Pursuant to Rule 424(b)(3)
                                                         File Number: 333-112489


                                   PROSPECTUS

                                   AXONYX INC.

                        12,641,740 shares of common stock

      This prospectus covers the offer and sale of up to 12,641,740 shares of
common stock of Axonyx Inc. from time to time by certain selling security
holders named in this prospectus.

      The shares being offered by the selling security holders include:

      o     9,650,183 shares of our issued and outstanding common stock
            currently held by the selling security holders; and

      o     2,991,557 shares of common stock issuable upon exercise of
            outstanding warrants to purchase common stock.

      The prices at which the selling security holders may sell these shares
will be determined by the prevailing market price for shares of our common stock
or in negotiated transactions. We will not receive any of the proceeds from the
sale of the shares of common stock. However, we will receive the exercise price
of the warrants underlying some of the common stock upon exercise by the selling
security holders, to the extent the warrants are exercised for cash.

      Our common stock is traded on the Nasdaq SmallCap Market under the symbol
"AXYX". On February 13, 2004, the last reported sale price for our common stock
was $7.05 per share.

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

      The common stock offered involves a high degree of risk. See "Risk
Factors" commencing on page 7 for a discussion of some important risks you
should consider before buying any shares of common stock.

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

      Neither the Securities and Exchange Commission, nor any state securities
commission has approved or disapproved of these securities, or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.

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

                The date of this prospectus is February 13, 2004



                                TABLE OF CONTENTS

                                                                            Page

WHERE YOU CAN FIND MORE INFORMATION............................................3
THE COMPANY....................................................................4
RISK FACTORS...................................................................7
FORWARD-LOOKING STATEMENTS....................................................18
USE OF PROCEEDS...............................................................19
SELLING SECURITY HOLDERS......................................................19
PLAN OF DISTRIBUTION..........................................................21
LEGAL MATTERS.................................................................23
EXPERTS.......................................................................23

      You should rely only on the information contained in this document or to
which we have referred you. We have not authorized anyone to provide you with
information that is different. This document may only be used where it is legal
to sell these securities. The information contained in this document may only be
accurate on the date of this document. This prospectus does not constitute an
offer to sell, or a solicitation of an offer to buy, in any state where the
offer or sale is prohibited. Neither the delivery of this prospectus, nor any
sale made under this prospectus shall, under any circumstances, imply that the
information in this prospectus is correct as of any date after the date of this
prospectus.



                       WHERE YOU CAN FIND MORE INFORMATION

      We file reports, proxy statements and other information with the
Securities and Exchange Commission, or SEC. You may read and copy any document
we file at the SEC's public reference rooms in Washington, D.C., New York, New
York and Chicago, Illinois. The SEC's public reference room in Washington, D.C.
is located at 450 Fifth Street, N.W., Washington, D.C. 20549. Please call the
SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our
SEC filings are also available to the public on the SEC's website at
http://www.sec.gov.

      The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information filed with the
SEC will update and supersede this information. We incorporate by reference the
documents listed below and any future filings we make with the SEC under Section
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 until the
offering is completed.

      1.    Our Annual Report on Form 10-K for the year ended December 31, 2002
            (file no. 000-25571);

      2.    Our Quarterly Reports on Form 10-Q for the quarters ended March 31,
            2003, June 30, 2003 and September 30, 2003 (file no. 000-25571);

      3.    Our Current Reports on Form 8-K dated April 7, 2003, June 18, 2003,
            September 16, 2003, January 12, 2004 and January 20, 2004; and

      4.    The description of our common stock set forth in our Amendment No. 1
            to Registration Statement on Form 10-SB, filed with the SEC on
            August 10, 1999.

      The reports and other documents that we file under the Exchange Act after
the date of this prospectus and before all of the shares under it have been sold
will be incorporated by reference into this prospectus and will update and
supersede the information in this prospectus.

      This prospectus does not contain all of the information set forth in the
registration statement and the exhibits thereto. Descriptions of any contract or
other document referred to in this prospectus are not necessarily complete, and
in each instance reference is made to the copy of the contract or other document
filed as an exhibit to the registration statement for a more complete
description of the matter involved, each statement being qualified in its
entirety by such reference. At your written or telephonic request, we will
provide you, without charge, a copy of any of the information that is
incorporated by reference herein (excluding exhibits to the information that is
incorporated by reference unless the exhibits are themselves specifically
incorporated by reference). Direct your request to us by writing or telephoning
us at:

                                   Axonyx Inc.
                          500 Seventh Ave., 10th Floor
                            New York, New York 10018
               Attention: S. Colin Neill, Chief Financial Officer
                            Telephone (212) 645-7704.




                                   THE COMPANY

      We are engaged in the business of acquiring and developing novel
post-discovery central nervous system drug candidates, primarily in areas of
memory and cognition. We acquire patent rights to central nervous system
pharmaceutical compounds we believe may have significant potential market impact
and work to advance the compounds through clinical development towards
regulatory approval. We have acquired worldwide exclusive patent rights to three
main classes of therapeutic compounds designed for the treatment of Alzheimer's
disease (AD), Mild Cognitive Impairment, and related diseases. We have acquired
patent rights to a class of potential therapeutic compounds designed for the
treatment of prion related diseases, which are degenerative diseases of the
brain that are thought to be caused by an infectious protein called a prion.
Prions, unlike viruses, bacteria and fungi, have no DNA and consist only of
protein. Such diseases include Creutzfeldt Jakob Disease, new variant in humans,
Bovine Spongiform Encephalopathy (BSE or Mad Cow Disease) in cows, and Scrapies
disease in sheep. We licensed these patent rights separately from New York
University and from the National Institutes of Health/National Institute on
Aging (via a sublicense). We also have co-inventorship rights to a therapeutic
compound named Posiphen designed for the treatment of Alzheimer's disease.

      We out-source all of our preclinical and clinical research and
development, utilizing contract research organizations, or CROs, and sponsored
research arrangements. We have contracted with several CROs to undertake the
pre-clinical development of Phenserine. We have entered into a License Agreement
with Applied Research Systems ARS Holding N.V. (ARS), a subsidiary of Serono
International, S.A. (Serono), a Swiss biopharmaceutical company, under which ARS
has the rights to conduct research on certain of our licensed technologies. We
received an up-front fee and a milestone payment, and may receive future
milestone payments and royalties, under the License Agreement. We do not
currently maintain any laboratory or research premises.

      Our current business strategy is to concentrate our financial resources
primarily on the further clinical development of Phenserine, an inhibitor of
acetylcholinesterase, that is our lead drug candidate for the treatment of AD.
Acetylcholinesterase is an enzyme in the synapse that degrades the
neurotransmitter acetylcholine in the brain and other tissues of the body.
Acetylcholine is a chemical substance that sends signals between nerve cells,
called neurotransmission, and is therefore called a neurotransmitter.
Neurotransmitters are secreted by neurons, or nerve cells, into the space
between neurons called the synapse. Acetylcholine is a primary neurotransmitter
in the brain, and is associated with memory and cognition.

      In early June 2003, we initiated a Phase IIb clinical trial designed
evaluate the effects of Phenserine on the levels of beta-amyloid precursor
protein and beta amyloid in the plasma and cerebrospinal fluid of AD patients.
The beta amyloid protein is one of more than a dozen types of amyloid proteins
found in the body. Beta amyloid is derived from the beta-amyloid precursor
protein normally present in the brain of healthy individuals in small
quantities. Beta-amyloid, derived from the beta-amyloid precursor protein, is
over-produced in AD and Down's Syndrome. In AD, the beta-amyloid protein
undergoes a conformational change, aggregates and is deposited as insoluble
fibrils in amyloid plaques in the brain. The beta-amyloid precursor protein is
present in the cell wall of numerous cells within the body including nerve cells
of the brain. Beta-amyloid protein is derived from this larger protein. In late
June 2003 we also initiated a Phase III potentially pivotal clinical trial to
further examine the safety and efficacy of Phenserine on AD patients.

      In addition to the Phenserine clinical program, we are sponsoring
pre-clinical research relating to an assay method for screening drug candidates
for Alzheimer's disease. Pursuant to a sublicense agreement with ARS, ARS has
the rights to undertake research and development concerning the development of
(1) compounds called Amyloid Inhibitory Peptides, or AIPs, which may prevent and
reverse the formation of amyloid plaques in AD, and (2) a pharmaceutical
compound for prion-related diseases. In Alzheimer's disease the conversion of
beta-amyloid protein into insoluble beta-sheets that aggregate to form insoluble
fibrous masses (fibrils) is a key event that leads eventually to neuronal cell
death in the brains of AD patients. These fibrils are deposited as part of the
amyloid plaques that appear to be a cause of the death of neurons in the brain.
The AIPs, also referred to as beta-sheet breaker peptides, have been designed to
block the aggregation of beta-amyloid in a competitive manner by binding to the
beta-sheet form of the amyloid protein, thus preventing the formation of amyloid
plaques in the brain. The beta-sheet breaker peptide is a molecule composed of
naturally occurring amino acids, the building blocks of proteins, that is
designed to bind to and prevent the conversion of the normal form of protein to
the misshapen form that forms amyloid plaques.


