market not accounted for
by Premarin(R).

         Our ability to compete with the Premarin(R) family of HRT products, or
with other currently marketed HRT products, will be significantly affected by
whether our product candidates are as safe and effective as, more safe and
effective than, or comparable or superior in other respects compared with, such
competing products by reason of the combination, doses, and regimens of the
hormones in our product candidates, the source and nature of the hormones we
use, and the absence of biological impurities in our product candidates. We
cannot claim that our product candidates have equivalent or

                                       9
superior qualities unless such equivalence or superiority is shown in
comparative studies. We currently do not intend to conduct such studies. Even
if we were to do so, we cannot assure you that such studies would be successful
or that the FDA would agree that they are sufficient to enable us to make
equivalence or superiority claims in our marketplace promotion of our product
candidates. If such studies are not conducted or are unsuccessful, or if the
FDA does not permit us to make relevant claims about the equivalent or superior
qualities of our product candidates, our ability to compete effectively with
the Premarin(R) family of products, or other HRT products, will be adversely
affected.

         The class of products we currently are developing is known to carry
certain health risks, including an increased risk of certain types of cancer.
If our product candidates are approved by the FDA, we expect the labeling of
each of our approved product candidates to contain a warning regarding the
possible health risks associated with taking the product candidate. If a
warning label required by the FDA adversely affects the market acceptance of
our product candidates or if our product candidates are otherwise unable to
effectively compete in the market for this class of drugs, such inability to
compete would have a material adverse effect on our business, results of
operations and financial condition.

         In addition, there are current studies that question certain of the
potential collateral benefits of HRT. These studies are discussed in a recent
position paper financed by the National Institutes of Health, or NIH, and the
private Giovanni Loren Zini Medical Science Foundation of Italy. This paper, in
which 28 doctors and scientists review the results of existing studies,
questions certain of the claimed collateral benefits of HRT. We cannot assure
you that these studies or the NIH paper will not adversely affect the market
for HRT products and the commercialization of our product candidates.

WE FACE SIGNIFICANT COMPETITION, INCLUDING THE RISK THAT PRODUCTS OF
COMPETITORS WILL MAKE OUR PRODUCT CANDIDATES OBSOLETE.

         In the HRT market, many companies compete directly with our product
candidates, including Wyeth, Novartis, Pharmacia, Ortho-McNeil, Berlex, Solvay,
King Pharmaceuticals, Warner Chilcott, Barr and Procter & Gamble. These
companies possess far greater financial, technical and human resources than we
do. In addition, many of these companies possess greater experience handling
the FDA testing and approval process and marketing pharmaceutical products.

         Moreover, rapid improvements and technological advances characterize
the pharmaceutical and biotechnology industries. Even if we manage to
successfully develop our product candidates, obtain FDA approval, and
effectively market our product candidates, other companies may develop
technologies and products that are more effective or achieve greater market
acceptance than those developed by us. Such products could render our product
candidates and technologies less competitive or obsolete.

IF THERE IS LITTLE OR NO MARKET ACCEPTANCE OF OUR PRODUCT CANDIDATES, OUR
REVENUES WILL BE REDUCED.

         Even if our product candidates obtain FDA approval, they may not gain
market acceptance among physicians, patients, third-party payors and the
medical community. The degree of market acceptance of any of our product
candidates will depend on a number of factors, including:

         -        demonstration of their clinical efficacy and safety;

         -        their cost-effectiveness;

         -        their potential advantage over alternative existing and newly
                  developed treatment methods;

         -        the marketing and distribution support they receive; and

                                      10
-        reimbursement policies of government and third-party payors.

         Our product candidates, if successfully developed and approved by the
FDA, will compete with a number of drugs and therapies currently manufactured
and marketed by major pharmaceutical and other specialty pharmaceutical
companies. The Premarin(R) family accounted for approximately 67% of all HRT
prescriptions in 2001. We may not be able to successfully compete with the
Premarin(R) family of products or command a meaningful portion of the HRT
market not accounted for by the Premarin(R) family of products. Furthermore,
there currently does not exist an established market for female sexual
dysfunction products, and thus our Juviand product candidate will face the
challenges associated with entering an unestablished product market. Our
product candidates also may compete with new products currently under
development by others or with products that may cost less than our product
candidates. Physicians, patients, third-party payors and the medical community
may not accept or utilize our product candidates. If our product candidates do
not achieve significant market acceptance, there will be a material adverse
effect on our business, results of operation and financial condition.

IF WE ARE UNABLE TO CREATE MARKETING AND SALES CAPABILITIES, OR ENTER INTO
AGREEMENTS WITH THIRD PARTIES TO PERFORM THESE FUNCTIONS, WE WILL NOT BE ABLE
TO COMMERCIALIZE OUR PRODUCT CANDIDATES.

         We do not have the marketing or sales capabilities to support the
launch of our product candidates. To commercialize our product candidates we
must acquire or internally develop marketing and sales capabilities or make
arrangements with third parties to perform these services for us. We initially
intend to rely on the services of a contract sales organization to market our
first product candidate if it receives FDA approval. If we obtain FDA approval
for our other product candidates, we intend to internalize our sales function
and/or to rely on relationships with one or more pharmaceutical companies or
other third parties with established distribution systems and direct sales
forces to market our product candidates. If we decide to market any of our
product candidates directly and are not able to hire sales representatives from
contract sales organizations, we must either acquire or internally develop a
sales force. The acquisition or development of a sales infrastructure would
require significant costs and management involvement, which may divert the
attention of our management and key personnel. To the extent we enter into
co-promotion or other licensing agreements for our product candidates, our
product revenues may be lower than if we directly marketed and sold our product
candidates, and a portion of the revenue we receive will depend upon the
efforts of third parties, which may not be successful.

CHANGES IN THE REIMBURSEMENT RATES OF THIRD-PARTY PAYORS OR CURRENT LAWS
REGARDING SUCH RATES MAY REDUCE OUR ABILITY TO MAKE A REASONABLE RETURN ON
INVESTMENT AND INVESTORS MAY BE ADVERSELY AFFECTED.

         Our success will depend in part on the extent to which reimbursement
for the costs of therapeutic products and related treatments will be available
from third-party payors, such as government health administration authorities,
private health insurers, managed care programs and other organizations. We
cannot assure you that our product candidates will be included in certain key
formularies of such third-party payors. If generic versions of the Premarin(R)
family of products enter the HRT market, third-party payors would likely tailor
reimbursement policies to encourage patients to use these generic products to
the extent they are less expensive than other alternatives, such as our product
candidates.

         Over the past decade, as the cost of healthcare has risen
significantly, legislators, regulators and third-party healthcare payors have
attempted to curb these costs by limiting the amount of reimbursement for
certain products. In the future, federal and state legislatures may pass laws
limiting the amount of reimbursement for certain pharmaceutical products,
including our product candidates. In addition, third-party insurance payors
also may reduce the amount they are willing to reimburse for certain
pharmaceutical products. Any such actions by state or federal legislatures or
by third-party payors could hinder our ability to realize a significant return
on investment in product development and our business,

                                      11
results of operations, and financial condition would be adversely affected.
Further, the threat of cost control measures might materially adversely affect
our stock price.

WE MAY NOT BE ABLE TO PROTECT, THROUGH PATENTS, THE PROPRIETARY TECHNOLOGIES
AND PROCESSES WE PLAN TO UTILIZE TO DEVELOP COMMERCIALLY VIABLE HORMONE-BASED
PRODUCT CANDIDATES.

         To a large extent, our future success will depend on our ability to
use our proprietary technologies and processes to develop commercially viable
hormone-based product candidates for the HRT and other therapeutic markets. Two
of our patent applications, which include claims directed to either the
composition of matter or the synthesis of the complex estrogens that we use in
our product candidates, are pending, and under review with the United States
Patent and Trademark Office, or USPTO. Obtaining patents for pharmaceuticals is
often difficult and sometimes requires an appeal within the USPTO. Many patent
applications initially receive "office actions" denying the grant of a patent
and there can be no guarantee a patent will issue once an application receives
an office action. We have received such an office action for our composition of
matter patent application, and no final determination has been made by the
USPTO examiners regarding either our composition of matter or our synthesis
patent applications. It is likely that an appeal within the USPTO will be
required with respect to our composition of matter application. If either of
such patents is not issued, any potential patent exclusivity period relative to
that technology will not be available, and if neither of such patents issues,
we will have no patent protection for our complex estrogens mixture used in our
first three product candidates. In addition, we can provide you no assurance
that such pending patent rights, if granted, will prevent competitors from
commercializing products that are similar or functionally equivalent to our
product candidates, or using technologies or processes for formulating or
manufacturing such similar or functionally equivalent products. More
specifically, we cannot assure you:

         -        if and when our pending patents will issue;

         -        the degree of protection any patents we obtain will afford us
                  against competitors with similar technologies or processes;

         -        whether or not others will obtain patents claiming properties
                  similar to those covered by our patent applications;

         -        the extent to which patents granted to others will affect our
                  patent applications and the use of our technologies or
                  processes; or

         -        the cost of potential patent litigation.

          Furthermore, we cannot assure you that any patent rights granted to
us will not be successfully challenged in the future or that any of our product
candidates, technologies or processes do not and will not infringe upon the
patent rights of third parties. In addition, our competitors may be able to
avoid our patent rights through design innovation. It is also possible that
third parties will obtain patent or other proprietary rights that might be
necessary or useful for the development, manufacture or sale of our product
candidates. In cases where third parties are the first to invent a particular
product or technology, it is possible that those parties will obtain patent
rights that will be sufficiently broad to prevent us from developing,
manufacturing or selling our product candidates. We may need to obtain licenses
for intellectual property rights from others to develop, manufacture and market
commercially viable product candidates. Such licenses may not be obtainable on
commercially reasonable terms, if at all, and any licensed patents or
proprietary rights we obtain may not be valid and enforceable. Failure to
obtain or maintain patent protection over our proprietary technologies or
processes, for any reason, would have a material adverse effect on our
business, results of operations and financial condition.

                                      12
OUR NON-PATENTED, PROPRIETARY TECHNOLOGIES AND PROCESSES MAY NOT BE ADEQUATELY
PROTECTED FROM UNAUTHORIZED DISCLOSURE, AND UNAUTHORIZED DISCLOSURE MAY HAVE A
MATERIAL ADVERSE EFFECT ON US.

         In addition to patent protection we have or propose to obtain, we also
rely on confidentiality and non-disclosure agreements with our employees,
consultants, advisers and collaborators to protect certain trade secrets and
proprietary information relating to our technologies and processes. These
agreements may not effectively prevent disclosure of our confidential
information and may not provide us with an adequate remedy in the event of
unauthorized disclosure of such information. Failure to obtain or maintain
trade secret protection, for any reason, would have a material adverse effect
on our business, results of operations and financial condition.

WE MAY NOT BE ABLE TO ESTABLISH OWNERSHIP OF TECHNOLOGIES AND PROCESSES
DEVELOPED BY EMPLOYEES, CONSULTANTS AND SERVICE PROVIDERS, WHICH COULD DIMINISH
OUR COMPETITIVE POSITION AND HAVE A MATERIAL ADVERSE EFFECT ON US.

         We use our employees, consultants and service providers to develop our
technologies and processes, and disputes may arise about the ownership of
proprietary rights to those technologies and processes. We may be unable to
prove or establish proprietary rights to such technologies and processes.
Protracted and costly litigation could be necessary to enforce and determine
the scope of our proprietary rights. Failure to prove or establish such
proprietary rights, or the failure to do so in a cost effective manner, could
have a material adverse effect on our business, results of operations and
financial condition.

WE RELY ON THIRD PARTIES FOR RESEARCH, DEVELOPMENT AND MANUFACTURING NEEDS, AND
ANY FAILURE OF SUCH THIRD PARTIES TO PROVIDE APPROPRIATE SERVICES TO US WILL
HAVE A MATERIAL ADVERSE EFFECT ON US.

         We currently rely on third parties to provide almost all our research,
development and manufacturing resources. Upon expiration of the term, or upon
earlier termination, of any third-party agreement, we may not be able to renew
or extend any such agreement with the third party, or obtain an alternative,
for the necessary goods or services on commercially viable terms, if at all. In
addition, third-party manufacturers may not be able to meet the demand for our
product candidates and any such failure may adversely affect our business,
results of operations and financial condition.

WE DEPEND ON CERTAIN KEY PERSONNEL AND CANNOT ASSURE YOU THAT SUCH PERSONNEL
WILL CONTINUE TO SERVE OUR COMPANY IN THE FUTURE OR THAT WE WILL BE ABLE TO
RECRUIT AND RETAIN OTHER NEEDED PERSONNEL.

         We are dependent on the members of our senior management team. In
particular, we rely on the services of R. Forrest Waldon, our President and
CEO, and Thomas W. Leonard, Ph.D., our Vice President, Chief Science Officer.
We do not carry key man life insurance on the lives of any of our key
personnel. We cannot assure that we can retain the services of all or any of
these individuals and the loss of service of any of these individuals would
disrupt our operations.

         In addition, we may need to hire certain additional key officers and
staff, including a medical director and regional marketing and sales managers.
We cannot assure you that we will be able to hire or retain capable personnel
to fill these positions. Many of the companies with whom we compete for
employees have greater financial resources than we do. We may not be able to
compete successfully with these companies for qualified personnel and officers.

                                      13
WE ARE SUBJECT TO REGULATION BY THE DRUG ENFORCEMENT ADMINISTRATION.

         Since our Juviand product candidate will contain an androgen, which is
an anabolic steroid, the Drug Enforcement Administration, or the DEA, will
require facility licenses, tracking records, secured storage and disposal
capabilities in facilities developing or manufacturing this product candidate.
Failure to comply with the DEA's facilities requirements for this type of
compound, or failure to comply with the DEA's requirements for tracking,
storing, or disposing of this compound, could result in revocation or
suspension of the facility license necessary to continue developing or
manufacturing the compound. Such suspension or revocation of the required DEA
license to develop or manufacture the Juviand product in a facility we use
could have a material adverse effect on our business, results of operations,
and financial condition. In addition, we may develop other product candidates
that fall under DEA jurisdiction and thus subject us to the same types of
risks.

WE FACE POTENTIAL LIABILITIES RELATING TO THE DEVELOPMENT AND SALE OF DRUGS AND
THE STORAGE OF POTENTIALLY HARMFUL MATERIALS.

         We develop, and hope to market, pharmaceutical product candidates that
involve human testing and expose us to the risk of liability for personal
injury or death to persons using such product candidates. We have obtained
liability insurance coverage at a level that we consider appropriate for our
current stage of development, which does not include comprehensive product
liability insurance. Our liability may exceed the limitations of our present
insurance coverage. As we commercialize our product candidates, we will need to
obtain more extensive insurance coverage. Such insurance may not be available
at an acceptable cost, if at all, and such coverage may not be sufficient to
shield us from liability. A successful product liability claim that exceeds our
insurance coverage could have a materially adverse effect on our business,
results of operations and financial condition.

         Our research and development involves the use of highly potent
hormones, which may result in serious injury and serious long-term health
problems to persons inappropriately exposed to such hormones. Currently, we do
not own adequate facilities to handle such hormone materials, and rely on third
parties for the processing, storage and destruction of such materials. Although
we believe that our service providers utilize adequate safety procedures for
handling and disposing of such materials that comply with the standards
prescribed by such laws and regulations, we cannot completely eliminate the
risk of accidental contamination or injury from these materials. In the event
of such an accident, we could be held liable for any damages that result and
any such liability could have a material adverse effect on our company. In
addition, we may be held liable in the event of third-party claims against our
manufacturers, suppliers, contract sales organizations, and third-party
research and development providers relating to our product candidates.

IF WE DECIDE TO ENTER THE GLOBAL PHARMACEUTICAL MARKET, WE WOULD CONFRONT MANY
RISKS ASSOCIATED WITH DOING BUSINESS IN MARKETS OUTSIDE THE UNITED STATES.

         Because the pharmaceutical and biotechnology industries are
increasingly competing in global markets, we may eventually market our product
candidates outside the United States. Doing business outside the United States
involves various risks and expenses. Non-U.S. regulatory agencies often require
different tests and applications than those required by the FDA. If we decide
to do business outside the United States, we may need to expend significant
resources to obtain non-U.S. regulatory approval. We cannot assure you that
such expenditures, if made, would result in regulatory approval.

         In addition, even if we obtain regulatory approval outside the United
States, we cannot assure you that we can successfully operate in non-U.S.
markets. International operations may be limited or disrupted by, among other
things, imposition of government controls, export license requirements,
political or economic instability, trade restrictions and changes in tariffs,
restrictions on repatriating

                                      14
profits, taxation, difficulties in staffing and managing international
operations, and fluctuations in currency exchange rates.

CERTAIN PROVISIONS IN OUR RESTATED CERTIFICATE OF INCORPORATION AND RESTATED
BYLAWS AND DELAWARE STATE LAW MAY BE USED TO RESIST ACQUISITIONS AND
COMBINATIONS INVOLVING US THAT MIGHT OTHERWISE BENEFIT OUR STOCKHOLDERS.

         Provisions of our restated certificate of incorporation and restated
bylaws and Section 203 of the Delaware General Corporation Law give our board
of directors broad discretion in resisting or delaying proposed acquisitions of
our company. These provisions, in addition to the existence of several large
stockholders, may discourage possible acquisitions or combinations of our
company, even if such acquisitions or combinations would otherwise benefit our
stockholders. For more information, see "Description of Capital Stock."

WE RETAIN BROAD DISCRETION AS TO THE USE OF PROCEEDS AND AN INEFFECTIVE USE OF
PROCEEDS WOULD BE DETRIMENTAL TO OUR COMPANY.

         We retain significant flexibility in applying the net proceeds of this
offering. If we fail to effectively use the net proceeds of this offering, our
business, results of operations and financial condition could be materially
adversely affected.

WE MAY NOT SUCCESSFULLY MANAGE OUR GROWTH.

         Our success will depend upon the expansion of our operations and the
effective management of growth, which will place significant strains on our
management and on our administrative, operational and financial resources. To
manage our growth, we must expand our facilities, augment our operational,
financial and management systems and hire and train additional qualified
personnel. If we cannot manage our growth effectively, our business will be
harmed.

WE MAY EXPERIENCE DIFFICULTY RAISING NEEDED CAPITAL IN THE FUTURE.

         We have expended and will continue to expend substantial funds to
complete the research, development, clinical testing, manufacturing and
commercialization of our product candidates. We will require additional funds
for the research, development and testing of our product candidates, as well as
for the development of internal marketing and sales capacities and possibly
manufacturing capacities. If any of these activities takes longer or costs more
than we expect or if our existing agreements are terminated, we may seek to
raise additional funds through equity or debt financings, collaborative
arrangements or other sources, any of which may dilute your ownership in us.
Additional financing may not be available on acceptable terms, if at all. If
our operations require more funds than we anticipate or our sources of
financing do not produce adequate funds, we may have to delay, reduce the scope
of, or eliminate one or more of our development programs, which would
materially curtail our business and growth and harm our prospects.

THE MARKET PRICE OF OUR COMMON STOCK AFTER THIS OFFERING MAY FLUCTUATE WIDELY
AND RAPIDLY.

         There is currently no public market for our common stock, and an
active trading market may not develop or be sustained after this offering. We
and the underwriters' representatives will negotiate an initial public offering
price that may not be indicative of the market price for our common stock after
this offering. As a result, the market price of our stock could fall below the
initial public offering price.

         The market price of our common stock could fluctuate significantly as
a result of many factors including:

                                      15
-        the receipt and timing of FDA approval of our product
                  candidates, if granted;

         -        our financial performance;

         -        failure to meet analysts' or investors' expectations;

         -        economic and stock market conditions;

         -        changes in evaluation and recommendation by securities
                  analysts who follow our stock or our industry;

         -        earnings and other announcements by, and changes in market
                  evaluations of, other companies in our industry;

         -        changes in business or regulatory conditions;

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

         -        the trading volume of our common stock; or

         -        other factors unrelated to our company or industry.

         The securities of many technology and pharmaceutical companies have
experienced extreme price and trading volume fluctuations in recent years,
often unrelated or disproportionate to the companies' operating performances.
Following periods of volatility in the market price of a company's securities,
stockholders often have instituted securities class action litigation against
that company. If we become involved in a class action suit, it could divert the
attention of management, and, if adversely determined, could have a material
adverse impact on our financial condition.

SUBSTANTIAL SALES OF OUR COMMON STOCK AFTER THE OFFERING COULD CAUSE OUR STOCK
PRICE TO FALL.

         Our sale or the resale by our stockholders of shares of our common
stock after this offering could cause the market price of our common stock to
decline. After this offering, we will have     shares of common stock
outstanding. Of these shares, the      shares sold in this offering will
be freely transferable without restriction.

         As of May     , 2002, options to purchase     shares of
our common stock were outstanding. These options are subject to vesting that
generally occurs over a period of up to three years following the date of
grant. In addition, we have established a new stock option plan, under which
      shares will be available for option grants. We intend to file a
registration statement following this offering to register the shares
underlying all such options. In addition, as of May      , 2002, warrants
to purchase       shares of our common stock were outstanding and were
fully vested with respect to      of such shares. The shares received upon
exercise of these warrants may become freely tradable at various points over
the next few years, depending upon the method of exercise.

         Certain of our stockholders, optionholders and warrantholders signed
lock-up agreements before the commencement of this offering. Under these lock-up
agreements, these stockholders, optionholders and warrantholders have agreed,
subject to limited exceptions, not to sell any shares owned by them as of the
date of this prospectus for a period of 180 days thereafter, unless they first
obtain the written consent of Banc of America Securities LLC and Bear, Stearns &
Co. Inc. At the end of 180 days, unless earlier waived by Banc of America
Securities LLC and Bear, Stearns & Co. Inc., the lock-up restrictions will end
and the stockholders, optionholders and warrantholders will be able to sell such
shares.

                                      16
YOU WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL DILUTION.

         If you purchase common stock in this offering, you will pay more for
your shares than the amounts paid by existing stockholders for their shares. As
a result, you will experience immediate and substantial dilution of
approximately $      per share, representing the difference between our
net tangible book value per share after giving effect to this offering and the
initial public offering price. For more information, see "Dilution."

                                      17
USE OF PROCEEDS

         We estimate that we will receive net proceeds from this offering of
approximately $        million, at an assumed initial public offering price of
$       per share, net of estimated underwriting discounts and commissions and
estimated offering expenses payable by us. If the underwriters exercise
their over-allotment option in full, we estimate our net proceeds will
be $       million.

         We expect to use these proceeds as follows:

         -        approximately 35% to 40% for research and development;

         -        approximately 40% to 45% to build our marketing and sales
                  capabilities; and

         -        the balance for general corporate purposes, including working
                  capital and the potential acquisition of other products or
                  product candidates.

         The amount and timing of our actual expenditures will depend upon
numerous factors, including the progress of our product candidate development
programs, future revenue, if any, and the amount of cash, if any, generated by
our operations. The amounts above are only broad estimates and we have not
determined with certainty the amounts we plan to spend on any of the areas
listed above or other areas or the timing of such expenditures. Accordingly,
our management will have broad discretion in the application of the net
proceeds. Pending these uses, we intend to invest the net proceeds in
interest-bearing, investment-grade instruments, certificates of deposit, or
direct or guaranteed obligations of the United States.

         We expect the proceeds of this offering to fund our operations through
the initial launch period for Enjuvia. We anticipate that cash flow from
operations and short-term borrowings will fund the launch of Projuvia and
Juviand. If any of our product candidates' anticipated launch dates are delayed
or if the launches are more costly than we anticipate, we may require
additional financing. In addition, one of our strategies is to acquire products
or product candidates. Any such acquisition, depending on its size and scope,
may require additional financing.

                                DIVIDEND POLICY

         We have never declared or paid dividends on our capital stock and do
not anticipate declaring or paying any dividends in the foreseeable future. We
currently intend to retain any future earnings for the expansion of our
business.

                                      18
DILUTION

         Our pro forma net tangible book value as of March 31, 2002 was
$      , or $       per share, assuming conversion of all outstanding
shares of convertible preferred stock into shares of our common stock on the
closing of this offering. Pro forma net tangible book value per share
represents the amount of our total tangible assets, reduced by the amount of
our total liabilities, and then divided by the total number of shares of common
stock outstanding after giving effect to the automatic conversion of all shares
of outstanding convertible preferred stock upon closing of this offering.
Dilution in pro forma net tangible book value per share represents the
difference between the amount paid per share by purchasers of shares of common
stock in this offering and the pro forma net tangible book value per share of
common stock immediately after the completion of this offering. After giving
effect to the sale of the shares of common stock offered by us at an assumed
initial public offering price of $       per share, and after deducting the
underwriting discounts and commissions and estimated offering expenses payable,
our pro forma net tangible book value would have been $       million or
$       per share of common stock. This represents an immediate increase in
pro forma net tangible book value of $       per share to existing
stockholders and an immediate dilution of $       per share to new
investors purchasing shares at the initial public offering price. The
following table illustrates this dilution on a per share basis:
Assumed public offering price...............................................      $
           Pro forma net tangible book value per share as of.......................      $
           Increase attributable to new investors..................................      $
       Pro forma net tangible book value per share after this offering.............      $
                                                                                         ----------
       Dilution to new investors...................................................      $
                                                                                         ==========
The following table summarizes, as of March 31, 2002, the differences
between the existing stockholders and new investors with respect to the number
of shares of common stock purchased from us, the total consideration paid to us
and the average price paid per share:
SHARE PURCHASED            TOTAL CONSIDERATION
                                               ---------------------        ---------------------    AVERAGE PRICE
                                               NUMBER        PERCENT        AMOUNT        PERCENT      PER SHARE
                                               ------        -------        ------        -------    -------------
Existing stockholders.................                             %        $                   %    $
New investors.........................                             %                            %    $
                                               ------        ------         ------        ------
         Totals.......................                             %        $                   %
                                               ======        ======         ======        ======
The preceding tables assume no issuance of shares of common stock
under our stock option or warrant plans after March 31, 2002. As of March 31,
2002,        shares were subject to outstanding options at a weighted average
exercise price of $       per share. This table also assumes no exercise of
the warrants outstanding as of March 31, 2002 for        shares of common
stock at a weighted average exercise price of $       per share. If all of
these options and warrants were exercised, then the total dilution per share
to new investors would be $      .

                                      19
CAPITALIZATION

The table below sets forth the following information as of December 31, 2001:

         -        our actual capitalization and our cash position, and

         -        our pro forma as adjusted capitalization and cash position
                  after giving effect to:

                  -        the filing of a restated certificate of
                           incorporation effective upon the closing of
                           this offering to authorize       shares of
                           common stock and a        for       stock split for
                           holders of record as of       ;

                  -        the elimination of all existing series of preferred
                           stock and authorization of       shares of
                           undesignated preferred stock, and the conversion of
                           all outstanding convertible preferred stock into
                           common stock; and

                  -        the sale of       shares of common stock in
                           this offering at an assumed initial public offering
                           price of $       per share, after deducting the
                           underwriting discounts and commissions and estimated
                           offering expenses.

