10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 2010
Or
¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from            to              .

Commission File No. 000-24537

DYAX CORP.

(Exact Name of Registrant as Specified in its Charter)

DELAWARE	04-3053198
(State of Incorporation)	(I.R.S. Employer Identification Number)

300 TECHNOLOGY SQUARE, CAMBRIDGE, MA 02139

(Address of Principal Executive Offices)

(617) 225-2500

(Registrant’s Telephone Number, including Area Code)

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

YES         x                            NO          ¨

Indicate by check mark whether the registrant has submitted electronically and posted on it corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit and post such files).

YES         ¨                            NO          ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company.  See definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer      ¨     Accelerated filer      x Non-accelerated filer      ¨     Smaller reporting company      ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES         ¨                            NO          x

Number of shares outstanding of Dyax Corp.’s Common Stock, par value $0.01, as of July 23, 2010:  98,400,476

DYAX CORP.

TABLE OF CONTENTS

			Page
PART I		FINANCIAL INFORMATION
Item 1	-	Financial Statements	3
		Consolidated Balance Sheets (Unaudited) as of June 30, 2010 and December 31, 2009	3
		Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) for the three and six months ended June 30, 2010 and 2009	4
		Consolidated Statements of Cash Flows (Unaudited) for the six months ended June 30, 2010 and 2009	5
		Notes to Consolidated Financial Statements (Unaudited)	6
Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3	-	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4	-	Controls and Procedures	30
PART II		OTHER INFORMATION
Item 1a	-	Risk Factors	31
Item 6	-	Exhibits	50
Signatures			51
Exhibit Index			52

2

PART I – FINANCIAL INFORMATION

Item 1 – FINANCIAL STATEMENTS

Dyax Corp. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

	June 30, 2010			December 31, 2009
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	45,736		$	29,386
Short-term investments		48,637			23,009
Accounts receivable, net		4,305			2,723
Inventory		1,103			578
Other current assets		2,485			2,816
Total current assets		102,266			58,512
Fixed assets, net		2,710			3,508
Restricted cash		2,188			2,177
Other assets		517			604
Total assets	$	107,681		$	64,801
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	10,060		$	11,787
Current portion of deferred revenue		6,716			10,345
Current portion of long-term obligations		809			890
Other current liabilities		978			1,364
Total current liabilities		18,563			24,386
Deferred revenue		11,801			19,785
Note payable		56,283			58,096
Long-term obligations		263			653
Deferred rent and other long-term liabilities		365			483
Total liabilities		87,275			103,403
Commitments and contingencies (Notes 7 and 9)
Stockholders' equity (deficit):
Preferred stock, $0.01 par value; 1,000,000 shares authorized; 0 shares issued and outstanding		—			—
Common stock, $0.01 par value; 125,000,000 shares authorized; 98,350,514 and 78,074,052 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively		984			781
Additional paid-in capital		441,499			378,421
Accumulated deficit		(422,126	)		(417,819	)
Accumulated other comprehensive income		49			15
Total stockholders' equity (deficit)		20,406			(38,602	)
Total liabilities and stockholders' equity (deficit)	$	107,681		$	64,801

The accompanying notes are an integral part of the unaudited consolidated financial statements.

3

Dyax Corp. and Subsidiaries Consolidated Statements of Operations and Comprehensive Income (Loss)

(Unaudited)

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
	(In thousands, except share and per share data)
Revenues:
Product sales, net	$	1,931		$	—		$	3,174		$	—
Development and license fee revenues		13,211			4,818			32,016			10,797
Total revenues		15,142			4,818			35,190			10,797
Costs and expenses:
Cost of product sales		92			—			128			—
Research and development expenses		8,034			11,421			15,803			30,692
Selling, general and administrative expenses		8,372			5,164			16,951			12,993
Restructuring costs		—			—			—			1,936
Total costs and expenses		16,498			16,585			32,882			45,621
Income (loss) from operations		(1,356	)		(11,767	)		2,308			(34,824	)
Other income (expense):
Interest income		48			66			75			179
Interest and other expenses		(3,953	)		(2,718	)		(6,690	)		(4,665	)
Total other expense		(3,905	)		(2,652	)		(6,615	)		(4,486	)
Net loss		(5,261	)		(14,419	)		(4,307	)		(39,310	)
Other comprehensive income (loss):
Foreign currency translation adjustments		—			(132	)		—			(180	)
Unrealized gain (loss) on investments		34			(49	)		34			(133	)
Comprehensive loss	$	(5,227	)	$	(14,600	)	$	(4,273	)	$	(39,623	)
Basic and diluted net loss per share	$	(0.05	)	$	(0.23	)	$	(0.05	)	$	(0.62	)
Shares used in computing basic and diluted net loss per share		97,568,409			63,679,410			87,995,184			63,386,244

The accompanying notes are an integral part of the unaudited consolidated financial statements.

4

Dyax Corp. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)

	Six Months Ended June 30,
	2010			2009
	(In thousands)
Cash flows from operating activities:
Net loss	$	(4,307	)	$	(39,310	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of purchased premium/discount		(3	)		125
Depreciation and amortization of fixed assets		771			1,229
Amortization of intangibles		1			251
Non-cash interest expense		1,100			1,687
Compensation expenses associated with stock-based compensation plans		1,964			3,550
(Gain) loss on disposal of fixed assets		51			(4	)
Provision for doubtful accounts		(15	)		10
Changes in operating assets and liabilities:
Accounts receivable		(1,567	)		2,349
Prepaid research and development and other current assets		(380	)		908
Inventory		(461	)		—
Accounts payable and accrued expenses		(3,219	)		(1,400	)
Accrued restructuring		—			15
Deferred revenue		(11,613	)		303
Other long-term liabilities and assets		97			(255	)
Net cash used in operating activities		(17,581	)		(30,542	)
Cash flows from investing activities:
Purchase of fixed assets		(101	)		(397	)
Purchase of investments		(36,590	)		(11,017	)
Proceeds from maturity of investments		11,000			23,500
Proceeds from sale of fixed assets		29			6
Restricted cash		700			—
Net cash (used in) provided by investing activities		(24,962	)		12,092
Cash flows from financing activities:
Net proceeds from common stock offerings		61,133			17,610
Proceeds from note payable		—			14,820
Repayment of long-term obligations		(2,407	)		(4,329	)
Proceeds from the issuance of common stock under employee stock purchase plan and exercise of stock options		167			191
Net cash provided by financing activities		58,893			28,292
Effect of foreign currency translation on cash balances		—			49
Net increase decrease in cash and cash equivalents		16,350			9,891
Cash and cash equivalents at beginning of the period		29,386			27,668
Cash and cash equivalents at end of the period	$	45,736		$	37,559
Supplemental disclosure of non-cash investing and financing activities:
Warrant issued in connection with note payable	$	—		$	477

The accompanying notes are an integral part of the unaudited consolidated financial statements.

5

DYAX CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS OVERVIEW

Dyax Corp. (Dyax or the Company) is a biopharmaceutical company focused on the discovery, development and commercialization of novel biotherapeutics for unmet medical needs. The Company began commercializing KALBITOR® (ecallantide) for treatment of acute attacks of hereditary angioedema (HAE) in patients 16 years of age and older in February 2010.  KALBITOR was discovered using Dyax’s proprietary drug discovery technology, known as phage display.  This technology is also used to identify other antibody, small protein and peptide compounds for clinical development and has provided the Company an internal pipeline of drug candidates and numerous licenses and collaborations that generate revenues through funded research, license fees, milestone payments and royalties.

The Company is subject to risks common to companies in the biotechnology industry including, but not limited to, risks relating to preclinical and clinical trials, the regulatory approval process, dependence on collaborative arrangements, development by its competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, and compliance with the United States Food and Drug Administration (FDA) and other governmental regulations and approval requirements.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and in accordance with instructions to the Quarterly Report on Form 10-Q.  It is management’s opinion that the accompanying unaudited interim consolidated financial statements reflect all adjustments (which are normal and recurring) necessary for a fair statement of the results for the interim periods.  The financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2009.  The accompanying December 31, 2009 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the dates of the financial statements and (iii) the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.  The results of operations for the three and six months ended June 30, 2010 are not necessarily indicative of the results that may be expected for the year ending December 31, 2010.  

 Basis of Consolidation  

The accompanying consolidated financial statements include the accounts of the Company and the Company's European subsidiaries Dyax S.A. and Dyax BV.  All inter-company accounts and transactions have been eliminated.

6

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make certain estimates and assumptions that affect the amounts of assets and liabilities reported and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods.  The significant estimates and assumptions in these financial statements include revenue recognition, product sales allowances, useful lives with respect to long lived assets, valuation of stock options, accrued expenses and tax valuation reserves.  Actual results could differ from those estimates.

Concentration of Credit Risk 

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, short-term investments and trade accounts receivable.  At June 30, 2010 and December 31, 2009, approximately 97% and 81% of the Company's cash, cash equivalents and short-term investments were invested in money market funds backed by U.S. Treasury obligations, U.S. Treasury notes and bills, and obligations of U.S. government agencies held by one financial institution.  The Company maintains balances in various operating accounts in excess of federally insured limits.

