<PAGE>   1

   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 1999

                                            REGISTRATION NO. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM S-1

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                                ANTIGENICS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                    <C>                                  <C>
             DELAWARE                             2836                            06-1562417
   (STATE OR OTHER JURISDICTION       (PRIMARY STANDARD INDUSTRIAL             (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)     CLASSIFICATION CODE NUMBER)           IDENTIFICATION NUMBER)
</TABLE>

                          630 FIFTH AVENUE, SUITE 2100
                            NEW YORK, NEW YORK 10111
                                 (212) 332-4774
         (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
            AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

                              GARO H. ARMEN, PH.D.
                            CHIEF EXECUTIVE OFFICER
                                ANTIGENICS INC.
                          630 FIFTH AVENUE, SUITE 2100
                            NEW YORK, NEW YORK 10111
                                 (212) 332-4774
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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

                                   COPIES TO:

<TABLE>
<S>                                                              <C>
               MICHAEL LYTTON, ESQ.                               DANIELLE CARBONE, ESQ.
                PAUL KINSELLA, ESQ.                                 SHEARMAN & STERLING
                PALMER & DODGE LLP                                 599 LEXINGTON AVENUE
                 ONE BEACON STREET                               NEW YORK, NEW YORK 10022
            BOSTON, MASSACHUSETTS 02108                               (212) 848-4000
                  (617) 573-0100
</TABLE>

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

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

    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 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 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 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,
check the following box.  [ ]

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

                        CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
============================================================================================================
                                                                 PROPOSED MAXIMUM
TITLE OF EACH CLASS OF                                          AGGREGATE OFFERING          AMOUNT OF
SECURITIES TO BE REGISTERED                                          PRICE(1)            REGISTRATION FEE
------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                     <C>
Common Stock, $.01 par value per share......................       $46,000,000               $12,788
============================================================================================================
</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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

================================================================================
<PAGE>   2

     THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
     MAY NOT SELL THESE SECURITIES UNTIL THE SECURITIES AND EXCHANGE COMMISSION
     DECLARES OUR REGISTRATION STATEMENT EFFECTIVE. THIS PROSPECTUS IS NOT AN
     OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
     SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                 SUBJECT TO COMPLETION, DATED NOVEMBER 30, 1999

 PRELIMINARY PROSPECTUS

             SHARES

 ANTIGENICS INC.                                                          [LOGO]

 COMMON STOCK

 $       PER SHARE

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

-  Antigenics Inc. is offering        shares of its common stock.

-  We anticipate that the initial public offering price will be between $
   and $     per share.

-  This is a firm commitment initial public offering and no public market
   currently exists for our shares.

-  Proposed trading symbol: Nasdaq
   National Market - AGEN

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

 THIS INVESTMENT INVOLVES RISKS.  SEE "RISK FACTORS" BEGINNING ON PAGE 8.

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

<TABLE>
<CAPTION>
                                                                PER SHARE       TOTAL
                                                                ---------    -----------
  <S>                                                           <C>          <C>
  Public offering price.......................................   $           $
  Underwriting discount.......................................   $           $
  Proceeds to Antigenics......................................   $           $
</TABLE>

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

 The underwriters have a 30-day option to purchase up to
 additional shares of common stock from us to cover over-allotments, if any.

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

 U.S. BANCORP PIPER JAFFRAY                                   ROBERTSON STEPHENS

               THE DATE OF THIS PROSPECTUS IS             , 2000.
<PAGE>   3

                         [PICTURE OF VIAL OF ONCOPHAGE]
<PAGE>   4

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                                ----
<S>                                                             <C>
Summary.....................................................      4
Risk Factors................................................      8
Use of Proceeds.............................................     19
Dividend Policy.............................................     19
Forward-Looking Statements..................................     20
Capitalization..............................................     21
Dilution....................................................     22
Selected Consolidated Financial Data........................     23
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     25
Business....................................................     31
Management..................................................     48
Certain Relationships and Related Transactions..............     54
Principal Stockholders......................................     55
Description of Capital Stock................................     56
Shares Eligible For Future Sale.............................     58
Underwriting................................................     59
Legal Matters...............................................     60
Experts.....................................................     60
Where You Can Find More Information.........................     60
Index To Consolidated 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 any other person to provide you
with different information. This prospectus is not an offer to sell, nor is it
seeking an offer to buy, the securities in any state where the offer or sale is
not permitted. The information in this prospectus is complete and accurate as of
the date in the front cover, but the information may have changed since that
date.

In this prospectus, Antigenics Inc., together with Antigenics L.L.C., is
referred to as "we," "us" or "Antigenics," unless the context indicates
otherwise.

                                        3
<PAGE>   5

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

                                    SUMMARY

The items in the following summary are described in more detail later in this
prospectus. This summary provides an overview of selected information and does
not contain all the information you should consider. Therefore, you should also
read the more detailed information set out in this prospectus, including the
financial information. Except as set forth in the consolidated financial
statements or as otherwise specified in this prospectus, all information in this
prospectus gives effect to:

      -     the $39.2 million private placement completed in November 1999; and

      -     the change from a limited liability company to a corporation which
            will occur concurrently with this offering.

In addition, unless otherwise stated, all information in this prospectus assumes
no exercise of the underwriters' over-allotment option.

BUSINESS OF ANTIGENICS

Antigenics is engaged in the discovery and development of a family of novel
immunotherapeutics for the treatment of life threatening and chronic medical
conditions. Immunotherapeutics are drugs that work by modulating the immune
system to fight disease. We are currently evaluating our lead immunotherapeutic,
Oncophage, in six separate phase II or phase I/II clinical trials in four
different cancers, and we expect to start a pivotal phase III trial by mid-2000.
We are also developing immunotherapeutics to treat infectious diseases, such as
genital herpes, and autoimmune disorders, such as diabetes and multiple
sclerosis. Based upon our scientific and drug development skills, our technology
platform and our strategic expertise, we intend to become a leader in drug
discovery, development and commercialization.

Our immunotherapeutics are based on a specific class of proteins known as heat
shock proteins. Heat shock proteins are present in all cells throughout the body
and published research suggests that they play a central role in the generation
of immune responses. We believe that when we inject our heat shock protein-based
immunotherapeutics into patients, they elicit a powerful immune response. We
believe this immune response is capable of systemically targeting and killing
cancers or other diseased cells from which the specific heat shock proteins were
derived.

We believe our heat shock protein technology can be used broadly for the
treatment of a wide variety of diseases. Each of our heat shock protein-based
immunotherapeutics includes a heat shock protein that is constant and a
repertoire of peptides that varies depending on the target disease. For diseases
such as cancer, which vary among individuals, we use heat shock protein-peptide
complexes derived from a patient's own cancer and therefore our
immunotherapeutics are patient-specific, or autologous. For each infectious
disease which is generally caused by a common pathogen, we intend to produce a
disease-specific immunotherapeutic using that same common pathogen. Our heat
shock protein technology has been shown to stimulate the immune system to treat
cancers in a wide range of preclinical studies. In addition, over one dozen
scientific institutions world-wide have independently confirmed various aspects
of our technology platform.

Our lead immunotherapeutic, Oncophage, consists of purified, patient-specific
heat shock protein-peptide complexes and is designed to elicit an immune
response to a patient's cancer. The manufacturing process for Oncophage begins
when a patient's tumor is surgically removed and shipped frozen by overnight
courier to our manufacturing facility. Using our proprietary methods, we purify
Oncophage from the tumor tissue in a process that takes less than 10 hours. We
then ship Oncophage frozen to the hospital for administration to the patient. A
patient is initially injected with Oncophage four to six weeks after surgery.
The typical course of treatment involves a series of injections into the skin
once per week for four to six weeks.

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

                                        4
<PAGE>   6
--------------------------------------------------------------------------------

To date, we have treated approximately 140 advanced stage cancer patients with
Oncophage in our clinical trial programs. We have initially targeted cancers for
which there are limited or no treatment alternatives and tumor types and stages
of disease that involve resectable tumors. Further, we have targeted cancers and
stages of disease that we believe can be evaluated in clinical trials with near
term endpoints to permit rapid and efficient completion of clinical trials and
submission of regulatory filings. We are currently conducting separate phase II
or phase I/II clinical trials with Oncophage for the treatment of:

      -     renal cell carcinoma, a type of kidney cancer;

      -     metastatic melanoma, a type of skin cancer;

      -     colorectal cancer, or cancer of the colon and rectum; and

      -     gastric cancer, or stomach cancer.

In addition, we are planning to start phase II clinical trials evaluating
Oncophage as a treatment for sarcoma, a type of soft tissue cancer, and low
grade indolent non-Hodgkin's lymphoma, a type of cancer that originates in the
lymph tissue. We also expect to begin a pivotal phase III trial for Oncophage as
a treatment for renal cell carcinoma by mid-2000.

Preliminary results from our completed and ongoing clinical trials indicate that
Oncophage is generally safe and well tolerated. These results also demonstrate
preliminary indications of clinical benefit in a number of patients. For
example, in renal cell carcinoma, we have shown that Oncophage has achieved a
response rate, a common measure of clinical benefit, comparable to that of the
existing approved treatment without the significant side effects associated with
that treatment. We have also shown that in all patients who responded
clinically, the number of immune cells increased after treatment with Oncophage.
Moreover, we have shown that we can manufacture Oncophage consistently and in
sufficient quantities from most tumor types.

In addition to cancer, we believe our heat shock protein derived
immunotherapeutics may be effective in treating various infectious diseases and
autoimmune disorders. Our immunotherapeutics for treating infectious diseases
will consist of heat shock proteins complexed to peptides that are produced by
disease-causing pathogens. We have targeted genital herpes as our first
infectious disease indication and are conducting preclinical studies. We
anticipate filing an Investigational New Drug Application, or IND, with the
United States Food and Drug Administration, or FDA, for genital herpes in 2000.

We are also researching the applicability of heat shock proteins to treat
autoimmune disorders like diabetes and multiple sclerosis. We have demonstrated
in a number of animal models that heat shock proteins administered in high doses
can turn off the misguided immune responses responsible for several autoimmune
disorders.

OFFICE LOCATION

Our principal operations are located in Woburn, Massachusetts and our executive
offices are located in New York, New York. The address for our executive offices
is 630 Fifth Avenue, Suite 2100, New York, New York 10111 and our telephone
number is (212) 332-4774.

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

                                        5
<PAGE>   7
--------------------------------------------------------------------------------

THE OFFERING

Common stock offered by us..........                 shares

Common stock outstanding after this
  offering..........................                 shares. This number
                                           excludes           shares of common
                                           stock issuable upon exercise of
                                           options outstanding at             ,
                                           1999, with a weighted average
                                           exercise price of $          per
                                           share and           shares issuable
                                           upon exercise of warrants outstanding
                                           at             , 1999, with an
                                           exercise price of $          per
                                           share.

Offering price......................       $          per share

Use of proceeds.....................       To fund clinical trials; to fund
                                           research and development of our
                                           immunotherapeutics; to increase our
                                           manufacturing capacity; and for
                                           general corporate purposes.

                                           You should read our discussion under
                                           "Use of Proceeds."

Proposed Nasdaq National Market
  symbol............................       AGEN

CORPORATE BACKGROUND AND MERGER

Our business was formed in March 1994. We currently operate as a limited
liability company, Antigenics L.L.C. Concurrently with the completion of this
offering, Antigenics L.L.C. will change its structure from a limited liability
company to a corporation. This change will occur by merging Antigenics L.L.C.
with and into Antigenics Inc., a newly formed Delaware corporation. Membership
units, options and warrants in Antigenics L.L.C. will be exchanged in the merger
for shares of Antigenics Inc. common stock and options and warrants exercisable
for shares of Antigenics Inc. common stock.

This prospectus contains our trademark, Oncophage(R). Each trademark, trade name
or service mark of any other company appearing in this prospectus belongs to its
holder.

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

                                        6
<PAGE>   8
--------------------------------------------------------------------------------

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                               PERIOD FROM                                                                          PERIOD FROM
                              MARCH 31, 1994                                                                       MARCH 31, 1994
                                 (DATE OF                                                  NINE MONTHS ENDED          (DATE OF
                              INCEPTION) TO           YEAR ENDED DECEMBER 31,                SEPTEMBER 30,         INCEPTION) TO
                               DECEMBER 31,    -------------------------------------   -------------------------   SEPTEMBER 30,
                                   1994         1995      1996      1997      1998        1998          1999            1999
                              --------------   -------   -------   -------   -------   -----------   -----------   --------------
                                                                                       (UNAUDITED)   (UNAUDITED)    (UNAUDITED)
<S>                           <C>              <C>       <C>       <C>       <C>       <C>           <C>           <C>
CONSOLIDATED STATEMENT OF
  OPERATIONS DATA:
  Revenue...................      $  --        $    --   $    --   $    --   $    --     $    --      $     --        $     --
  Operating expenses:
    Research and
      development...........       (112)          (742)   (1,569)   (2,548)   (5,908)     (4,072)       (6,926)        (17,806)
    General and
      administrative........        (56)        (2,453)   (1,042)   (1,375)   (2,735)     (1,823)       (3,825)        (11,486)
    Depreciation and
      amortization..........        (15)           (40)      (79)     (202)     (360)       (273)         (726)         (1,422)
                                  -----        -------   -------   -------   -------     -------      --------        --------
  Loss from operations......       (183)        (3,235)   (2,690)   (4,125)   (9,003)     (6,168)      (11,477)        (30,714)
  Interest income, net......         --              8       281       481       736         580           489           1,996
  Non-operating income......         --             --       250        --        --          --            --             250
                                  -----        -------   -------   -------   -------     -------      --------        --------
  Net loss(1)...............      $(183)       $(3,227)  $(2,159)  $(3,644)  $(8,267)    $(5,588)     $(10,988)       $(28,468)
                                  =====        =======   =======   =======   =======     =======      ========        ========
UNAUDITED PRO FORMA
  CONSOLIDATED STATEMENT OF
  OPERATIONS DATA:
  Pro forma net loss(2).....
  Pro forma net loss per
    common share, basic and
    diluted(2)..............
  Pro forma weighted average
    shares outstanding,
    basic and diluted(2)....
</TABLE>

<TABLE>
<CAPTION>
                                              AS OF DECEMBER 31,                    AS OF SEPTEMBER 30, 1999
                                         ----------------------------    ----------------------------------------------
                                                                                                           PRO FORMA,
                                          1996      1997       1998      HISTORICAL     PRO FORMA(3)     AS ADJUSTED(4)
                                         ------    -------    -------    -----------    -------------    --------------
                                                                         (UNAUDITED)     (UNAUDITED)      (UNAUDITED)
<S>                                      <C>       <C>        <C>        <C>            <C>              <C>
CONSOLIDATED BALANCE SHEET DATA:
  Cash and cash equivalents............  $9,588    $13,086    $22,168      $12,612         $50,882           $
  Total current assets.................   9,639     13,246     22,447       13,226          51,496
  Total assets.........................  10,041     14,090     26,636       21,280          59,550
  Total current liabilities............     883        878      2,285        2,170           2,170
  Long-term liabilities, less current
    portion............................      --         --        709        2,368           2,368
  Members' equity/stockholders'
    equity.............................   9,158     13,212     23,641       16,742          55,012
</TABLE>

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

(1)Since we have operated historically as a limited liability company, in
   accordance with federal, state and local income tax regulations which provide
   that no income taxes are levied on United States limited liability companies
   and each member of the company is individually responsible for reporting the
   member's share of our net income or loss, we do not provide for income taxes
   in our consolidated financial statements.

(2)The pro forma consolidated statements of operations data give effect to the
   change from a limited liability company to a corporation as though this event
   occurred as of January 1, 1998. Each unit of members' equity outstanding will
   be exchanged for       shares of common stock. The pro forma consolidated
   statements of operations data are unaudited and reflect adjustments which are
   necessary, in our management's opinion, for a fair presentation of our
   consolidated results of operations on a pro forma basis. Pro forma weighted
   average shares outstanding used for computing pro forma diluted loss per
   common share are the same as those used for computing pro forma basic loss
   per common share because our options are not included in the calculation
   since the inclusion of such potential common shares would be antidilutive.

(3)The pro forma consolidated balance sheet data give effect to the unaudited
   pro forma adjustments as described in footnote (2) and the $39.2 million
   private placement completed in November 1999 as though these events occurred
   as of September 30, 1999. Pro forma cash and cash equivalents and
   stockholders' equity do not include $653,000 in subscriptions receivable and
   $293,000 of private placement expenses.

(4)The pro forma as adjusted consolidated balance sheet data give effect to the
   unaudited pro forma adjustments as described in footnote (3) and are adjusted
   to reflect the issuance of         shares of common stock at $        per
   share, after deducting our estimated offering expenses and the underwriting
   discount, as though these events occurred as of September 30, 1999.

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

                                        7
<PAGE>   9

                                  RISK FACTORS

You should carefully consider the following risk factors before you decide to
buy our common stock. If any of these risks actually occur, our business,
financial condition, operating results or cash flows could be materially
adversely affected. This could cause the trading price of our common stock to
decline, and you may lose part or all of your investment.

                         RISKS RELATED TO OUR BUSINESS

WE DO NOT CURRENTLY GENERATE ANY REVENUE, AND WE CANNOT GUARANTEE THAT WE WILL
EVER COMMERCIALIZE ANY OF OUR IMMUNOTHERAPEUTICS AND GENERATE REVENUE IN THE
FUTURE.

  WE MUST RECEIVE SEPARATE REGULATORY APPROVAL FOR EACH OF OUR
  IMMUNOTHERAPEUTICS IN EACH INDICATION BEFORE THEY CAN BE SOLD COMMERCIALLY IN
  THE UNITED STATES OR INTERNATIONALLY.

To obtain regulatory approvals, we must, among other requirements, complete
clinical trials demonstrating that a particular immunotherapeutic is safe and
effective. Because Oncophage is our only immunotherapeutic in clinical trials,
any delays or difficulties we encounter in these clinical trials may have a
significant adverse impact on our operations and cause our stock price to
decline significantly. We have limited clinical data. Future clinical trials may
not show that Oncophage is safe and effective. In addition, our clinical trials
of Oncophage might be delayed or halted for various reasons, including:

      -     Oncophage may not appear to be more effective than current
            therapies;

      -     Oncophage may have unforeseen adverse side effects;

      -     the time required to determine efficacy may be longer than expected;

      -     patients may die during a clinical trial because their disease is
            too advanced or because they experience medical problems that may
            not be related to Oncophage;

      -     sufficient number of patients may not enroll in the trials; or

      -     we may not be able to produce sufficient quantities of Oncophage to
            complete the trials.

We rely on third party clinical investigators to conduct our clinical trials. As
a result, we may encounter delays outside of our control.

The process of obtaining and maintaining regulatory approvals for new
therapeutic products is lengthy, expensive and uncertain. It also can vary
substantially, based on the type, complexity and novelty of the product
involved. To date, the FDA and foreign regulatory agencies have approved only a
limited number of cancer immunotherapeutics for commercial sale. Furthermore,
the FDA and foreign regulatory agencies have relatively little experience with
autologous therapies. This lack of experience may lengthen the regulatory review
process for Oncophage, increase our development costs and delay
commercialization. In addition, problems encountered with other companies'
immunotherapeutic products may slow the regulatory approval for our
immunotherapeutics. The FDA may not consider Oncophage to be an appropriate
candidate for fast track designation should we choose to seek it. Accordingly,
Oncophage or any of our other future drug candidates could take a significantly
longer time to gain regulatory approval than we expect or may never gain
approval.

  BECAUSE DEVELOPMENT OF OUR IMMUNOTHERAPEUTICS FOR INFECTIOUS DISEASES AND
  AUTOIMMUNE DISORDERS WILL INVOLVE A LENGTHY AND COMPLEX PROCESS, WE ARE NOT
  CERTAIN WE WILL BE ABLE TO DEVELOP ANY MARKETABLE IMMUNOTHERAPEUTICS FOR THESE
  INDICATIONS.

We have not completed the preclinical development of our immunotherapeutics for
any infectious disease or autoimmune disorder. We will need to conduct extensive
additional research, preclinical and clinical testing of these
immunotherapeutics prior to commercialization. This development process takes
several years and often fails to yield commercial products. For example,
regulatory authorities may not permit

                                        8
<PAGE>   10

human testing of these immunotherapeutics and, even if human testing is
permitted, the subsequent clinical trials may not demonstrate that an
immunotherapeutic is safe and effective.

  EVEN IF SOME OF OUR IMMUNOTHERAPEUTICS RECEIVE REGULATORY APPROVAL, THOSE
  IMMUNOTHERAPEUTICS MAY STILL FACE SUBSEQUENT REGULATORY DIFFICULTIES.

If we receive regulatory approval to sell any of our immunotherapeutics, the FDA
or a comparable foreign regulatory agency may, nevertheless, limit the indicated
uses of that immunotherapeutic. In addition, a marketed product, its
manufacturer and the manufacturer's facilities are subject to continual review
and periodic inspections by regulatory agencies. Furthermore, the FDA and
foreign regulatory agencies may require expensive post-approval trials. The
discovery of previously unknown problems with a product, manufacturer or
facility can result in restrictions on the product or manufacturer, including
withdrawal of the product from the market. The failure to comply with applicable
regulatory approval requirements can, among other things, result in:

      -     warning letters;

      -     fines and other civil penalties;

      -     suspended regulatory approvals;

      -     refusal to approve pending applications or supplements to approved
            applications;

      -     refusal to permit exports from the United States;

      -     product recalls;

      -     seizure of products;

      -     injunctions;

      -     operating restrictions;

      -     total or partial suspension of production; and/or

      -     criminal prosecution.

WE MAY ENCOUNTER MANUFACTURING PROBLEMS THAT LIMIT OUR ABILITY TO SUCCESSFULLY
COMMERCIALIZE OUR IMMUNOTHERAPEUTICS.

  IF WE ARE UNABLE TO PURIFY HEAT SHOCK PROTEINS FROM SOME CANCER TYPES, THE
  SIZE OF OUR POTENTIAL MARKET WOULD DECREASE.

Our ability to successfully commercialize an immunotherapeutic for a particular
cancer type depends on our ability to purify heat shock proteins taken from that
type of cancer. Based on our clinical trials conducted to date, in renal cell
carcinoma, we have been able to manufacture Oncophage from 98% of the tumors
delivered to our manufacturing facility; for melanoma, 90%; for colorectal
carcinoma, 100%; for gastric cancer, 71%; and for pancreatic cancer, 30%. The
relatively low rate for pancreatic cancer is due to the abundance of proteases
in pancreatic tissue. Proteases are enzymes that break down proteins. These
proteases degrade the heat shock proteins during the purification process. We
may encounter this problem or similar problems with other types of cancers as we
expand our research. If these problems cannot be overcome, the number of cancer
types that our immunotherapeutics could treat would be limited.

  DELAYS IN OBTAINING REGULATORY APPROVAL OF OUR MANUFACTURING FACILITY AND
  DISRUPTIONS IN OUR MANUFACTURING PROCESS MAY DELAY OR DISRUPT OUR
  COMMERCIALIZATION EFFORTS.

Before we can begin commercially manufacturing our immunotherapeutics, we must
obtain regulatory approval of our manufacturing facility and process.
Manufacturing of our immunotherapeutics must

                                        9
<PAGE>   11

comply with the FDA's current Good Manufacturing Practices requirements,
commonly known as cGMP, and foreign regulatory requirements. The cGMP
requirements govern quality control and documentation policies and procedures.
In complying with cGMP and foreign regulatory requirements, we will be obligated
to expend time, money and effort in production, recordkeeping and quality
control to assure that the product meets applicable specifications and other
requirements. Failure to comply with these requirements would subject us to
possible regulatory action and may limit the jurisdictions in which we are
permitted to sell our immunotherapeutics.

We recently transitioned the manufacturing of Oncophage from our facility in
Framingham, Massachusetts to our new facility in Woburn, Massachusetts. We have
limited manufacturing experience in this facility and unforeseen circumstances
may cause delays or disruptions in our manufacturing process. This facility will
be continuously subject to inspection by the FDA, The Commonwealth of
Massachusetts and foreign regulatory authorities. Preparing this facility for
commercial manufacturing may take longer than planned and the costs of complying
with FDA regulations may be higher than those which we have budgeted. In
addition, any material changes we make to the manufacturing process may require
approval by the FDA, The Commonwealth of Massachusetts or foreign regulatory
authorities. Obtaining these approvals could take longer than expected and could
disrupt our manufacturing process.

We are the only manufacturer of our immunotherapeutics. For the next several
years, we expect that all of our manufacturing will take place in our facility
in Woburn, Massachusetts. If this facility or the equipment in the facility is
significantly damaged or destroyed, we will not be able to quickly or
inexpensively replace our manufacturing capacity. Due to the nature of our
immunotherapeutics, a third party may not be able to manufacture our
immunotherapeutics.

We have no experience manufacturing Oncophage in the volumes that will be
necessary to support large clinical trials or commercial sales. Our present
manufacturing process may not meet our initial expectations as to:

      -     scheduling;

      -     reproducibility;

      -     yields;

      -     purity;

      -     costs;

      -     potency;

      -     quality; and

      -     other measurements of performance.

In addition, we have not demonstrated the ability to manufacture our
immunotherapeutics other than Oncophage in quantities sufficient for any
clinical trials.

IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, TRADE SECRETS OR
KNOW-HOW, WE MAY NOT BE ABLE TO OPERATE OUR BUSINESS PROFITABLY.

  IF WE FAIL TO SUSTAIN AND FURTHER BUILD OUR INTELLECTUAL PROPERTY RIGHTS,
  COMPETITORS WILL BE ABLE TO TAKE ADVANTAGE OF OUR RESEARCH AND DEVELOPMENT
  EFFORTS TO DEVELOP COMPETING THERAPIES.

Our success will depend, in part, on our ability to maintain protection for our
products and technologies under the patent laws of the United States and other
countries, so that we can stop others from using our inventions. Our success
also will depend on our ability to prevent others from using our trade secrets.
In addition, we must operate in a way that does not infringe, or violate, the
intellectual property rights of other parties.

                                       10
<PAGE>   12

We have exclusive rights to seven issued U.S. patents, and foreign counterpart
patents and patent applications, relating to our heat shock protein technology.
Our rights to these patents are as a result of an exclusive worldwide license
with Fordham University and one with Mount Sinai School of Medicine of New York
University. In addition, we have licensed or optioned rights to 44 pending U.S.
patent applications and foreign counterpart patents and patent applications. The
standards which the U.S. Patent and Trademark Office uses to grant patents are
not always applied predictably or uniformly, and can change. Consequently, we
cannot be certain as to the type and extent of patent claims that will be issued
to us in the future. Any patents which do issue may not contain claims which
will permit us to stop competitors from using similar technology. The standards
which courts use to interpret patents are not always applied predictably or
uniformly, and can change, particularly as new technologies develop.
Consequently, we cannot be certain as to how much protection, if any, will be
given to our patents, if we attempt to enforce them and they are challenged in
court. If we choose to go to court to stop someone else from using the
inventions claimed in our patents, that individual or company has the right to
ask the court to rule that our patents are invalid and should not be enforced
against them. These lawsuits are expensive and would consume time and other
resources, even if we were successful in stopping the violation of our patents.
In addition, there is a risk that the court will decide that our patents are not
valid and that we do not have the right to stop the other party from using the
inventions. There is also the risk that, even if the validity of our patents
were upheld, the court will refuse to stop the other party on the ground that
its activities are not covered by, that is, do not infringe, the patent.

Furthermore, a third party may claim that we are using inventions covered by
their patents and may go to court to stop us from engaging in our normal
operations and activities, such as research and development and the sale of
products. Such lawsuits are expensive and would consume time and other
resources. There is a risk that a court would decide that we are violating the
third party's patents and would order us to stop the activities covered by the
patents. In addition, there is a risk that a court will order us to pay the
other party's damages for having violated their patents.

We rely on certain proprietary trade secrets and know-how that are not
patentable. We have taken measures to protect our unpatented trade secrets and
know-how, including the use of confidentiality agreements with our employees,
consultants and certain contractors. It is possible, however, that:

      -     the agreements may be breached;

      -     we would have inadequate remedies for any breach; or

      -     our trade secrets will otherwise become known or be independently
            developed or discovered by competitors.

  WE MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS
  RELATING TO PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS.

The cost to us of any litigation or other proceeding relating to intellectual
property rights, even if resolved in our favor, could be substantial. Some of
our competitors may be able to sustain the costs of complex patent litigation
more effectively than we can because of their substantially greater resources.
Uncertainties resulting from the initiation and continuation of any litigation
could have a material adverse effect on our ability to continue our operations.

Should third parties file patent applications, or be issued patents, claiming
technology also claimed by us in pending applications, we may be required to
participate in interference proceedings in the United States Patent and
Trademark Office to determine priority of invention. We, or our licensors, also
could be required to participate in interference proceedings involving our
issued patents and pending applications of another entity. An adverse outcome in
an interference proceeding could require us to cease using the technology or to
license rights from prevailing third parties. There is no guarantee that any
prevailing party would offer us a license or that any license, if made available
to us, could be acquired on commercially acceptable terms.

                                       11
<PAGE>   13

We cannot guarantee that the practice of our technologies will not conflict with
the rights of others. We are aware of a United States patent, issued to a third
party, with claims directed to certain heat shock protein based
immunotherapeutics and their use in the field of tissue grafting. We do not
believe that our products or activities are infringing any valid claims of this
patent. We also are aware of a United States patent, issued to a different third
party, with claims directed to certain methods of making heat shock protein
products. No therapeutic methods are claimed in this patent. In any event, none
of the methods we presently use to make Oncophage are claimed in this patent.
Moreover, we do not believe that our methods of producing any of our heat shock
protein-based immunotherapeutics would infringe any valid claims of this patent.
However, we cannot guarantee that we will not be sued for infringing these, or
any other, patents. One of the patent applications licensed to us contains
claims which are substantially the same as claims in the later third party
patent. Therefore, there is a possibility that an interference will be declared.
In an interference proceeding, the party with the earliest effective filing date
has certain advantages. We believe that our claims have an earlier effective
filing date than the claims of the other patent. However, we cannot guarantee
that we would prevail in any interference proceeding that might be declared.

In some foreign jurisdictions, we could become involved in opposition
proceedings, either by opposing the validity of another's foreign patent or by
third parties opposing the validity of our foreign patents. In 1995, a European
patent, with claims directed to the use of heat shock proteins to produce or
enhance immune responses to cancer and infectious diseases, issued to the
Whitehead Institute for Biomedical Research and to the Medical Research Council.
This patent is exclusively licensed to StressGen Biotechnologies Corporation. No
attempts have been made to enforce this patent against us. Nonetheless, we are
seeking to have this patent revoked in its entirety in an opposition proceeding
in the European Patent Office. The European Patent Office has issued a
provisional, non-binding opinion that this third party patent should be revoked
in its entirety. The patent owners, in response, amended the patent claims to
exclude autologous treatment of tumors. We then argued that this third party
patent still should be revoked in its entirety. Even if the European Patent
Office changes its position and the patent is maintained with the amended
claims, we still should be free to practice our autologous cancer business in
Europe. However, the patent owners or their licensee might try to enforce the
amended patent against our infectious disease business in Europe. Any decision
to revoke the patent in its entirety, or to maintain the patent in any form, can
be appealed. It may be years before a final, non-appealable decision is reached,
during which time, the patent, with any amendments made during the opposition
proceedings, remains enforceable. Participation in the opposition proceedings
and appeals may be costly. Furthermore, if we are sued on this patent in Europe
prior to any final decision of revocation, the cost of defending ourselves could
be substantial, even if we ultimately succeed in proving that we do not infringe
any valid claims of this patent.

This European patent claims priority to a United States patent application filed
in 1988. We do not know whether this application, or any related application,
still is pending. We do not believe that any United States patent has issued
from this application and we do not know whether a United States patent will
ever issue from this patent application. If a United States patent does issue,
we do not know whether the patent will be enforceable, whether any valid claims
will cover our activities or products, or whether the patent owner will attempt
to assert the patent against us.

Earlier this year, we received correspondence from both Copernicus Therapeutics,
Inc. and its counsel alleging similarity between the companies' respective logos
and demanding that we cease using our logo. In July 1999, a response was sent to
Copernicus, stating that we have prior rights in our logo. The response to
Copernicus also stated that since the respective corporate names are vastly
different, both companies should be able to continue the use of their respective
logos without causing public confusion. At this time, no further communications
have been received from Copernicus or its counsel. Although we do not believe we
are infringing any rights owned by Copernicus, we do not know whether Copernicus
will proceed with a trademark lawsuit against us.

                                       12
<PAGE>   14

WE ARE AN EARLY STAGE BIOTECHNOLOGY COMPANY THAT MAY NEVER BE PROFITABLE.

  IF WE INCUR OPERATING LOSSES FOR LONGER THAN WE EXPECT, WE MAY BE UNABLE TO
CONTINUE OUR OPERATIONS.

We have not generated any revenues from sales, and we do not expect to generate
significant revenues for several years. We have incurred losses since we were
formed. From inception through September 30, 1999, we have generated losses
totaling $28,468,000. We expect to incur increasing and significant losses over
the next several years as we complete our Oncophage clinical trials, apply for
regulatory approvals, continue development of our technology and expand our
operations.

Our profitability will depend on the market acceptance of any of our
immunotherapeutics that receive FDA or foreign regulatory approval. The
commercial success of any of our immunotherapeutics will depend on whether:

      -     the immunotherapeutic is more effective than alternative treatments;

      -     side effects of the immunotherapeutic are acceptable to doctors and
            patients;

      -     we produce the immunotherapeutic at a competitive price;

      -     we obtain sufficient reimbursement for the immunotherapeutic; and

      -     we have sufficient capital to market the immunotherapeutic
            effectively.

Because Oncophage is autologous, or patient specific, it may be more expensive
to manufacture than conventional therapeutic products. This increased expense
may decrease our profit margins. Furthermore, because our autologous products
are novel, some doctors and patients may be reluctant to use them.

  IF WE FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND OUR OPERATIONS, WE WILL BE
  UNABLE TO ADVANCE OUR DEVELOPMENT PROGRAMS AND COMPLETE OUR CLINICAL TRIALS.

Developing immunotherapeutics and conducting clinical trials in multiple
indications is expensive. We plan to conduct clinical trials for many different
cancer types simultaneously, which will increase our costs. We will need to
raise additional capital:

      -     to fund operations;

      -     to continue the research and development of our immunotherapeutics;
            and

      -     to commercialize our immunotherapeutics.

Additional financing may not be available on favorable terms or at all. If we
are unable to raise additional funds when we need them, we may be required to
delay, reduce or eliminate some or all of our development programs and some or
all of our clinical trials. We also may be forced to license technologies to
others that we would prefer to develop internally.

On September 30, 1999, we had $12,612,000 in cash and cash equivalents. We
believe that, with the proceeds from this offering and from the private
placement completed in November 1999, we will have sufficient capital to fund
our operations for the next two years. We may need to raise capital sooner,
however, due to a number of factors, including:

      -     an acceleration of the number, size or complexity of our clinical
            trials;

      -     slower than expected progress in developing our immunotherapeutics;

      -     higher than expected costs to obtain regulatory approvals;

      -     higher than expected costs to pursue our intellectual property
            strategy;

      -     higher than expected costs to further develop our manufacturing
            capability; and

      -     higher than expected costs to develop our sales and marketing
            capability.

                                       13
<PAGE>   15

BECAUSE OF THE SPECIALIZED NATURE OF OUR BUSINESS, THE TERMINATION OF
RELATIONSHIPS WITH OUR SCIENTIFIC ADVISORS OR THE DEPARTURE OF KEY MEMBERS OF
MANAGEMENT MAY PREVENT US FROM ACHIEVING OUR OBJECTIVES.

  IF PRAMOD K. SRIVASTAVA, PH.D. SEVERS HIS RELATIONSHIP WITH ANTIGENICS, OUR
  FUTURE DEVELOPMENT EFFORTS MAY BE HINDERED.

Since our formation, Dr. Srivastava has played a significant role in our
research efforts. Dr. Srivastava is a director of our company and acts as
chairman of our scientific advisory board. In addition, nearly all of our
intellectual property is licensed from institutions at which Dr. Srivastava
has worked. We sponsor research in Dr. Srivastava's laboratory at the
University of Connecticut Health Center in exchange for the right to license
discoveries made in that laboratory with our funding. Dr. Srivastava is a
member of the faculty of the University of Connecticut School of Medicine. The
regulations and policies of the University of Connecticut Health Center govern
the relationship between a faculty member and a commercial enterprise. These
regulations and policies prohibit Dr. Srivastava from becoming an employee of
Antigenics and may be modified in the future to further limit Dr. Srivastava's
relationship with us. While Dr. Srivastava has a consulting agreement with us,
which includes financial incentives for him to remain associated with us, we
cannot guarantee that he will remain associated with us even during the time
covered by the consulting agreement. In addition, this agreement does not
restrict his ability to compete with us after his association is terminated.

  IF WE FAIL TO KEEP KEY MANAGEMENT AND SCIENTIFIC PERSONNEL, OUR ABILITY TO
  DEVELOP OUR IMMUNOTHERAPEUTICS, CONDUCT CLINICAL TRIALS AND OBTAIN FINANCING
  COULD BE ADVERSELY AFFECTED.

We are highly dependent on our senior management and scientific staff,
particularly Garo H. Armen, Ph.D., our chairman and chief executive officer, and
Gamil G. de Chadarevian, our vice chairman and executive vice president,
international. The competition for qualified personnel in the biotechnology
field is intense, and we rely heavily on our ability to attract and retain
qualified scientific, technical and managerial personnel. Since our
manufacturing process is unique, our manufacturing and quality control personnel
are also very important.

THE COMMERCIAL SUCCESS OF ANY OF OUR IMMUNOTHERAPEUTICS WILL DEPEND UPON THE
STRENGTH OF THE SALES AND MARKETING EFFORT AND THE AVAILABILITY OF THIRD PARTY
REIMBURSEMENT.

  IF WE ARE UNABLE TO ESTABLISH SALES AND MARKETING CAPABILITIES OR ENTER INTO
  AGREEMENTS WITH PHARMACEUTICAL COMPANIES TO SELL AND MARKET OUR
  IMMUNOTHERAPEUTICS, OUR ABILITY TO GENERATE REVENUES WILL BE DIMINISHED.

We do not have a sales organization and have no experience in the sales,
marketing and distribution of pharmaceutical products. If Oncophage is approved
for commercial sale, we plan to market it in the United States with our own
sales force. Developing a sales force is expensive and time consuming and could
delay any product launch. We cannot be certain that we would be able to develop
this capacity. If we are unable to establish our sales and marketing capability,
we will need to enter into sales and marketing agreements to market Oncophage in
the United States. We plan to enter into these types of arrangements for sales
outside the United States. If we are unable to establish successful distribution
relationships with pharmaceutical companies, we may fail to realize the full
sales potential of our immunotherapeutics.

  IF WE FAIL TO OBTAIN ADEQUATE LEVELS OF REIMBURSEMENT FOR OUR
  IMMUNOTHERAPEUTICS FROM THIRD PARTY PAYORS, THE COMMERCIAL POTENTIAL OF OUR
  IMMUNOTHERAPEUTICS WILL BE SIGNIFICANTLY LIMITED.

Our profitability will depend on the extent to which reimbursement for the cost
of our immunotherapeutics will be provided by government health administration
authorities, private health insurance providers and other organizations. Many
patients will not be capable of paying for our immunotherapeutics themselves.
The primary trend in the United States health care industry is toward cost
containment and decisions regarding the use of a particular treatment are
increasingly influenced by large private payors, managed

                                       14
<PAGE>   16

care organizations, group purchasing organizations and similar organizations and
are becoming more economically focused. Furthermore, many third party payors
limit reimbursement for newly approved health care products. Cost containment
measures may prevent us from becoming profitable.

In addition, healthcare reform is an area of significant government focus. Any
reform measures, if adopted, could adversely affect:

      -     the pricing of immunotherapeutics in the United States or
            internationally; and

      -     the amount of reimbursement available from governmental agencies or
            other third party payors.

For example, recent proposals regarding Medicare coverage, if they take effect,
may put novel cancer therapies like Oncophage at a competitive disadvantage
compared to existing therapies.

PRODUCT LIABILITY AND OTHER CLAIMS AGAINST US MAY REDUCE DEMAND FOR OUR PRODUCTS
OR RESULT IN SUBSTANTIAL DAMAGES.

We face an inherent risk of product liability exposure related to
immunotherapeutics being tested in human clinical trials and will face an even
greater risk if any of our therapeutic products are sold commercially. We may
become subject to a product liability claim if one of our immunotherapeutics
causes, or merely appears to have caused, an injury. Regardless of merit or
eventual outcome, product liability claims may result in:

      -     decreased demand for our immunotherapeutics;

      -     injury to our reputation;

      -     withdrawal of clinical trial volunteers;

      -     costs of related litigation; and

      -     substantial monetary awards to plaintiffs.

Oncophage is manufactured from a patient's tumor and must be returned to the
same patient for injection. A patient may sue us if we, a hospital or a delivery
company fails to deliver the removed tumor or that patient's Oncophage. The
logistics of shipping will become more complex as the number of patients we
treat increases, and we cannot assure that all shipments will be made without
incident. In addition, administration of Oncophage at a hospital poses another
chance for delivery to the wrong patient. We do not currently have insurance
that covers loss of or damage to Oncophage and do not know whether insurance
will be available to us at a reasonable price or at all.

WE MAY BE REQUIRED TO INCUR SIGNIFICANT COSTS TO COMPLY WITH ENVIRONMENTAL LAWS
AND REGULATIONS AND OUR COMPLIANCE MAY LIMIT ANY FUTURE PROFITABILITY.

Our activities involve the use of hazardous, infectious and radioactive
materials that could be dangerous to human health, safety or the environment. As
appropriate, we store these materials and various wastes resulting from their
use at our facility pending ultimate use and disposal. We are subject to a
variety of federal, state and local laws and regulations governing the use,
generation, manufacture, storage, handling and disposal of these materials and
wastes resulting from their use. We may be required to incur significant costs
to comply with both existing and future environmental laws and regulations. In
particular, we are subject to regulation by the Occupational Safety and Health
Administration and the Environmental Protection Agency and to regulation under
the Toxic Substances Control Act and the Resource Conservation and Recovery Act.
OSHA or the EPA may adopt regulations that may affect our research and
development programs. We are unable to predict whether any agency will adopt any
regulations which could have a material adverse effect on our operations.

                                       15
<PAGE>   17

Although our safety procedures for handling and disposing of these materials
comply with federal, state and local laws and regulations, we believe that the
risk of accidental injury or contamination from these materials cannot be
entirely eliminated. In the event of an accident, we could be held liable for
any resulting damages which could be substantial.

OUR COMPETITORS IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES MAY HAVE
SUPERIOR PRODUCTS, MANUFACTURING CAPABILITY OR MARKETING EXPERTISE.

Our business may fail because we face intense competition from major
pharmaceutical companies and specialized biotechnology companies engaged in the
development of immunotherapeutics and other therapeutic products directed at
cancer, infectious diseases and autoimmune disorders. Many of our competitors
have greater financial and human resources and more experience. Our competitors
may:

      -     develop safer or more effective immunotherapeutics and other
            therapeutic products;

      -     implement more effective approaches to sales and marketing; or

      -     establish superior proprietary positions.

More specifically, if regulatory approvals are received, some of our
immunotherapeutics will compete with well-established, FDA approved therapies
that have generated substantial sales over a number of years.

We anticipate that we will face increased competition in the future as new
companies enter our markets and scientific developments surrounding
immunotherapy and other cancer therapies continue to accelerate.

WE MAY NOT BE ABLE TO KEEP UP WITH THE RAPID TECHNOLOGICAL CHANGES IN THE
BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES WHICH COULD MAKE OUR
IMMUNOTHERAPEUTICS OBSOLETE.

The field of biotechnology is characterized by significant and rapid
technological change. Research and discoveries by others may result in medical
insights or breakthroughs which may render our immunotherapeutics obsolete even
before they generate any revenue.

IF WE EXPERIENCE ANY PROBLEMS WITH Y2K COMPLIANCE, OUR BUSINESS MAY BE
DISRUPTED.

Beginning in the year 2000, the date fields coded in certain software products
and computer systems will need to accept four digit entries in order to
distinguish 21st century dates from the 20th century dates. This is commonly
known as the year 2000 or Y2K problem.

It is possible that our installed computer systems, software products or other
business systems, or those of our suppliers or service providers, working either
alone or in conjunction with other software systems, will not accept input of,
store, manipulate or output dates for the Y2K or subsequent years without error
or interruption. We have completed the process of determining whether there are
any critical areas of our business that are not Y2K compliant. Where
appropriate, we have taken corrective actions and implemented contingency plans
to address Y2K problems involving these areas. We estimate that the total cost
of addressing any Y2K problems will be immaterial.

Some risks associated with the Y2K problem are beyond our ability to control,
including the extent to which our suppliers and service providers can address
the Y2K problem. The failure by a third party to adequately address the Y2K
issue may have an adverse effect on their operations, which, in turn, may have
an adverse impact on us. If, for instance, our supply of electricity and/or
water is interrupted, our freezers may not be able to adequately preserve our
immunotherapeutics and our scientific experiments may be interrupted.

                                       16
<PAGE>   18

                         RISKS RELATING TO THE OFFERING

OUR OFFICERS AND DIRECTORS MAY BE ABLE TO BLOCK PROPOSALS FOR A CHANGE IN
CONTROL.

After this offering, our directors and officers will control approximately
     % of our outstanding common stock. Due to this concentration of ownership,
directors and officers may be able to prevail on all matters requiring a
stockholder vote, including:

      -     the election of directors;

      -     the amendment of our organizational documents; or

      -     the approval of a merger, sale of assets or other major corporate
            transaction.

THE NET PROCEEDS FROM THIS OFFERING MAY BE ALLOCATED IN WAYS WHICH YOU AND OTHER
STOCKHOLDERS MAY NOT APPROVE.

Management will have significant flexibility in applying the net proceeds of
this offering and could use these proceeds for purposes other than those
contemplated at the time of the offering.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW MAY
MAKE AN ACQUISITION OF US MORE DIFFICULT.

We are incorporated in Delaware. Anti-takeover provisions of Delaware law and
our charter documents may make a change in control more difficult, even if a
change in control is desired by the stockholders. Our anti-takeover provisions
include provisions in our certificate of incorporation providing that
stockholders' meetings may only be called by the president or the majority of
the board of directors and a provision in our by-laws providing that our
stockholders may not take action by written consent. Additionally, our board of
directors has the authority to issue 1,000,000 shares of preferred stock and to
determine the terms of those shares of stock without any further action by our
stockholders. The rights of holders of our common stock are subject to the
rights of the holders of any preferred stock that may be issued. The issuance of
preferred stock could make it more difficult for a third party to acquire a
majority of our outstanding voting stock. Our charter also provides for the
classification of our board of directors into three classes. This "classified
board" generally may prevent stockholders from replacing the entire board in a
single proxy contest. In addition, our directors may only be removed from office
for cause. Delaware law also prohibits a corporation from engaging in a business
combination with any holder of 15% or more of its capital stock until the holder
has held the stock for three years unless, among other possibilities, the board
of directors approves the transaction. The board may use this provision to
prevent changes in our management. Also, under applicable Delaware law, our
board of directors may adopt additional anti-takeover measures in the future.

OUR COMMON STOCK MAY HAVE A VOLATILE PUBLIC TRADING PRICE AND LOW TRADING
VOLUME.

Prior to this offering, there will have been no public market for our equity. An
active public market for our common stock may not develop or be sustained after
this offering. We and the underwriters, through negotiations, will determine the
initial public offering price. The initial public offering price is not
necessarily indicative of the market price at which the common stock will trade
after this offering. The market prices for securities of companies comparable to
us have been highly volatile, and the market has experienced significant price
and volume fluctuations that are unrelated to the operating performance of the
individual companies. Many factors may have a significant adverse effect on the
market price of the common stock, including:

      -     results of our preclinical and clinical trials;

      -     announcement of technological innovations or new commercial products
            by us or our competitors;

                                       17
<PAGE>   19

      -     developments concerning proprietary rights, including patent and
            litigation matters;

      -     publicity regarding actual or potential results with respect to
            products under development by us or by our competitors;

      -     regulatory developments; and

      -     quarterly fluctuations in our revenues and other financial results.

THE SALE OF A SUBSTANTIAL NUMBER OF SHARES COULD CAUSE THE MARKET PRICE OF OUR
COMMON STOCK TO DECLINE.

After this offering, we will have        shares outstanding. In connection with
the private placement completed in November 1999, we are obligated to file,
approximately 90 days after the date of this prospectus, a registration
statement covering up to        shares for resale. When this registration
statement is declared effective by the Securities and Exchange Commission, these
stockholders will be permitted to resell their shares on the Nasdaq National
Market. Sales of these shares or anticipation of those sales may depress our
stock price.

The sale by our company or the resale by stockholders of shares of our common
stock after this offering could cause the market price of the common stock to
decline. The        shares of common stock outstanding after this offering but
not offered in this prospectus will be available for resale on the Nasdaq
National Market as follows:

      -          shares when a resale registration statement to be filed
            approximately 90 days after the date of this prospectus is declared
            effective, and

      -          shares one year following this offering subject to volume and
            other limitations.

We intend to file a registration statement following the offering to permit the
sale of approximately 4,500,000 shares of common stock under our equity
incentive plan and 300,000 shares of common stock under our employee stock
purchase plan. As of             , 1999, options to purchase
shares of our common stock upon exercise of options with a weighted average
exercise price per share of $          were outstanding. Many of these shares
are subject to vesting that generally occurs over a period of up to five years
following the date of grant. All vested options are subject to agreements with
the underwriters not to sell the shares eligible upon their exercise for 365
days after the offering. As of             , 1999, warrants to purchase
            shares of our common stock with an exercise price per share of
$            were outstanding.

                                       18
<PAGE>   20

                                USE OF PROCEEDS

The net proceeds to us from the sale of        shares of common stock in this
offering at an assumed public offering price of $     per share are estimated to
be $          million after deducting the underwriting discount and estimated
offering expenses payable by us. The net proceeds to us are estimated to be
$          million if the underwriters' over-allotment option is exercised in
full.

We intend to use the net proceeds of this offering to fund clinical trials,
research, preclinical and development activities for our immunotherapeutics and
general corporate purposes, including working capital and an increase in our
administrative staff. We may also use a portion of the net proceeds to increase
our manufacturing capacity or to acquire complementary businesses or products.
We have no specific understandings, commitments or agreements with respect to
any acquisition.

We have not determined the amount of net proceeds to be used for each of these
purposes. Accordingly, we will have broad discretion to use the proceeds as we
see fit. Prior to spending the funds, we will invest the net proceeds in
short-term, investment grade, interest-bearing securities or guaranteed
obligations of the United States government.

                                DIVIDEND POLICY

We have never paid cash dividends. We currently intend to retain any future
earnings to finance the growth and development of our business. We do not intend
to pay cash dividends on our common stock in the foreseeable future.

                                       19
<PAGE>   21

                           FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, principally in the sections
entitled "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" and "Business." Generally, these statements can be
identified by the use of phrases like "believe," "expect," "anticipate," "plan,"
"may," "will," "could," "estimate," "potential," "opportunity," "future,"
"project" and similar terms and include statements about our:

      -     product research and development activities and projected
            expenditures;

      -     the efficacy of our immunotherapeutics in treating diseases;

      -     receipt of regulatory approvals;

      -     spending the proceeds from this offering;

      -     cash needs;

      -     plans for sales and marketing;

      -     results of scientific research;

      -     implementation of our corporate strategy;

      -     Y2K readiness; and

      -     financial performance.

These forward-looking statements may involve risks and uncertainties. Our actual
results could differ significantly from the results discussed in the
forward-looking statements. Factors that could cause or contribute to these
differences include those discussed in "Risk Factors." You should carefully
consider that information before you make an investment decision. You should not
place undue reliance on our forward-looking statements.

                                       20
<PAGE>   22

                                 CAPITALIZATION
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The following table sets forth, as of September 30, 1999, our historical and pro
forma capitalization and cash and cash equivalents. The pro forma capitalization
gives effect to the following transactions as if they occurred on September 30,
1999:

      -     the $39.2 million private placement completed in November 1999; and

      -     the change from a limited liability company to a corporation.

Pro forma cash and cash equivalents and stockholders' equity do not include
$653,000 in subscriptions receivable and $293,000 of private placement expenses.
The pro forma as adjusted capitalization reflects the pro forma adjustments
described in the previous sentence and the sale in this offering of
               shares of common stock at an assumed initial public offering
price of $       per share and the application of our estimated net proceeds
from this offering, after deducting the underwriting discount and estimated
offering expenses payable by us. This table does not include an aggregate of
               shares of common stock issuable upon exercise of stock options
outstanding as of September 30, 1999 with a weighted average exercise price of
$       per share. This table should be read in conjunction with our
consolidated financial statements and the other financial information included
in this prospectus.

<TABLE>
<CAPTION>
                                                                  AS OF SEPTEMBER 30, 1999
                                                         ------------------------------------------
                                                                                       PRO FORMA AS
                                                         HISTORICAL      PRO FORMA       ADJUSTED
                                                         -----------    -----------    ------------
                                                         (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
<S>                                                      <C>            <C>            <C>
Cash and cash equivalents............................     $ 12,612       $ 50,882        $
                                                          ========       ========        =======
Long-term liabilities................................     $  2,368          2,368
                                                          --------
Members' capital.....................................       45,210             --
Stockholders' equity
  Common stock, par value $0.01 per share;
     100,000,000 shares authorized,
                    shares issued and outstanding,
     pro forma,                shares issued and
     outstanding, pro forma as adjusted..............           --         83,480
  Preferred stock, par value $0.01 par value per
     share; 1,000,000 shares authorized, no shares
     issued and outstanding, pro forma and pro forma
     as adjusted.....................................           --             --             --
Deficit accumulated during the development stage.....      (28,468)       (28,468)
                                                          --------       --------        -------
  Total members'/stockholders' equity................       16,742         55,012
                                                          --------       --------        -------
          Total capitalization.......................     $ 19,110       $ 57,380        $
                                                          ========       ========        =======
</TABLE>

                                       21
<PAGE>   23

                                    DILUTION

Our pro forma net tangible book value as of September 30, 1999, was $       or
$       per share of common stock. Pro forma net tangible book value per share
before this offering represents the amount of our pro forma stockholders'
equity, less intangible assets, divided by the pro forma number of shares of
common stock outstanding as of September 30, 1999 after giving effect to:

      -     the application of net proceeds from the $39.2 million private
            placement completed in November 1999; and

      -     the change from a limited liability company to a corporation.

Pro forma net tangible book value per share after this offering gives effect to
the adjustments described above and to the application of net proceeds from the
sale of                shares of our common stock at an assumed initial public
offering price of $     per share. As of September 30, 1999, our pro forma net
tangible book value after this offering would be $          or $     per share.

This represents an immediate increase in net tangible book value to existing
stockholders of $     per share and an immediate dilution to new investors of
$     per share. The following table illustrates the per share dilution:

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

Assuming the exercise in full of the underwriters' over-allotment option, our
adjusted pro forma net tangible value after this offering at September 30, 1999
would have been approximately $     per share, representing an immediate
increase in pro forma tangible book value of $     per share to our existing
stockholders and an immediate dilution in pro forma net tangible book value of
$     per share to purchasers in this offering.

The following table enumerates the number of shares of common stock purchased,
the total consideration paid and the average price per share paid by our
existing stockholders. The following table also enumerates the number of shares
of common stock purchased and the total consideration paid, calculated before
deduction of the underwriting discount and estimated offering expenses, and the
average price per share paid by the new investors in this offering assuming the
sale of                shares of our common stock at an assumed initial offering
price of $     per share.

<TABLE>
<CAPTION>
                                                        SHARES PURCHASED     TOTAL CONSIDERATION
                                                        -----------------    -------------------    AVERAGE PRICE
                                                        NUMBER    PERCENT    AMOUNT     PERCENT       PER SHARE
                                                        ------    -------    -------    --------    -------------
<S>                                                     <C>       <C>        <C>        <C>         <C>
Existing stockholders...............................                    %    $                %        $
New investors.......................................                    %    $                %        $
                                                        ------     -----     ------      -----         -------
         Total......................................                 100%    $             100%        $
                                                        ======     =====     ======      =====         =======
</TABLE>

The tables above are calculated on a pro forma basis as of September 30, 1999
and give effect to the November 1999 private placement and the change from a
limited liability company to a corporation.

The tables above assume no exercise of the underwriters over-allotment option
and no exercise of stock options outstanding at September 30, 1999. As of
September 30, 1999, there were options outstanding to purchase a total of
               shares, at a weighted average exercise price of $       per
share. To the extent that any of these options are exercised, there will be
further dilution to new investors. Please see "Capitalization," "Management --
Director Compensation," "-- Executive Compensation" and Note 5 to Antigenics'
audited consolidated financial statements and Note C to Antigenics' unaudited
consolidated financial statements.