                                       4


      Given sufficient financial resources, we may, in the future, sponsor
further pre-clinical development of Tolserine, another acetylcholinesterase
inhibitor, some of our butyrylcholinesterase inhibitors, and initiate
pre-clinical development of Posiphen, a compound that appears to decrease the
formation of the beta-amyloid precursor protein with potential applications in
the treatment of AD. Acetylcholinesterase inhibitors are drugs designed to
selectively inhibit acetylcholinesterase. Butyrylcholinesterase is an enzyme
that is normally found widely in the body. Its function in the central nervous
system remains to be fully understood. Amongst other roles, it degrades
acetylcholine, a primary neurotransmitter in the brain. Butyrylcholinesterase is
found in high concentration in the plaques taken from individuals who have died
from AD. This enzyme also functions to degrade a number of drugs and natural
products and is involved in their elimination from the body.

The AD targeted approaches include:

(1)   Phenserine, an inhibitor of acetylcholinesterase and the beta-amyloid
      protein, our lead drug candidate, and Tolserine, another follow-on
      acetylcholinesterase inhibitor;

(2)   a butyrylcholinesterase inhibitor which will be chosen from a series of
      selectively acting compounds;

(3)   Posiphen, a compound that decreases the formation of beta-amyloid
      precursor protein;

(4)   through our sublicense with ARS, a subsidiary of Serono, which is
      described in greater detail below, compounds called Amyloid Inhibitory
      Peptides (AIPs) which may prevent and reverse the formation of amyloid
      plaques in AD.

      On May 2, 2000, ARS, a subsidiary of Serono, exercised its right to
license certain of our patent rights under the Development Agreement and Right
to License signed with us in May of 1999. Under that agreement, ARS paid us a
$250,000 non-refundable fee for the right to license. Pursuant to the resulting
License Agreement, which became effective on September 15, 2000, ARS acquired
exclusive worldwide patent rights to our AIP and Prion Inhibitory Peptide
technologies, called the Licensed Products. In conjunction with the signing of
the License Agreement with ARS, we generated $1.5 million of revenue in the form
of an up-front license fee. We received a milestone payment of $1 million in
April 2003 from ARS in relation to the initiation of a Phase I clinical trial
with a licensed AIP compound. We may generate additional revenues from ARS if
they reach certain development milestones concerning the licensed compounds or
other products and related intellectual property, although additional milestone
payments did not occur in fiscal year 2003. Axonyx could receive milestone
payments from ARS in an aggregate amount of $13 million if the Licensed Product
involved is a patented product covered by the sub-licensed patents and patent
applications and it achieves certain developmental milestones up through health
registration approval. The amount of aggregate milestone payments through health
registration approval would be $7 million if the Licensed Product involved was
developed by Serono during the one year term of the Development Agreement we
entered into with ARS in May 1999. We cannot assure you that licensed compounds
or products will reach any particular stage of development requiring a milestone
payment, that licensed compounds or products will ever reach the market and give
rise to royalty payments, or that additional revenues from patent licensing will
be generated.

      Through our sublicense with ARS, Serono has the right to conduct research
and development work on compounds called Prion Inhibitory Peptides designed for
the diagnosis and treatment of prion diseases such as Bovine Spongiform
Encephalopathy (also known as Mad Cow Disease) and the human form of the
disease, Creutzfeldt Jakob Disease, new variant.

      We are also funding research at the University of Monash in Australia
relating to the development of an assay method for the rapid screening of
potential drug candidates for the treatment of Alzheimer's disease. We have
signed a Research Agreement with the principal researcher, David Henry Small,
Ph.D., to fund this research over a three year period ending in May 2005.

      In December 2000 Axonyx incorporated Axonyx Europe BV, a wholly owned
subsidiary, in the Netherlands. Gosse Bruinsma, M.D., currently the President
and Chief Operating Officer of Axonyx, was appointed the President of Axonyx
Europe BV. Axonyx Europe explores out-licensing opportunities for Axonyx's
licensed technologies in Europe and other areas outside the United States,
facilitates communication with Axonyx's European shareholders, and is assisting
in organizing and administering our planned clinical research in Europe and
future potential pre-clinical and clinical studies there. Axonyx has established
a Scientific Advisory Board to assist


                                       5


in clinical protocol design as well as the identification of novel central
nervous system technology and products for potential licensing.

      We have incurred negative cash flows from operations since the inception
of the company in 1997. Our net losses for the three fiscal years ended 2000,
2001, and 2002 were $4,870,000, $8,144,000 and $6,256,000, respectively, and
$4,624,000 for the nine months ending September 30, 2003. As of September 30,
2003, we had an accumulated deficit of $30,246,000 and our operating losses are
continuing. We have no products available for sale and we do not expect to have
any products commercially available for several years, if at all.

      On January 20, 2004, we announced that we entered into agreements to
acquire approximately 53% of the outstanding voting stock of OXIS International,
Inc. (OTC: OXIS.OB). OXIS is a biopharmaceutical/diagnostic company engaged in
the development of research diagnostics, nutraceuticals and therapeutics in the
field of oxidative stress. Under the terms of separate agreements entered into
with several holders of OXIS common stock, we will be acquiring an aggregate of
approximately 14 million shares of OXIS stock, in consideration for our issuance
of an aggregate of approximately 1.6 million shares of our unregistered common
stock. We have agreed to register our shares of common stock being issued in the
exchange in the near future. Marvin S. Hausman, M.D., our Chairman and Chief
Executive Officer, owns 1,161,532 shares of OXIS common stock, representing
approximately 4% of OXIS' voting stock. Dr. Hausman's shares of OXIS common
stock are not subject to this exchange for our common stock.

      Axonyx was incorporated in Nevada on July 29, 1997. Our principal
executive offices are located at 500 Seventh Avenue, 10th Floor, New York, New
York 10018, and our telephone number is (212) 645-7704.


                                       6


                                  RISK FACTORS

You should carefully consider the risks described below in evaluating Axonyx and
our business. If any of the following risks actually occur, our business could
be harmed. This could cause the price of our stock to decline. This prospectus
contains, in addition to historical information, forward-looking statements,
including statements about future plans, objectives, and intentions, that
involve risks and uncertainties. Our actual results may differ materially from
the results discussed in the forward-looking statements. Factors that might
cause or contribute to these differences include those discussed below and
elsewhere in this prospectus.

                          Risks Related to Our Business

      We have a limited operating history. We have a large accumulated deficit
and may never become profitable.

      We have a limited operating history upon which investors may base an
evaluation of our likely future performance. Since we began operations in 1997
we have been engaged in developing our research programs, recruiting outside
directors, employees and key consultants, and consummating patent licensing
agreements. To date, we have not had any in-house laboratory facilities in which
to conduct any research and will not have any operational laboratories of our
own in the near future. We have had only limited revenue from license fees in
the amount of $2.75 million to date. As of September 30, 2003, we had an
accumulated deficit of $30,246,000 and our operating losses are continuing.

      We have no products available for sale and we may never be successful in
developing products suitable for commercialization.

      All of our drug candidates are at an early stage of development and all of
our drug candidates will require expensive and lengthy testing and regulatory
clearances. None of our drug candidates have been approved by regulatory
authorities. We have no products available for sale and we do not expect to have
any products commercially available for several years, if at all. There are many
reasons that we may fail in our efforts to develop our drug candidates,
including that:

o     our drug candidates will be ineffective, toxic or will not receive
      regulatory clearances,

o     our drug candidates will be too expensive to manufacture or market or will
      not achieve broad market acceptance,

o     third parties will hold proprietary rights that may preclude us from
      developing or marketing our drug candidates, or

o     third parties will market equivalent or superior products.

      The success of our business depends upon our ability to successfully
develop potential drug products from our sponsored preclinical research
programs.

      We cannot assure you that our sponsored research will lead to the
successful development of any therapeutic agents. If any potential products are
identified, they will require significant additional research, development,
preclinical and clinical testing, regulatory approval and substantial additional
investment prior to commercialization. Any potential products we identify may
not be successfully developed, prove to be safe and efficacious in clinical
trials, meet applicable regulatory standards, or be capable of being produced in
commercial quantities at acceptable costs or be successfully marketed.