The Company provides most of its services and licenses its technology to pharmaceutical and biomedical companies worldwide, and makes all product sales to its exclusive distributor.  Concentrations of credit risk with respect to trade receivable balances are usually limited on an ongoing basis, due to the diverse number of licensees and collaborators comprising the Company's customer base.  As of June 30, 2010, three customers accounted for 58%, 14% and 12% of the accounts receivable balance all of which were collected subsequent to the quarter end.  One customer accounted for approximately 64% of the Company's accounts receivable balance as of December 31, 2009, which was received in the first quarter of 2010.

Cash and Cash Equivalents

All highly liquid investments purchased with an original maturity of ninety days or less are considered to be cash equivalents.  Cash and cash equivalents consist principally of cash and U.S. Treasury funds.

 Investments  

Short-term investments primarily consist of investments with original maturities greater than ninety days and remaining maturities less than one year when purchased.  The Company has also classified its investments with maturities beyond one year as short-term, based on their highly liquid nature and because such marketable securities represent the investment of cash that is available for current operations. The Company considers its investment portfolio of investments available-for-sale.  Accordingly, these investments are recorded at fair value, which is based on quoted market prices.  As of June 30, 2010, the Company's investments consisted of U.S. Treasury notes and bills with an amortized cost and estimated fair value of $48.6 million and an unrealized gain of $49,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheets.  As of December 31, 2009, the Company's investments consisted of U.S. Treasury notes and bills with an amortized cost and estimated fair value of $23.0 million and had an unrealized gain of $15,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheets.

Inventories 

Inventories are stated at the lower of cost or market with cost determined under the first-in, first-out, or FIFO, basis. The Company evaluates inventory levels and would write-down inventory that is expected to expire prior to being sold, inventory that has a cost basis in excess of its expected net realizable value, inventory in excess of expected sales requirements, or inventory that fails to meet commercial sale specifications, through a charge to cost of product sales. Included in the cost of inventory are employee stock-based compensation costs capitalized under Accounting Standards Codification (ASC) 718.

7

Fixed Assets

Property and equipment are recorded at cost and depreciated over the estimated useful lives of the related assets using the straight-line method. Laboratory and production equipment, furniture and office equipment are depreciated over a three to seven year period. Leasehold improvements are stated at cost and are amortized over the lesser of the non-cancelable term of the related lease or their estimated useful lives. Leased equipment is amortized over the lesser of the life of the lease or their estimated useful lives. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost of these assets and related accumulated depreciation and amortization are eliminated from the balance sheet and any resulting gains or losses are included in operations in the period of disposal.

Impairment of Long-Lived Assets

The Company reviews its long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of assets may not be fully recoverable or that the useful lives of these assets are no longer appropriate. Each impairment test is based on a comparison of the undiscounted cash flow to the recorded value of the asset. If impairment is indicated, the asset is written down to its estimated fair value on a discounted cash flow basis.

Guarantees

The Company has determined that it is not a party to any agreements that fall within the scope of Guarantees of indebtedness in accordance with ASC 460, Guarantees.  The Company generally does not provide indemnification with respect to the license of its phage display technology. The Company does generally provide indemnifications for claims of third parties that arise out of activities that the Company performs under its collaboration, product development and cross-licensing activities. The maximum potential amount of future payments the Company could be required to make under the indemnification provisions in some instances may be unlimited. The Company has not incurred any costs to defend lawsuits or settle claims related to any indemnification obligations under its license agreements. As a result, the Company believes the estimated fair value of these obligations is minimal. The Company has no liabilities recorded for any of its indemnification obligations recorded as of June 30, 2010 and December 31, 2009.

Revenue Recognition

The Company’s principal sources of revenue are product sales of KALBITOR, license fees, funding for research and development, and milestones and royalties derived from collaboration and license agreements.  In all instances, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, collectibility of the resulting receivable is reasonably assured and the Company has no further performance obligations.

Product Sales and Allowances

Product Sales.  All product sales are generated from the sale of KALBITOR to ASD Specialty Healthcare Inc. (ASD), the Company’s exclusive wholesale distributor and US Bioservices Corporation (US Bio), its exclusive specialty pharmacy, both of which are wholly-owned subsidiaries of AmerisourceBergen Specialty Group, Inc. (ABSG).  Product sales are recorded upon delivery to ASD and US Bio.  These sales are recorded net of applicable reserves for trade prompt pay discounts, government rebates, a patient assistance program, product returns and other applicable allowances.

Product Sales Allowances.  The Company establishes reserves for trade prompt pay discounts, government rebates, a patient assistance program, product returns and other applicable allowances.  Reserves established for these discounts and allowances are classified as a reduction of accounts receivable (if the amount is payable to the customer) or a liability (if the amount is payable to a party other than the customer).

8

Allowances against receivable balances primarily relate to prompt payment discounts and are recorded at the time of sale, resulting in a reduction in product sales revenue.  Accruals related to government rebates, the patient financial assistance program, product returns and other applicable allowances are recognized at the time of sale, resulting in a reduction in product sales revenue and the recording of an increase in accrued expenses.

The Company maintains a service contract with its specialty pharmacy US Bio for patient service initiatives. Accounting standards related to consideration given by a vendor to a customer, including a reseller of a vendor’s product, specify that each consideration given by a vendor to a customer is presumed to be a reduction of the selling price.  Consideration should be characterized as a cost if the company receives, or will receive, an identifiable benefit in exchange for the consideration, and fair value of the benefit can be reasonably estimated.  The Company has established that the services are at fair value and represent a separate and identifiable benefit related to these services and accordingly, has classified them as selling, general and administrative expense.

Prompt Payment Discounts.  The Company offers a prompt payment discount to its customers ASD and US Bio.  Since the Company expects their customers will take advantage of this discount, the Company accrues 100% of the prompt payment discount that is based on the gross amount of each invoice, at the time of sale.  The accrual is adjusted quarterly to reflect actual earned discounts.

Government Rebates and Chargebacks.  The Company estimates reductions to product sales for Medicaid and Veterans’ Administration (VA) programs, as well as with respect to certain other qualifying federal and state government programs.  The Company estimates the amount of these reductions based on market research data related to payer mix, actual sales data and historical experience for similar products sold by others.  These allowances are adjusted each period based on actual experience.

Medicaid rebate reserves relate to the Company’s estimated obligations to states under the established reimbursement arrangements of each applicable state.  Rebate accruals are recorded during the same period in which the related product sales are recognized.  Rebate amounts are generally determined at the time of claim by the state, and the Company will generally make cash payments for such amounts after receiving billings from the state.

VA rebates or chargeback reserves represent the Company’s estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at a price lower than the list price charged to the Company’s distributor.  The distributor will charge the Company for the difference between what the distributor pays for the product and the ultimate selling price to the qualified healthcare provider.  Rebate accruals are established during the same period in which the related product sales are recognized. Chargeback amounts for Public Health Service are generally determined at the time of resale to the qualified healthcare provider from the distributor, and the Company will generally issue credits for such amounts after receiving notification from the distributor.

The Company offers a financial assistance program, which involves the use of a patient voucher, for qualified KALBITOR patients in order to aid a patient’s access to KALBITOR.  The Company estimates its liability from this voucher program based on actual redemption rates.

Although allowances and accruals are recorded at the time of product sale, certain rebates are typically paid out, on average, up to six months or longer after the sale.  Reserve estimates are evaluated quarterly and if necessary, adjusted to reflect actual results.  Any such adjustments will be reflected in the Company’s operating results in the period of the adjustment.

Product Returns.  Allowances for product returns are recorded during the period in which the related product sales are recognized, resulting in a reduction to product revenue.  The Company does not provide its customers with a general right of product return. It permits returns if the product is damaged or defective when received by its customers or if the product has expired.  The Company estimates product returns based upon historical trends in the pharmaceutical industry and trends for similar products sold by others.

9

Development and License Fee Revenue

Collaboration Agreements.  The Company enters into agreements with collaborative partners for the research and development of therapeutic, diagnostic and separations products. The terms of the agreements may include non-refundable signing and licensing fees, funding for research and development, milestone payments and royalties on any product sales derived from collaborations. These multiple element arrangements are analyzed to determine whether the deliverables, which often include a license and performance obligations such as research and steering committee services, can be separated or whether they must be accounted for as a single unit of accounting.

The Company recognizes up-front license payments as revenue upon delivery of the license only if the license has stand-alone value and the fair value of the undelivered performance obligations, typically including research and/or steering committee services, can be determined. If the fair value of the undelivered performance obligations can be determined, such obligations are accounted for separately once the obligations are fulfilled. If the license is considered to either not have stand-alone value or have stand-alone value but the fair value of any of the undelivered performance obligations cannot be determined, the arrangement would then be accounted for as a single unit of accounting and the license payments and payments for performance obligations are recognized as revenue over the estimated period of when the performance obligations are performed.

Steering committee services that are not inconsequential or perfunctory and that are determined to be performance obligations are combined with other research services or performance obligations required under an arrangement, if any, in determining the level of effort required in an arrangement and the period over which the Company expects to complete its aggregate performance obligations.