                                       22
<PAGE>   24

                      SELECTED CONSOLIDATED FINANCIAL DATA
               (IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT DATA)

The selected consolidated balance sheet data set forth below, as of December 31,
1997 and 1998, and the consolidated statement of operations data for each of the
years in the three-year period ended December 31, 1998, are derived from our
audited consolidated financial statements included elsewhere in this prospectus.
The selected consolidated balance sheet data as of December 31, 1994, 1995 and
1996 and selected consolidated statement of operations data for the period from
March 31, 1994 (date of inception) to December 31, 1994 and the year ended
December 31, 1995 are derived from our audited consolidated financial statements
which are not included in this prospectus. These consolidated financial
statements of Antigenics L.L.C. have been audited by KPMG LLP, independent
certified public accountants.

The selected consolidated financial data as of September 30, 1999 and for the
nine months ended September 30, 1998 and 1999 and for the period from March 31,
1994 (date of inception) to September 30, 1999 are derived from our unaudited
consolidated financial statements which are included elsewhere in this
prospectus. The unaudited financial data includes, in our opinion, all
adjustments (consisting only of normal recurring adjustments) that are necessary
for a fair presentation of our financial position and the results of our
operations for those periods. Operating results for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1999. The selected consolidated
financial data should be read in conjunction with, and are qualified by
reference to, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our consolidated financial statements and notes to
those consolidated financial statements included elsewhere in this prospectus.

Since we have operated historically as a limited liability company, in
accordance with federal, state and local income tax regulations which provide
that no income taxes are levied on United States limited liability companies and
each member of the limited liability company is individually responsible for
reporting the member's share of our net income or loss, we do not provide for
income taxes in our consolidated financial statements.

The unaudited pro forma information set forth below reflects adjustments which
are necessary, in our management's opinion, for a fair presentation of our
consolidated financial condition and results of operations on a pro forma basis.
The unaudited pro forma net loss, basic and diluted net loss per common share
and weighted average shares outstanding for the year ended December 31, 1998 and
the nine months ended September 30, 1999 give effect to the change from a
limited liability company to a corporation and the exchange of each unit of
members' equity into   shares of common stock as if they occurred on January 1,
1998.

The unaudited pro forma selected balance sheet data as of September 30, 1999
reflects the events described above as if these events occurred as of September
30, 1999 as well as the $39.2 million private placement completed in November
1999. Pro forma cash and cash equivalents and stockholders' equity do not
include $653,000 in subscriptions receivable and $293,000 of private placement
expenses.

                                       23
<PAGE>   25

<TABLE>
<CAPTION>
                               PERIOD FROM                                                                          PERIOD FROM
                              MARCH 31, 1994                                                                       MARCH 31, 1994
                                 (DATE OF                                                  NINE MONTHS ENDED          (DATE OF
                              INCEPTION) TO           YEAR ENDED DECEMBER 31,                SEPTEMBER 30,         INCEPTION) TO
                               DECEMBER 31,    -------------------------------------   -------------------------   SEPTEMBER 30,
                                   1994         1995      1996      1997      1998        1998          1999            1999
                              --------------   -------   -------   -------   -------   -----------   -----------   --------------
                                                                                       (UNAUDITED)   (UNAUDITED)    (UNAUDITED)
<S>                           <C>              <C>       <C>       <C>       <C>       <C>           <C>           <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
  Revenue...................     $    --       $    --   $    --   $    --   $    --     $    --      $      --       $     --
  Operating expenses:
    Research and
    development.............        (112)         (742)   (1,569)   (2,548)   (5,908)     (4,072)        (6,926)       (17,806)
    General and
    administrative..........         (56)       (2,453)   (1,042)   (1,375)   (2,735)     (1,823)        (3,825)       (11,486)
    Depreciation and
    amortization............         (15)          (40)      (79)     (202)     (360)       (273)          (726)        (1,422)
                                 -------       -------   -------   -------   -------     -------      ---------       --------
  Loss from operations......        (183)       (3,235)   (2,690)   (4,125)   (9,003)     (6,168)       (11,477)       (30,714)
  Interest income, net......          --             8       281       481       736         580            489          1,996
  Non-operating income......          --            --       250        --        --          --             --            250
                                 -------       -------   -------   -------   -------     -------      ---------       --------
  Net loss..................     $  (183)      $(3,227)  $(2,159)  $(3,644)  $(8,267)    $(5,588)     $ (10,988)      $(28,468)
                                 =======       =======   =======   =======   =======     =======      =========       ========
  Net loss per members'
    equity unit, basic and
    diluted.................     $(10.97)      $(40.92)  $(25.43)  $(40.71)  $(86.42)    $(62.06)     $ (105.57)
                                 =======       =======   =======   =======   =======     =======      =========
  Weighted average number of
    units outstanding, basic
    and diluted.............      16,675        78,854    84,876    89,525    95,673      90,032        104,079
                                 =======       =======   =======   =======   =======     =======      =========
UNAUDITED PRO FORMA
  CONSOLIDATED STATEMENT OF
  OPERATIONS DATA:
  Pro forma net loss........                                                 $                        $
  Pro forma net loss per
    common share, basic and
    diluted.................                                                 $                        $
  Pro forma weighted average
    shares outstanding,
    basic and diluted.......
</TABLE>

<TABLE>
<CAPTION>
                                                      AS OF DECEMBER 31,                     AS OF SEPTEMBER 30, 1999
                                       -------------------------------------------------    --------------------------
                                       1994      1995       1996       1997       1998      HISTORICAL      PRO FORMA
                                       -----    -------    -------    -------    -------    -----------    -----------
                                                                                            (UNAUDITED)    (UNAUDITED)
<S>                                    <C>      <C>        <C>        <C>        <C>        <C>            <C>
CONSOLIDATED BALANCE SHEET DATA:
  Cash and cash equivalents..........  $ 129    $   791    $ 9,588    $13,086    $22,168      $12,612       $  50,882
  Total current assets...............    163        876      9,639     13,246     22,447       13,226          51,496
  Total assets.......................    239      1,124     10,041     14,090     26,636       21,280          59,550
  Total current liabilities..........     22        584        883        878      2,285        2,170           2,170
  Long-term liabilities, less current
    portion..........................     --         --         --         --        709        2,368           2,368
  Members' equity/stockholders'
    equity...........................    217        540      9,158     13,212     23,641       16,742          55,012
</TABLE>

                                       24
<PAGE>   26

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

The following discussion of the financial condition and results of operations
should be read in conjunction with our consolidated financial statements and
their notes appearing elsewhere in this prospectus.

OVERVIEW

Since our inception in March 1994, our activities have primarily been associated
with the development of our heat shock protein technology and our lead
immunotherapeutic, Oncophage. Our business activities have included:

      -     establishing manufacturing capabilities;

      -     product research and development;

      -     manufacturing immunotherapeutics for clinical trials;

      -     regulatory and clinical affairs; and

      -     intellectual property prosecution.

We have incurred significant losses since our inception because we have not
generated any revenues. As of September 30, 1999, we had an accumulated deficit
of $28,468,000. We expect to continue to incur net losses over the next several
years as we complete our Oncophage clinical trials, apply for regulatory
approvals, continue development of our technology and expand our operations. We
have been dependent on funding from equity and debt financings to fund our
business activities. Our financial results may vary depending on many factors,
including:

      -     the progress of Oncophage in the regulatory process;

      -     the acceleration of our other pharmaceutical candidates into
            preclinical and clinical trials;

      -     our investment in manufacturing process development and in
            manufacturing capacity for Oncophage and other product candidates;

      -     development of a sales and marketing staff and initial sales
            activities if Oncophage is approved for commercialization; and

      -     the progress of our other additional research and development
            efforts.

HISTORICAL RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1998

Revenue:  No revenue was generated during the nine months ended September 30,
1999 or during the nine months ended September 30, 1998.

Research and Development:  Research and development expense increased 70.1% to
$6,926,000 for the nine months ended September 30, 1999 from $4,072,000 for the
nine months ended September 30, 1998. This increase was partially attributable
to the increase in the non-cash charge for options granted and earned by outside
advisors to $798,000 for the nine months ended September 30, 1999 from $124,000
for the nine months ended September 30, 1998. The remainder of the increase was
primarily due to the number of later stage Oncophage clinical trials in process,
an increase in our staff to support our expanded business activities and other
ongoing development activities. Research and development expenses consisted
primarily of compensation for our employees and outside advisors conducting
research and development work, funding paid to the University of Connecticut,
where we sponsor research, costs associated with the operation of our
manufacturing and laboratory facility and funding paid to support our Oncophage
clinical trials.

                                       25
<PAGE>   27

General and Administrative:  General and administrative expenses increased
109.8% to $3,825,000 for the nine months ended September 30, 1999 from
$1,823,000 for the nine months ended September 30, 1998. This increase was
partially due to the increase in the non-cash charge for options granted and
earned by outside advisors to $1,079,000 for the nine months ended September 30,
1999 from $58,000 for the nine months ended September 30, 1998. The remainder of
the increase was primarily due to the growth in the number of our employees to
support our expanded business operations. General and administrative expenses
consisted primarily of personnel compensation, office expenses and professional
fees.

Depreciation and Amortization:  Depreciation and amortization expense increased
165.9% to $726,000 for the nine months ended September 30, 1999 from $273,000
for the nine months ended September 30, 1998. This increase was due to the
depreciation expense of our new 30,225 square foot manufacturing and laboratory
facility and related equipment.

Interest Income, net:  Interest income increased 10.5% to $641,000 for the nine
months ended September 30, 1999 from $580,000 for the nine months ended
September 30, 1998. This increase was principally attributable to a higher
average cash and cash equivalents balance during the nine months ended September
30, 1999 as compared to the nine months ended September 30, 1998 due to a
$28,000,000 private equity financing completed in January 1999. Changes in
interest rates had an immaterial effect on the change in interest income.
Interest expense was $152,000 during the nine months ended September 30, 1999
due to borrowings under a credit facility to fund the construction of our
manufacturing and laboratory facility. There was no interest expense during the
nine months ended September 30, 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Revenue:  No revenue was generated during the year ended December 31, 1998 or
during the year ended December 31, 1997.

Research and Development:  Research and development expenses increased 131.9% to
$5,908,000 for the year ended December 31, 1998 from $2,548,000 for the year
ended December 31, 1997. This increase was due primarily to the significant
increase in the number of Oncophage clinical trials in process, higher salary
costs due to an increase in the number of our employees as we expanded our
business and clinical activities, higher levels of funding paid to support our
Oncophage clinical trials, professional fees related to expansion of our
intellectual property and patent activities, and the non-cash charge for options
granted to and earned by outside advisors.

General and Administrative:  General and administrative expenses increased 98.9%
to $2,735,000 for the year ended December 31, 1998 from $1,375,000 for the year
ended December 31, 1997. This increase was due to costs related to increased
personnel necessary to support our expanding business and clinical operations
and the non-cash charge for options granted and earned by outside advisors.

Depreciation and Amortization:  Depreciation and amortization expense increased
78.2% to $360,000 for the year ended December 31, 1998 from $202,000 for the
year ended December 31, 1997. This increase was due to the depreciation expense
of our manufacturing and laboratory equipment.

Interest Income, net:  Interest income increased 53.0% to $736,000 for the year
ended December 31, 1998 from $481,000 for the year ended December 31, 1997. This
increase was primarily attributable to a higher average cash and cash
equivalents balance during the year ended December 31, 1998 as compared to the
year ended December 31, 1997. Changes in interest rates had an immaterial effect
on the change in interest income. There was no interest expense during the years
ended December 31, 1998 and 1997.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996

Revenue:  No revenue was generated during the year ended December 31, 1997 or
during the year ended December 31, 1996.

                                       26
<PAGE>   28

Research and Development:  Research and development expenses increased 62.4% to
$2,548,000 for the year ended December 31, 1997 from $1,569,000 for the year
ended December 31, 1996. This increase was primarily due to additional personnel
in all our clinical and preclinical programs, an increase in the fee to the
research laboratory we sponsor at the University of Connecticut and higher
payments to clinics conducting our clinical trials. In addition, we incurred
higher professional fees related to the expansion of our intellectual property
and patent activities.

General and Administrative:  General and administrative expenses increased 32.0%
to $1,375,000 for the year ended December 31, 1997 from $1,042,000 for the year
ended December 31, 1996. This increase was due to costs related to increased
personnel necessary to support our expanding business and clinical operations
partially offset by a decrease in the non-cash charge for options granted to and
earned by outside advisors.

Depreciation and Amortization:  Depreciation and amortization expense increased
155.7% to $202,000 for the year ended December 31, 1997 from $79,000 for the
year ended December 31, 1996. This increase was due to the depreciation expense
of our manufacturing and laboratory equipment.

Interest Income, net:  Interest income increased 71.2% to $481,000 for the year
ended December 31, 1997 from $281,000 for the year ended December 31, 1996. This
increase was primarily attributable to a higher average cash and cash
equivalents balance during the year ended December 31, 1997 as compared to the
year ended December 31, 1996. There was no interest expense during both the
years ended December 31, 1997 and 1996.

Non-operating Income:  We recorded a non-recurring, non-operating fee of
$250,000 for the year ended December 31, 1996 relating to a potential
collaboration.

INCOME TAXES

No benefit for federal, state or local income taxes has been recorded for the
net losses we incurred in the years ended December 31, 1996, 1997 and 1998 and
no benefit for income taxes has been recorded for the period from March 31, 1994
(date of inception) through December 31, 1995. In addition, no net losses
incurred in 1999 prior to the closing of this offering will be recorded on our
federal, state or local income tax returns. Because we operated as a limited
liability company for tax purposes during these periods, and will continue to
until the closing of this offering, all taxable losses were, and will be,
allocated to the members for reporting on their income tax returns. As a result,
we will not be able to offset future taxable income, if any, against losses
incurred prior to the closing of this offering. Upon conversion from a limited
liability company to a corporation, we expect that a valuation allowance equal
to any gross deferred tax assets would be recognized as we believe that it is
more likely than not that these deferred tax assets will not be realized.

LIQUIDITY AND CAPITAL RESOURCES

We have incurred annual operating losses since inception and at September 30,
1999, we had incurred an accumulated deficit of $28,468,000. Since our
inception, we have financed our operations primarily through various private
placements of equity, interest income earned on cash and cash equivalent
balances and debt provided through a credit line secured by some of our
manufacturing and laboratory assets. From our inception through September 30,
1999, we have raised aggregate equity proceeds of $40,322,000 and have borrowed
$3,424,000 under our $5,000,000 credit facility. In addition, in November 1999,
we raised gross proceeds of $39,216,000 through a private placement of equity.
As part of the November 1999 private placement, we issued warrants that expire
September 30, 2002. The exercise price of these warrants is $       per share.
Upon the closing of this offering, we expect some of these warrants will be
converted, on a net exercise basis, into        shares of common stock and that
warrants to purchase             shares of common stock will remain outstanding.
We expect that the proceeds from the November 1999 private placement of equity,
the proceeds from this offering, and current working capital will fund our
capital expenditures and growing operations over the next two years. Our future
capital requirements

                                       27
<PAGE>   29

include, but are not limited to, supporting our Oncophage clinical trial efforts
and continuing our other research and development programs. Satisfying our
long-term liquidity needs will require the successful commercialization of
Oncophage or other products and may require additional capital.

Our cash and cash equivalents at September 30, 1999 were $12,612,000, a decrease
of $9,556,000 from December 31, 1998. The primary use of cash during the nine
months ended September 30, 1999 was to finance operations, including our
Oncophage clinical trials, and capital expenditures for the establishment of our
manufacturing and laboratory facility.

Net cash used in operating activities for the years ended December 31, 1996,
1997 and 1998 was $1,473,000, $3,518,000 and $6,377,000, and for the nine months
ended September 30, 1999 was $9,416,000 compared to $5,508,000 for the nine
months ended September 30, 1998. The increase resulted from the increase in the
number and size of our Oncophage clinical trials and general expansion of our
operations.

Net cash used in investing activities for the years ended December 31, 1996,
1997 and 1998 was $231,000, $619,000 and $3,676,000, and for the nine months
ended September 30, 1999 was $4,592,000 compared to $1,047,000 for the nine
months ended September 30, 1998. The investments were primarily for the
construction of our manufacturing and laboratory facility and equipment,
furniture and fixtures. Our new manufacturing and laboratory facility in Woburn,
Massachusetts was partially financed through the $5,000,000 credit facility
discussed below and available cash balances.

Net cash provided by financing activities was $10,500,000, $7,635,000 and
$19,134,000 for the years ended December 31, 1996, 1997 and 1998, and $4,451,000
for the nine months ended September 30, 1999 compared to $6,525,000 for the nine
months ended September 30, 1998. Since inception, our primary source of
financing has been from equity investments. During 1996, 1997 and 1998, equity
contributions from private placements and, in 1998, exercises of options,
totaled approximately $10,500,000, $7,635,000 and $18,225,000 and $2,212,000 for
the nine months ended September 30, 1999 compared to $6,525,000 for the nine
months ended September 30, 1998. We raised gross proceeds of $39,216,000 in
November 1999 through a private placement of equity. At September 30, 1999, we
have outstanding $3,149,000 under a $5,000,000 credit facility to finance the
construction of our manufacturing and laboratory facility and the purchase of
related equipment. Loans that are drawn down on the credit facility are secured
by specific assets, including leasehold improvements, which they finance.

YEAR 2000 COMPLIANCE

The following constitutes "Year 2000 Readiness Disclosure" under the Year 2000
Information and Readiness Disclosure Act of 1998.

The year 2000 issue, or Y2K, refers to potential problems with computer systems
or any equipment with computer chips or software that use dates where the date
has been stored as just two digits. On January 1, 2000, any clock or date
recording mechanism incorporating date sensitive software which uses only two
digits to represent the year may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including, among other things,
a temporary inability to process transactions, perform laboratory analyses, or
engage in similar business activities.

We are a biopharmaceutical company and our proposed product candidates are not
software or computer based. Therefore, our proposed products are not directly
impacted by the Y2K problem. Our exposure to potential risks from this problem
involves computer and information technology systems, and other systems which
include embedded technology using date sensitive programs such as for:

      -     heating, ventilation, air conditioning, or HVAC;

      -     scientific instrumentation;

      -     manufacturing and laboratory equipment; and

      -     laboratory facilities.

                                       28
<PAGE>   30

Our internal information systems consist of off-the-shelf accounting and e-mail
systems, off-the-shelf application programs such as spreadsheet, word
processing, graphics, database management, and presentation software, and some
instrumentation/data acquisition software. Non-informational technology systems
consist of HVAC and telecommunications.

We have completed the process of determining whether there are any critical
areas of our business that are not year 2000 compliant. We estimate that the
total cost of addressing any year 2000 problems will be immaterial. We believe
our worst case scenario relating to year 2000 risks includes a power
interruption and a lack of supplies to support our clinical trials. We are
implementing a contingency plan to cover these situations including expanding
our supplies inventory and maintaining a generator at our manufacturing facility
for the supply of electrical power.

We have taken actions to minimize the impact of the Y2K problem on our systems
and operations, excluding a systemic failure outside our control, such as a
prolonged loss of electrical, water or telephone service. We have inventoried
and reviewed our systems, scientific instrumentation, and laboratory facilities,
including querying third parties that have a material relationship with us, to
ascertain Y2K compliance. Our review included examining information from our
equipment and software vendors, literature supplied with software, and test
evaluations of our systems. Based upon our work and knowledge to date, which
included updating various software programs, we believe that the risk is minimal
that our internal systems, scientific instrumentation, and laboratory facilities
will be materially impacted by Y2K non-compliance disruptions. Most of our
existing systems, scientific instrumentation, and laboratory facilities are Y2K
compliant or are expected to be Y2K compliant by December 31, 1999.

Vendors for our off-the-shelf applications, including our accounting and e-mail
systems, have informed us that their products are Y2K compliant. To date, our
review has not disclosed otherwise. We have no reason to believe that these
applications are not Y2K compliant. If these applications are not Y2K compliant,
we expect, but cannot be certain, that the vendors will make appropriate
upgrades available to all of their customers at no cost or at minimal cost. We
believe that if it were necessary to replace our off-the-shelf software
applications, this software could be replaced at reasonable costs.

With regard to third party risks, we continue to assess Y2K risks. Third parties
include research partners, manufacturers, research organizations and clinical
study administrators. Our vendors and suppliers have indicated that they will
make every effort to be Y2K compliant before December 31, 1999, but that no
guarantees can be given.

The majority of our material third party contracts relate to sites for clinical
trials of our product candidates and research and development. We believe that
it would be difficult, time consuming, and costly to find alternative clinical
sites and research arrangements. We will continue to work with third parties to
identify and resolve any problems with Y2K compliance.

In a worst case scenario, we could experience delays in receiving research and
development and manufacturing supplies as well as managing and accessing data on
patients enrolled in clinical studies. These delays could slow clinical
development and research and development programs, or impact our ability to
effectively manage and monitor these programs. These delays could have an
adverse impact on our stock price. Based on the information and assessments to
date, no contingency plans have been developed.

Any Y2K compliance problems which arise could materially and adversely affect
our business, results of operations or cash flow. We will continue to identify
all Y2K problems that could materially adversely affect our business operations
and develop contingency plans, if possible. However, it is not possible to
determine with complete certainty that all Y2K problems affecting us or third
parties which have a material relationship with us have been identified. It is
not possible to insure economically against all conceivable risks.

                                       29
<PAGE>   31

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we are exposed to fluctuations in interest
rates as we seek debt financing to make capital expenditures. We do not use
derivative instruments or hedging to manage our exposures.

The information below summarizes our market risks associated with debt
obligations as of September 30, 1999. Fair values included herein have been
estimated taking into consideration the nature and terms of each instrument and
the prevailing economic and market conditions at September 30, 1999. The table
presents cash flows by year of maturity and related interest rates based on the
terms of the debt.

<TABLE>
<CAPTION>
                           ESTIMATED                              YEAR OF MATURITY
                              FAIR       CARRYING    -------------------------------------------
                             VALUE        AMOUNT       1999       2000        2001        2002
                           ----------   ----------   --------   --------   ----------   --------
<S>                        <C>          <C>          <C>        <C>        <C>          <C>
Long-term debt...........  $3,351,000   $3,149,000   $781,000   $906,000   $1,050,000   $412,000
  Fixed interest rates from 13.954% to 15.084%
</TABLE>

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments, including derivatives instruments embedded
in other contracts, and for hedging activities. SFAS No. 133 is effective for
all of our fiscal quarters beginning January 1, 2001. This statement is not
expected to affect us as we currently do not use derivative instruments or
engage in hedging activities.

                                       30
<PAGE>   32

                                    BUSINESS

OVERVIEW

Antigenics is engaged in the discovery and development of novel
immunotherapeutic drugs for the treatment of life threatening and chronic
medical conditions. Our immunotherapeutics are based on a specific class of
proteins known as heat shock proteins and their ability to modulate the immune
system. We are currently evaluating our lead immunotherapeutic, Oncophage, in
six clinical trials for the treatment of four different cancers, and we expect
to start our first pivotal clinical trial by mid-2000. We are also developing
immunotherapeutics to treat infectious diseases, such as genital herpes, and
autoimmune diseases, such as diabetes and multiple sclerosis. Based upon our
scientific and drug development skills, our technology platform and our
strategic expertise, we intend to become a leader in drug discovery, development
and commercialization.

THE IMMUNE SYSTEM

The immune system is the body's natural defense mechanism to prevent and combat
disease. The immune system differentiates between normal tissue, or "self,"
versus diseased tissue or "non-self." When a competent immune system recognizes
diseased cells, a series of steps ensues resulting in the elimination of these
cells. There are two types of immune response: antibody-based and T cell-based.

Antibody-based immune response is primarily involved in the prevention of
diseases. Antibodies are proteins produced by the body in response to disease
causing agents known as pathogens. Antibodies bind to pathogens, including
viruses and bacteria, and block their ability to infect cells. Preventive
vaccines that trigger an antibody-based immune response have been very
successful in reducing the incidence of several deadly diseases, including
smallpox, polio and measles. These vaccines consist of weakened or attenuated
pathogens that stimulate the production of antibodies. However, these types of
vaccines have not been effective in the prevention or treatment of many serious
diseases, including cancer, herpes, tuberculosis, hepatitis and HIV.

T cell-based immune response, on the other hand, is primarily involved in
combating diseases, such as cancers or infections. T cells are specialized white
blood cells that are normally produced by the body to kill cancer cells and
infected cells. T cell-based immune response begins when specialized immune
cells called dendritic cells capture antigens, which are the identifying
structural components of cancers and pathogens. Once inside dendritic cells,
antigens are broken down into small fragments called peptides that are
subsequently displayed on the surface of the dendritic cell. T cells continually
scan the surface of dendritic cells for peptides. If T cells recognize displayed
peptides as foreign or non-self, they replicate rapidly and then search for and
kill other diseased cells containing those same peptides. This T cell-based
immune response is enhanced by hormones known as cytokines that activate various
components of the immune system.

Significant scientific evidence suggests that cancers and infections trigger a T
cell-based immune response during the initial course of their progression. This
immune response, however, is not always sufficient to eradicate the disease.
Tumor cells, for example, hide their antigens and produce substances that
suppress the patient's immune response.

To date, efforts to develop immunotherapeutics that sufficiently overcome this
suppression of the immune system and stimulate T cells to selectively and
accurately target and kill diseased cells have failed due to one or both of the
following:

      -     the inability of drug developers to identify the appropriate
            antigens that identify diseases such as a particular person's
            cancer; and

      -     the inability to present these relevant antigens to activate T cells
            to selectively destroy diseased cells.

We believe our immunotherapeutics specifically address these issues.

                                       31
<PAGE>   33

OUR TECHNOLOGY PLATFORM

INTRODUCTION

We are the pioneers in activating T cells using purified heat shock
protein-peptide complexes. In individuals who develop cancer, infections and
autoimmune disorders, the immune system fails in its normal function. Our
immunotherapeutics are designed to restore this function and treat these life
threatening or chronic disease conditions.

We believe our immunotherapeutics will be applicable to the treatment of all
cancer types and several types of infectious diseases and autoimmune disorders.
Our immunotherapeutics consist of two components: a variable component,
consisting of small protein fragments called peptides, which is necessary for
the targeting of specific diseases; and a constant component, consisting of a
heat shock protein, which is necessary for the activation of a T cell-based
immune response to the targeted disease. In the case of cancer, which is a
highly variable disease from one patient to another, we purify heat shock
protein-peptide complexes from each patient's own tumor tissue. Our cancer
immunotherapeutics are therefore specific to each patient. In contrast, for each
infectious disease which is generally caused by a common pathogen, we use a
human heat shock protein complexed to peptides derived from the target pathogen.
Our immunotherapeutics for infectious diseases therefore will be
disease-specific rather than patient-specific. Our immunotherapeutic for
autoimmune disorders will be generic, meaning it will be intended for the
treatment of all disorders that result in T cells attacking healthy tissue.

The principle upon which our technology platform is based extends back over 50
years when scientists began using genetically identical laboratory animals to
study the immune response to cancer. Researchers demonstrated that animals
vaccinated with attenuated tumor cells are immune to subsequent injections of
live tumor cells, and further that this immunity to cancer is tumor-specific.
Twenty years ago, the chairman of our scientific advisory board, Pramod
Srivastava, discovered that cancers harbor molecular factors known as heat shock
proteins which are responsible for conferring immunity to cancer. Consistent
with the observation that immunity generated with attenuated tumor cells is
tumor-specific, we discovered that heat shock proteins elicit immunity only to
the tumor from which they are purified.

HEAT SHOCK PROTEINS

Heat shock proteins are a class of proteins that play a major role in
transporting peptides, including antigens, within a cell and are thus often
called chaperones. In this capacity, heat shock proteins bind to the entire
antigenic repertoire or fingerprint of the cell in which they reside. Heat shock
proteins are present in all cells of all organisms from bacteria to mammals and
their structure and function are similar across these diverse life forms.

Published research suggests that heat shock proteins play a central role in the
generation of immune responses. This role includes coordinating the breakdown
and transport of peptides from the point of their generation inside cells to
their ultimate display on the cell's surface for recognition by T cells.
Although heat shock proteins inside tumor cells and pathogen-infected cells help
display antigens to the immune system, tumors and pathogens simultaneously
employ strategies to evade immune responses. In some cases, this evasion of
immune responses results in disease progression.

The ability of heat shock proteins to chaperone peptides is key to our
technology platform. When we purify heat shock proteins from tumor cells or
pathogen-infected cells according to our manufacturing protocols, the heat shock
proteins remain complexed, or bound, to the entire repertoire of peptides
produced by the tumor or pathogen. These purified heat shock protein-peptide
complexes isolated from diseased cells are our immunotherapeutics.

We believe that when these purified heat shock protein-peptide complexes are
injected into the skin, they stimulate a powerful T cell-based immune response
capable of targeting and killing cancers and pathogen-infected cells from which
these complexes were derived. Our immunotherapeutics are injected into the skin
to take advantage of the high concentration of dendritic cells in this region.
These dendritic cells express receptors that specifically recognize heat shock
proteins; therefore, our immunotherapeutics are efficiently captured and
processed by dendritic cells. Once inside dendritic cells, heat shock
protein-peptide complexes separate and the peptides are displayed on the surface
of the dendritic cell where they can be recognized by T cells.

                                       32
<PAGE>   34

Dendritic cells expressing cancer-specific or pathogen-specific peptides
activate T cells that are capable of specifically targeting and killing diseased
cells throughout the body that express those same peptides. The interaction of
heat shock proteins with their receptors on dendritic cells also leads to
secretion of cytokines by the dendritic cells which further stimulate the immune
system.

          THE MECHANISM OF HEAT SHOCK PROTEIN-INDUCED IMMUNE RESPONSE

STEP 1. Injection of purified heat shock protein-peptide complexes into skin
                                       |
                                      \|/
                                       -
STEP 2. Heat shock protein-peptide complexes bind to receptor on surface of
        dendritic cell and are subsequently internalized
                                       |
                                      \|/
                                       -
STEP 3. Heat shock proteins and peptides separate inside dendritic cell
                                       |
                                      \|/
                                       -
STEP 4. Peptides are presented on the surface of dendritic cell for recognition
        by T cells. Upon recognition, T cells are activated to kill diseased
        cells, such as tumor or pathogen-infected cells, expressing those same
        peptides. Heat shock proteins also stimulate dendritic cells to release
        cytokines which activate natural killer cells and enhance the immune
        response

<TABLE>
<S>                                                           <C>

Heat shock protein receptor                                   Dendritic cell

Heat shock protein                                            Peptide presented on surface of dendritic cell

Peptide chaperoned by heat shock protein
</TABLE>

                                    [GRAPH]

                                       33
<PAGE>   35

Our immunotherapeutics are designed to stimulate the immune system to recognize
the entire antigenic fingerprint of a tumor or pathogen. Due to this
characteristic, we believe our immunotherapeutics will:

      -     trigger the immune system to recognize and destroy all tumor or
            pathogen-infected cells in the body; and

      -     make it difficult for tumors or pathogens to escape recognition by
            the immune system.

We believe that the re-presentation of peptides by dendritic cells triggers a
more potent immune response than that achieved by the presentation of these same
peptides by the tumor or pathogen-infected cell.

Our preclinical studies with heat shock protein immunotherapeutics have
demonstrated a beneficial effect in preventing or treating 13 types of cancer in
three different species. The cancer types tested include cancers of the skin,
colon, lung and other tissues. Further, our immunotherapeutics show therapeutic
benefit in animals with metastatic disease, which is when cancer has spread
beyond the primary tumor to distant regions of the body. Metastatic disease is
often responsible for the relapse and ultimate death of patients with cancer.

OUR PRODUCTS UNDER DEVELOPMENT

INTRODUCTION

The chart below summarizes the indications and status for each of our products
and development programs. We use "HSPPC" as an abbreviation for "heat shock
protein-peptide complex." The number following HSPPC is the molecular weight of
the heat shock protein used in the product. For cancer applications, we call
HSPPC-96 "Oncophage."

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRODUCT                 INDICATION                                STATUS
-------                 ----------                                ------
<S>                     <C>                                        <C>
CANCER
Oncophage               Renal cell carcinoma                       Phase II trial ongoing
                                                                   Phase I/II trial completed
                        Melanoma                                   Phase II trial ongoing
                                                                   Phase I/II trial completed
                        Colorectal carcinoma                       Phase II trial enrollment completed
                        Gastric cancer                             Phase I/II trial ongoing
                        Pancreatic cancer                          Phase I trial completed
                        Low grade indolent non-Hodgkin's lymphoma  Phase II trial planned
                        Sarcoma                                    Phase II trial planned
HSPPC-70-C              Various cancers                            Research
HSPPC-90-C              Various cancers                            Research
HSPPC-56-C              Various cancers                            Research
INFECTIOUS DISEASES
HSPPC-96-GH             Genital herpes                             Preclinical
HSPPC-70-GH             Genital herpes                             Preclinical
HSPPC-56-I              Various infectious diseases                Research
HSPPC-70-I              Various infectious diseases                Research
AUTOIMMUNE DISORDERS
gp96                    Type 1 diabetes                            Research
                        Multiple sclerosis                         Research
</TABLE>
--------------------------------------------------------------------------------

                                       34
<PAGE>   36

OUR CANCER IMMUNOTHERAPEUTICS

Background.  The American Cancer Society expects that approximately 1.2 million
new cases of cancer will be diagnosed in the United States in 1999. Cancer is
the second leading cause of death in the United States, resulting in an
estimated 563,100 deaths in 1999. The American Cancer Society reports that since
1990 nearly 12 million cases of cancer have been diagnosed and nearly 5 million
people have died from this disease in the United States.

Cancer results from the uncontrolled proliferation of abnormal cells.
Eventually, these cells form a mass referred to as a tumor. As the tumor grows,
it pushes outward, often invading adjacent tissues and organs and interfering
with their normal function. In addition, small groups of cells may break away
from the primary tumor and spread or metastasize. Tumors produced at distant
sites are referred to as metastatic tumors.

The uncontrolled proliferation of cancer cells is due to alterations, or
mutations, in a cell's DNA. Mutations can take place when a gene is exposed to
radiation or particular drugs or chemicals, or when some as yet unexplained
internal change occurs. The mutations in DNA also lead to production of
antigens. Because mutations occur randomly, the antigenic fingerprint of each
person's cancer is unique.

Studies in animals have confirmed that a unique repertoire of antigens is
associated with each primary tumor. As cancers metastasize, they continue to
mutate, potentially producing new antigens not found in the primary tumor of the
same patient. However, we believe that a significant overlap exists between the
antigenic fingerprint of the metastatic cells and the primary tumor of the same
patient.

Current Treatments.  Surgery, chemotherapy and radiotherapy are the three most
commonly used methods for treating cancer. A cancer patient often receives a
combination of these treatments depending upon the type of cancer and the extent
of the disease. Surgery is curative only when tumors are detected at relatively
early stages of growth and can be fully excised. Unfortunately, most tumors
metastasize when they are very small, ultimately causing relapse and death in
many cancer patients. The use of chemotherapy or radiotherapy sometimes improves
survival rates; however, these treatments have significant limitations.

High rates of treatment failure and limitations posed by severe side effects and
tumor resistance have compelled researchers to focus on alternative strategies
of cancer treatment. Immunotherapeutics have the ability to target and destroy
widely disseminated disease without damaging normal tissue. In addition,
immunotherapeutics do not have many of the shortcomings of traditional cancer
treatments.

Our Approach.  We purify our cancer immunotherapeutics from resected portions of
a patient's tumor. Our cancer immunotherapeutics are patient-specific and
therefore incorporate the entire antigenic fingerprint of each patient's own
tumor. Because our cancer immunotherapeutics contain overlapping antigens
present in both the primary and metastatic tumors, we believe they will be
effective in treating all the tumor cells that remain in the body that are
derived from the primary tumor.

ONCOPHAGE

Oncophage is our lead cancer immunotherapeutic. It is being evaluated in four
different cancers in six separate phase II or phase I/II clinical trials.
Oncophage consists of purified, patient-specific heat shock protein-peptide
complexes designed to elicit a T cell-based immune response to a patient's
cancer. After surgical removal of a patient's tumor, the hospital or clinic
ships a portion of the tumor tissue frozen by overnight courier to our facility.
We purify Oncophage from the tumor tissue using our proprietary manufacturing
process in less than ten hours. Depending on the dose, we require a minimum of
one to three grams of tumor tissue to yield a sufficient amount of Oncophage for
a typical course of treatment.

We formulate Oncophage in sterile buffered saline and package it in standard
single injection vials in our manufacturing facility. We subject the final
immunotherapeutic to extensive quality control testing including sterility
testing of each lot. We ship the product frozen via overnight courier back to
the hospital.

                                       35
<PAGE>   37

We have developed sophisticated tracking systems and procedures designed to
ensure correct delivery of Oncophage to the appropriate patient.

                        ONCOPHAGE MANUFACTURING PROCESS

--------------------------------------------------------------------------------
<TABLE>
<S>                     <C>                             <C>                          <C>
   STARTING MATERIAL                       MANUFACTURING                             FINAL PRODUCT

     Tumor tissue              Sample of tissue           Heat shock protein-        Product frozen
      removed by   ----    shipped frozen to our  ---     peptide complexes  ---    and shipped to
        surgery                 manufacturing              purified from          hospital/clinic for
                                  facility                 tumor tissue at         patient treatment
                                                            our facility
</TABLE>
--------------------------------------------------------------------------------

There are several benefits associated with the production and administration of
our autologous product:

      -     we can sterilize Oncophage through simple terminal filtration;
            sterility is required for FDA approval of a product that will be
            injected into humans;

      -     the scheduling of production at our central facility is flexible
            because we purify Oncophage from frozen tumor samples;

      -     our final product can be administered when the patient is ready to
            begin treatment because Oncophage is frozen and has a current
            shelf-life of at least six months; and

      -     Oncophage consists of a purified protein which can be consistently
            produced from most tumor types.

A patient initially receives Oncophage four to six weeks after surgical removal
of the patient's primary or metastatic tumor. The typical course of treatment
consists of a series of injections into the skin administered once per week for
four to six weeks. Patients may be treated with more than one course of
Oncophage based on the advice of their oncologist.

                         ONCOPHAGE COURSE OF TREATMENT

                                    [CHART]
--------------------------------------------------------------------------------
<TABLE>
<S>                              <C>                          <C>
                   4-6 week                                   Repeat course of Oncophage treatment
                   recovery                                             upon request


            Surgery  ---          Oncophage once per  ---        Follow up  ---
                                  week for 4-6 weeks
</TABLE>
--------------------------------------------------------------------------------

Although we believe Oncophage will be applicable to the treatment of all cancer
types, our initial focus is on cancers that are resistant to available treatment
options. Further, we chose types of cancer and stages of disease that typically
yield tumors that can be removed by surgery. Additionally, in order to complete
clinical trials rapidly and file for regulatory approval, we have selected
cancers and stages of disease that are evaluable in clinical trials with near
term endpoints.

                                       36
<PAGE>   38

We filed an IND for Oncophage in November 1996 that the FDA allowed on December
20, 1996. To date, we have treated approximately 140 advanced stage, metastatic
cancer patients with Oncophage in our clinical programs. We started enrolling
patients in our first clinical trial at the Memorial Sloan-Kettering Cancer
Center in New York, New York in November 1997.

We believe the collective results from these clinical programs show that
Oncophage is generally safe and well tolerated. These results also demonstrate
preliminary indications of clinical benefit in a number of these patients.
Moreover, we have shown that Oncophage can generate an anti-tumor immunological
response. In addition, we believe Oncophage can be made consistently and in
sufficient quantities from most human cancer tissue.

The investigators participating in our clinical programs have documented tumor
regressions using standard response criteria. A complete response means that all
tumor tissue has disappeared and the patient appears to be disease free. A
partial response means that evaluable tumor tissue has shrunk by at least 50%. A
minor response means that the tumor has shrunk by 25-50%. Stable disease means
that the tumor has either shrunk or grown by less than 25%. Progressive disease
means that the tumor has grown by more than 25%.

The investigators also documented survival. The median survival refers to the
time at which 50% of patients diagnosed with a particular cancer are alive.

Renal Cell Carcinoma

Background.  Renal cell carcinoma is the most common type of kidney cancer.
According to the American Cancer Society, there will be about 30,000 new cases
of kidney cancer in the United States in 1999. Approximately 11,900 people are
expected to die from the disease during 1999. Of the 30,000 patients diagnosed
with kidney cancer, approximately 85% have the specific type of kidney cancer
known as renal cell carcinoma. By the time renal cell carcinoma is diagnosed in
these patients, about one-third of them have developed metastatic disease.

The median survival of patients with metastatic renal cell carcinoma is
approximately 12 months. For patients with metastatic disease, the only FDA
approved treatment is intravenous high-dose interleukin-2, a human cytokine. The
response rate, which includes partial responses and complete responses, of
patients who are treated with high-dose interleukin-2 is approximately 15%.
Treatment with high-dose interleukin-2 is generally associated with severe
adverse effects. These side effects often can lead to discontinuation of
treatment. Although not FDA-approved for the treatment of renal cell carcinoma,
a lower-dose subcutaneous administration of interleukin-2, either alone or in
combination with other cytokines, has become a treatment option. This treatment
regimen has been the subject of a number of small studies with widely varying
outcomes. Generally, side effects using the subcutaneous route of administration
have been milder than those associated with high-dose, intravenous treatment.

Our Clinical Program.  In our phase I/II trial, we enrolled patients with
measurable metastatic renal cell carcinoma. This trial was conducted at the M.D.
Anderson Cancer Center in Houston, Texas. These patients did not receive prior
or concurrent cancer therapy. After surgical removal of their primary tumors,
patients were treated at one of three dose levels of Oncophage: 2.5 micrograms,
25 micrograms or 100 micrograms. We treated 38 patients, of whom 34 could be
evaluated with standard radiology measurements.

Of the 34 evaluable patients, 13 patients responded or had stable disease. Four
patients achieved a partial response and one patient achieved a minor response.
The other eight patients showed stabilization of their disease. Three of these
patients had been stable in excess of 10 months. The response rate in this
trial, which does not include patients with a minor response or stable disease,
was 12% and no adverse effects were associated with treatment with Oncophage.

The median survival in this trial has not yet been reached; this means that more
than half of the patients are still alive with an average follow up time of 12
months.

                                       37
<PAGE>   39

While the analysis of immunological results is still ongoing, testing to date
shows that in four out of five patients who responded clinically, the number of
T cells increased after treatment with Oncophage. Further, in all patients who
responded clinically, the number of natural killer cells increased after
treatment with Oncophage.

Our phase I/II trial also showed Oncophage to be generally safe and well
tolerated by patients. Sixty-three percent of our patients went on to receive
more than one course of treatment with Oncophage.

We were able to prepare Oncophage successfully from approximately 98% of renal
cancer carcinoma samples received at our manufacturing facility for this phase
I/II trial. Based on this result, we believe we should be able to manufacture
Oncophage for nearly all renal cell carcinoma patients whose tumors can be
surgically removed.

Based on the results from our phase I/II clinical trial, we have initiated a 60
patient phase II trial for patients with metastatic renal cell carcinoma at the
M.D. Anderson Cancer Center. For this trial, the dose of Oncophage has been set
at 25 micrograms and patients receive one dose once a week for four weeks,
followed by one dose every two weeks. Some patients may also receive an
injection of subcutaneous interleukin-2 if they have not had an adequate
response after three months of treatment with Oncophage. We anticipate that we
will complete this phase II trial in the first quarter of 2000. Based on the
analysis of the results from the phase I/II and phase II trials, we anticipate
that we will start a pivotal trial for renal cell carcinoma by the middle of
2000.

Melanoma

Background.  Melanoma is the most serious form of skin cancer. According to the
American Cancer Society, there will be about 44,200 new cases of melanoma in the
United States in 1999. Approximately 7,300 people are expected to die from the
disease during 1999. The incidence of melanoma is growing at 5-7% per year,
which is substantially faster than the growth in incidence rates of other
cancers. Advanced or metastatic melanoma, also known as stage III or IV, is
treated with surgery, radiation therapy, immunotherapy, or chemotherapy
depending on the case. Approximately 20% of all melanoma patients at the time of
their first diagnosis have stage III or stage IV disease. Overall survival of
patients with melanoma has not improved significantly with existing treatments.
The median survival of patients with stage III melanoma varies widely according
to published literature. At the M.D. Anderson Cancer Center, the median survival
of patients with late stage III melanoma is 24 months. According to published
literature, patients with stage IV melanoma have a median survival of about
seven months. Although various treatment options are practiced, the only FDA
approved drug therapies for patients with metastatic melanoma are high dose
intravenous interleukin-2 and alpha interferon, another human cytokine.

Our Clinical Program.  We have treated 36 patients in a phase I/II clinical
trial evaluating Oncophage as a treatment for late stage III and early stage IV
metastatic melanoma. Eighty-three percent of the patients in our trial were
previously treated with chemotherapy, radiotherapy, and alpha interferon. The
trial is being conducted at the M.D. Anderson Cancer Center. After surgery to
remove a portion of the tumor, patients were treated with 2.5 micrograms, 25
micrograms or 100 micrograms of Oncophage.

In this trial, we treated 25 patients with stage IV disease and 11 patients with
stage III disease. Among the 25 patients with stage IV disease, 12 patients were
"adjuvant patients." This means that these patients had all of their detectable
melanoma tissue resected before they received treatment with Oncophage. Of these
12 patients, 11 patients are free of disease at a median of 13 months after
surgery. Not enough time has elapsed to appropriately report on the 8 patients
in the adjuvant setting with stage III disease.

In our melanoma trial, we also treated 16 stage III and stage IV patients with
"residual disease." These are patients who have had only part of their disease
resected, leaving them with visible disease at the time of Oncophage treatment.
In this group of patients, there was one stage IV patient who, after initial
progression of his disease, experienced a mixed response. This patient's largest
metastatic lesion

                                       38
<PAGE>   40

disappeared completely but the smaller lesions progressed. There were also two
other stage IV patients who experienced stabilization of their disease following
initial progression of disease.

At the time of this analysis, 81% of all the patients who have been treated in
this study are alive. Further analysis of the results from this trial is
ongoing.

To date, the trial has shown Oncophage to be generally safe and well tolerated
by patients. In addition, we have been able to successfully prepare Oncophage
from approximately 92% of melanoma samples received at our manufacturing
facility for this phase I/II trial. Based on this result, we believe we should
be able to manufacture our product for nearly all melanoma patients from whom
adequate amount of tumors can be surgically removed.

In addition to our phase I/II trial at the M.D. Anderson Cancer Center, we are
also currently enrolling patients in a phase II trial for melanoma at the
Istituto dei Tumori in Milan, Italy. We anticipate treating 40 patients during
this trial at 5 or 50 micrograms of Oncophage. The purpose of this trial is to
confirm the route of administration of Oncophage.

Colorectal Cancer

Background.  Colorectal cancer is cancer of the colon or rectum. According to
the American Cancer Society, there will be about 129,400 new cases of colorectal
cancer in the United States in 1999. Approximately 56,600 people are expected to
die from the disease during 1999.

For patients whose disease has not spread to other parts of the body, surgery
remains the most common treatment and can be curative in about two thirds of
these cases. For patients whose disease has metastasized to other parts of the
body, treatment options are limited and the patients' prognosis is poor.
Patients who present with recurrence of advanced disease may have their
metastatic lesions removed by surgery. The median survival for these patients is
approximately 12 months. Conventional cancer treatments such as chemotherapy and
radiation have shown limited benefit in treating colorectal cancer.

Our Clinical Program.  We have completed enrollment of a 30 patient phase II
clinical trial evaluating Oncophage as a treatment for metastatic colorectal
cancer. The trial is being conducted at the Istituto dei Tumori. After surgery
to remove their metastatic tumors, patients are treated with 2.5 micrograms, 25
micrograms or 100 micrograms of Oncophage.

Analysis of the results from this trial is ongoing. To date, the trial has shown
Oncophage to be generally safe and well tolerated by patients. In addition, we
have been able to successfully prepare Oncophage from 100% of colorectal cancer
samples received at our manufacturing facility for this trial. Based on this
result, we believe we should be able to manufacture our product for nearly all
colorectal cancer patients whose tumors can be surgically removed.

Gastric Cancer

Background.  Gastric cancer is cancer of the stomach. According to the American
Cancer Society, there will be about 21,900 new cases of gastric cancer in the
United States in 1999. Approximately 13,500 people are expected to die from the
disease during 1999. The treatment options for gastric cancer are surgery,
chemotherapy and radiation. Biological therapies are currently in clinical
trials. For patients with resectable disease, improvements in surgical
techniques have led to increased survival. Despite these advances, as well as
the development of multi-drug chemotherapy regimens, the median survival for
patients with advanced gastric cancer, according to published research, is
approximately seven months.

Our Clinical Program.  We are currently enrolling patients in a 30 patient phase
I/II clinical trial evaluating Oncophage as a treatment for metastatic gastric
cancer. The trial is being conducted at the Johannes Gutenberg-University
Hospital in Mainz, Germany. After surgery to remove their tumors, patients are
treated with 2.5 micrograms or 15 micrograms of Oncophage. Although enrollment
is still

                                       39
<PAGE>   41

ongoing, to date, the trial has shown Oncophage to be generally safe and well
tolerated by patients. In addition, we have been able to successfully prepare
Oncophage from approximately 71% of gastric cancer samples received at our
manufacturing facility for this trial. Based on this result, we believe we
should be able to manufacture our product for the majority of gastric cancer
patients whose tumors can be surgically removed.

Pancreatic Cancer

Background.  Pancreatic cancer is the fourth leading cause of cancer death in
the United States. According to the American Cancer Society, there will be about
28,600 new cases of pancreatic cancer in the United States in 1999.
Approximately 28,600 people are expected to die from the disease during 1999.

The treatment options for pancreatic cancer are surgery and chemotherapy. For
resectable disease, a patient undergoes surgery and may receive chemotherapy as
a follow up treatment. At the Memorial Sloan-Kettering Cancer Center, patients
who have had resection of their disease, are reported to have a median survival
of 14 months. For unresectable disease, patients are treated with chemotherapy.
The median survival time for patients with unresectable disease is less than six
months.

Our Clinical Program.  In early 1999, we completed a pilot phase I clinical
trial evaluating Oncophage as a treatment for resectable pancreatic cancer. The
trial was conducted at the Memorial Sloan-Kettering Cancer Center and enrolled
15 patients. After surgery to remove their primary tumor, five of the fifteen
patients were treated with 5 micrograms of Oncophage.

Two out of five patients generated a T cell mediated immune response to their
tumor after treatment with Oncophage. These two patients are alive and disease
free at 11 and 22 months, respectively, since surgery. A third patient is known
to be free of disease at 24 months after surgery. The fourth patient is alive
with recurrent disease at 11 months and the fifth patient died seven months
after surgery.

The trial showed Oncophage to be generally safe and well tolerated by patients.
We successfully prepared Oncophage from 5 of 15 pancreatic cancer samples
received in our manufacturing facility. It was not possible to prepare Oncophage
from the remaining specimens due to the presence of enzymes in the pancreatic
tissue that break down proteins, including heat shock proteins. Based upon our
process development advances, we anticipate that a modified process will improve
our rate of success for purifying Oncophage from pancreatic tumors.

Low Grade Indolent Non-Hodgkin's Lymphoma

Background.  Non-Hodgkin's lymphoma is cancer that originates in lymph tissue.
According to the American Cancer Society, there will be about 56,800 new cases
of non-Hodgkin's lymphoma in the United States in 1999. Approximately 25,700
people are expected to die from the disease during 1999. Approximately 40% of
patients with non-Hodgkin's lymphoma have low grade indolent disease, which is a
slow growing, often fatal, lymphoma.

The treatment for patients with non-Hodgkin's lymphoma has traditionally been
chemotherapy. Recently, the FDA approved one new antibody therapy for low grade
non-Hodgkin's lymphoma.

Our Clinical Program.  We are in the process of initiating a 35 patient phase II
clinical trial evaluating Oncophage as a treatment for low grade non-Hodgkin's
lymphoma. The trial will be conducted at the M.D. Anderson Cancer Center.
Patients will be treated with 25 micrograms of Oncophage after surgical removal
of tumor tissue.

Sarcoma

Background.  Soft tissue sarcomas are cancerous tumors that can develop from
fat, muscle, nerve, joint, blood vessel, or deep skin tissues. According to the
American Cancer Society, there will be about 7,800

                                       40
<PAGE>   42

new cases of soft tissue sarcomas in the United States in 1999. Approximately
4,400 people are expected to die from the disease during 1999.

The treatment options for sarcoma are surgery, chemotherapy or targeted
radiotherapy. For resectable disease, a patient undergoes surgery and receives
chemotherapy or targeted radiotherapy as follow up treatments. For unresectable
disease, patients are treated with a combination of chemotherapy and
radiotherapy.

Our Clinical Program.  We are in the process of initiating a 35 patient phase II
clinical trial evaluating Oncophage as a treatment for soft tissue sarcomas. The
trial will be conducted at Memorial Sloan-Kettering Cancer Center and may be
expanded to include other sites. Patients will be treated with 25 micrograms of
Oncophage after surgical removal of tumor tissue.

Other Cancer Immunotherapeutics

In addition to Oncophage, we are currently researching several other autologous
cancer immunotherapeutics using different heat shock proteins including
HSPPC-70, HSPPC-90, and HSPPC-56. These immunotherapeutics have demonstrated
efficacy in animal cancer models.

OUR INFECTIOUS DISEASE IMMUNOTHERAPEUTICS

Background.  Infectious diseases are illnesses caused by microorganisms, like
viruses, bacteria and parasites, and include tuberculosis, hepatitis, genital
herpes and HIV. While a number of viral and bacterial diseases are treated
effectively with antiviral agents and antibiotics, a growing concern is the
emergence of new strains of pathogens that have developed resistance to all
available drugs.

Our Approach.  Our immunotherapeutics for treating infectious diseases will
consist of heat shock proteins complexed to peptides that are produced by the
pathogen causing the infection. Typically, each infectious disease is caused by
a specific pathogen. Consequently, our infectious disease immunotherapeutics
will be common to all patients with a particular infection and will not be
patient-specific. We currently produce these immunotherapeutics from cells
infected with the target pathogen. This manufacturing procedure has enabled
testing of our immunotherapeutics in preclinical studies and should enable
production of sufficient quantities to begin human clinical trials. Another
technique to manufacture our immunotherapeutics involves binding specific
peptides with heat shock proteins in vitro. The peptides can be generated in
microorganisms or they may be produced synthetically.

         OUR INFECTIOUS DISEASE IMMUNOTHERAPEUTIC MANUFACTURING PROCESS

                                     [GRAPH]
--------------------------------------------------------------------------------
<TABLE>
<S>                              <C>                              <C>
       Starting Material                  Manufacturing                    Final Product
      Mammalian cell lines    \     Heat shock protein-peptide     \       Product frozen
     infected with pathogen ---|  complexes (purified from cell  ---|      and shipped to
     of interest and grown    /    lines or produced in vitro)     /    hospital/clinic for
         in bioreactors                                                  patient treatment
               or
      Heat shock proteins
     and pathogen specific
       peptides produced
      synthetically or in
         microorganisms
</TABLE>
--------------------------------------------------------------------------------

                                       41
<PAGE>   43

Genital Herpes.  Genital herpes is a contagious viral infection that affects an
estimated 45 million Americans. Doctors estimate that as many as 500,000 new
cases may occur each year in the United States. Genital herpes is currently
treated with palliative antiviral agents that reduce further replication of the
virus. The challenge of antiviral therapy lies not only in treatment of the
symptoms during the first and recurrent episodes but also in the long-term
suppression of the herpes virus in patients with frequent recurrences. We expect
to file an IND for this indication in 2000.

OUR AUTOIMMUNE DISORDER IMMUNOTHERAPEUTIC

Background.  Autoimmune disorders result from an inappropriate immune response
that targets and destroys normal tissue. While it is not known definitively what
triggers autoimmune responses, both genetic and environmental factors are
probably involved in this process. Several autoimmune disorders, including
diabetes and multiple sclerosis, result in the proliferation of misdirected T
cells that attack normal tissues. We believe that a therapeutic product that can
turn off misdirected T cell responses could treat these disorders.

Our Approach.  We have demonstrated in animal models that heat shock proteins
administered at higher doses than those required for treating cancer and
infectious diseases can turn off misguided T cells that destroy healthy tissue
in animals with certain autoimmune disorders. We are currently researching the
application of heat shock proteins to treat autoimmune diseases like diabetes
and multiple sclerosis. The source of heat shock proteins used in our autoimmune
disorders immunotherapeutic will be human cells. Our immunotherapeutic could
also be made using recombinant DNA techniques.

        OUR AUTOIMMUNE DISORDER IMMUNOTHERAPEUTIC MANUFACTURING PROCESS

                                      [GRAPH]

--------------------------------------------------------------------------------
<TABLE>
<S>                             <C>                             <C>
       Starting Material    \            Manufacturing          \        Final Product
        Mammalian cells   ---|    Heat shock protein-peptide  ---|    Product frozen and
              or            /         complexes purified        /         shipped to
        recombinant DNA                 from cell lines               hospital/clinic for
                                              or                       patient treatment
                                    recombinantly produced
</TABLE>
--------------------------------------------------------------------------------

MANUFACTURING

We manufacture our own immunotherapeutic products in a 30,225 square foot
manufacturing and research and development facility located in Woburn,
Massachusetts. We are in the process of preparing this facility for the
commercialization of Oncophage.