You should read this table in conjunction with "Selected Financial Data,"
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and our financial statements and related notes included elsewhere
in this prospectus.
PRO FORMA
                                                                  ACTUAL     AS ADJUSTED
                                                                 --------    -----------
                                                                     (In thousands)
Cash and cash equivalents ..................................     $ 22,656      $
                                                                 ========      ========

Redeemable Series E convertible preferred stock ............     $ 44,478      $     --

Stockholders' (deficit) equity:
   Series A convertible preferred stock ....................            6            --
   Series B convertible preferred stock ....................            2            --
   Series C convertible preferred stock ....................            7            --
   Series D convertible preferred stock ....................            1            --
   Undesignated preferred stock ............................           --            --
   Common stock ............................................           --
   Additional paid-in capital ..............................       14,650
   Deferred compensation ...................................         (359)         (359)
   Accumulated deficit .....................................      (36,141)      (36,141)
                                                                 --------      --------
     Total stockholders' (deficit) equity ..................      (21,834)
                                                                 --------      --------
Total capitalization .......................................     $ 22,644      $
                                                                 ========      ========
The above table excludes:

         -               shares of common stock issuable upon exercise of stock
                  options outstanding as of       , 2002 with a weighted
                  average exercise price of $       per share, and

         -               shares of common stock issuable upon exercise of
                  warrants outstanding as of       , 2002 with a
                  weighted average exercise price of $       per share.

                                      20
SELECTED FINANCIAL DATA

         You should read the selected historical financial data set forth below
in conjunction with our financial statements and related notes and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this prospectus. The statement of operations data for the
years ended December 31, 1999, 2000 and 2001, and the balance sheet data at
December 31, 2000 and 2001 are derived from financial statements included
elsewhere in this prospectus that have been audited by Ernst & Young LLP,
independent auditors. The statement of operations data for the years ended
December 31, 1997 and 1998, and the balance sheet data at December 31, 1997,
1998 and 1999 are derived from financial statements that have been audited by
Ernst & Young LLP, independent auditors, and are not included in this
prospectus. Historical net loss per common share is not presented for periods
where no common stock was issued and outstanding. Shares used in computing pro
forma net loss per common share (unaudited) give effect to the conversion of all
outstanding shares of convertible preferred stock into common stock and excludes
the effect of outstanding stock options and warrants. Historical results are not
necessarily indicative of results to be expected for any future period.
THREE MONTHS
                                                                YEAR ENDED DECEMBER 31,                            ENDED MARCH 31,
                                             --------------------------------------------------------------      -------------------
                                               1997         1998         1999         2000          2001          2001        2002
                                             -------      -------      -------      -------      ----------      -------     -------
                                                     (Dollars in thousands, except per share data)                   (Unaudited)
STATEMENT OF OPERATIONS DATA:
Net revenues ...........................     $ 1,200      $   194      $   233      $   834      $       --

Operating Expenses:
   Cost of sales .......................          --          127          145           --              --
   Research and development ............       3,734          223          494        1,092           9,887
   General and administrative ..........         368          338          630        1,020           3,009
                                             -------      -------      -------      -------      ----------
   Total operating expenses ............       4,102          688        1,269        2,112          12,896
                                             -------      -------      -------      -------      ----------
Loss from operations ...................      (2,902)        (494)      (1,036)      (1,278)        (12,896)
                                             -------      -------      -------      -------      ----------
Net loss ...............................      (3,218)      (1,046)      (1,814)        (876)        (11,650)
                                             -------      -------      -------      -------      ----------
Net loss applicable to common stock ....     $(3,218)     $(1,046)     $(1,814)     $(1,019)     $  (12,080)
                                             =======      =======      =======      =======      ==========

Net loss per common share:
   Basic and diluted................
Shares used in computing net loss
   per common share.................
Pro forma basic and diluted net loss
   per common share (unaudited).....                                                             $    (2.92)
                                                                                                 ==========
Shares used in computing pro forma
   basic and diluted net loss per
   common share (unaudited).........                                                              4,131,890
                                                                                                 ==========
THREE MONTHS
                                                                     DECEMBER 31,                                  ENDED MARCH 31,
                                             --------------------------------------------------------------      -------------------
                                               1997         1998         1999         2000          2001          2001        2002
                                             -------      -------      -------      -------      ----------      -------     -------
                                                                    (In thousands)                                   (Unaudited)
BALANCE SHEET DATA:
Cash and cash equivalents ..............     $ 2,611      $   138      $   881      $34,249      $ 22,656
Working capital ........................         301         (122)      (8,792)      34,153        21,879
Total assets ...........................       2,715          932        1,123       34,897        23,799
Debt and accrued interest
    to stockholders ....................       6,316        6,886        7,676           --            --
Redeemable preferred stock .............          --           --           --       44,048        44,478
Total stockholders' (deficit) equity ...      (5,916)      (6,962)      (8,776)      (9,795)      (21,834)
21
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

         You should read the following discussion and analysis of our financial
condition and results of operations in conjunction with "Selected Financial
Data" and our financial statements and related notes appearing elsewhere in
this prospectus.

OVERVIEW

         We are initially focused on improving women's health by developing,
manufacturing and marketing advanced hormone therapies with competitive
advantages over existing therapies. Our first product candidates are Enjuvia,
Projuvia and Juviand, three proprietary HRT products designed to address
several limitations of existing HRT products. Enjuvia, a complex estrogens-only
product, and Projuvia, a complex estrogens/progestin combination product, are
designed to treat vasomotor symptoms of menopause and to assist in the
prevention of osteoporosis. Juviand is a complex estrogens/androgen combination
product designed to treat female sexual dysfunction, including diminished
sexual desire. We submitted an NDA for Enjuvia in March 2002 for the treatment
of vasomotor symptoms and expect approval in the first half of 2003. We are
currently enrolling participants in our pivotal Phase III study using Enjuvia
for the prevention of osteoporosis. A pivotal Phase III clinical safety and
efficacy study is currently underway for Projuvia, and we plan to initiate a
Phase II clinical study for Juviand in the second quarter of 2002.

         Because we have not yet completed the development of our current three
product candidates, we have not generated any significant product revenues. Our
revenues to date have primarily consisted of license fees and milestone
payments from collaborative partners. Since our inception in 1994 we have
incurred significant operating losses that we expect will continue for the next
several years. As of December 31, 2001, we had an accumulated deficit of $36.1
million and have primarily depended upon equity financings to fund our
operations.

         Our operating expenses consist primarily of costs associated with
research and development and general and administrative costs associated with
our operations. Research and development expenses consist of outside
professional fees related to pre-clinical studies and clinical trials, as well
as compensation and other related costs of our personnel dedicated to research
and development activities. General and administrative expenses consist
primarily of the costs of our senior management, finance, marketing and sales,
and administrative staff, business insurance and professional fees. We expect
marketing and sales expenses to increase significantly as we hire marketing and
sales managers and prepare for our product candidate launches. In addition,
expansion of our operations and costs associated with being a public reporting
entity will increase our general and administrative expenses.

         We expect our research and development expenses to increase
substantially in the foreseeable future as we continue to grow. We expect a
large percentage of our research and development expenses will be incurred in
support of our clinical trial programs for our current three product candidates
and other future products. The time and cost of completing the clinical
development of product candidates depend on a number of factors, including
medical condition to be treated, clinical trial design and endpoints,
availability of patients to participate in trials, the results of clinical
trials, the number of clinical trials required to be conducted, the need to
conduct unanticipated trials, and the length of time of the regulatory review
process. Due to these uncertainties, we are unable to assure you of the length
of time or the costs that will be required to complete the development of our
first three product candidates.

                                      22
CRITICAL ACCOUNTING POLICIES

         Our critical accounting policies are described in the notes to our
financial statements appearing elsewhere in this prospectus.

         We had no revenue in 2001 because we were not selling any products and
had no licensing agreements. We do not expect to have revenue until after we
launch our Enjuvia product candidate, which we expect to occur in the middle of
2003.

         Licensing fees and royalties are recognized as revenue as earned,
which is generally determined by the achievement of contractual milestones.
Contractual payments based on cost reimbursement are reflected as a reduction
to research and development expense. Product sales are recognized when
ownership and risk of loss transfers to the customer.

         Deferred Compensation from Stock Options

         We recorded $400,000 of deferred compensation related to stock options
granted to employees after May 1, 2001. This deferred compensation is being
amortized to expense on a straight-line basis over three years, which is the
vesting period of the underlying options. We recognized $41,000 of stock
compensation expense in 2001. The deferred compensation was calculated using
the guidelines of the Securities and Exchange Commission, which generally
require a more stringent approach to the valuation of the options than may be
used for other valuation purposes.

RESULTS OF OPERATIONS

         We believe that full year-to-year comparisons of our operations are
not meaningful because we have been primarily involved in development activities
that are and will be different over different time periods and are not
generally repetitive in nature. Our past performance will not necessarily
predict our future performance.

YEARS ENDED DECEMBER 31, 2001 AND 2000

         Revenues

         In early 2000, we made a strategic decision not to develop any generic
products for our product portfolio and sold the rights to a generic estradiol
product to aaiPharma Inc., or aaiPharma. We recognized this sale as licensing
revenues. This product was manufactured for us by aaiPharma and marketed for us
by a third party. We had no revenue in 2001 since we no longer had the generic
estradiol product.

         Research and Development

         Our research and development costs were $9.9 million in 2001 compared
to $1.1 million in 2000.

         Our research and development activities are managed internally with a
large portion of the work conducted by third parties. At the end of 2001, we
had ten staff members devoted to research and development activities compared
to four at the end of 2000. Our internal staff consists of people with
backgrounds in science, product development, regulatory affairs, quality
assurance and project management. We expect to add to this staff as we grow our
company. Our internal costs are not allocated to the various projects.

         In 2001, we advanced the development of Enjuvia through the
continuation of the pivotal Phase III clinical study for the vasomotor
indication and the start of a pivotal Phase III clinical study for an

                                      23
osteoporosis indication. The first Phase III study was completed in January
2002 and we submitted a new drug application, or NDA, for Enjuvia, which
incorporated the Phase III clinical study for the vasomotor indication, in
March 2002. The osteoporosis Phase III study is expected to continue for the
next few years because it requires two years of patient dosing. Our research
and development costs, excluding internal costs, directly attributable to
Enjuvia were $7.1 million in 2001 compared to $0.9 million in 2000.

         We completed pre-clinical work and a Phase II dose-ranging study for
Projuvia in 2001. We began a pivotal Phase III clinical study in the second
quarter of 2002, which should last for 18 to 24 months. Our research and
development costs, excluding internal costs, directly attributable to Projuvia
were $1.4 million in 2001 compared to $17,000 in 2000.

         We advanced the development of Juviand with pre-clinical work and the
production of clinical supplies for a Phase II dose-ranging study that we
expect to begin in the second quarter of 2002. Most of our work on this product
over the last two years has been carried out internally and with our Medical
Advisory Board. Our research and development costs, excluding internal and
Medical Advisory Board costs, directly attributable to Juviand were $453,000 in
2001 compared to none in 2000.

         We expect to incur approximately $20 million of total research and
development expense in 2002.

         General and Administrative

         Our general and administrative expenses were $3.0 million in 2001
compared to $1.0 million in 2000. The increase in general and administrative
expenses related to increased staffing costs (including payroll, benefits,
office space and travel) and increased consulting expenses. We opened our
marketing and sales office, located in New Jersey, midway through 2001. At the
end of 2001, we had 11 general and administrative staff members compared to
five at the end of 2000.

         We increased consulting expenses in the marketing and sales area to
begin preparing for the launch of Enjuvia and in the legal area to protect our
intellectual property. While the cost of filing patents is generally
capitalized, we expense the cost of keeping abreast of the patent landscape of
our competitors.

         Interest Income and Expense

         We had higher interest income in 2001 compared to 2000 because of
higher average balances in cash and cash equivalents during the year. Our
interest expense was significantly reduced in 2001 compared to 2000 because of
the August 2000 conversion of all outstanding debt and accrued interest to
Series E convertible preferred stock.

         Other, Net

         We had no transactions in 2001 compared to a sale of laboratory
equipment to aaiPharma that generated other income of approximately $300,000 in
2000.

         Income Taxes

         We had net losses in both 2001 and 2000 and did not have a provision
for income taxes in either year. At the end of 2001, we had accumulated net
operating loss carryforwards for federal and state income tax purposes of
approximately $28.8 million and federal tax credit carryforwards of

                                      24
approximately $1.7 million. We provided a full valuation allowance against the
net deferred tax assets generated by the above items because of the uncertainty
of realizing such assets.

YEARS ENDED DECEMBER 31, 2000 AND 1999

         Revenues

         Our 1999 net product sales were generated from the sale of a generic
estradiol product to a third party under a marketing agreement. As discussed
above, we sold the estradiol product rights to aaiPharma in early 2000 and
recognized such sale as licensing revenues.

         Cost of Sales

         The 1999 cost of sales were attributable to the generic estradiol
product sales during 1999. As discussed above, the rights to this product were
sold in 2000. We had no cost of sales in 2000 because we did not have any
product sales.

         Research and Development

         Our research and development costs were $1.1 million in 2000 compared
to $1.2 million in 1999, before the reduction of approximately $704,000 for
cost reimbursement payments made to us by Berlex as part of a development
agreement. This development agreement was terminated in 1999 and replaced with
a new supply agreement with Berlichem and Berlex.

         The research and development costs in both 2000 and 2001 were mostly
attributable to the development of our Enjuvia product candidate. We started
the pivotal Phase III clinical study for vasomotor indications in the fourth
quarter of 2000. The 1999 costs were mostly pre-clinical with some preparation
for the Phase III clinical study.

         General and Administrative

         Our general and administrative expenses were $1.0 million in 2000
compared to $0.6 million in 1999. The increase in general and administrative
expenses mostly related to increased staffing costs (payroll, benefits, office
space, travel, etc.). We opened our new headquarters office, located in North
Carolina, in the third quarter of 1999 so we had greater office costs in 2000
compared to 1999. At the end of 2000, we had five general and administrative
staff members compared to three at the end of 1999.

         Interest Income and Expense

         We had higher interest income in 2000 compared to 1999 because of
higher average balances in cash and cash equivalents during the year. In August
and November of 2000, we generated net cash proceeds of $35.6 million from the
private placement of Series E convertible preferred stock. This same
transaction also eliminated our outstanding debt, including accrued interest,
and reduced our interest expense in 2000 compared to 1999.

         Other, Net

         In 2000, we sold laboratory equipment to aaiPharma that generated
other income compared to a minimal other expense in 1999.

                                      25
Income Taxes

         We had net losses in both 2000 and 1999 and did not have a provision
for income taxes in either year. We provided a full valuation allowance against
the net deferred tax assets generated by net operating loss carryforwards and
federal tax credit carryforwards because of the uncertainty of realizing such
assets.

         LIQUIDITY AND CAPITAL RESOURCES

         We had cash of approximately $22.7 million and working capital of
approximately $21.9 million as of December 31, 2001. We have mainly funded our
business through the issuance of preferred stock. Our most recent financing
activity was the sale of Series E convertible preferred stock in 2000, which
raised approximately $35.6 million of net cash proceeds and converted
approximately $8.3 million of debt and accrued interest to Series E convertible
preferred stock. We also have funded a portion of our operating activities
through licensing agreement payments and product revenues; however, we have
generally had negative cash flows from operating activities.

         We will need a significant amount of funding to complete our
development plans and launch our product candidates as discussed in this
prospectus. We plan on spending approximately $20 million annually on research
and development activities and plan on expanding our marketing and
administrative activities over the next three years. We expect to fund such
activities and our other operations through the sale of equity, including this
offering or proceeds from borrowings until we can generate enough cash flow
from operating activities. We do not have any committed lines of credit, loans
or other methods of financing and cannot provide any assurance that credit will
be available in the future at acceptable terms, if at all.

         We expect the proceeds of this offering to fund our operations through
the initial launch period for Enjuvia. We anticipate that cash flow from
operations and short-term borrowings will fund the launches of Projuvia and
Juviand. If any of our product candidates' anticipated launch dates are delayed
or if our launches are more costly than we anticipate, we may require
additional financing. In addition, one of our strategies is to acquire products
or product candidates. Any such acquisition, depending on size and scope, may
require additional financing.

         If adequate funding is not obtained from this offering or future
funding sources, we will have to change our strategy for product development,
approval and commercialization by delaying the timing of certain clinical
studies and development activities, or we may have to seek out a strategic
partner for some of our development or marketing activities. For further
discussion, see "Risk Factors."

DISCLOSURE ABOUT MARKET RISK

         Our exposure to market risk is principally confined to our cash and
cash equivalents, which consist of money market accounts. We do not use
derivative instruments to hedge interest rate exposure. Due to the nature of
our investments, we believe we are not subject to material market risk.

NEW ACCOUNTING PRONOUNCEMENTS

         In 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141, "Business Combinations," No. 142,
"Goodwill and Other Intangible Assets," No. 143, "Accounting for Asset
Retirement Obligations" and No. 144, "Accounting for the Impairment or Disposal
of Long-Lived Assets." We adopted Statement No. 144 as of December 31, 2001
with no significant impact on our financial position or results of operations.
Statements No. 141, No. 142 and No. 143 are presently not applicable to our
company.

                                      27
BUSINESS

         We are a specialty pharmaceutical company initially focused on
improving women's health by developing and marketing advanced hormone therapies
with competitive advantages over existing therapies. We are seeking to
commercialize, through our own marketing and sales organization, a portfolio of
hormone replacement therapy product candidates that we are developing based on
our proprietary, complex combination of multiple estrogens. Our product
candidates contain complex estrogens alone or in combination with a progestin
or an androgen, two other hormones. These product candidates are designed to
alleviate the symptoms of, and reduce the health risks resulting from,
menopause-related hormone deficiencies, including vasomotor symptoms,
osteoporosis and female sexual dysfunction.

         Hormone replacement therapy, or HRT, products generated total sales in
the United States of over $2.9 billion in 2001. We expect that the United States
HRT market will grow at least through the rest of this decade. This growth is
expected to be driven primarily by the large group of post-World War II "baby
boomers" entering their menopausal years and increasing awareness of the
benefits of HRT. We believe that our complex estrogens product candidates will
address several of the limitations of existing HRT products and will enable us
to compete successfully in the HRT market.

         Our first product candidate, Enjuvia, is a complex estrogens product
that will treat the vasomotor symptoms associated with menopause and assist in
the prevention of osteoporosis in menopausal women. Estrogens are a
naturally-occurring group of hormones which, among other things, regulate a
woman's monthly cycles of ovulation and menstruation during her reproductive
years. Vasomotor symptoms include hot flashes, uncontrollable sweating, chills,
burning or tingling sensations, associated sleep disturbances and mood swings.
Osteoporosis causes bones to become brittle and weak, increasing the risk of
fractures that can have serious health consequences. Enjuvia is targeted for
women who have had a hysterectomy or for use in combination with a progestin by
women who have not had a hysterectomy. In March 2002, we submitted a New Drug
Application, or NDA, for Enjuvia to the FDA for the treatment of vasomotor
symptoms and anticipate FDA approval of Enjuvia in the first half of 2003.

         Our second product candidate, Projuvia, combines the complex estrogens
in Enjuvia with a progestin and is being developed to treat vasomotor symptoms
and to assist in the prevention of osteoporosis in menopausal women with intact
uteruses. Progestins are hormones which, among other things, can counteract
endometrial hyperplasia, a side effect of estrogen replacement on the uterus. We
completed a Phase II dose-ranging study and have commenced a pivotal Phase III
clinical safety and efficacy study for Projuvia.

         Our third product candidate, Juviand, combines the complex estrogens in
Enjuvia with an androgen and is being developed to treat female sexual
dysfunction, including diminished sexual desire, in menopausal women. Androgens
are hormones which, among other things, have been shown to have beneficial
effects on sexual desire. We plan to commence a Phase II clinical safety and
efficacy study for Juviand in the second quarter of 2002.

         We believe our portfolio of product candidates will address several
limitations of existing hormone replacement therapies. We believe all our
product candidates will provide the following benefits:

         -        Our product candidates are the only complex estrogens
                  products that contain the same ten essential active estrogens
                  as Premarin(R), the leading product franchise in the HRT
                  market.

                                      28
-        The complex estrogens in our product candidates are
                  synthesized principally from plant-derived material and are
                  free of the non-estrogenic urinary substances found in
                  Premarin(R), which is derived from the urine of pregnant
                  horses.

         -        Our product candidates are manufactured using the same
                  estrogens mixture and other ingredients from batch to batch.

         -        Each of our product candidates will use a proprietary,
                  stable, sustained-release delivery system that we expect will
                  provide a highly consistent delivery profile of hormones
                  throughout the day.

         Our Enjuvia product candidate:

         -        Is expected to be offered in 0.3, 0.45, 0.625 and 1.25 mg
                  dosage strengths. This wide range will enable physicians to
                  tailor patients' therapies to the lowest effective dosage
                  strength, thereby maximizing the benefits associated with HRT
                  while minimizing unwanted side effects.

         Our Projuvia product candidate:

         -        Will use a novel progestin dosing regimen that we expect will
                  reduce the incidence of breakthrough or unexpected bleeding
                  and more quickly stop menstrual-like bleeding altogether.

         -        Is expected to have fewer of the negative side effects, such
                  as painful vaginal bleeding, breast tenderness and bloating,
                  associated with currently marketed estrogen/progestin
                  combination products.

         -        Will use a progestin that we expect will eliminate the
                  negative effect associated with progestins in currently
                  marketed estrogen/progestin combination products which limit
                  the estrogens' ability to raise HDL cholesterol, known as the
                  good cholesterol, and lower LDL cholesterol, known as the bad
                  cholesterol.

         -        Will offer two dosage strengths of complex estrogens that
                  will enable physicians to tailor treatment to accommodate the
                  diverse and changing needs of their patients as they move
                  through menopause and beyond. Currently marketed
                  estrogen/progestin combination products only offer one dosage
                  strength of estrogens.

         Our Juviand product candidate:

         -        Will use an androgen that we expect will avoid liver toxicity
                  and other negative side effects, such as acne, male pattern
                  baldness, increase in facial hair and irreversible deepening
                  of the voice. Androgens used in currently marketed
                  estrogen/androgen combination products have been shown to
                  cause these side effects.

OUR STRATEGY

         Our primary objective is to become a market leader in advanced hormone
products and complementary therapies, initially focusing on women's healthcare
products for the HRT market. Key elements of our strategy include the
following:

                                      29
REDUCE RISK AND DEVELOPMENT COSTS BY USING HORMONES WITH KNOWN SAFETY AND
EFFICACY PROFILES

         We seek to minimize product development risk and costs by using
hormones with known safety and efficacy profiles. The roles of estrogens,
progestins and androgens in the maintenance of women's health are well
established and extensively documented, and their administration as therapeutic
agents have a demonstrated track record of safety and efficacy. Accordingly, in
developing our advanced HRT product candidates, we are able to reference
pre-clinical and clinical studies that were used in the approval of marketed
drugs or that are otherwise publicly available. This approach enables us to
minimize our investment in early stage discovery research, reduce overall
product development costs, reduce the risk of clinical failure, and shorten the
timeframe to receive FDA approval.

DEVELOP HORMONE PRODUCTS WITH COMPETITIVE ADVANTAGES OVER EXISTING PRODUCTS

         We intend to compete in the HRT market by developing hormone products
with competitive advantages over currently marketed products, as well as by
developing new therapeutic alternatives. We believe that currently marketed HRT
products have safety and patient compliance issues that can be mitigated with
new product formulations and the use of different hormones. Enjuvia and
Projuvia, our first two product candidates, are designed to address some of the
shortcomings of currently marketed HRT products for the treatment of vasomotor
symptoms and the prevention of osteoporosis. In the development of our Juviand
product candidate, we are striving to provide an FDA-approved product for the
treatment of female sexual dysfunction without the negative side effects of
currently marketed products used off-label for this indication.

ESTABLISH OUR OWN MARKETING AND SALES ORGANIZATION TO MAXIMIZE THE COMMERCIAL
BENEFIT OF OUR PRODUCT PORTFOLIO

         We intend to establish our own marketing and sales organization to
commercialize our initial product portfolio in the United States. We believe
that establishing our own sales force, rather than outlicensing product rights,
will enable us to better control the commercialization of our product
candidates and generate a higher return on investment. We plan to hire
additional marketing and sales managers who initially will use a contract sales
organization to provide sales representatives for the launch of Enjuvia. As our
product portfolio expands, we plan to develop our own sales force. We expect
significant marketing and sales synergies among our first three product
candidates because we will be targeting the same physician, patient and managed
care audiences. In addition, marketing our complementary product candidates to
these overlapping audiences will help us build recognized corporate and product
brands. We believe that brand recognition of our first product candidate and
our company will enhance market acceptance for each successive product
candidate. We will also selectively consider co-promotion arrangements for our
product candidates, in return for the rights to co-promote other companies'
products, in order to leverage our sales force. To market our product
candidates internationally, we initially anticipate selectively out-licensing
them to strong distribution partners outside the United States.

LEVERAGE PROPRIETARY TECHNOLOGIES

         We intend to leverage our expertise in hormonal science and our
proprietary technologies developed in connection with our first three product
candidates to develop additional product candidates and therapeutic
alternatives. Our expertise in complex hormone identification,
characterization, stabilization, delivery and manufacturing should position us
strategically to develop additional complex hormone product candidates. In
addition, our experience in hormone regimen development and clinical research
provides us with the expertise necessary to bring innovative product
alternatives to the market. Based on our expertise in complex hormone
compositions, we expect to be well-positioned to pursue

                                      30
future product candidates as scientific advances occur in the understanding of
how hormones work in the body.

ACQUIRE OR IN-LICENSE PRODUCTS AND TECHNOLOGIES TO EXPAND OUR PRODUCT PORTFOLIO

         We are seeking to acquire or in-license late stage and/or marketed
products and technologies that will leverage our current technology base and
increase the breadth and strength of our product portfolio. Examples of such
potential opportunities include new and improved HRT products and other
low-dose hormone products that may benefit from the application of our
specialized hormone formulations and analytical and manufacturing technologies.
We also are seeking to acquire or in-license products that are complementary to
our hormone portfolio. Acquiring or in-licensing other products could add
efficiencies to our promotional and sales activities and could result in
increased profits from operations.

HRT MARKET OVERVIEW

MENOPAUSE

         Menopause is the time when a woman's menstrual periods cease. The
average age of a woman entering natural menopause is approximately 51. However,
approximately 27% of women enter menopause earlier due to the surgical removal
of both ovaries, chemotherapy or radiation therapy. Natural menopause is not a
single event but a series of physiological changes that a woman goes through
over a number of years and is typically divided into two stages: perimenopause
and postmenopause. Perimenopause is the time when a woman begins experiencing
vasomotor symptoms, such as hot flashes, even though she is still ovulating,
and her menstrual cycles may become irregular. Perimenopause may last anywhere
from two to eight years. A woman is considered to be postmenopausal once 12
months have passed since her last period. At that point, a woman's ovaries no
longer produce estrogens or progesterone and ovulation ceases.