      Our product candidates may not successfully complete clinical trials
required for commercialization, and as a result our business may never achieve
profitability.

      To obtain regulatory approvals needed for the sale of our drug candidates,
we must demonstrate through preclinical testing and clinical trials that each
drug candidate is both safe and effective for the human population that it was
intended to treat. The clinical trial process is complex and the regulatory
environment varies widely from country to country. Positive results from
preclinical testing and early clinical trials do not ensure positive results in


                                       7


the pivotal human clinical trials. Many companies in our industry have suffered
significant setbacks in pivotal clinical trials, even after promising results in
earlier trials. The results from our trials, including our current Phase IIB or
Phase III Phenserine trials, may show that our drug candidates produce
undesirable side effects in humans or that our drug candidates are not safe or
effective. Such results could cause us or regulatory authorities to interrupt,
delay or halt clinical trials of a drug candidate. Moreover, we, the FDA, or
foreign regulatory authorities may suspend or terminate clinical trials at any
time if we or they believe the trial participants face unacceptable health risks
or that our drug candidates are not safe or effective. Clinical trials are
lengthy and expensive. They require adequate supplies of drug substance and
sufficient patient enrollment. Patient enrollment is a function of many factors,
including:

o     the size of the patient population,

o     the nature of the protocol (i.e., how the drug is given, and the size and
      frequency of the dose),

o     the proximity of patients to clinical sites, and

o     the eligibility criteria for the clinical trial (i.e., age group, level or
      symptoms, etc.).

      Delays in patient enrollment can result in increased costs and longer
development times. Even if we successfully complete clinical trials, we may not
be able to file any required regulatory submissions in a timely manner and we
may not receive regulatory approval for the particular drug candidate that was
tested.

      In addition, if the FDA or foreign regulatory authorities require
additional clinical trials, we could face increased costs and significant
development delays. Changes in regulatory policy or additional regulations
adopted during product development and regulatory review of information we
submit could also result in delays or rejections.

      We cannot assure you that we will have future revenue or operating profits
and you could lose your entire investment.

      We expect to incur substantial operating losses for at least the next
several years. We currently have limited sources of revenue other than interest
income, and we cannot assure you that we will be able to develop other revenue
sources or that our operations will become profitable, even if we are able to
commercialize any products. Other than interest income, the only revenue that we
have realized to date has been fees totaling $2.75 million paid by Applied
Research Systems ARS Holding N.V., a subsidiary of Serono International, S.A.,
under the terms of the Development Agreement and Right to License and the
subsequent License Agreement. If we do not generate significant increases in
revenue, at some point in the future we may not be in a position to continue
operations and investors could lose their entire investment.

      If we fail to comply with the terms of our licensing agreements our
licensors may terminate certain licenses to patent rights, causing us to lose
valuable intellectual property assets.

      Under the terms of our licensing agreements with each of our patent
licensors, New York University and CURE, LLC, (our rights to certain patents
under the CURE license are via a sublicense to CURE from the United States
Public Health Service on behalf of the National Institute of Aging), our
exclusive license to the patent rights covering all of our drug candidates may
be terminated if we fail to meet our obligations to the licensors.

      Under our Research and License Agreement with New York University, as
amended, we are obligated to meet certain deadlines for the pre-clinical and
clinical development of the licensed AIP and PIP technology, payment of
royalties, and filing, maintenance and prosecution of the covered patent rights.
Rights to conduct the ongoing drug development of the AIP and PIP technology
covered by the NYU agreement are held by Applied Research Systems ARS Holding
N.V., a subsidiary of Serono International, S.A., under the terms of our License
Agreement with them. NYU can terminate the Research and License Agreement for
cause: (a) if we do not cure within 60 days of notice of a material breach or
default in the performance or observance of any of the provisions of the
agreement or (b) if we fail to pay any amounts due under the agreement, within
30 days after receiving notice from NYU specifying such breach or default, or
automatically and (c) immediately without further action, if we discontinue our
business or become insolvent or bankrupt.


                                       8


      We are obligated, under the provisions of the License Agreement with CURE,
LLC to pay certain royalty payments, pay for the filing, prosecution and
maintenance of the patent rights covered by the agreement, meet certain
development timelines and comply with certain pass through provisions from the
License Agreement between CURE, LLC and the PHS. The reversionary rights
provision of the License Agreement sets certain deadlines by which we are to
achieve certain development milestones, including commencing clinical trials,
for Phenserine. If we fail to comply with the development benchmarks or the
commercial development plan, or pay the required penalty fees, then all rights
to the patents may, at CURE's election, revert to CURE, and the agreement will
terminate.

      Certain pass through provisions from the License Agreement between CURE,
LLC and the PHS are contained in our License Agreement with CURE, LLC. These
pass through provisions are binding on us as if we were a party to the License
Agreement with the PHS. Those provisions cover certain reserved government
rights to the licensed patents, obligations to meet certain benchmarks and
perform a commercial development plan, manufacturing restrictions, as well as
indemnification, termination and modification of rights. PHS reserves on behalf
of the U.S. government or any foreign government or international organization
pursuant to any existing or future treaty or agreement with the U.S. government
an irrevocable, nonexclusive, nontransferable, royalty free license for the
practice of all inventions licensed pursuant to the License Agreement between
CURE and PHS for research or other purposes. After making the first commercial
sale of licensed products until expiration of the agreement, we must use our
reasonable best efforts to make the licensed products and processes reasonably
accessible to the U.S. public. PHS reserves the right to terminate or modify the
License Agreement if it is determined that such action is necessary to meet
requirements for public use specified by federal regulations. We are also
obligated, under these pass through provisions, to manufacture licensed products
substantially in the U.S., unless a written waiver is obtained in advance from
the PHS. We undertook to develop and commercialize the licensed products covered
by the patents pursuant to a commercial development plan contained in a pass
through provision from the CURE-PHS license agreement. If we fail to cure
non-compliance with the commercial development plan after notice from CURE
within a reasonable period of time, we could be in material breach of the
agreement. We have not, as of the date this prospectus, received notice of
default of any of our obligations from CURE, LLC, or the PHS.

      If we receive written notice of our default or material breach of any of
our obligations under the licensing agreements, we must cure the default within
ninety days under the license with CURE or sixty days (or concerning payments,
30 days) under the license with New York University, or the relevant licensor
may terminate the license. After such termination, we would not be entitled to
make any further use whatsoever of the licensed patent rights, or any related
licensed know-how. Upon termination of our license agreements, we are required
to return the licensed technology to our licensors. Since we sublicensed the
technology licensed from New York University to ARS, a subsidiary of Serono,
such termination could also cause us to lose some or all of our future revenues
under this sublicense agreement or under any other future sublicensing
agreements concerning our patent rights to other drug candidates, if any.

      The performance of our obligations to the licensors will require
increasing expenditures as the development of the licensed drug compounds
proceeds. We cannot guarantee that we will be capable of raising the funds
necessary to meet our obligations under the license agreements, sublicense part
or all of our licensed drug compounds to a third party capable of undertaking
the obligations, or fulfill additional licensing obligations.

      We do not currently have the capability to undertake manufacturing,
marketing, or sales of any potential products and we have limited personnel to
oversee out-sourced clinical testing and the regulatory approval process.

      We have not invested in manufacturing, marketing or product sales
resources. We cannot assure you that we will be able to acquire such resources.
It is likely that we will also need to hire additional personnel skilled in the
clinical testing and regulatory compliance process if we develop additional
product candidates with commercial potential. We have no history of
manufacturing or marketing. We cannot assure you that we will successfully
manufacture or market any product we may develop, either independently or under
manufacturing or marketing arrangements, if any, with other companies. We
currently do not have any arrangements with other companies, and we cannot
assure you that any arrangements with other companies can be successfully
negotiated or that such arrangements will be on commercially reasonable terms.
To the extent that we arrange with other companies to


                                       9


manufacture or market our products, if any, the success of such products may
depend on the efforts of those other companies. We do not currently have the
capability to conduct clinical testing in-house and do not currently have plans
to develop such a capability. We out-source our clinical testing to contract
research organizations. We currently have one employee and certain other outside
consultants who oversee the contract research organizations involved in clinical
testing of our compounds. We cannot assure you that our limited oversight of the
contract research organizations will suffice to avoid significant problems with
the protocols and conduct of the clinical trials.

      We depend on contract research organizations to do much of our
pre-clinical and all of our clinical testing, and we are substantially dependent
on an outside manufacturer to develop and manufacture drug product for our lead
drug product.