Our process development group is currently working on improving the process by
which heat shock protein-based immunotherapeutics are manufactured. Efforts in
this area to date have resulted in a two-fold reduction in the time required to
purify Oncophage from individual patient's tumors and a 40% increase in the
quantity of Oncophage we can produce from a particular tumor mass. These efforts
in our cancer program should also benefit preparation of our heat shock
protein-based immunotherapeutics for treatment of infectious diseases.

                                       42
<PAGE>   44

SALES AND MARKETING

To commercially market our immunotherapeutic products once the necessary
regulatory approvals are obtained, we must either develop our own sales and
marketing force or enter into arrangements with third parties. Currently, our
sales and marketing plans consist of the following:

       -     Commercialize cancer immunotherapeutics in the United States
             through our own sales force. We believe that we can build a United
             States sales force to market our cancer immunotherapeutics due to
             the concentration of the United States oncology market.

       -     Form collaborations with pharmaceutical companies for
             commercializing cancer immunotherapeutics outside the United
             States.  For example, we have entered into an agreement with Sigma
             Tau, under which they have agreed to pay for two clinical trials in
             return for rights which include an option to enter into an
             agreement to market Oncophage in Italy, Spain, Portugal and
             Switzerland. We have also signed an agreement for marketing
             Oncophage in Israel.

       -     Form collaborations with pharmaceutical companies for infectious
             diseases and autoimmune disorders.  Unlike cancer, the number of
             doctors and health care institutions prescribing treatments for
             infectious diseases and autoimmune disorders is large and
             fragmented and will require a large sales force to effectively
             market our products.

OUR INTELLECTUAL PROPERTY PORTFOLIO

We devote significant resources to protecting and expanding our intellectual
property portfolio. We seek to protect our core technologies through a
combination of patents, trade secrets, and know-how. As a result of an exclusive
worldwide license with Fordham University and one with Mount Sinai School of
Medicine, we have exclusive rights to seven issued U.S. patents, and foreign
counterpart patents and patent applications, relating to our heat shock protein
technology. Prior to directing the Center for Immunotherapy of Cancer at the
University of Connecticut, Dr. Srivastava, the Chairman of our Scientific
Advisory Board, was an assistant professor of immunology at Mount Sinai School
of Medicine, and, then, a professor of immunology at Fordham University.

We also have licensed rights to 44 pending U.S. patent applications, and
corresponding foreign counterpart patents and applications, from Mount Sinai
School of Medicine of New York University, Fordham University, Duke University,
and the University of Miami. Under the license agreements with these
institutions, we have exclusive, worldwide rights to inventions using heat shock
proteins in the treatment and prevention of cancer, infectious diseases,
autoimmune disorders, and other indications. If we commercialize any of the
inventions, we will pay the licensors a royalty on sales of the commercialized
product. In addition, pursuant to a research agreement with the University of
Connecticut Health Center, we have agreed to provide funding, through December
31, 2002, to the laboratory directed by Dr. Srivastava at the University. In
return, we have an option to obtain an exclusive license to new inventions as
that term is defined in the research agreement, with the royalty rates and other
terms to be determined by negotiation between the parties. We also have an
option to obtain an exclusive license to certain types of "improvement"
inventions as that term is defined in the research agreement, at already-
determined royalty rates, but with the other terms to be determined by
negotiation between the parties. To date, we have exercised options to license
three patent applications.

It is worth noting that:

       -     patent applications in the United States are maintained in secrecy
             until patents issue;

       -     patent applications in other countries generally are not published
             until 18 months after they are first filed in any country;

       -     publication of technological developments in the scientific or
             patent literature often lags behind the date of these developments;
             and

       -     searches of prior art may not reveal all relevant prior inventions.

                                       43
<PAGE>   45

Although we have licensed seven issued United States patents and 44 pending
United States patent applications, we cannot be certain that our licensors'
inventors were the first to invent the subject matter covered by these patent
and patent applications or that they were the first to file patent applications
for those inventions or that these patent rights would not be rendered invalid
or unpatentable.

REGULATORY CONSIDERATIONS

The preclinical and clinical testing, manufacturing, labeling, storage, record
keeping, advertising, promotion, export, marketing and distribution, among other
things, of our immunotherapeutics are subject to extensive regulation by
governmental authorities in the United States and other countries. In the United
States, pharmaceutical products are subject to rigorous review by the FDA under
the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and
other federal statutes and regulations. Non-compliance with applicable
requirements can result in fines, recall or seizure of products, total or
partial suspension of production, refusal of the government to approve marketing
applications or allow us to enter into supply contracts, and criminal
prosecution. The FDA also has the authority to revoke previously granted
marketing authorizations.

In order to obtain approval of a new product from the FDA, we must, among other
requirements, submit proof of safety and efficacy as well as detailed
information on the manufacture and composition of the product. In most cases,
this proof entails extensive preclinical, clinical and laboratory tests. This
testing, the preparation of necessary applications and processing of those
applications by the FDA are expensive and typically take several years to
complete. We cannot assure that the FDA will act quickly or favorably in
reviewing these applications, and we may encounter significant difficulties or
costs in our efforts to obtain FDA approvals that could delay or preclude us
from marketing any products we may develop. The FDA may also require
post-marketing testing and surveillance to monitor the effects of approved
products or place conditions on any approvals that could restrict the commercial
applications of these products. Product approvals may be withdrawn if compliance
with regulatory standards is not maintained or if problems occur following
initial marketing. With respect to patented products or technologies, delays
imposed by the governmental approval process may materially reduce the period
during which we will have the exclusive right to exploit them.

The first stage of the FDA approval process for a new biologic or drug involves
completion of preclinical studies and the submission of the results of these
studies to the FDA, together with proposed clinical protocols, manufacturing
information, analytical data and other information, in an investigational new
drug application, which must become effective before human clinical trials may
commence. The investigational new drug application will automatically become
effective 30 days after receipt by the FDA, unless the FDA before that time
requests an extension to review the application, or raises concerns or questions
about the conduct of the trials as outlined in the application. In the latter
case, the sponsor of the application and the FDA must resolve any outstanding
concerns before clinical trials can proceed. We cannot guarantee that submission
of an investigational new drug application will result in FDA authorization to
commence clinical trials in any given case.

Preclinical studies involve laboratory evaluation of product characteristics and
animal studies to assess the efficacy and safety of the product. Preclinical
studies are regulated by the FDA under a series of regulations called the
current "Good Laboratory Practices" regulations. Violations of these regulations
can, in some cases, lead to invalidation of the studies, requiring those studies
to be replicated.

After the investigational new drug application becomes effective, human clinical
trials may commence. Human clinical trials are typically conducted in three
sequential phases, but the phases may overlap. Phase I trials consist of testing
the product in a small number of patients or healthy volunteers, primarily for
safety at one or more doses. In phase II, in addition to safety, the efficacy of
the product is evaluated in a patient population somewhat larger than phase I
trials. Phase III trials typically involve additional testing for safety and
clinical efficacy in an expanded population at geographically dispersed test
sites. A clinical plan, or "protocol," accompanied by the approval of the
institution participating in the trials, must be

                                       44
<PAGE>   46

submitted to the FDA prior to commencement of each clinical trial. The FDA may
order the temporary or permanent discontinuation of a clinical trial at any
time.

The results of the preclinical and clinical testing, together with, among other
things, detailed information on the manufacture and composition of the product,
are submitted to the FDA in the form of a new drug application or, in the case
of a biologic, a biologics license application. In a process which generally
takes several years, the FDA reviews this application and, when and if it
decides that adequate data is available to show that the new compound is both
safe and effective and that other applicable requirements have been met,
approves the drug or biologic for marketing. The amount of time taken for this
approval process is a function of a number of variables, including the quality
of the submission and studies presented, the potential contribution that the
compound will make in improving the treatment of the disease in question, and
the workload at the FDA. We cannot guarantee that any of our immunotherapeutics
will successfully proceed through this approval process or will be approved in
any specific period of time, or at all.

The Food and Drug Administration Modernization Act of 1997 was enacted, in part,
to ensure the availability of safe and effective drugs, biologics and medical
devices by expediting the FDA review process for new products. The Modernization
Act establishes a statutory program for the approval of fast track products,
including biologics. The fast track provisions essentially codify the FDA's
accelerated approval regulations for drugs and biologics. A fast track product
is defined as a new drug or biologic intended for the treatment of a serious or
life-threatening condition that demonstrates the potential to address unmet
medical needs for this condition. Under the fast track program, the sponsor of a
new drug or biologic may request the FDA to designate the drug or biologic as a
fast track product at any time during the clinical development of the product.

The Modernization Act specifies that the FDA must determine if the product
qualifies for fast track designation within 60 days of receipt of the sponsor's
request. Approval of a marketing application for a fast track product can be
based on an effect on a clinical endpoint or on a surrogate endpoint that is
reasonably likely to predict clinical benefit. Approval of an application for a
fast track product may be subject to:

       -     post-approval studies to validate the surrogate endpoint or confirm
             the effect on the clinical endpoint; and

       -     prior review of all promotional materials.

If a preliminary review of the clinical data suggests that a fast track product
may be effective, the FDA may initiate review of sections of a marketing
application for a fast track product before the application is complete. This
rolling review is available if the applicant provides a schedule for submission
of remaining information and pays applicable user fees. However, the time
periods specified under the Prescription Drug User Fee Act concerning timing
goals to which the FDA has committed in reviewing an application, do not begin
until the complete application is submitted.

We may request fast track designation for our immunotherapeutics. We cannot
predict whether the FDA will grant that designation nor can we predict the
ultimate impact, if any, of the fast track process on the timing or likelihood
of FDA approval of our immunotherapeutics.

The FDA may, during its review of a new drug application or biologics license
application, ask for additional test data. If the FDA does ultimately approve
the product, it may require post-marketing testing, including potentially
expensive phase IV studies, and surveillance to monitor the safety and
effectiveness of the drug. In addition, the FDA may in some circumstances impose
restrictions on the use of the drug that may be difficult and expensive to
administer, and may require prior approval of promotional materials.

Before approving a new drug application or biologics license application, the
FDA will inspect the facilities at which the product is manufactured and will
not approve the product unless the manufacturing facilities are in compliance
with current Good Manufacturing Practices. In addition, the manufacture,
holding, and

                                       45
<PAGE>   47

distribution of a product must be in compliance with current Good Manufacturing
Practices. Manufacturers must continue to expend time, money, and effort in the
area of production and quality control and record keeping and reporting to
ensure full compliance with those requirements. The labeling, advertising,
promotion, marketing and distribution of a drug or biologic product must be in
compliance with FDA regulatory requirements. Failure to comply with applicable
requirements can lead to the FDA demanding that production and shipment cease,
and, in some cases, that products be recalled, or to enforcement actions that
can include seizures, injunctions, and criminal prosecution. These failures can
also lead to FDA withdrawal of approval to market the product.

We are also subject to regulation by the Occupational Safety and Health
Administration and the Environmental Protection Agency and to regulation under
the Toxic Substances Control Act, the Resource Conservation and Recovery Act and
other regulatory statutes, and may in the future be subject to other federal,
state or local regulations. Either or both of OSHA or the EPA may promulgate
regulations that may affect our research and development programs. We are unable
to predict whether any agency will adopt any regulation which could have a
material adverse effect on our operations.

Sales of pharmaceutical products outside the United States are subject to
foreign regulatory requirements that vary widely from country to country.
Whether or not FDA approval has been obtained, approval of a product by
comparable regulatory authorities of foreign countries must be obtained prior to
the commencement of marketing the product in those countries. The time required
to obtain this approval may be longer or shorter than that required for FDA
approval. The foreign regulatory approval process includes all the risks
associated with FDA regulation set forth above as well as country-specific
regulations.

COMPETITION

Competition in the pharmaceutical and biotechnology industries is intense. Many
pharmaceutical or biotechnology companies have products on the market and are
actively engaged in the research and development of products for the treatment
of cancer, infectious diseases and autoimmune disorders. In addition, many
competitors focus on immunotherapy as a treatment for cancer, infectious
diseases and autoimmune disorders. In particular, some of these companies are
developing autologous cancer vaccines. Others are focusing on developing heat
shock protein products. We compete for funding, access to licenses, personnel
and third-party collaborations. In addition, many competitors have substantially
greater financial, manufacturing, marketing, sales, distribution and technical
resources, and more experience in research and development, clinical trials and
regulatory matters, than we do. If a competing company were to develop, or
acquire rights to, a more efficacious therapeutic product for the same diseases
targeted by us, or one which offers significantly lower costs of treatment, our
products could be rendered noncompetitive or obsolete.

Significant levels of research in biotechnology, medicinal chemistry and
pharmacology occur in academic institutions, governmental agencies and other
public and private research institutions. These entities have become
increasingly active in seeking patent protection and licensing revenues for
their research results. They also compete with us in recruiting and retaining
skilled scientific talent.

FACILITIES

We lease approximately 30,225 square feet of laboratory space in Woburn,
Massachusetts under a lease agreement that terminates in August 2003. We have an
option to renew for an additional five-year period with the landlord's consent.
Our executive offices are located in New York, New York, in an office building
in which we lease approximately 8,000 square feet from an affiliated party. The
agreement terminates in December 2006. You should read the discussion under
"Certain Relationships and Related Transactions" regarding our executive
offices. Finally, we lease a 2,000 square foot manufacturing facility in
Framingham, Massachusetts under a lease agreement that terminates in December
1999.

                                       46
<PAGE>   48

EMPLOYEES

As of October 31, 1999, we had 67 employees, of whom ten have Ph.D.s and one has
an M.D.; three are clinical staff, 21 are manufacturing and quality control
staff, 21 are research and development staff, and 22 are management or
administrative staff. None of our employees is subject to a collective
bargaining agreement. We believe that our relations with our employees are good.

LEGAL PROCEEDINGS

Other than our opposition of a European patent discussed under "Risk Factors,"
we are not currently a party to any material legal proceedings or claims. You
should read the discussion of our opposition of this European patent under "Risk
Factors."

                                       47
<PAGE>   49

                                   MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

Set forth below is certain information regarding our executive officers,
directors and key employees, including their age as of November 1, 1999:

<TABLE>
<CAPTION>
NAME                                         AGE                      TITLE
----                                         ---                      -----
<S>                                          <C>    <C>
Garo Armen, Ph.D.........................    46     Chairman of the Board, Chief Executive
                                                      Officer
Pramod Srivastava, Ph.D..................    44     Director, Chairman of Scientific Advisory
                                                      Board
Gamil de Chadarevian.....................    47     Vice Chairman of the Board, Executive
                                                      Vice President International
Elma Hawkins, Ph.D.......................    43     Senior Vice President
Dirk Reitsma, M.D........................    50     Vice President of Clinical Affairs
Neal Gordon, Ph.D........................    38     Vice President of Operations
Donald Panoz.............................    64     Director, Honorary Chairman
Noubar Afeyan, Ph.D.(1)(2)...............    37     Director
Edward Brodsky(1)........................    70     Director
Tom Dechaene(2)..........................    40     Director
Martin Taylor(1)(2)......................    47     Director
</TABLE>

---------------------------------------------
(1)Member of the Compensation Committee

(2)Member of the Audit Committee

The size of the board of directors is currently set at eight members.

Antigenics' certificate of incorporation provides for a classified board of
directors consisting of three classes, with each class being as nearly equal in
number as possible. The term of one class expires and their successors are
elected for a term of three years at each annual meeting of the stockholders.
Antigenics has designated three class I directors, Messrs. de Chadarevian,
Brodsky and Taylor, three class II directors, Messrs. Panoz, Afeyan and
Srivastava, and two class III directors, Messrs. Armen and Dechaene. These class
I, class II and class III directors will serve until the annual meetings of
stockholders to be held in 2000, 2001 and 2002, respectively, and until their
respective successors are duly elected and qualified, or until their earlier
resignation or removal. Officers are appointed by the board of directors until
the next annual meeting of the board of directors.

GARO ARMEN, PH.D. co-founded Antigenics in 1994 and has been the Chairman of the
board and Chief Executive Officer since inception. Dr. Armen was previously a
Senior Vice President of Research for Dean Witter Reynolds, focusing on the
chemical and pharmaceutical industries. Dr. Armen has also served as an
Associate Professor at the Merchant Marine Academy and as a research associate
at the Brookhaven National Laboratory. He currently serves as a director of Elan
Corporation, Plc. and Color Kinetics Inc. Dr. Armen received his Ph.D. degree in
physical chemistry from the City University of New York in 1979. Since 1990, Dr.
Armen has been the managing general partner of Armen Partners, L.P., an
investment partnership specializing in public and private healthcare and
biotechnology investments.

PRAMOD SRIVASTAVA, PH.D. co-founded Antigenics in 1994 and has served as the
Chairman of the scientific advisory board since inception. Dr. Srivastava is the
Director of the Center for Immunotherapy of Cancer and Infectious Diseases at
the University of Connecticut. Dr. Srivastava has held positions at Fordham
University and the Mount Sinai School of Medicine. His postdoctoral training was
performed at Yale University and the Sloan-Kettering Institute for Cancer
Research. Dr. Srivastava serves on the Scientific Advisory Council of the Cancer
Research Institute, New York, and has been a member of the Experimental
Immunology Study Section of the National Institutes of Health of the United
States

                                       48
<PAGE>   50

Government since 1994. Dr. Srivastava is a past recipient of the First
Independent Research Support & Transition Award of the National Institutes of
Health (1987), the Irma T. Hirschl Scholar Award (1988), the Investigator Award
of the Cancer Research Institute, New York (1991), the Mildred Scheel
Lectureship (1994), and the Sigma Tau Foundation Speakership (1996). In 1997, he
was inducted into the Roll of Honor of the International Union against Cancer
and was listed in the Who's Who in Science and Engineering. He is among the
twenty founding members of the Academy of Cancer Immunology. Dr. Srivastava
earned his Ph.D. in Biochemistry from the Centre for Cellular and Molecular
Biology, Hyderabad, India. Dr. Srivastava is a director of Iconics, Inc.

GAMIL DE CHADAREVIAN has served as the Vice Chairman of the Board since 1995 and
as Executive Vice President International since 1998. Until April of 1998, he
was Managing Director of Special Projects of Alza International, responsible for
creating new business opportunities in Europe. From 1992 to 1993, Mr. de
Chadarevian was the Vice President of Corporate Development for Corange London
Limited. Prior to 1992, Mr. de Chadarevian held positions at Pasfin Servizi
Finanziara SpA, GEA Consulenza and Credit Suisse. He is also co-founder and
serves as an advisor to several private health care companies in the United
States and Europe. Mr. de Chadarevian received a Lic. Oec. Publ. Degree from the
University of Zurich in Switzerland. Mr. de Chadarevian is the co-founder and
currently the Vice Chairman of Iconics, Inc. and Cambria Tech. Ltd.

ELMA HAWKINS, PH.D. has served as Senior Vice President since August 1998. From
July 1996 through August 1998, Dr. Hawkins served as the Chief Operating Officer
of the company. Prior to her employment by Antigenics, Dr. Hawkins served in a
number of senior positions at Genzyme Corporation, including Director of
Corporate Development. Dr. Hawkins has also held positions in preclinical and
clinical research at Warner-Lambert/Parke-Davis and at the Center for the Study
of Drug Development at Tufts Medical School. Dr. Hawkins holds a Ph.D. in
Medicinal Chemistry from the University of Alabama and an M.B.A. from Boston
University. Dr. Hawkins is a director of Nalari Computing Corporation.

DIRK REITSMA, M.D. has served as Vice President of Clinical Affairs and Medical
Director since April 1997. From 1990 to 1997, Dr. Reitsma was employed by
Ciba-Geigy, where he managed the clinical development of several biologic
compounds and other new drugs. Dr. Reitsma was responsible for the phase III
trials of Aredia in breast cancer, and for their regulatory submissions to the
FDA. Prior to that, Dr. Reitsma was employed by Organon in Rockville, Maryland,
where he worked on various biologics, including human monoclonal antibodies and
on the submission of the regulatory filing for Bacillus Calmette Guerin, also
known as BCG, for superficial bladder cancer. Dr. Reitsma practiced internal
medicine and oncology at the Bergwegiekenhuis in Rotterdam prior to joining
Organon. He received his M.D. from the Erasmus University in Rotterdam, The
Netherlands.

NEAL GORDON, PH.D. has served as Vice President of Operations since May 1999.
Prior to this position he served as Vice President Process Development since
July 1998. Previously, he was Senior Director of Chromatography R&D at
PerSeptive Biosystems, a division of PE Corp., formerly Perkin-Elmer
Corporation. Over his ten-year career at PerSeptive, Dr. Gordon was involved in
the development and application of innovative technologies for the purification
and analysis of biopolymers, most notably the development of the BioCAD(R)
Chromatography Workstation. Dr. Gordon received his Ph.D. in Biochemical
Engineering from the Massachusetts Institute of Technology and a Bachelors
degree in Chemical Engineering from McGill University.

DONALD PANOZ has been a director since 1995 and is the Honorary Chairman of the
board of directors. In 1969, Mr. Panoz founded Elan Corporation, Plc., a
pharmaceutical research and development company. Mr. Panoz was Chairman and
Chief Executive Officer of Elan Corporation from 1969 until his retirement in
1996. Mr. Panoz is currently a Lecturer of Pharmacy at the University of
Georgia. In January 1995, Mr. Panoz was named Honorary Irish Consulate General
to Bermuda. Mr. Panoz attended Pittsburgh University and Duquesne University in
Pennsylvania.

NOUBAR AFEYAN, PH.D. has been a director since 1998. Dr. Afeyan is Chairman and
CEO of the NewcoGen Group and is also a partner at One Liberty Ventures. Dr.
Afeyan was Senior Vice President

                                       49
<PAGE>   51

and Chief Business Officer of PE Corp. until August 1999. Prior to its
acquisition by PE Corp., Dr. Afeyan was the Chairman and Chief Executive Officer
of PerSeptive Biosystems, a company that he founded in 1987 to develop,
manufacture and market instruments and chemical reagents used to purify, analyze
and synthesize biomolecules. Dr. Afeyan served as Chairman of the Board of
ChemGenics Pharmaceuticals, Inc. during 1996 and 1997. He is also a member of
the board of directors of two private companies. Dr. Afeyan received his
undergraduate degree in Chemical Engineering from McGill University and his
Ph.D. in Biochemical Engineering from the Massachusetts Institute of Technology.

EDWARD BRODSKY has been a director since 1995. Mr. Brodsky has been a partner of
the law firm of Proskauer Rose LLP since 1992 and was previously a partner at
the firm of Spengler Carlson Gubar Brodsky & Frisching. Mr. Brodsky and his firm
represent Antigenics in legal matters. Mr. Brodsky is currently a director of
Giant Cement Holding, Inc. and UIS, Inc.. He received his LL.B. from New York
University School of Law.

TOM DECHAENE has been a director since 1999. Mr. Dechaene has been with Deutsche
Bank since 1991 and is currently a director in the Principal Investments Group
within the Equity Capital Markets division. This group specializes in minority
investments in fast growing private companies in information technology,
communications, new media and healthcare on a global basis. Mr. Dechaene is a
director of Color Kinetics Inc. and Iconics, Inc. Mr. Dechaene holds a law
degree from Ghent University, Belgium, an MBA from INSEAD, France and a degree
in Applied Economics from the University of Antwerp.

MARTIN TAYLOR has been a director since June 1999. From 1993 until 1998, Mr.
Taylor held the position of Chief Executive Officer of Barclays Bank Plc. Mr.
Taylor is presently a member of the Council for Science and Technology and,
since November 1999, has been chairman of the W.H. Smith Group Plc. In October
1999, he became an advisor to Goldman Sachs International. He was educated at
Balliol College, Oxford University.

SCIENTIFIC ADVISORY BOARD

Our scientific advisory board is comprised of internationally recognized
scientists in the fields of immunology, oncology, genetics and drug delivery.
The scientific advisory board advises our management on strategic issues related
to our scientific development program. Dr. Srivastava chairs the board which
consists of the following other individuals:

JOSHUA LEDERBERG, PH.D. has been a member of the scientific advisory board since
1996 and is the board's Honorary Chairman. In 1958, at the age of 33, Dr.
Lederberg received the Nobel Prize in Physiology of Medicine for his work in the
field of bacterial genetics. Dr. Lederberg is currently the Sackler Foundation
Scholar and Professor- and President-Emeritus at The Rockefeller University, in
New York City, where he is researching the interrelationships of DNA
conformation and mutagenesis. Previously, Dr. Lederberg was a professor of
genetics at Stanford University. A member of the National Academy of Sciences
and a charter member of its Institute of Medicine, Dr. Lederberg has served as
chairman of the President's Cancer Panel and has chaired a comprehensive study
of emergent infections sponsored by the Institute of Medicine, intended to
counteract complacency about the threats from many infectious diseases. He has
also received the United States National Medal of Science. Dr. Lederberg has
served on the board of the Procter & Gamble Co., and continues as a part-time
consultant to several financial and pharmaceutical research and development
institutions. He received his Ph.D. from Yale University.

SIR WALTER BODMER, PH.D. has been a member of the scientific advisory board
since 1996 and he is currently the board's Vice Chairman. Sir Walter currently
serves as the Principal of Herford College, Oxford University. Previously, he
was the Director-General of the Imperial Cancer Research Fund and was Director
of Research at the Fund from 1979 to 1991. He is a Foreign Associate of the
United States National Academy of Sciences and a Foreign Honorary Member of the
American Academy of Arts and Sciences. He is also a Trustee of Sir John Soane's
Museum and the first President of the International Federation of Associations
for the Advancement of Science and Technology. In 1995, Sir Walter was appointed
Chancellor of the University of Salford. Sir Walter was the second President of
the Human

                                       50
<PAGE>   52

Genome Organization and is a past President of the British Association for the
Advancement of Science and of the Royal Statistics Society. He has served as
Chairman of the BBC Science Consultative Group and as Vice-President of the
Royal Institution. Sir Walter has recently completed his term as Chairman of the
Trustees of the Natural History Museum, having served as a Trustee for ten
years. He received a Ph.D. from Cambridge University.

HANS-GEORG RAMMENSEE, PH.D. has been a member of the scientific advisory board
since 1999. Dr. Rammensee is currently the Chair of Immunology at the University
of Tubingen, where he has served in various capacities since 1987. From 1993
until 1996, he was Head, Department of Tumorvirus-Immunology, German Cancer
Research Center, Heidelberg, where he was also on the faculty of Theoretical
Medicine. From 1987 until 1993, Dr. Rammensee was Head, Laboratory for
Immunology at the Max Planck Institute for Biology. Since 1987, Dr. Rammensee
has been Coeditor of Immunogenetics and, since 1991, Coeditor of European
Journal of Immunology. Dr. Rammensee is also Speaker for the Graduate Committee
for Cell Biology in Medicine at the University of Tubingen and a Member of the
Evaluation Committee for the Cooperation Program in Cancer Research between the
German Cancer Research Center in Heidelberg and the Ministry of Science in
Israel. From 1992 through 1997, Dr. Rammensee was a Member of the
"Hinterzartener Kreis", a committee of the German Research Council. Dr.
Rammensee has been the recipient of numerous awards including the Heinz Maier
Leibnitz Award of the German Federal Ministry of Science (1988), the Wilhelm and
Maria Meyenburg Award of the German Cancer Research Center (1991), the Gottfried
Wilhelm Leibnitz Award of the German Research Council (1991), the Avery
Landsteiner Award of the Society for Immunology (1992), the Robert Koch Award of
the Robert Koch Foundation (1993), the Paul Ehrlich and Ludwig Darmstaedter
Award of the Paul Ehrlich Foundation (1996) and the Rose Payne Distinguished
Scientist Award of the American Society for Histocompatibility and
Immunogenetics (1997). Dr. Rammensee received his Ph.D. from the University of
Tubingen in 1982, where he studied minor histocompatibility antigens in immune
response.

FELIX THEEUWES, PH.D. has been a member of the scientific advisory board since
1996. Dr. Theeuwes is currently the Chairman and Chief Scientist of Durect
Corporation, which is an affiliate of Alza Corporation. Prior to his current
position, Dr. Theeuwes was Chief Scientist at Alza Corporation. Dr. Theeuwes was
with Alza from 1970, directing research, technology development and product
development for a variety of controlled drug delivery systems. Dr. Theeuwes
holds more than 220 United States patents and has published more than 80
articles and book chapters. In 1980, Dr. Theeuwes was named Inventor of the Year
by the Peninsula Patent Law Association. In 1983, he was the recipient of the
Award for the Advancement of Industrial Pharmacy. He was the Busse Lecturer at
the University of Wisconsin in 1981 and, in 1985, the Third Annual Sidney
Riegelman Lecturer at the University of California, San Francisco. He is a
Fellow of the American Association of Pharmaceutical Scientists, and, in 1993,
he became the first recipient of Alza Corporation's Founder's Award. Dr.
Theeuwes is currently a member of the board of directors of both Vinifera, Inc.
and Durect Corporation. He received his undergraduate and graduate education in
physics at the University of Leuven, Belgium, with a D.Sc. degree in 1966. From
1966 to 1970 he served as a post-doctoral fellow and visiting research assistant
professor in the Department of Chemistry, University of Kansas.

AUDIT COMMITTEE

The audit committee makes recommendations to the board of directors about the
selection of independent auditors, reviews the results and scope of the audit
and other services provided by our independent auditors, and evaluates our
internal controls. The audit committee consists of Messrs. Taylor, Dechaene and
Afeyan.

                                       51
<PAGE>   53

COMPENSATION COMMITTEE

The compensation committee reviews and approves the compensation and benefits
for our executive officers, administers our stock option plans and makes
recommendations to the board of directors about compensation matters. The
compensation committee consists of Messrs. Taylor, Brodsky and Afeyan.

EXECUTIVE COMPENSATION

The following table summarizes the compensation paid to or earned during the
fiscal year ended December 31, 1998 by our chief executive officer and all of
our other executive officers whose salary and bonus exceeded $100,000. We refer
to these persons as the named executive officers.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                                       LONG-TERM
                                                              1998 ANNUAL            COMPENSATION
                                                             COMPENSATION          -----------------
                                                        -----------------------    SHARES UNDERLYING
NAME AND PRINCIPAL POSITION                             SALARY($)     BONUS($)        OPTIONS(#)
---------------------------                             ----------    ---------    -----------------
<S>                                                     <C>           <C>          <C>
Garo H. Armen, Ph.D., Chief Executive Officer.......       --            --
Elma Hawkins, Ph.D., Senior Vice President..........     $200,000      $20,000
Neal Gordon, Ph.D., Vice President of Operations....     $ 57,272(1)   $28,750
</TABLE>

---------------------------------------------
(1)Dr. Gordon commenced employment with Antigenics in July 1998.

1998 OPTION GRANTS

The following table contains certain information regarding stock option grants
during the twelve months ended December 31, 1998 by us to the named executive
officers:

                       OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
                                                                                                  POTENTIAL REALIZABLE
                                                                                                    VALUE AT ASSUMED
                              NUMBER OF                                                           ANNUAL RATES OF STOCK
                              SECURITIES    PERCENT OF TOTAL                                       PRICE APPRECIATION
                              UNDERLYING    OPTIONS GRANTED     EXERCISE OR BASE                   FOR OPTION TERM(1)
                               OPTIONS        TO EMPLOYEES           PRICE          EXPIRATION    ---------------------
NAME                          GRANTED(#)     IN FISCAL YEAR        ($/SHARE)           DATE        5%($)        10%($)
----                          ----------    ----------------    ----------------    ----------    -------      --------
<S>                           <C>           <C>                 <C>                 <C>           <C>          <C>
Garo H. Armen, Ph.D.,
  Chief Executive
  Officer.................       --               --                  --                 --         --            --
Elma Hawkins, Ph.D.,
  Senior Vice President...       --               --                  --                 --         --            --
Neal Gordon, Ph.D., Vice
  President of
  Operations..............                                                             7/08
</TABLE>

---------------------------------------------
(1)The dollar amounts under these columns are the result of calculations at the
   5% and 10% rates set by the SEC and, therefore, are not intended to forecast
   possible future appreciation, if any, in the price of the underlying common
   stock. No gain to the optionees is possible without an increase in price of
   the common stock, which will benefit all stockholders proportionately. In
   order to realize the potential values set forth in the 5% and 10% columns of
   this table, the per share price of the common stock would have to be
   $        and $        , or approximately     % and     % above the respective
   exercise or base price shown, based on an assumed initial public offering
   price of $    per share.

                                       52
<PAGE>   54

OPTION EXERCISES AND YEAR-END OPTION VALUES

The following table provides information about the number of shares issued upon
option exercises by the named executive officers during the year ended December
31, 1998, and the value realized by the named executive officers. The table also
provides information about the number and value of options held by the named
executive officers at December 31, 1998. As our common stock is not publicly
traded, a readily ascertainable market value is not available.

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

<TABLE>
<CAPTION>
                                                                     NUMBER OF SECURITIES
                                                                    UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                                                       OPTIONS AT FISCAL           IN-THE-MONEY OPTIONS
                                                                          YEAR-END(#)            AT FISCAL YEAR END($)(1)
                                  SHARES ACQUIRED      VALUE      ---------------------------   ---------------------------
NAME                              ON EXERCISE(#)    REALIZED($)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                              ---------------   -----------   -----------   -------------   -----------   -------------
<S>                               <C>               <C>           <C>           <C>             <C>           <C>
Garo H. Armen, Ph.D., Chief
  Executive Officer...........          --              --
Elma Hawkins, Ph.D., Senior
  Vice President..............          --              --
Neal Gordon, Ph.D., Vice
  President of Operations.....          --              --
</TABLE>

---------------------------------------------
(1)Based on the difference between the option exercise price and an assumed
   initial public offering price of $    per share of common stock.

EMPLOYMENT AGREEMENTS

Under an employment agreement dated June 1, 1998, Antigenics agreed to employ
Elma Hawkins, Ph.D. as Senior Vice President for one year at an annual base
salary of $200,000, which is subject to performance and merit based increases.
Pursuant to the agreement, Dr. Hawkins was issued options to purchase
               shares of the company's common stock at an exercise price of
$          per share vesting over three years. The agreement is automatically
renewed for successive one-year periods unless either party terminates the
agreement. If Dr. Hawkins is terminated without cause as that term is defined in
the agreement, she is entitled to her base salary through the end of the
one-year term during which the termination occurs. If Dr. Hawkins is terminated
either because her position of Senior Vice President is eliminated or because
there is a change in control of Antigenics, we are obligated to pay her cash or
Antigenics common stock equal to one year's base salary.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As a limited liability company, a compensation committee consisting of Messrs.
Afeyan and Brodsky reviewed salaries and incentive compensation for our
employees and consultants. The compensation committee of the board of directors
of Antigenics Inc. consists of Messrs. Taylor, Brodsky and Afeyan. Although none
of the compensation committee members are officers or employees of Antigenics,
each of Garo Armen, our chairman and chief executive officer, and Gamil de
Chadarevian, our vice chairman and executive vice president international, have
previously participated in compensation discussions with the committee. None of
our executive officers serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving on our compensation committee. Mr. Brodsky, however, is a partner of
Proskauer Rose LLP, a law firm that provides legal services to Antigenics.

                                       53
<PAGE>   55

DIRECTOR COMPENSATION

We reimburse directors for out-of-pocket and travel expenses incurred while
attending board of director and committee meetings. Directors have been awarded
options to purchase up to           shares of common stock at exercise prices
ranging from $          to $          .

EMPLOYEE BENEFIT PLANS

1999 EQUITY INCENTIVE PLAN

Antigenics's equity plan authorizes the grant of incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and
nonqualified stock options for the purchase of an aggregate of 4,500,000 shares
(subject to adjustment for stock splits and similar capital changes) of common
stock to Antigenics's employees and, in the case of non-qualified stock options,
to consultants of Antigenics or any affiliate, as defined in the equity plan.
The board of directors has appointed the compensation committee to administer
the equity plan. Upon the closing of this offering,           shares of common
stock were subject to outstanding options granted under the equity plan, leaving
          shares available for issuance under future grants under the equity
plan.

1999 EMPLOYEE STOCK PURCHASE PLAN

Antigenics has also adopted an employee stock purchase plan under which
employees may purchase shares of common stock at a discount from fair market
value. There are 300,000 shares of common stock reserved for issuance under the
purchase plan. The purchase plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended. Rights to purchase common stock under the purchase plan are
granted at the discretion of the compensation committee, which determines the
frequency and duration of individual offerings under the plan and the dates when
stock may be purchased. Eligible employees participate voluntarily and may
withdraw from any offering at any time before stock is purchased. Participation
terminates automatically upon termination of employment. The purchase price per
share of common stock in an offering will not be less than 85% of the lesser of
its fair market value at the beginning of the offering period or on the
applicable exercise date and may be paid through payroll deductions, periodic
lump sum payments or a combination of both. The purchase plan terminates on
November 15, 2009. As of November 15, 1999, no shares of common stock had been
issued under the purchase plan.

401(K) PLAN

We sponsor a 401(k) plan for all of our employees. Employees are eligible to
participate after they have completed one year of service with us. Participants
may contribute up to 15% of their current compensation, with a maximum of
$10,000 each year. Each participant is fully vested in his or her salary
contributions and related earnings and losses. We match 100% of the
participant's contribution and our matching contributions vest over four years.
We have discretion to change that amount at any time.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Antigenics currently leases office space at cost from GHA Management Corporation
which is wholly owned by Garo Armen, Ph.D. Dr. Armen is the chairman and chief
executive officer of Antigenics and we use the office space for our corporate
headquarters. The payments to GHA Management totaled approximately $77,000,
$143,000 and $211,000 for the years ended December 31, 1996, 1997 and 1998,
respectively. Under the current agreement, payments will be approximately
$312,000 annually until the agreement expires in December 2006. Antigenics
believes that the terms of the current agreement are at least as favorable as
terms it could have obtained in an arm's length transaction with an independent
third party. In addition, we have letters of credit for the benefit of GHA
Management Corporation in connection with this lease in the amount of $375,000.
These letters of credit expire in January 2000. You should also read the
discussion regarding Mr. Brodsky's relationship with the law firm of Proskauer
Rose LLP under "Management -- Compensation Committee Interlocks and Insider
Participation."

                                       54
<PAGE>   56

                             PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of           , 1999, and as adjusted
to reflect the sale of           shares of common stock in this offering, by:

      -     each person, or group of affiliated persons, who is known by us to
            beneficially own more than 5% of the common stock;

      -     each of our directors;

      -     each of our named executive officers; and

      -     all of our directors and current executive officers as a group.

Except as otherwise noted, the persons or entities in this table have sole
voting and investing power with respect to all the shares of common stock
beneficially owned by them subject to community property laws, where applicable.

The "Number of Shares Beneficially Owned" column below is based on
shares of common stock outstanding at           , 1999, and           shares of
common stock outstanding after the offering. Shares of common stock subject to
options that are currently exercisable or exercisable within 60 days of
          , 1999 are deemed to be outstanding and to be beneficially owned by
the person holding the options for the purpose of computing the percentage
ownership of the person but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person.

<TABLE>
<CAPTION>
                                                                        PERCENTAGE OF TOTAL
                                                    NUMBER OF SHARES    --------------------
                                                      BENEFICIALLY       BEFORE      AFTER
BENEFICIAL OWNER(1)                                      OWNED          OFFERING    OFFERING
-------------------                                 ----------------    --------    --------
<S>                                                 <C>                 <C>         <C>
STOCKHOLDERS OWNING APPROXIMATELY 5% OR MORE:
  Lawrence Feinberg.............................
     c/o Oracle Partners LP
     712 Fifth Avenue, 45th Floor
     New York, New York 10019
DIRECTORS AND EXECUTIVE OFFICERS
  Garo H. Armen, Ph.D...........................
  Pramod Srivastava, Ph.D.......................
  Gamil de Chadarevian..........................
  Elma Hawkins, Ph.D............................
  Neal Gordon, Ph.D.............................
  Donald Panoz..................................
  Noubar Afeyan, Ph.D...........................
  Edward Brodsky................................
  Tom Dechaene..................................
  Martin Taylor.................................
  All current executive officers and directors
     as a group (10 persons)....................
</TABLE>

---------------------------------------------
 *  Indicates less than 1%

(1) Unless otherwise indicated, the address of each shareholder is Antigenics
    Inc., 630 Fifth Avenue, New York, New York 10111.

                                       55
<PAGE>   57

                          DESCRIPTION OF CAPITAL STOCK

Immediately following the closing of this offering, the authorized capital stock
of Antigenics will consist of 100,000,000 shares of common stock, $0.01 par
value per share, and 1,000,000 shares of preferred stock, $0.01 par value per
share. After the closing of this offering and giving effect to the issuance of
               shares of common stock and the merger of Antigenics L.L.C. with
and into Antigenics Inc., there will be:

      -                    shares of common stock outstanding;

      -     options to purchase                shares of common stock
            outstanding of which                will be exerciseable upon the
            closing of this offering;

      -     warrants to purchase                shares of common stock
            outstanding, all of which will be exercisable upon the closing of
            this offering; and

      -     no shares of preferred stock outstanding.

COMMON STOCK

Subject to preferences that may apply to shares of preferred stock outstanding
at the time, the holders of outstanding shares of common stock are entitled to
receive dividends out of assets legally available therefor as the board may from
time to time determine. Each stockholder is entitled to one vote for each share
of common stock held on all matters submitted to a vote of stockholders.
Cumulative voting for the election of directors is not provided for in
Antigenics' certificate of incorporation, which means that the holders of a
majority of the shares voted can elect all of the directors then standing for
election. The common stock is not entitled to preemptive rights and is not
subject to conversion or redemption. Each outstanding share of common stock is,
and all shares of common stock to be outstanding upon completion of this
offering will be, fully paid and nonassessable.

PREFERRED STOCK

Pursuant to Antigenics' certificate of incorporation, the board of directors has
the authority, without further action by the stockholders, to issue up to
1,000,000 shares of preferred stock in one or more series and to fix the
designations, powers, preferences, privileges, and relative participating,
optional or special rights as well as the qualifications, limitations or
restrictions of those shares, including dividend rights, conversion rights,
voting rights, terms of redemption and liquidation preferences, any or all of
which may be greater than the rights of the common stock. The board of
directors, without stockholder approval, is able to issue preferred stock with
voting, conversion or other rights that could adversely affect the voting power
and other rights of the holders of common stock. Preferred stock could thus be
issued quickly with terms calculated to delay or prevent a change in control of
Antigenics or make removal of management more difficult. Additionally, the
issuance of preferred stock may have the effect of decreasing the market price
of the common stock, and may adversely affect the voting and other rights of the
holders of common stock. At present, there are no shares of preferred stock
outstanding.

ANTI-TAKEOVER PROVISIONS

Delaware Law

Section 203 of the Delaware General Corporation Law is applicable to corporate
takeovers of Delaware corporations. Subject to exceptions enumerated in Section
203, Section 203 provides that a corporation shall not engage in any business
combination with any "interested stockholder" for a three-year period following
the date that the stockholder becomes an interested stockholder unless:

      -     prior to that date, the board of directors of the corporation
            approved either the business combination or the transaction that
            resulted in the stockholder becoming an interested stockholder;

      -     upon consummation of the transaction that resulted in the
            stockholder becoming an interested stockholder, the interested
            stockholder owned at least 85% of the voting stock of the

                                       56
<PAGE>   58

            corporation outstanding at the time the transaction commenced,
            though some shares may be excluded from the calculation; and

      -     on or subsequent to that date, the business combination is approved
            by the board of directors of the corporation and by the affirmative
            votes of holders of at least two-thirds of the outstanding voting
            stock that is not owned by the interested stockholder.

Except as specified in Section 203, an interested stockholder is generally
defined to include any person who, together with any affiliates or associates of
that person, beneficially owns, directly or indirectly, 15% or more of the
outstanding voting stock of the corporation, or is an affiliate or associate of
the corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation, any time within three years immediately prior to the
relevant date. Under certain circumstances, Section 203 makes it more difficult
for an interested stockholder to effect various business combinations with a
corporation for a three-year period, although the stockholders may elect not to
be governed by this section, by adopting an amendment to our certificate of
incorporation or by-laws, effective 12 months after adoption. Antigenics'
certificate of incorporation and its by-laws do not exclude Antigenics from the
restrictions imposed under Section 203. It is anticipated that the provisions of
Section 203 may encourage companies interested in acquiring Antigenics to
negotiate in advance with the board since the stockholder approval requirement
would be avoided if a majority of the directors then in office excluding an
interested stockholder approve either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder.
These provisions may have the effect of deterring hostile takeovers or delaying
changes in control of Antigenics, which could depress the market price of the
common stock and which could deprive stockholders of opportunities to realize a
premium on shares of the common stock held by them.

Charter and By-law Provisions

Our certificate of incorporation and by-laws contain provisions that could
discourage potential takeover attempts and make more difficult attempts by
stockholders to change management. Antigenics' certificate of incorporation
provides that stockholders may not take action by written consent but may only
act at a stockholders' meeting, and that special meetings of the stockholders of
Antigenics may only be called by the president or a majority of the board and
requires advance notice of business to be brought by a stockholder before the
annual meeting. The certificate of incorporation includes provisions classifying
the board of directors into three classes with staggered three-year terms. In
addition, our directors may only be removed from office for cause. Under the
certificate of incorporation and by-laws, the board of directors may enlarge the
size of the board and fill any vacancies on the board. The by-laws provide that
nominations for directors may not be made by stockholders at any annual or
special meeting unless the stockholder intending to make a nomination notifies
us of its intention a specified period in advance and furnishes certain
information.

REGISTRATION RIGHTS

In connection with the private placement completed in November 1999, we granted
registration rights with respect to                shares of common stock sold
in that private placement. Pursuant to these registration rights, we are
obligated to file, approximately 90 days after the date of this prospectus, a
registration statement covering these shares of common stock for resale. All
expenses incurred in connection with this registration, other than any
underwriters' discounts and commissions, will be borne by Antigenics.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock Transfer
& Trust Company.

                                       57
<PAGE>   59

                        SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for the common stock and we
cannot assure you that a liquid trading market for the common stock will develop
or be sustained after this offering. Future sales of substantial amounts of
common stock, including shares issued upon exercise of outstanding options and
warrants, in the public market after this offering or the anticipation of those
sales could adversely affect market prices prevailing from time to time and
could impair our ability to raise capital through sales of our equity
securities. Sales of substantial amounts of common stock of Antigenics in the
public market or the anticipation of these sales could adversely affect the
prevailing market price of the common stock and the ability of Antigenics to
raise equity capital in the future.

After the closing of this offering, Antigenics will have outstanding
shares of common stock, which includes           shares issued upon the
conversion of warrants issued in the November 1999 and assumes no exercise of
the underwriters' over-allotment option and no exercise of outstanding options.
Of these shares, the shares sold in this offering will be freely tradable
without restriction under the Securities Act unless purchased by "affiliates" of
Antigenics as that term is defined in Rule 144 under the Securities Act. An
additional           shares are expected to be covered by a registration
statement we will file approximately 90 days following this offering. The
remaining           restricted shares held by existing stockholders are subject
to various lock-up agreements providing that, with limited exceptions, the
stockholder will not offer, sell, contract to sell, grant an option to purchase,
effect a short sale or otherwise dispose of or engage in any hedging or other
transaction that is designed or reasonably expected to lead to a disposition of
any shares of common stock or any option to purchase common stock or any
securities exchangeable for or convertible into common stock for a period of one
year after the date of this prospectus. Though these shares may be eligible for
earlier sale under the provisions of the Securities Act, none of these shares
will be saleable until 365 days after the date of this prospectus as a result of
these lock-up agreements. Beginning 365 days after the date of this prospectus,
          restricted shares will be eligible for sale in the United States
public market, subject to volume and other limitations. In addition, as of
            , 1999, there were outstanding options to purchase           shares
of common stock, none of which options are expected to be exercised prior to the
closing of the offering. We expect that concurrently with the closing of this
offering warrants to purchase common stock will be converted, on a net exercise
basis, into      shares of common stock and that warrants to purchase an
additional           shares of common stock will be outstanding. All of the
shares issued upon exercise will be subject to lock-up agreements.

In general, under Rule 144 as currently in effect, a person, or persons whose
shares are aggregated, who has beneficially owned restricted shares for at least
one year is entitled to sell within any three-month period up to that number of
shares that does not exceed the greater of: (1) 1% of the number of shares of
common stock then outstanding, which is approximately           shares, or (2)
the average weekly trading volume of the common stock during the four calendar
weeks preceding the filing of a Form 144 with respect to the sale. Sales under
Rule 144 are also subject to certain "manner of sale" provisions and notice
requirements and to the requirement that current public information about
Antigenics be available. Under Rule 144(k), a person who is not deemed to have
been an affiliate of Antigenics at any time during the three months preceding a
sale, and who has beneficially owned the shares proposed to be sold for at least
two years, including the holding period of any prior owner except an affiliate,
is entitled to sell those shares without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.

Rule 701 permits resales of qualified shares held by some affiliates in reliance
upon Rule 144 but without compliance with some restrictions, including the
holding period requirement, of Rule 144. Any employee, officer or director of or
consultant to Antigenics who purchased his or her shares pursuant to a written
compensatory plan or contract may be entitled to rely on the resale provisions
of Rule 701. Rule 701 further provides that non-affiliates may sell shares in
reliance on Rule 144 without having to comply with the holding period, public
information, volume limitation or notice provisions of Rule 144. All holders of
Rule 701 shares of common stock are required to wait until 90 days after the
date of this prospectus before selling shares. However, all shares issued
pursuant to Rule 701 are subject to lock-up agreements and will only become
eligible for sale at the expiration of the 365-day lock-up.

                                       58
<PAGE>   60

                                  UNDERWRITING

Subject to certain terms and conditions contained in an underwriting agreement,
the underwriters named below, for whom U.S. Bancorp Piper Jaffray Inc. and
BancBoston Robertson Stephens Inc. are acting as representatives, have severally
agreed to purchase the number of shares of common stock from us set forth
opposite their names below:

<TABLE>
<CAPTION>
UNDERWRITERS                                                    NUMBER OF SHARES
------------                                                    ----------------
<S>                                                             <C>
U.S. Bancorp Piper Jaffray Inc..............................
BancBoston Robertson Stephens Inc...........................

          Total.............................................
                                                                    ========
</TABLE>

The underwriting agreement provides that the obligations of the several
underwriters to purchase shares of common stock are subject to the approval of
certain legal matters by counsel and to certain other conditions. If any of the
shares of common stock are purchased by the underwriters pursuant to the
underwriting agreement, all such shares of common stock (other than the shares
of common stock covered by the over-allotment option described below) must be so
purchased.

We have been advised by the underwriter representatives that the underwriters
propose to offer the shares of common stock to the public initially at the price
to the public set forth on the cover page of this prospectus and to certain
dealers (who may include the underwriters) at such price less a concession not
to exceed $     per share. The underwriters may allow, and such dealers may
reallow, discounts not in excess of           per share to any other underwriter
and certain other dealers.

We have granted to the underwriters an option to purchase up to
          additional shares of common stock at the initial public offering price
less the underwriting discount solely to cover over-allotments. Such option may
be exercised in whole or in part from time to time during the 30-day period
after the date of this prospectus. To the extent that the underwriters exercise
such option, each of the underwriters will be committed, subject to certain
conditions, to purchase a number of option shares proportionate to such
underwriter's initial commitment as indicated in the preceding table. If the
underwriters exercise their option in full, the total price to the public would
be $       , the total underwriting discount would be $       and total proceeds
to us would be $       .

We, together with certain of our stockholders and our executive officers and
directors, have agreed not to directly or indirectly offer, pledge, sell,
contract to sell, sell any option or contract to purchase or grant any option,
right or warrant to purchase or otherwise transfer or dispose of any shares of
common stock or any securities convertible into or exercisable or exchangeable
for common stock, or enter into any swap or other arrangement that transfers all
or a portion of the economic consequences associated with the ownership of such
common stock, or to cause a registration statement covering any shares of common
stock to be filed, for a period of 365 days after the date of this prospectus
without the prior written consent of the underwriters, subject to limited
exceptions. See "Shares Eligible for Future Sale."

Prior to this offering, there has been no established trading market for the
common stock. The initial price to the public for the common stock offered by us
will be determined by negotiation among and the underwriter representatives and
us. The factors to be considered in determining the initial price to the public
will include the history of and the prospects for the industry in which we
compete, the ability of our management, our past and present operations, our
prospects for future earnings, the general condition of the securities markets
at the time of this offering and the recent market prices of securities of
generally comparable companies. We will apply to list our common stock on the
Nasdaq National Market.

                                       59
<PAGE>   61

The underwriters do not intend to make sales to accounts over which they
exercise discretionary authority in excess of 5% of the number of shares of
common stock offered hereby.

In connection with this offering, the underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the common stock.
Specifically, the underwriters may over-allot this offering, creating a
syndicate short position. Underwriters may bid for and purchase shares of common
stock in the open market to cover syndicate short positions. In addition, the
underwriters may bid for and purchase shares of common stock in the open market
to stabilize the price of the common stock. These activities may stabilize or
maintain the market price of the common stock above independent market levels.
These transactions may be effected on the Nasdaq National Market or otherwise.
The underwriters are not required to engage in these activities and may end
these activities at any time.

In connection with this offering, some underwriters and selling group members
may also engage in passive market making transactions in the common stock on the
Nasdaq National Market. Passive market making consists of displaying bids on the
Nasdaq National Market limited by the prices of independent market makers and
effecting purchases limited by those prices in response to order flow. Rule 103
of Regulation M promulgated by the SEC limits the amount of net purchases that
each passive market maker may make and the displayed size of each bid. Passive
market making may stabilize the market price of the common stock at a level
above that which might otherwise prevail in the open market and, if commenced,
may be discontinued at any time.

At our request, the underwriters have reserved for sale, at the initial public
offering price, up to           shares of common stock for our directors,
officers, employees and business associates. The number of shares of common
stock available for sale to the general public will be reduced to the extent
those persons purchase any of the reserved shares. Any reserved shares that are
not purchased will be offered by the underwriters to the general public on the
same basis as the other shares in this offering.

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act.

                                 LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed upon
for us by Palmer & Dodge LLP, Boston, Massachusetts. Certain legal matters in
connection with this offering will be passed upon for the underwriters by
Shearman & Sterling, New York, New York.

                                    EXPERTS

The consolidated financial statements of Antigenics L.L.C. and subsidiary as of
December 31, 1997 and 1998, and for each of the years in the three-year period
ended December 31, 1998, and for the period from March 31, 1994 (date of
inception) to December 31, 1998, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC for the stock we
are offering by this prospectus. This prospectus does not include all of the
information contained in the registration statement. You should refer to the
registration statement and its exhibits for additional information. While we
have disclosed the material terms of any of our contracts, agreements or other
documents referenced in this prospectus, you should refer to the exhibits
attached to the registration statement for copies of the actual contract,
agreement or other document. When we complete this offering, we will also be
required to file annual, quarterly and special reports, proxy statements and
other information with the SEC.

                                       60
<PAGE>   62

You can read our SEC filings, including the registration statement, over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at 450
Fifth Street, NW, Washington, DC 20549, 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. You may also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference facilities. Our
SEC filings are also available at the office of the Nasdaq National Market. For
further information on obtaining copies of our public filings at the Nasdaq
National Market you should call (212) 656-5060.

                                       61
<PAGE>   63

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                                                                PAGE
                                                                ----
<S>                                                             <C>
Consolidated Financial Statements:
  Independent Auditors' Report..............................     F-2
  Consolidated Balance Sheets as of December 31, 1997 and
     1998...................................................     F-3
  Consolidated Statements of Operations for the years ended
     December 31, 1996, 1997 and 1998 and for the period
     from March 31, 1994 (date of inception) to December 31,
     1998...................................................     F-4
  Consolidated Statements of Members' Equity for the years
     ended December 31, 1996, 1997 and 1998 and for the
     period from March 31, 1994 (date of inception) to
     December 31, 1998......................................     F-5
  Consolidated Statement of Cash Flows for the years ended
     December 31, 1996, 1997 and 1998 and for the period
     from March 31, 1994 (date of inception) to December 31,
     1998...................................................     F-6
  Notes to Consolidated Financial Statements................     F-7
Unaudited Consolidated Interim Financial Statements:
  Consolidated Balance Sheet as of September 30, 1999.......    F-16
  Consolidated Statement of Operations for the nine months
     ended September 30, 1998 and 1999, and for the period
     from March 31, 1994 (date of inception) to September
     30, 1999...............................................    F-17
  Consolidated Statements of Members' Equity for the nine
     months ended September 30, 1999, and for the period
     from March 31, 1994 (date of inception) to September
     30, 1999...............................................    F-18
  Consolidated Statements of Cash Flows for the nine months
     ended September 30, 1998 and 1999, and for the period
     from March 31, 1994 (date of inception) to September
     30, 1999...............................................    F-19
  Notes to Unaudited Consolidated Financial Statements......    F-20
</TABLE>

                                       F-1
<PAGE>   64

                          INDEPENDENT AUDITORS' REPORT

The Members and Board of Managers
Antigenics L.L.C.:

We have audited the accompanying consolidated balance sheets of Antigenics
L.L.C. and subsidiary (a Delaware limited liability company in the development
stage and a successor operating company) as of December 31, 1997 and 1998, and
the related consolidated statements of operations, members' equity and cash
flows for each of the years in the three-year period ended December 31, 1998 and
the period from March 31, 1994 (date of inception) to December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Antigenics L.L.C.
and subsidiary as of December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998 and the period from March 31, 1994 (date of inception)
to December 31, 1998, in conformity with generally accepted accounting
principles.