         The North American Menopause Society estimates that approximately
4,900 women in the United States enter menopause each day. Due to the large
group of "baby boomers" now entering into their menopausal years, the female
population demographics are expected to change dramatically, increasing the
potential patient population and demand for products that address conditions
associated with menopause. It is estimated that by the end of 2002,
approximately 62 million women in North America will be 50 years old or older.
By the end of 2010, this potential patient base is expected to reach
approximately 76.5 million women in North America, representing more than 28%
of the total female population and approximately a 23% increase over the number
of women age 50 or older in 2002. Moreover, given that the average life
expectancy for women in the United States is approximately 80 years, the
postmenopausal period now makes up more than one-third of an average American
woman's life span.

MENOPAUSE LEADS TO DEBILITATING SYMPTOMS AND INCREASED HEALTH RISKS

         With the onset of menopause, a woman's body produces significantly
lower amounts of estrogens and progesterone, hormones which regulate monthly
cycles of ovulation and menstruation. Other hormones, such as androgens (e.g.,
testostorone) also continue to decline as a woman ages. These changes have
important consequences for a woman's quality of life and overall health. The
symptoms and health risks include vasomotor symptoms, osteoporosis and female
sexual dysfunction. Increased risks of heart disease, neurodegenerative
diseases and colon cancer also are associated with menopause.

         Vasomotor symptoms. Approximately 80% of menopausal women suffer from
vasomotor symptoms, such as hot flashes, uncontrollable sweating, chills,
burning or tingling sensations, associated sleep disturbances and mood swings.
An estimated 25% of menopausal women will suffer from these

                                      31
symptoms for more than five years. The onset of hot flashes occurs when a
woman's body begins producing less estrogen, causing deregulation of her
hypothalmus gland. This deregulation can result in her blood vessels repeatedly
and unexpectedly expanding rapidly, causing her skin temperature to rise
dramatically. A woman experiencing a hot flash may sweat profusely and
uncontrollably even though she is not physically exerting herself and the
temperature is moderate. Hot flashes can be very intense and debilitating. They
can last from 30 seconds to 30 minutes or more, and can occur as often as once
an hour or more in severe cases. The combination of hot flashes and other
vasomotor symptoms lead many women to complain of a general and sometimes
debilitating decrease in their quality of life.

         Osteoporosis. Osteoporosis causes bones to become brittle and weak,
which increases the risk of fractures. Osteoporosis is a serious disease that is
expected to affect eight million women in the United States in 2002. Estrogens
have positive effects on maintaining bone strength and integrity. Decreases in
estrogen production during and after menopause cause women to lose calcium from
their bones at an accelerated rate, increasing the risk of osteoporosis. The
North American Menopause Society estimates that, among caucasian women over age
50 in the United States, nearly 40% will experience an osteoporotic fracture in
their remaining lifetime. Bone fractures resulting from osteoporosis can be
devastating, especially hip fractures, which result in greater disability and
mortality than all other osteoporotic fracture types combined. It is estimated
that hip fractures cause up to a 20% increase in mortality within a year of the
occurrence of such fractures. It is also estimated that approximately 25% of
women need long-term care after a hip fracture and 50% will experience a
long-term loss of mobility.

         Female Sexual Dysfunction. Menopause also is associated with various
forms of female sexual dysfunction. Menopause-related hormonal changes can
result in a recurrent inability to attain or maintain lubrication in response to
sexual excitement, painful intercourse, a decrease in sexual pleasure and orgasm
and diminished sexual desire. The emotional and psychological changes that women
experience during and after menopause also may diminish sexual desire.
Diminished sexual desire is the most prevalent female sexual disorder. Among the
approximately 14 million menopausal women between the ages of 50 and 59, an
estimated 27% experience diminished sexual desire and approximately 23% do not
experience orgasm following normal sexual excitement.

EXISTING THERAPIES AND TRENDS

         Existing therapies for vasomotor symptoms, osteoporosis, and female
sexual dysfunction fall principally into the following two categories:

         -        HRT products, including estrogen replacement therapy and
                  estrogen/progestin combination products prescribed to treat
                  vasomotor symptoms and assist in the prevention of
                  osteoporosis, and estrogen/androgen combination products
                  prescribed to treat vasomotor symptoms and used off-label to
                  treat female sexual dysfunction; and

         -        Non-HRT products, including bisphosphonates, selective
                  estrogen receptor modulators, or SERMs, and calcitonins, each
                  of which prevents and/or treats only osteoporosis.

HRT Products

         In 2001, HRT was the fourth most prescribed drug category in the
United States, with more than 100 million prescriptions dispensed. These
prescriptions, for either treatment of menopause symptoms or prevention of
osteoporosis, generated total sales of over $2.9 billion. Oral, once-daily
hormone replacement therapy accounted for 89% of HRT prescriptions in 2001. The
Premarin(R) family of products accounted for 67% of all HRT prescriptions in
2001 and 72% of total HRT market sales.

                                      32
We expect that the domestic HRT market will continue to grow, at least
through the rest of this decade. Key drivers for this expected HRT sales
growth include:

         -        the "baby boomers" entering menopause;

         -        patient and physician education on the benefits of HRT;

         -        standardized osteoporosis screening; and

         -        evidence of potential collateral benefits of HRT, including
                  prevention of heart disease and neurodegenerative diseases.

         Estrogen-Only Therapies

         Estrogen replacement therapy is the only FDA-approved therapy that
treats vasomotor symptoms and is the first line cost effective therapy
recommended by the National Osteoporosis Foundation for prevention of
osteoporosis. The estrogen-only category of the oral HRT market totaled $1.4
billion in sales in the United States in 2001, with sales of Premarin(R)
accounting for 87% of total sales in that category.

         Estrogens have been used to treat vasomotor symptoms for more than 50
years. It is estimated that approximately 70% to 80% of estrogen usage is for
the treatment of vasomotor symptoms, with the other 20% to 30% being prescribed
for the prevention of osteoporosis. Because the vasomotor symptoms of menopause
are a direct result of the decline in estrogen levels associated with ovarian
shutdown, estrogen replacement directly remediates these symptoms. Multiple
studies have demonstrated the positive effects of estrogens on vasomotor
symptoms.

         Estrogen replacement therapy is approved for the prevention of
osteoporosis, and we believe no other osteoporosis therapy has been shown to be
more effective; only bisphosphonates have been shown to be comparably
effective. Estrogen replacement therapy is the only osteoporosis therapy with
long-term clinical experience. Multiple studies have been conducted on various
estrogen compositions that demonstrate efficacy based on increases in bone
mineral density. Epidemiological and some fracture prevention studies also have
demonstrated a decrease in fractures resulting from increases in bone density
associated with HRT. Estrogen replacement therapy also improves sexual
functioning by reducing vaginal dryness and painful intercourse.

         Numerous studies indicate that estrogen replacement therapy lowers
levels of LDL cholesterol (the bad cholesterol) and raises levels of HDL
cholesterol (the good cholesterol). Studies also indicate a beneficial
effect of estrogen replacement therapy on the prevention of heart disease,
although not all studies are consistent. In addition, certain studies show that
women using estrogen replacement therapy have a lower risk of colon cancer and
neurodegenerative disorders. While long-term estrogen use is associated with
increased risk of endometrial cancer for women with intact uteruses who use
estrogen-only therapies and an increased risk of breast cancer, it is not
associated with a higher breast cancer mortality rate. Accordingly, although
some concern exists regarding increased risk of breast cancer associated with
long-term estrogen use, we believe that, for many women, the established and
potential collateral benefits from estrogen therapy significantly outweigh the
associated risks.

         Limitations of Existing Estrogen-Only Therapies. The market leader of
estrogen-only replacement therapy, Premarin(R), is an extracted estrogen
product derived from the urine of a pregnant horse and contains numerous
non-estrogenic urinary substances. No existing synthetic estrogens-only product
contains delta(8),(9), which is one of the ten essential active estrogens in
Premarin(R). Delta(8),(9) is

                                      33
believed to be an important contributor in reducing hot flashes and preventing
osteoporosis when used in complex estrogen mixtures.

         Estrogen/Progestin Combination Products

         Progestins are used in combination with estrogen in women with
uteruses to avoid an increase in the incidence of endometrial hyperplasia. This
is a condition caused by chronic use of estrogen alone by a woman with a uterus
and is associated with an increased incidence of uterine, or endometrial,
cancer. Many studies have shown that after one year, the incidence of
endometrial hyperplasia is less than 1% in women taking estrogen/progestin
combinations, in contrast to up to 20% in women taking estrogen alone. Also, a
woman's risk of uterine cancer has been shown to be lower if she takes
estrogen/progestin products than if she does not. Doctors typically recommend
that a menopausal or postmenopausal woman who has a uterus take estrogen plus a
progestin, either as a combination drug or as two separate drugs. Sales of
estrogen/progestin combinations were approximately $900 million in the United
States in 2001, of which products in the Premarin(R) family constituted 88%.

         Limitations of Existing Estrogen/Progestin Therapies. Current
estrogen/progestin combination therapies vary the progestin, but not the
estrogen, dose. Menopausal women suffering from vasomotor symptoms may require
a higher dose of estrogen to control the symptoms but postmenopausal women may
require only low doses to prevent osteoporosis. As a result, current therapies
may cause postmenopausal women to take more estrogen than they need, possibly
leading to adverse side effects and health risks. In addition, the most
commonly prescribed progestin (medroxyprogesterone acetate) causes some women
to experience painful vaginal bleeding, breast tenderness and bloating, and may
reduce the cardio-protective benefits potentially associated with estrogen
therapy by limiting the estrogen's ability to raise HDL cholesterol and lower
LDL cholesterol. Furthermore, current estrogen/progestin regimens do not
sufficiently control unexpected bleeding, especially during the first year of
therapy. Most women on cyclic progestin regimens continue to experience
menstrual-like cycles for the duration of the therapy. Innovative regimens are
needed that can better control unexpected bleeding and more quickly stop
bleeding altogether.

         Estrogen/Androgen Combination Products

         We believe the primary use of estrogen/androgen combinations is to
address female sexual dysfunction in menopausal women. These products also have
most of the same benefits and limitations of estrogen-only therapy.
Estratest(R) and Estratest(R) HS from Solvay Pharmaceuticals are the only two
currently marketed estrogen/androgen combination products in the United States.
These products lack FDA approval, but remain on the market pending submission
of studies to gain FDA approval. In addition, neither is indicated for the
treatment of female sexual dysfunction. Sales of Estratest(R) and Estratest(R)
HS were approximately $211 million in 2001, a 32% increase over sales in 2000.

         Limitations of Existing Estrogen/Androgen Therapies. The androgen used
in Estratest(R) and Estratest(R) HS has been found to result, in some cases, in
liver toxicity and masculinizing side effects, such as acne, male pattern
baldness, an increase in facial hair and an irreversible deepening of the
voice. A combination estrogen/androgen is needed that can treat female sexual
dysfunction with fewer or less severe negative side effects.

         Non-HRT Osteoporosis Treatments

         Non-HRT treatments for osteoporosis include bisphosphonates, SERMs and
calcitonins. In 2001, non-HRT drugs approved for the treatment or prevention of
osteoporosis generated total sales in the United States of approximately $2.3
billion. Bisphosphonates and SERMs have been approved by the FDA and are
currently being marketed for both the treatment and prevention of osteoporosis,
while

                                      34
calcitonins are approved for the treatment, but not prevention, of
osteoporosis. These products do not address vasomotor symptoms or female sexual
dysfunction and, in some cases, may be used as adjunctive therapy to HRT.

         Limitations of Non-HRT Osteoporosis Treatments. Bisphosphonates can
cause gastrointestinal irritation and erosion of the esophagus. In addition,
the long-term safety of bisphosphonates is a concern because they reside in the
body for many years. The only SERM currently marketed in the United States is
Evista(R). Studies have shown that Evista(R) is less effective in protecting
against bone loss than HRT. In addition, one of the negative side effects of
Evista(R) is that it causes, and may exacerbate, hot flashes in approximately
25% of women taking it for osteoporosis prevention. Calcitonins are considered
to be less effective than other therapies in treating osteoporosis. Studies
have shown that calcitonins reduce the risk of vertebral fractures, but have no
significant effect on the prevention of hip fractures. Calcitonins have few
adverse side effects, but may cause nausea, local inflammation, flushing of the
face or hands when given as an injection, and local nasal irritation when used
as a nasal spray. In addition, all non-HRT treatments are significantly more
expensive than HRT treatments.

OUR PRODUCT PORTFOLIO

         We are developing three proprietary HRT product candidates to address
several of the limitations of existing hormone replacement therapies. Enjuvia,
a complex estrogens-only product, and Projuvia, a complex estrogens/progestin
combination product, are designed to treat vasomotor symptoms of menopause and
to assist in the prevention of osteoporosis. Juviand is a complex
estrogens/androgen combination product, designed to treat female sexual
dysfunction, including diminished sexual desire.

         Our product candidates are oral, once-daily, sustained-release
tablets, based on proprietary formulations that stabilize a synthetic, complex
estrogens mixture, alone and in combination with a progestin or an androgen. We
have state-of-the-art analytical methodologies for the analysis and control of
these hormonal substances. All our product candidates are based on a
synthetically derived, novel active pharmaceutical ingredient that combines ten
synthetic, plant-derived, complex estrogens that contain the same ten essential
active estrogens as Premarin(R). All of the compounds contained in our product
candidates have been in FDA-approved products. As a result, we believe we will
have substantially fewer safety and clinical risks compared to unproven, new
chemical entities. We expect this prior use to result in the FDA imposing lower
toxicity and safety requirements for our product candidates prior to clinical
trials, and to result in substantially reduced clinical development risk with
respect to the estrogen components.

         We believe that our product candidates will be the second family of
complex estrogens products marketed in the United States to contain
delta(8),(9). Data are available demonstrating that delta(8),(9) contributes to
the reduction of hot flashes and the maintenance of bone integrity. A hot flash
study in postmenopausal women demonstrated similar efficacy as estrone sulfate
(the predominant estrogen in complex estrogen mixtures) when delta(8),(9) was
administered at one-tenth the dose of estrone sulfate. A study in
postmenopausal women demonstrated that delta(8),(9) significantly lowered levels
of a bone resorption marker, indicating maintenance of bone integrity in these
women. Delta(8),(9) is also an antioxidant which leads to positive effects on
cholesterol.

                                      35
The following table sets forth certain information about our product
candidates:
PRODUCT CANDIDATE            ACTIVE INGREDIENTS           INDICATION(S)              REGULATORY STATUS
-----------------            ------------------           -------------              -----------------
Enjuvia                      Ten Essential Active         Vasomotor Symptoms         NDA filed March 2002
                             Estrogens
                                                          Osteoporosis               Phase III

Projuvia                     Ten Essential Active         Vasomotor Symptoms         Phase III
                             Estrogens and a Progestin    Osteoporosis

Juviand                      Ten Essential Active         Female Sexual Dysfunction  Entering Phase II
                             Estrogens and an Androgen
For an explanation of the terms NDA, Phase II and Phase III, please refer to "
-- Government Regulation" below.

ENJUVIA(TM)

         Enjuvia will target the treatment of vasomotor symptoms and the
prevention of osteoporosis in women who have had a hysterectomy or for use in
combination with a progestin by women who have not had a hysterectomy. Enjuvia
is a chemically synthesized complex combination of estrogens and is the only
HRT with the same ten essential active estrogens as Premarin(R), including
delta(8),(9). Unlike Premarin(R), which is derived from urine collected from
pregnant horses, the estrogens in Enjuvia are chemically derived from compounds
obtained from plant-derived material and free of non-estrogenic urinary
substances. In contrast, the estrogens obtained from horse urine contain
significant amounts of non-estrogenic urinary substances such as hippuric acid,
indican and benzoic acid. Enjuvia is a sustained-release product formulated in
0.3, 0.45, 0.625 and 1.25 mg dosage strengths.

Treatment of Vasomotor Symptoms

         We completed a pivotal Phase III clinical trial in the treatment of
moderate to severe vasomotor symptoms associated with menopause. The trial
randomized 281 menopausal women at 22 sites across the United States to
compare, in a double-blind fashion, the safety and efficacy of Enjuvia versus
placebo in reducing the frequency and severity of vasomotor symptoms over a
12-week period. The trial was conducted using dosage strengths of 0.3, 0.625
and 1.25 mg. All three dosage strengths were demonstrated to be effective in
the reduction of both the frequency and severity of vasomotor symptoms.

         Frequency. Groups treated with the 0.625 and 1.25 mg dosage strengths
had a statistically significant reduction, measured against the FDA threshold,
in the frequency of vasomotor symptoms at four, eight and 12 weeks. The 0.3 mg
group had a statistically significant reduction in frequency at eight and 12
weeks, and showed effective results at four weeks, although the reduction at
four weeks did not meet the FDA threshold. Because of these results, we cannot
assure you that the FDA will approve the 0.3 mg dosage strength. However, the
FDA did approve Cenestin(R), a synthetic, estrogen-only HRT product, at 0.625
and 0.9 mg dosage strengths without requiring a showing of a statistically
significant reduction in the frequency of vasomotor symptoms at such doses at
four weeks.

         Severity. Groups treated with the 0.625 and 1.25 mg strengths had a
statistically significant reduction in the severity of vasomotor symptoms at
four, eight and 12 weeks. The 0.3 mg group had a statistically significant
reduction in severity at 12 weeks, and showed effective results at four and
eight

                                      36
weeks, although the reduction at four and eight weeks did not meet the FDA
threshold. The FDA approved Cenestin(R) at 0.625 and 0.9 mg dosage strengths
without requiring a showing of a statistically significant reduction in the
severity of vasomotor symptoms.

Application for Approval

         We submitted an NDA for Enjuvia to the FDA on March 22, 2002 for
approval for the treatment of vasomotor symptoms for all four dosage strengths.
The NDA was filed under Section 505(b)(2) of the Federal Food, Drug, and
Cosmetic Act, or FDCA, under which previously available data in support of a
product's approval is referenced and new studies, such as animal toxicity and
other pre-clinical trials, are not required. We anticipate approval in the first
half of 2003 of all four strengths of Enjuvia for the treatment of vasomotor
symptoms associated with menopause. We are seeking FDA approval of our
0.45 mg dosage strength based upon data correlating the 0.45 mg dosage strength
to the 0.3 and 0.625 mg dosage strengths. The FDA may require us to perform
further pharmacokinetic or bioequivalence studies to prove the correlation of
dosage strengths. If these studies are required, we expect to be able to
complete them without significant delay. If the FDA does not approve the 0.3 mg
dosage strength, it will not approve the 0.45 mg dosage strength for the
vasomotor indication unless we conduct an additional trial. In that case, we
intend to conduct the additional trial and seek FDA approval of the 0.45 mg
dosage strength for the vasomotor indication on the basis of that trial.

Osteoporosis Prevention

         We currently are enrolling participants in our pivotal Phase III study
using Enjuvia in the prevention of osteoporosis. This study is a two-year,
randomized, double-blind, placebo-controlled trial of 0.3, 0.45 and 0.625 mg
dosage strengths of Enjuvia in 352 hysterectomized postmenopausal women. The
primary endpoint is an increase in bone mineral density. The NDA filing for the
osteoporosis indication for Enjuvia will rely upon this single pivotal safety
and efficacy trial. We expect enrollment for the Phase III study to be
completed by early 2003, although we cannot assure you that enrollment will be
completed by that date.

PROJUVIA(TM)

         Projuvia will target the treatment of vasomotor symptoms and the
prevention of osteoporosis in women with intact uteruses for whom there is a
risk of endometrial hyperplasia associated with the use of estrogen-only HRT.
Projuvia combines the ten essential complex estrogens in Enjuvia with a
progestin that has not previously been approved by the FDA for HRT use.

         We are evaluating Projuvia using 0.45 and 0.625 mg dosage strengths of
complex estrogens in combination with the progestin at doses designed to
minimize uncontrolled bleeding and achieve uterine protection. We believe that
menopausal women may require a higher dose of estrogens (0.625 mg) to control
vasomotor symptoms, while most postmenopausal women may only require a lower
dose of estrogens (0.45 mg) to prevent osteoporosis. These strengths of our
complex estrogens are being combined with the lowest effective doses of our
selected progestin. We expect this strategy, in concert with a novel, improved
dosing regimen, should maximize the potential lipid-enhancing profile of the
estrogens, reduce the incidence of breakthrough or unexpected bleeding more
quickly stop menstrual-like bleeding, altogether and eliminate or reduce the
negative side effects associated with current estrogen/progestin therapies. The
new estrogen dosage strengths and regimen provided by Projuvia will allow
physicians to precisely tailor the therapy to the changing needs of women as
they move through menopause and beyond.

Regulatory Strategy

         We have completed a Phase II dose-ranging study evaluating the effects
of the progestin on endometrial hyperplasia and bleeding, which assisted us in
identifying the lowest effective dose of the progestin for each estrogen dosage
strength. In April 2002, we initiated a pharmacokinetics trial to demonstrate
the bioequivalence of the estrogens in Projuvia and Enjuvia at each estrogen
dosage strength.

                                      37
By demonstrating bioequivalence, we will be able to seek FDA approval for the
same indications for Projuvia that we are seeking for Enjuvia.

         We have commenced a pivotal Phase III clinical safety and efficacy
trial studying Projuvia in the prevention of endometrial hyperplasia in
postmenopausal women. This pivotal study will be a one-year, randomized,
double-blind, parallel-group, controlled trial of four regimens of Projuvia in
624 non-hysterectomized, postmenopausal women in the suppression of endometrial
hyperplasia. During the course of this trial, we also will monitor cholesterol
levels, bleeding patterns and adrenal hormone production. The NDA filing will
rely upon the findings of this single pivotal safety and efficacy trial,
supported by the dose-ranging study already completed and the pharmacokinetics
trials currently underway. We will conduct multiple pharmokinetics studies to
support the filing.

JUVIAND(TM)

         Juviand will target the treatment of female sexual dysfunction in
menopausal women. Juviand combines the ten essential complex estrogens in
Enjuvia with an androgen that we expect will have a competitive safety and
efficacy profile compared to the currently marketed HRT product, Estratest(R),
which is an unapproved estrogen/testosterone combination product labeled for
vasomotor symptoms but prescribed off-label for female sexual dysfunction. We
expect our androgen to avoid liver toxicity and other negative side effects
associated with the use of most androgens, such as acne, male pattern baldness,
an increase in facial hair and an irreversible deepening of the voice.

Regulatory Strategy

         We intend to conduct two Phase II trials. The first will be a small,
single-dose, proof of concept trial with the androgen only to determine the
effect of the androgen on arousal within a confined laboratory setting. The
second will be a six-month, randomized, double-blind, parallel-group,
placebo-controlled trial of three different estrogen/androgen regimens in 160
women. We have completed the manufacture of clinical trial materials for this
second trial and it is scheduled to begin in the second quarter of 2002. This
trial will evaluate the safety and efficacy of our estrogen/androgen
combination as a function of dose. Two pivotal Phase III safety and efficacy
trials of Juviand in treating female sexual dysfunction will be required for
NDA filing and product approval. We expect the Phase III trials to take
approximately two years.

         In addition to the clinical development program for Juviand, we also
have discussed with the FDA the safety profile of the androgen and the need to
conduct pre-clinical studies. Based on these discussions, we have begun general
pharmacology and mutagenicity studies and plan chronic toxicity and
carcinogenicity studies to support the androgen's long-term, chronic use.
Supportive pharmacokinetic trials also are planned to document the absorption,
distribution, metabolism and excretion of the androgen in patients.

EARLY-STAGE RESEARCH

         In an effort to expand our product pipeline, we are continuing our
research in the fields of hormone discovery, characterization, and
pharmacology. The foundation of our research is the discovery, identification,
and characterization of new hormones with structural characteristics indicating
activity at certain hormone receptors. These receptors, found in both men and
women, are estrogen receptors and androgen receptors.

         Estrogen receptors are located primarily in the female reproductive
system and breasts. However, they are also found in concentrations in many
other body tissues, including the skin, lining of the intestines and colon,
vascular walls, heart, bone and brain. Androgens also play an important role in
the

                                      38
functioning and maintenance of the female reproductive system and reproductive
cycle, as well as many other functions of the female body not directly related
to sexual function. Androgen receptors are located in the cells of many tissues
in a woman's body, including reproductive organs, muscle, skin, hair follicles,
and bone.

         Our program has identified naturally and synthetically derived new
compositions of matter whose structure indicates they are potential estrogen
agonists (i.e., they activate receptors), partial estrogen agonists (also known
as SERMs), or estrogen antagonists (i.e., they block receptor activity). Two of
our new compounds have been shown to be highly active at estrogen receptors and
are the subject of composition of matter patent applications. We are continuing
to characterize a series of compounds that we believe will show activity at one
or more of the sex hormone receptors due to their structural relationships. We
expect to continue screening these compounds for activity and to aggressively
protect these compounds through appropriate patent filings. We expect to
identify other compounds with advantageous pharmacological profiles and, if we
do, we will consider them for further development as product candidates.

         We also are continuing our hormone research work in animal models and
human models to understand the pharmacological profiles of known hormones,
alone or in combination. This research is focused on identifying therapeutic
advantages associated with hormone regimens, lowest effective doses, and
synergistic hormone combinations. These studies have identified three
opportunities for therapeutic advantages in HRT. We have filed patent
applications to protect these therapeutic concepts.

MARKETING AND SALES

         We have retained worldwide marketing rights for all three of our
product candidates. We intend to market and sell them in the United States,
initially concentrating on the women's health community. We plan to focus our
marketing effort on three constituencies which we believe will be critical to
the success of our products candidates:

         -        high-prescribing physicians (principally gynecologists) and
                  the allied healthcare professionals who influence
                  prescribing;

         -        patients, who are increasingly involved in treatment
                  decisions relating to HRT; and

         -        managed care organizations which influence physicians'
                  prescribing behavior and patient use.

         The target audience of physicians who prescribe HRT is very
concentrated. Fewer than 25,000 physicians account for approximately 50% of HRT
prescriptions in the United States. This concentration should allow a small
sales force to have a large impact on prescribing patterns. Our
physician-directed activities will concentrate on attaining a high frequency of
interactions within the pool of actively prescribing physicians, rather than on
reaching a wide audience. We expect to expand our target audience as we launch
successive products.

         In April 2001, we hired a Vice President of Marketing and Sales who
has extensive experience in managing pharmaceutical marketing organizations,
and has led several successful product introductions. We also recently hired a
Senior Director of Marketing with significant product management and marketing
communications experience, and an Executive Sales Director with extensive
experience in managing both large and small sales forces. Prior to the launch
of our first product candidate, we plan to hire marketing and sales managers,
primarily in the areas of trade and managed care account management and
regional and divisional sales management.