Whenever the Company determines that an arrangement should be accounted for as a single unit of accounting, it must determine the period over which the performance obligations will be performed and revenue will be recognized. Revenue will be recognized using either a proportional performance or straight-line method. The Company recognizes revenue using the proportional performance method when the level of effort required to complete its performance obligations under an arrangement can be reasonably estimated and such performance obligations are provided on a best-efforts basis. Direct labor hours or full-time equivalents are typically used as the measurement of performance.

If the Company cannot reasonably estimate the level of effort to complete its performance obligations under an arrangement, then revenue under the arrangement would be recognized on a straight-line basis over the period the Company is expected to complete its performance obligations.

Many of the Company's collaboration agreements entitle it to additional payments upon the achievement of performance-based milestones. If the achievement of a milestone is considered probable at the inception of the collaboration, the related milestone payment is included with other collaboration consideration, such as up-front fees and research funding, in the Company's revenue model. Milestones that involve substantial effort on the Company's part and the achievement of which are not considered probable at the inception of the collaboration are considered "substantive milestones." Substantive milestones are included in the Company's revenue model when achievement of the milestone is considered probable. As future substantive milestones are achieved, a portion of the milestone payment, equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment, will be recognized as revenue upon achievement of such milestone. The remaining portion of the milestone will be recognized over the remaining performance period using the proportional performance or straight-line method. Milestones that are tied to regulatory approval are not considered probable of being achieved until such approval is received. Milestones tied to counter-party performance are not included in the Company's revenue model until the performance conditions are met.

Royalty revenue is recognized upon the sale of the related products provided the Company has no remaining performance obligations under the arrangement.

10

Costs of revenues related to product development and license fees are classified as research and development in the consolidated statements of operations and comprehensive loss.

Patent Licenses.  The Company generally licenses its patent rights covering phage display on a non-exclusive basis to third parties for use in connection with the research and development of therapeutic, diagnostic, and other products.

Standard terms of the patent rights agreements generally include non-refundable signing fees, non-refundable license maintenance fees, development milestone payments and royalties on product sales. Signing fees and maintenance fees are generally recognized on a straight line basis over the term of the agreement. Perpetual patent licenses are recognized immediately if the Company has no future obligations and the payments are upfront.

Library Licenses.  Standard terms of the proprietary phage display library agreements generally include non-refundable signing fees, license maintenance fees, development milestone payments, product license payments and royalties on product sales. Signing fees and maintenance fees are generally recognized on a straight line basis over the term of the agreement. As milestones are achieved under a phage display library license, a portion of the milestone payment, equal to the percentage of the performance period completed when the milestone is achieved, multiplied by the amount of the milestone payment, will be recognized. The remaining portion of the milestone will be recognized over the remaining performance period on a straight-line basis. Milestone payments under these license arrangements are recognized when the milestone is achieved if the Company has no future obligations under the license. Product license payments are recognized as revenue when the license is issued if the Company has no future obligations under the agreement. If there are future obligations under the agreement, product license payments are recognized as revenue only to the extent of the fair value of the license. Amounts paid in excess of fair value are recognized in a manner similar to milestone payments. Royalty revenue is recognized upon the sale of the related products provided the Company has no remaining performance obligations under the arrangement.

Payments received that have not met the appropriate criteria for revenue recognition are recorded as deferred revenue.

Cost of Product Sales  

Cost of product sales includes costs to procure, manufacture and distribute KALBITOR and manufacturing royalties. Costs associated with the manufacture of KALBITOR prior to regulatory approval were expensed when incurred as a research and development cost and accordingly the majority of the costs of KALBITOR sold during the three and six months ended June 30, 2010 are not included in cost of product sales.

Research and Development  

Research and development costs include all direct costs, including salaries and benefits for research and development personnel, outside consultants, costs of clinical trials, sponsored research, clinical trials insurance, other outside costs, depreciation and facility costs related to the development of drug candidates.

Income Taxes

The Company utilizes the asset and liability method of accounting for income taxes in accordance with ASC 740.  Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities using the current statutory tax rates. At June 30, 2010 and December 31, 2009, there were no unrecognized tax benefits.

11

The Company accounts for uncertain tax positions using a "more-likely-than-not" threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluates uncertain tax positions on a quarterly basis and adjusts the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions.

Translation of Foreign Currencies

Assets and liabilities of the Company's foreign subsidiaries are translated at period end exchange rates. Amounts included in the statements of operations are translated at the average exchange rate for the period. Beginning July 1, 2009, all currency translation adjustments are recorded to other income (expense) in the consolidated statement of operations. Prior to the closure of the Liege, Belgium facility, currency translation adjustments were made directly to accumulated other comprehensive income (loss) in the consolidated balance sheets. The change is a result of the closure of the Liege, Belgium facility. For the three and six months ending June 30, 2010, the translation of foreign currencies generated a loss of $54,000 and $94,000, respectively.  For the three and six months ending June 30, 2009, the translation of foreign currencies generated a loss of $132,000 and $180,000, respectively.

Share-Based Compensation

The Company’s share-based compensation program consists of share-based awards granted to employees in the form of stock options, as well as its Employee Stock Purchase Plan (the Purchase Plan).  The Company’s share-based compensation expense is recorded in accordance with ASC 718.

Income or Loss Per Share

The Company presents two earnings or loss per share (EPS) amounts, basic and diluted, in accordance with ASC 260.  Basic earnings or loss per share is computed using the weighted average number of shares of common stock outstanding. Diluted net loss per share does not differ from basic net loss per share since potential common shares from the exercise of stock options, warrants or rights under the Purchase Plan are anti-dilutive for the periods ended June 30, 2010 and 2009, and therefore, are excluded from the calculation of diluted net loss per share.

Stock options and warrants to purchase a total of 10,368,180 and 9,689,142 shares of common stock were outstanding at June 30, 2010 and 2009, respectively.

Comprehensive Income (Loss)

The Company accounts for comprehensive income (loss) under ASC 220, Comprehensive Income, which established standards for reporting and displaying comprehensive income (loss) and its components in a full set of general purpose financial statements. The statement required that all components of comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements.

Business Segments

The Company discloses business segments under ASC 280, Segment Reporting.   The statement established standards for reporting information about operating segments and disclosures about products and services, geographic areas and major customers.  The Company operates as one business segment with one geographic area.

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Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (FASB) or other standard setting bodies, which are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on its financial position or results of operations upon adoption.

In October 2009, the FASB issued a new accounting standard which amends existing revenue recognition accounting pronouncements for Multiple-Deliverable Revenue Arrangements.  This new standard provides accounting principles and application guidance on whether multiple deliverables exist, how the arrangement should be separated, and the consideration allocated. This guidance eliminates the requirement to establish the fair value of undelivered products and services and instead provides for separate revenue recognition based upon management’s estimate of the selling price for an undelivered item in circumstances when there is no other means to determine the fair value of that undelivered item. Multiple-deliverable revenue arrangement guidance previously required that the fair value of the undelivered item be the price of the item either sold in a separate transaction between unrelated third parties or the price charged for each item when the item is sold separately by the vendor. This was difficult to determine when the product was not individually sold because of its unique features. Under the previous guidance, if the fair value of all of the elements in the arrangement was not determinable, then revenue was deferred until all of the items were delivered or fair value was determined. This new approach is effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, which for the Company is no later than January 1, 2011.  While the Company does not expect the adoption of this standard to have a material impact on its financial position or results of operations, this standard may have an impact in the event that future transactions are completed or existing collaborations are materially modified.

In April 2010, the FASB issued Accounting Standards Update (ASU) No. 2010-17, Revenue Recognition — Milestone Method (ASU 2010-017). ASU 2010-017 provides guidance in applying the milestone method of revenue recognition to research or development arrangements. Under this guidance a company may recognize revenue contingent upon the achievement of a milestone in its entirety, in the period in which the milestone is achieved, only if the milestone meets all the criteria within the guidance to be considered substantive. This ASU is effective on a prospective basis for research and development milestones achieved in fiscal years, beginning on or after June 15, 2010, which for the Company is no later than January 1, 2011. Early adoption is permitted; however, adoption of this guidance as of a date other than January 1, 2011 will require the Company to apply this guidance retrospectively effective as of January 1, 2010 and will require disclosure of the effect of this guidance as applied to all previously reported interim periods in the fiscal year of adoption. As the Company plans to implement ASU No. 2010-17 prospectively, the effect of this guidance will be limited to future transactions. The Company does not expect adoption of this standard to have a material impact on its financial position or results of operations as it has no material research and development arrangements which will be accounted for under the milestone method.

3. SIGNIFICANT TRANSACTIONS

Sigma-Tau

In June 2010, the Company entered into a strategic partnership agreement with Defiante Farmaceutica S.A., a subsidiary of the pharmaceutical company Sigma-Tau SpA (Sigma-Tau) to develop and commercialize subcutaneous DX-88 (ecallantide) for the treatment of HAE and other therapeutic indications throughout Europe, North Africa, Middle East and Russia (the Territories).  The Company retains its rights to DX-88 in all other territories.