                                            /s/ KPMG LLP

Short Hills, New Jersey
October 28, 1999

                                       F-2
<PAGE>   65

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1998

<TABLE>
<CAPTION>
                                                                   1997            1998
                                                                -----------    ------------
<S>                                                             <C>            <C>
ASSETS
Cash and cash equivalents...................................    $13,086,402    $ 22,168,049
Prepaid expenses............................................        138,994         230,632
Other assets................................................         20,138          21,189
Due from related party......................................             --          27,605
                                                                -----------    ------------
     Total current assets...................................     13,245,534      22,447,475
Plant and equipment, net....................................        783,655       4,106,183
Other assets................................................         46,237          74,071
Organization costs, less accumulated amortization of $21,587
  and $28,174 in 1997 and 1998, respectively................         14,472           7,885
                                                                -----------    ------------
     Total assets...........................................    $14,089,898    $ 26,635,614
                                                                ===========    ============
LIABILITIES AND MEMBERS' EQUITY
Accounts payable............................................    $   245,602    $  2,036,814
Accrued liabilities.........................................        570,869          48,134
Due to related party........................................         61,658              --
Current portion, long-term debt.............................             --         200,497
                                                                -----------    ------------
     Total current liabilities..............................        878,129       2,285,445

Long-term debt..............................................             --         709,006

Members' capital -- no stated value; 93,354 and 104,024
  units issued..............................................     22,424,501      43,223,509
Subscription notes receivable...............................             --      (2,102,000)
Deficit accumulated during development stage................     (9,212,732)    (17,480,346)
                                                                -----------    ------------
     Total members' equity..................................     13,211,769      23,641,163
Commitments and contingencies
                                                                -----------    ------------
     Total liabilities and members' equity..................    $14,089,898    $ 26,635,614
                                                                ===========    ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-3
<PAGE>   66

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
             FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                                      MARCH 31,
                                                                                        1994
                                                                                      (DATE OF
                                                                                    INCEPTION) TO
                                                                                    DECEMBER 31,
                                          1996           1997           1998            1998
                                       -----------    -----------    -----------    -------------
<S>                                    <C>            <C>            <C>            <C>
Revenue............................    $        --    $        --    $        --    $         --
Expenses:
  Research and development.........     (1,568,903)    (2,547,799)    (5,908,160)    (10,879,904)
  General and administrative.......     (1,042,033)    (1,375,444)    (2,734,947)     (7,660,804)
  Depreciation and amortization....        (78,856)      (202,090)      (360,285)       (696,347)
                                       -----------    -----------    -----------    ------------
     Total operating loss..........     (2,689,792)    (4,125,333)    (9,003,392)    (19,237,055)
Other income:
  Non-operating income.............        249,988             --             --         249,988
  Interest income..................        281,245        481,179        735,778       1,506,721
                                       -----------    -----------    -----------    ------------
     Net loss......................    $(2,158,559)   $(3,644,154)   $(8,267,614)   $(17,480,346)
                                       ===========    ===========    ===========    ============
Net loss per members' equity unit,
  basic and diluted................    $    (25.43)   $    (40.71)   $    (86.42)
                                       ===========    ===========    ===========
Weighted average members' units
  outstanding, basic and diluted...         84,876         89,525         95,673
                                       ===========    ===========    ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-4
<PAGE>   67

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                   CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
            FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
               THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                         DEFICIT
                                                                       ACCUMULATED
                                                        SUBSCRIPTION      DURING
                                           MEMBERS'        NOTES       DEVELOPMENT
                                 UNITS      CAPITAL      RECEIVABLE       STAGE          TOTAL
                                -------   -----------   ------------   ------------   -----------
<S>                             <C>       <C>           <C>            <C>            <C>
Balance at March 31, 1994...         --   $        --   $        --    $         --   $        --
Net loss....................         --            --            --        (183,440)     (183,440)
Issuance of units...........     65,200       400,010            --              --       400,010
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1994......................     65,200       400,010            --        (183,440)      216,570
Net loss....................         --            --            --      (3,226,579)   (3,226,579)
Issuance of units...........      6,000     1,500,000      (150,000)             --     1,350,000
Grant of members' equity
  units.....................      8,800     2,200,000            --              --     2,200,000
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1995......................     80,000     4,100,010      (150,000)     (3,410,019)      539,991
Net loss....................         --            --            --      (2,158,559)   (2,158,559)
Grant and recognition of
  options...................         --       276,676            --              --       276,676
Payment of subscription
  notes receivable..........         --            --       150,000              --       150,000
Issuance of units...........      9,512    10,600,000      (250,000)             --    10,350,000
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1996......................     89,512    14,976,686      (250,000)     (5,568,578)    9,158,108
Net loss....................         --            --            --      (3,644,154)   (3,644,154)
Payment of subscription
  notes receivable..........         --            --       250,000              --       250,000
Grant and recognition of
  options...................         --        62,815            --              --        62,815
Issuance of units...........      3,842     7,385,000            --              --     7,385,000
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1997......................     93,354    22,424,501            --      (9,212,732)   13,211,769
Net loss....................         --            --            --      (8,267,614)   (8,267,614)
Grant and recognition of
  options...................         --       472,023            --              --       472,023
Exercise of options.........        224       250,000            --              --       250,000
Issuance of units...........     10,446    20,076,985    (2,102,000)             --    17,974,985
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1998......................    104,024   $43,223,509   $(2,102,000)   $(17,480,346)  $23,641,163
                                =======   ===========   ===========    ============   ===========
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-5
<PAGE>   68

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
             FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1998

<TABLE>
<CAPTION>
                                                                                      MARCH 31,
                                                                                        1994
                                                                                      (DATE OF
                                                                                    INCEPTION) TO
                                                                                    DECEMBER 31,
                                             1996          1997          1998           1998
                                          -----------   -----------   -----------   -------------
<S>                                       <C>           <C>           <C>           <C>
Cash flows from operating activities:
  Net loss............................    $(2,158,559)  $(3,644,154)  $(8,267,614)  $(17,480,346)
  Adjustments to reconcile net loss to
     net cash used in operating
     activities:
     Depreciation and amortization....         78,856       202,090       360,285        696,347
     Members' equity options..........        276,676        62,815       472,023        811,514
     Members' equity grant............             --            --            --      2,200,000
  Changes in operating assets and
     liabilities:
     Other assets.....................         (1,792)      (64,583)      (28,885)       (95,260)
     Prepaid assets...................        (10,734)      (87,927)      (91,638)      (230,632)
     Organization costs...............             --            --            --        (32,934)
     Accounts payable.................        246,357      (553,263)    1,791,212      2,036,814
     Accrued liabilities..............         66,865       504,004      (522,735)        48,134
     Due to/from related party, net...         29,788        63,361       (89,263)       (27,605)
                                          -----------   -----------   -----------   ------------
       Net cash used in operating
          activities..................     (1,472,543)   (3,517,657)   (6,376,615)   (12,073,968)
                                          -----------   -----------   -----------   ------------
Cash flows from investing activities:
  Purchase of plant and equipment.....       (231,262)     (622,504)   (3,704,168)    (4,809,423)
  Proceeds from the sale of plant and
     equipment........................             --         4,000        27,942         31,942
                                          -----------   -----------   -----------   ------------
       Net cash used in investing
          activities..................       (231,262)     (618,504)   (3,676,226)    (4,777,481)
                                          -----------   -----------   -----------   ------------
Cash flows from financing activities:
  Members' equity contributions.......     10,500,000     7,635,000    17,974,985     37,859,995
  Exercise of members' equity
     options..........................             --            --       250,000        250,000
  Proceeds from debt..................             --            --       909,503        909,503
                                          -----------   -----------   -----------   ------------
     Net cash provided by financing
       activities.....................     10,500,000     7,635,000    19,134,488     39,019,498
                                          -----------   -----------   -----------   ------------
Net increase in cash and cash
  equivalents.........................      8,796,195     3,498,839     9,081,647     22,168,049
Cash and cash equivalents at beginning
  of period...........................        791,368     9,587,563    13,086,402             --
                                          -----------   -----------   -----------   ------------
Cash and cash equivalents at end of
  period..............................    $ 9,587,563    13,086,402    22,168,049     22,168,049
                                          ===========   ===========   ===========   ============
Non-cash investing and financing
  activities:
  Members' equity contributions
     financed by notes receivable.....    $   250,000   $        --   $ 2,102,000   $  2,102,000
                                          ===========   ===========   ===========   ============
</TABLE>

          See accompanying notes to consolidated financial statements.

                                       F-6
<PAGE>   69

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  ORGANIZATION AND BUSINESS

The business was formed on March 31, 1994 through the creation of a Delaware
corporation. In July 1995, the founders of the Delaware corporation formed
Antigenics L.L.C. (together with its subsidiary, Antigenics or the Company), a
Delaware limited liability company, and subsequently transferred to the Company
all of the assets, liabilities, properties and rights of the Delaware
corporation in exchange for an initial 81.5% equity interest in the Company. The
accounting for this recapitalization was recorded at the Delaware corporation's
historical cost. In connection with the recapitalization, the Company also
raised $1,500,000 (including $150,000 of subscription notes receivable) in a
private equity transaction in exchange for a 7.5% initial ownership interest and
a further 11% initial ownership interest was exchanged for services rendered to
the Company by certain outside advisors, the value of which was recognized as a
non-cash expense of $2,200,000 during 1995.

The Company is developing immunotherapeutics for the treatment of cancer,
infectious diseases and autoimmune disorders based on the Company's proprietary
heat shock protein technology. The Company's research has demonstrated that when
purified heat shock protein-peptide complexes are injected into the skin, they
trigger an immune response against cancers and infectious diseases. Antigenics
seeks to create immunotherapeutics to "jump-start" patients' immune systems into
destroying diseased cells in the body.

Antigenics is primarily engaged in the development of its heat shock protein
technology and its lead immunotherapeutic product, Oncophage(R). The related
business activities include product research and development activities,
regulatory and clinical affairs, establishing manufacturing capabilities, pilot
stage production for clinical trials, and administrative and corporate
development activities. As of December 31, 1998, the Company has not commenced
commercial operations and, accordingly, is in the development stage.
Consequently, the Company is subject to all the risks inherent in the
establishment of a new business. The Company has incurred annual operating
losses since inception and, as a result, at December 31, 1998 has a deficit
accumulated during the development stage of approximately $17.5 million. The
Company's operations during development have been funded principally by members'
equity. While the Company believes that its working capital resources are
sufficient to satisfy its liquidity requirements over the next 12 months,
satisfying the Company's long-term liquidity needs will require the successful
commercialization of Oncophage or other products and additional members' equity.

The Company's immunotherapeutics require clinical trials and approvals from
regulatory agencies as well as acceptance in the marketplace. As of February 17,
1999, the Company had begun seven clinical trials in four cancer indications,
two of which have been completed, and three of which are in Phase II. Although
the Company believes its patents, patent rights and patent applications are
valid, the invalidation of its patents or failure of certain of its pending
patent applications to issue as patents could have a material adverse effect
upon its business. The Company competes with specialized biotechnology
companies, major pharmaceutical and chemical companies and universities and
research institutions. Many of these competitors have substantially greater
resources than does the Company.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  BASIS OF PRESENTATION

The Company's consolidated financial statements include the accounts of
Antigenics L.L.C. and its wholly-owned subsidiary. All significant intercompany
balances and transactions have been eliminated in consolidation.

                                       F-7
<PAGE>   70
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(b)  USE OF ESTIMATES

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

(c)  CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with maturities at
acquisition of three months or less to be cash equivalents. Cash equivalents at
December 31, 1997 and 1998 consist of investments in money market accounts which
are unrestricted as to withdrawal or use.

(d)  PLANT AND EQUIPMENT

Plant and equipment are carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. Amortization
of leasehold improvements is computed over the shorter of the lease term or
estimated useful life of the asset. Additions and improvements are capitalized,
while repairs and maintenance are charged to expense as incurred.

(e)  ORGANIZATION COSTS

Organization costs, consisting primarily of legal fees, are being amortized
using the straight-line method over a five-year period.

(f)  LONG-LIVED ASSETS

The Company's policy is to record long-lived assets at cost, amortizing these
costs over the expected useful lives of the related assets. In accordance with
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of,"
these assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amounts of the assets may not be
recoverable. The assets are evaluated for continuing value and proper useful
lives by comparison to expected undiscounted future cash flows. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets, calculated as expected discounted future cash flows. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.

(g)  FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation. Significant differences can arise
between the fair value and carrying amounts of financial instruments that are
recognized at historical cost amounts. The estimated fair values of all of the
Company's financial instruments, excluding debt, approximate their carrying
amounts in the consolidated balance sheets. The fair value of the Company's
long-term debt was derived by evaluating the nature and terms of each term note
and considering the prevailing economic and market conditions at the balance
sheet date. The carrying amount of debt, including current portions, is
approximately $910,000 at December 31, 1998 and the fair value is estimated to
be approximately this amount.

                                       F-8
<PAGE>   71
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(h)  ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 1997 and 1998:

<TABLE>
<CAPTION>
                                                           1997        1998
                                                         --------    --------
<S>                                                      <C>         <C>
Sponsored research.....................................  $475,000    $     --
Other..................................................    95,869      48,134
                                                         --------    --------
                                                         $570,869    $ 48,134
                                                         ========    ========
</TABLE>

(i)  MEMBERS' EQUITY OPTION PLAN

The Company accounts for options granted to employees and directors in
accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. As such,
compensation expense is recorded on fixed members' equity option grants only if
the current fair value of the underlying unit exceeds the exercise price of the
option at the date of grant.

The Company accounts for members' equity options granted to non-employees on a
fair value basis in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation" and Emerging Issues Task Force Issue No. 96-18, "Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services". As a result, the non-cash charge
to operations for non-employee options with vesting or other performance
criteria is affected each reporting period by changes in the fair value of the
Company's members' equity units.

As required, the Company also provides pro forma net loss and pro forma net loss
per members' equity unit disclosures for employee and director members' equity
option grants as if the fair-value-based method defined in SFAS No. 123 had been
applied (see Note 5).

(j)  RESEARCH AND DEVELOPMENT

Research and development expenditures are expensed as incurred.

(k)  INCOME TAXES

As a Delaware limited liability company, no federal, state and local income
taxes are levied on the Company. Each member of the Company is individually
responsible for reporting his or her share of the Company's net income or loss
on their personal tax returns. Therefore, no provision for income taxes and no
deferred tax assets or liabilities are recognized in the accompanying
consolidated financial statements.

(l)  NET LOSS PER MEMBERS' EQUITY UNIT

Basic earnings or loss per members' equity unit (EPU) is computed using the
weighted average number of members' equity units outstanding during the period
being reported on. Diluted EPU reflects the potential dilution that could occur
if securities or other contracts to issue members' equity units were exercised
or converted into members' equity units at the beginning of the period being
reported on and the effect was dilutive. Net loss and weighted average members'
equity units used for computing diluted EPU were the same as that used for
computing basic EPU for each of the years ended December 31, 1996, 1997 and 1998
because the Company's members' equity options were not included in the
calculation since the inclusion of such potential members' equity units would be
antidilutive.

                                       F-9
<PAGE>   72
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(m)  SEGMENT INFORMATION

The Company is managed and operated as one business. The entire business is
managed by a single management team that reports to the chief executive officer.
The Company does not operate separate lines of business or separate business
entities with respect to any of its product candidates. Accordingly, the Company
does not prepare discrete financial information with respect to separate product
areas or by location and does not have separately reportable segments as defined
by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information".

(n)  RECENT ACCOUNTING PRONOUNCEMENTS

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities", which requires the costs of start-up activities and organization
costs be expensed as incurred. The adoption of SOP 98-5 by the Company effective
January 1, 1999 will be immaterial to the Company's consolidated financial
statements.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments,
including derivatives instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for all the Company's fiscal quarters
beginning January 1, 2001. This statement is not expected to affect the Company
as it currently does not have derivative instruments or engage in hedging
activities.

(3)  PLANT AND EQUIPMENT, NET

Plant and equipment, net at December 31, 1997 and 1998 consists of the
following:

<TABLE>
<CAPTION>
                                                                             ESTIMATED
                                                                            DEPRECIABLE
                                                  1997          1998           LIVES
                                               ----------    ----------    -------------
<S>                                            <C>           <C>           <C>
Furniture, fixtures and other..............    $  299,580    $  486,933    3 to 10 years
Laboratory and manufacturing equipment.....       621,187     1,426,427    3 to 10 years
Leasehold improvements.....................       180,128       224,580    2 to 5 years
Construction in progress...................            --     2,639,181
                                               ----------    ----------
                                                1,100,895     4,777,121
Less accumulated depreciation and
  amortization.............................       317,240       670,938
                                               ----------    ----------
                                               $  783,655    $4,106,183
                                               ==========    ==========
</TABLE>

(4)  MEMBERS' EQUITY

Antigenics has one class of members' equity. All equity members' vote their
equity interests in proportion to their respective unit interest in the Company.
Net profits and losses of the Company for each fiscal year are allocated to the
capital accounts of the members as described in the limited liability company
agreement, generally in proportion to their respective unit ownership interests.
No members are liable for any obligations of the Company or are required to
contribute any additional capital related to the deficits incurred.

Since the formation of the Company in 1995 (see note 1), the Company has raised
capital through private placement equity transactions. During 1996, the Company
completed a private placement offering of

                                      F-10
<PAGE>   73
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

approximately 9,500 members' equity units in exchange for $10,600,000.
Subscription notes receivable of $250,000 at December 31, 1996, which represent
promissory notes from members in consideration of their equity contributions,
were satisfied in full during 1997.

During 1997, the Company commenced a private placement offering, which resulted
in approximately 3,800 members' equity units being sold for approximately
$7,385,000 during 1997 and approximately 10,400 members' equity units being sold
for approximately $20,077,000 during 1998. This offering was completed during
early 1999 and resulted in an aggregate of approximately $27,572,000 being
received by the Company over the three-year period.

Subscription notes receivable of $2,102,000 at December 31, 1998, which
represent promissory notes from members in consideration of their equity
contributions, were satisfied in full during 1999.

(5)  EQUITY OPTIONS

In March 1996, the board of managers approved an equity-based incentive
compensation plan (the Plan). Pursuant to the provisions of the Plan, the board
of managers may grant options to directors, employees and outside advisors to
purchase members' equity units of the Company. At the date of grant, the board
of managers sets the terms of the options including the exercise price and
vesting period. The options granted through December 31, 1998 have vesting
periods ranging up to five years. Options generally have a contractual life of
ten years. A maximum of 7% of total equity, inclusive of the options granted,
may be granted as options (approximately 7,800 options as of December 31, 1998).

The following summarizes activity for options granted to directors and
employees:

<TABLE>
<CAPTION>
                                                         OPTIONS       WEIGHTED     WEIGHTED
                                           MEMBERS'    EXERCISABLE     AVERAGE      AVERAGE
                                            EQUITY      AT END OF     GRANT-DATE    EXERCISE
                                           OPTIONS        YEAR        FAIR VALUE     PRICE
                                           --------    -----------    ----------    --------
<S>                                        <C>         <C>            <C>           <C>
Outstanding December 31, 1995............      --
  Granted................................   2,200                       $  121       $  250
  Exercised..............................      --                           --           --
                                            -----
Outstanding December 31, 1996............   2,200         1,500
                                                          =====
  Granted................................     276                          468          759
  Exercised..............................      --                           --           --
                                            -----
Outstanding December 31, 1997............   2,476         1,733
                                                          =====
  Granted................................     690                          845        1,241
  Exercised..............................      --                           --           --
                                            =====                       ======       ======
Outstanding December 31, 1998............   3,166         2,022
                                            =====         =====
</TABLE>

Compensation expense recognized with respect to options issued to employees and
directors is immaterial as the exercise price set by the board of managers
generally is at an amount equal to or greater than the fair value of the
members' equity units at the date of the option grant.

                                      F-11
<PAGE>   74
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes activity for options granted to outside advisors:

<TABLE>
<CAPTION>
                                                          OPTIONS       WEIGHTED     WEIGHTED
                                             MEMBER     EXERCISABLE     AVERAGE      AVERAGE
                                             EQUITY      AT END OF     GRANT-DATE    EXERCISE
                                             OPTIONS       YEAR        FAIR VALUE     PRICE
                                             -------    -----------    ----------    --------
<S>                                          <C>        <C>            <C>           <C>
Outstanding December 31, 1995..............      --
  Granted..................................   2,574                      $  171       $  344
  Exercised................................      --                          --           --
                                              -----
Outstanding December 31, 1996..............   2,574        1,449
                                                           =====
  Granted..................................      --                          --           --
  Exercised................................      --                          --           --
                                              -----
Outstanding December 31, 1997..............   2,574        1,857
                                                           =====
  Granted..................................   1,115                       1,023          549
  Exercised................................    (224)                        298          250
                                              -----                      ======       ======
Outstanding December 31, 1998..............   3,465        1,921
                                              =====        =====
</TABLE>

The 1996 option grants include 517 options granted to outside advisors with an
exercise price which is determined based on fair value of the underlying units
as the options vest. Compensation expense for these options is recognized as of
the vesting date when the exercise price becomes known. In 1998, 138 of such
options vested at an exercise price of approximately $1,118 per unit.

The charge to operations related to options granted to outside advisors totaled
approximately $277,000, $63,000 and $472,000 for the years ended December 31,
1996, 1997 and 1998, respectively. At December 31, 1998, unrecognized expense
for options granted to outside advisors which have not vested is approximately
$703,000; such expense will be recognized over the remaining vesting period and
is subject to change during the vesting period based upon the fair value of the
Company's members' equity units.

A summary of options outstanding and exercisable, excluding the 1996 options
described above, as of December 31, 1998, follows:

<TABLE>
<CAPTION>
                                    OPTIONS OUTSTANDING
                        --------------------------------------------       OPTIONS EXERCISABLE
                                      WEIGHTED AVE.                    ----------------------------
      RANGE OF            NUMBER        REMAINING     WEIGHTED AVE.      NUMBER      WEIGHTED AVE.
   EXERCISE PRICES      OUTSTANDING   LIFE (YEARS)    EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
---------------------   -----------   -------------   --------------   -----------   --------------
<S>            <C>      <C>           <C>             <C>              <C>           <C>
$  250    -   $  750      5,258          7.73            $  301          3,972          $  250
$  751    -   $1,250        840          8.92             1,118            171           1,118
$1,251    -   $1,750         --            --                --             --              --
$1,751    -   $2,250        154          9.74             2,077             --              --
                          -----                                          -----
                          6,252                                          4,143
                          =====                                          =====
</TABLE>

The Company accounts for options granted to employees and directors under APB
Opinion No. 25. Had compensation cost for options granted to employees and
directors been determined consistent with SFAS

                                      F-12
<PAGE>   75
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

No. 123, the Company's pro forma net loss and pro forma net loss per members'
equity unit would have been as follows:

<TABLE>
<CAPTION>
                                               YEAR ENDED      YEAR ENDED      YEAR ENDED
                                              DECEMBER 31,    DECEMBER 31,    DECEMBER 31,
                                                  1996            1997            1998
                                              ------------    ------------    ------------
<S>                                           <C>             <C>             <C>
Net loss:
  As reported...............................  $(2,158,559)    $(3,644,154)    $(8,267,614)
  Pro forma.................................   (2,342,028)     (3,694,280)     (8,370,709)
                                              ===========     ===========     ===========
Net loss per members' equity unit:
  As reported...............................  $    (25.43)    $    (40.71)    $    (86.42)
  Pro forma.................................       (27.59)         (41.27)         (87.49)
                                              ===========     ===========     ===========
</TABLE>

The effects of applying SFAS No. 123, for either recognizing or disclosing
compensation cost under such pronouncement, may not be representative of the
effects on reported net income or loss for future years. The fair value of each
option granted is estimated on the date of grant using an option-pricing model
with the following weighted average assumptions:

<TABLE>
<CAPTION>
                                                              1996    1997    1998
                                                              ----    ----    ----
<S>                                                           <C>     <C>     <C>
Estimated volatility........................................   38%     57%     61%
Expected life in years -- employee and director options.....    6       6       6
Risk-free interest rate.....................................  6.3%    6.3%    5.4%
Dividend yield..............................................    0%      0%      0%
</TABLE>

The Company estimates volatility for purposes of computing compensation expense
on outside advisor options and for disclosure purposes using the volatility of
public companies that the Company considers comparable. The expected life used
to estimate the fair value of outside advisor options is equal to the
contractual life of the option granted.

(6)  COMMITMENTS

In November 1994, the Company's predecessor entered into a Patent License
Agreement (Mount Sinai Agreement) with the Mount Sinai School of Medicine (Mount
Sinai). Through the Mount Sinai Agreement, the Company has obtained the
exclusive licenses to the patent rights which resulted from the research and
development performed by Dr. Pramod Srivastava, a director of the Company. Under
the Mount Sinai Agreement, the Company agreed to pay Mount Sinai a nominal
royalty on related product sales (as defined in the Mount Sinai Agreement)
through the last expiration date of the patents under the Mount Sinai Agreement
(2015). In addition to these royalty payments, Mount Sinai was issued a nominal
equity interest.

During 1995, Dr. Srivastava moved his research to Fordham University (Fordham).
The Company's predecessor entered into a Patent License Agreement (Fordham
Agreement) with Fordham, agreeing to reimburse Fordham for all approved costs
incurred in the performance of the research. The Company's predecessor has also
agreed to pay Fordham a nominal royalty on related product sales, as defined,
through the last expiration date of the patents under the Fordham Agreement.
This agreement ended in mid-1997. During 1995, 1996 and 1997, the direct and
indirect costs incurred by the Company related to this agreement were
approximately $546,000, $926,000 and $902,000, respectively, and are included in
research and development expenses in the consolidated statements of operations
for such years.

                                      F-13
<PAGE>   76
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In February 1998, the Company entered into a research agreement with the
University of Connecticut Health Center (UConn) and Dr. Srivastava. The
agreement has a term of approximately five years and calls for payments to UConn
totaling a minimum of $5,000,000, payable quarterly at the rate of $250,000
(contingent on the continuing employment of Dr. Srivastava by UConn). In
addition, as research was begun by Dr. Srivastava in 1997, the Company agreed to
pay approximately $475,000 for these previous services and expensed such amount
as research and development during 1997. Research and development expense in the
accompanying 1998 consolidated statement of operations includes approximately
$1,000,000 of costs incurred under the UConn agreement. Royalties at varying
rates are due to UConn upon commercialization of a product utilizing technology
discovered during the research agreement.

In 1996, Antigenics entered into an agreement with Sloan-Kettering Institute for
Cancer Research (Sloan Kettering) to conduct clinical studies. The Company is
required to pay Sloan Kettering $10,000 for administration and start up costs
and $4,000 per patient in the study.

On December 2, 1997, Antigenics entered into two agreements with The University
of Texas M.D. Anderson Cancer Center (M.D. Anderson) to conduct clinical
studies. The Company is required to pay M.D. Anderson a total of approximately
$538,000 for expenses for the clinical study of approximately 90 patients and
other related costs payable in four installments. In addition, on March 20, 1998
the Company entered into another clinical study with M.D. Anderson. Under such
1998 agreement, the Company is required to pay M.D. Anderson a total of
approximately $118,000 for the study of 30 patients and other related costs
payable in four installments.

In 1998, Antigenics entered into an agreement with the Johannes Gutenberg
Universitat Mainz Klinikum (Universitat) to conduct additional clinical studies.
The Company is required to pay the Universitat approximately $279,000 for
expenses for the clinical study of approximately 30 patients. The first
installment was paid upon signing the agreement.

In 1998, Antigenics entered into an agreement, as amended, with Sigma-Tau
Farmaceutiche Riunite SpA (Sigma-Tau) to conduct clinical studies in Italy,
Spain, Portugal and Switzerland. Under the agreement, Sigma-Tau is required to
reimburse Antigenics for all costs incurred in relation to the clinical studies.
In return, Antigenics has granted Sigma-Tau the exclusive right to negotiate a
marketing and development agreement (the Development Agreement) for the
exclusive use of Antigenics' patent rights and their product, and the right of
first offer to negotiate licenses for other medical uses of their product, in
Italy, Spain, Portugal and Switzerland. The Development Agreement has not been
finalized. No costs associated with these clinical studies were incurred during
1998.

For the years ended December 31, 1996, 1997 and 1998, approximately $10,000,
$4,000 and $255,000, respectively, has been expensed in the accompanying
consolidated statements of operations related to the above mentioned clinical
studies.

(7)  RELATED PARTY TRANSACTIONS

The Company rents office space for its New York City headquarters on a
month-to-month basis and utilizes certain office services of an entity which is
wholly-owned by the Company's chief executive officer and chairman of the board.
Such transactions are recorded at the affiliate's cost and amounted to
approximately $293,000, $557,000 and $211,000 for the years ended December 31,
1996, 1997 and 1998, respectively. From time to time the Company also pays
general and administrative costs on behalf of the affiliated entity for which
the Company is reimbursed on a current basis. As of December 31, 1998, the
affiliated entity was indebted to the Company for $27,605 of costs paid on the
affiliated entity's behalf. As

                                      F-14
<PAGE>   77
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of December 31, 1997, the Company was indebted to the affiliated entity for
$61,658 for rent and administrative services.

During 1997 and renewed each year thereafter, the Company obtained stand by
letters of credit for the benefit of the related party in the amount of $375,000
in connection with the related party's lease of the New York City office space.
These letters expire in January 2000.

(8)  LEASES

The Company leases administrative (see Note 7), laboratory and office facilities
under various month-to-month and long-term lease arrangements. Rent expense,
exclusive of the amounts included in Note 7, was approximately $134,000 and
$685,000 for the years ended December 31, 1997 and 1998, respectively.

The future minimum rental payments under the Company's lease of its Woburn,
Massachusetts manufacturing and laboratory facility, which expires in 2003, are
as follows:

<TABLE>
<S>                                                <C>
Year ending December 31:
  1999.........................................    $  447,516
  2000.........................................       447,516
  2001.........................................       447,516
  2002.........................................       447,516
  2003.........................................       279,698
                                                   ----------
                                                   $2,069,762
                                                   ==========
</TABLE>

(9)  DEBT

In November 1998, the Company entered into a $3 million credit facility
(increased to $5 million in May 1999) with a financial institution pursuant to
which the Company can draw down amounts to make or refinance certain capital
expenditures. As the Company utilizes the credit facility, separate term notes
will be executed. Each term loan will have a term of forty-two months and the
interest rate is fixed at the closing of each term loan. Each loan is
collateralized by the equipment, fixtures, and improvements acquired with the
proceeds of the loan.

On December 30, 1998, the Company closed its first term loan under the credit
facility for approximately $910,000; the loan bears interest on the remaining
balance at 13.954%.

The aggregate maturities of the term loan for each of the five years subsequent
to December 31, 1998 are as follows: 1999 -- $200,497; 2000 -- $230,335;
2001 -- $264,613; 2002 -- $214,059.

(10)  SUBSEQUENT EVENT

On June 21, 1999, Antigenics entered into another agreement with M.D. Anderson
to conduct clinical studies. The Company is required to pay M.D. Anderson a
total of approximately $277,000 for the clinical study of approximately 40
patients and other related costs payable in installments of over two years.

(11)  PRO FORMA INCOME TAX PROVISION (UNAUDITED)

As discussed in Note 2(k), the Company is not subject to income taxes and
therefore does not provide for income taxes in its consolidated financial
statements. Had the Company been organized as a tax paying entity for the year
ended December 31, 1998, there would be no pro forma income tax provision
because of a loss before income taxes and the need to recognize a valuation
allowance on all gross deferred tax assets. Given the Company's past history of
incurring operating losses, management believes that it is more likely than not
that any deferred tax assets will not be realized.

                                      F-15
<PAGE>   78

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 1999
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                SEPTEMBER 30,
                                                                    1999
                                                                -------------
<S>                                                             <C>
ASSETS
Cash and cash equivalents...................................    $ 12,611,690
Prepaid expenses............................................         196,424
Other assets................................................         418,065
                                                                ------------
          Total current assets..............................      13,226,179
Plant and equipment, net....................................       7,979,666
Other assets................................................          74,071
                                                                ------------
          Total assets......................................    $ 21,279,916
                                                                ============
LIABILITIES AND MEMBERS' EQUITY
Accounts payable............................................    $    986,552
Accrued liabilities.........................................         394,502
Due to related party........................................           7,994
Current portion, long-term debt.............................         781,061
                                                                ------------
          Total current liabilities.........................       2,170,109

Long-term debt..............................................       2,367,578

Members' capital -- no stated value; 104,086 units issued...      45,210,542
Deficit accumulated during development stage................     (28,468,313)
                                                                ------------
          Total members' equity.............................      16,742,229
Commitments and contingencies...............................
                                                                ------------
          Total liabilities and members' equity.............    $ 21,279,916
                                                                ============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                      F-16
<PAGE>   79

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999, AND
             FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                             TO SEPTEMBER 30, 1999
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                         MARCH 31,
                                                                                           1994
                                                                                         (DATE OF
                                                    NINE MONTHS ENDED SEPTEMBER 30,    INCEPTION) TO
                                                    -------------------------------    SEPTEMBER 30,
                                                        1998              1999             1999
                                                    -------------    --------------    -------------
<S>                                                 <C>              <C>               <C>
Revenue...........................................   $        --      $         --     $         --
Expenses:
  Research and development........................    (4,072,149)       (6,925,828)     (17,805,732)
  General and administrative......................    (1,822,867)       (3,825,120)     (11,485,924)
  Depreciation and amortization...................      (272,822)         (726,038)      (1,422,385)
                                                     -----------      ------------     ------------
          Total operating loss....................    (6,167,838)      (11,476,986)     (30,714,041)
Other income/(expense):
  Non-operating income............................            --                --          249,988
  Interest expense................................            --          (151,653)        (151,653)
  Interest income.................................       580,352           640,672        2,147,393
                                                     -----------      ------------     ------------
          Net loss................................   $(5,587,486)     $(10,987,967)    $(28,468,313)
                                                     ===========      ============     ============
Net loss per members' equity unit, basic and
  diluted.........................................   $    (62.06)     $    (105.57)
                                                     ===========      ============
Weighted average members' units outstanding, basic
  and diluted.....................................        90,032           104,079
                                                     ===========      ============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                      F-17
<PAGE>   80

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                   CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
               THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                             TO SEPTEMBER 30, 1999
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            DEFICIT
                                                                          ACCUMULATED
                                                           SUBSCRIPTION      DURING
                                              MEMBERS'        NOTES       DEVELOPMENT
                                    UNITS      CAPITAL      RECEIVABLE       STAGE          TOTAL
                                   -------   -----------   ------------   ------------   ------------
<S>                                <C>       <C>           <C>            <C>            <C>
Balance at March 31, 1994........       --   $        --   $        --    $         --   $         --
Net loss.........................       --            --            --        (183,440)      (183,440)
Issuance of units................   65,200       400,010            --              --        400,010
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1994.....   65,200       400,010            --        (183,440)       216,570
Net loss.........................       --            --            --      (3,226,579)    (3,226,579)
Issuance of units................    6,000     1,500,000      (150,000)             --      1,350,000
Grant of members' equity units...    8,800     2,200,000            --              --      2,200,000
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1995.....   80,000     4,100,010      (150,000)     (3,410,019)       539,991
Net loss.........................       --            --            --      (2,158,559)    (2,158,559)
Grant and recognition of
  options........................       --       276,676            --              --        276,676
Payment of subscription notes
  receivable.....................       --            --       150,000              --        150,000
Issuance of units................    9,512    10,600,000      (250,000)             --     10,350,000
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1996.....   89,512    14,976,686      (250,000)     (5,568,578)     9,158,108
Net loss.........................       --            --            --      (3,644,154)    (3,644,154)
Payment of subscription notes
  receivable.....................       --            --       250,000              --        250,000
Grant and recognition of
  options........................       --        62,815            --              --         62,815
Issuance of units................    3,842     7,385,000            --              --      7,385,000
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1997.....   93,354    22,424,501            --      (9,212,732)    13,211,769
Net loss.........................       --            --            --      (8,267,614)    (8,267,614)
Grant and recognition of
  options........................       --       472,023            --              --        472,023
Exercise of options..............      224       250,000            --              --        250,000
Issuance of units................   10,446    20,076,985    (2,102,000)             --     17,974,985
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1998.....  104,024    43,223,509    (2,102,000)    (17,480,346)    23,641,163
Net loss.........................       --            --            --     (10,987,967)   (10,987,967)
Payment of subscription notes
  receivable.....................       --            --     2,102,000              --      2,102,000
Grant and recognition of
  options........................       --     1,877,033            --              --      1,877,033
Issuance of units................       62       110,000            --              --        110,000
                                   -------   -----------   -----------    ------------   ------------

Balance at September 30, 1999....  104,086   $45,210,542   $        --    $(28,468,313)  $ 16,742,229
                                   =======   ===========   ===========    ============   ============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                      F-18
<PAGE>   81

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 AND
             FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                             TO SEPTEMBER 30, 1999
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     MARCH 31,
                                                                                       1994
                                                                                     (DATE OF
                                                           SEPTEMBER 30,           INCEPTION) TO
                                                    ---------------------------    SEPTEMBER 30,
                                                       1998            1999            1999
                                                    -----------    ------------    -------------
<S>                                                 <C>            <C>             <C>
Cash flows from operating activities:
  Net loss......................................    $(5,587,486)   $(10,987,967)   $(28,468,313)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization..............        272,822         726,038       1,422,385
     Members' equity options....................        181,734       1,877,033       2,688,546
     Members' equity grant......................             --              --       2,200,000
  Changes in operating assets and liabilities:
     Other assets...............................        (28,536)       (396,876)       (492,136)
     Prepaid assets.............................         21,631          34,208        (196,424)
     Organization costs.........................             --              --         (32,934)
     Accounts payable...........................        109,740      (1,050,262)        986,552
     Accrued liabilities........................       (497,572)        346,368         394,502
     Due to/from related party, net.............         19,409          35,599           7,994
                                                    -----------    ------------    ------------
       Net cash used in operating activities....     (5,508,258)     (9,415,859)    (21,489,828)
                                                    -----------    ------------    ------------
Cash flows from investing activities:
  Purchase of plant and equipment...............     (1,047,274)     (4,591,636)     (9,401,059)
  Proceeds from the sale of plant and
     equipment..................................             --              --          31,942
                                                    -----------    ------------    ------------
       Net cash used in investing activities....     (1,047,274)     (4,591,636)     (9,369,117)
                                                    -----------    ------------    ------------
Cash flows from financing activities:
  Members' equity contributions.................      6,525,000       2,212,000      40,071,995
  Exercise of members' equity options...........             --              --         250,000
  Proceeds from debt............................             --       2,514,656       3,424,160
  Repayments of debt............................             --        (275,520)       (275,520)
                                                    -----------    ------------    ------------
       Net cash provided by financing
          activities............................      6,525,000       4,451,136      43,470,635
                                                    -----------    ------------    ------------
Net (decrease) increase in cash and cash
  equivalents...................................        (30,532)     (9,556,359)     12,611,690
Cash and cash equivalents at beginning of
  period........................................     13,086,402      22,168,049              --
                                                    -----------    ------------    ------------
Cash and cash equivalents at end of period......    $13,055,870      12,611,690      12,611,690
                                                    ===========    ============    ============
Supplemental cash flow information:
  Interest paid.................................    $        --    $    151,653    $    151,653
                                                    ===========    ============    ============
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                      F-19
<PAGE>   82

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

(A)  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, considered necessary for a fair presentation have been
included. Operating results for the nine-month period ended September 30, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999. For further information, refer to the Company's
consolidated financial statements for the year ended December 31, 1998 and
footnotes thereto included elsewhere in this prospectus.

(B)  ACCOUNTING FOR ORGANIZATIONAL COSTS

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities", which requires that the costs of start-up activities and
organization costs be expensed as incurred. The Company adopted the provisions
of SOP 98-5 effective January 1, 1999; the adoption had an immaterial effect on
the Company's consolidated financial statements.

(C)  EQUITY OPTIONS

During the nine months ended September 30, 1999, the Company granted 1,620
members' equity options to employees and directors with exercise prices at or
above the fair value of the underlying units at the date of grant (exercise
prices ranging from $1,118 to $2,077 per unit). In addition, the Company granted
1,321 members' equity options to outside advisors of which 482 options vested
immediately and the remainder vest over periods of up to three years. The
outside advisors' options were granted at exercise prices ranging from $1,118 to
$2,402 per unit.

For the nine months ended September 30, 1998 and 1999, the charge to operations
related to options granted to and earned by outside advisors totaled
approximately $182,000 and $1,877,000, respectively. At September 30, 1999,
unrecognized expense for options granted to outside advisors which have not
vested is approximately $1,932,000; such expense will be recognized over the
remaining vesting period and is subject to change each reporting period based
upon the fair value of the Company's members' equity units.

(D)  COMMITMENTS

On June 21, 1999, Antigenics entered into another agreement with M.D. Anderson
to conduct clinical studies. The Company is required to pay M.D. Anderson a
total of approximately $277,000 for the clinical study of approximately 40
patients and other related costs payable in installments over two years.

Under Antigenics' agreement with Sigma-Tau Farmaceutiche Riunite SpA (Sigma-Tau)
to conduct clinical studies in Italy, Sigma-Tau is required to reimburse
Antigenics for all costs incurred in relation to the clinical studies. During
1999, Antigenics incurred approximately $266,000 of costs on behalf of Sigma-
Tau associated with this agreement. This amount is included in other assets in
the accompanying consolidated balance sheet.

                                      F-20
<PAGE>   83
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(E) RELATED PARTY TRANSACTIONS

In November 1999, the Company signed a long-term lease agreement for its New
York City headquarters with an entity wholly-owned by the Company's chief
executive officer and chairman of the board. The lease expires in December 2006
and requires annual rental payments of approximately $312,000 equal to the
related party's cost.

(F) SUBSEQUENT EVENTS

  Private Placement of Members' Equity

In November 1999, the Company raised gross proceeds of approximately $39.2
million from the sale of approximately 16,327 members' equity units through a
private equity placement and incurred approximately $293,000 of private
placement expenses. As of November 29, 1999, the Company has a subscriptions
receivable of approximately $653,000 related to the private placement. Each
member participating in this private placement received a warrant to purchase an
additional 10% of the units acquired in this offering, rounded to the nearest
whole number, at a price of approximately $2,402 per unit. The warrants expire
September 30, 2002. The warrants permit conversion on a net exercise basis upon
the completion of an initial public offering (IPO) of the Company's equity. Each
member participating in this private placement also received registration rights
in the event of an IPO.

  Initial Public Offering

In November 1999, the Company created a subsidiary, Antigenics Inc. in
contemplation of the Company's IPO. The board of directors of Antigenics Inc.
authorized the filing of a registration statement with the Securities and
Exchange Commission (SEC) to sell shares of its common stock in connection with
the proposed IPO. Concurrently with the completion of the IPO, the Company will
be converted from a limited liability company to a corporation through a merger
with and into Antigenics Inc. All members will exchange their respective member
interests for shares of common stock in Antigenics Inc. If the IPO is not
completed, the conversion to the corporation will not take place.

  Adoption of Employee Stock Purchase Plan

In connection with the proposed IPO, the board of directors of Antigenics Inc.
approved an employee stock purchase plan. Under the plan, employees may purchase
shares of common stock at a discount from fair market value. There are 300,000
shares of common stock reserved for issuance under the purchase plan. The
purchase plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Internal Revenue Code of 1986, as amended.
Rights to purchase common stock under the purchase plan are granted at the
discretion of the compensation committee, which determines the frequency and
duration of individual offerings under the plan and the dates when stock may be
purchased. Eligible employees participate voluntarily and may withdraw from any
offering at any time before stock is purchased. Participation terminates
automatically upon termination of employment. The purchase price per share of
common stock in an offering will not be less than 85% of the lesser of its fair
market value at the beginning of the offering period or on the applicable
exercise date and may be paid through payroll deductions, periodic lump sum
payments or a combination of both. The plan terminates on November 15, 2009.

                                      F-21
<PAGE>   84
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Adoption of Equity Incentive Plan

In connection with the proposed IPO, the board of directors of Antigenics Inc.
approved an employee equity incentive plan. Antigenics' equity incentive plan
authorizes the grant of incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, and nonqualified stock
options for the purchase of an aggregate of 4,500,000 shares (subject to
adjustment for stock splits and similar capital changes) of common stock to
Antigenics' employees and, in the case of non-qualified stock options, to
consultants and directors of Antigenics Inc. or any affiliate, as defined in the
equity plan. The board of directors has appointed the compensation committee to
administer the equity plan. Members' equity options outstanding under the
Company's current equity-based incentive compensation plan will be exchanged for
stock options under the new equity incentive plan at the closing of the IPO.

(G) PRO FORMA INCOME TAX PROVISION

The Company is not subject to income taxes and therefore does not provide for
income taxes in its consolidated financial statements. Had the Company been
organized as a tax paying entity for the nine-month period ended September 30,
1999, there would be no pro forma income tax provision because of a loss before
income taxes and the need to recognize a valuation allowance on all gross
deferred tax assets. Given the Company's past history of incurring operating
losses, management believes that it is more likely than not that any deferred
tax assets will not be realized.

                                      F-22
<PAGE>   85

                                                 SHARES

                                ANTIGENICS INC.

                                  COMMON STOCK

                           [LOGO OF ANTIGENICS INC.]

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

                                   PROSPECTUS

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


Until                2000, 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.

                           U.S. Bancorp Piper Jaffray

                               Robertson Stephens

                                            , 2000
<PAGE>   86

                                    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 common stock being registered. All amounts are estimates except the
registration fee and the NASD filing fee.

<TABLE>
<CAPTION>
                                                                 AMOUNT
                                                                 TO BE
                                                                  PAID
                                                                --------
<S>                                                             <C>
Registration fee............................................    $ 12,788
NASD filing fee.............................................       5,100
Nasdaq National Market listing fee..........................       *
Printing and engraving......................................       *
Legal fees and expenses.....................................       *
Accounting fees and expenses................................     200,000
Transfer Agent fees.........................................       3,500
Miscellaneous...............................................       *
                                                                --------
          Total.............................................    $
                                                                ========
</TABLE>

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

* To be filed by amendment.

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides that a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, other than an action
by or in the right of the corporation, by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation or is or was
serving at the corporation's request as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
the action, suit or proceeding if the person acted in good faith and in a manner
the person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person's conduct was unlawful. The power to
indemnify applies to actions brought by or in the right of the corporation as
well, but only to the extent of expenses, including attorneys' fees but
excluding judgments, fines and amounts paid in settlement, actually and
reasonably incurred by the person in connection with the defense or settlement
of the action or suit. And with the further limitation that in these actions no
indemnification shall be made in the event of any adjudication of negligence or
misconduct in the performance of his duties to the corporation, unless a court
believes that in light of all the circumstances indemnification should apply.

Article V of Antigenics' By-laws provides that Antigenics shall, to the extent
legally permitted, indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding by reason of the fact that he is or was, or has agreed to become, a
director or officer of Antigenics, or is or was serving, or has agreed to serve,
at the request of Antigenics, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprises. The indemnification provided for in Article V is expressly
not exclusive of any other rights to which those seeking indemnification may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such persons.

                                      II-1
<PAGE>   87

Section 145(g) of the Delaware General Corporation Law and Article V of By-laws
of Antigenics provide that the company shall have the power to purchase and
maintain insurance on behalf of its officers, directors, employees and agents,
against any liability asserted against and incurred by such persons in any such
capacity.

Antigenics has entered into indemnification agreements with each of its
directors and executive officers and has obtained insurance covering its
directors and officers against losses and insuring Antigenics against certain of
its obligations to indemnify its directors and officers.

Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provisions shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.

Pursuant to the Delaware General Corporation Law, Section 7 of Article FIFTH of
the Certificate of Incorporation of Antigenics eliminates a director's personal
liability for monetary damages to Antigenics and its shareholders for breach of
fiduciary duty as a director, except in circumstances involving a breach of the
director's duty of loyalty to Antigenics or its shareholders, acts or omissions
not in good faith, intentional misconduct, knowing violations of the law,
self-dealing or the unlawful payment of dividends or repurchase of stock.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

We have sold and issued the following securities in the previous three years.

In 1996, we completed a private placement offering of equity interests in
Antigenics L.L.C. equal to 10.6% of the total post-offering equity interests in
the L.L.C. for an aggregate sale price of $10,600,000.

In January 1999, we completed a private placement offering of equity interests
in Antigenics L.L.C. equal to 13.8% of the total post-offering equity interests
in the L.L.C. for an aggregate sales price of $27,572,000.

In November 1999, we completed a private placement offering of (i) equity
interests in Antigenics L.L.C. equal to 13.56% of the total post-offering equity
interests in the L.L.C. and (ii) warrants to purchase equity interests in the
L.L.C. equal to 1.36% of the total post-offering equity interests in the L.L.C.
The equity interests and warrants were sold for an aggregate of approximately
$39,200,000.

All of the above sales of L.L.C. equity interests were made in reliance on the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended, as transactions not involving a public offering.

We have from time to time granted options to purchase equity interests in
Antigenics L.L.C. These options have a weighted average exercise price of
per one percent equity interest in the L.L.C. and are, in the aggregate,
exercisable for      % of the total equity interests in the L.L.C. assuming all
of these options are exercised. The options were issued in reliance upon
exemptions from registration pursuant to either Section 4(2) of the Securities
Act of 1933, as amended, or Rule 701 promulgated under the Securities Act of
1933, as amended.

Concurrently with the closing of this offering, the registrant will merge with
Antigenics, L.L.C. Members of the L.L.C. will receive shares of the registrant's
common stock in exchange for their equity interests at a rate of
shares per percentage equity interest, for an aggregate of approximately
          shares of common stock. The issuance of the registrant's common stock
upon contribution of the equity interests

                                      II-2
<PAGE>   88

in the L.L.C. will be made in reliance on the exemption from registration under
Section 4(2) of the Securities Act of 1933 and Rule 506 thereunder as a
transaction not involving a public offering.

The registrant retained two placement agents in connection with the November
1999 private placement who received aggregate compensation of $217,769 in cash
and $76,298 in members' equity for their services. There were no underwriters
employed in connection with any of the other transactions set forth in Item 15.

For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Relationships and Related Transactions" in the form of prospectus included
herein.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)  Exhibits

     See the Exhibit Index, which is incorporated herein by reference.

     (b)  Financial Statement Schedules

     None.

Schedules not listed above have been omitted because the information required to
be set forth therein is not applicable or is shown in the consolidated financial
statements or notes thereto.

ITEM 17.  UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions referenced in Item 14 of this Registration
Statement 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 to provide to the underwriter at
the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

The undersigned registrant hereby undertakes that:

     (1)  For purposes of determining any liability under the Securities Act,
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 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,
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-3
<PAGE>   89
                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Town of Woburn,
Commonwealth of Massachusetts, on November 30, 1999.

                                          ANTIGENICS INC.

                                          By: /s/ GARO ARMEN
                                            ------------------------------------
                                              Garo H. Armen
                                              Chief Executive Officer and
                                              Chairman of the Board of Directors

                               POWER OF ATTORNEY

We, the undersigned officers and directors of Antigenics Inc., hereby severally
constitute and appoint Garo H. Armen, Ph.D. and Edward Brodsky, and each of them
singly, our true and lawful attorneys-in-fact, with full power to them in any
and all capacities, to sign any amendments to this Registration Statement, and
any related Rule 462(b) registration statement or amendment thereto, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact may do or cause to be done by virtue hereof.

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

<TABLE>
<CAPTION>
SIGNATURE                                                       TITLE                      DATE
---------                                                       -----                      ----
<S>                                                  <C>                             <C>
/s/ GARO ARMEN                                       Chief Executive Officer and     November 30, 1999
---------------------------------------------------    Chairman of the Board of
Garo Armen, Ph.D.                                      Directors (Principal
                                                       Executive Officer and
                                                       Principal Financial and
                                                       Accounting Officer)

/s/ PRAMOD SRIVASTAVA                                Director                        November 30, 1999
---------------------------------------------------
Pramod Srivastava, Ph.D.

/s/ NOUBAR AFEYAN                                    Director                        November 30, 1999
---------------------------------------------------
Noubar Afeyan, Ph.D.

/s/ EDWARD BRODSKY                                   Director                        November 30, 1999
---------------------------------------------------
Edward Brodsky

/s/ GAMIL DE CHADAREVIAN                             Director                        November 30, 1999
---------------------------------------------------
Gamil de Chadarevian

/s/ TOM DECHAENE                                     Director                        November 30, 1999
---------------------------------------------------
Tom Dechaene

/s/ DONALD PANOZ                                     Director                        November 30, 1999
---------------------------------------------------
Donald Panoz

/s/ MARTIN TAYLOR                                    Director                        November 30, 1999
---------------------------------------------------
Martin Taylor
</TABLE>

                                      II-4
<PAGE>   90

                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                      DESCRIPTION OF DOCUMENT
-------                     -----------------------
<C>       <S>
  1.1+    Form of Underwriting Agreement.
  2.1+    Form of Agreement and Plan of Merger of Antigenics Inc. and
          Antigenics L.L.C.(1)
  3.1     Certificate of Incorporation of Antigenics Inc.
  3.2     By-laws of Antigenics Inc.
  4.1     Form of Common Stock Certificate.
  4.2+    Form of Warrant to purchase interests, together with a list
          of holders.
  5.1+    Opinion of Palmer & Dodge LLP.
 10.1*    1999 Equity Incentive Plan.
 10.2*    1999 Employee Stock Purchase Plan.
 10.3     Founding Scientist's Agreement between Antigenics and Pramod
          K. Srivastava dated March 28, 1995.
 10.4     Form of Indemnification Agreement between Antigenics and its
          directors and executive officers. These agreements are
          materially different only as to the signatories and the
          dates of execution.
 10.5     Lease Agreement between Antigenics and Cummings Property
          Management, Inc. dated May 28, 1998, as amended on December
          10, 1998.
 10.6     License Agreement between GHA Management Corporation and
          Antigenics dated November 12, 1999.
 10.7     Master Loan and Security Agreement between Antigenics and
          Finova Technology Finance, Inc. dated November 19, 1998.
          (Schedules have been omitted but will be furnished to the
          Commission upon its request).
 10.8     Patent License Agreement between Antigenics and Mount Sinai
          School of Medicine dated November 1, 1994, as amended on
          June 5, 1995.(2)
 10.9     Sponsored Research and Technology License Agreement between
          Antigenics and Fordham University dated March 28, 1995, as
          amended on March 22, 1996.(2)
 10.10    Research Agreement between Antigenics and The University of
          Connecticut Health Center dated February 18, 1998.(2)
 10.11    License Agreement between Antigenics and Duke University
          dated March 4, 1999.(2)
 10.12    License Agreement between Antigenics and University of Miami
          dated April 12, 1999.(2)
 10.13    Letter Agreement between Antigenics and Sigma-Tau Industrie
          Farmaceutiche Riunite SpA dated June 3, 1998.(2)
 10.14    Letter Agreement between Antigenics and Medison Pharma Ltd.
          dated November 15, 1999.(2)
 10.15+   Amendment to Letter Agreement between Antigenics and
          Sigma-Tau Industrie Farmaceutiche Riunite SpA dated October
          20, 1999.
 10.16*   Employment Agreement between Antigenics and Elma Hawkins,
          Ph.D. dated June 1, 1998.
 10.17+*  Antigenics 401(k) Plan.
 23.1     Consent of KPMG LLP.
 23.2+    Consent of Palmer & Dodge LLP. Included in the opinion to be
          filed by amendment as Exhibit 5.1.
 24.1     Power of Attorney. Included on signature page hereto.
 27.1     Financial Data Schedule (available in EDGAR format only).
</TABLE>

---------------------------------------------
 * Indicates a management contract or compensatory plan.

(1)As proposed to be filed with the Secretary of State of the State of Delaware
   concurrently with the closing of the offering.

(2)This Exhibit has been filed separately with the Commission pursuant to an
   application for confidential treatment. The confidential portions of this
   Exhibit have been omitted and are marked by an asterisk.