                                      39
We are exploring the potential of entering into co-promotion
arrangements with other pharmaceutical companies. Possible co-promotion
strategies include utilizing our partner's sales force to market and sell our
product candidates, with the aim of increasing our reach and/or frequency of
contact, and employing our sales force to market and sell our partner's
products in exchange for a share of revenues.

         In geographic markets outside the United States, we may establish
relationships with marketing partners for the sale of our product candidates.
As part of this strategy, we may enter into marketing and collaborative
arrangements which include granting marketing rights with respect to selected
products and markets.

PATENT PROTECTION, REGULATORY EXCLUSIVITY AND INTELLECTUAL PROPERTY

         We are aggressively pursuing several patents which, if issued, would
provide long-term protection for our HRT products. In addition, we believe that
each of our current product candidates, if approved by the FDA, would enjoy a
three-year exclusive marketing period during which the FDA could not approve
generic versions of these product candidates for the same indications. Further,
we believe that there are technological barriers inherent in the replication of
our products.

PATENTS AND PATENT APPLICATIONS

         Our ability to ensure long-term market exclusivity will depend on our
ability to obtain patent protection in the United States and elsewhere. We have
filed, and continue to file, patent applications with respect to multiple
aspects of our technologies, products and processes. We believe that many of
these patent applications will enhance our competitive position.

         We believe that our patent applications cover novel technologies of
potential commercial significance. However, due to the extended period of time
for review of patent applications in the pharmaceutical field, we cannot be
certain as to when decisions regarding our patent applications will be made.
Moreover, we do not know whether any pending patents will be granted to us or
whether any issued patents will be sufficiently broad to provide a competitive
advantage. The validity of any patent granted to us may be challenged by a
competitor or a competitor may claim that its products do not infringe on our
patents.

         We have filed a composition of matter patent application including,
among other things, the complex estrogens that we use in our product
candidates. In addition, we have filed a synthesis patent application
including, among other things, the inclusion of delta(8),(9) in our complex
estrogens composition. We believe that either of these patents, if issued,
would prohibit generic competition and provide substantial protection against
competitive products that use the same ten essential estrogens for at least 20
years from the respective filing dates of the patent applications. Many patent
applications initially receive "office actions" denying the grant of a patent
but later are approved based on the submission of supplemental information or
arguments to the patent office on appeal. Although we have received an initial
office action denying our composition of matter patent application, it is
possible that this application will be allowed without an appeal. If an appeal
is required, we believe our legal and scientific bases for this application are
sound and that the patent will ultimately be issued through the appeal process.

         We have filed a patent application for our Projuvia dosing regimen
which is designed to reduce unexpected bleeding. This patent, if issued, would
prohibit any competitors from using our regimen with any estrogen or progestin
combination.

                                      40
Juviand is covered under our patent applications that include the
class of androgens we are using in hormone replacement therapy in
postmenopausal women and that include the use of our class of androgens as a
female sexual dysfunction therapy. These patents, if issued, would prohibit any
competitors from using our class of androgens to treat female sexual
dysfunction and from using our class of androgens in combination with estrogens
for postmenopausal HRT.

         As of April 5, 2002, we had two United States and foreign patents. The
first covers methods for dry blend compression of medicaments. The second
covers a method for preparing low dose pharmaceutical products. While neither
of these patents directly relates to our current product portfolio, we believe
they will be valuable to the extent that they afford products in our research
pipeline protection that may use these processes against infringing products.
In addition to the two issued patents, we have 13 patent applications pending
in the United States and 13 patent applications pending in foreign countries.

REGULATORY EXCLUSIVITY PERIODS

         We believe that each of our product candidates, if approved by the FDA,
would enjoy a three-year exclusive marketing period during which the FDA could
not approve a generic version of the product for the same indications. This
exclusivity is provided under the Drug Price Competition and Patent Term
Restoration Act of 1984, commonly referred to as the Waxman-Hatch Amendment, and
is available to NDAs for which new clinical studies were conducted or sponsored
by the applicant and which were essential to approval. We believe our vasomotor
trial for Enjuvia qualifies as a new clinical study eligible for exclusivity
under the Waxman-Hatch Amendment. In addition, upon the completion of our
osteoporosis trial and approval of our application for the addition of the
prevention of osteoporosis claim to Enjuvia's labeling, we believe an additional
three-year exclusive marketing period would be granted for that indication. We
also believe our Phase III clinical trial of Projuvia in the prevention of
endometrial hyperplasia in postmenopausal women will qualify as a new clinical
study for purposes of the Waxman-Hatch Amendment. If the trial does so qualify
and if Projuvia is approved by the FDA, then it will enjoy a three-year
exclusive marketing period during which the FDA could not approve a generic
version of Projuvia for any indication. If approved by the FDA, our Juviand
product candidate also would enjoy a three-year exclusive marketing period for
the female sexual dysfunction indication based on our clinical trials for that
product candidate.

TECHNOLOGICAL SOPHISTICATION

         Our product candidates contain a complex combination of ten essential
estrogens, either alone or combined with a progestin or an androgen. All our
product candidates utilize a sophisticated drug delivery system providing a
sustained release of their component parts. This system stabilizes the
inherently unstable complex hormonal blends. We believe few companies, if any,
currently have the ability to independently source and replicate our product
candidates. Our ability to develop, manufacture, and control our product
candidates is based on hormone technology platforms developed over a period of
years which include proprietary capabilities in the identification,
characterization, control, and manufacturing of hormones.

         Even if our pending patents do not issue, a competitor could not
utilize the streamlined FDA approval process for generics afforded under the
Waxman-Hatch Amendment unless it could establish that its generic versions were
"bioequivalent" to our product candidates. A drug is bioequivalent to another
drug if it possesses the same active ingredients, and approximately the same
amount of each active ingredient remains in the body for approximately the same
time and disperses in the body at approximately the same rate. For example, a
competitor's generic version of Enjuvia would have to contain each of the ten
complex estrogens present in Enjuvia, including delta(8),(9), and each estrogen
would have to be as effectively absorbed into, and metabolized by, the body at
the same rate and to the same

                                      41
extent. We do not believe that a competitor could easily produce a
bioequivalent generic version of Enjuvia, or any of our other product
candidates, in the near future.

OTHER PROPRIETARY RIGHTS

         Some elements of our pharmaceutical composition, formulation,
delivery, processes or methods of manufacturing involve unpatented, proprietary
technology, processes, know-how or data. With respect to proprietary
technology, know-how and data that are not patentable or potentially
patentable, or processes other than production processes for which patents are
difficult to enforce, we rely on trade secret protection and confidentiality
agreements with our employees, consultants and contractors. To maintain the
confidentiality of trade secrets and proprietary information, we maintain a
policy of requiring employees, scientific advisors, consultants and
collaborators to execute confidentiality and invention assignment agreements
upon commencement of a relationship with us. These agreements are designed both
to enable us to protect our proprietary information by controlling the
disclosure and use of technology to which we have rights, and to provide for
our ownership of proprietary technology that we develop. However, we cannot
assure you that these agreements will provide meaningful protection for our
trade secrets in the event of unauthorized use or disclosure of such
information. We also have several United States and foreign trademark and
service mark applications pending for registrations of our name, logo, tag
lines and product names.

MANUFACTURING AND SUPPLY ARRANGEMENTS

         Our manufacturing strategy is designed to achieve the following goals:

         -        Support clinical supply needs on a timely basis;

         -        Provide uninterrupted supply of commercial products to the
                  marketplace;

         -        Produce products that meet cGMP requirements in a
                  cost-effective manner; and

         -        Protect our intellectual property.

Initially, we plan to use third-party contractors to source key raw materials
and manufacture and package our commercial products. The FDA must issue
marketing clearance and deem a manufacturer acceptable under cGMP regulations
before production of bulk proprietary or finished pharmaceuticals for
commercial sale may begin. Accordingly, we intend to engage only those
third-party contract manufacturers that have consistently shown the ability to
satisfy these requirements.

CONTRACT MANUFACTURING

         Our Enjuvia NDA was filed with two contract manufacturers qualified to
produce that product candidate. These manufacturers satisfy the cGMP
requirements as well as our capacity and cost of manufacturing requirements. We
will use several contract-packaging suppliers to support our packaging needs
for both commercial and promotional products. We will seek to maintain quality
control over manufacturing through ongoing inspections, rigorous review,
control over documented operating procedures and thorough analytical testing.
We believe that our current strategy of outsourcing manufacturing is a
cost-effective measure that will enable us to avoid the fixed costs of plant,
equipment and manufacturing staffs and conserve our resources. We will continue
to evaluate our manufacturing requirements and may establish or acquire our own
facilities to manufacture our products for clinical trials or commercial
distribution if we determine that doing so would reduce costs or improve
control and flexibility of product supply. Because our HRT production process
uses conventional equipment, we

                                      42
believe that we may have the opportunity to acquire existing, high quality
production facilities with sufficient capacity at a significantly lower cost
than building such facilities.

ESTROGEN SUPPLY ARRANGEMENTS

         We have agreements in place with suppliers to provide our complex
estrogens drug substance, which we use to produce tablets for the product
candidates in our HRT product portfolio. In particular, we have an agreement
with Berlichem, Inc. and Berlex Laboratories, Inc. to provide the delta(8),(9)
dehydroestrone that is synthesized into delta(8),(9) dehydroestrone sulfate by
Organics/LaGrange for inclusion in our complex estrogens mixture. Throughout
this prospectus, we use delta(8),(9) to refer to delta(8),(9) dehydroestrone
sulfate.

         Berlichem/Berlex. We have a supply agreement with Berlichem and Berlex,
affiliates of Schering AG, to supply our requirements of delta(8),(9)
dehydroestrone. Under this agreement, Berlex is prohibited from supplying
delta(8),(9) dehydroestrone to any purchaser in the United States for inclusion
in the manufacture of an HRT product (other than our products), but may use the
compound in products for sale in the United States only by Berlex or its
affiliates. If Berlex decides to market an oral, synthetic estrogens product for
the HRT market in the United States, our agreement with Berlex provides that
Berlex cannot file an Abbreviated New Drug Application referencing any of our
NDAs until three years after our NDA is initially approved by the FDA. Berlex's
limited exclusivity obligations terminate on December 31, 2010, but thereafter
renew automatically for periods of two years unless Berlex provides written
notice of non-renewal to us at least six months prior to December 31, 2007 or
six months prior to the end of any of the two-year renewal periods. Berlex's
limited exclusivity obligations would terminate before December 31, 2010 upon
the occurrence of any of the following events:

         -        The FDA does not accept an NDA filing for an oral synthetic
                  estrogens product for any indication by December 31, 2003;

         -        We do not satisfy certain delta(8),(9) dehydroestrone minimum
                  annual purchase requirements beginning in 2006; or

         -        The agreement is terminated with cause prior to December 31,
                  2006 or without cause after such date.

         Under the agreement, Berlex has an option to acquire co-promotion
rights for Enjuvia in the United States. If Berlex exercises the option and we
and Berlex are able to negotiate a definitive co-promotion agreement, then,
among other things, we and Berlex will share in the profits resulting from the
sale of Enjuvia and Berlex will be prohibited from selling delta(8),(9)
dehydroestrone, or any product containing delta(8),(9) dehydroestrone, to any
person in the United States for use in an HRT product for the duration of the
agreement. If Berlex exercises the option and we and Berlex are unable to
negotiate a definitive co-promotion agreement, then we will be prohibited from
granting co-promotion rights for Enjuvia to a third party on more favorable
terms than those offered to Berlex. If Berlex does not exercise the option, the
limited exclusivity provisions will remain unchanged.

         Organics/LaGrange. We also have a supply and manufacturing agreement
with Organics/LaGrange, Inc. under which Organics supplies and manufactures our
requirements of complex estrogens products containing delta(8),(9). Under the
agreement, Organics is prohibited from preparing for, or selling to, a third
party (other than Berlex) any complex estrogens product containing delta(8),(9),
as long as, among other things, we satisfy a minimum annual purchase or fee
requirement through 2007. If we fail to comply with this or other requirements,
Organics may sell or transfer complex estrogens products containing delta(8),(9)
to any other party for any use and without affecting its remaining obligations
under the agreement. With certain limited exceptions, the agreement terminates
no earlier than November 1, 2010.

                                      43
PROGESTIN AND ANDROGEN SUPPLY ARRANGEMENTS

         The progestin we are using in Projuvia is available from several
different sources. We have evaluated material from more than one source, and
have confirmed suitability of use in our product candidate. We believe our
current arrangements with suppliers for this product candidate are sufficient
to cover our needs for the foreseeable future. We have agreements in place for
the supply of the androgen we use, which is available from a limited number of
suppliers. The androgen we are using is a potent compound, and is used in low
doses. Our agreements cover a sufficient supply of this material for all our
clinical work and foreseeable commercial needs.

         We believe that the foregoing supply arrangements, in addition to
arrangements we have with other suppliers, provide us with access, on
competitive terms, to the raw materials we need to manufacture our product
candidates. Moreover, we believe that our dependence on each supply arrangement
is reduced by the existence of one or more other suppliers of the raw materials
we require, and our current inventory of raw materials.

COMPETITION

         The pharmaceutical industry is highly competitive with a number of
established, large companies, as well as smaller emerging companies, whose
activities are directly focused on our target markets and areas of expertise.
Many of our competitors possess greater financial, managerial and technical
resources and have established reputations for successfully developing and
marketing drugs, all of which put us at a competitive disadvantage. We face,
and will continue to face, competition in the discovery, in-licensing,
development and commercialization of HRT products, which could severely impact
our ability to generate revenue or achieve significant market acceptance of our
product candidates. Furthermore, the development of other drug technologies
occur at a rapid pace in the pharmaceutical industry. These developments may
render our product candidates or technologies obsolete or noncompetitive.

         Our first product candidate, Enjuvia, if approved by the FDA, would
face competition from the dominant market leader, Premarin(R). We expect that
all our product candidates, if approved by the FDA, would compete with existing
therapies for our targeted indications, as well as new drugs, therapies, drug
delivery systems or technological approaches that may be developed to treat our
targeted indications. Any of these drugs, therapies or systems may receive
government approval or gain market acceptance more rapidly than our product
candidates or may offer therapeutic or cost advantages.

         We believe that pharmaceutical, drug delivery and biotechnology
companies, as well as others, are seeking to develop therapies for our targeted
indications. For all our targeted indications, competitors have already
commercialized, or are in advanced stages of development of, alternative
therapies. Our direct competitors include Wyeth, Novartis, Pharmacia,
Ortho-McNeil, Berlex, Solvay, King Pharmaceuticals, Warner Chilcott, Barr and
Procter & Gamble. These competitors may succeed in developing pharmaceutical
products that are more effective or less costly than any we may develop or
market.

         Our competitive position also depends on our ability to attract and
retain qualified scientific and other personnel, develop effective proprietary
products, implement development and marketing plans, obtain patent protection
and secure adequate capital resources.

GOVERNMENT REGULATION

         The pharmaceutical products, or pharmaceuticals, that we are
developing and intend to have manufactured by third parties are subject to
rigorous domestic regulatory requirements designed to ensure the safety,
effectiveness, quality and integrity of pharmaceuticals, primarily under the
FDCA. Some of

                                      44
our products, because they contain an anabolic steroid, also will be subject to
regulation by the U.S. Drug Enforcement Administration, or DEA, under the
Controlled Substances Act, relating to requirements for and restrictions on the
manufacture, sale, and distribution of drugs with a potential for abuse. Our
development efforts performed outside the United States and pharmaceuticals
intended to be sold outside the United States are also subject to additional
regulatory requirements and government agencies.

         United States laws and regulations apply to all phases of the
development, manufacturing, testing, promotion and distribution of
pharmaceuticals, including with respect to our personnel, record keeping,
facilities, equipment, control of materials, processes, laboratories,
packaging, labeling, storage, and advertising. In particular, our manufacturing
operations, and those of our contractors, are subject to the FDA's cGMP
regulations which are administered by the FDA in accordance with current
industry standards.

         All our pharmaceuticals must be manufactured in conformity with the
FDA's cGMP regulations, and pharmaceuticals subject to an approved FDA
application must be manufactured, processed, packaged, held and labeled in
accordance with information contained in the application. Additionally,
modifications, enhancements, or changes in manufacturing sites of, or the
manufacturing procedures for, approved pharmaceuticals are in many
circumstances subject to FDA inspections and prior approval that we may not be
able to obtain and that may be subject to a lengthy application process. Our
facilities, including the facilities of third-party manufacturers of our
product candidates, are periodically subject to inspection by the FDA and other
governmental agencies, and operations at these facilities could be interrupted
or halted for lengthy periods of time if such inspections prove unsatisfactory.

         Failure to comply with FDA, DEA, or other governmental regulations can
result in fines, unanticipated compliance expenditures, recall or seizure of
products, total or partial suspension of production or distribution, suspension
of the FDA's review of our drug approval applications, termination of ongoing
research, disqualification of data for submission to regulatory authorities,
enforcement actions, injunctions and criminal prosecution. Under certain
circumstances, the FDA also has the authority to revoke previously granted drug
approvals. Although we intend to institute internal compliance programs, if
these programs do not meet regulatory agency standards or if compliance is
deemed deficient in any significant way, it could have a material adverse
effect on us.

         In connection with our products to be sold outside the United States,
we are also subject to foreign regulatory requirements governing the testing,
approval, manufacture, labeling, marketing and sale of pharmaceutical products,
which requirements vary from country to country. Whether or not FDA approval
has been obtained for a product, approval by comparable regulatory authorities
of foreign countries must be obtained prior to marketing the product in those
countries. The approval process may be more or less rigorous from country to
country, and the time required for approval may be longer or shorter than that
required in the United States. No assurance can be given that clinical studies
conducted outside of any country will be accepted by that particular country,
and the approval of a pharmaceutical product in one country does not assure
that the product will be approved in another country. In addition, regulatory
agency approval of pricing is required in many countries and may be required
for the marketing in those countries of any drug that we develop.

         Of particular importance to our proposed product candidates is the
process mandated by the FDA under the new drug approval provisions of the FDCA
to enable pharmaceuticals to be marketed in the United States. This process
generally involves the following:

         -        pre-clinical laboratory and animal tests;

         -        submission to the FDA of an Investigational New Drug
                  Application, or IND, which must become effective before
                  certain clinical trials may begin;

                                      45
-        adequate and well controlled clinical trials to establish the
                  safety and efficacy of the proposed pharmaceutical for its
                  use;

         -        submission to the FDA of an NDA; and

         -        FDA review and approval of the NDA.

Pre-clinical tests include laboratory evaluation of the pharmaceutical product,
its chemistry, formulation and stability, as well as animal studies to assess
its potential safety and efficacy. The results of the pre-clinical tests,
together with manufacturing information and analytical data, are submitted by
the applicant to the FDA as part of an IND. The IND must become effective
before human clinical trials may begin. The IND automatically becomes effective
30 days after receipt by the FDA, unless the FDA, within the 30-day time
period, raises concerns or questions about the conduct of the trials as
outlined in the IND and imposes a clinical hold.

         Clinical trials involve the administration of the pharmaceutical to
human subjects under the supervision of a qualified principal investigator.
Clinical trials are conducted in accordance with protocols that detail the
objectives of the study, the parameters to be used to monitor safety, and the
efficacy criteria to be used to evaluate the trial results. Each protocol must
be submitted to the FDA as part of the IND. Further, each clinical study must
be conducted under the auspices of an independent institutional review board,
usually at the institution where the study will be conducted. The institutional
review board considers, among other things, ethical factors, the safety of
human subjects, the adequacy of the informed consent form, and the possible
liability of the institution.

         Human clinical trials are typically conducted in three sequential
phases which may overlap:

Phase I    Refers typically to closely monitored clinical trials and includes
           the initial introduction of the pharmaceutical into human patients or
           normal volunteer subjects. Phase I clinical trials are designed to
           determine the metabolism and pharmacologic actions of the
           pharmaceutical in humans, the side effects associated with increasing
           dosage and, if possible, to gain early evidence on effectiveness. The
           total number of subjects and patients included in Phase I clinical
           trials varies, but is generally in the range of 20 to 80 people.

Phase II   Refers to controlled clinical trials conducted to evaluate the
           effectiveness of the pharmaceutical for a particular indication or
           indications in patients with a disease or condition under study and
           to determine the common short-term side effects and risks associated
           with the pharmaceutical. These clinical trials are typically well
           controlled, closely monitored and conducted in a relatively small
           number of patients, usually involving no more than several hundred
           subjects.

Phase III  Refers to expanded controlled and uncontrolled clinical trials. These
           clinical trials are performed after preliminary evidence suggesting
           effectiveness of the pharmaceutical has been obtained. They are
           intended to gather additional information about the effectiveness and
           safety that is needed to evaluate the overall benefit-risk
           relationship of the pharmaceutical and to provide an adequate basis
           for physician labeling containing adequate information for use of the
           pharmaceutical in treating patients. Phase III trials usually include
           from several hundred to several thousand subjects.

The FDA reviews the progress of each of the three phases of clinical trials that
are conducted pursuant to an IND. The FDA may, at its discretion, reevaluate,
alter, suspend or terminate the testing based upon the data accumulated to that
point and the FDA's assessment of the risk/benefit ratio to the subjects.

                                      46
Once Phase III trials are completed, an applicant submits the results
of the pre-clinical studies and clinical trials to the FDA in the form of an
NDA for approval to commence commercial sales. Before approving a drug, the FDA
also requires that manufacturing and related procedures and operations conform
to the cGMP regulations. In response to the NDA, the FDA may grant marketing
approval, request additional information or deny the application if the FDA
determines that the application does not meet regulatory approval criteria.

         The FDA also permits an applicant to submit NDAs that rely on the
FDA's approval of another company's pharmaceutical, or on safety and efficacy
studies that the applicant has not conducted and to which the applicant has not
obtained a right of reference, such as published scientific studies. These
505(b)(2) applications may, in certain cases, permit the applicant to meet NDA
approval requirements with less original scientific data than would normally be
required, thus allowing the applicant to begin drug development in a later
phase, or to reduce the time and expense involved in any particular phase, for
any new products the applicant chooses to develop.

         As a condition to initial FDA approval for the marketing of a
pharmaceutical, further studies, including so-called Phase IV post-approval
studies, may be required to provide additional data on safety or effectiveness.
Also, the FDA requires post-approval reporting to monitor the adverse effects
of the pharmaceutical. Results of post-approval programs may limit or expand
the further marketing of the pharmaceutical. Further, if there are any
modifications to the pharmaceutical, including changes in indication,
manufacturing process or manufacturing facility, an application seeking
approval of the modifications must be submitted to the FDA or other regulatory
authority before the change is implemented. Additionally, the FDA regulates
post-approval promotional labeling and advertising activities to assure that
such activities are being conducted in conformity with statutory and regulatory
requirements. Moreover, we must follow the cGMP regulations at all times during
the manufacture of our products. To help ensure compliance with these
regulations, we must continue to spend time, money and effort in the areas of
production and quality control. If the FDA believes a company is not in
compliance with cGMP, sanctions may be imposed upon that company including:

         -        Withholding new drug approvals as well as approvals for
                  supplemental changes to existing approvals;

         -        Preventing the company from exporting its products; and

         -        Classifying the company as an unacceptable supplier and
                  thereby disqualifying the company from selling products to
                  federal agencies.

         The testing and approval process requires substantial time, effort and
financial resources. We cannot be certain that we will successfully complete
Phase I, Phase II or Phase III testing of our product candidates within any
specific time period, if at all. Furthermore, we, the FDA or an institutional
review board may suspend clinical trials at any time on various grounds,
including a finding that the subjects or patients are being exposed to an
unacceptable health risk.

         We are also subject to numerous other federal, state and local laws
relating to such matters as safe working conditions, manufacturing practices,
environmental protection, fire hazard control, and disposal of hazardous or
potentially hazardous substances. We may incur significant costs to comply with
such laws and regulations now or in the future. In addition, we cannot predict
what adverse governmental regulations may arise from future United States or
foreign governmental action.

                                      47
EMPLOYEES

         As of May 1, 2002, we had 29 full-time employees, 11 of which were in
research and development and 18 of which were in marketing and sales and general
and administrative roles. Of our 29 full-time employees, eight hold either a
Ph.D. or a masters degree. None of our employees is represented by a collective
bargaining unit, and we have never experienced a work stoppage. We believe our
relations with our employees are good.

FACILITIES

         Our headquarters are located in Wilmington, North Carolina, where we
currently lease approximately 10,600 square feet under a lease that expires in
September 2005. Our marketing and sales team is located in Parsippany, New
Jersey, where we currently sublease approximately 4,500 square feet under a
sublease that expires in March 2004.

OUR MEDICAL ADVISORY BOARD

         We have established a Medical Advisory Board, consisting of
individuals with recognized expertise in fields relating to menopause. The
members of our Medical Advisory Board typically meet with us three to four
times per year, formally and informally, to review our clinical progress, to
identify potential applications of our technologies and processes and to advise
us concerning long-term product planning, research and development. Several of
the members of our Medical Advisory Board are employed by academic institutions
and may have commitments to or agreements with other entities that may limit
their availability to us. Members also may serve as consultants to other
pharmaceutical companies. Certain members of our Medical Advisory Board are
associated with institutions which conduct our clinical trials and such
institutions are compensated by us for performing such services. In addition,
all but one member of our Medical Advisory Board hold stock options in our
company. The members of our Medical Advisory Board have agreed to maintain the
confidentiality of all proprietary information we disclose to them, and each
member has executed a confidentiality and assignment of inventions agreement
with us. At present, the following persons compose our Medical Advisory Board:

Wulf Utian, M.D., Ph.D., has served as Chairman of our Medical Advisory Board
since its beginning in November 1999. Dr. Utian is a Professor Emeritus at Case
Western. He has served on the faculty of Case Western for more than 20 years,
and through 1999, served as the Arthur H. Bill Professor in Obstetrics and
Gynecology, the Chairman of the Department of Reproductive Biology, Director of
the Department of Obstetrics and Gynecology at the University Hospitals of
Cleveland, President of University Ob/Gyn Specialties, Inc., and Director of
the Cleveland Menopause Clinic. He founded, and currently is the Executive
Director of, the North American Menopause Society, and is the President of
Rapid Medical Research, Inc., a site management organization engaged in
clinical trials. He is an internationally recognized expert in menopause with
more than 140 research publications and eight books to his credit.

Julia R. Heiman, Ph.D., has served on our Medical Advisory Board since October
2000. She has served on the faculty of the University of Washington, Seattle
for over 15 years where she is currently a Professor in the Department of
Psychiatry and Behavioral Sciences and an Adjunct Professor in the Department
of Psychology. Since 1992, she has served as Associate Director for
Psychotherapy Programs at the University of Washington Outpatient Psychiatry
Center and as Special Reviewer for the National Institute of Health. She has
served as an Expert Panel Member on Female Sexual Dysfunction for Pfizer, Inc.,
on the Advisory Panel on Female Sexual Dysfunction for Lilly-ICOS and on
numerous other national and international committees.