      We have engaged and intend to continue to engage third party contract
research organizations, or CROs, and other third parties to help us develop our
drug candidates. Although we have designed the clinical trials for our drug
candidates, the CROs have conducted all of our clinical trials. As a result,
many important aspects of our drug development programs have been and will
continue to be outside of our direct control. In addition, the CROs may not
perform all of their obligations under arrangements with us. If the CROs do not
perform clinical trials in a satisfactory manner or breach their obligations to
us, the development and commercialization of any drug candidate may be delayed
or precluded. We cannot control the amount and timing of resources these CROs
devote to our programs or product candidates. The failure of any of these CROs
to comply with any governmental regulations would substantially harm our
development and marketing efforts and delay or prevent regulatory approval of
our drug candidates. If we are unable to rely on clinical data collected by
others, we could be required to repeat, extend the duration of, or increase the
size of our clinical trials and this could significantly delay commercialization
and require significantly greater expenditures.

      We have contracted with or are currently negotiating contracts with
several CROs to perform services concerning certain pre-clinical and clinical
testing of Phenserine. For example, our subsidiary, Axonyx Europe has contracted
with NOTOX Safety and Environmental Research B.V. of Holland to conduct a
pre-clinical carcinogenicity study. Other CROs are providing other services,
including conducting a Phase I bioavailability clinical trial, a shelf life
testing on the final formulation of Phenserine. We have contracted with JSW
Research in Austria to undertake the running of our Phase IIb beta-amyloid
clinical trial for Phenserine, as well as undertaking the running of the
potentially pivotal Phase III clinical trial for Phenserine. Other CROs will
provide the program management, program quality assurance and quality control
service, and data management and analysis for both clinical trials. In the event
that any of these CROs fails to perform the services that they have been
contracted to perform such failure would likely cause delay in the completion of
the relevant drug development program and additional expense incurred in the
process of replacing the CRO. Replacement of NOTOX would likely cause a delay in
any future NDA submission for Phenserine and it is likely that switching to
another vendor would involve paying higher contract costs. Given that we
currently have only one person in house and certain outside consultants who will
be primarily responsible for overseeing the conduct of the contract research
organizations, we cannot assure you that any failure on the part of those CROs
will be detected on a timely basis. We have, in the past, engaged Rhodia Chirex,
an API or active pharmaceutical ingredient manufacturer, to develop and
manufacture Phenserine drug product. While the rights to the proprietary
manufacturing processes have been assigned to us and are covered by a patent
application, transferring to another manufacturer would create delays in our
drug development of Phenserine and would involve higher costs.

      If we need additional funds, and if we are unable to raise them, we will
have to curtail or cease operations.

      Our drug development programs and the potential commercialization of our
drug candidates require substantial working capital, including expenses for
preclinical testing, chemical synthetic scale-up, manufacture of drug substance
for clinical trials, toxicology studies, clinical trials of drug candidates,
payments to our licensors and potential commercial launch of our drug
candidates. Our future working capital needs will depend on many factors,
including:

o     the progress and magnitude of our drug development programs,

o     the scope and results of preclinical testing and clinical trials,


                                       10


o     the cost, timing and outcome of regulatory reviews,

o     the costs under current and future license and option agreements for our
      drug candidates, including the costs of obtaining and maintaining patent
      protection for our drug candidates,

o     the costs of acquiring any technologies or additional drug candidates,

o     the rate of technological advances,

o     the commercial potential of our drug candidates,

o     the magnitude of our administrative and legal expenses, including office
      rent, and

o     the costs of establishing third party arrangements for manufacturing.

      We have incurred negative cash flow from operations since we incorporated
and do not expect to generate positive cash flow from our operations for at
least the next several years. Although since September 2003, we have raised
approximately $75 million through financings and an additional $5 million
through the cash exercise of various warrants to purchase our common stock, we
expect that additional financings will be required in the future to fund our
operations. We may not be able to obtain adequate financing to fund our
operations, and any additional financing we obtain may be on terms that are not
favorable to us. In addition, any future financings (which may include the
issuance of warrants issued in connection with such financings) could
substantially dilute our stockholders. If adequate funds are not available we
will be required to delay, reduce or eliminate one or more of our drug
development programs, to enter into new collaborative arrangements on terms that
are not favorable to us i.e., the collaborative arrangements could result in the
transfer to third parties of rights that we consider valuable.

      We are dependent on executive officers and non-employee scientific
personnel, most of whom do not have employment contracts.

      Because of the specialized scientific nature of our business, we are
highly dependent upon our ability to attract and retain qualified scientific and
management personnel. The loss of our Chief Executive Officer and Chairman,
Marvin S. Hausman, M.D. and/or Gosse B. Bruinsma, M.D., our President and Chief
Operating Officer, and/or S. Colin Neill, our Chief Financial Officer and
Treasurer, would be detrimental to us. We do not currently have employment
agreements with our officers, except Gosse B. Bruinsma, M.D. We do not have
employment agreements with key scientific personnel who are doing research at
the National Institute of Aging related, in some cases, to pharmaceutical
compounds licensed via a sublicense to Axonyx, and have no assurance that such
personnel will continue to be employed in such research. We do not carry key man
insurance on any of our personnel.

      There is intense competition for qualified personnel in the areas of our
activities, and there can be no assurance that we will be able to continue to
attract and retain qualified personnel necessary for the development of our
business. Loss of the services of or failure to recruit additional key
scientific and technical personnel would be detrimental to our research and
development programs and business.

      Most members of our Scientific Advisory Board and our other scientific
consultants are employed by academic and research institutions, or are
self-employed. For this reason, our advisors and consultants will be able to
devote only a portion of their time to us. In addition, it is possible, in
certain circumstances, that inventions or processes discovered by them will not
become the property of our company but will be the property of their full-time
employers.

      Our business could be harmed if we fail to protect our intellectual
property.

      We have licensed rights to certain patented and patent pending proprietary
technology from NYU and CURE, LLC to which we are obligated to pay royalties if
we or our sublicensees develop products based upon the licensed technology.
Because of the substantial length of time, effort and expense associated with
bringing new products through development and regulatory approval to the
marketplace, the pharmaceutical industry places considerable importance on
patent and trade secret protection for new technologies, products and processes.
We have interests in eight patents issued in the United States. We obtained
patent rights in six of those patents from our licensors at New York University
and CURE, LLC. We sublicensed the rights to two of those six patents to by
Applied Research Systems ARS Holding N.V., a subsidiary of Serono International,
S.A. We have also filed two patent applications, one in conjunction with the NIH
and two co-inventor scientists, that have become issued patents in the United
States. In addition to the eight issued patents, we have filed four patent
applications in the United


                                       11


States. We have co-ownership patent rights to two of these patent applications.
We have ownership rights to one of the patent applications pursuant to
assignment by the inventors and we have sublicensed the fourth patent
application to ARS. We are obligated to pay the filing, prosecution and
maintenance expenses with regard to all of these patents and patent
applications. We and our licensors have filed patent applications in other
countries, and we may seek additional patents in the future. Our patent
position, like that of many pharmaceutical companies, is uncertain and involves
complex legal and factual questions for which important legal principles are
unresolved. We may not develop or obtain rights to products or processes that
are patentable. Even if we do obtain patents, they may not adequately protect
the technology we own or have in-licensed. In addition, others may challenge,
seek to invalidate, infringe or circumvent any patents we own or in-license, and
rights we receive under those patents may not provide competitive advantages to
us. Further, the manufacture, use or sale of our products or processes, if any,
may infringe the patent rights of others.

      We cannot assure you as to the breadth or the degree of protection that
any such patents, if issued, will afford us or that any patents based on the
patent applications will be issued at all. In addition, we cannot assure you
that others will not independently develop substantially equivalent proprietary
information or otherwise obtain access to our know-how or that others may not be
issued patents that may require licensing and the payment of significant fees or
royalties by us for the pursuit of our business.

      Several pharmaceutical and biotechnology companies, universities and
research institutions may have filed patent applications or received patents
that cover technologies similar to ours. Our ability to make, use or sell any of
our drug candidates may be blocked by patents that have been or will be issued
to third parties that we may not be aware of. The United States patent
applications are confidential while pending in the Patent and Trademark Office,
and patent applications filed in foreign countries are often first published six
months or more after filing. Therefore, until a patent is issued, we have no way
of knowing if a third party has a patent that could preclude us from
commercializing our drug candidates. Third party patent applications and patents
could significantly reduce the coverage of our patents and limit our ability to
obtain meaningful patent protection. If other companies obtain patents with
conflicting claims, we may be required to obtain licenses to these patents or to
develop or obtain alternative technology. We may not be able to obtain any such
license on acceptable terms or at all. Any failure to obtain such licenses could
delay or prevent us from pursuing the development or commercialization of our
drug candidates, which would adversely affect our business.