+ To be filed by amendment.
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1

   AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 30, 1999

                                            REGISTRATION NO. 333-
================================================================================

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM S-1

                             REGISTRATION STATEMENT
                                     UNDER
                           THE SECURITIES ACT OF 1933

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

                                ANTIGENICS INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE                             2836                            06-1562417
   (STATE OR OTHER JURISDICTION       (PRIMARY STANDARD INDUSTRIAL             (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)     CLASSIFICATION CODE NUMBER)           IDENTIFICATION NUMBER)
630 FIFTH AVENUE, SUITE 2100
                            NEW YORK, NEW YORK 10111
                                 (212) 332-4774
         (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
            AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

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

                              GARO H. ARMEN, PH.D.
                            CHIEF EXECUTIVE OFFICER
                                ANTIGENICS INC.
                          630 FIFTH AVENUE, SUITE 2100
                            NEW YORK, NEW YORK 10111
                                 (212) 332-4774
           (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
                   INCLUDING AREA CODE, OF AGENT FOR SERVICE)

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

                                   COPIES TO:
MICHAEL LYTTON, ESQ.                               DANIELLE CARBONE, ESQ.
                PAUL KINSELLA, ESQ.                                 SHEARMAN & STERLING
                PALMER & DODGE LLP                                 599 LEXINGTON AVENUE
                 ONE BEACON STREET                               NEW YORK, NEW YORK 10022
            BOSTON, MASSACHUSETTS 02108                               (212) 848-4000
                  (617) 573-0100
------------------------

    APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

    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 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 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 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,
check the following box.  [ ]

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

                        CALCULATION OF REGISTRATION FEE
============================================================================================================
                                                                 PROPOSED MAXIMUM
TITLE OF EACH CLASS OF                                          AGGREGATE OFFERING          AMOUNT OF
SECURITIES TO BE REGISTERED                                          PRICE(1)            REGISTRATION FEE
------------------------------------------------------------------------------------------------------------
Common Stock, $.01 par value per share......................       $46,000,000               $12,788
============================================================================================================
(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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.

================================================================================
2

     THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE
     MAY NOT SELL THESE SECURITIES UNTIL THE SECURITIES AND EXCHANGE COMMISSION
     DECLARES OUR REGISTRATION STATEMENT EFFECTIVE. THIS PROSPECTUS IS NOT AN
     OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO BUY THESE
     SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.

                 SUBJECT TO COMPLETION, DATED NOVEMBER 30, 1999

 PRELIMINARY PROSPECTUS

             SHARES

 ANTIGENICS INC.                                                          [LOGO]

 COMMON STOCK

 $       PER SHARE

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

-  Antigenics Inc. is offering        shares of its common stock.

-  We anticipate that the initial public offering price will be between $
   and $     per share.

-  This is a firm commitment initial public offering and no public market
   currently exists for our shares.

-  Proposed trading symbol: Nasdaq
   National Market - AGEN

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

 THIS INVESTMENT INVOLVES RISKS.  SEE "RISK FACTORS" BEGINNING ON PAGE 8.

================================================================================
PER SHARE       TOTAL
                                                                ---------    -----------
Public offering price.......................................   $           $
  Underwriting discount.......................................   $           $
  Proceeds to Antigenics......................................   $           $
================================================================================

 The underwriters have a 30-day option to purchase up to
 additional shares of common stock from us to cover over-allotments, if any.

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

 U.S. BANCORP PIPER JAFFRAY                                   ROBERTSON STEPHENS

               THE DATE OF THIS PROSPECTUS IS             , 2000.
3

                         [PICTURE OF VIAL OF ONCOPHAGE]
4

                               TABLE OF CONTENTS
PAGE
                                                                ----
Summary.....................................................      4
Risk Factors................................................      8
Use of Proceeds.............................................     19
Dividend Policy.............................................     19
Forward-Looking Statements..................................     20
Capitalization..............................................     21
Dilution....................................................     22
Selected Consolidated Financial Data........................     23
Management's Discussion and Analysis of Financial Condition
  and Results of Operations.................................     25
Business....................................................     31
Management..................................................     48
Certain Relationships and Related Transactions..............     54
Principal Stockholders......................................     55
Description of Capital Stock................................     56
Shares Eligible For Future Sale.............................     58
Underwriting................................................     59
Legal Matters...............................................     60
Experts.....................................................     60
Where You Can Find More Information.........................     60
Index To Consolidated Financial Statements..................    F-1
----------------------

You should rely only on the information contained in this prospectus. We have
not, and the underwriters have not, authorized any other person to provide you
with different information. This prospectus is not an offer to sell, nor is it
seeking an offer to buy, the securities in any state where the offer or sale is
not permitted. The information in this prospectus is complete and accurate as of
the date in the front cover, but the information may have changed since that
date.

In this prospectus, Antigenics Inc., together with Antigenics L.L.C., is
referred to as "we," "us" or "Antigenics," unless the context indicates
otherwise.

                                        3
5

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

                                    SUMMARY

The items in the following summary are described in more detail later in this
prospectus. This summary provides an overview of selected information and does
not contain all the information you should consider. Therefore, you should also
read the more detailed information set out in this prospectus, including the
financial information. Except as set forth in the consolidated financial
statements or as otherwise specified in this prospectus, all information in this
prospectus gives effect to:

      -     the $39.2 million private placement completed in November 1999; and

      -     the change from a limited liability company to a corporation which
            will occur concurrently with this offering.

In addition, unless otherwise stated, all information in this prospectus assumes
no exercise of the underwriters' over-allotment option.

BUSINESS OF ANTIGENICS

Antigenics is engaged in the discovery and development of a family of novel
immunotherapeutics for the treatment of life threatening and chronic medical
conditions. Immunotherapeutics are drugs that work by modulating the immune
system to fight disease. We are currently evaluating our lead immunotherapeutic,
Oncophage, in six separate phase II or phase I/II clinical trials in four
different cancers, and we expect to start a pivotal phase III trial by mid-2000.
We are also developing immunotherapeutics to treat infectious diseases, such as
genital herpes, and autoimmune disorders, such as diabetes and multiple
sclerosis. Based upon our scientific and drug development skills, our technology
platform and our strategic expertise, we intend to become a leader in drug
discovery, development and commercialization.

Our immunotherapeutics are based on a specific class of proteins known as heat
shock proteins. Heat shock proteins are present in all cells throughout the body
and published research suggests that they play a central role in the generation
of immune responses. We believe that when we inject our heat shock protein-based
immunotherapeutics into patients, they elicit a powerful immune response. We
believe this immune response is capable of systemically targeting and killing
cancers or other diseased cells from which the specific heat shock proteins were
derived.

We believe our heat shock protein technology can be used broadly for the
treatment of a wide variety of diseases. Each of our heat shock protein-based
immunotherapeutics includes a heat shock protein that is constant and a
repertoire of peptides that varies depending on the target disease. For diseases
such as cancer, which vary among individuals, we use heat shock protein-peptide
complexes derived from a patient's own cancer and therefore our
immunotherapeutics are patient-specific, or autologous. For each infectious
disease which is generally caused by a common pathogen, we intend to produce a
disease-specific immunotherapeutic using that same common pathogen. Our heat
shock protein technology has been shown to stimulate the immune system to treat
cancers in a wide range of preclinical studies. In addition, over one dozen
scientific institutions world-wide have independently confirmed various aspects
of our technology platform.

Our lead immunotherapeutic, Oncophage, consists of purified, patient-specific
heat shock protein-peptide complexes and is designed to elicit an immune
response to a patient's cancer. The manufacturing process for Oncophage begins
when a patient's tumor is surgically removed and shipped frozen by overnight
courier to our manufacturing facility. Using our proprietary methods, we purify
Oncophage from the tumor tissue in a process that takes less than 10 hours. We
then ship Oncophage frozen to the hospital for administration to the patient. A
patient is initially injected with Oncophage four to six weeks after surgery.
The typical course of treatment involves a series of injections into the skin
once per week for four to six weeks.

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

                                        4
6
--------------------------------------------------------------------------------

To date, we have treated approximately 140 advanced stage cancer patients with
Oncophage in our clinical trial programs. We have initially targeted cancers for
which there are limited or no treatment alternatives and tumor types and stages
of disease that involve resectable tumors. Further, we have targeted cancers and
stages of disease that we believe can be evaluated in clinical trials with near
term endpoints to permit rapid and efficient completion of clinical trials and
submission of regulatory filings. We are currently conducting separate phase II
or phase I/II clinical trials with Oncophage for the treatment of:

      -     renal cell carcinoma, a type of kidney cancer;

      -     metastatic melanoma, a type of skin cancer;

      -     colorectal cancer, or cancer of the colon and rectum; and

      -     gastric cancer, or stomach cancer.

In addition, we are planning to start phase II clinical trials evaluating
Oncophage as a treatment for sarcoma, a type of soft tissue cancer, and low
grade indolent non-Hodgkin's lymphoma, a type of cancer that originates in the
lymph tissue. We also expect to begin a pivotal phase III trial for Oncophage as
a treatment for renal cell carcinoma by mid-2000.

Preliminary results from our completed and ongoing clinical trials indicate that
Oncophage is generally safe and well tolerated. These results also demonstrate
preliminary indications of clinical benefit in a number of patients. For
example, in renal cell carcinoma, we have shown that Oncophage has achieved a
response rate, a common measure of clinical benefit, comparable to that of the
existing approved treatment without the significant side effects associated with
that treatment. We have also shown that in all patients who responded
clinically, the number of immune cells increased after treatment with Oncophage.
Moreover, we have shown that we can manufacture Oncophage consistently and in
sufficient quantities from most tumor types.

In addition to cancer, we believe our heat shock protein derived
immunotherapeutics may be effective in treating various infectious diseases and
autoimmune disorders. Our immunotherapeutics for treating infectious diseases
will consist of heat shock proteins complexed to peptides that are produced by
disease-causing pathogens. We have targeted genital herpes as our first
infectious disease indication and are conducting preclinical studies. We
anticipate filing an Investigational New Drug Application, or IND, with the
United States Food and Drug Administration, or FDA, for genital herpes in 2000.

We are also researching the applicability of heat shock proteins to treat
autoimmune disorders like diabetes and multiple sclerosis. We have demonstrated
in a number of animal models that heat shock proteins administered in high doses
can turn off the misguided immune responses responsible for several autoimmune
disorders.

OFFICE LOCATION

Our principal operations are located in Woburn, Massachusetts and our executive
offices are located in New York, New York. The address for our executive offices
is 630 Fifth Avenue, Suite 2100, New York, New York 10111 and our telephone
number is (212) 332-4774.

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

                                        5
7
--------------------------------------------------------------------------------

THE OFFERING

Common stock offered by us..........                 shares

Common stock outstanding after this
  offering..........................                 shares. This number
                                           excludes           shares of common
                                           stock issuable upon exercise of
                                           options outstanding at             ,
                                           1999, with a weighted average
                                           exercise price of $          per
                                           share and           shares issuable
                                           upon exercise of warrants outstanding
                                           at             , 1999, with an
                                           exercise price of $          per
                                           share.

Offering price......................       $          per share

Use of proceeds.....................       To fund clinical trials; to fund
                                           research and development of our
                                           immunotherapeutics; to increase our
                                           manufacturing capacity; and for
                                           general corporate purposes.

                                           You should read our discussion under
                                           "Use of Proceeds."

Proposed Nasdaq National Market
  symbol............................       AGEN

CORPORATE BACKGROUND AND MERGER

Our business was formed in March 1994. We currently operate as a limited
liability company, Antigenics L.L.C. Concurrently with the completion of this
offering, Antigenics L.L.C. will change its structure from a limited liability
company to a corporation. This change will occur by merging Antigenics L.L.C.
with and into Antigenics Inc., a newly formed Delaware corporation. Membership
units, options and warrants in Antigenics L.L.C. will be exchanged in the merger
for shares of Antigenics Inc. common stock and options and warrants exercisable
for shares of Antigenics Inc. common stock.

This prospectus contains our trademark, Oncophage(R). Each trademark, trade name
or service mark of any other company appearing in this prospectus belongs to its
holder.

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

                                        6
8
--------------------------------------------------------------------------------

SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
PERIOD FROM                                                                          PERIOD FROM
                              MARCH 31, 1994                                                                       MARCH 31, 1994
                                 (DATE OF                                                  NINE MONTHS ENDED          (DATE OF
                              INCEPTION) TO           YEAR ENDED DECEMBER 31,                SEPTEMBER 30,         INCEPTION) TO
                               DECEMBER 31,    -------------------------------------   -------------------------   SEPTEMBER 30,
                                   1994         1995      1996      1997      1998        1998          1999            1999
                              --------------   -------   -------   -------   -------   -----------   -----------   --------------
                                                                                       (UNAUDITED)   (UNAUDITED)    (UNAUDITED)
CONSOLIDATED STATEMENT OF
  OPERATIONS DATA:
  Revenue...................      $  --        $    --   $    --   $    --   $    --     $    --      $     --        $     --
  Operating expenses:
    Research and
      development...........       (112)          (742)   (1,569)   (2,548)   (5,908)     (4,072)       (6,926)        (17,806)
    General and
      administrative........        (56)        (2,453)   (1,042)   (1,375)   (2,735)     (1,823)       (3,825)        (11,486)
    Depreciation and
      amortization..........        (15)           (40)      (79)     (202)     (360)       (273)         (726)         (1,422)
                                  -----        -------   -------   -------   -------     -------      --------        --------
  Loss from operations......       (183)        (3,235)   (2,690)   (4,125)   (9,003)     (6,168)      (11,477)        (30,714)
  Interest income, net......         --              8       281       481       736         580           489           1,996
  Non-operating income......         --             --       250        --        --          --            --             250
                                  -----        -------   -------   -------   -------     -------      --------        --------
  Net loss(1)...............      $(183)       $(3,227)  $(2,159)  $(3,644)  $(8,267)    $(5,588)     $(10,988)       $(28,468)
                                  =====        =======   =======   =======   =======     =======      ========        ========
UNAUDITED PRO FORMA
  CONSOLIDATED STATEMENT OF
  OPERATIONS DATA:
  Pro forma net loss(2).....
  Pro forma net loss per
    common share, basic and
    diluted(2)..............
  Pro forma weighted average
    shares outstanding,
    basic and diluted(2)....
AS OF DECEMBER 31,                    AS OF SEPTEMBER 30, 1999
                                         ----------------------------    ----------------------------------------------
                                                                                                           PRO FORMA,
                                          1996      1997       1998      HISTORICAL     PRO FORMA(3)     AS ADJUSTED(4)
                                         ------    -------    -------    -----------    -------------    --------------
                                                                         (UNAUDITED)     (UNAUDITED)      (UNAUDITED)
CONSOLIDATED BALANCE SHEET DATA:
  Cash and cash equivalents............  $9,588    $13,086    $22,168      $12,612         $50,882           $
  Total current assets.................   9,639     13,246     22,447       13,226          51,496
  Total assets.........................  10,041     14,090     26,636       21,280          59,550
  Total current liabilities............     883        878      2,285        2,170           2,170
  Long-term liabilities, less current
    portion............................      --         --        709        2,368           2,368
  Members' equity/stockholders'
    equity.............................   9,158     13,212     23,641       16,742          55,012
---------------------------------------------

(1)Since we have operated historically as a limited liability company, in
   accordance with federal, state and local income tax regulations which provide
   that no income taxes are levied on United States limited liability companies
   and each member of the company is individually responsible for reporting the
   member's share of our net income or loss, we do not provide for income taxes
   in our consolidated financial statements.

(2)The pro forma consolidated statements of operations data give effect to the
   change from a limited liability company to a corporation as though this event
   occurred as of January 1, 1998. Each unit of members' equity outstanding will
   be exchanged for       shares of common stock. The pro forma consolidated
   statements of operations data are unaudited and reflect adjustments which are
   necessary, in our management's opinion, for a fair presentation of our
   consolidated results of operations on a pro forma basis. Pro forma weighted
   average shares outstanding used for computing pro forma diluted loss per
   common share are the same as those used for computing pro forma basic loss
   per common share because our options are not included in the calculation
   since the inclusion of such potential common shares would be antidilutive.

(3)The pro forma consolidated balance sheet data give effect to the unaudited
   pro forma adjustments as described in footnote (2) and the $39.2 million
   private placement completed in November 1999 as though these events occurred
   as of September 30, 1999. Pro forma cash and cash equivalents and
   stockholders' equity do not include $653,000 in subscriptions receivable and
   $293,000 of private placement expenses.

(4)The pro forma as adjusted consolidated balance sheet data give effect to the
   unaudited pro forma adjustments as described in footnote (3) and are adjusted
   to reflect the issuance of         shares of common stock at $        per
   share, after deducting our estimated offering expenses and the underwriting
   discount, as though these events occurred as of September 30, 1999.

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

                                        7
9

                                  RISK FACTORS

You should carefully consider the following risk factors before you decide to
buy our common stock. If any of these risks actually occur, our business,
financial condition, operating results or cash flows could be materially
adversely affected. This could cause the trading price of our common stock to
decline, and you may lose part or all of your investment.

                         RISKS RELATED TO OUR BUSINESS

WE DO NOT CURRENTLY GENERATE ANY REVENUE, AND WE CANNOT GUARANTEE THAT WE WILL
EVER COMMERCIALIZE ANY OF OUR IMMUNOTHERAPEUTICS AND GENERATE REVENUE IN THE
FUTURE.

  WE MUST RECEIVE SEPARATE REGULATORY APPROVAL FOR EACH OF OUR
  IMMUNOTHERAPEUTICS IN EACH INDICATION BEFORE THEY CAN BE SOLD COMMERCIALLY IN
  THE UNITED STATES OR INTERNATIONALLY.

To obtain regulatory approvals, we must, among other requirements, complete
clinical trials demonstrating that a particular immunotherapeutic is safe and
effective. Because Oncophage is our only immunotherapeutic in clinical trials,
any delays or difficulties we encounter in these clinical trials may have a
significant adverse impact on our operations and cause our stock price to
decline significantly. We have limited clinical data. Future clinical trials may
not show that Oncophage is safe and effective. In addition, our clinical trials
of Oncophage might be delayed or halted for various reasons, including:

      -     Oncophage may not appear to be more effective than current
            therapies;

      -     Oncophage may have unforeseen adverse side effects;

      -     the time required to determine efficacy may be longer than expected;

      -     patients may die during a clinical trial because their disease is
            too advanced or because they experience medical problems that may
            not be related to Oncophage;

      -     sufficient number of patients may not enroll in the trials; or

      -     we may not be able to produce sufficient quantities of Oncophage to
            complete the trials.

We rely on third party clinical investigators to conduct our clinical trials. As
a result, we may encounter delays outside of our control.

The process of obtaining and maintaining regulatory approvals for new
therapeutic products is lengthy, expensive and uncertain. It also can vary
substantially, based on the type, complexity and novelty of the product
involved. To date, the FDA and foreign regulatory agencies have approved only a
limited number of cancer immunotherapeutics for commercial sale. Furthermore,
the FDA and foreign regulatory agencies have relatively little experience with
autologous therapies. This lack of experience may lengthen the regulatory review
process for Oncophage, increase our development costs and delay
commercialization. In addition, problems encountered with other companies'
immunotherapeutic products may slow the regulatory approval for our
immunotherapeutics. The FDA may not consider Oncophage to be an appropriate
candidate for fast track designation should we choose to seek it. Accordingly,
Oncophage or any of our other future drug candidates could take a significantly
longer time to gain regulatory approval than we expect or may never gain
approval.

  BECAUSE DEVELOPMENT OF OUR IMMUNOTHERAPEUTICS FOR INFECTIOUS DISEASES AND
  AUTOIMMUNE DISORDERS WILL INVOLVE A LENGTHY AND COMPLEX PROCESS, WE ARE NOT
  CERTAIN WE WILL BE ABLE TO DEVELOP ANY MARKETABLE IMMUNOTHERAPEUTICS FOR THESE
  INDICATIONS.

We have not completed the preclinical development of our immunotherapeutics for
any infectious disease or autoimmune disorder. We will need to conduct extensive
additional research, preclinical and clinical testing of these
immunotherapeutics prior to commercialization. This development process takes
several years and often fails to yield commercial products. For example,
regulatory authorities may not permit

                                        8
10

human testing of these immunotherapeutics and, even if human testing is
permitted, the subsequent clinical trials may not demonstrate that an
immunotherapeutic is safe and effective.

  EVEN IF SOME OF OUR IMMUNOTHERAPEUTICS RECEIVE REGULATORY APPROVAL, THOSE
  IMMUNOTHERAPEUTICS MAY STILL FACE SUBSEQUENT REGULATORY DIFFICULTIES.

If we receive regulatory approval to sell any of our immunotherapeutics, the FDA
or a comparable foreign regulatory agency may, nevertheless, limit the indicated
uses of that immunotherapeutic. In addition, a marketed product, its
manufacturer and the manufacturer's facilities are subject to continual review
and periodic inspections by regulatory agencies. Furthermore, the FDA and
foreign regulatory agencies may require expensive post-approval trials. The
discovery of previously unknown problems with a product, manufacturer or
facility can result in restrictions on the product or manufacturer, including
withdrawal of the product from the market. The failure to comply with applicable
regulatory approval requirements can, among other things, result in:

      -     warning letters;

      -     fines and other civil penalties;

      -     suspended regulatory approvals;

      -     refusal to approve pending applications or supplements to approved
            applications;

      -     refusal to permit exports from the United States;

      -     product recalls;

      -     seizure of products;

      -     injunctions;

      -     operating restrictions;

      -     total or partial suspension of production; and/or

      -     criminal prosecution.

WE MAY ENCOUNTER MANUFACTURING PROBLEMS THAT LIMIT OUR ABILITY TO SUCCESSFULLY
COMMERCIALIZE OUR IMMUNOTHERAPEUTICS.

  IF WE ARE UNABLE TO PURIFY HEAT SHOCK PROTEINS FROM SOME CANCER TYPES, THE
  SIZE OF OUR POTENTIAL MARKET WOULD DECREASE.

Our ability to successfully commercialize an immunotherapeutic for a particular
cancer type depends on our ability to purify heat shock proteins taken from that
type of cancer. Based on our clinical trials conducted to date, in renal cell
carcinoma, we have been able to manufacture Oncophage from 98% of the tumors
delivered to our manufacturing facility; for melanoma, 90%; for colorectal
carcinoma, 100%; for gastric cancer, 71%; and for pancreatic cancer, 30%. The
relatively low rate for pancreatic cancer is due to the abundance of proteases
in pancreatic tissue. Proteases are enzymes that break down proteins. These
proteases degrade the heat shock proteins during the purification process. We
may encounter this problem or similar problems with other types of cancers as we
expand our research. If these problems cannot be overcome, the number of cancer
types that our immunotherapeutics could treat would be limited.

  DELAYS IN OBTAINING REGULATORY APPROVAL OF OUR MANUFACTURING FACILITY AND
  DISRUPTIONS IN OUR MANUFACTURING PROCESS MAY DELAY OR DISRUPT OUR
  COMMERCIALIZATION EFFORTS.

Before we can begin commercially manufacturing our immunotherapeutics, we must
obtain regulatory approval of our manufacturing facility and process.
Manufacturing of our immunotherapeutics must

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11

comply with the FDA's current Good Manufacturing Practices requirements,
commonly known as cGMP, and foreign regulatory requirements. The cGMP
requirements govern quality control and documentation policies and procedures.
In complying with cGMP and foreign regulatory requirements, we will be obligated
to expend time, money and effort in production, recordkeeping and quality
control to assure that the product meets applicable specifications and other
requirements. Failure to comply with these requirements would subject us to
possible regulatory action and may limit the jurisdictions in which we are
permitted to sell our immunotherapeutics.

We recently transitioned the manufacturing of Oncophage from our facility in
Framingham, Massachusetts to our new facility in Woburn, Massachusetts. We have
limited manufacturing experience in this facility and unforeseen circumstances
may cause delays or disruptions in our manufacturing process. This facility will
be continuously subject to inspection by the FDA, The Commonwealth of
Massachusetts and foreign regulatory authorities. Preparing this facility for
commercial manufacturing may take longer than planned and the costs of complying
with FDA regulations may be higher than those which we have budgeted. In
addition, any material changes we make to the manufacturing process may require
approval by the FDA, The Commonwealth of Massachusetts or foreign regulatory
authorities. Obtaining these approvals could take longer than expected and could
disrupt our manufacturing process.

We are the only manufacturer of our immunotherapeutics. For the next several
years, we expect that all of our manufacturing will take place in our facility
in Woburn, Massachusetts. If this facility or the equipment in the facility is
significantly damaged or destroyed, we will not be able to quickly or
inexpensively replace our manufacturing capacity. Due to the nature of our
immunotherapeutics, a third party may not be able to manufacture our
immunotherapeutics.

We have no experience manufacturing Oncophage in the volumes that will be
necessary to support large clinical trials or commercial sales. Our present
manufacturing process may not meet our initial expectations as to:

      -     scheduling;

      -     reproducibility;

      -     yields;

      -     purity;

      -     costs;

      -     potency;

      -     quality; and

      -     other measurements of performance.

In addition, we have not demonstrated the ability to manufacture our
immunotherapeutics other than Oncophage in quantities sufficient for any
clinical trials.

IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY, TRADE SECRETS OR
KNOW-HOW, WE MAY NOT BE ABLE TO OPERATE OUR BUSINESS PROFITABLY.

  IF WE FAIL TO SUSTAIN AND FURTHER BUILD OUR INTELLECTUAL PROPERTY RIGHTS,
  COMPETITORS WILL BE ABLE TO TAKE ADVANTAGE OF OUR RESEARCH AND DEVELOPMENT
  EFFORTS TO DEVELOP COMPETING THERAPIES.

Our success will depend, in part, on our ability to maintain protection for our
products and technologies under the patent laws of the United States and other
countries, so that we can stop others from using our inventions. Our success
also will depend on our ability to prevent others from using our trade secrets.
In addition, we must operate in a way that does not infringe, or violate, the
intellectual property rights of other parties.

                                       10
12

We have exclusive rights to seven issued U.S. patents, and foreign counterpart
patents and patent applications, relating to our heat shock protein technology.
Our rights to these patents are as a result of an exclusive worldwide license
with Fordham University and one with Mount Sinai School of Medicine of New York
University. In addition, we have licensed or optioned rights to 44 pending U.S.
patent applications and foreign counterpart patents and patent applications. The
standards which the U.S. Patent and Trademark Office uses to grant patents are
not always applied predictably or uniformly, and can change. Consequently, we
cannot be certain as to the type and extent of patent claims that will be issued
to us in the future. Any patents which do issue may not contain claims which
will permit us to stop competitors from using similar technology. The standards
which courts use to interpret patents are not always applied predictably or
uniformly, and can change, particularly as new technologies develop.
Consequently, we cannot be certain as to how much protection, if any, will be
given to our patents, if we attempt to enforce them and they are challenged in
court. If we choose to go to court to stop someone else from using the
inventions claimed in our patents, that individual or company has the right to
ask the court to rule that our patents are invalid and should not be enforced
against them. These lawsuits are expensive and would consume time and other
resources, even if we were successful in stopping the violation of our patents.
In addition, there is a risk that the court will decide that our patents are not
valid and that we do not have the right to stop the other party from using the
inventions. There is also the risk that, even if the validity of our patents
were upheld, the court will refuse to stop the other party on the ground that
its activities are not covered by, that is, do not infringe, the patent.

Furthermore, a third party may claim that we are using inventions covered by
their patents and may go to court to stop us from engaging in our normal
operations and activities, such as research and development and the sale of
products. Such lawsuits are expensive and would consume time and other
resources. There is a risk that a court would decide that we are violating the
third party's patents and would order us to stop the activities covered by the
patents. In addition, there is a risk that a court will order us to pay the
other party's damages for having violated their patents.

We rely on certain proprietary trade secrets and know-how that are not
patentable. We have taken measures to protect our unpatented trade secrets and
know-how, including the use of confidentiality agreements with our employees,
consultants and certain contractors. It is possible, however, that:

      -     the agreements may be breached;

      -     we would have inadequate remedies for any breach; or

      -     our trade secrets will otherwise become known or be independently
            developed or discovered by competitors.

  WE MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS
  RELATING TO PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS.

The cost to us of any litigation or other proceeding relating to intellectual
property rights, even if resolved in our favor, could be substantial. Some of
our competitors may be able to sustain the costs of complex patent litigation
more effectively than we can because of their substantially greater resources.
Uncertainties resulting from the initiation and continuation of any litigation
could have a material adverse effect on our ability to continue our operations.

Should third parties file patent applications, or be issued patents, claiming
technology also claimed by us in pending applications, we may be required to
participate in interference proceedings in the United States Patent and
Trademark Office to determine priority of invention. We, or our licensors, also
could be required to participate in interference proceedings involving our
issued patents and pending applications of another entity. An adverse outcome in
an interference proceeding could require us to cease using the technology or to
license rights from prevailing third parties. There is no guarantee that any
prevailing party would offer us a license or that any license, if made available
to us, could be acquired on commercially acceptable terms.

                                       11
13

We cannot guarantee that the practice of our technologies will not conflict with
the rights of others. We are aware of a United States patent, issued to a third
party, with claims directed to certain heat shock protein based
immunotherapeutics and their use in the field of tissue grafting. We do not
believe that our products or activities are infringing any valid claims of this
patent. We also are aware of a United States patent, issued to a different third
party, with claims directed to certain methods of making heat shock protein
products. No therapeutic methods are claimed in this patent. In any event, none
of the methods we presently use to make Oncophage are claimed in this patent.
Moreover, we do not believe that our methods of producing any of our heat shock
protein-based immunotherapeutics would infringe any valid claims of this patent.
However, we cannot guarantee that we will not be sued for infringing these, or
any other, patents. One of the patent applications licensed to us contains
claims which are substantially the same as claims in the later third party
patent. Therefore, there is a possibility that an interference will be declared.
In an interference proceeding, the party with the earliest effective filing date
has certain advantages. We believe that our claims have an earlier effective
filing date than the claims of the other patent. However, we cannot guarantee
that we would prevail in any interference proceeding that might be declared.

In some foreign jurisdictions, we could become involved in opposition
proceedings, either by opposing the validity of another's foreign patent or by
third parties opposing the validity of our foreign patents. In 1995, a European
patent, with claims directed to the use of heat shock proteins to produce or
enhance immune responses to cancer and infectious diseases, issued to the
Whitehead Institute for Biomedical Research and to the Medical Research Council.
This patent is exclusively licensed to StressGen Biotechnologies Corporation. No
attempts have been made to enforce this patent against us. Nonetheless, we are
seeking to have this patent revoked in its entirety in an opposition proceeding
in the European Patent Office. The European Patent Office has issued a
provisional, non-binding opinion that this third party patent should be revoked
in its entirety. The patent owners, in response, amended the patent claims to
exclude autologous treatment of tumors. We then argued that this third party
patent still should be revoked in its entirety. Even if the European Patent
Office changes its position and the patent is maintained with the amended
claims, we still should be free to practice our autologous cancer business in
Europe. However, the patent owners or their licensee might try to enforce the
amended patent against our infectious disease business in Europe. Any decision
to revoke the patent in its entirety, or to maintain the patent in any form, can
be appealed. It may be years before a final, non-appealable decision is reached,
during which time, the patent, with any amendments made during the opposition
proceedings, remains enforceable. Participation in the opposition proceedings
and appeals may be costly. Furthermore, if we are sued on this patent in Europe
prior to any final decision of revocation, the cost of defending ourselves could
be substantial, even if we ultimately succeed in proving that we do not infringe
any valid claims of this patent.

This European patent claims priority to a United States patent application filed
in 1988. We do not know whether this application, or any related application,
still is pending. We do not believe that any United States patent has issued
from this application and we do not know whether a United States patent will
ever issue from this patent application. If a United States patent does issue,
we do not know whether the patent will be enforceable, whether any valid claims
will cover our activities or products, or whether the patent owner will attempt
to assert the patent against us.

Earlier this year, we received correspondence from both Copernicus Therapeutics,
Inc. and its counsel alleging similarity between the companies' respective logos
and demanding that we cease using our logo. In July 1999, a response was sent to
Copernicus, stating that we have prior rights in our logo. The response to
Copernicus also stated that since the respective corporate names are vastly
different, both companies should be able to continue the use of their respective
logos without causing public confusion. At this time, no further communications
have been received from Copernicus or its counsel. Although we do not believe we
are infringing any rights owned by Copernicus, we do not know whether Copernicus
will proceed with a trademark lawsuit against us.

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14

WE ARE AN EARLY STAGE BIOTECHNOLOGY COMPANY THAT MAY NEVER BE PROFITABLE.

  IF WE INCUR OPERATING LOSSES FOR LONGER THAN WE EXPECT, WE MAY BE UNABLE TO
CONTINUE OUR OPERATIONS.

We have not generated any revenues from sales, and we do not expect to generate
significant revenues for several years. We have incurred losses since we were
formed. From inception through September 30, 1999, we have generated losses
totaling $28,468,000. We expect to incur increasing and significant losses over
the next several years as we complete our Oncophage clinical trials, apply for
regulatory approvals, continue development of our technology and expand our
operations.

Our profitability will depend on the market acceptance of any of our
immunotherapeutics that receive FDA or foreign regulatory approval. The
commercial success of any of our immunotherapeutics will depend on whether:

      -     the immunotherapeutic is more effective than alternative treatments;

      -     side effects of the immunotherapeutic are acceptable to doctors and
            patients;

      -     we produce the immunotherapeutic at a competitive price;

      -     we obtain sufficient reimbursement for the immunotherapeutic; and

      -     we have sufficient capital to market the immunotherapeutic
            effectively.

Because Oncophage is autologous, or patient specific, it may be more expensive
to manufacture than conventional therapeutic products. This increased expense
may decrease our profit margins. Furthermore, because our autologous products
are novel, some doctors and patients may be reluctant to use them.

  IF WE FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND OUR OPERATIONS, WE WILL BE
  UNABLE TO ADVANCE OUR DEVELOPMENT PROGRAMS AND COMPLETE OUR CLINICAL TRIALS.

Developing immunotherapeutics and conducting clinical trials in multiple
indications is expensive. We plan to conduct clinical trials for many different
cancer types simultaneously, which will increase our costs. We will need to
raise additional capital:

      -     to fund operations;

      -     to continue the research and development of our immunotherapeutics;
            and

      -     to commercialize our immunotherapeutics.

Additional financing may not be available on favorable terms or at all. If we
are unable to raise additional funds when we need them, we may be required to
delay, reduce or eliminate some or all of our development programs and some or
all of our clinical trials. We also may be forced to license technologies to
others that we would prefer to develop internally.

On September 30, 1999, we had $12,612,000 in cash and cash equivalents. We
believe that, with the proceeds from this offering and from the private
placement completed in November 1999, we will have sufficient capital to fund
our operations for the next two years. We may need to raise capital sooner,
however, due to a number of factors, including:

      -     an acceleration of the number, size or complexity of our clinical
            trials;

      -     slower than expected progress in developing our immunotherapeutics;

      -     higher than expected costs to obtain regulatory approvals;

      -     higher than expected costs to pursue our intellectual property
            strategy;

      -     higher than expected costs to further develop our manufacturing
            capability; and

      -     higher than expected costs to develop our sales and marketing
            capability.

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BECAUSE OF THE SPECIALIZED NATURE OF OUR BUSINESS, THE TERMINATION OF
RELATIONSHIPS WITH OUR SCIENTIFIC ADVISORS OR THE DEPARTURE OF KEY MEMBERS OF
MANAGEMENT MAY PREVENT US FROM ACHIEVING OUR OBJECTIVES.

  IF PRAMOD K. SRIVASTAVA, PH.D. SEVERS HIS RELATIONSHIP WITH ANTIGENICS, OUR
  FUTURE DEVELOPMENT EFFORTS MAY BE HINDERED.

Since our formation, Dr. Srivastava has played a significant role in our
research efforts. Dr. Srivastava is a director of our company and acts as
chairman of our scientific advisory board. In addition, nearly all of our
intellectual property is licensed from institutions at which Dr. Srivastava
has worked. We sponsor research in Dr. Srivastava's laboratory at the
University of Connecticut Health Center in exchange for the right to license
discoveries made in that laboratory with our funding. Dr. Srivastava is a
member of the faculty of the University of Connecticut School of Medicine. The
regulations and policies of the University of Connecticut Health Center govern
the relationship between a faculty member and a commercial enterprise. These
regulations and policies prohibit Dr. Srivastava from becoming an employee of
Antigenics and may be modified in the future to further limit Dr. Srivastava's
relationship with us. While Dr. Srivastava has a consulting agreement with us,
which includes financial incentives for him to remain associated with us, we
cannot guarantee that he will remain associated with us even during the time
covered by the consulting agreement. In addition, this agreement does not
restrict his ability to compete with us after his association is terminated.

  IF WE FAIL TO KEEP KEY MANAGEMENT AND SCIENTIFIC PERSONNEL, OUR ABILITY TO
  DEVELOP OUR IMMUNOTHERAPEUTICS, CONDUCT CLINICAL TRIALS AND OBTAIN FINANCING
  COULD BE ADVERSELY AFFECTED.

We are highly dependent on our senior management and scientific staff,
particularly Garo H. Armen, Ph.D., our chairman and chief executive officer, and
Gamil G. de Chadarevian, our vice chairman and executive vice president,
international. The competition for qualified personnel in the biotechnology
field is intense, and we rely heavily on our ability to attract and retain
qualified scientific, technical and managerial personnel. Since our
manufacturing process is unique, our manufacturing and quality control personnel
are also very important.

THE COMMERCIAL SUCCESS OF ANY OF OUR IMMUNOTHERAPEUTICS WILL DEPEND UPON THE
STRENGTH OF THE SALES AND MARKETING EFFORT AND THE AVAILABILITY OF THIRD PARTY
REIMBURSEMENT.

  IF WE ARE UNABLE TO ESTABLISH SALES AND MARKETING CAPABILITIES OR ENTER INTO
  AGREEMENTS WITH PHARMACEUTICAL COMPANIES TO SELL AND MARKET OUR
  IMMUNOTHERAPEUTICS, OUR ABILITY TO GENERATE REVENUES WILL BE DIMINISHED.

We do not have a sales organization and have no experience in the sales,
marketing and distribution of pharmaceutical products. If Oncophage is approved
for commercial sale, we plan to market it in the United States with our own
sales force. Developing a sales force is expensive and time consuming and could
delay any product launch. We cannot be certain that we would be able to develop
this capacity. If we are unable to establish our sales and marketing capability,
we will need to enter into sales and marketing agreements to market Oncophage in
the United States. We plan to enter into these types of arrangements for sales
outside the United States. If we are unable to establish successful distribution
relationships with pharmaceutical companies, we may fail to realize the full
sales potential of our immunotherapeutics.

  IF WE FAIL TO OBTAIN ADEQUATE LEVELS OF REIMBURSEMENT FOR OUR
  IMMUNOTHERAPEUTICS FROM THIRD PARTY PAYORS, THE COMMERCIAL POTENTIAL OF OUR
  IMMUNOTHERAPEUTICS WILL BE SIGNIFICANTLY LIMITED.

Our profitability will depend on the extent to which reimbursement for the cost
of our immunotherapeutics will be provided by government health administration
authorities, private health insurance providers and other organizations. Many
patients will not be capable of paying for our immunotherapeutics themselves.
The primary trend in the United States health care industry is toward cost
containment and decisions regarding the use of a particular treatment are
increasingly influenced by large private payors, managed

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care organizations, group purchasing organizations and similar organizations and
are becoming more economically focused. Furthermore, many third party payors
limit reimbursement for newly approved health care products. Cost containment
measures may prevent us from becoming profitable.

In addition, healthcare reform is an area of significant government focus. Any
reform measures, if adopted, could adversely affect:

      -     the pricing of immunotherapeutics in the United States or
            internationally; and

      -     the amount of reimbursement available from governmental agencies or
            other third party payors.

For example, recent proposals regarding Medicare coverage, if they take effect,
may put novel cancer therapies like Oncophage at a competitive disadvantage
compared to existing therapies.

PRODUCT LIABILITY AND OTHER CLAIMS AGAINST US MAY REDUCE DEMAND FOR OUR PRODUCTS
OR RESULT IN SUBSTANTIAL DAMAGES.

We face an inherent risk of product liability exposure related to
immunotherapeutics being tested in human clinical trials and will face an even
greater risk if any of our therapeutic products are sold commercially. We may
become subject to a product liability claim if one of our immunotherapeutics
causes, or merely appears to have caused, an injury. Regardless of merit or
eventual outcome, product liability claims may result in:

      -     decreased demand for our immunotherapeutics;

      -     injury to our reputation;

      -     withdrawal of clinical trial volunteers;

      -     costs of related litigation; and

      -     substantial monetary awards to plaintiffs.

Oncophage is manufactured from a patient's tumor and must be returned to the
same patient for injection. A patient may sue us if we, a hospital or a delivery
company fails to deliver the removed tumor or that patient's Oncophage. The
logistics of shipping will become more complex as the number of patients we
treat increases, and we cannot assure that all shipments will be made without
incident. In addition, administration of Oncophage at a hospital poses another
chance for delivery to the wrong patient. We do not currently have insurance
that covers loss of or damage to Oncophage and do not know whether insurance
will be available to us at a reasonable price or at all.

WE MAY BE REQUIRED TO INCUR SIGNIFICANT COSTS TO COMPLY WITH ENVIRONMENTAL LAWS
AND REGULATIONS AND OUR COMPLIANCE MAY LIMIT ANY FUTURE PROFITABILITY.

Our activities involve the use of hazardous, infectious and radioactive
materials that could be dangerous to human health, safety or the environment. As
appropriate, we store these materials and various wastes resulting from their
use at our facility pending ultimate use and disposal. We are subject to a
variety of federal, state and local laws and regulations governing the use,
generation, manufacture, storage, handling and disposal of these materials and
wastes resulting from their use. We may be required to incur significant costs
to comply with both existing and future environmental laws and regulations. In
particular, we are subject to regulation by the Occupational Safety and Health
Administration and the Environmental Protection Agency and to regulation under
the Toxic Substances Control Act and the Resource Conservation and Recovery Act.
OSHA or the EPA may adopt regulations that may affect our research and
development programs. We are unable to predict whether any agency will adopt any
regulations which could have a material adverse effect on our operations.

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Although our safety procedures for handling and disposing of these materials
comply with federal, state and local laws and regulations, we believe that the
risk of accidental injury or contamination from these materials cannot be
entirely eliminated. In the event of an accident, we could be held liable for
any resulting damages which could be substantial.

OUR COMPETITORS IN THE BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES MAY HAVE
SUPERIOR PRODUCTS, MANUFACTURING CAPABILITY OR MARKETING EXPERTISE.

Our business may fail because we face intense competition from major
pharmaceutical companies and specialized biotechnology companies engaged in the
development of immunotherapeutics and other therapeutic products directed at
cancer, infectious diseases and autoimmune disorders. Many of our competitors
have greater financial and human resources and more experience. Our competitors
may:

      -     develop safer or more effective immunotherapeutics and other
            therapeutic products;

      -     implement more effective approaches to sales and marketing; or

      -     establish superior proprietary positions.

More specifically, if regulatory approvals are received, some of our
immunotherapeutics will compete with well-established, FDA approved therapies
that have generated substantial sales over a number of years.

We anticipate that we will face increased competition in the future as new
companies enter our markets and scientific developments surrounding
immunotherapy and other cancer therapies continue to accelerate.

WE MAY NOT BE ABLE TO KEEP UP WITH THE RAPID TECHNOLOGICAL CHANGES IN THE
BIOTECHNOLOGY AND PHARMACEUTICAL INDUSTRIES WHICH COULD MAKE OUR
IMMUNOTHERAPEUTICS OBSOLETE.

The field of biotechnology is characterized by significant and rapid
technological change. Research and discoveries by others may result in medical
insights or breakthroughs which may render our immunotherapeutics obsolete even
before they generate any revenue.

IF WE EXPERIENCE ANY PROBLEMS WITH Y2K COMPLIANCE, OUR BUSINESS MAY BE
DISRUPTED.

Beginning in the year 2000, the date fields coded in certain software products
and computer systems will need to accept four digit entries in order to
distinguish 21st century dates from the 20th century dates. This is commonly
known as the year 2000 or Y2K problem.

It is possible that our installed computer systems, software products or other
business systems, or those of our suppliers or service providers, working either
alone or in conjunction with other software systems, will not accept input of,
store, manipulate or output dates for the Y2K or subsequent years without error
or interruption. We have completed the process of determining whether there are
any critical areas of our business that are not Y2K compliant. Where
appropriate, we have taken corrective actions and implemented contingency plans
to address Y2K problems involving these areas. We estimate that the total cost
of addressing any Y2K problems will be immaterial.

Some risks associated with the Y2K problem are beyond our ability to control,
including the extent to which our suppliers and service providers can address
the Y2K problem. The failure by a third party to adequately address the Y2K
issue may have an adverse effect on their operations, which, in turn, may have
an adverse impact on us. If, for instance, our supply of electricity and/or
water is interrupted, our freezers may not be able to adequately preserve our
immunotherapeutics and our scientific experiments may be interrupted.

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                         RISKS RELATING TO THE OFFERING

OUR OFFICERS AND DIRECTORS MAY BE ABLE TO BLOCK PROPOSALS FOR A CHANGE IN
CONTROL.

After this offering, our directors and officers will control approximately
     % of our outstanding common stock. Due to this concentration of ownership,
directors and officers may be able to prevail on all matters requiring a
stockholder vote, including:

      -     the election of directors;

      -     the amendment of our organizational documents; or

      -     the approval of a merger, sale of assets or other major corporate
            transaction.

THE NET PROCEEDS FROM THIS OFFERING MAY BE ALLOCATED IN WAYS WHICH YOU AND OTHER
STOCKHOLDERS MAY NOT APPROVE.

Management will have significant flexibility in applying the net proceeds of
this offering and could use these proceeds for purposes other than those
contemplated at the time of the offering.

ANTI-TAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW MAY
MAKE AN ACQUISITION OF US MORE DIFFICULT.

We are incorporated in Delaware. Anti-takeover provisions of Delaware law and
our charter documents may make a change in control more difficult, even if a
change in control is desired by the stockholders. Our anti-takeover provisions
include provisions in our certificate of incorporation providing that
stockholders' meetings may only be called by the president or the majority of
the board of directors and a provision in our by-laws providing that our
stockholders may not take action by written consent. Additionally, our board of
directors has the authority to issue 1,000,000 shares of preferred stock and to
determine the terms of those shares of stock without any further action by our
stockholders. The rights of holders of our common stock are subject to the
rights of the holders of any preferred stock that may be issued. The issuance of
preferred stock could make it more difficult for a third party to acquire a
majority of our outstanding voting stock. Our charter also provides for the
classification of our board of directors into three classes. This "classified
board" generally may prevent stockholders from replacing the entire board in a
single proxy contest. In addition, our directors may only be removed from office
for cause. Delaware law also prohibits a corporation from engaging in a business
combination with any holder of 15% or more of its capital stock until the holder
has held the stock for three years unless, among other possibilities, the board
of directors approves the transaction. The board may use this provision to
prevent changes in our management. Also, under applicable Delaware law, our
board of directors may adopt additional anti-takeover measures in the future.

OUR COMMON STOCK MAY HAVE A VOLATILE PUBLIC TRADING PRICE AND LOW TRADING
VOLUME.

Prior to this offering, there will have been no public market for our equity. An
active public market for our common stock may not develop or be sustained after
this offering. We and the underwriters, through negotiations, will determine the
initial public offering price. The initial public offering price is not
necessarily indicative of the market price at which the common stock will trade
after this offering. The market prices for securities of companies comparable to
us have been highly volatile, and the market has experienced significant price
and volume fluctuations that are unrelated to the operating performance of the
individual companies. Many factors may have a significant adverse effect on the
market price of the common stock, including:

      -     results of our preclinical and clinical trials;

      -     announcement of technological innovations or new commercial products
            by us or our competitors;

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19

      -     developments concerning proprietary rights, including patent and
            litigation matters;

      -     publicity regarding actual or potential results with respect to
            products under development by us or by our competitors;

      -     regulatory developments; and

      -     quarterly fluctuations in our revenues and other financial results.

THE SALE OF A SUBSTANTIAL NUMBER OF SHARES COULD CAUSE THE MARKET PRICE OF OUR
COMMON STOCK TO DECLINE.

After this offering, we will have        shares outstanding. In connection with
the private placement completed in November 1999, we are obligated to file,
approximately 90 days after the date of this prospectus, a registration
statement covering up to        shares for resale. When this registration
statement is declared effective by the Securities and Exchange Commission, these
stockholders will be permitted to resell their shares on the Nasdaq National
Market. Sales of these shares or anticipation of those sales may depress our
stock price.

The sale by our company or the resale by stockholders of shares of our common
stock after this offering could cause the market price of the common stock to
decline. The        shares of common stock outstanding after this offering but
not offered in this prospectus will be available for resale on the Nasdaq
National Market as follows:

      -          shares when a resale registration statement to be filed
            approximately 90 days after the date of this prospectus is declared
            effective, and

      -          shares one year following this offering subject to volume and
            other limitations.

We intend to file a registration statement following the offering to permit the
sale of approximately 4,500,000 shares of common stock under our equity
incentive plan and 300,000 shares of common stock under our employee stock
purchase plan. As of             , 1999, options to purchase
shares of our common stock upon exercise of options with a weighted average
exercise price per share of $          were outstanding. Many of these shares
are subject to vesting that generally occurs over a period of up to five years
following the date of grant. All vested options are subject to agreements with
the underwriters not to sell the shares eligible upon their exercise for 365
days after the offering. As of             , 1999, warrants to purchase
            shares of our common stock with an exercise price per share of
$            were outstanding.

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                                USE OF PROCEEDS

The net proceeds to us from the sale of        shares of common stock in this
offering at an assumed public offering price of $     per share are estimated to
be $          million after deducting the underwriting discount and estimated
offering expenses payable by us. The net proceeds to us are estimated to be
$          million if the underwriters' over-allotment option is exercised in
full.

We intend to use the net proceeds of this offering to fund clinical trials,
research, preclinical and development activities for our immunotherapeutics and
general corporate purposes, including working capital and an increase in our
administrative staff. We may also use a portion of the net proceeds to increase
our manufacturing capacity or to acquire complementary businesses or products.
We have no specific understandings, commitments or agreements with respect to
any acquisition.

We have not determined the amount of net proceeds to be used for each of these
purposes. Accordingly, we will have broad discretion to use the proceeds as we
see fit. Prior to spending the funds, we will invest the net proceeds in
short-term, investment grade, interest-bearing securities or guaranteed
obligations of the United States government.

                                DIVIDEND POLICY

We have never paid cash dividends. We currently intend to retain any future
earnings to finance the growth and development of our business. We do not intend
to pay cash dividends on our common stock in the foreseeable future.

                                       19
21

                           FORWARD-LOOKING STATEMENTS

This prospectus contains forward-looking statements, principally in the sections
entitled "Management's Discussion and Analysis of Financial Conditions and
Results of Operations" and "Business." Generally, these statements can be
identified by the use of phrases like "believe," "expect," "anticipate," "plan,"
"may," "will," "could," "estimate," "potential," "opportunity," "future,"
"project" and similar terms and include statements about our:

      -     product research and development activities and projected
            expenditures;

      -     the efficacy of our immunotherapeutics in treating diseases;

      -     receipt of regulatory approvals;

      -     spending the proceeds from this offering;

      -     cash needs;

      -     plans for sales and marketing;

      -     results of scientific research;

      -     implementation of our corporate strategy;

      -     Y2K readiness; and

      -     financial performance.

These forward-looking statements may involve risks and uncertainties. Our actual
results could differ significantly from the results discussed in the
forward-looking statements. Factors that could cause or contribute to these
differences include those discussed in "Risk Factors." You should carefully
consider that information before you make an investment decision. You should not
place undue reliance on our forward-looking statements.

                                       20
22

                                 CAPITALIZATION
                (IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

The following table sets forth, as of September 30, 1999, our historical and pro
forma capitalization and cash and cash equivalents. The pro forma capitalization
gives effect to the following transactions as if they occurred on September 30,
1999:

      -     the $39.2 million private placement completed in November 1999; and

      -     the change from a limited liability company to a corporation.

Pro forma cash and cash equivalents and stockholders' equity do not include
$653,000 in subscriptions receivable and $293,000 of private placement expenses.
The pro forma as adjusted capitalization reflects the pro forma adjustments
described in the previous sentence and the sale in this offering of
               shares of common stock at an assumed initial public offering
price of $       per share and the application of our estimated net proceeds
from this offering, after deducting the underwriting discount and estimated
offering expenses payable by us. This table does not include an aggregate of
               shares of common stock issuable upon exercise of stock options
outstanding as of September 30, 1999 with a weighted average exercise price of
$       per share. This table should be read in conjunction with our
consolidated financial statements and the other financial information included
in this prospectus.
AS OF SEPTEMBER 30, 1999
                                                         ------------------------------------------
                                                                                       PRO FORMA AS
                                                         HISTORICAL      PRO FORMA       ADJUSTED
                                                         -----------    -----------    ------------
                                                         (UNAUDITED)    (UNAUDITED)    (UNAUDITED)
Cash and cash equivalents............................     $ 12,612       $ 50,882        $
                                                          ========       ========        =======
Long-term liabilities................................     $  2,368          2,368
                                                          --------
Members' capital.....................................       45,210             --
Stockholders' equity
  Common stock, par value $0.01 per share;
     100,000,000 shares authorized,
                    shares issued and outstanding,
     pro forma,                shares issued and
     outstanding, pro forma as adjusted..............           --         83,480
  Preferred stock, par value $0.01 par value per
     share; 1,000,000 shares authorized, no shares
     issued and outstanding, pro forma and pro forma
     as adjusted.....................................           --             --             --
Deficit accumulated during the development stage.....      (28,468)       (28,468)
                                                          --------       --------        -------
  Total members'/stockholders' equity................       16,742         55,012
                                                          --------       --------        -------
          Total capitalization.......................     $ 19,110       $ 57,380        $
                                                          ========       ========        =======
21
23

                                    DILUTION

Our pro forma net tangible book value as of September 30, 1999, was $       or
$       per share of common stock. Pro forma net tangible book value per share
before this offering represents the amount of our pro forma stockholders'
equity, less intangible assets, divided by the pro forma number of shares of
common stock outstanding as of September 30, 1999 after giving effect to:

      -     the application of net proceeds from the $39.2 million private
            placement completed in November 1999; and

      -     the change from a limited liability company to a corporation.

Pro forma net tangible book value per share after this offering gives effect to
the adjustments described above and to the application of net proceeds from the
sale of                shares of our common stock at an assumed initial public
offering price of $     per share. As of September 30, 1999, our pro forma net
tangible book value after this offering would be $          or $     per share.

This represents an immediate increase in net tangible book value to existing
stockholders of $     per share and an immediate dilution to new investors of
$     per share. The following table illustrates the per share dilution:
Assumed initial public offering price per share.............               $
                                                                           -------
  Pro forma net tangible book value per share before this
    offering................................................
                                                                -------
  Increase in net tangible book value per share attributable
    to new investors........................................
                                                                -------
Pro forma net tangible book value per share after this
  offering..................................................
                                                                           -------
Dilution per share to new investors.........................               $
                                                                           =======
Assuming the exercise in full of the underwriters' over-allotment option, our
adjusted pro forma net tangible value after this offering at September 30, 1999
would have been approximately $     per share, representing an immediate
increase in pro forma tangible book value of $     per share to our existing
stockholders and an immediate dilution in pro forma net tangible book value of
$     per share to purchasers in this offering.

The following table enumerates the number of shares of common stock purchased,
the total consideration paid and the average price per share paid by our
existing stockholders. The following table also enumerates the number of shares
of common stock purchased and the total consideration paid, calculated before
deduction of the underwriting discount and estimated offering expenses, and the
average price per share paid by the new investors in this offering assuming the
sale of                shares of our common stock at an assumed initial offering
price of $     per share.
SHARES PURCHASED     TOTAL CONSIDERATION
                                                        -----------------    -------------------    AVERAGE PRICE
                                                        NUMBER    PERCENT    AMOUNT     PERCENT       PER SHARE
                                                        ------    -------    -------    --------    -------------
Existing stockholders...............................                    %    $                %        $
New investors.......................................                    %    $                %        $
                                                        ------     -----     ------      -----         -------
         Total......................................                 100%    $             100%        $
                                                        ======     =====     ======      =====         =======
The tables above are calculated on a pro forma basis as of September 30, 1999
and give effect to the November 1999 private placement and the change from a
limited liability company to a corporation.

The tables above assume no exercise of the underwriters over-allotment option
and no exercise of stock options outstanding at September 30, 1999. As of
September 30, 1999, there were options outstanding to purchase a total of
               shares, at a weighted average exercise price of $       per
share. To the extent that any of these options are exercised, there will be
further dilution to new investors. Please see "Capitalization," "Management --
Director Compensation," "-- Executive Compensation" and Note 5 to Antigenics'
audited consolidated financial statements and Note C to Antigenics' unaudited
consolidated financial statements.

                                       22
24

                      SELECTED CONSOLIDATED FINANCIAL DATA
               (IN THOUSANDS, EXCEPT PER SHARE AND PER UNIT DATA)

The selected consolidated balance sheet data set forth below, as of December 31,
1997 and 1998, and the consolidated statement of operations data for each of the
years in the three-year period ended December 31, 1998, are derived from our
audited consolidated financial statements included elsewhere in this prospectus.
The selected consolidated balance sheet data as of December 31, 1994, 1995 and
1996 and selected consolidated statement of operations data for the period from
March 31, 1994 (date of inception) to December 31, 1994 and the year ended
December 31, 1995 are derived from our audited consolidated financial statements
which are not included in this prospectus. These consolidated financial
statements of Antigenics L.L.C. have been audited by KPMG LLP, independent
certified public accountants.