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Under the terms of the agreement, Sigma-Tau made a $2.5 million upfront payment, which was received in July 2010.  In addition, Sigma-Tau purchased 636,132 shares of the Company’s common stock at a price of $3.93 per share, which represented a 50% premium over the 20-day average closing price through June 17, 2010, for an aggregate purchase price of $2.5 million.  The Company is also eligible to receive over $100 million in development and sales milestones related to DX-88 and royalties equal to 41% of net sales of product, as adjusted for product costs.  Sigma-Tau will pay costs associated with regulatory approval and commercialization in the licensed territories.  In addition, the Company and Sigma-Tau will share equally the costs for all development activities for optional future indications developed in partnership with Sigma-Tau.

The Company applied the provisions of multiple deliverable arrangements in accordance with ASC 605 and evaluated whether the performance obligations under this agreement, including the technology license and development, steering committee, and manufacturing services should be accounted for as a single unit or multiple units of accounting.  The Company determined that there were two units of accounting.   The first unit of accounting includes the technology license, the committed future development services and the steering committee involvement.  The second unit of accounting relates to the manufacturing services.  The Company has the ability to estimate the scope and timing of their involvement in the future development of this program as the Company’s obligations under the development period are clearly defined and therefore are recognizing revenue related to the first unit of accounting utilizing a proportional performance model based on the actual effort performed in proportion to the total estimated level of effort.   Under this model, the Company estimates the level of effort to be expended over the term of the agreement and recognizes revenue based on the lesser of the amount calculated based on proportional performance of total expected revenue or the amount of non-refundable payments earned.  The second unit of accounting relates to manufacturing services under which manufacturing revenue will be recognized as manufacturing services are completed during commercialization of DX-88 in the Territories.

The $2.5 million upfront payment, $922,000 in premium equity which represented the difference between the purchase price and the closing price of the common stock on the date of the stock purchase by Sigma-Tau and estimated reimbursements related to the development services, are being recorded as revenue under the proportional performance method.  As future substantive milestones are achieved, and to the extent they are within the period of performance, milestone payments will be recognized as revenue on a proportional performance basis over the contract’s entire performance period, starting with the contract’s commencement. A portion of the milestone payment, equal to the percentage of total performance completed when the milestone is achieved, multiplied by the milestone payment, will be recognized as revenue upon achievement of the milestone. The remaining portion of the milestone will be recognized over the remaining performance period under the proportional performance method.

The Company recognized revenue of approximately $51,000 related to this agreement for the three and six months ending June 30, 2010.  As of June 30, 2010, the Company has deferred $3.4 million of revenue related to this arrangement, which is recorded in deferred revenue on the accompanying consolidated balance sheets.    

Sale of Xyntha Royalty Rights

During the three months ended June 30, 2010, the Company sold its rights to royalties and other payments related to the commercialization of the product Xyntha, which was developed by one of the Company’s licensees under the LFRP.  Under the terms of this sale, the Company received an upfront cash payment of $9.8 million and is eligible to receive milestone payments of up to $2.0 million based on 2010 and 2011 product sales.  A portion of the upfront cash payment was required to be applied to the Company’s loan with Cowen Healthcare (see Note 7 – Note Payable), including a $1.9 million principal reduction and interest expense of $1.3 million.  The Company evaluated the guidelines of ASC 470-10 “Sale of Future Revenues” and has determined that it has no substantive future obligations under the arrangement.  During the three months ended June 30, 2010, the full amount of the $9.8 million upfront payment was recognized as revenue.

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Cubist Pharmaceuticals Inc.

In 2008, the Company entered into an exclusive license and collaboration agreement with Cubist Pharmaceuticals, Inc. (Cubist), for the development and commercialization in North America and Europe of the intravenous formulation of DX-88 for the reduction of blood loss during surgery. Under this agreement, Cubist assumed responsibility for all further development and costs associated with DX-88 in the licensed indications in the Cubist territory. The Company received $17.5 million in license and milestone fees in 2008 as a result of the Cubist agreement. Additionally, the Company received $3.6 million for drug product supply and reimbursement of costs incurred in 2008 related to the conduct of the Phase 2 clinical trial, known as Kalahari 1.  The Company also received $139,000 for drug product supply in 2009.

On March 31, 2010, Cubist announced its plan to stop investing in the clinical development of DX-88 as a therapy to reduce blood loss during surgery and its intention to terminate the 2008 agreement with the Company.  Based upon Cubist’s decision to end clinical development of this program, $13.8 million of deferred revenue was recognized as revenue in first quarter of 2010 as the development period had ended.  During the three and six months ended June 30, 2009, the Company recognized revenue of $1.1 million and $2.1 million, respectively, related to this agreement.

4. FAIR VALUE MEASUREMENTS

The following tables present information about the Company's financial assets that have been measured at fair value as of June 30, 2010 and December 31, 2009 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices, for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

Description (in thousands)	June 30, 2010		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	42,560	$	42,560	$	—	$	—
Marketable debt securities		48,637		48,637		—		—
Total	$	91,197	$	91,197	$	—	$	—

Description (in thousands)	December 31, 2009		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	19,638	$	19,638	$	—	$	—
Marketable debt securities		23,009		23,009		—		—
Total	$	42,647	$	42,647	$	—	$	—

As of June 30, 2010 and December 31, 2009, the Company's investments consisted of U.S. Treasury notes and bills which are categorized as Level 1. The fair values of cash equivalents and marketable debt securities are determined through market, observable and corroborated sources. The carrying amounts reflected in the consolidated balance sheets for cash, cash equivalents, accounts receivable, other current assets, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term maturities.

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5. INVENTORY

In December 2009, the Company received marketing approval of KALBITOR by the FDA. Costs associated with the manufacture of KALBITOR prior to regulatory approval were expensed when incurred, and therefore were not capitalized as inventory.  Subsequent to FDA approval, all costs associated with the manufacture of KALBITOR have been recorded as inventory, which consists of the following (in thousands):

	June 30, 2010		December 31, 2009
Raw Materials	$	646	$	472
Work in Progress		237		106
Finished Goods		220		—
Total	$	1,103	$	578

6. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consist of the following (in thousands):

	June 30, 2010		December 31, 2009
Accounts payable	$	2,075	$	686
Accrued employee compensation and related taxes		3,295		4,296
Accrued external research and development and contract manufacturing		2,724		2,431
Accrued license fees		355		2,047
Other accrued liabilities		1,611		2,327
Total	$	10,060	$	11,787

7. NOTE PAYABLE

In 2008, the Company entered into an agreement with Cowen Healthcare Royalty Partners, LP (Cowen Healthcare) for a $50.0 million loan secured by the Company's phage display Licensing and Funded Research Program (LFRP). This loan is now known as the Tranche A loan.  In March 2009, the Company amended and restated the loan agreement with Cowen Healthcare to include a Tranche B loan of $15.0 million. The Company used $35.1 million from the proceeds of the Tranche A loan to pay off its remaining obligation under a then existing agreement with Paul Royalty Fund Holdings II, LP.

The Tranche A and Tranche B loans (collectively, the Loan) mature in August 2016.  The Tranche A portion bears interest at an annual rate of 16%, payable quarterly, and the Tranche B portion bears interest at an annual rate of 21.5%, payable quarterly. The Loan may be prepaid without penalty, in whole or in part, beginning in August 2012.  In connection with the Loan, the Company has entered into a security agreement granting Cowen Healthcare a security interest in the intellectual property related to the LFRP, and the revenues generated by the Company through the license of the intellectual property related to the LFRP. The security agreement does not apply to the Company's internal drug development or to any of the Company's co-development programs.

Under the terms of the loan agreement, the Company is required to repay the Loan based on the annual net LFRP receipts.  Until June 30, 2013, required payments are tiered as follows: 75% of the first $10.0 million in specified annual LFRP receipts, 50% of the next $5.0 million and 25% of annual included LFRP receipts over $15.0 million.  After June 30, 2013, and until the maturity date or the complete amortization of the Loan, Cowen Healthcare will receive 90% of all included LFRP receipts.  If the Cowen Healthcare portion of LFRP receipts for any quarter exceeds the interest for that quarter, then the principal balance will be reduced.  Any unpaid principal will be due upon the maturity of the Loan.  If the Cowen Healthcare portion of LFRP revenues for any quarterly period is insufficient to cover the cash interest due for that period, the deficiency may be added to the outstanding principal or paid in cash by the Company. After five years from the date of funding of each loan the Company must repay to Cowen Healthcare all additional accumulated principal above the original $50.0 million and $15.0 million loan amounts of Tranche A and Tranche B, respectively.

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In addition, under the terms of the loan agreement, the Company is permitted to sell or otherwise transfer collateral generating cash proceeds of up to $25.0 million. Twenty percent of these cash proceeds will be applied to principal and accrued interest on the Loan plus any applicable prepayment premium and an additional 5.0% of such proceeds will be paid to Cowen Healthcare as a cash premium.  During the three months ended June 30, 2010, the Company sold its rights to royalties and other payments related to the commercialization of a product developed by one of the Company’s licensees under the LFRP for $9.8 million (see Note 3, Significant Transactions - Sale of Xyntha Royalty Rights).