      Potential litigation concerning patent rights could involve significant
expenses and damage our business.

      In the United States, the first to invent a technology is entitled to
patent protection on that technology. For patent applications filed prior to
January 1, 1996, United States patent law provides that a party who invented a
technology outside the United States is deemed to have invented the technology
on the earlier of the date it introduced the invention in the United States or
the date it filed its patent application. In many foreign countries, the first
party to file a patent application on a technology, not the first to invent the
technology, is entitled to patent protection on that technology. Under the
patent laws of most countries, a product can be found to infringe a third party
patent if the third party patent expressly covers the product or method of
treatment using the product, or if the third party patent covers subject matter
that is substantially equivalent in nature to the product or method, even if the
patent does not expressly cover the product or method.

      While we have not received notification of potential infringement of
patents held by third parties, with respect to any of our drug candidates,
litigation, patent opposition and adversarial proceedings could result in
substantial costs to us. Litigation and/or proceedings could be necessary or may
be initiated to enforce any patents we own or in-license, or to determine the
scope, validity and enforceability of other parties' proprietary rights and the
priority of an invention. The outcome of any of these types of proceedings could
significantly affect our drug candidates and technology. United States patents
carry a presumption of validity and generally can be invalidated only through
clear and convincing evidence.

      Under our license agreements with New York University, CURE LLC, ARS, a
subsidiary of Serono, and Dr. David Small and co-inventors, we have the right to
pursue any actions against third parties for infringement of the patent rights
covered by those agreements. Under those arrangements we are obligated to share
any recovery over and above that required for reimbursement of our costs and
expenses in bringing the infringement


                                       12


action with our licensors, or in the case of ARS, with our licensee, if ARS
joins the suit. Under one of those arrangements, our failure to effect the
discontinuance of any infringement after a certain period of time can reduce our
royalty income. Under our License Agreement with ARS, if, after the expiration
of 90 days of notice of any third party infringement by one party to the other,
and we have not obtained discontinuance of such infringement or brought suit
against the third party infringer, then the royalty in effect in such country
shall be reduced by fifty percent. Such reduced royalty rate shall continue
until such infringement ceases.

      An adverse outcome of these proceedings could subject us to significant
liabilities to third parties, require disputed rights to be licensed from third
parties or require us to cease using such technology, any of which could
adversely affect our business. Moreover, the mere uncertainty resulting from the
initiation and continuation of any technology related litigation or adversarial
proceeding could adversely affect our business pending resolution of the
disputed matters.

      If we do not exercise our right to prosecute and our licensors institute
and prosecute patent proceedings, our rights will depend in part upon the manner
in which these licensors conduct the proceedings. In any proceedings they elect
to initiate and maintain, these licensors may not vigorously pursue or defend or
may decide to settle such proceedings on terms that are unfavorable to us.

      Companies and universities that have licensed product candidates to us for
clinical development and marketing are sophisticated competitors that could
develop similar products to compete with our products.

      Licensing product candidates from other companies, universities or
individuals does not always prevent them from developing non-identical but
competitive products for their own commercial purposes, nor from pursuing patent
protection in areas that are competitive with us. The partners who created these
technologies are sophisticated scientists and business people who may continue
to do research and development and seek patent protection in the same areas that
led to the discovery of the product candidates that they licensed to us. The
development and commercialization of successful new drugs from our research
program is likely to attract additional research by our licensors in addition to
other investigators who have experience in developing products for the memory
and cognition market. By virtue of the previous research that led to the
discovery of the drugs or product candidates that they licensed to us, these
companies, universities, or individuals may be able to develop and market
competitive products in less time than might be required to develop a product
with which they have no prior experience.

      Despite the use of confidentiality agreements and/or proprietary rights
agreements, which themselves may be of limited effectiveness, it may be
difficult for us to protect our trade secrets.

      We rely on trade secrets to protect technology in cases when we believe
patent protection is not appropriate or obtainable. However, trade secrets are
difficult to protect. While we require certain of our academic collaborators,
contractors and consultants to enter into confidentiality agreements, we may not
be able to adequately protect our trade secrets or other proprietary
information.

      We might face intellectual property claims that may be costly to resolve
and could divert management attention.

      We may from time to time be subject to claims of infringement of other
parties' proprietary rights. We could incur substantial costs in defending
ourselves in any suits brought against us claiming infringement of the patent
rights of others or in asserting our patent rights in a suit against another
company. Adverse determinations in any litigation could subject us to
significant liabilities to third parties, require us to seek costly licenses
from third parties and prevent us or our sublicensees from manufacturing and
selling our potential products.

      Third party co-ownership concerning certain of our in-licensed patent
rights could affect any future decision to commercialize certain drug
candidates.

      There are significant risks regarding the patent rights surrounding
Bisnorcymserine and Phenethylnorcymserine (PENC), two of our potential
butyrylcholinesterase inhibitor drug candidates, and for


                                       13


Posiphen, a potential pharmaceutical compound for the treatment of Alzheimer's
Disease that is the positive isomer of Phenserine. Because we do not own the
patent rights exclusively, any future decisions to commercialize PENC or
Bisnorcymserine, may be adversely impacted due to patent rights held by third
parties with whom we do not currently have licensing agreements concerning the
patent application covering those drug candidates. In addition, even if our
patent rights are not adversely impacted, we may still attempt to obtain
licenses from the third party patent holders to reduce or eliminate the risks
relating to our development and commercialization efforts. Such licenses may not
be available on acceptable terms or at all and may impair our ability to
commercialize PENC, Bisnorcymserine, or Posiphen. A decision not to
commercialize these drug candidates could adversely affect our business.

      Because we depend on third parties for the acquisition and development of
drug candidates, we may not be able to successfully acquire additional drug
candidates or commercialize or develop our current drug candidates.

      We do not currently nor do we intend to engage in drug discovery for drug
candidate acquisition. Our strategy for obtaining additional drug candidates is
to utilize the relationships of our management team and scientific consultants
to identify drug candidates for in-licensing from companies, universities,
research institutions and other organizations. It is possible that we may not
succeed in acquiring additional drug candidates on acceptable terms or at all.

      If our drug candidates do not achieve market acceptance, our business may
never achieve profitability.

      Our success will depend on the market acceptance of any products we may
develop. The degree of market acceptance will depend upon a number of factors,
including the receipt and scope of regulatory approvals, the establishment and
demonstration in the medical community of the safety and effectiveness of our
products and their potential advantages over existing treatment methods, and
reimbursement policies of government and third party payors. Physicians,
patients, payors or the medical community in general may not accept or utilize
any product that we may develop.

      We are significantly controlled by our management.

      Our executive officers comprise two of the five members of our Board of
Directors. As a result, our management has the ability to exercise influence
over significant matters. This high level of influence may have a significant
effect in delaying, deferring or preventing a change of control of our company.

                          Risks Related to Our Industry

      Potential technological changes in our field of business create
considerable uncertainty.

      We are engaged in the biopharmaceutical field, which is characterized by
extensive research efforts and rapid technological progress. New developments in
Alzheimer's disease research are expected to continue at a rapid pace in both
industry and academia. We cannot assure you that research and discoveries by
others will not render some or all of our programs or product candidates
noncompetitive or obsolete.

      Our business strategy is based in part upon inhibition of amyloid
conformational change and amyloid precursor protein processing and the
application of these new and unproven technologies to the development of
biopharmaceutical products for the treatment of Alzheimer's disease and other
neurological disorders. We cannot assure you that unforeseen problems will not
develop with these technologies or applications or that commercially feasible
products will ultimately be developed by us.

      The markets in which we seek to participate are intensely competitive and
many of our competitors are better capitalized and have more experience than we
do.