The selected consolidated financial data as of September 30, 1999 and for the
nine months ended September 30, 1998 and 1999 and for the period from March 31,
1994 (date of inception) to September 30, 1999 are derived from our unaudited
consolidated financial statements which are included elsewhere in this
prospectus. The unaudited financial data includes, in our opinion, all
adjustments (consisting only of normal recurring adjustments) that are necessary
for a fair presentation of our financial position and the results of our
operations for those periods. Operating results for the nine months ended
September 30, 1999 are not necessarily indicative of the results that may be
expected for the fiscal year ending December 31, 1999. The selected consolidated
financial data should be read in conjunction with, and are qualified by
reference to, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and our consolidated financial statements and notes to
those consolidated financial statements included elsewhere in this prospectus.

Since we have operated historically as a limited liability company, in
accordance with federal, state and local income tax regulations which provide
that no income taxes are levied on United States limited liability companies and
each member of the limited liability company is individually responsible for
reporting the member's share of our net income or loss, we do not provide for
income taxes in our consolidated financial statements.

The unaudited pro forma information set forth below reflects adjustments which
are necessary, in our management's opinion, for a fair presentation of our
consolidated financial condition and results of operations on a pro forma basis.
The unaudited pro forma net loss, basic and diluted net loss per common share
and weighted average shares outstanding for the year ended December 31, 1998 and
the nine months ended September 30, 1999 give effect to the change from a
limited liability company to a corporation and the exchange of each unit of
members' equity into   shares of common stock as if they occurred on January 1,
1998.

The unaudited pro forma selected balance sheet data as of September 30, 1999
reflects the events described above as if these events occurred as of September
30, 1999 as well as the $39.2 million private placement completed in November
1999. Pro forma cash and cash equivalents and stockholders' equity do not
include $653,000 in subscriptions receivable and $293,000 of private placement
expenses.

                                       23
25
PERIOD FROM                                                                          PERIOD FROM
                              MARCH 31, 1994                                                                       MARCH 31, 1994
                                 (DATE OF                                                  NINE MONTHS ENDED          (DATE OF
                              INCEPTION) TO           YEAR ENDED DECEMBER 31,                SEPTEMBER 30,         INCEPTION) TO
                               DECEMBER 31,    -------------------------------------   -------------------------   SEPTEMBER 30,
                                   1994         1995      1996      1997      1998        1998          1999            1999
                              --------------   -------   -------   -------   -------   -----------   -----------   --------------
                                                                                       (UNAUDITED)   (UNAUDITED)    (UNAUDITED)
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
  Revenue...................     $    --       $    --   $    --   $    --   $    --     $    --      $      --       $     --
  Operating expenses:
    Research and
    development.............        (112)         (742)   (1,569)   (2,548)   (5,908)     (4,072)        (6,926)       (17,806)
    General and
    administrative..........         (56)       (2,453)   (1,042)   (1,375)   (2,735)     (1,823)        (3,825)       (11,486)
    Depreciation and
    amortization............         (15)          (40)      (79)     (202)     (360)       (273)          (726)        (1,422)
                                 -------       -------   -------   -------   -------     -------      ---------       --------
  Loss from operations......        (183)       (3,235)   (2,690)   (4,125)   (9,003)     (6,168)       (11,477)       (30,714)
  Interest income, net......          --             8       281       481       736         580            489          1,996
  Non-operating income......          --            --       250        --        --          --             --            250
                                 -------       -------   -------   -------   -------     -------      ---------       --------
  Net loss..................     $  (183)      $(3,227)  $(2,159)  $(3,644)  $(8,267)    $(5,588)     $ (10,988)      $(28,468)
                                 =======       =======   =======   =======   =======     =======      =========       ========
  Net loss per members'
    equity unit, basic and
    diluted.................     $(10.97)      $(40.92)  $(25.43)  $(40.71)  $(86.42)    $(62.06)     $ (105.57)
                                 =======       =======   =======   =======   =======     =======      =========
  Weighted average number of
    units outstanding, basic
    and diluted.............      16,675        78,854    84,876    89,525    95,673      90,032        104,079
                                 =======       =======   =======   =======   =======     =======      =========
UNAUDITED PRO FORMA
  CONSOLIDATED STATEMENT OF
  OPERATIONS DATA:
  Pro forma net loss........                                                 $                        $
  Pro forma net loss per
    common share, basic and
    diluted.................                                                 $                        $
  Pro forma weighted average
    shares outstanding,
    basic and diluted.......
AS OF DECEMBER 31,                     AS OF SEPTEMBER 30, 1999
                                       -------------------------------------------------    --------------------------
                                       1994      1995       1996       1997       1998      HISTORICAL      PRO FORMA
                                       -----    -------    -------    -------    -------    -----------    -----------
                                                                                            (UNAUDITED)    (UNAUDITED)
CONSOLIDATED BALANCE SHEET DATA:
  Cash and cash equivalents..........  $ 129    $   791    $ 9,588    $13,086    $22,168      $12,612       $  50,882
  Total current assets...............    163        876      9,639     13,246     22,447       13,226          51,496
  Total assets.......................    239      1,124     10,041     14,090     26,636       21,280          59,550
  Total current liabilities..........     22        584        883        878      2,285        2,170           2,170
  Long-term liabilities, less current
    portion..........................     --         --         --         --        709        2,368           2,368
  Members' equity/stockholders'
    equity...........................    217        540      9,158     13,212     23,641       16,742          55,012
24
26

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

The following discussion of the financial condition and results of operations
should be read in conjunction with our consolidated financial statements and
their notes appearing elsewhere in this prospectus.

OVERVIEW

Since our inception in March 1994, our activities have primarily been associated
with the development of our heat shock protein technology and our lead
immunotherapeutic, Oncophage. Our business activities have included:

      -     establishing manufacturing capabilities;

      -     product research and development;

      -     manufacturing immunotherapeutics for clinical trials;

      -     regulatory and clinical affairs; and

      -     intellectual property prosecution.

We have incurred significant losses since our inception because we have not
generated any revenues. As of September 30, 1999, we had an accumulated deficit
of $28,468,000. We expect to continue to incur net losses over the next several
years as we complete our Oncophage clinical trials, apply for regulatory
approvals, continue development of our technology and expand our operations. We
have been dependent on funding from equity and debt financings to fund our
business activities. Our financial results may vary depending on many factors,
including:

      -     the progress of Oncophage in the regulatory process;

      -     the acceleration of our other pharmaceutical candidates into
            preclinical and clinical trials;

      -     our investment in manufacturing process development and in
            manufacturing capacity for Oncophage and other product candidates;

      -     development of a sales and marketing staff and initial sales
            activities if Oncophage is approved for commercialization; and

      -     the progress of our other additional research and development
            efforts.

HISTORICAL RESULTS OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 1999 COMPARED TO THE NINE MONTHS ENDED SEPTEMBER
30, 1998

Revenue:  No revenue was generated during the nine months ended September 30,
1999 or during the nine months ended September 30, 1998.

Research and Development:  Research and development expense increased 70.1% to
$6,926,000 for the nine months ended September 30, 1999 from $4,072,000 for the
nine months ended September 30, 1998. This increase was partially attributable
to the increase in the non-cash charge for options granted and earned by outside
advisors to $798,000 for the nine months ended September 30, 1999 from $124,000
for the nine months ended September 30, 1998. The remainder of the increase was
primarily due to the number of later stage Oncophage clinical trials in process,
an increase in our staff to support our expanded business activities and other
ongoing development activities. Research and development expenses consisted
primarily of compensation for our employees and outside advisors conducting
research and development work, funding paid to the University of Connecticut,
where we sponsor research, costs associated with the operation of our
manufacturing and laboratory facility and funding paid to support our Oncophage
clinical trials.

                                       25
27

General and Administrative:  General and administrative expenses increased
109.8% to $3,825,000 for the nine months ended September 30, 1999 from
$1,823,000 for the nine months ended September 30, 1998. This increase was
partially due to the increase in the non-cash charge for options granted and
earned by outside advisors to $1,079,000 for the nine months ended September 30,
1999 from $58,000 for the nine months ended September 30, 1998. The remainder of
the increase was primarily due to the growth in the number of our employees to
support our expanded business operations. General and administrative expenses
consisted primarily of personnel compensation, office expenses and professional
fees.

Depreciation and Amortization:  Depreciation and amortization expense increased
165.9% to $726,000 for the nine months ended September 30, 1999 from $273,000
for the nine months ended September 30, 1998. This increase was due to the
depreciation expense of our new 30,225 square foot manufacturing and laboratory
facility and related equipment.

Interest Income, net:  Interest income increased 10.5% to $641,000 for the nine
months ended September 30, 1999 from $580,000 for the nine months ended
September 30, 1998. This increase was principally attributable to a higher
average cash and cash equivalents balance during the nine months ended September
30, 1999 as compared to the nine months ended September 30, 1998 due to a
$28,000,000 private equity financing completed in January 1999. Changes in
interest rates had an immaterial effect on the change in interest income.
Interest expense was $152,000 during the nine months ended September 30, 1999
due to borrowings under a credit facility to fund the construction of our
manufacturing and laboratory facility. There was no interest expense during the
nine months ended September 30, 1998.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Revenue:  No revenue was generated during the year ended December 31, 1998 or
during the year ended December 31, 1997.

Research and Development:  Research and development expenses increased 131.9% to
$5,908,000 for the year ended December 31, 1998 from $2,548,000 for the year
ended December 31, 1997. This increase was due primarily to the significant
increase in the number of Oncophage clinical trials in process, higher salary
costs due to an increase in the number of our employees as we expanded our
business and clinical activities, higher levels of funding paid to support our
Oncophage clinical trials, professional fees related to expansion of our
intellectual property and patent activities, and the non-cash charge for options
granted to and earned by outside advisors.

General and Administrative:  General and administrative expenses increased 98.9%
to $2,735,000 for the year ended December 31, 1998 from $1,375,000 for the year
ended December 31, 1997. This increase was due to costs related to increased
personnel necessary to support our expanding business and clinical operations
and the non-cash charge for options granted and earned by outside advisors.

Depreciation and Amortization:  Depreciation and amortization expense increased
78.2% to $360,000 for the year ended December 31, 1998 from $202,000 for the
year ended December 31, 1997. This increase was due to the depreciation expense
of our manufacturing and laboratory equipment.

Interest Income, net:  Interest income increased 53.0% to $736,000 for the year
ended December 31, 1998 from $481,000 for the year ended December 31, 1997. This
increase was primarily attributable to a higher average cash and cash
equivalents balance during the year ended December 31, 1998 as compared to the
year ended December 31, 1997. Changes in interest rates had an immaterial effect
on the change in interest income. There was no interest expense during the years
ended December 31, 1998 and 1997.

YEAR ENDED DECEMBER 31, 1997 COMPARED TO THE YEAR ENDED DECEMBER 31, 1996

Revenue:  No revenue was generated during the year ended December 31, 1997 or
during the year ended December 31, 1996.

                                       26
28

Research and Development:  Research and development expenses increased 62.4% to
$2,548,000 for the year ended December 31, 1997 from $1,569,000 for the year
ended December 31, 1996. This increase was primarily due to additional personnel
in all our clinical and preclinical programs, an increase in the fee to the
research laboratory we sponsor at the University of Connecticut and higher
payments to clinics conducting our clinical trials. In addition, we incurred
higher professional fees related to the expansion of our intellectual property
and patent activities.

General and Administrative:  General and administrative expenses increased 32.0%
to $1,375,000 for the year ended December 31, 1997 from $1,042,000 for the year
ended December 31, 1996. This increase was due to costs related to increased
personnel necessary to support our expanding business and clinical operations
partially offset by a decrease in the non-cash charge for options granted to and
earned by outside advisors.

Depreciation and Amortization:  Depreciation and amortization expense increased
155.7% to $202,000 for the year ended December 31, 1997 from $79,000 for the
year ended December 31, 1996. This increase was due to the depreciation expense
of our manufacturing and laboratory equipment.

Interest Income, net:  Interest income increased 71.2% to $481,000 for the year
ended December 31, 1997 from $281,000 for the year ended December 31, 1996. This
increase was primarily attributable to a higher average cash and cash
equivalents balance during the year ended December 31, 1997 as compared to the
year ended December 31, 1996. There was no interest expense during both the
years ended December 31, 1997 and 1996.

Non-operating Income:  We recorded a non-recurring, non-operating fee of
$250,000 for the year ended December 31, 1996 relating to a potential
collaboration.

INCOME TAXES

No benefit for federal, state or local income taxes has been recorded for the
net losses we incurred in the years ended December 31, 1996, 1997 and 1998 and
no benefit for income taxes has been recorded for the period from March 31, 1994
(date of inception) through December 31, 1995. In addition, no net losses
incurred in 1999 prior to the closing of this offering will be recorded on our
federal, state or local income tax returns. Because we operated as a limited
liability company for tax purposes during these periods, and will continue to
until the closing of this offering, all taxable losses were, and will be,
allocated to the members for reporting on their income tax returns. As a result,
we will not be able to offset future taxable income, if any, against losses
incurred prior to the closing of this offering. Upon conversion from a limited
liability company to a corporation, we expect that a valuation allowance equal
to any gross deferred tax assets would be recognized as we believe that it is
more likely than not that these deferred tax assets will not be realized.

LIQUIDITY AND CAPITAL RESOURCES

We have incurred annual operating losses since inception and at September 30,
1999, we had incurred an accumulated deficit of $28,468,000. Since our
inception, we have financed our operations primarily through various private
placements of equity, interest income earned on cash and cash equivalent
balances and debt provided through a credit line secured by some of our
manufacturing and laboratory assets. From our inception through September 30,
1999, we have raised aggregate equity proceeds of $40,322,000 and have borrowed
$3,424,000 under our $5,000,000 credit facility. In addition, in November 1999,
we raised gross proceeds of $39,216,000 through a private placement of equity.
As part of the November 1999 private placement, we issued warrants that expire
September 30, 2002. The exercise price of these warrants is $       per share.
Upon the closing of this offering, we expect some of these warrants will be
converted, on a net exercise basis, into        shares of common stock and that
warrants to purchase             shares of common stock will remain outstanding.
We expect that the proceeds from the November 1999 private placement of equity,
the proceeds from this offering, and current working capital will fund our
capital expenditures and growing operations over the next two years. Our future
capital requirements

                                       27
29

include, but are not limited to, supporting our Oncophage clinical trial efforts
and continuing our other research and development programs. Satisfying our
long-term liquidity needs will require the successful commercialization of
Oncophage or other products and may require additional capital.

Our cash and cash equivalents at September 30, 1999 were $12,612,000, a decrease
of $9,556,000 from December 31, 1998. The primary use of cash during the nine
months ended September 30, 1999 was to finance operations, including our
Oncophage clinical trials, and capital expenditures for the establishment of our
manufacturing and laboratory facility.

Net cash used in operating activities for the years ended December 31, 1996,
1997 and 1998 was $1,473,000, $3,518,000 and $6,377,000, and for the nine months
ended September 30, 1999 was $9,416,000 compared to $5,508,000 for the nine
months ended September 30, 1998. The increase resulted from the increase in the
number and size of our Oncophage clinical trials and general expansion of our
operations.

Net cash used in investing activities for the years ended December 31, 1996,
1997 and 1998 was $231,000, $619,000 and $3,676,000, and for the nine months
ended September 30, 1999 was $4,592,000 compared to $1,047,000 for the nine
months ended September 30, 1998. The investments were primarily for the
construction of our manufacturing and laboratory facility and equipment,
furniture and fixtures. Our new manufacturing and laboratory facility in Woburn,
Massachusetts was partially financed through the $5,000,000 credit facility
discussed below and available cash balances.

Net cash provided by financing activities was $10,500,000, $7,635,000 and
$19,134,000 for the years ended December 31, 1996, 1997 and 1998, and $4,451,000
for the nine months ended September 30, 1999 compared to $6,525,000 for the nine
months ended September 30, 1998. Since inception, our primary source of
financing has been from equity investments. During 1996, 1997 and 1998, equity
contributions from private placements and, in 1998, exercises of options,
totaled approximately $10,500,000, $7,635,000 and $18,225,000 and $2,212,000 for
the nine months ended September 30, 1999 compared to $6,525,000 for the nine
months ended September 30, 1998. We raised gross proceeds of $39,216,000 in
November 1999 through a private placement of equity. At September 30, 1999, we
have outstanding $3,149,000 under a $5,000,000 credit facility to finance the
construction of our manufacturing and laboratory facility and the purchase of
related equipment. Loans that are drawn down on the credit facility are secured
by specific assets, including leasehold improvements, which they finance.

YEAR 2000 COMPLIANCE

The following constitutes "Year 2000 Readiness Disclosure" under the Year 2000
Information and Readiness Disclosure Act of 1998.

The year 2000 issue, or Y2K, refers to potential problems with computer systems
or any equipment with computer chips or software that use dates where the date
has been stored as just two digits. On January 1, 2000, any clock or date
recording mechanism incorporating date sensitive software which uses only two
digits to represent the year may recognize a date using "00" as the year 1900
rather than the year 2000. This could result in a system failure or
miscalculations causing disruption of operations, including, among other things,
a temporary inability to process transactions, perform laboratory analyses, or
engage in similar business activities.

We are a biopharmaceutical company and our proposed product candidates are not
software or computer based. Therefore, our proposed products are not directly
impacted by the Y2K problem. Our exposure to potential risks from this problem
involves computer and information technology systems, and other systems which
include embedded technology using date sensitive programs such as for:

      -     heating, ventilation, air conditioning, or HVAC;

      -     scientific instrumentation;

      -     manufacturing and laboratory equipment; and

      -     laboratory facilities.

                                       28
30

Our internal information systems consist of off-the-shelf accounting and e-mail
systems, off-the-shelf application programs such as spreadsheet, word
processing, graphics, database management, and presentation software, and some
instrumentation/data acquisition software. Non-informational technology systems
consist of HVAC and telecommunications.

We have completed the process of determining whether there are any critical
areas of our business that are not year 2000 compliant. We estimate that the
total cost of addressing any year 2000 problems will be immaterial. We believe
our worst case scenario relating to year 2000 risks includes a power
interruption and a lack of supplies to support our clinical trials. We are
implementing a contingency plan to cover these situations including expanding
our supplies inventory and maintaining a generator at our manufacturing facility
for the supply of electrical power.

We have taken actions to minimize the impact of the Y2K problem on our systems
and operations, excluding a systemic failure outside our control, such as a
prolonged loss of electrical, water or telephone service. We have inventoried
and reviewed our systems, scientific instrumentation, and laboratory facilities,
including querying third parties that have a material relationship with us, to
ascertain Y2K compliance. Our review included examining information from our
equipment and software vendors, literature supplied with software, and test
evaluations of our systems. Based upon our work and knowledge to date, which
included updating various software programs, we believe that the risk is minimal
that our internal systems, scientific instrumentation, and laboratory facilities
will be materially impacted by Y2K non-compliance disruptions. Most of our
existing systems, scientific instrumentation, and laboratory facilities are Y2K
compliant or are expected to be Y2K compliant by December 31, 1999.

Vendors for our off-the-shelf applications, including our accounting and e-mail
systems, have informed us that their products are Y2K compliant. To date, our
review has not disclosed otherwise. We have no reason to believe that these
applications are not Y2K compliant. If these applications are not Y2K compliant,
we expect, but cannot be certain, that the vendors will make appropriate
upgrades available to all of their customers at no cost or at minimal cost. We
believe that if it were necessary to replace our off-the-shelf software
applications, this software could be replaced at reasonable costs.

With regard to third party risks, we continue to assess Y2K risks. Third parties
include research partners, manufacturers, research organizations and clinical
study administrators. Our vendors and suppliers have indicated that they will
make every effort to be Y2K compliant before December 31, 1999, but that no
guarantees can be given.

The majority of our material third party contracts relate to sites for clinical
trials of our product candidates and research and development. We believe that
it would be difficult, time consuming, and costly to find alternative clinical
sites and research arrangements. We will continue to work with third parties to
identify and resolve any problems with Y2K compliance.

In a worst case scenario, we could experience delays in receiving research and
development and manufacturing supplies as well as managing and accessing data on
patients enrolled in clinical studies. These delays could slow clinical
development and research and development programs, or impact our ability to
effectively manage and monitor these programs. These delays could have an
adverse impact on our stock price. Based on the information and assessments to
date, no contingency plans have been developed.

Any Y2K compliance problems which arise could materially and adversely affect
our business, results of operations or cash flow. We will continue to identify
all Y2K problems that could materially adversely affect our business operations
and develop contingency plans, if possible. However, it is not possible to
determine with complete certainty that all Y2K problems affecting us or third
parties which have a material relationship with us have been identified. It is
not possible to insure economically against all conceivable risks.

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31

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

In the normal course of business, we are exposed to fluctuations in interest
rates as we seek debt financing to make capital expenditures. We do not use
derivative instruments or hedging to manage our exposures.

The information below summarizes our market risks associated with debt
obligations as of September 30, 1999. Fair values included herein have been
estimated taking into consideration the nature and terms of each instrument and
the prevailing economic and market conditions at September 30, 1999. The table
presents cash flows by year of maturity and related interest rates based on the
terms of the debt.
ESTIMATED                              YEAR OF MATURITY
                              FAIR       CARRYING    -------------------------------------------
                             VALUE        AMOUNT       1999       2000        2001        2002
                           ----------   ----------   --------   --------   ----------   --------
Long-term debt...........  $3,351,000   $3,149,000   $781,000   $906,000   $1,050,000   $412,000
  Fixed interest rates from 13.954% to 15.084%
RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities", which establishes accounting and reporting
standards for derivative instruments, including derivatives instruments embedded
in other contracts, and for hedging activities. SFAS No. 133 is effective for
all of our fiscal quarters beginning January 1, 2001. This statement is not
expected to affect us as we currently do not use derivative instruments or
engage in hedging activities.

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32

                                    BUSINESS

OVERVIEW

Antigenics is engaged in the discovery and development of novel
immunotherapeutic drugs for the treatment of life threatening and chronic
medical conditions. Our immunotherapeutics are based on a specific class of
proteins known as heat shock proteins and their ability to modulate the immune
system. We are currently evaluating our lead immunotherapeutic, Oncophage, in
six clinical trials for the treatment of four different cancers, and we expect
to start our first pivotal clinical trial by mid-2000. We are also developing
immunotherapeutics to treat infectious diseases, such as genital herpes, and
autoimmune diseases, such as diabetes and multiple sclerosis. Based upon our
scientific and drug development skills, our technology platform and our
strategic expertise, we intend to become a leader in drug discovery, development
and commercialization.

THE IMMUNE SYSTEM

The immune system is the body's natural defense mechanism to prevent and combat
disease. The immune system differentiates between normal tissue, or "self,"
versus diseased tissue or "non-self." When a competent immune system recognizes
diseased cells, a series of steps ensues resulting in the elimination of these
cells. There are two types of immune response: antibody-based and T cell-based.

Antibody-based immune response is primarily involved in the prevention of
diseases. Antibodies are proteins produced by the body in response to disease
causing agents known as pathogens. Antibodies bind to pathogens, including
viruses and bacteria, and block their ability to infect cells. Preventive
vaccines that trigger an antibody-based immune response have been very
successful in reducing the incidence of several deadly diseases, including
smallpox, polio and measles. These vaccines consist of weakened or attenuated
pathogens that stimulate the production of antibodies. However, these types of
vaccines have not been effective in the prevention or treatment of many serious
diseases, including cancer, herpes, tuberculosis, hepatitis and HIV.

T cell-based immune response, on the other hand, is primarily involved in
combating diseases, such as cancers or infections. T cells are specialized white
blood cells that are normally produced by the body to kill cancer cells and
infected cells. T cell-based immune response begins when specialized immune
cells called dendritic cells capture antigens, which are the identifying
structural components of cancers and pathogens. Once inside dendritic cells,
antigens are broken down into small fragments called peptides that are
subsequently displayed on the surface of the dendritic cell. T cells continually
scan the surface of dendritic cells for peptides. If T cells recognize displayed
peptides as foreign or non-self, they replicate rapidly and then search for and
kill other diseased cells containing those same peptides. This T cell-based
immune response is enhanced by hormones known as cytokines that activate various
components of the immune system.

Significant scientific evidence suggests that cancers and infections trigger a T
cell-based immune response during the initial course of their progression. This
immune response, however, is not always sufficient to eradicate the disease.
Tumor cells, for example, hide their antigens and produce substances that
suppress the patient's immune response.

To date, efforts to develop immunotherapeutics that sufficiently overcome this
suppression of the immune system and stimulate T cells to selectively and
accurately target and kill diseased cells have failed due to one or both of the
following:

      -     the inability of drug developers to identify the appropriate
            antigens that identify diseases such as a particular person's
            cancer; and

      -     the inability to present these relevant antigens to activate T cells
            to selectively destroy diseased cells.

We believe our immunotherapeutics specifically address these issues.

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33

OUR TECHNOLOGY PLATFORM

INTRODUCTION

We are the pioneers in activating T cells using purified heat shock
protein-peptide complexes. In individuals who develop cancer, infections and
autoimmune disorders, the immune system fails in its normal function. Our
immunotherapeutics are designed to restore this function and treat these life
threatening or chronic disease conditions.

We believe our immunotherapeutics will be applicable to the treatment of all
cancer types and several types of infectious diseases and autoimmune disorders.
Our immunotherapeutics consist of two components: a variable component,
consisting of small protein fragments called peptides, which is necessary for
the targeting of specific diseases; and a constant component, consisting of a
heat shock protein, which is necessary for the activation of a T cell-based
immune response to the targeted disease. In the case of cancer, which is a
highly variable disease from one patient to another, we purify heat shock
protein-peptide complexes from each patient's own tumor tissue. Our cancer
immunotherapeutics are therefore specific to each patient. In contrast, for each
infectious disease which is generally caused by a common pathogen, we use a
human heat shock protein complexed to peptides derived from the target pathogen.
Our immunotherapeutics for infectious diseases therefore will be
disease-specific rather than patient-specific. Our immunotherapeutic for
autoimmune disorders will be generic, meaning it will be intended for the
treatment of all disorders that result in T cells attacking healthy tissue.

The principle upon which our technology platform is based extends back over 50
years when scientists began using genetically identical laboratory animals to
study the immune response to cancer. Researchers demonstrated that animals
vaccinated with attenuated tumor cells are immune to subsequent injections of
live tumor cells, and further that this immunity to cancer is tumor-specific.
Twenty years ago, the chairman of our scientific advisory board, Pramod
Srivastava, discovered that cancers harbor molecular factors known as heat shock
proteins which are responsible for conferring immunity to cancer. Consistent
with the observation that immunity generated with attenuated tumor cells is
tumor-specific, we discovered that heat shock proteins elicit immunity only to
the tumor from which they are purified.

HEAT SHOCK PROTEINS

Heat shock proteins are a class of proteins that play a major role in
transporting peptides, including antigens, within a cell and are thus often
called chaperones. In this capacity, heat shock proteins bind to the entire
antigenic repertoire or fingerprint of the cell in which they reside. Heat shock
proteins are present in all cells of all organisms from bacteria to mammals and
their structure and function are similar across these diverse life forms.

Published research suggests that heat shock proteins play a central role in the
generation of immune responses. This role includes coordinating the breakdown
and transport of peptides from the point of their generation inside cells to
their ultimate display on the cell's surface for recognition by T cells.
Although heat shock proteins inside tumor cells and pathogen-infected cells help
display antigens to the immune system, tumors and pathogens simultaneously
employ strategies to evade immune responses. In some cases, this evasion of
immune responses results in disease progression.

The ability of heat shock proteins to chaperone peptides is key to our
technology platform. When we purify heat shock proteins from tumor cells or
pathogen-infected cells according to our manufacturing protocols, the heat shock
proteins remain complexed, or bound, to the entire repertoire of peptides
produced by the tumor or pathogen. These purified heat shock protein-peptide
complexes isolated from diseased cells are our immunotherapeutics.

We believe that when these purified heat shock protein-peptide complexes are
injected into the skin, they stimulate a powerful T cell-based immune response
capable of targeting and killing cancers and pathogen-infected cells from which
these complexes were derived. Our immunotherapeutics are injected into the skin
to take advantage of the high concentration of dendritic cells in this region.
These dendritic cells express receptors that specifically recognize heat shock
proteins; therefore, our immunotherapeutics are efficiently captured and
processed by dendritic cells. Once inside dendritic cells, heat shock
protein-peptide complexes separate and the peptides are displayed on the surface
of the dendritic cell where they can be recognized by T cells.

                                       32
34

Dendritic cells expressing cancer-specific or pathogen-specific peptides
activate T cells that are capable of specifically targeting and killing diseased
cells throughout the body that express those same peptides. The interaction of
heat shock proteins with their receptors on dendritic cells also leads to
secretion of cytokines by the dendritic cells which further stimulate the immune
system.

          THE MECHANISM OF HEAT SHOCK PROTEIN-INDUCED IMMUNE RESPONSE

STEP 1. Injection of purified heat shock protein-peptide complexes into skin
                                       |
                                      \|/
                                       -
STEP 2. Heat shock protein-peptide complexes bind to receptor on surface of
        dendritic cell and are subsequently internalized
                                       |
                                      \|/
                                       -
STEP 3. Heat shock proteins and peptides separate inside dendritic cell
                                       |
                                      \|/
                                       -
STEP 4. Peptides are presented on the surface of dendritic cell for recognition
        by T cells. Upon recognition, T cells are activated to kill diseased
        cells, such as tumor or pathogen-infected cells, expressing those same
        peptides. Heat shock proteins also stimulate dendritic cells to release
        cytokines which activate natural killer cells and enhance the immune
        response
Heat shock protein receptor                                   Dendritic cell

Heat shock protein                                            Peptide presented on surface of dendritic cell

Peptide chaperoned by heat shock protein
[GRAPH]

                                       33
35

Our immunotherapeutics are designed to stimulate the immune system to recognize
the entire antigenic fingerprint of a tumor or pathogen. Due to this
characteristic, we believe our immunotherapeutics will:

      -     trigger the immune system to recognize and destroy all tumor or
            pathogen-infected cells in the body; and

      -     make it difficult for tumors or pathogens to escape recognition by
            the immune system.

We believe that the re-presentation of peptides by dendritic cells triggers a
more potent immune response than that achieved by the presentation of these same
peptides by the tumor or pathogen-infected cell.

Our preclinical studies with heat shock protein immunotherapeutics have
demonstrated a beneficial effect in preventing or treating 13 types of cancer in
three different species. The cancer types tested include cancers of the skin,
colon, lung and other tissues. Further, our immunotherapeutics show therapeutic
benefit in animals with metastatic disease, which is when cancer has spread
beyond the primary tumor to distant regions of the body. Metastatic disease is
often responsible for the relapse and ultimate death of patients with cancer.

OUR PRODUCTS UNDER DEVELOPMENT

INTRODUCTION

The chart below summarizes the indications and status for each of our products
and development programs. We use "HSPPC" as an abbreviation for "heat shock
protein-peptide complex." The number following HSPPC is the molecular weight of
the heat shock protein used in the product. For cancer applications, we call
HSPPC-96 "Oncophage."

--------------------------------------------------------------------------------
PRODUCT                 INDICATION                                STATUS
-------                 ----------                                ------
CANCER
Oncophage               Renal cell carcinoma                       Phase II trial ongoing
                                                                   Phase I/II trial completed
                        Melanoma                                   Phase II trial ongoing
                                                                   Phase I/II trial completed
                        Colorectal carcinoma                       Phase II trial enrollment completed
                        Gastric cancer                             Phase I/II trial ongoing
                        Pancreatic cancer                          Phase I trial completed
                        Low grade indolent non-Hodgkin's lymphoma  Phase II trial planned
                        Sarcoma                                    Phase II trial planned
HSPPC-70-C              Various cancers                            Research
HSPPC-90-C              Various cancers                            Research
HSPPC-56-C              Various cancers                            Research
INFECTIOUS DISEASES
HSPPC-96-GH             Genital herpes                             Preclinical
HSPPC-70-GH             Genital herpes                             Preclinical
HSPPC-56-I              Various infectious diseases                Research
HSPPC-70-I              Various infectious diseases                Research
AUTOIMMUNE DISORDERS
gp96                    Type 1 diabetes                            Research
                        Multiple sclerosis                         Research
--------------------------------------------------------------------------------

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36

OUR CANCER IMMUNOTHERAPEUTICS

Background.  The American Cancer Society expects that approximately 1.2 million
new cases of cancer will be diagnosed in the United States in 1999. Cancer is
the second leading cause of death in the United States, resulting in an
estimated 563,100 deaths in 1999. The American Cancer Society reports that since
1990 nearly 12 million cases of cancer have been diagnosed and nearly 5 million
people have died from this disease in the United States.

Cancer results from the uncontrolled proliferation of abnormal cells.
Eventually, these cells form a mass referred to as a tumor. As the tumor grows,
it pushes outward, often invading adjacent tissues and organs and interfering
with their normal function. In addition, small groups of cells may break away
from the primary tumor and spread or metastasize. Tumors produced at distant
sites are referred to as metastatic tumors.

The uncontrolled proliferation of cancer cells is due to alterations, or
mutations, in a cell's DNA. Mutations can take place when a gene is exposed to
radiation or particular drugs or chemicals, or when some as yet unexplained
internal change occurs. The mutations in DNA also lead to production of
antigens. Because mutations occur randomly, the antigenic fingerprint of each
person's cancer is unique.

Studies in animals have confirmed that a unique repertoire of antigens is
associated with each primary tumor. As cancers metastasize, they continue to
mutate, potentially producing new antigens not found in the primary tumor of the
same patient. However, we believe that a significant overlap exists between the
antigenic fingerprint of the metastatic cells and the primary tumor of the same
patient.

Current Treatments.  Surgery, chemotherapy and radiotherapy are the three most
commonly used methods for treating cancer. A cancer patient often receives a
combination of these treatments depending upon the type of cancer and the extent
of the disease. Surgery is curative only when tumors are detected at relatively
early stages of growth and can be fully excised. Unfortunately, most tumors
metastasize when they are very small, ultimately causing relapse and death in
many cancer patients. The use of chemotherapy or radiotherapy sometimes improves
survival rates; however, these treatments have significant limitations.

High rates of treatment failure and limitations posed by severe side effects and
tumor resistance have compelled researchers to focus on alternative strategies
of cancer treatment. Immunotherapeutics have the ability to target and destroy
widely disseminated disease without damaging normal tissue. In addition,
immunotherapeutics do not have many of the shortcomings of traditional cancer
treatments.

Our Approach.  We purify our cancer immunotherapeutics from resected portions of
a patient's tumor. Our cancer immunotherapeutics are patient-specific and
therefore incorporate the entire antigenic fingerprint of each patient's own
tumor. Because our cancer immunotherapeutics contain overlapping antigens
present in both the primary and metastatic tumors, we believe they will be
effective in treating all the tumor cells that remain in the body that are
derived from the primary tumor.

ONCOPHAGE

Oncophage is our lead cancer immunotherapeutic. It is being evaluated in four
different cancers in six separate phase II or phase I/II clinical trials.
Oncophage consists of purified, patient-specific heat shock protein-peptide
complexes designed to elicit a T cell-based immune response to a patient's
cancer. After surgical removal of a patient's tumor, the hospital or clinic
ships a portion of the tumor tissue frozen by overnight courier to our facility.
We purify Oncophage from the tumor tissue using our proprietary manufacturing
process in less than ten hours. Depending on the dose, we require a minimum of
one to three grams of tumor tissue to yield a sufficient amount of Oncophage for
a typical course of treatment.

We formulate Oncophage in sterile buffered saline and package it in standard
single injection vials in our manufacturing facility. We subject the final
immunotherapeutic to extensive quality control testing including sterility
testing of each lot. We ship the product frozen via overnight courier back to
the hospital.

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37

We have developed sophisticated tracking systems and procedures designed to
ensure correct delivery of Oncophage to the appropriate patient.

                        ONCOPHAGE MANUFACTURING PROCESS

--------------------------------------------------------------------------------
STARTING MATERIAL                       MANUFACTURING                             FINAL PRODUCT

     Tumor tissue              Sample of tissue           Heat shock protein-        Product frozen
      removed by   ----    shipped frozen to our  ---     peptide complexes  ---    and shipped to
        surgery                 manufacturing              purified from          hospital/clinic for
                                  facility                 tumor tissue at         patient treatment
                                                            our facility
--------------------------------------------------------------------------------

There are several benefits associated with the production and administration of
our autologous product:

      -     we can sterilize Oncophage through simple terminal filtration;
            sterility is required for FDA approval of a product that will be
            injected into humans;

      -     the scheduling of production at our central facility is flexible
            because we purify Oncophage from frozen tumor samples;

      -     our final product can be administered when the patient is ready to
            begin treatment because Oncophage is frozen and has a current
            shelf-life of at least six months; and

      -     Oncophage consists of a purified protein which can be consistently
            produced from most tumor types.

A patient initially receives Oncophage four to six weeks after surgical removal
of the patient's primary or metastatic tumor. The typical course of treatment
consists of a series of injections into the skin administered once per week for
four to six weeks. Patients may be treated with more than one course of
Oncophage based on the advice of their oncologist.

                         ONCOPHAGE COURSE OF TREATMENT

                                    [CHART]
--------------------------------------------------------------------------------
4-6 week                                   Repeat course of Oncophage treatment
                   recovery                                             upon request

            Surgery  ---          Oncophage once per  ---        Follow up  ---
                                  week for 4-6 weeks
--------------------------------------------------------------------------------

Although we believe Oncophage will be applicable to the treatment of all cancer
types, our initial focus is on cancers that are resistant to available treatment
options. Further, we chose types of cancer and stages of disease that typically
yield tumors that can be removed by surgery. Additionally, in order to complete
clinical trials rapidly and file for regulatory approval, we have selected
cancers and stages of disease that are evaluable in clinical trials with near
term endpoints.

                                       36
38

We filed an IND for Oncophage in November 1996 that the FDA allowed on December
20, 1996. To date, we have treated approximately 140 advanced stage, metastatic
cancer patients with Oncophage in our clinical programs. We started enrolling
patients in our first clinical trial at the Memorial Sloan-Kettering Cancer
Center in New York, New York in November 1997.

We believe the collective results from these clinical programs show that
Oncophage is generally safe and well tolerated. These results also demonstrate
preliminary indications of clinical benefit in a number of these patients.
Moreover, we have shown that Oncophage can generate an anti-tumor immunological
response. In addition, we believe Oncophage can be made consistently and in
sufficient quantities from most human cancer tissue.

The investigators participating in our clinical programs have documented tumor
regressions using standard response criteria. A complete response means that all
tumor tissue has disappeared and the patient appears to be disease free. A
partial response means that evaluable tumor tissue has shrunk by at least 50%. A
minor response means that the tumor has shrunk by 25-50%. Stable disease means
that the tumor has either shrunk or grown by less than 25%. Progressive disease
means that the tumor has grown by more than 25%.

The investigators also documented survival. The median survival refers to the
time at which 50% of patients diagnosed with a particular cancer are alive.

Renal Cell Carcinoma

Background.  Renal cell carcinoma is the most common type of kidney cancer.
According to the American Cancer Society, there will be about 30,000 new cases
of kidney cancer in the United States in 1999. Approximately 11,900 people are
expected to die from the disease during 1999. Of the 30,000 patients diagnosed
with kidney cancer, approximately 85% have the specific type of kidney cancer
known as renal cell carcinoma. By the time renal cell carcinoma is diagnosed in
these patients, about one-third of them have developed metastatic disease.

The median survival of patients with metastatic renal cell carcinoma is
approximately 12 months. For patients with metastatic disease, the only FDA
approved treatment is intravenous high-dose interleukin-2, a human cytokine. The
response rate, which includes partial responses and complete responses, of
patients who are treated with high-dose interleukin-2 is approximately 15%.
Treatment with high-dose interleukin-2 is generally associated with severe
adverse effects. These side effects often can lead to discontinuation of
treatment. Although not FDA-approved for the treatment of renal cell carcinoma,
a lower-dose subcutaneous administration of interleukin-2, either alone or in
combination with other cytokines, has become a treatment option. This treatment
regimen has been the subject of a number of small studies with widely varying
outcomes. Generally, side effects using the subcutaneous route of administration
have been milder than those associated with high-dose, intravenous treatment.

Our Clinical Program.  In our phase I/II trial, we enrolled patients with
measurable metastatic renal cell carcinoma. This trial was conducted at the M.D.
Anderson Cancer Center in Houston, Texas. These patients did not receive prior
or concurrent cancer therapy. After surgical removal of their primary tumors,
patients were treated at one of three dose levels of Oncophage: 2.5 micrograms,
25 micrograms or 100 micrograms. We treated 38 patients, of whom 34 could be
evaluated with standard radiology measurements.

Of the 34 evaluable patients, 13 patients responded or had stable disease. Four
patients achieved a partial response and one patient achieved a minor response.
The other eight patients showed stabilization of their disease. Three of these
patients had been stable in excess of 10 months. The response rate in this
trial, which does not include patients with a minor response or stable disease,
was 12% and no adverse effects were associated with treatment with Oncophage.

The median survival in this trial has not yet been reached; this means that more
than half of the patients are still alive with an average follow up time of 12
months.

                                       37
39

While the analysis of immunological results is still ongoing, testing to date
shows that in four out of five patients who responded clinically, the number of
T cells increased after treatment with Oncophage. Further, in all patients who
responded clinically, the number of natural killer cells increased after
treatment with Oncophage.

Our phase I/II trial also showed Oncophage to be generally safe and well
tolerated by patients. Sixty-three percent of our patients went on to receive
more than one course of treatment with Oncophage.

We were able to prepare Oncophage successfully from approximately 98% of renal
cancer carcinoma samples received at our manufacturing facility for this phase
I/II trial. Based on this result, we believe we should be able to manufacture
Oncophage for nearly all renal cell carcinoma patients whose tumors can be
surgically removed.

Based on the results from our phase I/II clinical trial, we have initiated a 60
patient phase II trial for patients with metastatic renal cell carcinoma at the
M.D. Anderson Cancer Center. For this trial, the dose of Oncophage has been set
at 25 micrograms and patients receive one dose once a week for four weeks,
followed by one dose every two weeks. Some patients may also receive an
injection of subcutaneous interleukin-2 if they have not had an adequate
response after three months of treatment with Oncophage. We anticipate that we
will complete this phase II trial in the first quarter of 2000. Based on the
analysis of the results from the phase I/II and phase II trials, we anticipate
that we will start a pivotal trial for renal cell carcinoma by the middle of
2000.

Melanoma

Background.  Melanoma is the most serious form of skin cancer. According to the
American Cancer Society, there will be about 44,200 new cases of melanoma in the
United States in 1999. Approximately 7,300 people are expected to die from the
disease during 1999. The incidence of melanoma is growing at 5-7% per year,
which is substantially faster than the growth in incidence rates of other
cancers. Advanced or metastatic melanoma, also known as stage III or IV, is
treated with surgery, radiation therapy, immunotherapy, or chemotherapy
depending on the case. Approximately 20% of all melanoma patients at the time of
their first diagnosis have stage III or stage IV disease. Overall survival of
patients with melanoma has not improved significantly with existing treatments.
The median survival of patients with stage III melanoma varies widely according
to published literature. At the M.D. Anderson Cancer Center, the median survival
of patients with late stage III melanoma is 24 months. According to published
literature, patients with stage IV melanoma have a median survival of about
seven months. Although various treatment options are practiced, the only FDA
approved drug therapies for patients with metastatic melanoma are high dose
intravenous interleukin-2 and alpha interferon, another human cytokine.

Our Clinical Program.  We have treated 36 patients in a phase I/II clinical
trial evaluating Oncophage as a treatment for late stage III and early stage IV
metastatic melanoma. Eighty-three percent of the patients in our trial were
previously treated with chemotherapy, radiotherapy, and alpha interferon. The
trial is being conducted at the M.D. Anderson Cancer Center. After surgery to
remove a portion of the tumor, patients were treated with 2.5 micrograms, 25
micrograms or 100 micrograms of Oncophage.

In this trial, we treated 25 patients with stage IV disease and 11 patients with
stage III disease. Among the 25 patients with stage IV disease, 12 patients were
"adjuvant patients." This means that these patients had all of their detectable
melanoma tissue resected before they received treatment with Oncophage. Of these
12 patients, 11 patients are free of disease at a median of 13 months after
surgery. Not enough time has elapsed to appropriately report on the 8 patients
in the adjuvant setting with stage III disease.

In our melanoma trial, we also treated 16 stage III and stage IV patients with
"residual disease." These are patients who have had only part of their disease
resected, leaving them with visible disease at the time of Oncophage treatment.
In this group of patients, there was one stage IV patient who, after initial
progression of his disease, experienced a mixed response. This patient's largest
metastatic lesion

                                       38
40

disappeared completely but the smaller lesions progressed. There were also two
other stage IV patients who experienced stabilization of their disease following
initial progression of disease.

At the time of this analysis, 81% of all the patients who have been treated in
this study are alive. Further analysis of the results from this trial is
ongoing.

To date, the trial has shown Oncophage to be generally safe and well tolerated
by patients. In addition, we have been able to successfully prepare Oncophage
from approximately 92% of melanoma samples received at our manufacturing
facility for this phase I/II trial. Based on this result, we believe we should
be able to manufacture our product for nearly all melanoma patients from whom
adequate amount of tumors can be surgically removed.

In addition to our phase I/II trial at the M.D. Anderson Cancer Center, we are
also currently enrolling patients in a phase II trial for melanoma at the
Istituto dei Tumori in Milan, Italy. We anticipate treating 40 patients during
this trial at 5 or 50 micrograms of Oncophage. The purpose of this trial is to
confirm the route of administration of Oncophage.

Colorectal Cancer

Background.  Colorectal cancer is cancer of the colon or rectum. According to
the American Cancer Society, there will be about 129,400 new cases of colorectal
cancer in the United States in 1999. Approximately 56,600 people are expected to
die from the disease during 1999.

For patients whose disease has not spread to other parts of the body, surgery
remains the most common treatment and can be curative in about two thirds of
these cases. For patients whose disease has metastasized to other parts of the
body, treatment options are limited and the patients' prognosis is poor.
Patients who present with recurrence of advanced disease may have their
metastatic lesions removed by surgery. The median survival for these patients is
approximately 12 months. Conventional cancer treatments such as chemotherapy and
radiation have shown limited benefit in treating colorectal cancer.

Our Clinical Program.  We have completed enrollment of a 30 patient phase II
clinical trial evaluating Oncophage as a treatment for metastatic colorectal
cancer. The trial is being conducted at the Istituto dei Tumori. After surgery
to remove their metastatic tumors, patients are treated with 2.5 micrograms, 25
micrograms or 100 micrograms of Oncophage.

Analysis of the results from this trial is ongoing. To date, the trial has shown
Oncophage to be generally safe and well tolerated by patients. In addition, we
have been able to successfully prepare Oncophage from 100% of colorectal cancer
samples received at our manufacturing facility for this trial. Based on this
result, we believe we should be able to manufacture our product for nearly all
colorectal cancer patients whose tumors can be surgically removed.

Gastric Cancer

Background.  Gastric cancer is cancer of the stomach. According to the American
Cancer Society, there will be about 21,900 new cases of gastric cancer in the
United States in 1999. Approximately 13,500 people are expected to die from the
disease during 1999. The treatment options for gastric cancer are surgery,
chemotherapy and radiation. Biological therapies are currently in clinical
trials. For patients with resectable disease, improvements in surgical
techniques have led to increased survival. Despite these advances, as well as
the development of multi-drug chemotherapy regimens, the median survival for
patients with advanced gastric cancer, according to published research, is
approximately seven months.

Our Clinical Program.  We are currently enrolling patients in a 30 patient phase
I/II clinical trial evaluating Oncophage as a treatment for metastatic gastric
cancer. The trial is being conducted at the Johannes Gutenberg-University
Hospital in Mainz, Germany. After surgery to remove their tumors, patients are
treated with 2.5 micrograms or 15 micrograms of Oncophage. Although enrollment
is still

                                       39
41

ongoing, to date, the trial has shown Oncophage to be generally safe and well
tolerated by patients. In addition, we have been able to successfully prepare
Oncophage from approximately 71% of gastric cancer samples received at our
manufacturing facility for this trial. Based on this result, we believe we
should be able to manufacture our product for the majority of gastric cancer
patients whose tumors can be surgically removed.

Pancreatic Cancer

Background.  Pancreatic cancer is the fourth leading cause of cancer death in
the United States. According to the American Cancer Society, there will be about
28,600 new cases of pancreatic cancer in the United States in 1999.
Approximately 28,600 people are expected to die from the disease during 1999.

The treatment options for pancreatic cancer are surgery and chemotherapy. For
resectable disease, a patient undergoes surgery and may receive chemotherapy as
a follow up treatment. At the Memorial Sloan-Kettering Cancer Center, patients
who have had resection of their disease, are reported to have a median survival
of 14 months. For unresectable disease, patients are treated with chemotherapy.
The median survival time for patients with unresectable disease is less than six
months.

Our Clinical Program.  In early 1999, we completed a pilot phase I clinical
trial evaluating Oncophage as a treatment for resectable pancreatic cancer. The
trial was conducted at the Memorial Sloan-Kettering Cancer Center and enrolled
15 patients. After surgery to remove their primary tumor, five of the fifteen
patients were treated with 5 micrograms of Oncophage.

Two out of five patients generated a T cell mediated immune response to their
tumor after treatment with Oncophage. These two patients are alive and disease
free at 11 and 22 months, respectively, since surgery. A third patient is known
to be free of disease at 24 months after surgery. The fourth patient is alive
with recurrent disease at 11 months and the fifth patient died seven months
after surgery.

The trial showed Oncophage to be generally safe and well tolerated by patients.
We successfully prepared Oncophage from 5 of 15 pancreatic cancer samples
received in our manufacturing facility. It was not possible to prepare Oncophage
from the remaining specimens due to the presence of enzymes in the pancreatic
tissue that break down proteins, including heat shock proteins. Based upon our
process development advances, we anticipate that a modified process will improve
our rate of success for purifying Oncophage from pancreatic tumors.

Low Grade Indolent Non-Hodgkin's Lymphoma

Background.  Non-Hodgkin's lymphoma is cancer that originates in lymph tissue.
According to the American Cancer Society, there will be about 56,800 new cases
of non-Hodgkin's lymphoma in the United States in 1999. Approximately 25,700
people are expected to die from the disease during 1999. Approximately 40% of
patients with non-Hodgkin's lymphoma have low grade indolent disease, which is a
slow growing, often fatal, lymphoma.

The treatment for patients with non-Hodgkin's lymphoma has traditionally been
chemotherapy. Recently, the FDA approved one new antibody therapy for low grade
non-Hodgkin's lymphoma.

Our Clinical Program.  We are in the process of initiating a 35 patient phase II
clinical trial evaluating Oncophage as a treatment for low grade non-Hodgkin's
lymphoma. The trial will be conducted at the M.D. Anderson Cancer Center.
Patients will be treated with 25 micrograms of Oncophage after surgical removal
of tumor tissue.

Sarcoma

Background.  Soft tissue sarcomas are cancerous tumors that can develop from
fat, muscle, nerve, joint, blood vessel, or deep skin tissues. According to the
American Cancer Society, there will be about 7,800

                                       40
42

new cases of soft tissue sarcomas in the United States in 1999. Approximately
4,400 people are expected to die from the disease during 1999.

The treatment options for sarcoma are surgery, chemotherapy or targeted
radiotherapy. For resectable disease, a patient undergoes surgery and receives
chemotherapy or targeted radiotherapy as follow up treatments. For unresectable
disease, patients are treated with a combination of chemotherapy and
radiotherapy.

Our Clinical Program.  We are in the process of initiating a 35 patient phase II
clinical trial evaluating Oncophage as a treatment for soft tissue sarcomas. The
trial will be conducted at Memorial Sloan-Kettering Cancer Center and may be
expanded to include other sites. Patients will be treated with 25 micrograms of
Oncophage after surgical removal of tumor tissue.

Other Cancer Immunotherapeutics

In addition to Oncophage, we are currently researching several other autologous
cancer immunotherapeutics using different heat shock proteins including
HSPPC-70, HSPPC-90, and HSPPC-56. These immunotherapeutics have demonstrated
efficacy in animal cancer models.

OUR INFECTIOUS DISEASE IMMUNOTHERAPEUTICS

Background.  Infectious diseases are illnesses caused by microorganisms, like
viruses, bacteria and parasites, and include tuberculosis, hepatitis, genital
herpes and HIV. While a number of viral and bacterial diseases are treated
effectively with antiviral agents and antibiotics, a growing concern is the
emergence of new strains of pathogens that have developed resistance to all
available drugs.

Our Approach.  Our immunotherapeutics for treating infectious diseases will
consist of heat shock proteins complexed to peptides that are produced by the
pathogen causing the infection. Typically, each infectious disease is caused by
a specific pathogen. Consequently, our infectious disease immunotherapeutics
will be common to all patients with a particular infection and will not be
patient-specific. We currently produce these immunotherapeutics from cells
infected with the target pathogen. This manufacturing procedure has enabled
testing of our immunotherapeutics in preclinical studies and should enable
production of sufficient quantities to begin human clinical trials. Another
technique to manufacture our immunotherapeutics involves binding specific
peptides with heat shock proteins in vitro. The peptides can be generated in
microorganisms or they may be produced synthetically.

         OUR INFECTIOUS DISEASE IMMUNOTHERAPEUTIC MANUFACTURING PROCESS

                                     [GRAPH]
--------------------------------------------------------------------------------
Starting Material                  Manufacturing                    Final Product
      Mammalian cell lines    \     Heat shock protein-peptide     \       Product frozen
     infected with pathogen ---|  complexes (purified from cell  ---|      and shipped to
     of interest and grown    /    lines or produced in vitro)     /    hospital/clinic for
         in bioreactors                                                  patient treatment
               or
      Heat shock proteins
     and pathogen specific
       peptides produced
      synthetically or in
         microorganisms
--------------------------------------------------------------------------------

                                       41
43

Genital Herpes.  Genital herpes is a contagious viral infection that affects an
estimated 45 million Americans. Doctors estimate that as many as 500,000 new
cases may occur each year in the United States. Genital herpes is currently
treated with palliative antiviral agents that reduce further replication of the
virus. The challenge of antiviral therapy lies not only in treatment of the
symptoms during the first and recurrent episodes but also in the long-term
suppression of the herpes virus in patients with frequent recurrences. We expect
to file an IND for this indication in 2000.

OUR AUTOIMMUNE DISORDER IMMUNOTHERAPEUTIC

Background.  Autoimmune disorders result from an inappropriate immune response
that targets and destroys normal tissue. While it is not known definitively what
triggers autoimmune responses, both genetic and environmental factors are
probably involved in this process. Several autoimmune disorders, including
diabetes and multiple sclerosis, result in the proliferation of misdirected T
cells that attack normal tissues. We believe that a therapeutic product that can
turn off misdirected T cell responses could treat these disorders.

Our Approach.  We have demonstrated in animal models that heat shock proteins
administered at higher doses than those required for treating cancer and
infectious diseases can turn off misguided T cells that destroy healthy tissue
in animals with certain autoimmune disorders. We are currently researching the
application of heat shock proteins to treat autoimmune diseases like diabetes
and multiple sclerosis. The source of heat shock proteins used in our autoimmune
disorders immunotherapeutic will be human cells. Our immunotherapeutic could
also be made using recombinant DNA techniques.

        OUR AUTOIMMUNE DISORDER IMMUNOTHERAPEUTIC MANUFACTURING PROCESS

                                      [GRAPH]

--------------------------------------------------------------------------------
Starting Material    \            Manufacturing          \        Final Product
        Mammalian cells   ---|    Heat shock protein-peptide  ---|    Product frozen and
              or            /         complexes purified        /         shipped to
        recombinant DNA                 from cell lines               hospital/clinic for
                                              or                       patient treatment
                                    recombinantly produced
--------------------------------------------------------------------------------

MANUFACTURING

We manufacture our own immunotherapeutic products in a 30,225 square foot
manufacturing and research and development facility located in Woburn,
Massachusetts. We are in the process of preparing this facility for the
commercialization of Oncophage.

Our process development group is currently working on improving the process by
which heat shock protein-based immunotherapeutics are manufactured. Efforts in
this area to date have resulted in a two-fold reduction in the time required to
purify Oncophage from individual patient's tumors and a 40% increase in the
quantity of Oncophage we can produce from a particular tumor mass. These efforts
in our cancer program should also benefit preparation of our heat shock
protein-based immunotherapeutics for treatment of infectious diseases.

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44

SALES AND MARKETING

To commercially market our immunotherapeutic products once the necessary
regulatory approvals are obtained, we must either develop our own sales and
marketing force or enter into arrangements with third parties. Currently, our
sales and marketing plans consist of the following:

       -     Commercialize cancer immunotherapeutics in the United States
             through our own sales force. We believe that we can build a United
             States sales force to market our cancer immunotherapeutics due to
             the concentration of the United States oncology market.

       -     Form collaborations with pharmaceutical companies for
             commercializing cancer immunotherapeutics outside the United
             States.  For example, we have entered into an agreement with Sigma
             Tau, under which they have agreed to pay for two clinical trials in
             return for rights which include an option to enter into an
             agreement to market Oncophage in Italy, Spain, Portugal and
             Switzerland. We have also signed an agreement for marketing
             Oncophage in Israel.

       -     Form collaborations with pharmaceutical companies for infectious
             diseases and autoimmune disorders.  Unlike cancer, the number of
             doctors and health care institutions prescribing treatments for
             infectious diseases and autoimmune disorders is large and
             fragmented and will require a large sales force to effectively
             market our products.