In connection with the Tranche A loan, the Company issued to Cowen Healthcare a warrant to purchase 250,000 shares of the Company's common stock at a 50% premium over the 30-day average closing price ending on August 4, 2008.  The warrant expires in August 2016 and became exercisable on August 5, 2009.  The Company has estimated the relative fair value of the warrant to be $853,000, using the Black-Scholes valuation model, assuming a volatility factor of 83.64%, risk-free interest rate of 4.07%, an eight-year expected term and an expected dividend yield of zero.  In conjunction with the Tranche B loan, the Company issued to Cowen Healthcare a warrant to purchase 250,000 shares of the Company’s common stock at a 25% premium over the 45-day average closing price ending on March 17, 2009.  The warrant expires in August 2016 and became exercisable on March 27, 2010. The Company has estimated the relative fair value of the warrant to be $477,000, using the Black-Scholes valuation model, assuming a volatility factor of 85.98%, risk-free interest rate of 2.77%, a seven-year, four-month expected term and an expected dividend yield of zero.  The relative fair values of the warrants are recorded in additional paid-in capital on the Company's consolidated balance sheets.

The cash proceeds from the Loan were recorded as a note payable on the Company's consolidated balance sheet.  The note payable balance was reduced by $1.3 million for the fair value of the Tranche A and Tranche B warrants, and by $580,000 for payment of Cowen Healthcare’s legal fees in conjunction with the Loan.  Each of these amounts is being accreted over the life of the note.

The following table reflects the activity on the Loan for financial reporting purposes for the three and six months ended June 30, 2010 and 2009 (in thousands):

	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009
Beginning balance	$	58,157		$	57,913		$	58,096		$	46,880
Accretion on warrants and discount		61			61			122			103
Loan activity:
Tranche B (net proceeds)		—			—			—			14,343
Interest expense		2,511			2,594			5,106			4,494
Payments applied to principal		(1,935	)		—			(1,935	)		(3,352	)
Payments applied to interest		(1,533	)		(1,302	)		(4,128	)		(3,202	)
Accrued interest payable		(978	)		(1,292	)		(978	)		(1,292	)
Ending book balance	$	56,283		$	57,974		$	56,283		$	57,974

The Loan principal balance at June 30, 2010, and December 31, 2009 was $57.8 million and $59.7 million, respectively.  The estimated fair value of the note payable was $46.6 million at June 30, 2010.

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8. STOCKHOLDER’S EQUITY (DEFICIT) AND STOCK-BASED COMPENSATION

Common Stock

 In June 2010, the Company issued 636,132 shares of its common stock for an aggregate purchase price of $2.5 million in connection with a strategic partnership transaction (see Note 3, Significant Transactions - Sigma Tau).

In March 2010, the Company issued 17,000,000 shares of its common stock in an underwritten public offering.  In connection with this offering, in April 2010, the underwriters exercised in full their over-allotment option to purchase an additional 2,550,000 shares of common stock.  Net proceeds to the Company were approximately $59.6 million, after deducting underwriting fees and offering expenses.

In June 2009, the Company issued an aggregate of 8,539,605 shares of its common stock in an underwritten public offering at a price of $2.02 per share.  The aggregate net proceeds to the Company were approximately $16.1 million after deducting underwriting fees and offering expenses.

Equity Incentive Plan

The Company's 1995 Equity Incentive Plan (the Equity Plan), as amended, is an equity plan under which equity awards, including awards of restricted stock and incentive and nonqualified stock options to purchase shares of common stock may be granted to employees, consultants and directors of the Company by action of the Compensation Committee of the Board of Directors. Options are generally granted at the current fair market value on the date of grant, generally vest ratably over a 48-month period, and expire within ten years from date of grant. The Equity Plan is intended to attract and retain employees and to provide an incentive for employees, consultants and directors to assist the Company to achieve long-range performance goals and to enable them to participate in the long-term growth of the Company.  At June 30, 2010, a total of 4,813,236 shares were available for future grants under the Plan.

Employee Stock Purchase Plan

The Company's 1998 Employee Stock Purchase Plan (the Purchase Plan), as amended, allows employees to purchase shares of the Company's common stock at a discount from fair market value. Under this Plan, eligible employees may purchase shares during six-month offering periods commencing on January 1 and July 1 of each year at a price per share of 85% of the lower of the fair market value price per share on the first or last day of each six-month offering period. Participating employees may elect to have up to 10% of their base pay withheld and applied toward the purchase of such shares, subject to the limitation of 875 shares per participant per quarter. The rights of participating employees under the Purchase Plan terminate upon voluntary withdrawal from the Purchase Plan at any time or upon termination of employment. The compensation expense in connection with the Plan for the three and six months ended June 30, 2010 was approximately $5,000 and $31,000, respectively, and $21,000 and $72,000, respectively for the three and six months ended June 30, 2009. There were 49,972 and 49,960 shares purchased under the Plan during the six months ended June 30, 2010 and 2009, respectively. At June 30, 2010, a total of 644,042 shares were reserved and available for issuance under this Plan.

Stock-Based Compensation Expense

The Company measures compensation cost for all stock awards at fair value on date of grant and recognition of compensation over the service period for awards expected to vest.  The fair value of stock options was determined using the Black-Scholes valuation model. Such value is recognized as expense over the service period, net of estimated forfeitures and adjusted for actual forfeitures. The estimation of stock options that will ultimately vest requires significant judgment. The Company considers many factors when estimating expected forfeitures, including historical experience. Actual results and future changes in estimates may differ substantially from the Company's current estimates.

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The following table reflects stock compensation expense recorded, net of amounts capitalized into inventory, during the three and six months ended June 30, 2010 and 2009 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2010		2009		2010		2009
Compensation expense related to:
Equity incentive plan	$	1,017	$	956	$	1,933	$	3,478
Employee stock purchase plan		5		21		31		72
	$	1,022	$	977	$	1,964	$	3,550
Stock-based compensation expense charged to:
Research and development expenses	$	376	$	471	$	719	$	1,116
General and administrative expenses	$	646	$	506	$	1,245	$	2,197
Restructuring charges	$	—	$	—	$	—	$	237

Stock-based compensation of $17,000 was capitalized into inventory for the six months ended June 30, 2010.  Capitalized stock-based compensation is recognized into cost of product sales when the related product is sold.  During the six months ended June 30, 2009, amendments to the exercise and vesting schedules to certain options resulted in additional stock-based compensation expense of $1.3 million, inclusive of $237,000 of stock-based compensation expense recorded in relation to restructuring activities.

9. INCOME TAXES

Deferred tax assets and deferred tax liabilities are recognized based on temporary differences between the financial reporting and tax basis of assets and liabilities using future expected enacted rates. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some or all of the deferred tax assets will not be realized. The Company has recorded a deferred tax asset of approximately $1.8 million at December 31, 2009 reflecting the benefit of deductions from the exercise of stock options which has been fully reserved until it is more likely than not that the benefit will be realized.  The benefit from this deferred tax asset will be recorded as a credit to additional paid-in capital if and when realized through a reduction of cash taxes.

As required by ASC 740, the Company's management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, and has determined that it is not “more likely than not” that the Company will recognize the benefits of the deferred tax assets.  Accordingly, a valuation allowance of approximately $180.5 million was established at December 31, 2009.

The Company accounts for uncertain tax positions using a "more-likely-than-not" threshold for recognizing and resolving uncertain tax positions. The evaluation of uncertain tax positions is based on factors that include, but are not limited to, changes in tax law, the measurement of tax positions taken or expected to be taken in tax returns, the effective settlement of matters subject to audit, new audit activity and changes in facts or circumstances related to a tax position. The Company evaluates uncertain tax positions on a quarterly basis and adjusts the level of the liability to reflect any subsequent changes in the relevant facts surrounding the uncertain positions. As of June 30, 2010, the Company had no unrecognized tax benefits.

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The tax years 1995 through 2009 remain open to examination by major taxing jurisdictions to which the Company is subject, which are primarily in the United States, as carryforward attributes generated in years past may still be adjusted upon examination by the Internal Revenue Service or state tax authorities if they have or will be used in a future period.  The Company is currently not under examination in any jurisdictions for any tax years.

Item 2 - MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The discussion in this item and elsewhere in this report contains forward-looking statements involving risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements.  These risks and uncertainties include those described in Part II, Item 1a – Risk Factors.

OVERVIEW

We are a biopharmaceutical company focused on the discovery, development and commercialization of novel biotherapeutics for unmet medical needs. We began commercializing KALBITOR for treatment of acute attacks of hereditary angioedema (HAE) in patients 16 years of age and older in February 2010.  We commercialize KALBITOR on our own in the United States and intend to seek approval and commercialize KALBITOR through partners for HAE and other angioedema indications in markets outside of the United States.

In June 2010, we entered into a collaboration agreement with Sigma-Tau to develop and commercialize subcutaneous DX-88 for the treatment of HAE and other therapeutic indications throughout Europe, North Africa, Middle East and Russia.