                                       14


      There are many companies, both public and private, including well-known
pharmaceutical companies, engaged in developing synthetic pharmaceutical and
biotechnological products for human therapeutic applications in the Alzheimer's
disease area. Our major competitors are currently the pharmaceutical companies
that are marketing the acetylcholinesterase inhibitors for the treatment of
Alzheimer's disease. The market for such is dominated primarily by Pfizer with
its drug Aricept. The other significant drugs are Exelon marketed by Novartis
and Reminyl marketed by Jansen Pharmaceuticals. These are large pharmaceutical
companies with far ranging capabilities to market their drugs and to develop
follow on drug products. Although our major potential drug Phenserine is
currently in Phase III clinical trials, there can be no guarantees that we will
obtain regulatory approval for Phenserine and such approval, even if obtained,
may be years away. In addition we do not have the capability or the resources of
marketing a drug and will have to enter into a collaborative relationship with a
larger pharmaceutical company in order to market Phenserine. As Phenserine is
also an acetylcholinesterase inhibitor, like the currently marketed drugs,
unless the data from future Phenserine clinical trials reflects the general lack
of adverse side effects found in previous clinical trials and the unique
mechanism of action involving the inhibition of the beta-amyloid precursor
protein found in pre-clinical studies, it will be difficult to distinguish
Phenserine from the currently market drugs and gain market share.

      Certain smaller pharmaceutical companies may also be competitors. Smaller
companies may also prove to be competitors through collaborative arrangements
with large pharmaceutical and biotechnology companies. Academic institutions,
governmental agencies and other public and private research organizations are
also becoming increasingly aware of the commercial value of their inventions and
are more actively seeking to commercialize the technology they have developed.
Many of these companies have substantially greater capital, research and
development and human resources and experience than us and represent significant
long-term competition for us. In addition, many of these competitors have
significantly greater experience than us in undertaking preclinical testing and
clinical trials of new pharmaceutical products and obtaining FDA and other
regulatory approvals. Furthermore, if we or our current or any future licensee
is permitted to commence commercial sales of any product, we or our licensee
will also be competing with companies that have greater resources and experience
in manufacturing, marketing and sales. We have no experience in these areas.
These other companies may succeed in developing products that are more effective
or less costly than any that may be developed by us or our future licensee and
may also prove to be more successful than us or our future licensee in
production and marketing. Competition may increase further as a result of the
potential advances in the commercial applicability of peptide chemistry and
greater availability of capital for investment in these fields. Other companies
are engaged in research and product development based on amyloidogenesis and
acetylcholinesterase inhibition.

      If we successfully develop and obtain approval for our drug candidates, we
will face competition based on the safety and effectiveness of our products, the
timing and scope of regulatory approvals, the availability of supply, marketing
and sales capability, reimbursement coverage, price, patent position and other
factors. Our competitors may develop or commercialize more effective or more
affordable products, or obtain more effective patent protection, than we do.
Accordingly, our competitors may commercialize products more rapidly or
effectively than we do, which could hurt our competitive position.

      We cannot assure you of FDA approval for our potential products and
government regulation may impact our development plans.

      The FDA and comparable agencies in foreign countries impose rigorous
safety and efficacy requirements on the introduction of therapeutic
pharmaceutical products through lengthy and detailed laboratory and clinical
testing procedures and other costly and time-consuming procedures. Satisfaction
of these requirements typically takes a number of years and varies substantially
based upon the type, complexity and novelty of the pharmaceutical compounds. All
but two of our drug product candidates are currently in various stages of
pre-clinical development and consequently significant regulatory hurdles remain
before any application for regulatory approval can be submitted. Only two of our
drug product candidates have been tested in human clinical trials. We cannot
assure you that the drug candidates currently in preclinical development will
elicit similar results in human testing to the results in animal testing. We
cannot predict with any certainty when we may submit product candidates for FDA
or other regulatory approval.

      Government regulation also affects the manufacture and marketing of
pharmaceutical products. The effect of government regulation may be to delay
marketing of our new products, if any, for a considerable period of time,


                                       15


to impose costly procedures upon our activities and to furnish a competitive
advantage to larger companies that compete with us. We cannot assure you that
FDA or other regulatory approval for any products developed by us will be
granted on a timely basis, if at all. Any such delay in obtaining, or failure to
obtain, such approvals would adversely affect the marketing of our products and
the ability to generate product revenue. Government regulation may increase at
any time creating additional hurdles for us. The extent of potentially adverse
government regulation which might arise from future legislation or
administrative action cannot be predicted.

      We are subject to extensive government regulation and may fail to receive
regulatory approval which could prevent or delay the commercialization of our
products, if any.

      Any approval of our drug candidates may be contingent on post-marketing
studies or other conditions and the approval of any of our drug candidates may
limit the indicated uses of the drug candidate. Further, even if our drug
candidates receive regulatory approval, we may still face difficulties in
entering into collaborative arrangements for the marketing and manufacturing of
those drug candidates. A marketed product, its manufacturer and the
manufacturer's facilities are subject to continual review and periodic
inspections. The FDA requires that all pre-clinical and clinical testing, as
well as manufacturing of drug product, meet certain criteria commonly referred
to in our industry as Good Practices guidelines, including Good Manufacturing
Processes, Good Laboratory Practices and Good Clinical Practices. In our case,
contract research organizations and academic or other sponsored research
laboratories that we utilize for our pre-clinical and clinical research, as well
as API manufacturing of drug product, must comply with these guidelines. Our
contracted manufacturers, sponsored research labs and contract research
organizations undertake to adhere to Good Manufacturing Processes, Good
Laboratory Practices and Good Clinical Practices. In addition, such guidelines
and practices may change, and our compliance such changes may have an adverse
effect on our business.

      The discovery of non-compliance with regulatory requirements with respect
to a product, manufacturer or facility may result in restrictions on the product
or manufacturer, including withdrawal of the product from the market. The
failure to comply with applicable regulatory requirements can, among other
things, result in any or all of the following:

o     fines,

o     suspended regulatory approvals,

o     refusal to approve pending applications,

o     refusal to permit exports from the United States,

o     product recalls,

o     seizure of products,

o     injunctions,

o     operating restrictions, and

o     criminal prosecutions.

      Health care reform measures and third party reimbursement practices are
uncertain and may adversely impact the commercialization of our products, if
any.

      The efforts of governments and third party payors to contain or reduce the
cost of health care will continue to affect the business and financial condition
of drug companies. A number of legislative and regulatory proposals to change
the health care system have been proposed in recent years. In addition, an
increasing emphasis on managed care in the United States has and will continue
to increase pressure on drug pricing. While we cannot predict whether
legislative or regulatory proposals will be adopted or what effect those
proposals or managed care efforts may have on our business, the announcement
and/or adoption of such proposals or efforts could have an adverse effect on our
profit margins and financial condition. Sales of prescription drugs depend
significantly on the availability of reimbursement to the consumer from third
party payors, such as government and private insurance plans. These third party
payors frequently require that drug companies give them predetermined discounts
from list prices, and they are increasingly challenging the prices charged for
medical products and services. We expect that reimbursement pressures will
continue in the future. If we succeed in bringing, through collaborative
arrangements, one or more products to the market, these products may not be
considered cost effective and reimbursement to the consumer may not be available
or sufficient to allow us to sell our products on a competitive basis.


                                       16


      If product liability lawsuits are successfully brought against us, we may
incur substantial liabilities and may be required to limit commercialization of
our products.

      The testing and marketing of drug products entail an inherent risk of
product liability. If we cannot successfully defend ourselves against liability
claims, we may incur substantial liabilities or be required to limit
commercialization of our products. Our inability to obtain sufficient product
liability insurance at an acceptable cost to protect against potential product
liability claims could prevent or inhibit the commercialization of
pharmaceutical products we develop, alone or with corporate collaborators. We
currently carry clinical trial insurance but do not carry product liability
insurance. We currently maintain clinical trial insurance in the amount of
$5,000,000. When we decide that product liability insurance is necessary, we may
not be able to obtain product liability insurance at a reasonable cost, if at
all. While under various circumstances we are entitled to be indemnified against
losses by our corporate collaborators, indemnification may not be available or
adequate should any claims arise.

                                   Other Risks

      We do not pay cash dividends.

      We have never paid dividends and do not presently intend to pay any
dividends in the foreseeable future.

      Sales of our common stock may cause our stock price to decline.

      The sale of our shares by our selling security holders from time to time,
or even the potential of such sale, may have an adverse effect on the price of
our common stock.

      The sales of our shares in the future may also have an adverse effect on
the price of our common stock. There are currently approximately 2.7 million
shares of our common stock outstanding that are "restricted securities" as that
term is defined by Rule 144 under the Securities Act of 1933. Such shares will
be eligible for public sale only if registered under the Securities Act or if
sold in accordance with Rule 144. We have registered and are in the process of
registering additional shares for selling shareholders. Under Rule 144, a person
who has held restricted securities for a period of one year may sell a limited
number of shares to the public in ordinary brokerage transactions. The timing
and amount of sales of common stock that are currently restricted securities
could have a depressive effect on the future market price of our common stock.

      There is only a limited trading market for our common stock and it is
possible that you may not be able to sell your shares easily.