                                      48
J. Christopher Gallagher, M.D., has served on our Medical Advisory Board since
May 2000. He has served on the faculty of the Creighton University School of
Medicine for over 23 years where he has been a Professor of Medicine in the
Endocrinology Department since 1985. He is a member of the American Federation
of Clinical Research, the Endocrine Society, the North American Bone and
Mineral Society and the North American Menopause Society.

Philip M. Sarrel, M.D., has served on our Medical Advisory Board since October
2001. He has been a Professor of Obstetrics, Gynecology and Psychiatry at Yale
University School of Medicine since 1989. He has been an attending physician,
OB/GYN at Yale-New Haven Hospital in New Haven, Connecticut since 1966 and at
Waterbury Hospital in Waterbury, Connecticut since 1984. He has been a Director
of the Waterbury Menopause Program since 1984.

Regine Sitruk-Ware, Ph.D., has served on our Medical Advisory Board since March
2000. For the past two years, she has been an Adjunct Professor at Rockefeller
University in New York, New York and the Executive Director of Contraceptive
Development for the Population Council in New York, New York. From 1997 to
2000, Dr. Sitruk-Ware was Head of Medicine, Research and Development at Exelgyn
in Paris, France and from 1995 to 2000, she was a Senior Consultant of
Reproductive Endocrinology at St. Antoine Hospital in Paris, France. For over
15 years, she was President of the Association for Contraceptive Research in
Paris, France. Dr. Sitruk-Ware is also the Founding and Executive Committee
Member of the International Menopause Society.

LEGAL PROCEEDINGS

         We are unaware of any claims or actions currently pending against us.

                                   MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

         The following table sets forth information regarding our executive
officers and directors as of May 1, 2002.
NAME                                         AGE                              POSITION
----                                         ---                              --------
R. Forrest Waldon, Esq................        40     Chairman of the Board, President and Chief Executive
                                                     Officer
Thomas W. Leonard, Ph.D...............        49     Vice President and Chief Science Officer
Stephen F. Rizzo......................        49     Vice President, Chief Financial Officer and Assistant
                                                     Secretary
Christopher Smith.....................        51     Vice President, Regulatory Affairs and Quality Assurance
Kathleen M. Milligan..................        45     Vice President, Marketing and Sales
Richard F. Moldin.....................        54     Vice President, Manufacturing and Business Development
Parris J. Sanz, Esq...................        33     General Counsel and Secretary
Ansbert K. Gadicke, M.D...............        44     Director
Daniel Janney.........................        36     Director
Garry E. Menzel, Ph.D.................        37     Director
Thomas C. Nelson......................        39     Director
David M. Stack........................        50     Director
R. Forrest Waldon, Esq. has served as our Chairman of the Board since February
2000 and as our President and Chief Executive Officer since March 1999. Before
joining Endeavor, Mr. Waldon held

                                      49
several management positions at aaiPharma, a specialty pharmaceutical company.
At aaiPharma, Mr. Waldon served as Executive Vice President from May 1997
through 1998, General Counsel and Secretary from 1989 through 1998, and Vice
President from 1993 through 1997. Prior to his employment with aaiPharma, Mr.
Waldon practiced law with Thrasher & Whitley, P.C. in Atlanta, Georgia. Mr.
Waldon received his B.S. from the University of North Carolina at Chapel Hill,
Phi Beta Kappa, where he also received his J.D.

Thomas W. Leonard, Ph.D. has served as our Vice President and Chief Science
Officer since March 1999. Before joining Endeavor, Dr. Leonard held several
management positions with aaiPharma, including serving as Senior Director of
Research and Development from 1998 to 1999, Senior Director of Product
Development from 1997 to 1998, and Director of Formulation Development from
1994 to 1997. Prior to his tenure with aaiPharma, Dr. Leonard held various
positions in development at Wyeth, formerly Wyeth-Ayerst, including Associate
Director of Liquid Formulation and Parenteral Development and Section Head of
Biopharmacy and Experimental Formulations. Dr. Leonard holds 14 patents in the
area of novel drug delivery. He received his Ph.D. from the Medical College of
Virginia, Virginia Commonwealth University and his B.S. in Pharmacy from the
University of South Carolina.

Stephen F. Rizzo has served as our Vice President, Chief Financial Officer, and
Assistant Secretary since March 1999. He previously held the position of Vice
President and Controller for aaiPharma from 1996 to 1998. Prior to joining
aaiPharma Mr. Rizzo held financial management positions with Federal Paper
Board Company from 1990 to 1996 and with International Paper from 1984 to 1990.
Mr. Rizzo also worked as a certified public accountant with Touche Ross & Co.,
a predecessor of Deloitte & Touche LLP, from 1979 to 1984. Mr. Rizzo received
his B.B.A. from Hofstra University.

Christopher Smith has served as our Vice President, Regulatory Affairs and
Quality Assurance since December 2000. Mr. Smith has more than 25 years of
experience in the pharmaceutical industry. Prior to joining Endeavor, Mr. Smith
was Vice President of Regulatory Affairs and Quality Assurance Worldwide at
aaiPharma. He joined aaiPharma in 1992 after five years as Associate Director
of Regulatory Affairs in Abbott Laboratories' Pharmaceutical Products Division.
Mr. Smith began his regulatory career as an Investigator with the FDA and spent
more than 11 years with the FDA holding positions including Assistant Director
of Congressional Operations and Deputy Associate Commissioner for Public
Affairs. Mr. Smith received his B.A. from Oakland University and his M.S. from
Wayne State University.

Kathleen M. Milligan has served as our Vice President, Marketing and Sales
since May 2001. Ms. Milligan served as Executive Director, Strategy and
Planning for the Primary Care Products division of Roche Laboratories, Inc.
from 1999 to 2001. Prior to joining Roche, Ms. Milligan was Vice President of
Marketing for Solvay Pharmaceuticals from 1995 to 1999. Ms. Milligan's tenure
at Solvay was preceded by almost 15 years at Bristol-Myers Squibb in marketing,
marketing research and sales. Ms. Milligan received her B.A. from Bryn Mawr
College.

Richard F. Moldin has served as our Vice President, Manufacturing and Business
Development since February 2002. Mr. Moldin has more than 30 years experience
within the pharmaceutical industry. Mr. Moldin served as President and Chief
Operating Officer for Mylan Laboratories, a specialty pharmaceutical company,
from 2000 to 2001. From 1995 to 2000, he was President and Chief Executive
Officer of Faulding Inc., a generic pharmaceutical company. Mr. Moldin also
held a number of senior positions with Burroughs Wellcome, a pharmaceutical
company, from 1971 to 1995. Mr. Moldin received his B.S. and M.S. in Chemistry
as well as his M.B.A. from East Carolina University.

Parris J. Sanz, Esq. became our General Counsel and Secretary in March 2002.
Prior to joining us, Mr. Sanz practiced law in the Corporate Finance Practice
Group of Paul, Hastings, Janofsky & Walker LLP in San Francisco, California
from 2000 to 2002. Before joining Paul Hastings, Mr. Sanz was a consultant with
PricewaterhouseCoopers in San Francisco, California from 1998 to 2000, and
practiced law with

                                      50
Latham & Watkins in Los Angeles, California from 1993 to 1997. Mr. Sanz
received his A.B. from the University of California, Berkeley, magna cum laude
and Phi Beta Kappa, and his J.D. from Harvard Law School.

Ansbert K. Gadicke, M.D. has been a member of our board of directors since
2000. Dr. Gadicke is President and Chairman of the MPM Group, a management
consulting firm which he founded in 1992 assisting the food service, retail and
hospitality industries. Dr. Gadicke is also a General Partner of the MPM
Capital, L.P., a private investment partnership. Dr. Gadicke was formerly
employed by The Boston Consulting Group where he worked with the senior
management of pharmaceutical, biotechnology and health insurance companies in
the areas of business strategy, product development, marketing, company
valuation and acquisitions. Dr. Gadicke received an M.D. from J.W. Goethe
University in Frankfurt, Germany. He subsequently held research positions at
the Whitehead Institute at M.I.T., Harvard University, and the German Cancer
Research Center. He is a member of the Advisory Councils for Harvard Medical
School, the Human Science and Technology Program of Harvard University and
M.I.T., as well as the Whitehead Institute at M.I.T.

Daniel S. Janney has been a member of our board of directors since 2000. Mr.
Janney currently serves as a Managing Director at Alta Partners, an investment
adviser to several limited partnerships, where he has been since 1996. Prior to
joining Alta Partners, Mr. Janney was a Vice President of Montgomery
Securities' healthcare and biotechnology investment banking group. Previously,
Mr. Janney was an Associate at Bankers Trust Company in the leveraged
buyout/private equity group. Mr. Janney sits on the board of directors of
several companies including Dynavax Technologies, Endonetics,
CornerHardware.com, and LJL BioSystems. He holds a B.A. from Georgetown
University and an M.B.A. from the Anderson School at the University of
California, Los Angeles.

Garry E. Menzel, Ph.D. has been a member of our board of directors since 2001.
Dr. Menzel is a Senior Vice President and Head of Global Biotechnology
Investment Banking at Goldman Sachs, which he joined in 1994. Previously, he
was a consultant with Bain & Company. Dr. Menzel earned a BSc with honors in
Biochemistry from Imperial College, a Ph.D. in Molecular Biology from the
University of Cambridge, and an M.B.A. from the Stanford Graduate School of
Business. He is an Associate of the Royal College of Science.

Thomas C. Nelson has been a member of our board of directors since 1994. Mr.
Nelson also serves as Vice Chairman and Chief Executive Officer of the National
Gypsum Company, the nation's second largest wallboard manufacturer. He is a
General Partner and Co-Founder of the Wakefield Group, a Charlotte, North
Carolina based venture capital firm. Prior to forming the Wakefield Group, Mr.
Nelson worked in the High Technology Group at Morgan Stanley & Co. in New York
and San Francisco. Selected as a White House Fellow, Mr. Nelson has also served
as Assistant to the Secretary of Defense for Special Projects from 1992 to
1993. Mr. Nelson received a B.S. from Stanford University and an M.B.A. from
the Harvard Graduate School of Business Administration.

David M. Stack became a member of our board of directors in April 2002. Mr.
Stack currently serves as the President, Chief Executive Officer, and a
Director of The Medicines Company, a specialty pharmaceutical company. Mr.
Stack also currently serves on the board of directors of Bio-Imaging
Technologies, Inc., a pharmaceutical contract service organization. From 2000
to 2001, Mr. Stack served as President and General Partner of Stack
Pharmaceuticals, Inc. From 1995 to 1999, Mr. Stack served as the President and
General Manager of Innovex Inc., a commercial solutions company offering
marketing, sales, and clinical research capabilities to pharmaceutical and
biotechnology customers. From 1993 to 1995, he was the Vice President of
Business Development and Marketing for Immunomedics, Inc., a specialty
biopharmaceutical company. From 1992 to 1993, he was the Director of Business
Development and Planning for Infections Disease, Oncology, and Virology of
Roche Laboratories. Mr. Stack is a

                                      51
graduate of Siena College where he received a B.S. in Biology and Albany
College of Pharmacy where he received a B.S. in Pharmacy.

EXECUTIVE OFFICERS

         Each executive officer serves at the discretion of the board of
directors and holds office until his successor is elected and qualified or
until his earlier resignation or removal. There are no family relationships
among any of our directors or executive officers.

BOARD COMPOSITION

         Our board of directors currently consists of six directors. Certain
directors serve on the board of directors pursuant to the terms of an agreement
that will terminate with respect to such board seats upon the closing of this
offering. Following this offering, the board of directors will be divided into
three classes, each of whose members will serve for a three-year term. Messrs.
Gadicke, Janney and Menzel will serve in the class whose term expires in 2003,
Messrs. Nelson and Stack will serve in the class whose term expires in 2004,
and Mr. Waldon will serve in the class whose term expires in 2005. At each
annual meeting of stockholders, a class of directors will be elected for a
three-year term to succeed the directors of the same class whose terms are then
expiring.

BOARD COMMITTEES

         Our board of directors has established an audit committee and a
compensation committee. The audit committee, consisting of Messrs.       ,
       and       , reviews our internal accounting procedures and consults with
and reviews the services provided by our independent accountants. The
compensation committee, consisting of Messrs. Gadicke, Janney and Menzel,
reviews and determines the compensation and benefits of all of our officers,
establishes and reviews general policies relating to the compensation and
benefits of all of our employees, and administers our 1999 Stock Option Plan,
2002 Stock Incentive Plan, 2000 Warrant Plan for Consultants and our Stock
Option Plan for Employees and Consultants.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

         Prior to establishing the compensation committee, the board of
directors as a whole performed the functions delegated to the compensation
committee. No member of our current compensation committee serves or has ever
served as one of our officers or employees. None of our executive officers
serves or has ever served as a member of the board of directors or compensation
committee of any entity that has one or more executive officers serving on our
board of directors or compensation committee.

DIRECTOR COMPENSATION

         Our directors currently do not receive any cash compensation from us
for their services as members of the board of directors. We reimburse our
directors for out-of-pocket expenses in connection with attendance at board and
committee meetings. All of our directors, including non-employee directors, are
eligible to participate in our stock incentive plans. In April 2002 we issued
to David Stack, one of our directors, options to purchase 3,500 shares of our
common stock with an exercise price of $2.50 per share.

EXECUTIVE COMPENSATION

         The following table sets forth a summary of the compensation paid
during the fiscal year ended December 31, 2001 to our Chief Executive Officer
and to all of our other executive officers whose salary and bonus exceeded
$100,000. We refer to these persons as the named executive officers. Unless
noted

                                      52
otherwise, the number of shares of common stock and the number of shares of
common stock underlying and exercise prices for all the options and warrants
referred to herein under "Executive Compensation," "Stock Option Grants,"
"Stock Plans," "Warrant Plans," and "Description of Capital Stock" will be
proportionately adjusted upon the closing of the offering to reflect the
for       stock split to occur upon the filing of the restated certificate of
incorporation and the closing of this offering.

                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                                                       COMPENSATION
                                                            ANNUAL COMPENSATION        ------------
                                                           ----------------------       SECURITIES
                                                                                        UNDERLYING          ALL OTHER
    NAME AND PRINCIPAL POSITION            YEAR             SALARY        BONUS          OPTIONS         COMPENSATION (1)
    ---------------------------            ----            --------       -------      ------------      ----------------
R. Forrest Waldon (2)...............       2001            $240,250            --              --             $5,208
Chairman, President and CEO                2000             228,462            --          76,261                108
                                           1999             136,058            --          67,776                 65

Thomas W. Leonard (3)...............       2001            $180,250            --              --             $5,208
Vice President and Chief Science           2000             165,538            --          38,130                180
Officer                                    1999              86,800            --          33,888                106

Stephen F. Rizzo (4)................       2001            $110,250            --              --             $3,416
Vice President, Chief Financial            2000             102,308            --          38,130                 94
Officer and Assistant Secretary            1999              58,038            --          33,888              1,803

Christopher Smith (5)...............       2001            $160,250            --              --             $5,084
Vice President, Regulatory Affairs         2000              16,615            --          18,000                 24
and Quality Assurance

Kathleen M. Milligan (6)............       2001            $141,654       $15,000          40,000             $4,811
Vice President, Marketing & Sales
---------------

(1)      Represents the cost of group life insurance coverage in excess of
         $50,000 unless indicated otherwise below.
(2)      Mr. Waldon's 2001 other compensation includes a company contribution to
         the 401(k) Plan of $5,100 and excess group life coverage of $108.
(3)      Mr. Leonard's 2001 other compensation includes a company contribution
         to the 401(k) Plan of $5,100 and excess group life coverage of $108.
(4)      Mr. Rizzo's 1999 other compensation includes a company contribution to
         the 401(k) Plan of $1,743 and excess group life coverage of $60.
(5)      Mr. Smith's 2001 other compensation includes a company contribution to
         the 401(k) Plan of $4,808 and excess group life coverage of $276.
(6)      Ms. Milligan's 2001 other compensation includes a company contribution
         to the 401(k) Plan of $4,700 and excess group life coverage of $111.

STOCK OPTION GRANTS

         The following table contains summary information regarding stock
option grants made during the year ended December 31, 2001 by us to the named
executive officers. We granted these options at an exercise price equal to
$2.50 on the date of grant as determined by the compensation committee of our
board of directors. The options granted to Ms. Milligan vest ratably over three
years on the yearly anniversary of the date of grant.

         We calculated the potential realizable value of options in the table
assuming our initial public offering price appreciates at the indicated rate
for the entire term of the option and that the option holder exercises his
option on the last day of its term at the appreciated price. All options listed
have a term of ten years. We assumed stock price appreciation of 5% and 10%
pursuant to the rules of the Securities and

                                      53
Exchange Commission. We cannot assure you that our actual stock price will
appreciate over the ten-year option term at the assumed 5% and 10% levels, or
at any other rate.

                       OPTION GRANTS IN LAST FISCAL YEAR
% OF TOTAL
                                                        OPTIONS                                POTENTIAL REALIZABLE VALUE AT
                                    NUMBER OF          GRANTED TO                              ASSUMED RATES OF STOCK PRICE
                                   SECURITIES         EMPLOYEES IN    EXERCISE                APPRECIATION FOR OPTION TERM(2)
                                   UNDERLYING            FISCAL      PRICE PER   EXPIRATION   -------------------------------
        NAME                    OPTIONS GRANTED          YEAR(1)       SHARE        DATE          5%                   10%
--------------------            ---------------       ------------   ---------   ----------   --------             ----------
Kathleen M. Milligan                 40,000               52.6%        $2.50      4/27/11
(1)      Based on a total of 76,000 options granted in 2001.
(2)      The dollar amounts under these columns are a result of calculations
         mandated by the Securities and Exchange Commission and are based on
         the term of the option at the time of grant and the initial public
         offering price of $       per share. These dollar amounts do not
         represent our estimate or projection of future common stock prices.
         Actual gains, if any, on stock option exercises depend on the future
         performance of the common stock and overall stock market conditions,
         as well as the optionee's continued employment through the vesting
         period. The amounts reflected in these columns may not be achieved.

YEAR-END OPTION VALUES

         The following table provides information about the number and value of
unexercised options to purchase common stock held on December 31, 2001 by the
named executive officers. There was no public market for our common stock on
December 31, 2001. Accordingly, we have calculated the values of the
unexercised options on the basis of our initial public offering price of $
per share, less the applicable exercise price, multiplied by the number of
shares acquired upon exercise. None of the named executive officers exercised
any stock options in 2001.

                         FISCAL YEAR END OPTION VALUES
NUMBER OF SECURITIES             VALUE OF UNEXERCISED
                                         UNDERLYING UNEXERCISED OPTIONS      IN-THE-MONEY OPTIONS AT
                                               AT FISCAL YEAR END(1)            FISCAL YEAR END(2)
                                         ------------------------------   ----------------------------
                 NAME                     EXERCISABLE     UNEXERCISABLE   EXERCISABLE    UNEXERCISABLE
-----------------------------------      ------------     -------------   -----------    -------------
R. Forrest Waldon..................          70,604           73,433
Thomas W. Leonard..................          35,302           36,716
Stephen F. Rizzo...................          35,302           36,716
Christopher Smith..................           6,400           12,000
Kathleen M. Milligan...............              --           40,000
(1)      No shares were acquired through exercise of stock options during 2001.
(2)      The value of each unexercised in-the-money option at fiscal year-end
         represents an amount equal to the initial public offering price of
         $       per share, minus the per share option exercise price,
         multiplied by the number of option shares.

INDEMNIFICATION OF DIRECTORS AND EXECUTIVE OFFICERS AND LIMITATION ON LIABILITY

         Prior to this offering, we will have entered into indemnification
agreements with each of our directors and officers. The form of indemnification
agreement provides that we will indemnify our directors and officers for
expenses incurred by them in connection with their service to our company to
the fullest extent permitted by Delaware law, our restated certificate of
incorporation and our restated bylaws.

                                      54
Our restated certificate of incorporation and restated bylaws to be
filed upon completion of this offering provides that our directors will not be
liable to us or our stockholders for monetary damages for any breach of
fiduciary duty, except to the extent otherwise required by the Delaware General
Corporation Law. This provision will not prevent our stockholders from
obtaining injunctive or other relief against our directors nor does it shield
our directors from liability under federal or state securities laws.

         Our restated certificate of incorporation and our restated bylaws also
require us to indemnify our directors and officers to the fullest extent
permitted by the Delaware General Corporation Law, subject to a few very
limited exceptions where indemnification is not permitted by applicable law.
Our restated certificate of incorporation and restated bylaws also require us
to advance expenses, as incurred, to our directors and officers in connection
with any legal proceeding to the fullest extent permitted by the Delaware
General Corporation Law. These rights are not exclusive.

STOCK PLANS

2002 STOCK INCENTIVE PLAN

         Our 2002 Stock Incentive Plan was adopted by our board of directors in
April 2002 and will be submitted to our stockholders for approval before
completion of this offering. We have reserved 400,000 shares of common stock
for issuance under the plan. The plan terminates in April 2012, unless
terminated earlier by our board of directors.

         The compensation committee of our board of directors administers the
plan. The compensation committee has authority to interpret the plan, grant
awards and make all other determinations necessary to administer the plan.

         The plan provides for the grant of stock options, stock appreciation
rights, restricted stock awards, deferred stock awards and phantom rights to
employees, directors and consultants. Stock awards may be granted with or
without vesting restrictions. Stock options may be issued either as incentive
stock options, commonly called ISOs, that qualify under Section 422 of the
Internal Revenue Code of 1986, as amended, or as nonqualified stock options,
commonly called NQSOs. ISOs may be granted only to our employees. Generally,
the exercise price of ISOs and NQSOs must be at least equal to the fair market
value of our common stock on the date of grant. Any grant of an ISO to a holder
of 10% or more of our outstanding shares of common stock must have an exercise
price of at least 110% of the fair market value of our common stock on the date
of grant. Options granted under the plan generally have a maximum term of 10
years, except that any ISO held by a holder of 10% or more of our outstanding
shares of common stock shall have a maximum term of 5 years. ISOs granted under
the plan may not be transferred other than by will or by the laws of descent
and distribution. They generally also must be exercised during the lifetime of
the optionee and only by the optionee. NQSOs and other stock awards that are
not ISOs may be transferred to immediate family members, to a trust or
partnership solely benefiting the participant or immediate family members, or
to an inter vivos or testamentary trust from which the award will be
transferred following the participant's death.

         Options granted under the plan generally expire three months after the
termination of the optionee's service with the Company, except in the case of
death or disability, in which case the options generally may be exercised up to
12 months following the date of death or disability. If we experience a change
in control, all outstanding awards become fully vested, unless otherwise stated
in an award agreement or employment agreement.

                                      55
1999 STOCK OPTION PLAN

         Our board of directors and shareholders adopted our 1999 Stock Option
Plan in April 1999 and approved amendments in 2000 and 2002. We have reserved
605,000 shares of common stock for issuance under the plan. The plan terminates
in April 2009, unless terminated earlier by our board of directors.

         The compensation committee of our board of directors administers the
plan. The compensation committee has authority to interpret the plan, grant
awards and make all other determinations necessary to administer the plan.

         The plan provides for the grant of restricted stock awards, deferred
share awards and both ISOs and NQSOs, which are subject to the same restrictions
as ISOs and NQSOs granted under our 2002 Stock Incentive Plan. Awards may be
granted to employees, directors and consultants.

         Options granted under the plan generally expire 30 days after the
termination of the optionee's service with the Company, except in the case of
death or disability, in which case the options generally may be exercised up to
12 months following the date of death or disability. If we experience a change
in control, all outstanding awards become fully vested, unless otherwise stated
in an award agreement or employment agreement.

WARRANT PLANS

2000 WARRANT PLAN FOR CONSULTANTS

         Our board of directors and stockholders adopted our 2000 Warrant Plan
for Consultants in October 2000. We have reserved 75,000 shares of common stock
for issuance under the plan. The plan terminates in October 2005.

         The compensation committee of our board of directors administers the
plan. The compensation committee has authority to interpret the plan, grant
awards and make all other determinations necessary to administer the plan.

         The plan provides for the grant of warrants to consultants of our
company. Warrants may be granted with or without vesting restrictions, and to
date we have granted fully vested warrants as well as warrants with vesting
provisions. Warrants granted under the plan generally have a maximum term of
five years. Warrants generally may not be transferred other than by will, by the
laws of descent and distribution or pursuant to a qualified domestic relations
order.

         Warrants granted under the plan generally expire 30 days after the
termination of the consultant's service with our company, except in the case of
death or disability, in which case the warrants generally may be exercised up to
12 months following the date of death or disability. If we experience a change
in control, all outstanding warrants issued pursuant to the plan become fully
vested.

STOCK OPTION PLAN FOR EMPLOYEES AND CONSULTANTS

         Our board of directors adopted our Stock Option Plan for Employees and
Consultants in July 1999. We have reserved 55,000 shares of common stock for
issuance under the plan. No awards may be made under the plan after April 25,
2004.

         The compensation committee of our board of directors administers the
plan. The compensation committee has authority to interpret the plan, grant
awards and make all other determinations necessary to administer the plan.

                                       56
The plan provides for the grant of options to purchase common stock in
the form of warrants to employees and consultants of our company and employees
of aaiPharma who work on projects on behalf of our company or provide consulting
services to our company. Awards granted under the plan generally have a maximum
term of the earlier of ten years from the date of issuance or the sale of all
our outstanding capital stock to one person. Awards generally may not be
transferred other than by will, by the laws of descent and distribution or
pursuant to a qualified domestic relations order.

         Awards granted under the plan generally expire 30 days after the
termination of the recipient's service with our company, except in the case of
death or disability, in which case the award generally may be exercised up to 12
months following the date of death or disability. If we experience a change in
control, all outstanding awards issued pursuant to the plan become fully vested.

401(K) PLAN

         We sponsor a 401(k) savings plan covering our employees who are at
least 21 years of age and have completed three months of service following their
date of hire. The 401(k) savings plan is intended to qualify under Section
401(a) and 401(k) of the Internal Revenue Code. Contributions to the 401(k)
savings plan and income earned on such contributions are not taxable to
employees until withdrawn from the 401(k) savings plan. Subject to restrictions
imposed by the Internal Revenue Code on highly compensated employees, employees
generally may defer their compensation up to the statutorily prescribed annual
limit, which is $11,000 for the 2002 calendar year, and have the amount of such
reduction contributed to the 401(k) savings plan. The 401(k) savings plan
permits, but does not require, employer contributions to the 401(k) savings
plan. The 401(k) savings plan may be amended or terminated by us at any time, in
our sole discretion.

EMPLOYMENT AGREEMENTS

         We have entered into employment agreements with some of our employees.
The material terms of the employment agreements are summarized as follows:

         R. Forrest Waldon. We have entered into an employment agreement with
Mr. Waldon, effective April 2002, pursuant to which he will be employed as our
President and Chief Executive Officer. The agreement has a three-year term,
unless otherwise terminated or extended. The agreement will automatically renew
for additional one-year periods unless either party gives notice of non-renewal
at least 12 months before its then-scheduled expiration date. Mr. Waldon's
salary is $253,440 annually and may be increased at the discretion of the Board
of Directors in light of his performance and other factors, including how much
our competitors are paying their top officers. The agreement also provides Mr.
Waldon with performance-based bonuses (targeted at 50% of his salary), and other
incentive compensation, reimbursement of reasonable expenses, fringe benefits,
retirement benefits, health coverage, life and disability insurance, vacation
pay, and other employee benefits maintained by us.