We have also licensed DX-88 for development through a collaboration with Fovea Pharmaceuticals SA, a subsidiary of sanofi-aventis, for treatment of retinal diseases. We are also exploring use of DX-88 for treatment of ACE inhibitor-induced angioedema, a life threatening inflammatory response brought on by adverse reactions to ACE inhibitors; and acquired angioedema, a condition associated with B-cell lymphoma and autoimmune disorders.

Beyond DX-88, we have also developed a pipeline of drug candidates using our proprietary drug discovery technology, known as phage display. We use phage display to identify antibody, small protein and peptide compounds with potential for clinical development.

Although we use our phage display technology primarily to advance our own internal development activities, we also leverage it through licenses and collaborations designed to generate revenues and provide us access to co-develop and/or co-promote drug candidates identified by other biopharmaceutical and pharmaceutical companies. Through our LFRP, we have more than 70 ongoing license agreements. Currently, our licensees have 17 product candidates in clinical trials and our technology has been used in connection with the manufacturing of one approved product.

We have incurred net losses on an annual basis since our inception.  We have generated minimal revenue from product sales to date, and it is possible that we will never have significant product sales revenue. Currently, we generate most of our revenue from collaborators through license and milestone fees, research and development funding, and maintenance fees that we receive in connection with the licensing of our phage display technology. It is possible that we will never have significant product sales revenue or receive significant royalties on our licensed product candidates or licensed technology in order to achieve or sustain future profitability.

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KALBITOR AND THE DX-88 FRANCHISE

DX-88 is a compound that we developed using our phage display technology, which we have shown in vitro to be a high affinity, high specificity inhibitor of human plasma kallikrein. Plasma kallikrein, an enzyme found in blood, is believed to be a key component responsible for the regulation of the inflammation and coagulation pathways. Excess plasma kallikrein activity is thought to play a role in a number of inflammatory and autoimmune diseases, including HAE.

HAE is a rare, genetic disorder characterized by severe, debilitating and often painful swelling, which can occur in the abdomen, face, hands, feet and airway. HAE is caused by low or dysfunctional levels of C1-INH, a naturally occurring molecule that inhibits plasma kallikrein, a key mediator of inflammation, and other serine proteases in the blood. It is estimated that HAE affects between 1 in 10,000 to 1 in 50,000 people around the world. Despite the fact that 85% of patients experience symptoms before age 20, 68% of patients are not diagnosed until after age 20, which makes it difficult to accurately determine the size of the HAE patient population. HAE patient association registries estimate there is an immediately addressable target population of approximately 6,500 patients in the United States.

KALBITOR

In December 2009, DX-88 was approved by the FDA under the brand name KALBITOR (ecallantide) for treatment of HAE in patients 16 years of age and older regardless of anatomic location. KALBITOR, a potent, selective and reversible plasma kallikrein inhibitor discovered and developed by us, is the first subcutaneous HAE treatment approved in the United States.

As part of product approval, we have established a Risk Evaluation and Mitigation Strategy (REMS) program to communicate the risk of anaphylaxis and the importance of distinguishing between hypersensitivity reaction and HAE attack symptoms. To communicate these risks, the REMS requires a Medication Guide be dispensed with each dose of KALBITOR and a "Dear Healthcare Professional" letter be provided to doctors identified as likely to prescribe KALBITOR and treat HAE patients. KALBITOR should only be administered by a healthcare professional with appropriate medical support to manage anaphylaxis and HAE.

We have also initiated a Phase 4 observational study which will be conducted with 200 HAE patients to evaluate immunogenicity and hypersensitivity with exposure to KALBITOR for treatment of acute attacks of HAE. The study is designed to identify predictive risk factors and develop effective screening tools to mitigate the risk of hypersensitivity and anaphylaxis. This 4-year study was initiated in February 2010.

U.S. Sales and Marketing

We have established a commercial organization to support sales of KALBITOR in the United States. We believe that a field-based team of approximately 25 professionals, consisting of sales representatives, medical science liaisons and corporate account directors, is appropriate to effectively market KALBITOR in the United States, where patients are treated primarily by a limited number of specialty physicians, consisting mainly of allergists and immunologists.

Distribution

In 2009, we entered into separate agreements with three wholly-owned subsidiaries of AmerisourceBergen Specialty Group, Inc. (ABSG) to establish an exclusive distribution network for KALBITOR and to provide comprehensive call center services to support its commercialization. The ABSG agreements consist of:

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•an agreement with US Bioservices Corporation (US Bio), under which US Bio serves as our exclusive specialty pharmacy for KALBITOR in the United States, and will also manage the KALBITOR Access program for patients and healthcare providers seeking information and access to KALBITOR;

•an agreement with ASD Specialty Healthcare Inc. (ASD), under which ASD serves as our exclusive wholesale distributor for KALBITOR to treating hospitals in the United States; and

•an agreement with Integrated Commercialization Solutions, Inc. (ICS), under which ICS provides warehousing, inventory management and other logistical services in connection with the distribution of KALBITOR throughout the United States.

All three agreements have an initial term of three years, although each contains customary termination provisions and may be terminated by us for any reason upon six months prior written notice.

KALBITOR AccessSM

In furtherance of our efforts to facilitate access to KALBITOR in the United States, we have created the KALBITOR Access program, designed as a one-stop point of contact for information about KALBITOR, that offers treatment support service for patients with HAE and their healthcare providers. KALBITOR case managers provide comprehensive product and disease information, treatment site coordination, financial assistance for qualified patients and reimbursement facilitation services.

Manufacturing

In connection with the commercial launch of KALBITOR in the United States, we have established a commercial supply chain, consisting of single-source third party suppliers to manufacture, test and distribute this product. All third party manufacturers involved in the KALBITOR manufacturing process are required to comply with current good manufacturing practices, or cGMPs.

To date, the DX-88 drug substance used in the production of KALBITOR has been manufactured in the United Kingdom by Avecia Biologics Limited, a subsidiary of Merck & Co., Inc. (Avecia). As a result of previously completed manufacturing activities conducted at Avecia, we have significant inventories of DX-88 drug substance, which we believe are sufficient to supply all ongoing studies relating to DX-88 and KALBITOR, and to meet the anticipated market demand for KALBITOR well into 2011. Under existing arrangements with Avecia, they have agreed to conduct additional manufacturing campaigns, as necessary to supplement existing inventory. Additionally, we are in the process of evaluating alternative arrangements for long-term commercial supply of DX-88 drug substance.

DX-88 drug substance is filled, labeled and packaged into the final form of KALBITOR drug product by Hollister-Steir at its facilities in Spokane, Washington under a commercial supply agreement. This process, known in the industry as the "fill and finish" process, is not unique to KALBITOR and alternative manufacturers are readily available in the event that we elect, or are required, to relocate the "fill and finish" process.

KALBITOR Outside of the United States

In markets outside of the United States, we intend to seek approval and commercialize KALBITOR for HAE and other angioedema indications in conjunction with multiple partners by entering into license or collaboration agreements with companies that have established distribution systems and direct sales forces in such territories.

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In June 2010, we entered into a strategic partnership agreement with a subsidiary of the pharmaceutical company Sigma-Tau to develop and commercialize subcutaneous DX-88 for the treatment of HAE and other therapeutic indications throughout Europe, North Africa, Middle East and Russia.  We retained our rights to DX-88 in all other territories.  Under the terms of the agreement, Sigma-Tau made a $2.5 million upfront payment to us and also purchased 636,132 shares of our common stock at a price of $3.93 per share, which represented a 50% premium over the 20-day average closing price through June 17, 2010, for an aggregate purchase price of $2.5 million.  We will also be eligible to receive over $100 million in development and sales milestones related to DX-88 and royalties equal to 41% of net sales of product.  Sigma-Tau will pay the costs associated with regulatory approval and commercialization in the licensed territories.  In addition, we and Sigma-Tau will share equally the costs for all development activities for future indications developed in partnership with Sigma-Tau.

The Marketing Authorization Application (MAA) was submitted in May 2010 to the European Medicines Agency (EMA) for DX-88 for the treatment of HAE.   In July 2010, the EMA completed its validation process for the MAA for potential approval to market DX-88 (ecallantide) in the European Union (EU).  The completion of this validation process signifies that the formal scientific review of the MAA has begun.  We anticipate that the MAA will be transferred from us to Sigma-Tau prior to any approval decision.  If approved, DX-88 will receive marketing authorization in 27 EU member states.

DX-88 FRANCHISE

DX-88 for treatment of Other Angioedemas.    In addition to its approved commercial use, we are also developing DX-88 in other angioedema indications. Another form of angioedema is induced by the use of so-called ACE inhibitors. With an estimated 51 million prescriptions written annually worldwide, ACE inhibitors are widely prescribed to reduce ACE and generally reduce high blood pressure and vascular constriction. It is estimated that up to 2% of patients treated with ACE inhibitors suffer from angioedema attacks, which represents approximately 30% of all angioedemas treated in emergency rooms. Research suggests the use of ACE inhibitors increases the relative activity of bradykinin, a protein that causes blood vessels to enlarge, or dilate, which can also cause the swelling known as angioedema. As a specific inhibitor of plasma kallikrein, an enzyme needed to produce bradykinin, DX-88 has the potential to be effective for treating this condition. We are working with investigators affiliated with the University of Cincinnati on an investigator sponsored study for drug-induced angioedema.  We also plan to initiate a Dyax-sponsored Phase 2 clinical study for this indication by early 2011.