      There is currently only a limited trading market for our common stock. Our
common stock trades on the Nasdaq SmallCap Market under the symbol "AXYX" with,
until recently, very limited trading volume. We cannot assure you that a
substantial trading market will be sustained for our common stock.

      The market price of our stock may be adversely affected by market
volatility.

      The market price of our common stock is likely to be volatile and could
fluctuate widely in response to many factors, including:

o     announcements of the results of clinical trials by us or our competitors,

o     developments with respect to patents or proprietary rights,

o     announcements of technological innovations by us or our competitors,

o     announcements of new products or new contracts by us or our competitors,

o     actual or anticipated variations in our operating results due to the level
      of development expenses and other factors,

o     changes in financial estimates by securities analysts and whether our
      earnings meet or exceed such estimates,

o     conditions and trends in the pharmaceutical and other industries,

o     new accounting standards,


                                       17


o     general economic, political and market conditions and other factors, and

o     the occurrence of any of the risks described in these "Risk Factors."

      In the past two years, the price range of the closing prices for our
common stock has been between a high of $7.74 and a low of $0.51. In the past,
following periods of volatility in the market price of the securities of
companies in our industry, securities class action litigation has often been
instituted against those companies. If we face such litigation in the future, it
would result in substantial costs and a diversion of management attention and
resources, which would negatively impact our business.

      Declines in our stock price might harm our ability to issue equity under
future potential financing arrangements. The price at which we issue shares in
such transactions is generally based on the market price of our common stock and
a decline in our stock price would result in our needing to issue a greater
number of shares to raise a given amount of funds or acquire a given amount of
goods or services. For this reason, a decline in our stock price might also
result in increased ownership dilution to our stockholders.

      The future issuance of common stock upon exercise of warrants and stock
options may depress the price of our common stock.

      As of January 31, 2004, we had outstanding options to purchase an
aggregate of 4,422,000 shares of our common stock to our employees, officers,
directors, and consultants under our 2000 and 1998 Stock Option Plans. We may
issue options to purchase an additional 443,000 shares of our common stock under
the 2000 Stock Option Plan.

      In addition, we have granted options to purchase an aggregate of 375,000
shares of common stock outside of our Stock Option Plans to consultants and
others.

      There are currently outstanding warrants to purchase an aggregate of
9,581,510 shares of common stock.

      During the respective terms of the warrants and options granted or to be
granted under our stock option plans or otherwise, the holders thereof are given
an opportunity to benefit from a rise in the market price of the common stock,
with a resultant dilution of the interests of existing stockholders. The
existence of these warrants and options could make it more difficult for us to
obtain additional financing while such securities are outstanding. The holders
may be expected to exercise their rights to acquire common stock and sell at a
time when we would, in all likelihood, be able to obtain needed capital through
a new offering of securities on terms more favorable than those provided by
these warrants and options.

                           FORWARD-LOOKING STATEMENTS

      This prospectus contains "forward-looking statements" within the meaning
of Section 27A of the Securities Act of 1933, as amended. All statements, other
than statements of historical facts, included in, or incorporated by reference
into this prospectus, are forward-looking statements. In addition, when used in
this document, the words "anticipate", "estimate", "project", and similar
expressions are intended to identify forward-looking statements. These
forward-looking statements are subject to various risks or uncertainties and
assumptions. Should one or more of these risks or uncertainties materialize, or
should underlying assumptions prove incorrect, actual results may vary
materially from those anticipated, estimated or projected. Although we believe
that the expectations reflected in these forward-looking statements are
reasonable, we cannot assure you that such expectations will prove to have been
correct. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks outlined under "Risk
Factors," that may cause our or our industry's actual results, levels of
activity, performance or achievements to be materially different from future
results, levels of activity, performance or achievements expressed or implied by
these forward-looking statements.

      Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of these statements. We
are under no duty to


                                       18


update any of the forward-looking statements after the date of this prospectus
or to conform these statements to actual results unless required by law.

                                 USE OF PROCEEDS

      We will not receive any proceeds from the sale of the shares by the
selling security holders, although we will receive the exercise price of the
warrants upon exercise by the selling security holders, to the extent that the
warrants are exercised for cash. We plan to use the exercise price for working
capital. All proceeds from the sale of the shares of common stock covered by
this prospectus will go to the selling security holders who offer and sell their
shares. In addition, we plan to use for working capital purposes any proceeds we
receive from the exercise of warrants to purchase our common stock covered by
this prospectus. Assuming all such warrants are exercised through the payment of
cash (rather than a net exercise) by the exercising security holders, this may
result in up to an additional $21.6 million of proceeds to us.

                            SELLING SECURITY HOLDERS

      On January 8, 2004, we closed a private placement of 9,650,183 shares of
common stock and warrants to purchase an additional 2,991,557 shares of common
stock. This prospectus covers only the 9,650,183 common shares and the 2,991,557
warrant shares issued in the private placement, which include 482,510 shares of
common stock issuable upon the exercise of warrants issued to Rodman & Renshaw
Inc. and 96,502 shares of common stock issuable upon the exercise of warrants
issued to Punk Ziegel & Company L.P., each as part of placement fees related to
the closing of the private placement. We have listed below:

o     the name of each selling security holder;

o     the number of shares of common stock beneficially owned by the selling
      security holder as of the date of this prospectus;

o     the maximum number of shares of common stock being offered by each of them
      in this offering; and

o     the number of shares of common stock to be owned by the selling security
      holder after this offering (assuming sale of such maximum number of
      shares).

      After the offering, assuming all shares offered hereby are sold, none of
the selling security holders will own one percent or more of the outstanding
shares of our common stock, with the exception of Galleon Healthcare Offshore,
Ltd. (2.64%) and Smithfield Fiduciary LLC (2.15%).

      Except as otherwise noted below, during the last three years no selling
security holder has been an officer, director or affiliate of our company, nor
has any selling security holder had any material relationship with our company
during that period. Each selling security holder represented at the closing of
the private placement that they did not have any contract, undertaking,
agreement or arrangement with any person to sell, transfer, pledge, hypothecate,
grant any option to purchase or otherwise dispose of any of the securities. The
selling security holders purchased the shares in the ordinary course of
business, to the best of our knowledge.

      The shares being offered hereby are being registered to permit public
secondary trading, and the selling security holders are under no obligation to
sell all or any portion of their shares of common stock included in this
prospectus. The information contained in the following table is derived from our
books and records, as well as from our transfer agent. The following table
assumes the sale of all shares included in this prospectus.


                                       19




                                                  Shares Owned     Shares Available
                                                  Prior to this    Pursuant to this      Shares Owned
       Selling Security Holder                      Offering          Prospectus        After Offering
       -----------------------                      --------          ----------        --------------

                                                                                
Alexandra Global Master Fund Ltd.                    603,136            603,136                  0
Asset Management                                      48,705             48,705                  0
Atlas Fund, LLC                                      625,000            625,000                  0
BayStar Capital II, LP                               361,881            361,881                  0
Bristol Investment Fund, Ltd                         120,627            120,627                  0
Capital Ventures International                       241,255            241,255                  0
Castle Creek Healthcare Partners LLC                 120,627            120,627                  0
Cohanzick Partners, LP                                32,500             32,500                  0
Cranshire Capital, L.P.                              609,219            482,509            126,710
Crescent International Ltd.                          100,000            100,000                  0
DKR Saturn Event Driven Holding Fund Ltd.            248,375            208,375             40,000
DKR Saturn Holding Fund Ltd.                          47,625             41,625              6,000
Ehrenkrantz King Nussbaum, Inc.                      120,627            120,627                  0
Elliot Associates, L.P.                              144,753            144,753                  0
Elliot International, L.P.                           217,129            217,129
EGMF, LP                                              62,500             62,500                  0
FIPS Health Fund                                      50,000             50,000                  0
First New York Securities LLC                        106,250            106,250                  0
FNY Carpediem II L.P.                                115,563            115,563                  0
FNY Carpediem Offshore Ltd.                           64,500             64,500                  0
FNY Carpediem Partners L.P.                           88,688             88,688                  0
Framlington Biotech Fund                             137,500            137,500                  0
Framlington Health Fund                              875,000            875,000                  0
Gabriel Capital, L.P.                                 88,127             88,127                  0
Galleon Captains Offshore, Ltd.                      301,700            293,750              7,950
Galleon Captains Partners, LP                         83,300             81,250              2,050
Galleon Healthcare Offshore, Ltd.                  1,810,450            543,750          1,266,700
Galleon Healthcare Partners, LP                      239,550             81,250            158,300
Langley Partners, L.P.                               417,956            361,881             56,075
Munder Healthcare Fund                               262,500            262,500                  0
North Sound Legacy Fund LLC                           16,885             16,885                  0
North Sound Legacy International Fund LLC            171,290            171,290                  0
North Sound Legacy International Ltd.                294,335            294,335                  0
Omicron Master Trust                                 626,527            402,228            224,299
OTAPE Investments LLC                                 86,929             24,125             62,804
Portside Growth and Opportunity Fund (1)             768,183            500,000            268,183
Punk, Ziegel & Company (2)                            96,502             96,502                  0
RHP Master Fund, Ltd.                                120,627            120,627                  0
Rodman & Renshaw, Inc. (3)                           482,510            482,510                  0
S.A.C. Capital Associates, LLC                     1,222,500            750,000            472,500
Smithfield Fiduciary LLC                           1,755,830            723,763          1,032,067
Symmetry Capital Offshore Fund LTD                     9,694              9,694                  0
Symmetry Capital Partners, L.P.                       25,513             25,513                  0
Symmetry Capital Qualified Partners, L.P.             35,045             35,045                  0
Symmetry Parallax Partners, L.P.                       6,044              6,044                  0
The Riverview Group, LLC                                   0            363,781                  0
The Tail Wind Fund Limited                           282,310            120,627            161,683
Topaz Partners                                       603,136            603,136                  0
Ursus Capital LP                                      71,125             71,125                  0
Ursus Offshore Ltd.                                   49,503             49,503                  0
VGE III Portfolio Ltd.                               595,175            524,875             70,300
Viking Global Equities LP                            613,925            537,625             76,300
WSSMF, LP                                             31,250             31,250                  0