         The agreement will terminate early upon the death or disability of Mr.
Waldon. We may terminate the employment agreement for cause at any time. Mr.
Waldon will not receive severance benefits if his employment terminates for the
preceding reasons, but he will receive severance benefits if he terminates the
employment agreement pursuant to constructive discharge, as well as if we
terminate his employment without cause. In these events, he will be entitled to:
(a) his base salary through his date of termination plus an additional year of
salary, paid in 12 monthly installments after his termination; (b) any unpaid
bonuses for fiscal years ending before his employment terminates plus a
prorated bonus for the fiscal year in which his employment terminates equal to
the target bonus described above times a fraction, the numerator of which is
the number of days in the calendar year of termination that precede the date
of termination and the denominator is 365; (c) two years of

                                       57
medical benefits for his beneficiaries and dependants; and (d) his stock
options will become fully vested and will be exercisable for 24 months after
this termination, subject to his obligation to waive accelerated vesting of his
stock options to the extent necessary to avoid excise taxes under the Internal
Revenue Code (or applicable regulations).

         The agreement prohibits Mr. Waldon from competing with us for 24 months
after the date his employment terminates for any reason. We have retained the
right to unconditionally protect and secure all intellectual property conceived
by Mr. Waldon, by himself or with others, during his employment.

         Other Executives. We have entered into similar employment agreements
with the following executive officers: Thomas Leonard, Stephen Rizzo, Richard
Moldin, Christopher Smith, Kathleen Milligan and Parris Sanz. These agreements
took effect in April, 2002, and have a term of one year for each officer, unless
otherwise terminated or extended. The agreements provide for a minimum annual
salary of $190,080 for Mr. Leonard, $116,160 for Mr. Rizzo, $110,000 for Mr.
Moldin, $168,000 for Mr. Smith, $221,665 for Ms. Milligan and $160,000 for Mr.
Sanz. In addition, the agreements entitle these officers to participation in the
company's stock option plans and other incentive plans, reimbursement for
reasonable expenses, retirement benefits, health coverage, life and disability
insurance, vacation pay, and participation in other employee benefits we
maintain.

         Each officer's employment agreement will terminate early upon the
officer's death or disability. We may terminate each employment agreement for
cause at any time. Each officer will not receive severance benefits if his or
her employment terminates for the preceding reasons, but he or she will receive
severance benefits if we terminate his or her employment without cause. If an
officer's employment is terminated without cause, he or she will be entitled to:
(a) his or her base salary through the date of termination plus additional
salary, paid in monthly installments, for the greater of six months or the
remaining term of the officer's employment agreement; and (b) company-paid COBRA
premiums for the duration of such salary payments.

         If, on or after an "accelerating event" within the meaning of our 2002
Stock Option Plan, we terminate an officer's employment for a reason other than
cause or his or her death or disability, or if the officer resigns for good
reason the officer instead will receive the following severance benefits: (a) 24
months of salary; (b) company-paid COBRA premiums for the duration of such
salary payments; and (c) accelerated vesting on stock options and other stock
awards, subject to the officer's obligation to waive accelerated vesting of his
or her stock options to the extent necessary to avoid excise taxes under the
Internal Revenue Code (or applicable regulations).

         The employment agreements prohibit the officers from disclosing
confidential information at any time during employment or thereafter and from
competing with us during employment and for one year after the date employment
terminates for any reason. We have retained the right to unconditionally protect
and secure all inventions conceived by the officers during their employment with
us.

                           RELATED PARTY TRANSACTIONS

         Company History. Our company was founded in 1994 to exploit analytical
and formulation hormone technologies previously developed and contributed to our
company by aaiPharma in exchange for shares of our convertible preferred stock.
Upon our founding, other investors, including Schering Berlin Venture
Corporation, a wholly-owned subsidiary of Schering AG, purchased shares of our
convertible preferred stock. We originally commenced development of three HRT
products intended to

                                       58
be generically equivalent to Ogen(R)(estropipate), Estrace(R)(estradiol) and
Premarin(R)(estrogens). Our Estradiol product was approved for marketing in
January 1998 and was originally licensed to and marketed by Teva Phamaceuticals
USA. We terminated the license with Teva Phamaceuticals USA and subsequently
re-licensed the estradiol marketing rights to Zenith Goldline in late 1999. In
January 2000 we sold our rights to estradiol, including our rights under the
license agreement with Zenith Goldline, to aaiPharma in exchange for research
and development credits. We suspended our estropipate development project in
1996 due to eroding market conditions for estropipate generics.

         Prior to 1999, we focused much of our efforts on gaining approval for a
synthetic-based generic equivalent to Premarin(R). We filed an ANDA for an
estrogens-only generic product in December 1996. To accept the application, the
FDA requested that the application be amended with results from an ongoing food
effects study. In February 1997, we amended our ANDA to include the food effects
study results and the FDA accepted the ANDA for filing in March 1997. In May
1997, we received a non-approvable letter from the FDA stating that no generic
equivalent for Premarin(R) could be approved because the active components of
Premarin(R) had not been fully characterized. This letter and many subsequent
discussions with the FDA through April 1999 led us to recognize the protective
barriers the FDA established for the class of complex estrogens products. As a
result, we made the strategic decision to convert our generic estrogens program
to a program designed to develop proprietary complex estrogens products. Since
that time, we have focused our efforts on developing our current product
candidates.

         aaiPharma. One of our stockholders, aaiPharma, has provided, and
continues to provide research and development services to us. In 2001, we
incurred approximately $383,000 in research and development costs for services
performed by aaiPharma. We expect that aaiPharma will continue to provide
research and development services to us in the future.

         Stack Pharmaceuticals. Prior to the time that David Stack was nominated
and became one of our directors, we entered into a consulting agreement with
Stack Pharmaceuticals, Inc., a company of which David Stack is the president and
sole stockholder. Pursuant to that agreement, Stack Pharmaceuticals agreed to
provide us with consulting services in the areas of marketing, sales, and
strategic business planning in exchange for cash compensation and the issuance
of warrants to David Stack and other employees of Stack Pharmaceuticals under
our 2000 Warrant Plan. In 2001, we paid approximately $40,000 to Stack
Pharmaceuticals in cash compensation for consulting services. As of April 2002,
we have issued warrants to employees of Stack Pharmaceuticals under the 2000
Warrant Plan to purchase a total of 4,834 shares of our common stock, of which
David Stack holds warrants to purchase 2,418 shares. Of the total issued
warrants, warrants to purchase 2,159 shares currently are unvested, 1,063 of
which will vest upon the closing of this offering and 1,096 of which will vest
upon our company achieving $50 million of sales revenue from one of our complex
estrogens products. We no longer receive consulting services from Mr. Stack or
Stack Pharmaceuticals. Consequently, we will not be making additional cash
payments to Stack Pharmaceuticals or issuing additional warrants to employees of
Stack Pharmaceuticals. In April 2002, we issued to Mr. Stack options to purchase
3,500 shares of our common stock with an exercise price of $2.50 per share
pursuant to our 1999 Stock Option Plan.

                                       59
PRINCIPAL STOCKHOLDERS

         The following table sets forth information known to us with respect to
the beneficial ownership of our common stock as of May 1, 2002 by the
following persons:

         -        each stockholder known by us to own beneficially more than 5%
                  of our common stock,

         -        each of our directors,

         -        each of the named executive officers, and

         -        all directors and executive officers as a group.

         This table lists applicable percentage ownership based on 4,488,180
shares of common stock outstanding as of May 1, 2002 (including options and
warrants exercisable within 60 days of May 1, 2002), and also lists applicable
percentage ownership based on        shares of common stock outstanding after
completion of this offering. Percentage ownership assumes conversion of all
shares of preferred stock outstanding as of May 1, 2002, into shares of
common stock, which will occur upon the closing of this offering.

         We have determined beneficial ownership in the table in accordance with
the rules of the Securities and Exchange Commission. In computing the number of
shares beneficially owned by a person and the percentage ownership of that
person, we have deemed shares of common stock subject to options or warrants
held by that person that are currently exercisable or will become exercisable
within 60 days of May 1, 2002 to be outstanding, but we have not deemed these
shares to be outstanding for computing the percentage ownership of any other
person. To our knowledge, except as set forth in the footnotes below, each
stockholder identified in the table possesses sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by that
stockholder. Unless otherwise indicated, the address of all listed stockholders
is c/o Endeavor Pharmaceuticals, Inc., 127 Racine Drive, Suite 202, Wilmington,
NC 28403.

                                       60
PERCENTAGE OF SHARES
                                                                                   OUTSTANDING(1)
                                                                              ------------------------
                                                      NUMBER OF SHARES         BEFORE          AFTER
         NAME OF BENEFICIAL OWNER                   BENEFICIALLY OWNED(1)     OFFERING        OFFERING
---------------------------------------------       ---------------------     --------        --------
MPM Capital LP (2)(3) .......................             1,010,609            22.5%
   111 Huntington Avenue, 31st Floor
   Boston, MA 02199
aaiPharma Inc. (2)(4) .......................               722,504            16.1%
   2320 Scientific Park Drive
   Wilmington, NC 28405
The Goldman Sachs Group, Inc. (2)(5) ........               689,756            15.4%
   85 Broad Street
   New York, NY 10004
Alta Partners (2)(6) ........................               378,977             8.4%
   One Embarcadero Center, Suite 4050
   San Francisco, CA 94111
Wakefield Group, L.P.(2) ....................               270,938             6.0%
   1110 East Morehead Street
   Charlotte, NC 28204
Noro-Moseley Partners II, L.P.(2) ...........               270,938             6.0%
   4200 Northside Parkway, Building 9
   Atlanta, GA 30327
Quantum Partners LDC(2)(7) ..................               227,893             5.1%
   Kaya Flamboyan 9
   Willemstad, Curacao
   Netherlands Antilles
R. Forrest Waldon (8) .......................               110,383             2.5%              *
Thomas W. Leonard (9) .......................                55,191             1.2%              *
Stephen F. Rizzo (9) ........................                55,191             1.2%              *
Richard F. Moldin ...........................                    --               *               *
Christopher Smith (9) .......................                 6,400               *               *
Kathleen M. Milligan (9) ....................                13,333               *               *
Parris J. Sanz ..............................                    --               *               *
Ansbert K. Gadicke, M.D .....................                    --               *               *
Garry E. Menzel, Ph.D .......................                    --               *               *
Daniel Janney (10) ..........................                    --               *               *
Thomas C. Nelson (11) .......................                    --               *               *
David M. Stack (12) .........................                 1,886               *               *
All directors and officers as a group .......               242,384             5.4%
-----------------
*        Less than 1% of the outstanding shares of common stock.

(1)      The number of shares owned and percentage of shares outstanding does
         not reflect the        for        stock split to occur immediately upon
         the closing of this offering. Unless otherwise indicated below, the
         persons and entities named in the table have sole voting and sole
         investment power with respect to all shares beneficially owned, subject
         to community property laws where applicable.

(2)      Represents outstanding shares of convertible preferred stock which
         are convertible to common stock as if converted to common stock.

(3)      Includes 75,088 shares held of record by MPM BioVentures II, L.P.;
         680,343 shares held of record by MPM BioVentures II-QP, L.P.; 239,514
         shares held of record by MPM BioVentures GmbH & Co.
         Parallel-Beteiligungs KG and 15,664 shares held of record by MPM Asset
         Management Investors 2000 B LLC. MPM Capital is a direct or indirect
         parent and/or control person of MPM Asset Management II LLC, funds
         managed or advised by it (including MPM BioVentures II, L.P., MPM
         BioVentures II-QP, L.P., MPM BioVentures GmbH & Co.
         Parallel-Beteiligungs KG, and MPM Asset Management Investors 2000 B
         LLC) and the general partners of such funds, and may be deemed to
         beneficially hold the securities owned by such entities.

(4)      Includes 38,927 shares of common stock beneficially owned by Fred
         Sancilio, the chief executive officer, a director and a stockholder of
         aaiPharma, and 31,849 shares of common stock beneficially owned by The
         Waters Foundation, the trustee of which is a director of aaiPharma.

                                       61
(5)      Represents shares owned by investment partnerships, of which affiliates
         of The Goldman Sachs Group, Inc., or GS Group, are the general partner,
         managing general partner or investment manager. Includes 432,779 shares
         held of record by GS Capital Partners II, L.P.; 172,045 shares held of
         record by GS Capital Partners II Offshore, L.P.; 36,520 shares held of
         record by Bridge Street Fund 1995, L.P.; 32,452 shares held of record
         by Stone Street Fund 1995, L.P.; and 15,960 shares held of record by
         Goldman, Sachs & Co. Verwaltungs GmbH, as nominee for GS Capital
         Partners (Germany) Civil Law Partnership. GS Group disclaims beneficial
         ownership of the shares owned by such investment partnerships to the
         extent attributable to partnership interests therein held by persons
         other than GS Group and its affiliates. Each of such investment
         partnerships shares voting and investment power with certain of its
         respective affiliates.

(6)      Represents shares owned by investment partnerships, of which affiliates
         of Alta Partners are the general partner, managing general partner or
         general manager. Includes 235,567 shares held of record by Alta
         BioPharma Partners, L.P.; 134,531 shares held of record by Endeavor
         Pharma. Chase Partners (AltoBio), LLC; and 8,879 shares held of record
         by Alta Embarcadero BioPharma, LLC. Alta Partners disclaims beneficial
         ownership of the shares owned by such investment partnerships to the
         extent attributable to partnership interests therein held by persons
         other than Alta Partners and its affiliates. Each of such investment
         partnerships shares voting and investment power with certain of its
         respective affiliates.

(7)      Soros Fund Management LLC, or SFM, serves as principal investment
         manager to Quantum Partners LDC, or Quantum. The Chairman of SFM is
         George Soros. SFM has delegated investment discretion over a portion of
         the portfolio of Quantum, including the shares, to Origin Capital
         Management LLC. Each of SFM and Mr. Soros may be deemed to have voting
         and dispositive power over the shares by virtue of SFM's right to
         obtain investment discretion over such shares within 60 days (even
         though it does not currently exercise such investment discretion).

(8)      Represents 35,000 shares of common stock owned and 75,383 shares of
         common stock that Mr. Waldon has the right to acquire through the
         exercise of stock options within 60 days.

(9)      Represents shares of common stock that may be acquired through the
         exercise of stock options within 60 days.

(10)     Does not include 378,977 shares of common stock beneficially owned by
         Alta Partners. Mr. Janney disclaims beneficial ownership of such
         shares.

(11)     Does not include 270,938 shares of common stock beneficially owned by
         Wakefield Group, L.P. Mr. Nelson disclaims beneficial ownership of such
         shares.

(12)     Represents shares of common stock that may be acquired through the
         exercise of warrants within 60 days.

                                       62
DESCRIPTION OF CAPITAL STOCK

GENERAL

         Upon the completion of this offering, we will be authorized to issue
       shares of common stock, $0.01 par value per share, and       shares of
undesignated preferred stock, $0.01 par value per share. The following
description of our capital stock does not purport to be complete and is subject
to, and qualified in its entirety by, our restated certificate of incorporation
and restated bylaws, which we have included as exhibits to the registration
statement of which this prospectus forms a part.

PREFERRED STOCK

         As of May       , 2002, there were 578,402 shares of Series A
convertible preferred stock outstanding, 162,932 shares of Series B convertible
preferred stock outstanding, 651,728 shares of Series C convertible preferred
stock outstanding, 117,216 shares of Series D convertible preferred stock
outstanding and 2,327,180 shares of Series E convertible preferred stock
outstanding. Upon the closing of this offering and the filing of our restated
certificate of incorporation, all outstanding shares of convertible preferred
stock will convert into an aggregate of         shares of common stock. The
board of directors will have the authority, without further action by the
stockholders, to issue up to         shares of preferred stock in one or more
series and to designate the rights, preferences, privileges and restrictions of
each series. The issuance of preferred stock could have the effect of
restricting dividends on the common stock, diluting the voting power of the
common stock, impairing the liquidation rights of the common stock or delaying
or preventing a change in control without further action by the stockholders. We
have no present plans to issue any shares of preferred stock after the
completion of this offering.

COMMON STOCK

         As of May 1, 2002, there were 35,000 shares of common stock
outstanding. In addition, as of May 1, 2002, there were 620,328 shares of
common stock subject to outstanding options and warrants. Upon completion of
this offering, there will be         shares of common stock outstanding,
assuming no exercise of outstanding stock options or warrants and conversion of
all outstanding shares of convertible preferred stock into common stock.

         Each share of common stock entitles its holder to one vote on all
matters to be voted upon by stockholders. Subject to preferences that may apply
to any outstanding preferred stock, holders of common stock will receive ratably
any dividends that the board of directors may declare out of funds legally
available for that purpose. In the event of our liquidation, dissolution or
winding up, the holders of common stock are entitled to share ratably in all
assets remaining after payment of liabilities and any liquidation preference of
preferred stock that may be outstanding. The common stock has no preemptive
rights, conversion rights or other subscription rights or redemption or sinking
fund provisions. All outstanding shares of common stock are fully paid and
non-assessable, and the shares of common stock that we will issue upon
completion of this offering will be fully paid and non-assessable.

REGISTRATION RIGHTS

         We have granted registration rights to holders of all our series of
convertible preferred stock and outstanding warrants. Beginning 180 days after
this offering, former holders of at least a majority of the shares of former
Series E convertible preferred stock or eight percent of all other stock or
stock equivalents entitled to registration rights may require that we register
their shares of common stock. With respect to the holders of Series E
convertible preferred stock, we are not obligated to effect more than two
required registrations, and with respect to the other stockholders entitled to
registration rights we are not

                                       63
obligated to effect more than three required registrations. We are not obligated
to effect more than two required registrations in any 12-month period. We have
the right to decrease the number of shares included in a required registration
if market conditions prevent the registration of all shares that requested
registration. Holders of registration rights also may require us to register
their shares any time we propose a registered offering of Company shares,
subject to our right to decrease the number of shares included if market
conditions prevent the registration of all shares. Twelve months after this
offering, holders of registration rights may request that we register their
shares on Form S-3, provided that each proposed registration exceeds $5.0
million. Holders of registration rights may not require us to register shares on
Form S-3 more than twice in any 12-month period and under certain other
conditions.

         If our board of directors determines that a registration would be
materially detrimental to us, we may suspend these rights for up to 90 days, but
we may not do so more than once in any 12-month period. We must bear all
expenses associated with the filing of registration statements on behalf of
holders of registration rights, except for underwriting discounts and selling
commissions, and must indemnify stockholders who sell shares of our common stock
pursuant to the foregoing registration rights. We are prohibited from granting
registration rights to any person, other than registration rights that are
subordinate to the registration rights described above, without the written
consent of certain holders of the above registration rights.

ANTI-TAKEOVER PROVISIONS

         DELAWARE LAW

         We are subject to Section 203 of the Delaware General Corporation Law,
which regulates acquisitions of some Delaware corporations. 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 becomes an interested stockholder, unless:

         -        the corporation's board of directors approved the business
                  combination or the transaction in which the person became an
                  interested stockholder prior to the time the person attained
                  this status;

         -        upon consummation of the transaction that resulted in the
                  person becoming an interested stockholder, the person owned at
                  least 85% of the voting stock of the corporation outstanding
                  at the time the transaction commenced, excluding shares owned
                  by persons who are directors and also officers and certain
                  employee stock plans; or

         -        at or subsequent to the time the person became an interested
                  stockholder, the corporation's board of directors approved the
                  business combination and the stockholders (other than the
                  interested stockholder) authorized the transaction at an
                  annual or special meeting of stockholders by the affirmative
                  vote of at least 66 2/3% of the outstanding voting stock not
                  owned by the interested stockholder.

         A "business combination" generally includes a merger, asset or stock
sale or other transaction with or caused by the interested stockholder. In
general, an "interested stockholder" is a person who, together with the person's
affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status did own, 15% or more of a
corporation's voting stock.

         This statute could prohibit or delay mergers or other takeover or
change-in-control attempts with respect to us and, accordingly, may discourage
attempts to acquire us.

                                       64
CERTIFICATE OF INCORPORATION AND BYLAW PROVISIONS

         Board of Directors.

         Our restated certificate of incorporation will divide our board of
directors into three classes with staggered three-year terms. In addition, our
certificate of incorporation provides that directors may be removed only for
cause by the affirmative vote of the holders of 80% of our shares of capital
stock entitled to vote. Under our certificate of incorporation, any vacancy on
our board of directors, including a vacancy resulting from an enlargement of our
board of directors, may only be filled by vote of a majority of our directors
then in office. The classification of our board of directors and the limitations
on the removal of directors and filling of vacancies could make it more
difficult for a third-party to acquire, or discourage a third party from
acquiring, control of us.

         Stockholder Meetings. Under our restated bylaws to be effective upon
the closing of this offering, special meetings of the stockholders may be called
only by the board of directors, the chairman of the board or the committee of
the board that has been duly designated by the board and whose power and
authority include the power to call such meetings. Our restated bylaws also will
provide that stockholders wishing to propose business to be brought before a
meeting of stockholders will be required to comply with various advance notice
requirements. Finally, our restated certificate of incorporation and restated
bylaws will provide that any action required or permitted to be taken by our
stockholders at an annual or special meeting may be taken only if properly
brought before the meeting, and may not be taken by written consent in lieu of a
meeting. These provisions could have the effect of delaying until the next
stockholders' meeting stockholder actions which are favored by the holders of a
majority of our outstanding voting securities. These provisions may also
discourage a third party from making a tender offer for our common stock,
because even if it acquired a majority of our outstanding voting securities, the
third party would be able to take action as a stockholder (such as electing new
directors or approving a merger) only at a duly called stockholders' meeting,
and not by written consent.

         Undesignated Preferred Stock. The authorization of undesignated
preferred stock makes 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 acquire us. These and other provisions of our restated
certificate of incorporation and restated bylaws may have the effect of
deterring hostile takeovers or delaying changes in control of us.

         Our restated certificate of incorporation and restated bylaws provide
that our restated bylaws may be amended only by a vote of the majority of the
members of the board of directors or a vote of the holders of 80% of our shares
of capital stock entitled to vote in the election of directors.

TRANSFER AGENT AND REGISTRAR

         The transfer agent and registrar for the common stock is      . The
transfer agent's address is      .

                                       65
SHARES ELIGIBLE FOR FUTURE SALE

         Prior to this offering, there has been no public market for our common
stock, and we cannot predict the effect, if any, that market sales of shares or
the availability of any shares for sale will have on the market price of the
common stock prevailing from time to time. Sales of substantial amounts of
common stock (including shares issued on the exercise of outstanding options and
warrants), or the perception that such sales could occur, could adversely affect
the market price of our common stock (including shares issued on the exercise of
outstanding options and warrants) and our ability to raise capital through a
future sale of our securities.

         Upon completion of this offering, we will have       shares of common
stock outstanding (or shares if the underwriters' over-allotment option is
exercised in full), assuming no exercise of outstanding options or warrants. The
      shares (or       shares if the underwriters' over-allotment option is
exercised in full) of common stock sold in this offering will be freely
tradable without further restriction or further registration under the
Securities Act, except for shares purchased by an affiliate (as this term is
defined in the Securities Act) of ours, which will be subject to the
limitations of Rule 144 under the Securities Act. Subject to certain
contractual limitations, holders of restricted shares will be entitled to sell
these shares in the public securities market without registration if they
qualify for an exemption from registration under Rule 144 or any other
applicable exemption under the Securities Act.

SALES OF RESTRICTED SHARES AND SHARES HELD BY OUR AFFILIATES

         In general, under Rule 144 under the Securities Act, beginning 90 days
after the date of this prospectus, a person (or persons whose shares are
aggregated) who has beneficially owned restricted securities within the meaning
of Rule 144 for at least one year, and including the holding period of any prior
owner except an affiliate, would be entitled to sell within any three-month
period a number of shares that does not exceed the greater of one percent of the
then outstanding shares of our common stock or the average weekly trading volume
of our common stock on the Nasdaq National Market during the four calendar weeks
preceding such sale. Sales under Rule 144 are also subject to certain manner of
sale provisions, notice requirements and the availability of current public
information about our company. Any person (or persons whose shares are
aggregated) who is not deemed to have been our affiliate at any time during the
three months preceding a sale, and who has beneficially owned shares for at
least two years (including any period of ownership of preceding non-affiliated
holders), would be entitled to sell such shares under Rule 144(k) without regard
to the volume limitations, manner of sale provisions, public information
requirements or notice requirements. Therefore, unless otherwise restricted,
"144(k)" shares may be sold immediately on completion of this offering. An
"affiliate" is a person that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
an issuer.

OPTIONS

         After the date of this prospectus, we intend to file one or more
registration statements on Form S-8 under the Securities Act to register shares
of common stock subject to outstanding stock options or reserved for issuance
under our equity compensation plans. Subject to certain conditions, Rule 701
under the Securities Act may be relied upon with respect to the resale of
securities originally purchased from us by our employees, directors, officers,
consultants or advisors prior to the closing of this offering, under written
compensatory benefit plans or written contracts relating to the compensation of
these persons. This also applies to stock options we granted prior to this
offering, along with the shares acquired upon exercise of those options after
the closing of this offering. Unless subject to lock-up agreements or other
contractual restrictions, these shares may be sold, beginning 90 days after the
date of this prospectus, by persons other than affiliates subject only to the
manner of sale provisions of Rule 144

                                       66
and by affiliates under Rule 144 without compliance with the one-year minimum
holding period requirement.

LOCK-UP

         We, our directors, executive officers, most of our existing
stockholders and selected option and warrant holders have entered into lock-up
agreements pursuant to which we and such holders of stock, options and warrants
have agreed not to sell, directly or indirectly, any shares of common stock
without the prior written consent of Banc of America Securities LLC and Bear,
Stearns & Co. Inc. for a period of 180 days from the date of this prospectus.

         Shares eligible for future sale in the public market based on shares
outstanding at the time we close this offering is as follows:
NUMBER OF SHARES                    DATE
----------------                    ----
(or up to       if            After the date of this prospectus. Freely tradable
the underwriters'                   shares sold in this offering.
over-allotment option is
exercised in full)
                                    After the date of this prospectus or 90 days after
                                    the date of this prospectus. Shares not locked up and
                                    eligible for resale under Rule 144 or 701.

                                    180 days after the date of this prospectus when the
                                    lock-up expires. Shares eligible for resale under
                                    Rule 144, Rule 144(k) or Rule 701.