We are also exploring with FDA, the use of DX-88 for acquired angioedema, a condition associated with B-cell lymphoma and autoimmune disorders, as well as for pediatric use in HAE in an “expanded access” setting.

DX-88 for On-Pump Cardiac Surgery. In 2008, we entered into an exclusive license and collaboration agreement with Cubist for the development and commercialization in North America and Europe of the intravenous formulation of DX-88 for the reduction of blood loss during surgery. Under this agreement, Cubist assumed responsibility for all further development and costs associated with DX-88 in the licensed indications in the Cubist territory. Under the terms of the license agreement, we received a $15 million upfront payment and an additional $2.5 million milestone payment in 2008.

On March 31, 2010, Cubist announced its plan to stop investing in the clinical development of DX-88 as a therapy to reduce blood loss during surgery and its intention to terminate the 2008 agreement and return all rights to us.  Cubist is expected to complete the data analysis of their clinical trials and provide that information to us.

DX-88 for Ophthalmic Indications.    We have entered into a license agreement with Fovea Pharmaceuticals SA, a subsidiary of sanofi-aventis in 2009, for the development of DX-88 for treatment of retinal diseases in the EU. Under this agreement, Fovea will fully fund development for the first indication, retinal vein occlusion-induced macular edema, for which a Phase 1 trial was initiated in the third quarter of 2009.  We retain all rights to commercialize DX-88 in this indication outside of the EU. Under the license agreement, we do not receive milestone payments, but are entitled to receive tiered royalties, ranging from the high teens to mid twenties, based on sales of DX-88 by Fovea in the EU.  If we elect to commercialize DX-88 in this indication outside of the EU, Fovea will be entitled to receive royalties from us, ranging from the low to mid teens, based on our sales of DX-88 outside the EU. The term of the agreement continues until the expiration of the licensed patents or, if later, the eleventh anniversary of the first commercial sale of DX-88 in an ophthalmic indication. The agreement may be terminated by Fovea on prior notice to us and by either party for cause.

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Results of Operations

Three Months Ended June 30, 2010 and 2009

Revenues.   Total revenues for the three months ended June 30, 2010 (the 2010 Quarter) was $15.1 million, compared with $4.8 million for the three months ended June 30, 2009 (the 2009 Quarter).  

Product Sales.  We began commercializing KALBITOR for treatment of acute attacks of HAE in patients 16 years of age and older in February 2010.  We sell KALBITOR to ABSG, which functions as our exclusive distributor, and we recognize revenue when title and risk of loss have passed to ABSG, typically delivery.  Due to the specialty nature of KALBITOR, the limited number of patients, limited return rights and contractual limits on inventory levels, we anticipate that ABSG will carry limited inventory.

We record product sales allowances and accruals related to trade prompt pay discounts, government rebates, a patient financial assistance program, product returns and other applicable allowances.  For the 2010 Quarter, product sales of KALBITOR were $1.9 million, net of product discounts and allowances of $104,000.

Development and License Fees.  We derive revenues from licensing, funded research and development fees, including milestone payments from our licensees and collaborators. This revenue fluctuates from quarter-to-quarter due to the timing of the clinical activities of our collaborators and licensees.  This revenue was $13.2 million in the 2010 Quarter and $4.8 million in the 2009 Quarter.  The 2010 increase was due to $9.8 million in revenue recognized under the sale of rights to royalties and other payments related to the product Xyntha, which was developed by one of our licensees under the LFRP.  The increase is offset by $1.1 million of revenue recognized in the 2009 Quarter associated with the Cubist license, for which there was no revenue in the 2010 Quarter, based upon Cubist’s announcement to end its DX-88 development program in the first quarter of 2010.

Cost of Product Sales.We incurred $92,000 of costs associated with product sales during the 2010 Quarter.  Costs associated with the manufacture of KALBITOR prior to FDA approval were previously expensed when incurred, and therefore are not included in the cost of product sales during this quarter.  The supply of KALBITOR produced prior to FDA approval is expected to meet anticipated commercial needs well into 2011.  When this supply has been fully depleted, we expect our costs of product sales will increase, reflecting the full manufacturing cost of KALBITOR.

Research and Development.Our research and development expenses are summarized as follows:

	Three Months  Ended June 30,
	2010		2009
	(In thousands)
KALBITOR development costs	$	4,702	$	4,698
DX-88 drug substance manufacturing costs		—		2,547
Other research and development expenses		3,332		4,176
Research and development expenses	$	8,034	$	11,421

Our research and development expenses arise primarily from compensation and other related costs for our personnel dedicated to research and development activities, fees paid and costs reimbursed to outside parties to conduct research and clinical trials and the cost of manufacturing drug material prior to FDA approval.  The decrease in costs in the 2010 Quarter is due to a $2.5 million decrease in manufacturing costs, as well as a $627,000 decrease in occupancy costs.  Costs incurred in research and development may increase in future periods as our development programs advance.

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Selling, General and Administrative. Our selling, general and administrative expenses consist primarily of the sales and marketing costs of commercializing KALBITOR in 2010 and costs of our management and administrative staff, as well as expenses related to business development, protecting our intellectual property, administrative occupancy, professional fees, market research, promotion activities and the reporting requirements of a public company. Selling, general and administrative expenses for the 2010 and 2009 Quarters were $8.4 million and $5.2 million, respectively.  Costs increased during the 2010 Quarter due to additional infrastructure to support the commercialization of KALBITOR, including the expansion of sales and marketing personnel.  This includes increases of $1.6 million in internal sales and marketing expenses and $1.3 million in external sales and marketing expenses.  Selling, general and administrative expenses may increase in future periods as the commercialization of KALBITOR expands.

Interest Expense.  Interest expense was $3.9 million in the 2010 Quarter compared to $2.7 million in 2009.  The 2010 increase is primarily due to additional interest expense of approximately $1.3 million for payments due under the Cowen Healthcare loan in connection with the sale of our rights to royalties and other payments related to the Xyntha product.

Six Months Ended June 30, 2010 and 2009

Revenues.   Total revenues for the six months ended June 30, 2010 (the 2010 Period) was $35.2 million, compared with $10.8 million for the six months ended June 30, 2009 (the 2009 Period).  

Product Sales.  We began commercializing KALBITOR for treatment of acute attacks of HAE in patients 16 years of age and older in February 2010.  We sell KALBITOR to ABSG, which functions as our exclusive distributor, and we recognize revenue when title and risk of loss have passed to ABSG, typically upon delivery.  Due to the specialty nature of KALBITOR, the limited number of patients, limited return rights and contractual limits on inventory levels, we anticipate that ABSG will carry limited inventory.

We record product sales allowances and accruals related to trade prompt pay discounts, government rebates, a patient financial assistance program, product returns and other applicable allowances.  For the 2010 Period, product sales of KALBITOR were $3.2 million, net of product discounts and allowances of $173,000.

Development and License Fees.  We derive revenues from licensing, funded research and development fees, including milestone payments from our licensees and collaborators. This revenue fluctuates from period-to-period due to the timing of the clinical activities of our collaborators and licensees.  This revenue was $32.0 million in the 2010 Period and $10.8 million in the 2009 Period, an increase of $21.2 million.  The 2010 increase was due to $9.8 million in revenue recognized under the sale of rights to royalties and other payments related to the product Xyntha, which was developed by one of our licensees under the LFRP and $13.8 million of previously deferred revenue associated with the Cubist license that was fully recognized during the 2010 Period based upon Cubist’s announcement to end its DX-88 development program.  During the 2009 Period, $2.1 million of revenue was recognized associated with the Cubist license.

Cost of Product Sales.We incurred $128,000 of costs associated with product sales during the 2010 Period.  Costs associated with the manufacture of KALBITOR prior to FDA approval were previously expensed when incurred, and therefore are not included in the cost of product sales during this period.  The supply of KALBITOR produced prior to FDA approval is expected to meet anticipated commercial needs well into 2011.  When this supply has been fully depleted, we expect our costs of product sales will increase, reflecting the full manufacturing cost of KALBITOR.

Research and Development.Our research and development expenses are summarized as follows):

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	Six Months  Ended June 30,
	2010		2009
	(In thousands)
KALBITOR development costs	$	8,469	$	10,353
DX-88 drug substance manufacturing costs		—		8,182
Other research and development expenses		7,334		12,157
Research and development expenses	$	15,803	$	30,692

Our research and development expenses arise primarily from compensation and other related costs for our personnel dedicated to research and development activities, fees paid and costs reimbursed to outside parties to conduct research and clinical trials and the cost of manufacturing drug material prior to FDA approval.  The decrease in costs from the 2009 Period to the 2010 Period is primarily due to an $8.0 million decrease in manufacturing costs and $4.9 million in lower personnel expenses resulting from our workforce reduction in the 2009 Period.