OUR INTELLECTUAL PROPERTY PORTFOLIO

We devote significant resources to protecting and expanding our intellectual
property portfolio. We seek to protect our core technologies through a
combination of patents, trade secrets, and know-how. As a result of an exclusive
worldwide license with Fordham University and one with Mount Sinai School of
Medicine, we have exclusive rights to seven issued U.S. patents, and foreign
counterpart patents and patent applications, relating to our heat shock protein
technology. Prior to directing the Center for Immunotherapy of Cancer at the
University of Connecticut, Dr. Srivastava, the Chairman of our Scientific
Advisory Board, was an assistant professor of immunology at Mount Sinai School
of Medicine, and, then, a professor of immunology at Fordham University.

We also have licensed rights to 44 pending U.S. patent applications, and
corresponding foreign counterpart patents and applications, from Mount Sinai
School of Medicine of New York University, Fordham University, Duke University,
and the University of Miami. Under the license agreements with these
institutions, we have exclusive, worldwide rights to inventions using heat shock
proteins in the treatment and prevention of cancer, infectious diseases,
autoimmune disorders, and other indications. If we commercialize any of the
inventions, we will pay the licensors a royalty on sales of the commercialized
product. In addition, pursuant to a research agreement with the University of
Connecticut Health Center, we have agreed to provide funding, through December
31, 2002, to the laboratory directed by Dr. Srivastava at the University. In
return, we have an option to obtain an exclusive license to new inventions as
that term is defined in the research agreement, with the royalty rates and other
terms to be determined by negotiation between the parties. We also have an
option to obtain an exclusive license to certain types of "improvement"
inventions as that term is defined in the research agreement, at already-
determined royalty rates, but with the other terms to be determined by
negotiation between the parties. To date, we have exercised options to license
three patent applications.

It is worth noting that:

       -     patent applications in the United States are maintained in secrecy
             until patents issue;

       -     patent applications in other countries generally are not published
             until 18 months after they are first filed in any country;

       -     publication of technological developments in the scientific or
             patent literature often lags behind the date of these developments;
             and

       -     searches of prior art may not reveal all relevant prior inventions.

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45

Although we have licensed seven issued United States patents and 44 pending
United States patent applications, we cannot be certain that our licensors'
inventors were the first to invent the subject matter covered by these patent
and patent applications or that they were the first to file patent applications
for those inventions or that these patent rights would not be rendered invalid
or unpatentable.

REGULATORY CONSIDERATIONS

The preclinical and clinical testing, manufacturing, labeling, storage, record
keeping, advertising, promotion, export, marketing and distribution, among other
things, of our immunotherapeutics are subject to extensive regulation by
governmental authorities in the United States and other countries. In the United
States, pharmaceutical products are subject to rigorous review by the FDA under
the Federal Food, Drug, and Cosmetic Act, the Public Health Service Act and
other federal statutes and regulations. Non-compliance with applicable
requirements can result in fines, recall or seizure of products, total or
partial suspension of production, refusal of the government to approve marketing
applications or allow us to enter into supply contracts, and criminal
prosecution. The FDA also has the authority to revoke previously granted
marketing authorizations.

In order to obtain approval of a new product from the FDA, we must, among other
requirements, submit proof of safety and efficacy as well as detailed
information on the manufacture and composition of the product. In most cases,
this proof entails extensive preclinical, clinical and laboratory tests. This
testing, the preparation of necessary applications and processing of those
applications by the FDA are expensive and typically take several years to
complete. We cannot assure that the FDA will act quickly or favorably in
reviewing these applications, and we may encounter significant difficulties or
costs in our efforts to obtain FDA approvals that could delay or preclude us
from marketing any products we may develop. The FDA may also require
post-marketing testing and surveillance to monitor the effects of approved
products or place conditions on any approvals that could restrict the commercial
applications of these products. Product approvals may be withdrawn if compliance
with regulatory standards is not maintained or if problems occur following
initial marketing. With respect to patented products or technologies, delays
imposed by the governmental approval process may materially reduce the period
during which we will have the exclusive right to exploit them.

The first stage of the FDA approval process for a new biologic or drug involves
completion of preclinical studies and the submission of the results of these
studies to the FDA, together with proposed clinical protocols, manufacturing
information, analytical data and other information, in an investigational new
drug application, which must become effective before human clinical trials may
commence. The investigational new drug application will automatically become
effective 30 days after receipt by the FDA, unless the FDA before that time
requests an extension to review the application, or raises concerns or questions
about the conduct of the trials as outlined in the application. In the latter
case, the sponsor of the application and the FDA must resolve any outstanding
concerns before clinical trials can proceed. We cannot guarantee that submission
of an investigational new drug application will result in FDA authorization to
commence clinical trials in any given case.

Preclinical studies involve laboratory evaluation of product characteristics and
animal studies to assess the efficacy and safety of the product. Preclinical
studies are regulated by the FDA under a series of regulations called the
current "Good Laboratory Practices" regulations. Violations of these regulations
can, in some cases, lead to invalidation of the studies, requiring those studies
to be replicated.

After the investigational new drug application becomes effective, human clinical
trials may commence. Human clinical trials are typically conducted in three
sequential phases, but the phases may overlap. Phase I trials consist of testing
the product in a small number of patients or healthy volunteers, primarily for
safety at one or more doses. In phase II, in addition to safety, the efficacy of
the product is evaluated in a patient population somewhat larger than phase I
trials. Phase III trials typically involve additional testing for safety and
clinical efficacy in an expanded population at geographically dispersed test
sites. A clinical plan, or "protocol," accompanied by the approval of the
institution participating in the trials, must be

                                       44
46

submitted to the FDA prior to commencement of each clinical trial. The FDA may
order the temporary or permanent discontinuation of a clinical trial at any
time.

The results of the preclinical and clinical testing, together with, among other
things, detailed information on the manufacture and composition of the product,
are submitted to the FDA in the form of a new drug application or, in the case
of a biologic, a biologics license application. In a process which generally
takes several years, the FDA reviews this application and, when and if it
decides that adequate data is available to show that the new compound is both
safe and effective and that other applicable requirements have been met,
approves the drug or biologic for marketing. The amount of time taken for this
approval process is a function of a number of variables, including the quality
of the submission and studies presented, the potential contribution that the
compound will make in improving the treatment of the disease in question, and
the workload at the FDA. We cannot guarantee that any of our immunotherapeutics
will successfully proceed through this approval process or will be approved in
any specific period of time, or at all.

The Food and Drug Administration Modernization Act of 1997 was enacted, in part,
to ensure the availability of safe and effective drugs, biologics and medical
devices by expediting the FDA review process for new products. The Modernization
Act establishes a statutory program for the approval of fast track products,
including biologics. The fast track provisions essentially codify the FDA's
accelerated approval regulations for drugs and biologics. A fast track product
is defined as a new drug or biologic intended for the treatment of a serious or
life-threatening condition that demonstrates the potential to address unmet
medical needs for this condition. Under the fast track program, the sponsor of a
new drug or biologic may request the FDA to designate the drug or biologic as a
fast track product at any time during the clinical development of the product.

The Modernization Act specifies that the FDA must determine if the product
qualifies for fast track designation within 60 days of receipt of the sponsor's
request. Approval of a marketing application for a fast track product can be
based on an effect on a clinical endpoint or on a surrogate endpoint that is
reasonably likely to predict clinical benefit. Approval of an application for a
fast track product may be subject to:

       -     post-approval studies to validate the surrogate endpoint or confirm
             the effect on the clinical endpoint; and

       -     prior review of all promotional materials.

If a preliminary review of the clinical data suggests that a fast track product
may be effective, the FDA may initiate review of sections of a marketing
application for a fast track product before the application is complete. This
rolling review is available if the applicant provides a schedule for submission
of remaining information and pays applicable user fees. However, the time
periods specified under the Prescription Drug User Fee Act concerning timing
goals to which the FDA has committed in reviewing an application, do not begin
until the complete application is submitted.

We may request fast track designation for our immunotherapeutics. We cannot
predict whether the FDA will grant that designation nor can we predict the
ultimate impact, if any, of the fast track process on the timing or likelihood
of FDA approval of our immunotherapeutics.

The FDA may, during its review of a new drug application or biologics license
application, ask for additional test data. If the FDA does ultimately approve
the product, it may require post-marketing testing, including potentially
expensive phase IV studies, and surveillance to monitor the safety and
effectiveness of the drug. In addition, the FDA may in some circumstances impose
restrictions on the use of the drug that may be difficult and expensive to
administer, and may require prior approval of promotional materials.

Before approving a new drug application or biologics license application, the
FDA will inspect the facilities at which the product is manufactured and will
not approve the product unless the manufacturing facilities are in compliance
with current Good Manufacturing Practices. In addition, the manufacture,
holding, and

                                       45
47

distribution of a product must be in compliance with current Good Manufacturing
Practices. Manufacturers must continue to expend time, money, and effort in the
area of production and quality control and record keeping and reporting to
ensure full compliance with those requirements. The labeling, advertising,
promotion, marketing and distribution of a drug or biologic product must be in
compliance with FDA regulatory requirements. Failure to comply with applicable
requirements can lead to the FDA demanding that production and shipment cease,
and, in some cases, that products be recalled, or to enforcement actions that
can include seizures, injunctions, and criminal prosecution. These failures can
also lead to FDA withdrawal of approval to market the product.

We are also subject to regulation by the Occupational Safety and Health
Administration and the Environmental Protection Agency and to regulation under
the Toxic Substances Control Act, the Resource Conservation and Recovery Act and
other regulatory statutes, and may in the future be subject to other federal,
state or local regulations. Either or both of OSHA or the EPA may promulgate
regulations that may affect our research and development programs. We are unable
to predict whether any agency will adopt any regulation which could have a
material adverse effect on our operations.

Sales of pharmaceutical products outside the United States are subject to
foreign regulatory requirements that vary widely from country to country.
Whether or not FDA approval has been obtained, approval of a product by
comparable regulatory authorities of foreign countries must be obtained prior to
the commencement of marketing the product in those countries. The time required
to obtain this approval may be longer or shorter than that required for FDA
approval. The foreign regulatory approval process includes all the risks
associated with FDA regulation set forth above as well as country-specific
regulations.

COMPETITION

Competition in the pharmaceutical and biotechnology industries is intense. Many
pharmaceutical or biotechnology companies have products on the market and are
actively engaged in the research and development of products for the treatment
of cancer, infectious diseases and autoimmune disorders. In addition, many
competitors focus on immunotherapy as a treatment for cancer, infectious
diseases and autoimmune disorders. In particular, some of these companies are
developing autologous cancer vaccines. Others are focusing on developing heat
shock protein products. We compete for funding, access to licenses, personnel
and third-party collaborations. In addition, many competitors have substantially
greater financial, manufacturing, marketing, sales, distribution and technical
resources, and more experience in research and development, clinical trials and
regulatory matters, than we do. If a competing company were to develop, or
acquire rights to, a more efficacious therapeutic product for the same diseases
targeted by us, or one which offers significantly lower costs of treatment, our
products could be rendered noncompetitive or obsolete.

Significant levels of research in biotechnology, medicinal chemistry and
pharmacology occur in academic institutions, governmental agencies and other
public and private research institutions. These entities have become
increasingly active in seeking patent protection and licensing revenues for
their research results. They also compete with us in recruiting and retaining
skilled scientific talent.

FACILITIES

We lease approximately 30,225 square feet of laboratory space in Woburn,
Massachusetts under a lease agreement that terminates in August 2003. We have an
option to renew for an additional five-year period with the landlord's consent.
Our executive offices are located in New York, New York, in an office building
in which we lease approximately 8,000 square feet from an affiliated party. The
agreement terminates in December 2006. You should read the discussion under
"Certain Relationships and Related Transactions" regarding our executive
offices. Finally, we lease a 2,000 square foot manufacturing facility in
Framingham, Massachusetts under a lease agreement that terminates in December
1999.

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EMPLOYEES

As of October 31, 1999, we had 67 employees, of whom ten have Ph.D.s and one has
an M.D.; three are clinical staff, 21 are manufacturing and quality control
staff, 21 are research and development staff, and 22 are management or
administrative staff. None of our employees is subject to a collective
bargaining agreement. We believe that our relations with our employees are good.

LEGAL PROCEEDINGS

Other than our opposition of a European patent discussed under "Risk Factors,"
we are not currently a party to any material legal proceedings or claims. You
should read the discussion of our opposition of this European patent under "Risk
Factors."

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                                   MANAGEMENT

EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES

Set forth below is certain information regarding our executive officers,
directors and key employees, including their age as of November 1, 1999:
NAME                                         AGE                      TITLE
----                                         ---                      -----
Garo Armen, Ph.D.........................    46     Chairman of the Board, Chief Executive
                                                      Officer
Pramod Srivastava, Ph.D..................    44     Director, Chairman of Scientific Advisory
                                                      Board
Gamil de Chadarevian.....................    47     Vice Chairman of the Board, Executive
                                                      Vice President International
Elma Hawkins, Ph.D.......................    43     Senior Vice President
Dirk Reitsma, M.D........................    50     Vice President of Clinical Affairs
Neal Gordon, Ph.D........................    38     Vice President of Operations
Donald Panoz.............................    64     Director, Honorary Chairman
Noubar Afeyan, Ph.D.(1)(2)...............    37     Director
Edward Brodsky(1)........................    70     Director
Tom Dechaene(2)..........................    40     Director
Martin Taylor(1)(2)......................    47     Director
---------------------------------------------
(1)Member of the Compensation Committee

(2)Member of the Audit Committee

The size of the board of directors is currently set at eight members.

Antigenics' certificate of incorporation provides for a classified board of
directors consisting of three classes, with each class being as nearly equal in
number as possible. The term of one class expires and their successors are
elected for a term of three years at each annual meeting of the stockholders.
Antigenics has designated three class I directors, Messrs. de Chadarevian,
Brodsky and Taylor, three class II directors, Messrs. Panoz, Afeyan and
Srivastava, and two class III directors, Messrs. Armen and Dechaene. These class
I, class II and class III directors will serve until the annual meetings of
stockholders to be held in 2000, 2001 and 2002, respectively, and until their
respective successors are duly elected and qualified, or until their earlier
resignation or removal. Officers are appointed by the board of directors until
the next annual meeting of the board of directors.

GARO ARMEN, PH.D. co-founded Antigenics in 1994 and has been the Chairman of the
board and Chief Executive Officer since inception. Dr. Armen was previously a
Senior Vice President of Research for Dean Witter Reynolds, focusing on the
chemical and pharmaceutical industries. Dr. Armen has also served as an
Associate Professor at the Merchant Marine Academy and as a research associate
at the Brookhaven National Laboratory. He currently serves as a director of Elan
Corporation, Plc. and Color Kinetics Inc. Dr. Armen received his Ph.D. degree in
physical chemistry from the City University of New York in 1979. Since 1990, Dr.
Armen has been the managing general partner of Armen Partners, L.P., an
investment partnership specializing in public and private healthcare and
biotechnology investments.

PRAMOD SRIVASTAVA, PH.D. co-founded Antigenics in 1994 and has served as the
Chairman of the scientific advisory board since inception. Dr. Srivastava is the
Director of the Center for Immunotherapy of Cancer and Infectious Diseases at
the University of Connecticut. Dr. Srivastava has held positions at Fordham
University and the Mount Sinai School of Medicine. His postdoctoral training was
performed at Yale University and the Sloan-Kettering Institute for Cancer
Research. Dr. Srivastava serves on the Scientific Advisory Council of the Cancer
Research Institute, New York, and has been a member of the Experimental
Immunology Study Section of the National Institutes of Health of the United
States

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50

Government since 1994. Dr. Srivastava is a past recipient of the First
Independent Research Support & Transition Award of the National Institutes of
Health (1987), the Irma T. Hirschl Scholar Award (1988), the Investigator Award
of the Cancer Research Institute, New York (1991), the Mildred Scheel
Lectureship (1994), and the Sigma Tau Foundation Speakership (1996). In 1997, he
was inducted into the Roll of Honor of the International Union against Cancer
and was listed in the Who's Who in Science and Engineering. He is among the
twenty founding members of the Academy of Cancer Immunology. Dr. Srivastava
earned his Ph.D. in Biochemistry from the Centre for Cellular and Molecular
Biology, Hyderabad, India. Dr. Srivastava is a director of Iconics, Inc.

GAMIL DE CHADAREVIAN has served as the Vice Chairman of the Board since 1995 and
as Executive Vice President International since 1998. Until April of 1998, he
was Managing Director of Special Projects of Alza International, responsible for
creating new business opportunities in Europe. From 1992 to 1993, Mr. de
Chadarevian was the Vice President of Corporate Development for Corange London
Limited. Prior to 1992, Mr. de Chadarevian held positions at Pasfin Servizi
Finanziara SpA, GEA Consulenza and Credit Suisse. He is also co-founder and
serves as an advisor to several private health care companies in the United
States and Europe. Mr. de Chadarevian received a Lic. Oec. Publ. Degree from the
University of Zurich in Switzerland. Mr. de Chadarevian is the co-founder and
currently the Vice Chairman of Iconics, Inc. and Cambria Tech. Ltd.

ELMA HAWKINS, PH.D. has served as Senior Vice President since August 1998. From
July 1996 through August 1998, Dr. Hawkins served as the Chief Operating Officer
of the company. Prior to her employment by Antigenics, Dr. Hawkins served in a
number of senior positions at Genzyme Corporation, including Director of
Corporate Development. Dr. Hawkins has also held positions in preclinical and
clinical research at Warner-Lambert/Parke-Davis and at the Center for the Study
of Drug Development at Tufts Medical School. Dr. Hawkins holds a Ph.D. in
Medicinal Chemistry from the University of Alabama and an M.B.A. from Boston
University. Dr. Hawkins is a director of Nalari Computing Corporation.

DIRK REITSMA, M.D. has served as Vice President of Clinical Affairs and Medical
Director since April 1997. From 1990 to 1997, Dr. Reitsma was employed by
Ciba-Geigy, where he managed the clinical development of several biologic
compounds and other new drugs. Dr. Reitsma was responsible for the phase III
trials of Aredia in breast cancer, and for their regulatory submissions to the
FDA. Prior to that, Dr. Reitsma was employed by Organon in Rockville, Maryland,
where he worked on various biologics, including human monoclonal antibodies and
on the submission of the regulatory filing for Bacillus Calmette Guerin, also
known as BCG, for superficial bladder cancer. Dr. Reitsma practiced internal
medicine and oncology at the Bergwegiekenhuis in Rotterdam prior to joining
Organon. He received his M.D. from the Erasmus University in Rotterdam, The
Netherlands.

NEAL GORDON, PH.D. has served as Vice President of Operations since May 1999.
Prior to this position he served as Vice President Process Development since
July 1998. Previously, he was Senior Director of Chromatography R&D at
PerSeptive Biosystems, a division of PE Corp., formerly Perkin-Elmer
Corporation. Over his ten-year career at PerSeptive, Dr. Gordon was involved in
the development and application of innovative technologies for the purification
and analysis of biopolymers, most notably the development of the BioCAD(R)
Chromatography Workstation. Dr. Gordon received his Ph.D. in Biochemical
Engineering from the Massachusetts Institute of Technology and a Bachelors
degree in Chemical Engineering from McGill University.

DONALD PANOZ has been a director since 1995 and is the Honorary Chairman of the
board of directors. In 1969, Mr. Panoz founded Elan Corporation, Plc., a
pharmaceutical research and development company. Mr. Panoz was Chairman and
Chief Executive Officer of Elan Corporation from 1969 until his retirement in
1996. Mr. Panoz is currently a Lecturer of Pharmacy at the University of
Georgia. In January 1995, Mr. Panoz was named Honorary Irish Consulate General
to Bermuda. Mr. Panoz attended Pittsburgh University and Duquesne University in
Pennsylvania.

NOUBAR AFEYAN, PH.D. has been a director since 1998. Dr. Afeyan is Chairman and
CEO of the NewcoGen Group and is also a partner at One Liberty Ventures. Dr.
Afeyan was Senior Vice President

                                       49
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and Chief Business Officer of PE Corp. until August 1999. Prior to its
acquisition by PE Corp., Dr. Afeyan was the Chairman and Chief Executive Officer
of PerSeptive Biosystems, a company that he founded in 1987 to develop,
manufacture and market instruments and chemical reagents used to purify, analyze
and synthesize biomolecules. Dr. Afeyan served as Chairman of the Board of
ChemGenics Pharmaceuticals, Inc. during 1996 and 1997. He is also a member of
the board of directors of two private companies. Dr. Afeyan received his
undergraduate degree in Chemical Engineering from McGill University and his
Ph.D. in Biochemical Engineering from the Massachusetts Institute of Technology.

EDWARD BRODSKY has been a director since 1995. Mr. Brodsky has been a partner of
the law firm of Proskauer Rose LLP since 1992 and was previously a partner at
the firm of Spengler Carlson Gubar Brodsky & Frisching. Mr. Brodsky and his firm
represent Antigenics in legal matters. Mr. Brodsky is currently a director of
Giant Cement Holding, Inc. and UIS, Inc.. He received his LL.B. from New York
University School of Law.

TOM DECHAENE has been a director since 1999. Mr. Dechaene has been with Deutsche
Bank since 1991 and is currently a director in the Principal Investments Group
within the Equity Capital Markets division. This group specializes in minority
investments in fast growing private companies in information technology,
communications, new media and healthcare on a global basis. Mr. Dechaene is a
director of Color Kinetics Inc. and Iconics, Inc. Mr. Dechaene holds a law
degree from Ghent University, Belgium, an MBA from INSEAD, France and a degree
in Applied Economics from the University of Antwerp.

MARTIN TAYLOR has been a director since June 1999. From 1993 until 1998, Mr.
Taylor held the position of Chief Executive Officer of Barclays Bank Plc. Mr.
Taylor is presently a member of the Council for Science and Technology and,
since November 1999, has been chairman of the W.H. Smith Group Plc. In October
1999, he became an advisor to Goldman Sachs International. He was educated at
Balliol College, Oxford University.

SCIENTIFIC ADVISORY BOARD

Our scientific advisory board is comprised of internationally recognized
scientists in the fields of immunology, oncology, genetics and drug delivery.
The scientific advisory board advises our management on strategic issues related
to our scientific development program. Dr. Srivastava chairs the board which
consists of the following other individuals:

JOSHUA LEDERBERG, PH.D. has been a member of the scientific advisory board since
1996 and is the board's Honorary Chairman. In 1958, at the age of 33, Dr.
Lederberg received the Nobel Prize in Physiology of Medicine for his work in the
field of bacterial genetics. Dr. Lederberg is currently the Sackler Foundation
Scholar and Professor- and President-Emeritus at The Rockefeller University, in
New York City, where he is researching the interrelationships of DNA
conformation and mutagenesis. Previously, Dr. Lederberg was a professor of
genetics at Stanford University. A member of the National Academy of Sciences
and a charter member of its Institute of Medicine, Dr. Lederberg has served as
chairman of the President's Cancer Panel and has chaired a comprehensive study
of emergent infections sponsored by the Institute of Medicine, intended to
counteract complacency about the threats from many infectious diseases. He has
also received the United States National Medal of Science. Dr. Lederberg has
served on the board of the Procter & Gamble Co., and continues as a part-time
consultant to several financial and pharmaceutical research and development
institutions. He received his Ph.D. from Yale University.

SIR WALTER BODMER, PH.D. has been a member of the scientific advisory board
since 1996 and he is currently the board's Vice Chairman. Sir Walter currently
serves as the Principal of Herford College, Oxford University. Previously, he
was the Director-General of the Imperial Cancer Research Fund and was Director
of Research at the Fund from 1979 to 1991. He is a Foreign Associate of the
United States National Academy of Sciences and a Foreign Honorary Member of the
American Academy of Arts and Sciences. He is also a Trustee of Sir John Soane's
Museum and the first President of the International Federation of Associations
for the Advancement of Science and Technology. In 1995, Sir Walter was appointed
Chancellor of the University of Salford. Sir Walter was the second President of
the Human

                                       50
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Genome Organization and is a past President of the British Association for the
Advancement of Science and of the Royal Statistics Society. He has served as
Chairman of the BBC Science Consultative Group and as Vice-President of the
Royal Institution. Sir Walter has recently completed his term as Chairman of the
Trustees of the Natural History Museum, having served as a Trustee for ten
years. He received a Ph.D. from Cambridge University.

HANS-GEORG RAMMENSEE, PH.D. has been a member of the scientific advisory board
since 1999. Dr. Rammensee is currently the Chair of Immunology at the University
of Tubingen, where he has served in various capacities since 1987. From 1993
until 1996, he was Head, Department of Tumorvirus-Immunology, German Cancer
Research Center, Heidelberg, where he was also on the faculty of Theoretical
Medicine. From 1987 until 1993, Dr. Rammensee was Head, Laboratory for
Immunology at the Max Planck Institute for Biology. Since 1987, Dr. Rammensee
has been Coeditor of Immunogenetics and, since 1991, Coeditor of European
Journal of Immunology. Dr. Rammensee is also Speaker for the Graduate Committee
for Cell Biology in Medicine at the University of Tubingen and a Member of the
Evaluation Committee for the Cooperation Program in Cancer Research between the
German Cancer Research Center in Heidelberg and the Ministry of Science in
Israel. From 1992 through 1997, Dr. Rammensee was a Member of the
"Hinterzartener Kreis", a committee of the German Research Council. Dr.
Rammensee has been the recipient of numerous awards including the Heinz Maier
Leibnitz Award of the German Federal Ministry of Science (1988), the Wilhelm and
Maria Meyenburg Award of the German Cancer Research Center (1991), the Gottfried
Wilhelm Leibnitz Award of the German Research Council (1991), the Avery
Landsteiner Award of the Society for Immunology (1992), the Robert Koch Award of
the Robert Koch Foundation (1993), the Paul Ehrlich and Ludwig Darmstaedter
Award of the Paul Ehrlich Foundation (1996) and the Rose Payne Distinguished
Scientist Award of the American Society for Histocompatibility and
Immunogenetics (1997). Dr. Rammensee received his Ph.D. from the University of
Tubingen in 1982, where he studied minor histocompatibility antigens in immune
response.

FELIX THEEUWES, PH.D. has been a member of the scientific advisory board since
1996. Dr. Theeuwes is currently the Chairman and Chief Scientist of Durect
Corporation, which is an affiliate of Alza Corporation. Prior to his current
position, Dr. Theeuwes was Chief Scientist at Alza Corporation. Dr. Theeuwes was
with Alza from 1970, directing research, technology development and product
development for a variety of controlled drug delivery systems. Dr. Theeuwes
holds more than 220 United States patents and has published more than 80
articles and book chapters. In 1980, Dr. Theeuwes was named Inventor of the Year
by the Peninsula Patent Law Association. In 1983, he was the recipient of the
Award for the Advancement of Industrial Pharmacy. He was the Busse Lecturer at
the University of Wisconsin in 1981 and, in 1985, the Third Annual Sidney
Riegelman Lecturer at the University of California, San Francisco. He is a
Fellow of the American Association of Pharmaceutical Scientists, and, in 1993,
he became the first recipient of Alza Corporation's Founder's Award. Dr.
Theeuwes is currently a member of the board of directors of both Vinifera, Inc.
and Durect Corporation. He received his undergraduate and graduate education in
physics at the University of Leuven, Belgium, with a D.Sc. degree in 1966. From
1966 to 1970 he served as a post-doctoral fellow and visiting research assistant
professor in the Department of Chemistry, University of Kansas.

AUDIT COMMITTEE

The audit committee makes recommendations to the board of directors about the
selection of independent auditors, reviews the results and scope of the audit
and other services provided by our independent auditors, and evaluates our
internal controls. The audit committee consists of Messrs. Taylor, Dechaene and
Afeyan.

                                       51
53

COMPENSATION COMMITTEE

The compensation committee reviews and approves the compensation and benefits
for our executive officers, administers our stock option plans and makes
recommendations to the board of directors about compensation matters. The
compensation committee consists of Messrs. Taylor, Brodsky and Afeyan.

EXECUTIVE COMPENSATION

The following table summarizes the compensation paid to or earned during the
fiscal year ended December 31, 1998 by our chief executive officer and all of
our other executive officers whose salary and bonus exceeded $100,000. We refer
to these persons as the named executive officers.

                           SUMMARY COMPENSATION TABLE
LONG-TERM
                                                              1998 ANNUAL            COMPENSATION
                                                             COMPENSATION          -----------------
                                                        -----------------------    SHARES UNDERLYING
NAME AND PRINCIPAL POSITION                             SALARY($)     BONUS($)        OPTIONS(#)
---------------------------                             ----------    ---------    -----------------
Garo H. Armen, Ph.D., Chief Executive Officer.......       --            --
Elma Hawkins, Ph.D., Senior Vice President..........     $200,000      $20,000
Neal Gordon, Ph.D., Vice President of Operations....     $ 57,272(1)   $28,750
---------------------------------------------
(1)Dr. Gordon commenced employment with Antigenics in July 1998.

1998 OPTION GRANTS

The following table contains certain information regarding stock option grants
during the twelve months ended December 31, 1998 by us to the named executive
officers:

                       OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
                                                                                                    VALUE AT ASSUMED
                              NUMBER OF                                                           ANNUAL RATES OF STOCK
                              SECURITIES    PERCENT OF TOTAL                                       PRICE APPRECIATION
                              UNDERLYING    OPTIONS GRANTED     EXERCISE OR BASE                   FOR OPTION TERM(1)
                               OPTIONS        TO EMPLOYEES           PRICE          EXPIRATION    ---------------------
NAME                          GRANTED(#)     IN FISCAL YEAR        ($/SHARE)           DATE        5%($)        10%($)
----                          ----------    ----------------    ----------------    ----------    -------      --------
Garo H. Armen, Ph.D.,
  Chief Executive
  Officer.................       --               --                  --                 --         --            --
Elma Hawkins, Ph.D.,
  Senior Vice President...       --               --                  --                 --         --            --
Neal Gordon, Ph.D., Vice
  President of
  Operations..............                                                             7/08
---------------------------------------------
(1)The dollar amounts under these columns are the result of calculations at the
   5% and 10% rates set by the SEC and, therefore, are not intended to forecast
   possible future appreciation, if any, in the price of the underlying common
   stock. No gain to the optionees is possible without an increase in price of
   the common stock, which will benefit all stockholders proportionately. In
   order to realize the potential values set forth in the 5% and 10% columns of
   this table, the per share price of the common stock would have to be
   $        and $        , or approximately     % and     % above the respective
   exercise or base price shown, based on an assumed initial public offering
   price of $    per share.

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OPTION EXERCISES AND YEAR-END OPTION VALUES

The following table provides information about the number of shares issued upon
option exercises by the named executive officers during the year ended December
31, 1998, and the value realized by the named executive officers. The table also
provides information about the number and value of options held by the named
executive officers at December 31, 1998. As our common stock is not publicly
traded, a readily ascertainable market value is not available.

               AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
                         FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
                                                                    UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                                                                       OPTIONS AT FISCAL           IN-THE-MONEY OPTIONS
                                                                          YEAR-END(#)            AT FISCAL YEAR END($)(1)
                                  SHARES ACQUIRED      VALUE      ---------------------------   ---------------------------
NAME                              ON EXERCISE(#)    REALIZED($)   EXERCISABLE   UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                              ---------------   -----------   -----------   -------------   -----------   -------------
Garo H. Armen, Ph.D., Chief
  Executive Officer...........          --              --
Elma Hawkins, Ph.D., Senior
  Vice President..............          --              --
Neal Gordon, Ph.D., Vice
  President of Operations.....          --              --
---------------------------------------------
(1)Based on the difference between the option exercise price and an assumed
   initial public offering price of $    per share of common stock.

EMPLOYMENT AGREEMENTS

Under an employment agreement dated June 1, 1998, Antigenics agreed to employ
Elma Hawkins, Ph.D. as Senior Vice President for one year at an annual base
salary of $200,000, which is subject to performance and merit based increases.
Pursuant to the agreement, Dr. Hawkins was issued options to purchase
               shares of the company's common stock at an exercise price of
$          per share vesting over three years. The agreement is automatically
renewed for successive one-year periods unless either party terminates the
agreement. If Dr. Hawkins is terminated without cause as that term is defined in
the agreement, she is entitled to her base salary through the end of the
one-year term during which the termination occurs. If Dr. Hawkins is terminated
either because her position of Senior Vice President is eliminated or because
there is a change in control of Antigenics, we are obligated to pay her cash or
Antigenics common stock equal to one year's base salary.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

As a limited liability company, a compensation committee consisting of Messrs.
Afeyan and Brodsky reviewed salaries and incentive compensation for our
employees and consultants. The compensation committee of the board of directors
of Antigenics Inc. consists of Messrs. Taylor, Brodsky and Afeyan. Although none
of the compensation committee members are officers or employees of Antigenics,
each of Garo Armen, our chairman and chief executive officer, and Gamil de
Chadarevian, our vice chairman and executive vice president international, have
previously participated in compensation discussions with the committee. None of
our executive officers serves as a member of the board of directors or
compensation committee of any entity that has one or more executive officers
serving on our compensation committee. Mr. Brodsky, however, is a partner of
Proskauer Rose LLP, a law firm that provides legal services to Antigenics.

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DIRECTOR COMPENSATION

We reimburse directors for out-of-pocket and travel expenses incurred while
attending board of director and committee meetings. Directors have been awarded
options to purchase up to           shares of common stock at exercise prices
ranging from $          to $          .

EMPLOYEE BENEFIT PLANS

1999 EQUITY INCENTIVE PLAN

Antigenics's equity plan authorizes the grant of incentive stock options within
the meaning of Section 422 of the Internal Revenue Code of 1986, as amended, and
nonqualified stock options for the purchase of an aggregate of 4,500,000 shares
(subject to adjustment for stock splits and similar capital changes) of common
stock to Antigenics's employees and, in the case of non-qualified stock options,
to consultants of Antigenics or any affiliate, as defined in the equity plan.
The board of directors has appointed the compensation committee to administer
the equity plan. Upon the closing of this offering,           shares of common
stock were subject to outstanding options granted under the equity plan, leaving
          shares available for issuance under future grants under the equity
plan.

1999 EMPLOYEE STOCK PURCHASE PLAN

Antigenics has also adopted an employee stock purchase plan under which
employees may purchase shares of common stock at a discount from fair market
value. There are 300,000 shares of common stock reserved for issuance under the
purchase plan. The purchase plan is intended to qualify as an employee stock
purchase plan within the meaning of Section 423 of the Internal Revenue Code of
1986, as amended. Rights to purchase common stock under the purchase plan are
granted at the discretion of the compensation committee, which determines the
frequency and duration of individual offerings under the plan and the dates when
stock may be purchased. Eligible employees participate voluntarily and may
withdraw from any offering at any time before stock is purchased. Participation
terminates automatically upon termination of employment. The purchase price per
share of common stock in an offering will not be less than 85% of the lesser of
its fair market value at the beginning of the offering period or on the
applicable exercise date and may be paid through payroll deductions, periodic
lump sum payments or a combination of both. The purchase plan terminates on
November 15, 2009. As of November 15, 1999, no shares of common stock had been
issued under the purchase plan.

401(K) PLAN

We sponsor a 401(k) plan for all of our employees. Employees are eligible to
participate after they have completed one year of service with us. Participants
may contribute up to 15% of their current compensation, with a maximum of
$10,000 each year. Each participant is fully vested in his or her salary
contributions and related earnings and losses. We match 100% of the
participant's contribution and our matching contributions vest over four years.
We have discretion to change that amount at any time.

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Antigenics currently leases office space at cost from GHA Management Corporation
which is wholly owned by Garo Armen, Ph.D. Dr. Armen is the chairman and chief
executive officer of Antigenics and we use the office space for our corporate
headquarters. The payments to GHA Management totaled approximately $77,000,
$143,000 and $211,000 for the years ended December 31, 1996, 1997 and 1998,
respectively. Under the current agreement, payments will be approximately
$312,000 annually until the agreement expires in December 2006. Antigenics
believes that the terms of the current agreement are at least as favorable as
terms it could have obtained in an arm's length transaction with an independent
third party. In addition, we have letters of credit for the benefit of GHA
Management Corporation in connection with this lease in the amount of $375,000.
These letters of credit expire in January 2000. You should also read the
discussion regarding Mr. Brodsky's relationship with the law firm of Proskauer
Rose LLP under "Management -- Compensation Committee Interlocks and Insider
Participation."

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                             PRINCIPAL STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of our common stock as of           , 1999, and as adjusted
to reflect the sale of           shares of common stock in this offering, by:

      -     each person, or group of affiliated persons, who is known by us to
            beneficially own more than 5% of the common stock;

      -     each of our directors;

      -     each of our named executive officers; and

      -     all of our directors and current executive officers as a group.

Except as otherwise noted, the persons or entities in this table have sole
voting and investing power with respect to all the shares of common stock
beneficially owned by them subject to community property laws, where applicable.

The "Number of Shares Beneficially Owned" column below is based on
shares of common stock outstanding at           , 1999, and           shares of
common stock outstanding after the offering. Shares of common stock subject to
options that are currently exercisable or exercisable within 60 days of
          , 1999 are deemed to be outstanding and to be beneficially owned by
the person holding the options for the purpose of computing the percentage
ownership of the person but are not treated as outstanding for the purpose of
computing the percentage ownership of any other person.
PERCENTAGE OF TOTAL
                                                    NUMBER OF SHARES    --------------------
                                                      BENEFICIALLY       BEFORE      AFTER
BENEFICIAL OWNER(1)                                      OWNED          OFFERING    OFFERING
-------------------                                 ----------------    --------    --------
STOCKHOLDERS OWNING APPROXIMATELY 5% OR MORE:
  Lawrence Feinberg.............................
     c/o Oracle Partners LP
     712 Fifth Avenue, 45th Floor
     New York, New York 10019
DIRECTORS AND EXECUTIVE OFFICERS
  Garo H. Armen, Ph.D...........................
  Pramod Srivastava, Ph.D.......................
  Gamil de Chadarevian..........................
  Elma Hawkins, Ph.D............................
  Neal Gordon, Ph.D.............................
  Donald Panoz..................................
  Noubar Afeyan, Ph.D...........................
  Edward Brodsky................................
  Tom Dechaene..................................
  Martin Taylor.................................
  All current executive officers and directors
     as a group (10 persons)....................
---------------------------------------------
 *  Indicates less than 1%

(1) Unless otherwise indicated, the address of each shareholder is Antigenics
    Inc., 630 Fifth Avenue, New York, New York 10111.

                                       55
57

                          DESCRIPTION OF CAPITAL STOCK

Immediately following the closing of this offering, the authorized capital stock
of Antigenics will consist of 100,000,000 shares of common stock, $0.01 par
value per share, and 1,000,000 shares of preferred stock, $0.01 par value per
share. After the closing of this offering and giving effect to the issuance of
               shares of common stock and the merger of Antigenics L.L.C. with
and into Antigenics Inc., there will be:

      -                    shares of common stock outstanding;

      -     options to purchase                shares of common stock
            outstanding of which                will be exerciseable upon the
            closing of this offering;

      -     warrants to purchase                shares of common stock
            outstanding, all of which will be exercisable upon the closing of
            this offering; and

      -     no shares of preferred stock outstanding.

COMMON STOCK

Subject to preferences that may apply to shares of preferred stock outstanding
at the time, the holders of outstanding shares of common stock are entitled to
receive dividends out of assets legally available therefor as the board may from
time to time determine. Each stockholder is entitled to one vote for each share
of common stock held on all matters submitted to a vote of stockholders.
Cumulative voting for the election of directors is not provided for in
Antigenics' certificate of incorporation, which means that the holders of a
majority of the shares voted can elect all of the directors then standing for
election. The common stock is not entitled to preemptive rights and is not
subject to conversion or redemption. Each outstanding share of common stock is,
and all shares of common stock to be outstanding upon completion of this
offering will be, fully paid and nonassessable.

PREFERRED STOCK

Pursuant to Antigenics' certificate of incorporation, the board of directors has
the authority, without further action by the stockholders, to issue up to
1,000,000 shares of preferred stock in one or more series and to fix the
designations, powers, preferences, privileges, and relative participating,
optional or special rights as well as the qualifications, limitations or
restrictions of those shares, including dividend rights, conversion rights,
voting rights, terms of redemption and liquidation preferences, any or all of
which may be greater than the rights of the common stock. The board of
directors, without stockholder approval, is able to issue preferred stock with
voting, conversion or other rights that could adversely affect the voting power
and other rights of the holders of common stock. Preferred stock could thus be
issued quickly with terms calculated to delay or prevent a change in control of
Antigenics or make removal of management more difficult. Additionally, the
issuance of preferred stock may have the effect of decreasing the market price
of the common stock, and may adversely affect the voting and other rights of the
holders of common stock. At present, there are no shares of preferred stock
outstanding.

ANTI-TAKEOVER PROVISIONS

Delaware Law

Section 203 of the Delaware General Corporation Law is applicable to corporate
takeovers of Delaware corporations. Subject to exceptions enumerated in Section
203, Section 203 provides that a corporation shall not engage in any business
combination with any "interested stockholder" for a three-year period following
the date that the stockholder becomes an interested stockholder unless:

      -     prior to that date, the board of directors of the corporation
            approved either the business combination or the transaction that
            resulted in the stockholder becoming an interested stockholder;

      -     upon consummation of the transaction that resulted in the
            stockholder becoming an interested stockholder, the interested
            stockholder owned at least 85% of the voting stock of the

                                       56
58

            corporation outstanding at the time the transaction commenced,
            though some shares may be excluded from the calculation; and

      -     on or subsequent to that date, the business combination is approved
            by the board of directors of the corporation and by the affirmative
            votes of holders of at least two-thirds of the outstanding voting
            stock that is not owned by the interested stockholder.

Except as specified in Section 203, an interested stockholder is generally
defined to include any person who, together with any affiliates or associates of
that person, beneficially owns, directly or indirectly, 15% or more of the
outstanding voting stock of the corporation, or is an affiliate or associate of
the corporation and was the owner of 15% or more of the outstanding voting stock
of the corporation, any time within three years immediately prior to the
relevant date. Under certain circumstances, Section 203 makes it more difficult
for an interested stockholder to effect various business combinations with a
corporation for a three-year period, although the stockholders may elect not to
be governed by this section, by adopting an amendment to our certificate of
incorporation or by-laws, effective 12 months after adoption. Antigenics'
certificate of incorporation and its by-laws do not exclude Antigenics from the
restrictions imposed under Section 203. It is anticipated that the provisions of
Section 203 may encourage companies interested in acquiring Antigenics to
negotiate in advance with the board since the stockholder approval requirement
would be avoided if a majority of the directors then in office excluding an
interested stockholder approve either the business combination or the
transaction that resulted in the stockholder becoming an interested stockholder.
These provisions may have the effect of deterring hostile takeovers or delaying
changes in control of Antigenics, which could depress the market price of the
common stock and which could deprive stockholders of opportunities to realize a
premium on shares of the common stock held by them.

Charter and By-law Provisions

Our certificate of incorporation and by-laws contain provisions that could
discourage potential takeover attempts and make more difficult attempts by
stockholders to change management. Antigenics' certificate of incorporation
provides that stockholders may not take action by written consent but may only
act at a stockholders' meeting, and that special meetings of the stockholders of
Antigenics may only be called by the president or a majority of the board and
requires advance notice of business to be brought by a stockholder before the
annual meeting. The certificate of incorporation includes provisions classifying
the board of directors into three classes with staggered three-year terms. In
addition, our directors may only be removed from office for cause. Under the
certificate of incorporation and by-laws, the board of directors may enlarge the
size of the board and fill any vacancies on the board. The by-laws provide that
nominations for directors may not be made by stockholders at any annual or
special meeting unless the stockholder intending to make a nomination notifies
us of its intention a specified period in advance and furnishes certain
information.

REGISTRATION RIGHTS

In connection with the private placement completed in November 1999, we granted
registration rights with respect to                shares of common stock sold
in that private placement. Pursuant to these registration rights, we are
obligated to file, approximately 90 days after the date of this prospectus, a
registration statement covering these shares of common stock for resale. All
expenses incurred in connection with this registration, other than any
underwriters' discounts and commissions, will be borne by Antigenics.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for our common stock is American Stock Transfer
& Trust Company.

                                       57
59

                        SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no market for the common stock and we
cannot assure you that a liquid trading market for the common stock will develop
or be sustained after this offering. Future sales of substantial amounts of
common stock, including shares issued upon exercise of outstanding options and
warrants, in the public market after this offering or the anticipation of those
sales could adversely affect market prices prevailing from time to time and
could impair our ability to raise capital through sales of our equity
securities. Sales of substantial amounts of common stock of Antigenics in the
public market or the anticipation of these sales could adversely affect the
prevailing market price of the common stock and the ability of Antigenics to
raise equity capital in the future.

After the closing of this offering, Antigenics will have outstanding
shares of common stock, which includes           shares issued upon the
conversion of warrants issued in the November 1999 and assumes no exercise of
the underwriters' over-allotment option and no exercise of outstanding options.
Of these shares, the shares sold in this offering will be freely tradable
without restriction under the Securities Act unless purchased by "affiliates" of
Antigenics as that term is defined in Rule 144 under the Securities Act. An
additional           shares are expected to be covered by a registration
statement we will file approximately 90 days following this offering. The
remaining           restricted shares held by existing stockholders are subject
to various lock-up agreements providing that, with limited exceptions, the
stockholder will not offer, sell, contract to sell, grant an option to purchase,
effect a short sale or otherwise dispose of or engage in any hedging or other
transaction that is designed or reasonably expected to lead to a disposition of
any shares of common stock or any option to purchase common stock or any
securities exchangeable for or convertible into common stock for a period of one
year after the date of this prospectus. Though these shares may be eligible for
earlier sale under the provisions of the Securities Act, none of these shares
will be saleable until 365 days after the date of this prospectus as a result of
these lock-up agreements. Beginning 365 days after the date of this prospectus,
          restricted shares will be eligible for sale in the United States
public market, subject to volume and other limitations. In addition, as of
            , 1999, there were outstanding options to purchase           shares
of common stock, none of which options are expected to be exercised prior to the
closing of the offering. We expect that concurrently with the closing of this
offering warrants to purchase common stock will be converted, on a net exercise
basis, into      shares of common stock and that warrants to purchase an
additional           shares of common stock will be outstanding. All of the
shares issued upon exercise will be subject to lock-up agreements.

In general, under Rule 144 as currently in effect, a person, or persons whose
shares are aggregated, who has beneficially owned restricted shares for at least
one year is entitled to sell within any three-month period up to that number of
shares that does not exceed the greater of: (1) 1% of the number of shares of
common stock then outstanding, which is approximately           shares, or (2)
the average weekly trading volume of the common stock during the four calendar
weeks preceding the filing of a Form 144 with respect to the sale. Sales under
Rule 144 are also subject to certain "manner of sale" provisions and notice
requirements and to the requirement that current public information about
Antigenics be available. Under Rule 144(k), a person who is not deemed to have
been an affiliate of Antigenics at any time during the three months preceding a
sale, and who has beneficially owned the shares proposed to be sold for at least
two years, including the holding period of any prior owner except an affiliate,
is entitled to sell those shares without complying with the manner of sale,
public information, volume limitation or notice provisions of Rule 144.

Rule 701 permits resales of qualified shares held by some affiliates in reliance
upon Rule 144 but without compliance with some restrictions, including the
holding period requirement, of Rule 144. Any employee, officer or director of or
consultant to Antigenics who purchased his or her shares pursuant to a written
compensatory plan or contract may be entitled to rely on the resale provisions
of Rule 701. Rule 701 further provides that non-affiliates may sell shares in
reliance on Rule 144 without having to comply with the holding period, public
information, volume limitation or notice provisions of Rule 144. All holders of
Rule 701 shares of common stock are required to wait until 90 days after the
date of this prospectus before selling shares. However, all shares issued
pursuant to Rule 701 are subject to lock-up agreements and will only become
eligible for sale at the expiration of the 365-day lock-up.

                                       58
60

                                  UNDERWRITING

Subject to certain terms and conditions contained in an underwriting agreement,
the underwriters named below, for whom U.S. Bancorp Piper Jaffray Inc. and
BancBoston Robertson Stephens Inc. are acting as representatives, have severally
agreed to purchase the number of shares of common stock from us set forth
opposite their names below:
UNDERWRITERS                                                    NUMBER OF SHARES
------------                                                    ----------------
U.S. Bancorp Piper Jaffray Inc..............................
BancBoston Robertson Stephens Inc...........................

          Total.............................................
                                                                    ========
The underwriting agreement provides that the obligations of the several
underwriters to purchase shares of common stock are subject to the approval of
certain legal matters by counsel and to certain other conditions. If any of the
shares of common stock are purchased by the underwriters pursuant to the
underwriting agreement, all such shares of common stock (other than the shares
of common stock covered by the over-allotment option described below) must be so
purchased.

We have been advised by the underwriter representatives that the underwriters
propose to offer the shares of common stock to the public initially at the price
to the public set forth on the cover page of this prospectus and to certain
dealers (who may include the underwriters) at such price less a concession not
to exceed $     per share. The underwriters may allow, and such dealers may
reallow, discounts not in excess of           per share to any other underwriter
and certain other dealers.

We have granted to the underwriters an option to purchase up to
          additional shares of common stock at the initial public offering price
less the underwriting discount solely to cover over-allotments. Such option may
be exercised in whole or in part from time to time during the 30-day period
after the date of this prospectus. To the extent that the underwriters exercise
such option, each of the underwriters will be committed, subject to certain
conditions, to purchase a number of option shares proportionate to such
underwriter's initial commitment as indicated in the preceding table. If the
underwriters exercise their option in full, the total price to the public would
be $       , the total underwriting discount would be $       and total proceeds
to us would be $       .

We, together with certain of our stockholders and our executive officers and
directors, have agreed not to directly or indirectly offer, pledge, sell,
contract to sell, sell any option or contract to purchase or grant any option,
right or warrant to purchase or otherwise transfer or dispose of any shares of
common stock or any securities convertible into or exercisable or exchangeable
for common stock, or enter into any swap or other arrangement that transfers all
or a portion of the economic consequences associated with the ownership of such
common stock, or to cause a registration statement covering any shares of common
stock to be filed, for a period of 365 days after the date of this prospectus
without the prior written consent of the underwriters, subject to limited
exceptions. See "Shares Eligible for Future Sale."

Prior to this offering, there has been no established trading market for the
common stock. The initial price to the public for the common stock offered by us
will be determined by negotiation among and the underwriter representatives and
us. The factors to be considered in determining the initial price to the public
will include the history of and the prospects for the industry in which we
compete, the ability of our management, our past and present operations, our
prospects for future earnings, the general condition of the securities markets
at the time of this offering and the recent market prices of securities of
generally comparable companies. We will apply to list our common stock on the
Nasdaq National Market.

                                       59
61

The underwriters do not intend to make sales to accounts over which they
exercise discretionary authority in excess of 5% of the number of shares of
common stock offered hereby.

In connection with this offering, the underwriters may engage in transactions
that stabilize, maintain or otherwise affect the price of the common stock.
Specifically, the underwriters may over-allot this offering, creating a
syndicate short position. Underwriters may bid for and purchase shares of common
stock in the open market to cover syndicate short positions. In addition, the
underwriters may bid for and purchase shares of common stock in the open market
to stabilize the price of the common stock. These activities may stabilize or
maintain the market price of the common stock above independent market levels.
These transactions may be effected on the Nasdaq National Market or otherwise.
The underwriters are not required to engage in these activities and may end
these activities at any time.

In connection with this offering, some underwriters and selling group members
may also engage in passive market making transactions in the common stock on the
Nasdaq National Market. Passive market making consists of displaying bids on the
Nasdaq National Market limited by the prices of independent market makers and
effecting purchases limited by those prices in response to order flow. Rule 103
of Regulation M promulgated by the SEC limits the amount of net purchases that
each passive market maker may make and the displayed size of each bid. Passive
market making may stabilize the market price of the common stock at a level
above that which might otherwise prevail in the open market and, if commenced,
may be discontinued at any time.

At our request, the underwriters have reserved for sale, at the initial public
offering price, up to           shares of common stock for our directors,
officers, employees and business associates. The number of shares of common
stock available for sale to the general public will be reduced to the extent
those persons purchase any of the reserved shares. Any reserved shares that are
not purchased will be offered by the underwriters to the general public on the
same basis as the other shares in this offering.

We have agreed to indemnify the underwriters against certain liabilities,
including liabilities under the Securities Act.

                                 LEGAL MATTERS

The validity of the common stock offered by this prospectus will be passed upon
for us by Palmer & Dodge LLP, Boston, Massachusetts. Certain legal matters in
connection with this offering will be passed upon for the underwriters by
Shearman & Sterling, New York, New York.

                                    EXPERTS

The consolidated financial statements of Antigenics L.L.C. and subsidiary as of
December 31, 1997 and 1998, and for each of the years in the three-year period
ended December 31, 1998, and for the period from March 31, 1994 (date of
inception) to December 31, 1998, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, appearing elsewhere herein, and upon the authority
of said firm as experts in accounting and auditing.

                      WHERE YOU CAN FIND MORE INFORMATION

We have filed a registration statement on Form S-1 with the SEC for the stock we
are offering by this prospectus. This prospectus does not include all of the
information contained in the registration statement. You should refer to the
registration statement and its exhibits for additional information. While we
have disclosed the material terms of any of our contracts, agreements or other
documents referenced in this prospectus, you should refer to the exhibits
attached to the registration statement for copies of the actual contract,
agreement or other document. When we complete this offering, we will also be
required to file annual, quarterly and special reports, proxy statements and
other information with the SEC.

                                       60
62

You can read our SEC filings, including the registration statement, over the
Internet at the SEC's web site at http://www.sec.gov. You may also read and copy
any document we file with the SEC at its public reference facilities at 450
Fifth Street, NW, Washington, DC 20549, 7 World Trade Center, Suite 1300, New
York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511. You may also obtain copies of the documents at
prescribed rates by writing to the Public Reference Section of the SEC at 450
Fifth Street, NW, Washington, DC 20549. Please call the SEC at 1-800-SEC-0330
for further information on the operation of the public reference facilities. Our
SEC filings are also available at the office of the Nasdaq National Market. For
further information on obtaining copies of our public filings at the Nasdaq
National Market you should call (212) 656-5060.

                                       61
63

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
PAGE
                                                                ----
Consolidated Financial Statements:
  Independent Auditors' Report..............................     F-2
  Consolidated Balance Sheets as of December 31, 1997 and
     1998...................................................     F-3
  Consolidated Statements of Operations for the years ended
     December 31, 1996, 1997 and 1998 and for the period
     from March 31, 1994 (date of inception) to December 31,
     1998...................................................     F-4
  Consolidated Statements of Members' Equity for the years
     ended December 31, 1996, 1997 and 1998 and for the
     period from March 31, 1994 (date of inception) to
     December 31, 1998......................................     F-5
  Consolidated Statement of Cash Flows for the years ended
     December 31, 1996, 1997 and 1998 and for the period
     from March 31, 1994 (date of inception) to December 31,
     1998...................................................     F-6
  Notes to Consolidated Financial Statements................     F-7
Unaudited Consolidated Interim Financial Statements:
  Consolidated Balance Sheet as of September 30, 1999.......    F-16
  Consolidated Statement of Operations for the nine months
     ended September 30, 1998 and 1999, and for the period
     from March 31, 1994 (date of inception) to September
     30, 1999...............................................    F-17
  Consolidated Statements of Members' Equity for the nine
     months ended September 30, 1999, and for the period
     from March 31, 1994 (date of inception) to September
     30, 1999...............................................    F-18
  Consolidated Statements of Cash Flows for the nine months
     ended September 30, 1998 and 1999, and for the period
     from March 31, 1994 (date of inception) to September
     30, 1999...............................................    F-19
  Notes to Unaudited Consolidated Financial Statements......    F-20
F-1
64

                          INDEPENDENT AUDITORS' REPORT

The Members and Board of Managers
Antigenics L.L.C.:

We have audited the accompanying consolidated balance sheets of Antigenics
L.L.C. and subsidiary (a Delaware limited liability company in the development
stage and a successor operating company) as of December 31, 1997 and 1998, and
the related consolidated statements of operations, members' equity and cash
flows for each of the years in the three-year period ended December 31, 1998 and
the period from March 31, 1994 (date of inception) to December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Antigenics L.L.C.
and subsidiary as of December 31, 1997 and 1998, and the results of their
operations and their cash flows for each of the years in the three-year period
ended December 31, 1998 and the period from March 31, 1994 (date of inception)
to December 31, 1998, in conformity with generally accepted accounting
principles.