                                    Various dates as these shares qualify for an
                                    exemption from registration under Rule 144 or 701.
67
UNDERWRITING

         We are offering the shares of common stock described in this prospectus
through a number of underwriters. Banc of America Securities LLC and Bear,
Stearns & Co. Inc. are acting as joint book- running managers of the offering
and together with CIBC World Markets Corp. are acting as representatives of the
underwriters. We have entered into a firm commitment underwriting agreement with
the representatives. Subject to the terms and conditions of the underwriting
agreement, we have agreed to sell to the underwriters, and each underwriter has
agreed to purchase, at the public offering price less the underwriting discounts
and commissions set forth on the cover page of this prospectus, the number of
shares of common stock listed next to its name in the following table:
UNDERWRITER                                 NUMBER OF SHARES
                          -----------                                 ----------------
Banc of America Securities LLC................................
Bear, Stearns & Co. Inc. .....................................
CIBC World Markets Corp. .....................................
                                                                         -----------
Total.........................................................
                                                                         ===========
The underwriters initially will offer shares to the public at the price
specified on the cover page of this prospectus. The underwriters may allow to
some dealers a concession of not more than $      per share. The underwriters
also may allow, and any dealers may reallow, a concession of not more than $
per share to some other dealers. If all the shares are not sold at the initial
public offering price, the underwriters may change the offering price and other
selling terms. The common stock is offered subject to a number of conditions,
including:

         -        receipt and acceptance of our common stock by the
                  underwriters; and

         -        the right to reject orders in whole or in part.

         The underwriters have an option to buy up to      additional shares of
common stock from us to cover sales of shares by the underwriters which exceed
the number of shares specified in the table above at the public offering price
less the underwriting discounts and commissions set forth on the cover page of
this prospectus. The underwriters have 30 days from the date of this prospectus
to exercise this option. If the underwriters exercise this option, they will
each be obligated, subject to certain conditions, to purchase additional shares
approximately in proportion to the amounts specified in the table above. If any
additional shares of common stock are purchased, the underwriters will offer the
additional shares on the same terms as those on which the shares are being
offered.

         The underwriting fee is equal to the public offering price per share of
common stock less the amount paid by the underwriters to us per share of common
stock. The underwriting fee is      % of the initial public offering price. The
following table shows the per share and total underwriting discounts and
commissions to be paid to the underwriters assuming both no exercise and full
exercise of the underwriters' option to purchase additional shares.
PAID BY ENDEAVOR
                                                       ---------------------------------------------
                                                          NO EXERCISE                FULL EXERCISE
                                                       ------------------         ------------------
Per Share .........................................    $                          $
Total .............................................    $                          $
In addition, we estimate that our share of the total expenses of this
offering, excluding underwriting discounts and commissions, will be
approximately $     .

                                       68
Our directors, executive officers, most of our existing stockholders
and selected option and warrant holders have entered into lock-up agreements
with the underwriters pursuant to which such holders of stock, options and
warrants have agreed not to sell, directly or indirectly, any shares of common
stock without the prior written consent of Banc of America Securities LLC and
Bear, Stearns & Co. Inc. for a period of 180 days from the date of this
prospectus. This consent may be given at any time without public notice. We have
entered into a similar agreement with the representatives of the underwriters,
except that we may grant options and sell shares pursuant to our stock plans
without such consent. There are no agreements between the representatives and
any of our stockholders or affiliates releasing them from these lock-up
agreements prior to the expiration of the 180-day period.

         We have applied for our common stock to be quoted on the Nasdaq
National Market under the symbol "EDVR."

         We will indemnify the underwriters against some specified types of
liabilities, including liabilities under the Securities Act. If we are unable to
provide this indemnification, we will contribute to payments the underwriters
may be required to make in respect of those liabilities. In connection with this
offering, the underwriters may purchase and sell shares of common stock in the
open market. These transactions may include:

         -        short sales;

         -        stabilizing transactions; and

         -        purchases to cover positions created by short sales.

         Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the common stock while this offering
is in progress.

         The underwriters may also impose a penalty bid. This means that if the
representatives purchase shares in the open market in stabilizing transactions
or to cover short sales, the representatives can require the underwriters that
sold those shares as part of this offering to repay the underwriting discount
received by them.

         The underwriters may engage in activities that stabilize, maintain or
otherwise affect the price of the common stock, including:

         -        over-allotment;

         -        stabilization;

         -        syndicate covering transactions; and

         -        imposition of penalty bids.

         As a result of these activities, the price of the common stock may be
higher than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter-market or otherwise.

                                       69
The underwriters do not expect sales to discretionary accounts to
exceed five percent of the total number of shares of common stock offered by
this prospectus.

         Prior to this offering, there has been no public market for our common
stock. The initial public offering price has been negotiated between us and the
representatives of the underwriters. Among the factors considered in these
negotiations were:

         -        the history of, and prospects for, our company and the
                  industry in which we compete;

         -        the past and present financial performance of our company;

         -        an assessment of our management;

         -        the present state of our development;

         -        the prospects for our future earnings;

         -        the prevailing market conditions of the applicable United
                  States securities market at the time of this offering,

         -        market valuations of publicly traded companies that we and the
                  representatives of the underwriters believe to be comparable
                  to our company; and

         -        other factors deemed relevant.

         The underwriters, at our request, have reserved for sale to our
employees, family members of employees, business associates and other third
parties at the initial public offering price up to five percent of the shares
being offered by this prospectus. The sale of shares to our employees and
affiliates will be made by Banc of America Securities LLC. We do not know if our
employees or affiliates will choose to purchase all or any portion of these
reserved shares, but any purchases they do make will reduce the number of shares
available to the general public. Reserved shares purchased by our employees and
affiliates will not be subject to a lock-up except as may be required by the
Conduct Rules of the National Association of Securities Dealers. These rules
require that some purchasers of reserved shares be subject to three-month
lock-ups if they are affiliated with or associated with NASD members or if they
or members of their immediate families hold senior positions at financial
institutions. If all of these reserved shares are not purchased, the
underwriters will offer the remainder to the general public on the same terms as
the other shares offered by this prospectus.

                                       70
VALIDITY OF COMMON STOCK

         The validity of the common stock offered hereby will be passed upon for
us by Paul, Hastings, Janofsky & Walker LLP, New York, New York. Davis Polk &
Wardwell, New York, New York, has represented the underwriters in this offering.

                                     EXPERTS

         Ernst & Young LLP, independent auditors, have audited our financial
statements at December 31, 2001 and 2000, and for each of the three years in the
period ended December 31, 2001, as set forth in their report. We have included
our financial statements in the prospectus and elsewhere in the registration
statement in reliance on Ernst & Young LLP's report, given on their authority as
experts in accounting and auditing.

                  WHERE YOU CAN FIND MORE INFORMATION ABOUT US

         We have filed with the Securities and Exchange Commission a
registration statement on Form S-1 under the Securities Act for the common stock
offered in this offering. This prospectus constitutes part of that registration
statement. This prospectus does not contain all of the information set forth in
the registration statement or its exhibits and schedules. For further
information about us and our common stock, we refer you to the registration
statement and to its attached exhibits and schedules. Statements made in this
prospectus concerning the contents of any document are not necessarily complete.
With respect to each document filed as an exhibit to the registration statement,
we refer you to the exhibit for a more complete description of the matter
involved.

         You may read and copy our registration statement and the attached
exhibits and schedules without charge at the public reference room maintained by
the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
regional offices of the Commission located at 233 Broadway, New York, New York
10279 and at 500 West Madison Street, Suite 1400, Chicago, IL 60661. You may
obtain information on the operation of these reference facilities by calling the
Commission at 1 (800) SEC-0330. You may also inspect reports, proxy and
information statements and other information that we file electronically with
the Commission without charge at the Commission's Internet site,
http://www.sec.gov.

         We intend to furnish our stockholders with annual reports containing
financial statements audited by our independent auditors.

                                       71
INDEX TO FINANCIAL STATEMENTS
PAGE
                                                                                                          ----
Report of Independent Auditors..................................................................           F-2

Balance Sheets as of December 31, 2001 and 2000.................................................           F-3

Statements of Operations for the years ended December 31, 2001, 2000 and 1999...................           F-4

Statements of Stockholders' Deficit for the years ended December 31,
2001, 2000 and 1999.............................................................................           F-5

Statements of Cash Flows for the years ended December 31, 2001, 2000 and 1999...................           F-6

Notes to Financial Statements..................................................................            F-7
F-1
Report of Independent Auditors

Board of Directors and Stockholders
Endeavor Pharmaceuticals, Inc.

We have audited the accompanying balance sheets of Endeavor Pharmaceuticals,
Inc. as of December 31, 2001 and 2000, and the related statements of operations,
stockholders' deficit, and cash flows for each of the three years in the period
ended December 31, 2001. 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. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Endeavor Pharmaceuticals, Inc.
at December 31, 2001 and 2000, and the results of its operations and its cash
flows for each of the three years in the period ended December 31, 2001, in
conformity with accounting principles generally accepted in the United States.

                                                           /s/ ERNST & YOUNG LLP

Raleigh, North Carolina
February 12, 2002

                                      F-2
ENDEAVOR PHARMACEUTICALS, INC.
                                 BALANCE SHEETS
December 31,
                                                                                       2001             2000
                                                                                     --------         --------
                                                                                       (Dollars in thousands)
ASSETS
Current assets:
    Cash and cash equivalents                                                        $ 22,656         $ 34,249
    Prepaid and other current assets                                                      378              548
                                                                                     --------         --------
Total current assets                                                                   23,034           34,797

Property and equipment, net                                                               250               64
Patents                                                                                   179               36
Other assets                                                                              336               --
                                                                                     --------         --------
Total assets                                                                         $ 23,799         $ 34,897
                                                                                     ========         ========

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable and accrued liabilities                                          $    950         $    400
   Due to related party                                                                   205              244
                                                                                     --------         --------
Total current liabilities                                                               1,155              644
                                                                                     --------         --------

Series E redeemable convertible preferred stock, $0.01 par
   value, 2,327,188 shares authorized; 2,327,180 issued and
   outstanding, aggregate liquidation preference of $46,054,892                        44,478           44,048

Stockholders' deficit:
   Convertible preferred stock, $0.01 par value:
     Series A, 578,402 shares authorized, issued and outstanding,
       aggregate liquidation preference of $5,784,020                                       6                6
     Series B, 162,932 shares authorized, issued and outstanding,
       aggregate liquidation preference of $1,629,320                                       2                2
     Series C, 651,728 shares authorized, issued and outstanding,
       aggregate liquidation preference of $6,517,280                                       7                7
     Series D, 117,216 shares authorized, issued and outstanding,
       aggregate liquidation preference of $8,146,512                                       1                1
   Common stock, $0.01 par value; 5.0 million shares
     authorized, none issued and outstanding                                               --               --
   Paid-in capital                                                                     14,650           14,680
   Deferred compensation                                                                 (359)              --
   Accumulated deficit                                                                (36,141)         (24,491)
                                                                                     --------         --------
Total stockholders' deficit                                                           (21,834)          (9,795)
                                                                                     --------         --------
Total liabilities and stockholders' deficit                                          $ 23,799         $ 34,897
                                                                                     ========         ========
See accompanying notes.

                                      F-3
ENDEAVOR PHARMACEUTICALS, INC.
                            STATEMENTS OF OPERATIONS
                  (Dollars in thousands, except per share data)
Year ended December 31,
                                                       -------------------------------------------
                                                          2001              2000            1999
                                                       -----------         -------         -------
Revenues:
    Licensing                                          $        --         $   834         $    --
    Product sales, net                                          --              --             233
                                                       -----------         -------         -------
                                                                --             834             233
                                                       -----------         -------         -------
 Operating costs and expenses:
   Cost of sales                                                --              --             145
   Research and development                                  9,887           1,092             494
   Selling, general and administrative                       3,009           1,020             630
                                                       -----------         -------         -------
                                                            12,896           2,112           1,269
                                                       -----------         -------         -------

Loss from operations                                       (12,896)         (1,278)         (1,036)

Other income (expense):
   Interest expense                                             --            (505)           (790)
   Interest income                                           1,246             731              19
   Other, net                                                   --             299              (7)
                                                       -----------         -------         -------
                                                             1,246             525            (778)
                                                       -----------         -------         -------

Loss before extraordinary item                             (11,650)           (753)         (1,814)
Extraordinary loss from early extinguishment of
   debt                                                         --            (123)             --
                                                       -----------         -------         -------
Net loss                                                   (11,650)           (876)         (1,814)
Accretion of redeemable preferred stock
   liquidation preference                                     (430)           (143)             --
                                                       -----------         -------         -------
Net loss applicable to common stock                    $   (12,080)        $(1,019)        $(1,814)
                                                       ===========         =======         =======

Pro forma basic and diluted net loss per
   common share (unaudited)                            $     (2.92)
                                                       ===========
 Shares used in computing pro forma
   basic and diluted net loss per
   common share (unaudited)                              4,131,890
                                                       ===========
See accompanying notes.

                                      F-4
ENDEAVOR PHARMACEUTICALS, INC.
                       STATEMENTS OF STOCKHOLDERS' DEFICIT
                             (Dollars in thousands)
CONVERTIBLE PREFERRED STOCK
                     ------------------------------------------------------------------
                         SERIES A         SERIES B        SERIES C          SERIES D                DEFERRED     ACCU-
                     ---------------  ---------------  ---------------  ---------------  PAID-IN    COMPEN-     MULATED
                     SHARES   AMOUNT  SHARES   AMOUNT  SHARES   AMOUNT  SHARES   AMOUNT  CAPITAL     SATION     DEFICIT     TOTAL
                     -------  ------  -------  ------  -------  ------  -------  ------  --------   --------   --------   --------
Balance at
 December 31, 1998   578,402  $    6  162,932  $    2  651,728  $    7  117,216  $    1  $ 14,823   $     --   $(21,801)  $ (6,962)
  Net loss for 1999       --      --       --      --       --      --       --      --        --         --     (1,814)    (1,814)
                     -------  ------  -------  ------  -------  ------  -------  ------  --------   --------   --------   --------
Balance at
 December 31, 1999   578,402  $    6  162,932  $    2  651,728  $    7  117,216  $    1  $ 14,823         --   $(23,615)  $ (8,776)
  Net loss for 2000       --      --       --      --       --      --       --      --        --         --       (876)      (876)
  Accretion of
   redeemable
   preferred stock
   liquidation
   preference             --      --       --      --       --      --       --      --      (143)        --         --       (143)
                     -------  ------  -------  ------  -------  ------  -------  ------  --------   --------   --------   --------
Balance at
 December 31, 2000   578,402  $    6  162,932  $    2  651,728  $    7  117,216  $    1  $ 14,680         --   $(24,491)  $ (9,795)
  Stock based
   compensation           --      --       --      --       --      --       --      --       400       (359)        --         41
  Net loss for 2001       --      --       --      --       --      --       --      --        --         --    (11,650)   (11,650)
  Accretion of
   redeemable
   preferred stock
   liquidation
   preference             --      --       --      --       --      --       --      --      (430)        --         --       (430)
                     -------  ------  -------  ------  -------  ------  -------  ------  --------   --------   --------   --------
Balance at
 December 31, 2001   578,402  $    6  162,932  $    2  651,728  $    7  117,216  $    1  $ 14,650   $   (359)  $(36,141)  $(21,834)
                     =======  ======  =======  ======  =======  ======  =======  ======  ========   ========   ========   ========
See accompanying notes.

                                      F-5
ENDEAVOR PHARMACEUTICALS, INC.
                            STATEMENTS OF CASH FLOWS
                                 (In thousands)
Year ended December 31,
                                                                              -------------------------------------
                                                                                2001           2000          1999
                                                                              --------       --------       -------
OPERATING ACTIVITIES
Net loss                                                                      $(11,650)      $   (876)      $(1,814)
Adjustments to reconcile net loss to net cash (used in) provided by
   operating activities:
     Depreciation and amortization                                                  31              6            45
     Stock based compensation                                                       41             --            --
     Debt discount amortization                                                     --            280           415
     Extraordinary loss on extinguishment of debt                                   --            123            --
     Changes in operating assets and liabilities:
       Accounts receivable                                                          --             21           635
       Prepaid and other current assets                                            170           (343)         (113)
       Accounts payable and accrued liabilities                                    550            269            85
       Due to related party                                                        (39)        (1,846)        1,130
       Accrued interest on debt to stockholders                                     --            225           375
                                                                              --------       --------       -------
Net cash (used in) provided by operating activities                            (10,897)        (2,141)          758
                                                                              --------       --------       -------
INVESTING ACTIVITIES
Purchase of property and equipment                                                (217)           (55)          (15)
Patent development                                                                (143)           (36)           --
Other, net                                                                        (336)            --            --
                                                                              --------       --------       -------
Net cash used in investing activities                                             (696)           (91)          (15)
                                                                              --------       --------       -------
FINANCING ACTIVITIES
Issuance of redeemable convertible preferred stock                                  --         35,600            --
                                                                              --------       --------       -------
Net cash provided by financing activities                                           --         35,600            --
                                                                              --------       --------       -------
Net (decrease) increase in cash and cash equivalents                           (11,593)        33,368           743
Cash and cash equivalents at beginning of year                                  34,249            881           138
                                                                              --------       --------       -------
Cash and cash equivalents at end of year                                      $ 22,656       $ 34,249       $   881
                                                                              ========       ========       =======

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for interest                                                        $     --       $     --       $    --
                                                                              ========       ========       =======
Cash paid for income taxes                                                    $     --       $     --       $    --
                                                                              ========       ========       =======
NONCASH INVESTING AND FINANCING ACTIVITIES
Issuance of redeemable convertible preferred stock in exchange for
   notes payable and accrued interest                                         $     --       $  8,305       $    --
                                                                              ========       ========       =======
See accompanying notes.

                                      F-6
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                December 31, 2001

1.  DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Endeavor Pharmaceuticals, Inc. (referred to as "We", "Endeavor" or the
"Company") is a specialty pharmaceutical company initially focused on improving
women's health by developing and marketing advanced hormone therapies with
competitive advantages over existing therapies. We are seeking to commercialize,
through our own marketing and sales organization, a portfolio of proprietary
hormone replacement therapy, or HRT, product candidates that we are developing
based on our proprietary, complex combination of multiple estrogens. In
addition, we have product candidates that combine our complex estrogens with a
progestin and an androgen, two other hormones. These product candidates are
designed to alleviate the symptoms and reduce the health risks resulting from
menopause-related hormone deficiencies, which have significant negative effects
on the quality of life of many women.

Endeavor is a Delaware corporation with operations in North Carolina and New
Jersey. We have no subsidiaries or equity investments in other entities.

REVENUE RECOGNITION

Licensing fees and royalties are recognized as revenue as earned, which is
generally determined by the achievement of contractual milestones. Contractual
payments based on cost reimbursement are reflected as a reduction to research
and development expense. Product sales are recognized when ownership and risk of
loss transfers to the customer.

RESEARCH AND DEVELOPMENT

Research and development costs are expensed as incurred.

CASH AND CASH EQUIVALENTS

All highly liquid investments purchased with a maturity of three months or less
are considered to be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment is recorded at cost. Depreciation is recognized using the
straight-line method over the estimated useful lives of the assets which ranges
from five to seven years.

PATENTS

The costs of filing patent applications are capitalized and then amortized using
the straight-line method over the life of the patents. The Company performs an
annual evaluation of these capitalized costs and, if necessary, expenses any
patents that are impaired.

                                      F-7
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from such estimates and changes
in such estimates may affect amounts reported in future periods.

The Company reviews long-lived assets, including intangible assets and property
and equipment, for impairment whenever events or changes in business
circumstances indicate that the carrying amounts of the assets may not be fully
recoverable. An impairment loss will be recognized when estimated undiscounted
future cash flows expected to result from the use of an asset and its eventual
disposition are less than its carrying amount. In that event, a loss would be
recognized based on the amount by which the carrying value exceeds the fair
value of the long-lived asset. While the Company's current operating and cash
flow losses are indicators of impairment, the Company believes the future cash
flows to be received from the long-lived assets will exceed the assets' carrying
value, and accordingly, the Company has not recognized any impairment losses
through December 31, 2001.

STOCK-BASED COMPENSATION

The Company accounts for stock option grants in accordance with Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and
related Interpretations ("APB 25") because the Company believes the alternative
fair value accounting provided for under the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("SFAS 123") requires the use of option valuation
models that were not developed for use in valuing employee stock options. Under
APB 25, no compensation expense is recognized for stock options issued to
employees with an exercise price equal to the fair value of the underlying
stock. For stock options granted at exercise prices below the deemed fair value,
the Company records deferred compensation expense for the difference between the
exercise price of the shares and the deemed fair market value. The deferred
compensation expense is amortized ratably over the vesting period of the related
options. SFAS 123 provides for a fair value-based method of accounting for
employee stock options and similar equity instruments. However, companies that
continue to account for stock-based compensation arrangements under APB 25 are
required by SFAS 123 to disclose the pro forma effect on net income (loss) as if
the fair value-based method prescribed by SFAS 123 had been applied. The Company
has continued to account for stock-based compensation using the provisions of
APB 25 and presents the pro forma disclosure requirements of SFAS 123 in Note 7.

NEW ACCOUNTING PRONOUNCEMENTS

In 2001, the Financial Accounting Standards Board issued Statements of Financial
Accounting Standards No. 141, "Business Combinations," No. 142, "Goodwill and
Other Intangible Assets," No. 143, "Accounting for Asset Retirement Obligations"
and No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets".
Endeavor adopted Statement No. 144 as of December 31, 2001 with no significant
impact on the Company's financial position or results of operations. Statements
No. 141, No. 142 and No. 143 are presently not applicable to the Company.

                                      F-8
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)

2.   NET LOSS PER COMMON SHARE

Historical net loss per common share information is not presented for periods
where there was no common stock issued or outstanding. Pro forma net loss per
common share is presented for 2001 to give effect to the conversion of
convertible preferred stock that will automatically convert to common stock, at
the completion of the Company's planned initial public offering, as if it were
converted as of January 1, 2001. Common stock equivalents, stock options and
warrants, are not included in the calculation of pro forma net loss per common
share because the effect would be anti-dilutive.

3.   LEASES

The Company has entered into various facility operating leases. The Company
currently maintains a facility lease with an initial expiration of September
2005 and a facility sub-lease with an expiration of March 2004. The Company may
cancel one of these leases with six months notice beginning in March 2002. Rent
expense for the years ended December 31, 2001, 2000 and 1999 was $132,500,
$52,000 and $13,000, respectively.

Minimum lease payments in future years under operating leases having an initial
or remaining non-cancelable terms of one year or more at December 31, 2001 are
as follows: $128,000 in 2002, $128,000 in 2003, $32,000 in 2004 and none
thereafter.

4.   RELATED PARTY TRANSACTIONS

Berlichem, Inc., an affiliate of Schering Berlin Venture Corporation ("SBVC", a
preferred stockholder), and Endeavor have entered into a supply agreement for
one of the components used to make the Company's synthetic complex estrogen
mixture.

Berlex Laboratories, Inc. ("Berlex"), also an affiliate of SBVC, had an
exclusive licensing agreement to market a product that was being developed by
Endeavor. The licensing agreement, as amended, provided for milestone payments
by Berlex as certain defined development criteria were met. For the year ended
December 31, 1999, Endeavor recognized approximately $704,000, as a reduction to
research and development expense for cost reimbursement payments from Berlex.
The development project with Berlex was terminated during 1999 and Berlex made
all anticipated payments under the agreement as of December 31, 1999.

Certain research and development activities of Endeavor were completed under
contracts with aaiPharma, Inc. ("aaiPharma", a preferred stockholder). Endeavor
incurred approximately $383,000, $525,000 and $1,180,000 in research and
development costs for services performed by aaiPharma, for the years ended
December 31, 2001, 2000 and 1999, respectively. Endeavor and aaiPharma also
entered into a manufacturing agreement, whereby aaiPharma manufactured a
commercial product, which Endeavor marketed through an unrelated third party.
The costs associated with the manufacturing agreement were reported in 1999 as
cost of sales in the statement of operations.

On February 22, 2000, the Company and aaiPharma finalized an accord and
satisfaction agreement whereby Endeavor agreed to pay aaiPharma $950,000 from
the proceeds of the Company's Series E Preferred Stock financing and transfer
its estradiol product and certain other assets valued at $1,131,000 to aaiPharma
as full satisfaction for all invoices outstanding and all work in progress
through January 31, 2000. During 2000, the Company recorded revenues of $834,000
related to the sale of its estradiol product and a gain of $297,000 on the
transfer of fixed assets. The fair value of Endeavor's estradiol product was
estimated by management based on an analysis of expected discounted future cash
flows. The Company estimated the fair value of its transferred assets based on
current replacement costs.

                                      F-9
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)

5.  INCOME TAXES

The Company uses the asset and liability method to account for income taxes.
This method requires the recognition of deferred tax assets or liabilities for
the temporary differences between the financial reporting and tax reporting of
assets and liabilities. The tax benefit for tax loss carryforwards are presented
at current statutory rates. The effect of future changes in statutory rates
would be recognized in the period such changes are enacted.

Endeavor has not provided for income taxes in any of the three years ended
December 31, 2001 because it has had net losses. The Company has provided a full
valuation allowance against its net deferred tax assets because of the
uncertainty of realizing such assets. A reconciliation of the Company's
provision for income taxes to a provision using the Federal statutory rate of
35% is presented below.
2001           2000           1999
                                              --------       --------       -------
                                                         (In thousands)
Tax provision at statutory rate      $ (4,077)      $   (307)      $  (635)
         State taxes                              (582)           (44)          (91)
         Research tax credits                     (716)           (58)          (45)
         Other, net                                310            186           192
         Change in valuation allowance           5,065            223           579
                                              --------       --------       -------
         Provision for income taxes           $     --       $     --       $    --
                                              ========       ========       =======
The significant components of the net deferred tax assets are presented below.
DECEMBER 31,
                                                     -------------------------
                                                       2001             2000
                                                     --------         --------
                                                          (In thousands)
Deferred tax assets, resulting from:
           Net operating losses                      $ 11,528         $  7,179
           Research tax credits                         1,677              961
                                                     --------         --------
                                                       13,205            8,140
           Valuation allowance on tax assets          (13,205)          (8,140)
                                                     --------         --------
         Net deferred tax assets                     $     --         $     --
                                                     ========         ========
Endeavor had Federal and state tax loss carryforwards of approximately $28.8
million for income tax purposes that begin to expire in the year 2010 and
research tax credits of approximately $1.7 million that also begin to expire in
the year 2010. Future use of these tax loss and tax credit carryforwards may be
limited if certain change in ownership transactions occur.

                                      F-10
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)

6.   PROPERTY AND EQUIPMENT

The following table presents the components of property and equipment as of
December 31:
2001             2000
                                                --------         --------
                                                     (In thousands)
Computer equipment                    $    142         $     39
          Furniture and fixtures                     151               37
                                                --------         --------
                                                     293               76
          Less accumulated depreciation              (43)             (12)
                                                --------         --------
          Property and equipment, net           $    250         $     64
                                                ========         ========
7.  PREFERRED STOCK

The Company has authorized 3,837,466 shares of preferred stock, $0.01 par value,
of which 578,402, 162,932, 651,728, 117,216 and 2,327,188 shares were designated
as Series A, B, C, D and E convertible preferred stock, respectively, of which
578,402, 162,932, 651,728, 117,216 and 2,327,180 shares are issued and
outstanding, respectively, at December 31, 2001.