                                       20


(1) The Investment Advisor to Portside Growth and Opportunity Fund is Ramius
Capital Group, LLC. The Managing Member of Ramius Capital Group, LLC is C4S &
Co., the Managing Members of which are Peter Cohen, Morgan Stark and Thomas
Strauss. As such, Messrs. Cohen, Stark and Strauss may be deemed beneficial
owners of shares issued and issuable to Portside Growth and Opportunity Fund.
Messrs. Cohen, Stark and Strauss disclaim beneficial ownership of all of such
shares.

(2) Punk Ziegel & Company LLP is a financial advisor to Axonyx Inc. pursuant to
a Financial Advisory Agreement dated August 1, 2003. Punk Ziegel acted as a
placement agent in the January 8, 2004 private placement and was issued warrants
to purchase 96,502 shares of common stock exercisable at $7.25 per share.

(3) Rodman & Renshaw acted as a placement agent to Axonyx in the January 8, 2004
private placement pursuant to an Engagement Letter dated September 5, 2003 and
was issued warrants to purchase 482,510 shares of common stock exercisable at
$7.25 per share in addition to a cash placement fee.

      We have undertaken to maintain the registration current until the earlier
of two years from the effective date of the registration statement of which this
prospectus is a part, the date when all the shares registered thereunder have
been sold or the date when selling security holders may sell under Rule 144(k)
in order that sales of shares may be made by the selling security holders. We
have agreed to pay for all costs and expenses incident to the issuance, offer,
sale and delivery of the shares, including, but not limited to, all expenses and
fees of preparing, filing and printing the registration statement and prospectus
and related exhibits, amendments and supplements thereto and mailing of such
items. We will not pay transfer taxes, selling commissions or underwriting
discounts associated with any sales by the selling security holders. We have
agreed to indemnify the selling security holders against civil liabilities,
including liabilities under the Securities Act of 1933, arising from certain
statements, omissions or violations relating to this offering. The selling
security holders have agreed to indemnify us and our directors and each officer
signing the registration statement against liabilities relating to the
information given to us by the selling security holders in writing for inclusion
in the registration statement, including liabilities under the Securities Act.

                              PLAN OF DISTRIBUTION

         The term "selling security holder" includes the selling security
holders listed herein and their pledgees, donees, transferees or other
successors in interest. The selling security holders may, from time to time,
sell any or all of their shares of our common stock on any stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These sales may be at fixed or negotiated prices. The selling
security holders may use any one or more of the following methods when selling
shares:

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


                                       21


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

            o     purchases by a broker-dealer as principal and resale by the
                  broker-dealer for its account;

            o     an exchange distribution in accordance with the rules of the
                  applicable exchange;

            o     privately negotiated transactions;

            o     settlement of short sales entered into after the date of this
                  prospectus;

            o     broker-dealers may agree with the Selling Stockholders to sell
                  a specified number of such shares at a stipulated price per
                  share;

            o     a combination of any such methods of sale; and

            o     any other method permitted pursuant to applicable law.

      The selling security holders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.

      Broker-dealers engaged by the selling security holders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the selling security holders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling security holders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.

      The selling security holders may from time to time pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock from
time to time under this prospectus, or under an amendment to this prospectus
under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933
amending the list of selling security holders to include the pledgee, transferee
or other successors in interest as selling security holders under this
prospectus.

      The selling security holders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The selling security holders
have informed the Company that it does not have any agreement or understanding,
directly or indirectly, with any person to distribute our common stock.

      We are required to pay all fees and expenses incident to the registration
of the shares. We also agree to indemnify the selling security holders against
certain losses, claims, damages and liabilities, including liabilities under the
Securities Act.

      At the time a particular offer of the securities is made by or on behalf
of a selling security holder, to the extent required, a prospectus will be
distributed which will set forth the number of shares being offered and the
terms of the offering, including the name or names of any underwriters, dealers
or agents, if any, the purchase price paid by any underwriter for the shares
purchased from the selling security holders and any discounts, commissions or
concessions allowed or reallowed or paid to dealers, and the proposed selling
price to the public. For transactions effected on or through Nasdaq, those
requirements may be satisfied by our delivery of copies of this prospectus to
Nasdaq in compliance with Securities Act Rule 153.

      Whenever we are notified by the selling security holders that any material
arrangement has been entered into with a broker-dealer, agent or underwriter for
the sale of shares through a block trade, special offering,


                                       22


exchange distribution or secondary distribution or a purchase by a
broker-dealer, agent or underwriter, we will file a supplemental prospectus, if
required, pursuant to Rule 424(c) under the Securities Act. The supplemental
prospectus will disclose:

o     the name of each such selling security holder and of each participating
      broker-dealer, agent or underwriter,

o     the number of shares involved,

o     the price at which the shares were sold,

o     the commissions paid or discounts or concessions allowed to
      broker-dealer(s), agent(s) or underwriter(s) or other items constituting
      compensation or indemnification arrangements with respect to particular
      offerings, where applicable,

o     that the broker-dealer(s), agent(s) or underwriter(s) did not conduct any
      investigation to verify the information set out or incorporated by
      reference in this prospectus, as supplemented, and

o     other facts material to the transaction.

      Under the securities laws of certain states, the shares may be sold by
selling security holders only through registered or licensed brokers or dealers.
In addition, in certain states the shares may not be sold unless they have been
registered or qualified for sale in the applicable state or an exemption from
the registration or qualification requirement is available and is complied with.

      Any shares of a selling security holder covered by this prospectus which
qualify for sale pursuant to Rule 144 promulgated under the Securities Act of
1933 may be sold under Rule 144 rather than pursuant to this prospectus.

      Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of shares may not simultaneously engage in market
making activities with respect to our common stock for a period of two business
days prior to the commencement of such distribution. In addition, each selling
security holder will be subject to applicable provisions of the Exchange Act and
the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling shareholders. We will make copies of
this prospectus available to the selling security holders and have informed them
of the need for delivery of copies of this prospectus to purchasers at or prior
to the time of any sale of the shares.

                                  LEGAL MATTERS

      The validity of the shares offered hereby were passed upon for us by
Ehrenreich Eilenberg & Krause LLP.

                                     EXPERTS

      Eisner LLP, independent auditors, have audited our financial statements
included in our Annual Report on Form 10-K for the year ended December 31, 2002,
as set forth in their report, which is incorporated by reference in this
prospectus. Our financial statements are incorporated by reference in reliance
on the report of Eisner LLP, given on their authority as experts in accounting
and auditing.


                                       23


                                   AXONYX INC.

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----

WHERE YOU CAN FIND MORE INFORMATION............................................3
THE COMPANY....................................................................4
RISK FACTORS...................................................................7
FORWARD-LOOKING STATEMENTS....................................................18
USE OF PROCEEDS...............................................................19
SELLING SECURITY HOLDERS......................................................19
PLAN OF DISTRIBUTION..........................................................21
LEGAL MATTERS.................................................................23
EXPERTS.......................................................................23

                                February 13, 2004