                                            /s/ KPMG LLP

Short Hills, New Jersey
October 28, 1999

                                       F-2
65

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1998
1997            1998
                                                                -----------    ------------
ASSETS
Cash and cash equivalents...................................    $13,086,402    $ 22,168,049
Prepaid expenses............................................        138,994         230,632
Other assets................................................         20,138          21,189
Due from related party......................................             --          27,605
                                                                -----------    ------------
     Total current assets...................................     13,245,534      22,447,475
Plant and equipment, net....................................        783,655       4,106,183
Other assets................................................         46,237          74,071
Organization costs, less accumulated amortization of $21,587
  and $28,174 in 1997 and 1998, respectively................         14,472           7,885
                                                                -----------    ------------
     Total assets...........................................    $14,089,898    $ 26,635,614
                                                                ===========    ============
LIABILITIES AND MEMBERS' EQUITY
Accounts payable............................................    $   245,602    $  2,036,814
Accrued liabilities.........................................        570,869          48,134
Due to related party........................................         61,658              --
Current portion, long-term debt.............................             --         200,497
                                                                -----------    ------------
     Total current liabilities..............................        878,129       2,285,445

Long-term debt..............................................             --         709,006

Members' capital -- no stated value; 93,354 and 104,024
  units issued..............................................     22,424,501      43,223,509
Subscription notes receivable...............................             --      (2,102,000)
Deficit accumulated during development stage................     (9,212,732)    (17,480,346)
                                                                -----------    ------------
     Total members' equity..................................     13,211,769      23,641,163
Commitments and contingencies
                                                                -----------    ------------
     Total liabilities and members' equity..................    $14,089,898    $ 26,635,614
                                                                ===========    ============
See accompanying notes to consolidated financial statements.

                                       F-3
66

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
             FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1998
MARCH 31,
                                                                                        1994
                                                                                      (DATE OF
                                                                                    INCEPTION) TO
                                                                                    DECEMBER 31,
                                          1996           1997           1998            1998
                                       -----------    -----------    -----------    -------------
Revenue............................    $        --    $        --    $        --    $         --
Expenses:
  Research and development.........     (1,568,903)    (2,547,799)    (5,908,160)    (10,879,904)
  General and administrative.......     (1,042,033)    (1,375,444)    (2,734,947)     (7,660,804)
  Depreciation and amortization....        (78,856)      (202,090)      (360,285)       (696,347)
                                       -----------    -----------    -----------    ------------
     Total operating loss..........     (2,689,792)    (4,125,333)    (9,003,392)    (19,237,055)
Other income:
  Non-operating income.............        249,988             --             --         249,988
  Interest income..................        281,245        481,179        735,778       1,506,721
                                       -----------    -----------    -----------    ------------
     Net loss......................    $(2,158,559)   $(3,644,154)   $(8,267,614)   $(17,480,346)
                                       ===========    ===========    ===========    ============
Net loss per members' equity unit,
  basic and diluted................    $    (25.43)   $    (40.71)   $    (86.42)
                                       ===========    ===========    ===========
Weighted average members' units
  outstanding, basic and diluted...         84,876         89,525         95,673
                                       ===========    ===========    ===========
See accompanying notes to consolidated financial statements.

                                       F-4
67

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                   CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
            FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
               THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1998
DEFICIT
                                                                       ACCUMULATED
                                                        SUBSCRIPTION      DURING
                                           MEMBERS'        NOTES       DEVELOPMENT
                                 UNITS      CAPITAL      RECEIVABLE       STAGE          TOTAL
                                -------   -----------   ------------   ------------   -----------
Balance at March 31, 1994...         --   $        --   $        --    $         --   $        --
Net loss....................         --            --            --        (183,440)     (183,440)
Issuance of units...........     65,200       400,010            --              --       400,010
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1994......................     65,200       400,010            --        (183,440)      216,570
Net loss....................         --            --            --      (3,226,579)   (3,226,579)
Issuance of units...........      6,000     1,500,000      (150,000)             --     1,350,000
Grant of members' equity
  units.....................      8,800     2,200,000            --              --     2,200,000
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1995......................     80,000     4,100,010      (150,000)     (3,410,019)      539,991
Net loss....................         --            --            --      (2,158,559)   (2,158,559)
Grant and recognition of
  options...................         --       276,676            --              --       276,676
Payment of subscription
  notes receivable..........         --            --       150,000              --       150,000
Issuance of units...........      9,512    10,600,000      (250,000)             --    10,350,000
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1996......................     89,512    14,976,686      (250,000)     (5,568,578)    9,158,108
Net loss....................         --            --            --      (3,644,154)   (3,644,154)
Payment of subscription
  notes receivable..........         --            --       250,000              --       250,000
Grant and recognition of
  options...................         --        62,815            --              --        62,815
Issuance of units...........      3,842     7,385,000            --              --     7,385,000
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1997......................     93,354    22,424,501            --      (9,212,732)   13,211,769
Net loss....................         --            --            --      (8,267,614)   (8,267,614)
Grant and recognition of
  options...................         --       472,023            --              --       472,023
Exercise of options.........        224       250,000            --              --       250,000
Issuance of units...........     10,446    20,076,985    (2,102,000)             --    17,974,985
                                -------   -----------   -----------    ------------   -----------

Balance at December 31,
  1998......................    104,024   $43,223,509   $(2,102,000)   $(17,480,346)  $23,641,163
                                =======   ===========   ===========    ============   ===========
See accompanying notes to consolidated financial statements.

                                       F-5
68

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
            FOR THE YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998 AND
             FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                              TO DECEMBER 31, 1998
MARCH 31,
                                                                                        1994
                                                                                      (DATE OF
                                                                                    INCEPTION) TO
                                                                                    DECEMBER 31,
                                             1996          1997          1998           1998
                                          -----------   -----------   -----------   -------------
Cash flows from operating activities:
  Net loss............................    $(2,158,559)  $(3,644,154)  $(8,267,614)  $(17,480,346)
  Adjustments to reconcile net loss to
     net cash used in operating
     activities:
     Depreciation and amortization....         78,856       202,090       360,285        696,347
     Members' equity options..........        276,676        62,815       472,023        811,514
     Members' equity grant............             --            --            --      2,200,000
  Changes in operating assets and
     liabilities:
     Other assets.....................         (1,792)      (64,583)      (28,885)       (95,260)
     Prepaid assets...................        (10,734)      (87,927)      (91,638)      (230,632)
     Organization costs...............             --            --            --        (32,934)
     Accounts payable.................        246,357      (553,263)    1,791,212      2,036,814
     Accrued liabilities..............         66,865       504,004      (522,735)        48,134
     Due to/from related party, net...         29,788        63,361       (89,263)       (27,605)
                                          -----------   -----------   -----------   ------------
       Net cash used in operating
          activities..................     (1,472,543)   (3,517,657)   (6,376,615)   (12,073,968)
                                          -----------   -----------   -----------   ------------
Cash flows from investing activities:
  Purchase of plant and equipment.....       (231,262)     (622,504)   (3,704,168)    (4,809,423)
  Proceeds from the sale of plant and
     equipment........................             --         4,000        27,942         31,942
                                          -----------   -----------   -----------   ------------
       Net cash used in investing
          activities..................       (231,262)     (618,504)   (3,676,226)    (4,777,481)
                                          -----------   -----------   -----------   ------------
Cash flows from financing activities:
  Members' equity contributions.......     10,500,000     7,635,000    17,974,985     37,859,995
  Exercise of members' equity
     options..........................             --            --       250,000        250,000
  Proceeds from debt..................             --            --       909,503        909,503
                                          -----------   -----------   -----------   ------------
     Net cash provided by financing
       activities.....................     10,500,000     7,635,000    19,134,488     39,019,498
                                          -----------   -----------   -----------   ------------
Net increase in cash and cash
  equivalents.........................      8,796,195     3,498,839     9,081,647     22,168,049
Cash and cash equivalents at beginning
  of period...........................        791,368     9,587,563    13,086,402             --
                                          -----------   -----------   -----------   ------------
Cash and cash equivalents at end of
  period..............................    $ 9,587,563    13,086,402    22,168,049     22,168,049
                                          ===========   ===========   ===========   ============
Non-cash investing and financing
  activities:
  Members' equity contributions
     financed by notes receivable.....    $   250,000   $        --   $ 2,102,000   $  2,102,000
                                          ===========   ===========   ===========   ============
See accompanying notes to consolidated financial statements.

                                       F-6
69

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1)  ORGANIZATION AND BUSINESS

The business was formed on March 31, 1994 through the creation of a Delaware
corporation. In July 1995, the founders of the Delaware corporation formed
Antigenics L.L.C. (together with its subsidiary, Antigenics or the Company), a
Delaware limited liability company, and subsequently transferred to the Company
all of the assets, liabilities, properties and rights of the Delaware
corporation in exchange for an initial 81.5% equity interest in the Company. The
accounting for this recapitalization was recorded at the Delaware corporation's
historical cost. In connection with the recapitalization, the Company also
raised $1,500,000 (including $150,000 of subscription notes receivable) in a
private equity transaction in exchange for a 7.5% initial ownership interest and
a further 11% initial ownership interest was exchanged for services rendered to
the Company by certain outside advisors, the value of which was recognized as a
non-cash expense of $2,200,000 during 1995.

The Company is developing immunotherapeutics for the treatment of cancer,
infectious diseases and autoimmune disorders based on the Company's proprietary
heat shock protein technology. The Company's research has demonstrated that when
purified heat shock protein-peptide complexes are injected into the skin, they
trigger an immune response against cancers and infectious diseases. Antigenics
seeks to create immunotherapeutics to "jump-start" patients' immune systems into
destroying diseased cells in the body.

Antigenics is primarily engaged in the development of its heat shock protein
technology and its lead immunotherapeutic product, Oncophage(R). The related
business activities include product research and development activities,
regulatory and clinical affairs, establishing manufacturing capabilities, pilot
stage production for clinical trials, and administrative and corporate
development activities. As of December 31, 1998, the Company has not commenced
commercial operations and, accordingly, is in the development stage.
Consequently, the Company is subject to all the risks inherent in the
establishment of a new business. The Company has incurred annual operating
losses since inception and, as a result, at December 31, 1998 has a deficit
accumulated during the development stage of approximately $17.5 million. The
Company's operations during development have been funded principally by members'
equity. While the Company believes that its working capital resources are
sufficient to satisfy its liquidity requirements over the next 12 months,
satisfying the Company's long-term liquidity needs will require the successful
commercialization of Oncophage or other products and additional members' equity.

The Company's immunotherapeutics require clinical trials and approvals from
regulatory agencies as well as acceptance in the marketplace. As of February 17,
1999, the Company had begun seven clinical trials in four cancer indications,
two of which have been completed, and three of which are in Phase II. Although
the Company believes its patents, patent rights and patent applications are
valid, the invalidation of its patents or failure of certain of its pending
patent applications to issue as patents could have a material adverse effect
upon its business. The Company competes with specialized biotechnology
companies, major pharmaceutical and chemical companies and universities and
research institutions. Many of these competitors have substantially greater
resources than does the Company.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)  BASIS OF PRESENTATION

The Company's consolidated financial statements include the accounts of
Antigenics L.L.C. and its wholly-owned subsidiary. All significant intercompany
balances and transactions have been eliminated in consolidation.

                                       F-7
70
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(b)  USE OF ESTIMATES

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

(c)  CASH AND CASH EQUIVALENTS

The Company considers all highly liquid investments purchased with maturities at
acquisition of three months or less to be cash equivalents. Cash equivalents at
December 31, 1997 and 1998 consist of investments in money market accounts which
are unrestricted as to withdrawal or use.

(d)  PLANT AND EQUIPMENT

Plant and equipment are carried at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets. Amortization
of leasehold improvements is computed over the shorter of the lease term or
estimated useful life of the asset. Additions and improvements are capitalized,
while repairs and maintenance are charged to expense as incurred.

(e)  ORGANIZATION COSTS

Organization costs, consisting primarily of legal fees, are being amortized
using the straight-line method over a five-year period.

(f)  LONG-LIVED ASSETS

The Company's policy is to record long-lived assets at cost, amortizing these
costs over the expected useful lives of the related assets. In accordance with
Statement of Financial Accounting Standards (SFAS) No. 121, "Accounting for the
Impairment of Long-lived Assets and for Long-lived Assets to be Disposed of,"
these assets are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amounts of the assets may not be
recoverable. The assets are evaluated for continuing value and proper useful
lives by comparison to expected undiscounted future cash flows. If such assets
are considered to be impaired, the impairment to be recognized is measured by
the amount by which the carrying amount of the assets exceed the fair value of
the assets, calculated as expected discounted future cash flows. Assets to be
disposed of are reported at the lower of the carrying amount or fair value less
costs to sell.

(g)  FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair value of a financial instrument represents the amount at which the
instrument could be exchanged in a current transaction between willing parties,
other than in a forced sale or liquidation. Significant differences can arise
between the fair value and carrying amounts of financial instruments that are
recognized at historical cost amounts. The estimated fair values of all of the
Company's financial instruments, excluding debt, approximate their carrying
amounts in the consolidated balance sheets. The fair value of the Company's
long-term debt was derived by evaluating the nature and terms of each term note
and considering the prevailing economic and market conditions at the balance
sheet date. The carrying amount of debt, including current portions, is
approximately $910,000 at December 31, 1998 and the fair value is estimated to
be approximately this amount.

                                       F-8
71
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(h)  ACCRUED LIABILITIES

Accrued liabilities consist of the following at December 31, 1997 and 1998:
1997        1998
                                                         --------    --------
Sponsored research.....................................  $475,000    $     --
Other..................................................    95,869      48,134
                                                         --------    --------
                                                         $570,869    $ 48,134
                                                         ========    ========
(i)  MEMBERS' EQUITY OPTION PLAN

The Company accounts for options granted to employees and directors in
accordance with Accounting Principles Board (APB) Opinion No. 25, "Accounting
for Stock Issued to Employees," and related interpretations. As such,
compensation expense is recorded on fixed members' equity option grants only if
the current fair value of the underlying unit exceeds the exercise price of the
option at the date of grant.

The Company accounts for members' equity options granted to non-employees on a
fair value basis in accordance with SFAS No. 123, "Accounting for Stock-Based
Compensation" and Emerging Issues Task Force Issue No. 96-18, "Accounting for
Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling, Goods or Services". As a result, the non-cash charge
to operations for non-employee options with vesting or other performance
criteria is affected each reporting period by changes in the fair value of the
Company's members' equity units.

As required, the Company also provides pro forma net loss and pro forma net loss
per members' equity unit disclosures for employee and director members' equity
option grants as if the fair-value-based method defined in SFAS No. 123 had been
applied (see Note 5).

(j)  RESEARCH AND DEVELOPMENT

Research and development expenditures are expensed as incurred.

(k)  INCOME TAXES

As a Delaware limited liability company, no federal, state and local income
taxes are levied on the Company. Each member of the Company is individually
responsible for reporting his or her share of the Company's net income or loss
on their personal tax returns. Therefore, no provision for income taxes and no
deferred tax assets or liabilities are recognized in the accompanying
consolidated financial statements.

(l)  NET LOSS PER MEMBERS' EQUITY UNIT

Basic earnings or loss per members' equity unit (EPU) is computed using the
weighted average number of members' equity units outstanding during the period
being reported on. Diluted EPU reflects the potential dilution that could occur
if securities or other contracts to issue members' equity units were exercised
or converted into members' equity units at the beginning of the period being
reported on and the effect was dilutive. Net loss and weighted average members'
equity units used for computing diluted EPU were the same as that used for
computing basic EPU for each of the years ended December 31, 1996, 1997 and 1998
because the Company's members' equity options were not included in the
calculation since the inclusion of such potential members' equity units would be
antidilutive.

                                       F-9
72
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(m)  SEGMENT INFORMATION

The Company is managed and operated as one business. The entire business is
managed by a single management team that reports to the chief executive officer.
The Company does not operate separate lines of business or separate business
entities with respect to any of its product candidates. Accordingly, the Company
does not prepare discrete financial information with respect to separate product
areas or by location and does not have separately reportable segments as defined
by SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information".

(n)  RECENT ACCOUNTING PRONOUNCEMENTS

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities", which requires the costs of start-up activities and organization
costs be expensed as incurred. The adoption of SOP 98-5 by the Company effective
January 1, 1999 will be immaterial to the Company's consolidated financial
statements.

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities", which
establishes accounting and reporting standards for derivative instruments,
including derivatives instruments embedded in other contracts, and for hedging
activities. SFAS No. 133 is effective for all the Company's fiscal quarters
beginning January 1, 2001. This statement is not expected to affect the Company
as it currently does not have derivative instruments or engage in hedging
activities.

(3)  PLANT AND EQUIPMENT, NET

Plant and equipment, net at December 31, 1997 and 1998 consists of the
following:
ESTIMATED
                                                                            DEPRECIABLE
                                                  1997          1998           LIVES
                                               ----------    ----------    -------------
Furniture, fixtures and other..............    $  299,580    $  486,933    3 to 10 years
Laboratory and manufacturing equipment.....       621,187     1,426,427    3 to 10 years
Leasehold improvements.....................       180,128       224,580    2 to 5 years
Construction in progress...................            --     2,639,181
                                               ----------    ----------
                                                1,100,895     4,777,121
Less accumulated depreciation and
  amortization.............................       317,240       670,938
                                               ----------    ----------
                                               $  783,655    $4,106,183
                                               ==========    ==========
(4)  MEMBERS' EQUITY

Antigenics has one class of members' equity. All equity members' vote their
equity interests in proportion to their respective unit interest in the Company.
Net profits and losses of the Company for each fiscal year are allocated to the
capital accounts of the members as described in the limited liability company
agreement, generally in proportion to their respective unit ownership interests.
No members are liable for any obligations of the Company or are required to
contribute any additional capital related to the deficits incurred.

Since the formation of the Company in 1995 (see note 1), the Company has raised
capital through private placement equity transactions. During 1996, the Company
completed a private placement offering of

                                      F-10
73
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

approximately 9,500 members' equity units in exchange for $10,600,000.
Subscription notes receivable of $250,000 at December 31, 1996, which represent
promissory notes from members in consideration of their equity contributions,
were satisfied in full during 1997.

During 1997, the Company commenced a private placement offering, which resulted
in approximately 3,800 members' equity units being sold for approximately
$7,385,000 during 1997 and approximately 10,400 members' equity units being sold
for approximately $20,077,000 during 1998. This offering was completed during
early 1999 and resulted in an aggregate of approximately $27,572,000 being
received by the Company over the three-year period.

Subscription notes receivable of $2,102,000 at December 31, 1998, which
represent promissory notes from members in consideration of their equity
contributions, were satisfied in full during 1999.

(5)  EQUITY OPTIONS

In March 1996, the board of managers approved an equity-based incentive
compensation plan (the Plan). Pursuant to the provisions of the Plan, the board
of managers may grant options to directors, employees and outside advisors to
purchase members' equity units of the Company. At the date of grant, the board
of managers sets the terms of the options including the exercise price and
vesting period. The options granted through December 31, 1998 have vesting
periods ranging up to five years. Options generally have a contractual life of
ten years. A maximum of 7% of total equity, inclusive of the options granted,
may be granted as options (approximately 7,800 options as of December 31, 1998).

The following summarizes activity for options granted to directors and
employees:
OPTIONS       WEIGHTED     WEIGHTED
                                           MEMBERS'    EXERCISABLE     AVERAGE      AVERAGE
                                            EQUITY      AT END OF     GRANT-DATE    EXERCISE
                                           OPTIONS        YEAR        FAIR VALUE     PRICE
                                           --------    -----------    ----------    --------
Outstanding December 31, 1995............      --
  Granted................................   2,200                       $  121       $  250
  Exercised..............................      --                           --           --
                                            -----
Outstanding December 31, 1996............   2,200         1,500
                                                          =====
  Granted................................     276                          468          759
  Exercised..............................      --                           --           --
                                            -----
Outstanding December 31, 1997............   2,476         1,733
                                                          =====
  Granted................................     690                          845        1,241
  Exercised..............................      --                           --           --
                                            =====                       ======       ======
Outstanding December 31, 1998............   3,166         2,022
                                            =====         =====
Compensation expense recognized with respect to options issued to employees and
directors is immaterial as the exercise price set by the board of managers
generally is at an amount equal to or greater than the fair value of the
members' equity units at the date of the option grant.

                                      F-11
74
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The following summarizes activity for options granted to outside advisors:
OPTIONS       WEIGHTED     WEIGHTED
                                             MEMBER     EXERCISABLE     AVERAGE      AVERAGE
                                             EQUITY      AT END OF     GRANT-DATE    EXERCISE
                                             OPTIONS       YEAR        FAIR VALUE     PRICE
                                             -------    -----------    ----------    --------
Outstanding December 31, 1995..............      --
  Granted..................................   2,574                      $  171       $  344
  Exercised................................      --                          --           --
                                              -----
Outstanding December 31, 1996..............   2,574        1,449
                                                           =====
  Granted..................................      --                          --           --
  Exercised................................      --                          --           --
                                              -----
Outstanding December 31, 1997..............   2,574        1,857
                                                           =====
  Granted..................................   1,115                       1,023          549
  Exercised................................    (224)                        298          250
                                              -----                      ======       ======
Outstanding December 31, 1998..............   3,465        1,921
                                              =====        =====
The 1996 option grants include 517 options granted to outside advisors with an
exercise price which is determined based on fair value of the underlying units
as the options vest. Compensation expense for these options is recognized as of
the vesting date when the exercise price becomes known. In 1998, 138 of such
options vested at an exercise price of approximately $1,118 per unit.

The charge to operations related to options granted to outside advisors totaled
approximately $277,000, $63,000 and $472,000 for the years ended December 31,
1996, 1997 and 1998, respectively. At December 31, 1998, unrecognized expense
for options granted to outside advisors which have not vested is approximately
$703,000; such expense will be recognized over the remaining vesting period and
is subject to change during the vesting period based upon the fair value of the
Company's members' equity units.

A summary of options outstanding and exercisable, excluding the 1996 options
described above, as of December 31, 1998, follows:
OPTIONS OUTSTANDING
                        --------------------------------------------       OPTIONS EXERCISABLE
                                      WEIGHTED AVE.                    ----------------------------
      RANGE OF            NUMBER        REMAINING     WEIGHTED AVE.      NUMBER      WEIGHTED AVE.
   EXERCISE PRICES      OUTSTANDING   LIFE (YEARS)    EXERCISE PRICE   EXERCISABLE   EXERCISE PRICE
---------------------   -----------   -------------   --------------   -----------   --------------
$  250    -   $  750      5,258          7.73            $  301          3,972          $  250
$  751    -   $1,250        840          8.92             1,118            171           1,118
$1,251    -   $1,750         --            --                --             --              --
$1,751    -   $2,250        154          9.74             2,077             --              --
                          -----                                          -----
                          6,252                                          4,143
                          =====                                          =====
The Company accounts for options granted to employees and directors under APB
Opinion No. 25. Had compensation cost for options granted to employees and
directors been determined consistent with SFAS

                                      F-12
75
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

No. 123, the Company's pro forma net loss and pro forma net loss per members'
equity unit would have been as follows:
YEAR ENDED      YEAR ENDED      YEAR ENDED
                                              DECEMBER 31,    DECEMBER 31,    DECEMBER 31,
                                                  1996            1997            1998
                                              ------------    ------------    ------------
Net loss:
  As reported...............................  $(2,158,559)    $(3,644,154)    $(8,267,614)
  Pro forma.................................   (2,342,028)     (3,694,280)     (8,370,709)
                                              ===========     ===========     ===========
Net loss per members' equity unit:
  As reported...............................  $    (25.43)    $    (40.71)    $    (86.42)
  Pro forma.................................       (27.59)         (41.27)         (87.49)
                                              ===========     ===========     ===========
The effects of applying SFAS No. 123, for either recognizing or disclosing
compensation cost under such pronouncement, may not be representative of the
effects on reported net income or loss for future years. The fair value of each
option granted is estimated on the date of grant using an option-pricing model
with the following weighted average assumptions:
1996    1997    1998
                                                              ----    ----    ----
Estimated volatility........................................   38%     57%     61%
Expected life in years -- employee and director options.....    6       6       6
Risk-free interest rate.....................................  6.3%    6.3%    5.4%
Dividend yield..............................................    0%      0%      0%
The Company estimates volatility for purposes of computing compensation expense
on outside advisor options and for disclosure purposes using the volatility of
public companies that the Company considers comparable. The expected life used
to estimate the fair value of outside advisor options is equal to the
contractual life of the option granted.

(6)  COMMITMENTS

In November 1994, the Company's predecessor entered into a Patent License
Agreement (Mount Sinai Agreement) with the Mount Sinai School of Medicine (Mount
Sinai). Through the Mount Sinai Agreement, the Company has obtained the
exclusive licenses to the patent rights which resulted from the research and
development performed by Dr. Pramod Srivastava, a director of the Company. Under
the Mount Sinai Agreement, the Company agreed to pay Mount Sinai a nominal
royalty on related product sales (as defined in the Mount Sinai Agreement)
through the last expiration date of the patents under the Mount Sinai Agreement
(2015). In addition to these royalty payments, Mount Sinai was issued a nominal
equity interest.

During 1995, Dr. Srivastava moved his research to Fordham University (Fordham).
The Company's predecessor entered into a Patent License Agreement (Fordham
Agreement) with Fordham, agreeing to reimburse Fordham for all approved costs
incurred in the performance of the research. The Company's predecessor has also
agreed to pay Fordham a nominal royalty on related product sales, as defined,
through the last expiration date of the patents under the Fordham Agreement.
This agreement ended in mid-1997. During 1995, 1996 and 1997, the direct and
indirect costs incurred by the Company related to this agreement were
approximately $546,000, $926,000 and $902,000, respectively, and are included in
research and development expenses in the consolidated statements of operations
for such years.

                                      F-13
76
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

In February 1998, the Company entered into a research agreement with the
University of Connecticut Health Center (UConn) and Dr. Srivastava. The
agreement has a term of approximately five years and calls for payments to UConn
totaling a minimum of $5,000,000, payable quarterly at the rate of $250,000
(contingent on the continuing employment of Dr. Srivastava by UConn). In
addition, as research was begun by Dr. Srivastava in 1997, the Company agreed to
pay approximately $475,000 for these previous services and expensed such amount
as research and development during 1997. Research and development expense in the
accompanying 1998 consolidated statement of operations includes approximately
$1,000,000 of costs incurred under the UConn agreement. Royalties at varying
rates are due to UConn upon commercialization of a product utilizing technology
discovered during the research agreement.

In 1996, Antigenics entered into an agreement with Sloan-Kettering Institute for
Cancer Research (Sloan Kettering) to conduct clinical studies. The Company is
required to pay Sloan Kettering $10,000 for administration and start up costs
and $4,000 per patient in the study.

On December 2, 1997, Antigenics entered into two agreements with The University
of Texas M.D. Anderson Cancer Center (M.D. Anderson) to conduct clinical
studies. The Company is required to pay M.D. Anderson a total of approximately
$538,000 for expenses for the clinical study of approximately 90 patients and
other related costs payable in four installments. In addition, on March 20, 1998
the Company entered into another clinical study with M.D. Anderson. Under such
1998 agreement, the Company is required to pay M.D. Anderson a total of
approximately $118,000 for the study of 30 patients and other related costs
payable in four installments.

In 1998, Antigenics entered into an agreement with the Johannes Gutenberg
Universitat Mainz Klinikum (Universitat) to conduct additional clinical studies.
The Company is required to pay the Universitat approximately $279,000 for
expenses for the clinical study of approximately 30 patients. The first
installment was paid upon signing the agreement.

In 1998, Antigenics entered into an agreement, as amended, with Sigma-Tau
Farmaceutiche Riunite SpA (Sigma-Tau) to conduct clinical studies in Italy,
Spain, Portugal and Switzerland. Under the agreement, Sigma-Tau is required to
reimburse Antigenics for all costs incurred in relation to the clinical studies.
In return, Antigenics has granted Sigma-Tau the exclusive right to negotiate a
marketing and development agreement (the Development Agreement) for the
exclusive use of Antigenics' patent rights and their product, and the right of
first offer to negotiate licenses for other medical uses of their product, in
Italy, Spain, Portugal and Switzerland. The Development Agreement has not been
finalized. No costs associated with these clinical studies were incurred during
1998.

For the years ended December 31, 1996, 1997 and 1998, approximately $10,000,
$4,000 and $255,000, respectively, has been expensed in the accompanying
consolidated statements of operations related to the above mentioned clinical
studies.

(7)  RELATED PARTY TRANSACTIONS

The Company rents office space for its New York City headquarters on a
month-to-month basis and utilizes certain office services of an entity which is
wholly-owned by the Company's chief executive officer and chairman of the board.
Such transactions are recorded at the affiliate's cost and amounted to
approximately $293,000, $557,000 and $211,000 for the years ended December 31,
1996, 1997 and 1998, respectively. From time to time the Company also pays
general and administrative costs on behalf of the affiliated entity for which
the Company is reimbursed on a current basis. As of December 31, 1998, the
affiliated entity was indebted to the Company for $27,605 of costs paid on the
affiliated entity's behalf. As

                                      F-14
77
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of December 31, 1997, the Company was indebted to the affiliated entity for
$61,658 for rent and administrative services.

During 1997 and renewed each year thereafter, the Company obtained stand by
letters of credit for the benefit of the related party in the amount of $375,000
in connection with the related party's lease of the New York City office space.
These letters expire in January 2000.

(8)  LEASES

The Company leases administrative (see Note 7), laboratory and office facilities
under various month-to-month and long-term lease arrangements. Rent expense,
exclusive of the amounts included in Note 7, was approximately $134,000 and
$685,000 for the years ended December 31, 1997 and 1998, respectively.

The future minimum rental payments under the Company's lease of its Woburn,
Massachusetts manufacturing and laboratory facility, which expires in 2003, are
as follows:
Year ending December 31:
  1999.........................................    $  447,516
  2000.........................................       447,516
  2001.........................................       447,516
  2002.........................................       447,516
  2003.........................................       279,698
                                                   ----------
                                                   $2,069,762
                                                   ==========
(9)  DEBT

In November 1998, the Company entered into a $3 million credit facility
(increased to $5 million in May 1999) with a financial institution pursuant to
which the Company can draw down amounts to make or refinance certain capital
expenditures. As the Company utilizes the credit facility, separate term notes
will be executed. Each term loan will have a term of forty-two months and the
interest rate is fixed at the closing of each term loan. Each loan is
collateralized by the equipment, fixtures, and improvements acquired with the
proceeds of the loan.

On December 30, 1998, the Company closed its first term loan under the credit
facility for approximately $910,000; the loan bears interest on the remaining
balance at 13.954%.

The aggregate maturities of the term loan for each of the five years subsequent
to December 31, 1998 are as follows: 1999 -- $200,497; 2000 -- $230,335;
2001 -- $264,613; 2002 -- $214,059.

(10)  SUBSEQUENT EVENT

On June 21, 1999, Antigenics entered into another agreement with M.D. Anderson
to conduct clinical studies. The Company is required to pay M.D. Anderson a
total of approximately $277,000 for the clinical study of approximately 40
patients and other related costs payable in installments of over two years.

(11)  PRO FORMA INCOME TAX PROVISION (UNAUDITED)

As discussed in Note 2(k), the Company is not subject to income taxes and
therefore does not provide for income taxes in its consolidated financial
statements. Had the Company been organized as a tax paying entity for the year
ended December 31, 1998, there would be no pro forma income tax provision
because of a loss before income taxes and the need to recognize a valuation
allowance on all gross deferred tax assets. Given the Company's past history of
incurring operating losses, management believes that it is more likely than not
that any deferred tax assets will not be realized.

                                      F-15
78

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 1999
                                  (UNAUDITED)
SEPTEMBER 30,
                                                                    1999
                                                                -------------
ASSETS
Cash and cash equivalents...................................    $ 12,611,690
Prepaid expenses............................................         196,424
Other assets................................................         418,065
                                                                ------------
          Total current assets..............................      13,226,179
Plant and equipment, net....................................       7,979,666
Other assets................................................          74,071
                                                                ------------
          Total assets......................................    $ 21,279,916
                                                                ============
LIABILITIES AND MEMBERS' EQUITY
Accounts payable............................................    $    986,552
Accrued liabilities.........................................         394,502
Due to related party........................................           7,994
Current portion, long-term debt.............................         781,061
                                                                ------------
          Total current liabilities.........................       2,170,109

Long-term debt..............................................       2,367,578

Members' capital -- no stated value; 104,086 units issued...      45,210,542
Deficit accumulated during development stage................     (28,468,313)
                                                                ------------
          Total members' equity.............................      16,742,229
Commitments and contingencies...............................
                                                                ------------
          Total liabilities and members' equity.............    $ 21,279,916
                                                                ============
See accompanying notes to unaudited consolidated financial statements.

                                      F-16
79

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF OPERATIONS
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999, AND
             FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                             TO SEPTEMBER 30, 1999
                                  (UNAUDITED)
MARCH 31,
                                                                                           1994
                                                                                         (DATE OF
                                                    NINE MONTHS ENDED SEPTEMBER 30,    INCEPTION) TO
                                                    -------------------------------    SEPTEMBER 30,
                                                        1998              1999             1999
                                                    -------------    --------------    -------------
Revenue...........................................   $        --      $         --     $         --
Expenses:
  Research and development........................    (4,072,149)       (6,925,828)     (17,805,732)
  General and administrative......................    (1,822,867)       (3,825,120)     (11,485,924)
  Depreciation and amortization...................      (272,822)         (726,038)      (1,422,385)
                                                     -----------      ------------     ------------
          Total operating loss....................    (6,167,838)      (11,476,986)     (30,714,041)
Other income/(expense):
  Non-operating income............................            --                --          249,988
  Interest expense................................            --          (151,653)        (151,653)
  Interest income.................................       580,352           640,672        2,147,393
                                                     -----------      ------------     ------------
          Net loss................................   $(5,587,486)     $(10,987,967)    $(28,468,313)
                                                     ===========      ============     ============
Net loss per members' equity unit, basic and
  diluted.........................................   $    (62.06)     $    (105.57)
                                                     ===========      ============
Weighted average members' units outstanding, basic
  and diluted.....................................        90,032           104,079
                                                     ===========      ============
See accompanying notes to unaudited consolidated financial statements.

                                      F-17
80

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                   CONSOLIDATED STATEMENTS OF MEMBERS' EQUITY
                FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND
               THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                             TO SEPTEMBER 30, 1999
                                  (UNAUDITED)
DEFICIT
                                                                          ACCUMULATED
                                                           SUBSCRIPTION      DURING
                                              MEMBERS'        NOTES       DEVELOPMENT
                                    UNITS      CAPITAL      RECEIVABLE       STAGE          TOTAL
                                   -------   -----------   ------------   ------------   ------------
Balance at March 31, 1994........       --   $        --   $        --    $         --   $         --
Net loss.........................       --            --            --        (183,440)      (183,440)
Issuance of units................   65,200       400,010            --              --        400,010
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1994.....   65,200       400,010            --        (183,440)       216,570
Net loss.........................       --            --            --      (3,226,579)    (3,226,579)
Issuance of units................    6,000     1,500,000      (150,000)             --      1,350,000
Grant of members' equity units...    8,800     2,200,000            --              --      2,200,000
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1995.....   80,000     4,100,010      (150,000)     (3,410,019)       539,991
Net loss.........................       --            --            --      (2,158,559)    (2,158,559)
Grant and recognition of
  options........................       --       276,676            --              --        276,676
Payment of subscription notes
  receivable.....................       --            --       150,000              --        150,000
Issuance of units................    9,512    10,600,000      (250,000)             --     10,350,000
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1996.....   89,512    14,976,686      (250,000)     (5,568,578)     9,158,108
Net loss.........................       --            --            --      (3,644,154)    (3,644,154)
Payment of subscription notes
  receivable.....................       --            --       250,000              --        250,000
Grant and recognition of
  options........................       --        62,815            --              --         62,815
Issuance of units................    3,842     7,385,000            --              --      7,385,000
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1997.....   93,354    22,424,501            --      (9,212,732)    13,211,769
Net loss.........................       --            --            --      (8,267,614)    (8,267,614)
Grant and recognition of
  options........................       --       472,023            --              --        472,023
Exercise of options..............      224       250,000            --              --        250,000
Issuance of units................   10,446    20,076,985    (2,102,000)             --     17,974,985
                                   -------   -----------   -----------    ------------   ------------

Balance at December 31, 1998.....  104,024    43,223,509    (2,102,000)    (17,480,346)    23,641,163
Net loss.........................       --            --            --     (10,987,967)   (10,987,967)
Payment of subscription notes
  receivable.....................       --            --     2,102,000              --      2,102,000
Grant and recognition of
  options........................       --     1,877,033            --              --      1,877,033
Issuance of units................       62       110,000            --              --        110,000
                                   -------   -----------   -----------    ------------   ------------

Balance at September 30, 1999....  104,086   $45,210,542   $        --    $(28,468,313)  $ 16,742,229
                                   =======   ===========   ===========    ============   ============
See accompanying notes to unaudited consolidated financial statements.

                                      F-18
81

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
           FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1999 AND
             FOR THE PERIOD FROM MARCH 31, 1994 (DATE OF INCEPTION)
                             TO SEPTEMBER 30, 1999
                                  (UNAUDITED)
MARCH 31,
                                                                                       1994
                                                                                     (DATE OF
                                                           SEPTEMBER 30,           INCEPTION) TO
                                                    ---------------------------    SEPTEMBER 30,
                                                       1998            1999            1999
                                                    -----------    ------------    -------------
Cash flows from operating activities:
  Net loss......................................    $(5,587,486)   $(10,987,967)   $(28,468,313)
  Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization..............        272,822         726,038       1,422,385
     Members' equity options....................        181,734       1,877,033       2,688,546
     Members' equity grant......................             --              --       2,200,000
  Changes in operating assets and liabilities:
     Other assets...............................        (28,536)       (396,876)       (492,136)
     Prepaid assets.............................         21,631          34,208        (196,424)
     Organization costs.........................             --              --         (32,934)
     Accounts payable...........................        109,740      (1,050,262)        986,552
     Accrued liabilities........................       (497,572)        346,368         394,502
     Due to/from related party, net.............         19,409          35,599           7,994
                                                    -----------    ------------    ------------
       Net cash used in operating activities....     (5,508,258)     (9,415,859)    (21,489,828)
                                                    -----------    ------------    ------------
Cash flows from investing activities:
  Purchase of plant and equipment...............     (1,047,274)     (4,591,636)     (9,401,059)
  Proceeds from the sale of plant and
     equipment..................................             --              --          31,942
                                                    -----------    ------------    ------------
       Net cash used in investing activities....     (1,047,274)     (4,591,636)     (9,369,117)
                                                    -----------    ------------    ------------
Cash flows from financing activities:
  Members' equity contributions.................      6,525,000       2,212,000      40,071,995
  Exercise of members' equity options...........             --              --         250,000
  Proceeds from debt............................             --       2,514,656       3,424,160
  Repayments of debt............................             --        (275,520)       (275,520)
                                                    -----------    ------------    ------------
       Net cash provided by financing
          activities............................      6,525,000       4,451,136      43,470,635
                                                    -----------    ------------    ------------
Net (decrease) increase in cash and cash
  equivalents...................................        (30,532)     (9,556,359)     12,611,690
Cash and cash equivalents at beginning of
  period........................................     13,086,402      22,168,049              --
                                                    -----------    ------------    ------------
Cash and cash equivalents at end of period......    $13,055,870      12,611,690      12,611,690
                                                    ===========    ============    ============
Supplemental cash flow information:
  Interest paid.................................    $        --    $    151,653    $    151,653
                                                    ===========    ============    ============
See accompanying notes to unaudited consolidated financial statements.

                                      F-19
82

                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

(A)  BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments, consisting only of normal
recurring adjustments, considered necessary for a fair presentation have been
included. Operating results for the nine-month period ended September 30, 1999
are not necessarily indicative of the results that may be expected for the year
ended December 31, 1999. For further information, refer to the Company's
consolidated financial statements for the year ended December 31, 1998 and
footnotes thereto included elsewhere in this prospectus.

(B)  ACCOUNTING FOR ORGANIZATIONAL COSTS

In April 1998, the American Institute of Certified Public Accountants issued
Statement of Position (SOP) 98-5, "Reporting on the Costs of Start-Up
Activities", which requires that the costs of start-up activities and
organization costs be expensed as incurred. The Company adopted the provisions
of SOP 98-5 effective January 1, 1999; the adoption had an immaterial effect on
the Company's consolidated financial statements.

(C)  EQUITY OPTIONS

During the nine months ended September 30, 1999, the Company granted 1,620
members' equity options to employees and directors with exercise prices at or
above the fair value of the underlying units at the date of grant (exercise
prices ranging from $1,118 to $2,077 per unit). In addition, the Company granted
1,321 members' equity options to outside advisors of which 482 options vested
immediately and the remainder vest over periods of up to three years. The
outside advisors' options were granted at exercise prices ranging from $1,118 to
$2,402 per unit.

For the nine months ended September 30, 1998 and 1999, the charge to operations
related to options granted to and earned by outside advisors totaled
approximately $182,000 and $1,877,000, respectively. At September 30, 1999,
unrecognized expense for options granted to outside advisors which have not
vested is approximately $1,932,000; such expense will be recognized over the
remaining vesting period and is subject to change each reporting period based
upon the fair value of the Company's members' equity units.

(D)  COMMITMENTS

On June 21, 1999, Antigenics entered into another agreement with M.D. Anderson
to conduct clinical studies. The Company is required to pay M.D. Anderson a
total of approximately $277,000 for the clinical study of approximately 40
patients and other related costs payable in installments over two years.

Under Antigenics' agreement with Sigma-Tau Farmaceutiche Riunite SpA (Sigma-Tau)
to conduct clinical studies in Italy, Sigma-Tau is required to reimburse
Antigenics for all costs incurred in relation to the clinical studies. During
1999, Antigenics incurred approximately $266,000 of costs on behalf of Sigma-
Tau associated with this agreement. This amount is included in other assets in
the accompanying consolidated balance sheet.

                                      F-20
83
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

(E) RELATED PARTY TRANSACTIONS

In November 1999, the Company signed a long-term lease agreement for its New
York City headquarters with an entity wholly-owned by the Company's chief
executive officer and chairman of the board. The lease expires in December 2006
and requires annual rental payments of approximately $312,000 equal to the
related party's cost.

(F) SUBSEQUENT EVENTS

  Private Placement of Members' Equity

In November 1999, the Company raised gross proceeds of approximately $39.2
million from the sale of approximately 16,327 members' equity units through a
private equity placement and incurred approximately $293,000 of private
placement expenses. As of November 29, 1999, the Company has a subscriptions
receivable of approximately $653,000 related to the private placement. Each
member participating in this private placement received a warrant to purchase an
additional 10% of the units acquired in this offering, rounded to the nearest
whole number, at a price of approximately $2,402 per unit. The warrants expire
September 30, 2002. The warrants permit conversion on a net exercise basis upon
the completion of an initial public offering (IPO) of the Company's equity. Each
member participating in this private placement also received registration rights
in the event of an IPO.

  Initial Public Offering

In November 1999, the Company created a subsidiary, Antigenics Inc. in
contemplation of the Company's IPO. The board of directors of Antigenics Inc.
authorized the filing of a registration statement with the Securities and
Exchange Commission (SEC) to sell shares of its common stock in connection with
the proposed IPO. Concurrently with the completion of the IPO, the Company will
be converted from a limited liability company to a corporation through a merger
with and into Antigenics Inc. All members will exchange their respective member
interests for shares of common stock in Antigenics Inc. If the IPO is not
completed, the conversion to the corporation will not take place.

  Adoption of Employee Stock Purchase Plan

In connection with the proposed IPO, the board of directors of Antigenics Inc.
approved an employee stock purchase plan. Under the plan, employees may purchase
shares of common stock at a discount from fair market value. There are 300,000
shares of common stock reserved for issuance under the purchase plan. The
purchase plan is intended to qualify as an employee stock purchase plan within
the meaning of Section 423 of the Internal Revenue Code of 1986, as amended.
Rights to purchase common stock under the purchase plan are granted at the
discretion of the compensation committee, which determines the frequency and
duration of individual offerings under the plan and the dates when stock may be
purchased. Eligible employees participate voluntarily and may withdraw from any
offering at any time before stock is purchased. Participation terminates
automatically upon termination of employment. The purchase price per share of
common stock in an offering will not be less than 85% of the lesser of its fair
market value at the beginning of the offering period or on the applicable
exercise date and may be paid through payroll deductions, periodic lump sum
payments or a combination of both. The plan terminates on November 15, 2009.

                                      F-21
84
                               ANTIGENICS L.L.C.
                         (A DEVELOPMENT STAGE COMPANY)

      NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

  Adoption of Equity Incentive Plan

In connection with the proposed IPO, the board of directors of Antigenics Inc.
approved an employee equity incentive plan. Antigenics' equity incentive plan
authorizes the grant of incentive stock options within the meaning of Section
422 of the Internal Revenue Code of 1986, as amended, and nonqualified stock
options for the purchase of an aggregate of 4,500,000 shares (subject to
adjustment for stock splits and similar capital changes) of common stock to
Antigenics' employees and, in the case of non-qualified stock options, to
consultants and directors of Antigenics Inc. or any affiliate, as defined in the
equity plan. The board of directors has appointed the compensation committee to
administer the equity plan. Members' equity options outstanding under the
Company's current equity-based incentive compensation plan will be exchanged for
stock options under the new equity incentive plan at the closing of the IPO.

(G) PRO FORMA INCOME TAX PROVISION

The Company is not subject to income taxes and therefore does not provide for
income taxes in its consolidated financial statements. Had the Company been
organized as a tax paying entity for the nine-month period ended September 30,
1999, there would be no pro forma income tax provision because of a loss before
income taxes and the need to recognize a valuation allowance on all gross
deferred tax assets. Given the Company's past history of incurring operating
losses, management believes that it is more likely than not that any deferred
tax assets will not be realized.

                                      F-22
85

                                                 SHARES

                                ANTIGENICS INC.

                                  COMMON STOCK

                           [LOGO OF ANTIGENICS INC.]

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

                                   PROSPECTUS

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

Until                2000, 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.

                           U.S. Bancorp Piper Jaffray

                               Robertson Stephens

                                            , 2000
86

                                    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 common stock being registered. All amounts are estimates except the
registration fee and the NASD filing fee.
AMOUNT
                                                                 TO BE
                                                                  PAID
                                                                --------
Registration fee............................................    $ 12,788
NASD filing fee.............................................       5,100
Nasdaq National Market listing fee..........................       *
Printing and engraving......................................       *
Legal fees and expenses.....................................       *
Accounting fees and expenses................................     200,000
Transfer Agent fees.........................................       3,500
Miscellaneous...............................................       *
                                                                --------
          Total.............................................    $
                                                                ========
---------------

* To be filed by amendment.

ITEM 14.  INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law provides that a corporation
may indemnify any person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, other than an action
by or in the right of the corporation, by reason of the fact that the person is
or was a director, officer, employee or agent of the corporation or is or was
serving at the corporation's request as a director, officer, employee or agent
of another corporation, partnership, joint venture, trust or other enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
the action, suit or proceeding if the person acted in good faith and in a manner
the person reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe the person's conduct was unlawful. The power to
indemnify applies to actions brought by or in the right of the corporation as
well, but only to the extent of expenses, including attorneys' fees but
excluding judgments, fines and amounts paid in settlement, actually and
reasonably incurred by the person in connection with the defense or settlement
of the action or suit. And with the further limitation that in these actions no
indemnification shall be made in the event of any adjudication of negligence or
misconduct in the performance of his duties to the corporation, unless a court
believes that in light of all the circumstances indemnification should apply.

Article V of Antigenics' By-laws provides that Antigenics shall, to the extent
legally permitted, indemnify each person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding by reason of the fact that he is or was, or has agreed to become, a
director or officer of Antigenics, or is or was serving, or has agreed to serve,
at the request of Antigenics, as a director, officer or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprises. The indemnification provided for in Article V is expressly
not exclusive of any other rights to which those seeking indemnification may be
entitled under any law, agreement or vote of stockholders or disinterested
directors or otherwise, and shall inure to the benefit of the heirs, executors
and administrators of such persons.

                                      II-1
87

Section 145(g) of the Delaware General Corporation Law and Article V of By-laws
of Antigenics provide that the company shall have the power to purchase and
maintain insurance on behalf of its officers, directors, employees and agents,
against any liability asserted against and incurred by such persons in any such
capacity.

Antigenics has entered into indemnification agreements with each of its
directors and executive officers and has obtained insurance covering its
directors and officers against losses and insuring Antigenics against certain of
its obligations to indemnify its directors and officers.

Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a corporation may eliminate or limit the personal liability of a
director to the corporation or its stockholders for monetary damages for breach
of fiduciary duty as a director, provided that such provisions shall not
eliminate or limit the liability of a director (i) for any breach of the
director's duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General Corporation Law
of the State of Delaware, or (iv) for any transaction from which the director
derived an improper personal benefit. No such provision shall eliminate or limit
the liability of a director for any act or omission occurring prior to the date
when such provision becomes effective.

Pursuant to the Delaware General Corporation Law, Section 7 of Article FIFTH of
the Certificate of Incorporation of Antigenics eliminates a director's personal
liability for monetary damages to Antigenics and its shareholders for breach of
fiduciary duty as a director, except in circumstances involving a breach of the
director's duty of loyalty to Antigenics or its shareholders, acts or omissions
not in good faith, intentional misconduct, knowing violations of the law,
self-dealing or the unlawful payment of dividends or repurchase of stock.

ITEM 15.  RECENT SALES OF UNREGISTERED SECURITIES

We have sold and issued the following securities in the previous three years.

In 1996, we completed a private placement offering of equity interests in
Antigenics L.L.C. equal to 10.6% of the total post-offering equity interests in
the L.L.C. for an aggregate sale price of $10,600,000.

In January 1999, we completed a private placement offering of equity interests
in Antigenics L.L.C. equal to 13.8% of the total post-offering equity interests
in the L.L.C. for an aggregate sales price of $27,572,000.

In November 1999, we completed a private placement offering of (i) equity
interests in Antigenics L.L.C. equal to 13.56% of the total post-offering equity
interests in the L.L.C. and (ii) warrants to purchase equity interests in the
L.L.C. equal to 1.36% of the total post-offering equity interests in the L.L.C.
The equity interests and warrants were sold for an aggregate of approximately
$39,200,000.

All of the above sales of L.L.C. equity interests were made in reliance on the
exemption from registration under Section 4(2) of the Securities Act of 1933, as
amended, as transactions not involving a public offering.

We have from time to time granted options to purchase equity interests in
Antigenics L.L.C. These options have a weighted average exercise price of
per one percent equity interest in the L.L.C. and are, in the aggregate,
exercisable for      % of the total equity interests in the L.L.C. assuming all
of these options are exercised. The options were issued in reliance upon
exemptions from registration pursuant to either Section 4(2) of the Securities
Act of 1933, as amended, or Rule 701 promulgated under the Securities Act of
1933, as amended.

Concurrently with the closing of this offering, the registrant will merge with
Antigenics, L.L.C. Members of the L.L.C. will receive shares of the registrant's
common stock in exchange for their equity interests at a rate of
shares per percentage equity interest, for an aggregate of approximately
          shares of common stock. The issuance of the registrant's common stock
upon contribution of the equity interests

                                      II-2
88

in the L.L.C. will be made in reliance on the exemption from registration under
Section 4(2) of the Securities Act of 1933 and Rule 506 thereunder as a
transaction not involving a public offering.

The registrant retained two placement agents in connection with the November
1999 private placement who received aggregate compensation of $217,769 in cash
and $76,298 in members' equity for their services. There were no underwriters
employed in connection with any of the other transactions set forth in Item 15.

For additional information concerning these equity investment transactions,
reference is made to the information contained under the caption "Certain
Relationships and Related Transactions" in the form of prospectus included
herein.

ITEM 16.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

     (a)  Exhibits

     See the Exhibit Index, which is incorporated herein by reference.

     (b)  Financial Statement Schedules

     None.

Schedules not listed above have been omitted because the information required to
be set forth therein is not applicable or is shown in the consolidated financial
statements or notes thereto.

ITEM 17.  UNDERTAKINGS

Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions referenced in Item 14 of this Registration
Statement 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 to provide to the underwriter at
the closing specified in the underwriting agreements, certificates in such
denominations and registered in such names as required by the underwriter to
permit prompt delivery to each purchaser.

The undersigned registrant hereby undertakes that:

     (1)  For purposes of determining any liability under the Securities Act,
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 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,
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-3
89
                                   SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has duly caused this Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the Town of Woburn,
Commonwealth of Massachusetts, on November 30, 1999.

                                          ANTIGENICS INC.

                                          By: /s/ GARO ARMEN
                                            ------------------------------------
                                              Garo H. Armen
                                              Chief Executive Officer and
                                              Chairman of the Board of Directors

                               POWER OF ATTORNEY

We, the undersigned officers and directors of Antigenics Inc., hereby severally
constitute and appoint Garo H. Armen, Ph.D. and Edward Brodsky, and each of them
singly, our true and lawful attorneys-in-fact, with full power to them in any
and all capacities, to sign any amendments to this Registration Statement, and
any related Rule 462(b) registration statement or amendment thereto, and to file
the same, with exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, hereby ratifying and confirming all
that each of said attorneys-in-fact may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
SIGNATURE                                                       TITLE                      DATE
---------                                                       -----                      ----
/s/ GARO ARMEN                                       Chief Executive Officer and     November 30, 1999
---------------------------------------------------    Chairman of the Board of
Garo Armen, Ph.D.                                      Directors (Principal
                                                       Executive Officer and
                                                       Principal Financial and
                                                       Accounting Officer)

/s/ PRAMOD SRIVASTAVA                                Director                        November 30, 1999
---------------------------------------------------
Pramod Srivastava, Ph.D.

/s/ NOUBAR AFEYAN                                    Director                        November 30, 1999
---------------------------------------------------
Noubar Afeyan, Ph.D.

/s/ EDWARD BRODSKY                                   Director                        November 30, 1999
---------------------------------------------------
Edward Brodsky

/s/ GAMIL DE CHADAREVIAN                             Director                        November 30, 1999
---------------------------------------------------
Gamil de Chadarevian

/s/ TOM DECHAENE                                     Director                        November 30, 1999
---------------------------------------------------
Tom Dechaene

/s/ DONALD PANOZ                                     Director                        November 30, 1999
---------------------------------------------------
Donald Panoz

/s/ MARTIN TAYLOR                                    Director                        November 30, 1999
---------------------------------------------------
Martin Taylor
II-4
90

                                 EXHIBIT INDEX
EXHIBIT
NUMBER                      DESCRIPTION OF DOCUMENT
-------                     -----------------------
1.1+    Form of Underwriting Agreement.
  2.1+    Form of Agreement and Plan of Merger of Antigenics Inc. and
          Antigenics L.L.C.(1)
  3.1     Certificate of Incorporation of Antigenics Inc.
  3.2     By-laws of Antigenics Inc.
  4.1     Form of Common Stock Certificate.
  4.2+    Form of Warrant to purchase interests, together with a list
          of holders.
  5.1+    Opinion of Palmer & Dodge LLP.
 10.1*    1999 Equity Incentive Plan.
 10.2*    1999 Employee Stock Purchase Plan.
 10.3     Founding Scientist's Agreement between Antigenics and Pramod
          K. Srivastava dated March 28, 1995.
 10.4     Form of Indemnification Agreement between Antigenics and its
          directors and executive officers. These agreements are
          materially different only as to the signatories and the
          dates of execution.
 10.5     Lease Agreement between Antigenics and Cummings Property
          Management, Inc. dated May 28, 1998, as amended on December
          10, 1998.
 10.6     License Agreement between GHA Management Corporation and
          Antigenics dated November 12, 1999.
 10.7     Master Loan and Security Agreement between Antigenics and
          Finova Technology Finance, Inc. dated November 19, 1998.
          (Schedules have been omitted but will be furnished to the
          Commission upon its request).
 10.8     Patent License Agreement between Antigenics and Mount Sinai
          School of Medicine dated November 1, 1994, as amended on
          June 5, 1995.(2)
 10.9     Sponsored Research and Technology License Agreement between
          Antigenics and Fordham University dated March 28, 1995, as
          amended on March 22, 1996.(2)
 10.10    Research Agreement between Antigenics and The University of
          Connecticut Health Center dated February 18, 1998.(2)
 10.11    License Agreement between Antigenics and Duke University
          dated March 4, 1999.(2)
 10.12    License Agreement between Antigenics and University of Miami
          dated April 12, 1999.(2)
 10.13    Letter Agreement between Antigenics and Sigma-Tau Industrie
          Farmaceutiche Riunite SpA dated June 3, 1998.(2)
 10.14    Letter Agreement between Antigenics and Medison Pharma Ltd.
          dated November 15, 1999.(2)
 10.15+   Amendment to Letter Agreement between Antigenics and
          Sigma-Tau Industrie Farmaceutiche Riunite SpA dated October
          20, 1999.
 10.16*   Employment Agreement between Antigenics and Elma Hawkins,
          Ph.D. dated June 1, 1998.
 10.17+*  Antigenics 401(k) Plan.
 23.1     Consent of KPMG LLP.
 23.2+    Consent of Palmer & Dodge LLP. Included in the opinion to be
          filed by amendment as Exhibit 5.1.
 24.1     Power of Attorney. Included on signature page hereto.
 27.1     Financial Data Schedule (available in EDGAR format only).
---------------------------------------------
 * Indicates a management contract or compensatory plan.

(1)As proposed to be filed with the Secretary of State of the State of Delaware
   concurrently with the closing of the offering.

(2)This Exhibit has been filed separately with the Commission pursuant to an
   application for confidential treatment. The confidential portions of this
   Exhibit have been omitted and are marked by an asterisk.

+ To be filed by amendment.