During 2000, the Company issued 2,327,180 shares of Series E redeemable
convertible preferred stock at $19.79 per share of which $7,500,000 in debt and
$805,000 of accrued interest to stockholders was extinguished in exchange for
419,661 shares of Series E preferred stock to the debt holders. This early
extinguishment of debt resulted in an extraordinary loss of $123,000 for the
write-off of unamortized discount.

CONVERSION

The all outstanding series of preferred stock are convertible at the option of
the holder into fully paid and nonassessable shares of common stock based on a
calculated ratio at the time of conversion determined by the original purchase
of the preferred stock as adjusted for certain anti-dilution provisions.
Additionally, all outstanding shares of preferred stock will automatically
convert into common stock upon the closing of a public offering of the Company's
common stock when certain requirements are met. The conversion price per share
at December 31, 2001 was $10.00 for series A, B and C preferred stock and $19.79
for series D and E preferred stock.

VOTING

Each holder of outstanding preferred stock is entitled to the number of votes
equal to the number of whole shares of common stock into which the preferred
shares are convertible.

DIVIDENDS

The preferred stock holders are entitled to receive their proportionate share of
dividends as declared by the Board of Directors.

                                      F-11
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)

LIQUIDATION

Upon liquidation, dissolution, or winding up of the Company, holders of the
Series E preferred stock shall be entitled to receive, prior and in preference
to, any distribution of any of the assets to holders of all other preferred
stock and holders of common stock an amount equal to $19.79 per share (as
adjusted for any combinations, consolidations, stock distribution or stock
dividends). If the assets and funds of the Company are insufficient to pay the
full liquidation preference amount to holders of Series E preferred stock, the
available assets and funds shall be distributed ratably among the holders of
Series E preferred stock based upon the number of shares held.

Upon liquidation, dissolution, or winding up of the Company, holders of the
Series A and D preferred stock shall be entitled to receive, prior and in
preference to any distribution of any of the assets to holders of series B and C
preferred stock and holders of common stock, an amount equal to $10 and $69.50
per share (as adjusted for any combinations, consolidations, stock distribution
or stock dividends) for series A and D, respectively. If the assets and funds of
the Company are insufficient to pay the full liquidation preference amount to
holders of series A and D preferred stock after paying the full liquidation
preference to holders of Series E preferred stock, the available assets and
funds shall be distributed ratably among the holders of series A and D preferred
stock based upon the number of shares held.

Upon liquidation, dissolution, or winding up of the Company, holders of the
Series B and C preferred stock shall be entitled to receive, prior and in
preference to, any distribution of any of the assets to holders of common stock
an amount equal to $10 per share (as adjusted for any combinations,
consolidations, stock distribution or stock dividends). If the assets and funds
of the Company are insufficient to pay the full liquidation preference amount to
holders of Series B and C preferred stock, after paying the full liquidation
preference to holders of series A, D and E preferred stock, the available assets
and funds shall be distributed ratably among the holders of series B and C
preferred stock based upon the number of shares held.

Upon liquidation, dissolution or winding up of the Company, holders of the
Series A, B, C, D, and E preferred stock shall be entitled to share in the
remaining assets and funds with common shareholders on a pro rata basis as if
fully diluted.

REDEEMABLE PREFERRED STOCK

On or after August 9, 2005 any holder or holders of Series E preferred stock
owning shares representing, in the aggregate, at least fifty percent (50%) of
the then outstanding shares of Series E preferred stock, may request the Company
to redeem all shares of Series E preferred stock. Any such redemption of Series
E preferred stock shall be redeemable at a price per share equal to the Series E
liquidation preference ($19.79 at December 31, 2001) and shall be payable in
five annual installments. The potential redemption requirements would be zero
for 2002 through 2004, and $9,210,978, annually, for 2005 through 2009. As
discussed above, all of the preferred stock will automatically convert into
common stock upon the closing of a public offering of the Company's common stock
when certain requirements are met. In this event the redemption features would
no longer exist.

The Company is accreting the difference between the net proceeds received on the
issuance of Series E preferred stock and its aggregate liquidation preference
over the period from the issue date to the earliest redemption date using the
straight-line method, which approximates the effective interest method.

                                      F-12
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)

8.   STOCK OPTIONS AND WARRANTS

STOCK OPTIONS

The Amended and Restated 1999 Stock Option Plan (the "Plan"), originally adopted
in 1999, was amended in both 2000 and 2001.). The Plan provides for the granting
of options to purchase common stock to employees, directors and also
consultants, advisors, and contractors in the service of the Company. The Plan
permits the granting of both incentive stock options and nonqualified stock
options. The maximum shares of common stock that may be issued under the Plan
are 605,000, subject to adjustment upon occurrence of certain events affecting
the Company's capitalization.

The Board of Directors' Compensation Committee determines the terms of the stock
option grants, including the exercise price per share and vesting periods. The
exercise price of the options generally shall not be less than 100% percent of
the fair market value of a share of common stock on the date of grant. The
maximum term of the options granted generally is ten years.

A summary of the Company's stock option activity is as follows:
Weighted
                                                                 Number of        Average
                                                                  Options         Exercise
                                                                Outstanding         Price
                                                                -----------       --------
Granted during 1999                               145,552          $ 1.00
                                                                  -------
                Balance at December 31, 1999                      145,552          $ 1.00
                Granted during 2000                               175,765          $ 2.50
                                                                  -------
                Balance at December 31, 2000                      321,317          $ 1.82
                Granted during 2001                                76,000          $ 2.50
                Forfeited                                          (1,100)         $ 2.50
                                                                  -------
                Balance at December 31, 2001                      396,217          $ 1.95
                                                                  =======
                Exercisable options at:
                  December 31, 1999                                    --          $   --
                  December 31, 2000                                48,517          $ 1.00
                  December 31, 2001                               155,255          $ 1.56
The Company follows APB 25 to account for its stock option plan. Pro forma
information regarding net loss is required by SFAS 123 and has been determined
as if the Company accounted for its stock options under the fair value method of
SFAS 123. The fair value of these options was estimated at the date of grant
using the minimum value method for employees and the Black Scholes model for
non-employees with the following weighted-average assumptions for the year ended
December 31, 2001: risk free interest rate of 4.5%, no expected dividends, a
volatility factor of 80% and a weighted average expected life of 10 years. The
weighted average grant date fair value per share for options granted during the
periods presented was $1.00, $.92 and $.39 for 2001, 2000 and 1999,
respectively. For purposes of pro forma disclosure, the estimated fair value of
the options is amortized over the options' vesting period. The Company's pro
forma net loss for the years ended December 31, 2001 and 2000 would have been
$11,700,000 and $907,000, respectively.

                                      F-13
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)

Summarized information about stock options outstanding as of December 31, 2001
is as follows:
Exercisable Options
                                                                            ----------------------
                                        Average
                       Number of     Remaining Life                         Number of     Exercise
   Exercise Price       Options         in Years        Exercise Price       Options        Price
   --------------      ---------     --------------     --------------      ---------     --------
$1.00            145,552           7.5                $1.00            97,034        $1.00
       $2.50            250,665           9.1                $2.50            58,221        $2.50
DEFERRED COMPENSATION FROM STOCK OPTIONS

The Company recorded $400,000 of deferred compensation related to stock options
granted to employees after May 1, 2001. This deferred compensation is being
amortized to expense on a straight-line basis over three years, which is the
vesting period of the underlying options. The Company recognized $41,000 of
stock compensation expense in 2001. The deferred compensation was calculated
using the guidelines of the Securities and Exchange Commission which generally
requires a more stringent approach to the value of the options than may be used
for other valuation purposes.

WARRANTS

The Company may issue third party warrants for the purchase of up to 75,000
shares of common stock at an exercise price of no less than $10 per share to any
person that provides goods or services to the Company. In December 2000, the
Company entered into an agreement with a consulting firm that allows for certain
compensation and the issuance of warrants. The Company issued warrants to
purchase 4,834 shares of common stock during 2001, 1,612 shares of which are
exercisable at the discretion of the holder at $20.00 per share and 3,222 shares
of which become exercisable upon the achievement of certain milestones at $10.00
per share. Milestones were achieved to make 1,063 shares of the $10.00 warrants
exercisable as of December 31, 2001. No value was assigned to these warrants as
they were considered to have only a nominal value upon issuance.

The Company is authorized to issue warrants to purchase up to 55,000 shares of
common stock at a minimum exercise price of $5 per share, subject to adjustment,
to Endeavor employees or employees, directors or affiliates of aaiPharma. In
2000 and 2001, warrants for the purchase of 3,200 shares and 1,700 shares,
respectively, of common stock at $5 per share were issued to employees of
aaiPharma. No value was assigned to these warrants as they were considered to
have only a nominal value upon issuance.

In 2000, the Company issued warrants to purchase 76,427 shares of common stock
at an exercise price of $21.77 per share for services provided by the placement
agent for the Series E preferred stock financing. These warrants are exercisable
at the discretion of the holder and expire August 9, 2005. No value was assigned
to these warrants as they were considered to have only a nominal value upon
issuance.

In 1994, the Company issued warrants to purchase 13,500 shares of common stock
at an exercise price of $12.00 per share with the issuance of the Series A, B,
and C preferred stock. These warrants are exercisable at the discretion of the
holder and expire on April 25, 2004. No value was assigned to these warrants as
they were considered to have only nominal value upon issuance.

                                      F-14
ENDEAVOR PHARMACEUTICALS, INC.
                          NOTES TO FINANCIAL STATEMENTS
                                   (continued)

In 1995, the Company issued warrants in connection with the $5 million,
non-interest bearing debt issued to the Series D Preferred stockholders. The
warrants were exercisable for up to 71,943 shares of common stock or Series D
Preferred Stock at an aggregate exercise price of $5 million or $69.50 per
share. The warrants had certain anti-dilution rights, were exercisable at the
discretion of the holder, and expired on November 17, 2000. The $1,892,000 value
of these warrants was recorded as a debt discount and charged to paid-in
capital. The warrants were terminated with the issuance of new Series E
preferred stock, previously discussed.

COMMON STOCK RESERVED FOR FUTURE ISSUANCE

At December 31, 2001, the Company had reserved a total of 4,956,817 of its five
million authorized shares of common stock for future issuance is presented
below.
Conversion of Series A preferred                          578,402
         Conversion of Series B preferred                          162,932
         Conversion of Series C preferred                          651,728
         Conversion of Series D preferred                          411,648
         Conversion of Series E preferred                        2,327,180
         Stock options outstanding                                 396,217
         Possible future issuance of stock options                 208,783
         Warrants outstanding                                       99,661
         Possible future issuance of warrants                      120,266
                                                                 ---------
                                                                 4,956,817
                                                                 =========
9.  EMPLOYEE BENEFIT PLAN

The Company has a plan to allow salary deferrals and provide retirement benefits
for its employees with at least three months of service through a defined
contribution plan qualified under section 401(k) of the Internal Revenue Code of
1986, as amended (the "401(k) Plan"). The 401(k) Plan does not require the
Company to make matching or other contributions. In 2001, 2000 and 1999,
Endeavor accrued for company contributions of approximately $32,000, $2,000 and
$2,300, respectively, which were required to keep the 401(K) Plan qualified.

10.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter
                                                         -------------------------------------------------
                                                           First       Second         Third        Fourth
                                                         --------     --------      --------      --------
                                                                           (In thousands)
2001
    Net revenues                                         $     --     $     --      $     --      $     --
    Net loss                                               (1,337)      (3,717)       (3,994)       (2,602)

                           2000
    Net revenues                                         $    834     $     --      $     --      $     --
    Income (loss) before extraordinary item                   677         (558)         (400)         (472)
    Net income (loss)                                         677         (558)         (523)         (472)
F-15
================================================================================
                                     Shares

                                [ENDEAVOR LOGO]

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

                                   Prospectus

                                     , 2002

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

                           Joint Book-Running Managers

BANC OF AMERICA SECURITIES LLC                          BEAR, STEARNS & CO. INC.

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

                               CIBC WORLD MARKETS

          Until   , 2002, all dealers that buy, sell or trade the common stock
may be required to deliver a prospectus, regardless of whether they are
participating in the offering. This is in addition to the dealers' obligation to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions.
================================================================================
PART II

                     INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

         The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the sale of the securities being registered. All amounts are estimates
except the SEC registration fee, the NASD fee and the Nasdaq National Market
listing fee.
SEC Registration fee........................................................       $   6,900
        NASD filing fee.............................................................         100,000
        Nasdaq National Market listing fee..........................................               *
        Printing....................................................................               *
        Legal fees and expenses.....................................................               *
        Accounting fees and expenses................................................               *
        Transfer agent and registrar fees...........................................               *
        Miscellaneous...............................................................               *
                                                                                           ---------
               Total................................................................       $       *
                                                                                           =========
-----------------
*        To be provided by amendment

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

         Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933, as amended (the "Securities
Act").

         As permitted by the Delaware General Corporation Law, the restated
certificate of incorporation and the restated bylaws of the Registrant provide
that its directors shall not be liable to the Registrant or its stockholders for
monetary damages for breach of fiduciary duty as a director, except to the
extent that the exculpation from liabilities is not permitted under the Delaware
General Corporation Law as in effect at the time the liability is determined. As
permitted by the Delaware General Corporation Law, the restated certificate of
incorporation and the restated bylaws of the Registrant also provide that the
Registrant shall indemnify its directors to the full extent permitted by the
laws of the State of Delaware.

         The Registrant is in the process of obtaining policies of insurance
under which coverage will be provided (a) to its directors and officers against
loss arising from claims made by reason of breach of fiduciary duty or other
wrongful acts, including claims relating to public securities matters and (b) to
the Registrant with respect to payments which may be made by the Registrant to
these officers and directors pursuant to the above indemnification provision or
otherwise as a matter of law.

         The Underwriting Agreement provides for the indemnification of officers
and directors of the Registrant by the Underwriters against some types of
liability.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

         Set forth below in reverse chronological order is information regarding
the number of shares of capital stock, options and warrants issued by us since
1999. Also included is the consideration if any received by us for the
securities.

                                      II-1
There was no public offering in any such transaction and we believe
that each transaction was exempt from the registration requirements of the
Securities Act of 1933 by reason of Regulation D and Section 4(2) of the 1933
Act, based on the private nature of the transactions and the financial
sophistication of the purchasers, all of whom had access to complete information
concerning us and acquired the securities for investment and not with a view to
the distribution thereof. In addition, we believe that the transactions
described below with respect to the issuance of option grants to our employees
and directors were exempt from registration requirements of the 1933 Act by
reason of Section 4(2) or Rule 701 promulgated thereunder.

(a)      Issuance of Preferred Stock. The Series E convertible preferred stock
         listed in this section will automatically convert into common stock
         upon completion of this offering.

         (i)      On August 9, 2000, we issued 1,603,873 shares of our Series E
                  convertible preferred stock for an aggregate purchase price of
                  $36,055,065 and the conversion of $8,305,107 of principal
                  amount of outstanding indebtedness and accrued interest. We
                  subsequently issued 218,002 shares of Series E convertible
                  preferred stock to account for the sale of Series E
                  convertible preferred stock described in paragraph (ii) below
                  and $159 was refunded as a cash payment in lieu of issuing
                  fractional shares.

         (ii)     On November 22, 2000, we issued 505,305 shares of our Series E
                  convertible preferred stock for an aggregate purchase price of
                  $9,999,986.

(b)      Issuance of Stock Options

         (i)      In the period from January 1, 1999 through May 1, 2002, we
                  granted options to purchase an aggregate of 555,667 shares of
                  common stock, net of forfeitures, to a number of our
                  employees, directors and consultants. We have not received
                  consideration from any grantee relating to the issuance of any
                  of such options. All such options were granted pursuant to our
                  1999 Stock Option Plan, as amended. As of this date, options
                  to purchase 35,000 shares have been exercised for an aggregate
                  consideration of $35,000.

(c)      Issuance of Warrants

         (i)      On August 9, 2000, we issued a warrant to purchase 61,721
                  shares of our common stock at an initial exercise price of
                  $24.73 per share to a financial advisor in exchange for
                  services rendered. The foregoing number of shares and exercise
                  price was adjusted by increasing the number of shares
                  underlying the warrant by 8,390 shares and decreasing the
                  exercise price for all underlying shares to $21.77, each to
                  reflect the sale of Series E convertible preferred stock
                  described in paragraph (a)(ii) above.

         (ii)     On November 22, 2000, we issued a warrant to purchase 6,316
                  shares of our common stock at an initial exercise price of
                  $21.77 per share to a financial advisor in exchange for
                  services rendered.

         (iii)    In the period from January 1, 1999 through May 1, 2002, we
                  issued warrants to purchase an aggregate of 4,834 shares of
                  our common stock to David Stack, one of our directors, and
                  certain employees of Stack Pharmaceuticals. We have not
                  received consideration from any recipient of such warrants and
                  as of this date none of such warrants have been exercised. All
                  such warrants were issued pursuant to our 2000 Warrant Plan
                  for Consultants.

                                      II-2
(iv)     In the period from January 1, 1999 through May 1, 2002, we
                  issued warrants to purchase an aggregate of 4,900 shares of
                  our common stock to certain employees of aaiPharma. Two of
                  such persons are currently employees of our company. We have
                  not received consideration from any recipient of such warrants
                  and as of this date none of such warrants have been exercised.
                  All such warrants were issued under our Stock Option Plan
                  for Employees and Consultants.

                                      II-3
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

         (a)      Exhibits. The following exhibits are filed as part of this
                  registration statement:
Exhibit No.                                                      Description
  -----------                                                      -----------
1.1                   Form of Underwriting Agreement.*

       3.1                   Form of Restated Certificate of Incorporation of the Registrant.

       3.2                   Form of Restated Bylaws of the Registrant.

       4.1                   See Exhibits 3.1 and 3.2 for provisions of Form of Restated Certificate of
                             Incorporation and Form of Restated Bylaws of the Registrant defining rights
                             of the holders of common stock of the Registrant.

       4.2                   Specimen certificate for shares of common stock, $.01 par value, of the Registrant.*

       5.1                   Opinion of Paul, Hastings, Janofsky & Walker LLP.*

      10.1                   Securityholders Agreement dated as of August 8, 2000, among the Registrant and the
                             Securityholders named therein.

      10.2                   Amendment to Securityholders Agreement dated as of November 21, 2000.

      10.3                   Second Amendment to Securityholders Agreement dated as of April 22, 2002.

      10.4                   Stack Pharmaceuticals Consulting Agreement dated December 23, 2000, by and between the
                             Registrant and Stack Pharmaceuticals, Inc.

      10.5                   Pharmaceutical Services Agreement made and entered into February 4, 2002 between the
                             Registrant and aaiPharma, Inc.

      10.6                   Component Supply Agreement made as of July 28, 2000, by and among the Registrant,
                             Berlex Laboratories, Inc. and Berlichem, Inc. (+)

      10.7                   Supply Agreement, dated November 1, 2000, by and between the Registrant and
                             Organics/LaGrange, Inc. (+)

      10.8                   Advertising Agency Agreement, dated October 1, 2001, by and between the Registrant and
                             Accel Healthcare Communications LLC.

      10.9                   Lease Agreement dated September 20, 1999, by and between University Corporate Center, LLC and the
                             Registrant for commercial premises located at 127 Racine Drive, Wilmington, North Carolina.

     10.10                   Amendment to Lease Agreement dated December 20, 2000.

     10.11                   Modification to Lease Agreement dated January 9, 2002.
II-4
EXHIBIT NO.                                                      DESCRIPTION
----------------             -------------------------------------------------------------------------------------------
10.12                   Consent to Sub-Sublet Agreement, dated July 3, 2001, by and among Mack-Cali Campus Realty
                             LLC, The Ayco Company LP, Parson Group LLC and the Registrant for commercial premises
                             located at 8 Campus Drive, Parsippany, New Jersey.

     10.13                   Sub-Sublease Agreement, dated July 3, 2001, by and between the Registrant and Parson Group
                             LLC for commercial premises located at 8 Campus Drive, Parsippany, New Jersey.

     10.14                   Amended and Restated 1999 Stock Option Plan.

     10.15                   2002 Stock Incentive Plan.

     10.16                   2000 Warrant Plan for Consultants.

     10.17                   Stock Option Plan for Employees and Consultants.

     10.18                   Employment Agreement between the Registrant and R. Forrest Waldon.*

     10.19                   Form of Employment Agreement between the Registrant and each of Thomas W. Leonard,
                             Stephen F. Rizzo, Christopher Smith and Kathleen M. Milligan.*

     10.20                   Form of Indemnification Agreement.*

      23.1                   Consent of Ernst & Young LLP.

      23.2                   Consent of Paul Hastings, Janofsky & Walker LLP (included in Exhibit 5.1).*

      24.1                   Power of Attorney (included on signature page).
-------------
*        To be filed by amendment.

(+)      The Registrant requests confidential treatment for portions of this
         exhibit.

                                      II-5
ITEM 17. UNDERTAKINGS.

         The undersigned registrant hereby undertakes to provide to the
underwriters at the closing specified in the underwriting agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.

         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 foregoing provisions, 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.

         The undersigned registrant hereby undertakes that:

         (1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part of
this registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.

         (2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of prospectus
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

                                      II-6
SIGNATURES

         Pursuant to the requirements of the Securities Act of 1933, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Wilmington,
North Carolina, on the 3rd of May, 2002.

                                    ENDEAVOR PHARMACEUTICALS, INC.

                                    By:  /s/ R. Forrest Waldon
                                         ---------------------------------------
                                         R. Forrest Waldon
                                         Chairman and Chief Executive Officer

         KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears immediately below constitutes and appoints R. Forrest Waldon, Stephen F.
Rizzo and Parris J. Sanz, and each of them, his true and lawful attorney-in-fact
and agents, each with full power of substitution, for him and in his name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and any and all
additional registration statements pursuant to Rule 462(b) under the Securities
Act of 1933, as amended, and all post-effective amendments thereto, in
connection with or related to the offering contemplated by this Registration
Statement and its amendments, if any, and to file the same with all exhibits
thereto, and other documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorneys-in-fact and agents, and each
of them, full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.

         Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURE                                         TITLE                                      DATE
                ---------                                         -----                                      ----
/s/ R. Forrest Waldon
--------------------------------------------       Chairman of the Board, President and Chief              May 3, 2002
R. Forrest Waldon                                  Executive Officer (Principal Executive
                                                   Officer)

/s/ Stephen F. Rizzo
--------------------------------------------       Vice President, Chief Financial Officer,                May 3, 2002
Stephen F. Rizzo                                   Assistant Secretary (Principal Financial
                                                   Officer and Principal Accounting Officer)
II-7
SIGNATURE                                         TITLE                                     DATE
                ---------                                         -----                                     ----
/s/ Ansbert Gadicke                                                  Director                            May 3, 2002
--------------------------------------------
Ansbert Gadicke

/s/ Daniel Janney                                                    Director                            May 3, 2002
--------------------------------------------
Daniel Janney

/s/ Garry E. Menzel                                                  Director                            May 3, 2002
--------------------------------------------
Garry E. Menzel

/s/ Thomas C. Nelson                                                 Director                            May 3, 2002
--------------------------------------------
Thomas C. Nelson

/s/ David M. Stack                                                   Director                            May 3, 2002
--------------------------------------------
David M. Stack
II-8
EXHIBIT INDEX
Exhibit No.                                                      Description
  -----------                                                      -----------
1.1                   Form of Underwriting Agreement.*

       3.1                   Form of Restated Certificate of Incorporation of the Registrant.

       3.2                   Form of Restated Bylaws of the Registrant.

       4.1                   See Exhibits 3.1 and 3.2 for provisions of Form of Restated Certificate of
                             Incorporation and Form of Restated Bylaws of the Registrant defining rights
                             of the holders of common stock of the Registrant.

       4.2                   Specimen certificate for shares of common stock, $.01 par value, of the Registrant.*

       5.1                   Opinion of Paul, Hastings, Janofsky & Walker LLP.*

      10.1                   Securityholders Agreement dated as of August 8, 2000, among the Registrant and the
                             Securityholders named therein.

      10.2                   Amendment to Securityholders Agreement dated as of November 21, 2000.

      10.3                   Second Amendment to Securityholders Agreement dated as of April 22, 2002.

      10.4                   Stack Pharmaceuticals Consulting Agreement dated December 23, 2000, by and between the
                             Registrant and Stack Pharmaceuticals, Inc.

      10.5                   Pharmaceutical Services Agreement made and entered into February 4, 2002 between the
                             Registrant and aaiPharma, Inc.

      10.6                   Component Supply Agreement made as of July 28, 2000, by and among the Registrant,
                             Berlex Laboratories, Inc. and Berlichem, Inc. (+)

      10.7                   Supply Agreement, dated November 1, 2000, by and between the Registrant and
                             Organics/LaGrange, Inc. (+)

      10.8                   Advertising Agency Agreement, dated October 1, 2001, by and between the Registrant and
                             Accel Healthcare Communications LLC.

      10.9                   Lease Agreement dated September 20, 1999, by and between University Corporate Center, LLC
                             and the Registrant for commercial premises located at 127 Racine Drive, Wilmington,
                             North Carolina.

     10.10                   Amendment to Lease Agreement dated December 20, 2000.

     10.11                   Modification to Lease Agreement dated January 9, 2002.
II-9
Exhibit No.                                                      Description
  -----------                                                      -----------
10.12                   Consent to Sub-Sublet Agreement, dated July 3, 2001, by and among Mack-Cali Campus
                             Realty LLC, The Ayco Company LP, Parson Group LLC and the Registrant for commercial
                             premises located at 8 Campus Drive, Parsippany, New Jersey.

     10.13                   Sub-Sublease Agreement, dated July 3, 2001, by and between the Registrant and Parson
                             Group LLC for commercial premises located at 8 Campus Drive, Parsippany, New Jersey.

     10.14                   Amended and Restated 1999 Stock Option Plan.

     10.15                   2002 Stock Incentive Plan.

     10.16                   2000 Warrant Plan for Consultants.

     10.17                   Stock Option Plan for Employees and Consultants.

     10.18                   Employment Agreement between the Registrant and R. Forrest Waldon. *

     10.19                   Form of Employment Agreement between the Registrant and each of Thomas W. Leonard,
                             Stephen F. Rizzo, Christopher Smith and Kathleen M. Milligan. *

     10.20                   Form of Indemnification Agreement. *

      23.1                   Consent of Ernst & Young LLP.

      23.2                   Consent of Paul Hastings, Janofsky & Walker LLP (included in Exhibit 5.1).*

      24.1                   Power of Attorney (included on signature page).
-------------
*        To be filed by amendment.

(+)      The Registrant requests confidential treatment for portions of this
         exhibit.

                                     II-10