Selling, General and Administrative. Our selling, general and administrative expenses consist primarily of the sales and marketing costs of commercializing KALBITOR in 2010, costs of our management and administrative staff, as well as expenses related to business development, protecting our intellectual property, administrative occupancy, professional fees, market research, promotion activities and the reporting requirements of a public company. Selling, general and administrative expenses for the 2010 and 2009 Periods were $17.0 million and $13.0 million, respectively.  Costs increased $4.0 million during the 2010 Period due to additional infrastructure to support the commercialization of KALBITOR, including the expansion of sales and marketing personnel.  This includes increases of $3.1 million in internal sales and marketing expenses and $1.3 million in external sales and marketing expenses.  These increases are offset by a $1.1 million charge for share-based compensation expense for amendments to the exercise and vesting schedules of certain options in the 2009 Period.

Restructuring and Impairment.  In March 2009, we implemented a workforce reduction to focus our resources on the commercialization of KALBITOR and to support our long-term financial success.  As a result, during the 2009 Period, we recorded one-time restructuring charges related to the workforce reduction of approximately $1.9 million.

Interest Expense.  Interest expense was $6.6 million in the 2010 Period compared to $4.7 million in 2009.  The 2010 increase is primarily due to additional interest expense of approximately $1.3 million for payments due under the Cowen Healthcare loan in connection with the sale of our rights to royalties and other payments related to the Xyntha product.

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Liquidity and Capital Resources

	June 30, 2010		December 31, 2009
	(in thousands)
Cash and cash equivalents	$	45,736	$	29,386
Short-term investments		48,637		23,009
Total cash, cash equivalents and investments	$	94,373	$	52,395

The following table summarizes our cash flow activity for the six months ended June 30, 2010 and 2009 (in thousands):

	Six Months Ended June 30,
	2010			2009
Net cash used in operating activities	$	(17,581	)	$	(30,542	)
Net cash (used in) provided by investing activities		(24,962	)		12,092
Net cash provided by financing activities		58,893			28,292
Effect of foreign currency translation on cash balances		—			49
Net increase in cash and cash equivalents	$	16,350		$	9,891

We require cash to fund our operating expenses, to make capital expenditures, acquisitions and investments, and to service debt. Through June 30, 2010, we have funded our operations principally through the sale of equity securities, which have provided aggregate net cash proceeds since inception of approximately $397 million.  We have also borrowed funds under our loan agreement with Cowen Healthcare, which are secured by certain assets associated with our LFRP.  In addition, we generate funds from product development and license fees and product sales.  Our excess funds are currently invested in short-term investments primarily consisting of U.S. Treasury notes and bills and money market funds backed by U.S. Treasury obligations.

Operating Activities

The principal use of cash in our operations was to fund our net loss, which was $4.3 million during the six months ended June 30, 2010.  Of this net loss, certain costs were non-cash charges, such as depreciation and amortization costs of $769,000, and stock-based compensation expense of $2.0 million.  In addition to non-cash charges, we also had a net change in other operating assets and liabilities of $17.1 million, including a decrease in accounts payable and accrued expenses of $3.2 million, an increase in accounts receivable of $1.6 million, and a decrease in deferred revenue of $11.6 million.  The change in deferred revenue is primarily due to the recognition of $13.8 million of revenue associated with the Cubist license.

For 2009, our net loss was $39.3 million, of which certain costs were non-cash charges, such as depreciation and amortization costs of $1.6 million, and stock-based compensation expense of $3.6 million.  In addition to non-cash charges, we also had a net change in other operating assets and liabilities of $1.9 million, including a decrease in accounts receivable of $2.3 million, offset by a decrease in accounts payable and accrued expenses of $1.4 million.

Investing Activities

Our investing activities for the six months ended June 30, 2010 primarily consisted of timing of the maturity and purchase of investments, as well as a decrease of $700,000 in restricted cash from the contractual reduction of the letter of credit that serves as our security deposit for the lease of our facility in Cambridge, Massachusetts.

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Our investing activities for the six months ended June 30, 2009, consisted of timing of the maturity and purchase of investments, and the purchase of approximately $397,000 of fixed assets.

Financing Activities

Our financing activities for the six months ended June 30, 2010 consisted of net proceeds of $61.1 million from the sale of 20,186,132 shares of our common stock, as well as repayments of long-term debt totaling $2.4 million, including $1.9 million to Cowen Healthcare.

Our financing activities for the six months ended June 30, 2009, consisted of net proceeds of $14.8 million from the Tranche B loan with Cowen Healthcare, as well as approximately $17.6 million of net proceeds from the sale of 9,280,570 shares of our common stock, and a $4.3 million repayment of long-term obligations, primarily principal payments to Cowen Healthcare.  During the 2009 Period, we amended our existing loan with Cowen Healthcare to receive an additional loan of $15 million.  This Tranche B loan is secured by our LFRP on the same terms as the initial Tranche A loan, which was executed in August 2008.  The Tranche B loan, which matures in August 2016, bears interest at an annual rate of 21.50%, payable quarterly, resulting in a blended interest rate of 17.38% per annum for both the Tranche A and Tranche B loans under the amended loan agreement.

We may seek additional funding through our collaborative arrangements and public or private financings.  We may not be able to obtain financing on acceptable terms or at all, and we may not be able to enter into additional collaborative arrangements. Arrangements with collaborators or others may require us to relinquish rights to certain of our technologies, product candidates or products. The terms of any financing may adversely affect the holdings or the rights of our stockholders. If we need additional funds and are unable to obtain funding on a timely basis, we would curtail significantly our research, development or commercialization programs in an effort to provide sufficient funds to continue our operations, which could adversely affect our business prospects.

OFF BALANCE SHEET ARRANGEMENTS

We have no off-balance sheet arrangements with the exception of operating leases.

COMMITMENTS AND CONTINGENCIES

In our Annual Report on Form 10-K for the year ended December 31, 2009, Part II, Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of Operations, under the heading “Contractual Obligations,” we described our commitments and contingencies. There were no material changes in our commitments and contingencies during the six months ended June 30, 2010.

CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

In our Annual Report on Form 10-K for the year ended December 31, 2009, our critical accounting policies and estimates were identified as those relating to revenue recognition, allowance for doubtful accounts, share-based compensation and valuation of long-lived and intangible assets.  Other than noted below, there have been no material changes to our critical accounting policies from the information provided in our 2009 Annual Report on Form 10-K.

Changes in Critical Accounting Policies

As a result of the February 2010 commercial launch of KALBITOR, we have updated our critical accounting policies to include our product sales recognition and related sales allowances policies.  We believe that our judgment and assumptions with respect to these significant accounting policies are critical to the accounting estimates used in the preparation of our consolidating financial statements.

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Product Sales.  Revenue from product sales is recognized when all four of the following criteria are met: (1) we have persuasive evidence an arrangement exists, (2) the price is fixed or determinable, (3) the product has been shipped and title and risk of loss have passed to the customer and (4) collection is reasonably assured.  Our return policy includes provisions for returns of our product when it has expired or was damaged in shipment.  Product sales are recorded net of applicable reserves for trade prompt pay discounts, government rebates, a patient assistance program, product returns and other applicable allowances.

Product Sales Allowances.  We establish reserves for trade prompt pay discounts, government rebates, a patient assistance program, product returns and other applicable allowances.  Reserves established for these discounts and allowances are classified as a reduction of accounts receivable (if the amount is payable to the customer) or a liability (if the amount is payable to a party other than the customer).

Allowances against receivable balances primarily relate to prompt payment discounts and are recorded at the time of sale, resulting in a reduction in product sales revenue.  Accruals related to government rebates, product returns and other applicable allowances are recognized at the time of sale, resulting in a reduction in product sales revenue and an increase in accrued expenses.

We maintain a service contract with our specialty pharmacy for customer service initiatives. We have established the fair value of these services and have classified them as selling, general and administrative expense.

Prompt Payment Discounts.  We offer a prompt payment discount to our customer ABSG.  Since we expect ABSG will take advantage of this discount, we accrue 100% of the prompt payment discount, based on the gross amount of each invoice, at the time of sale.  The accrual is adjusted quarterly to reflect the actual experience.

Government Rebates and Chargebacks.  We estimate reductions to product sales for Medicaid and Veterans’ Administration (VA) programs, as well as with respect to certain other qualifying federal and state government programs.  We estimate the amount of these reductions based on market research data related to payer mix, actual sales data and historical experience for similar products sold by others.

Medicaid rebate reserves relate to our estimated obligations to states under established reimbursement arrangements.  Rebate accruals are recorded during the same period in which the related product sales are recognized.  Rebate amounts are generally determined at the time of claim by the state, and we will generally make cash payments for such amounts after receiving billings from the state.

VA rebates or chargeback reserves represent estimated obligations resulting from contractual commitments to sell products to qualified healthcare providers at a price lower than the list price charged to our distributor.  The distributor will charge us for the difference between what the distributor pays for the product and the ultimate selling price to the qualified healthcare provider.  Rebate accruals are established during the same period in which the related product sales are recognized. Chargeback amounts are generally determined at the time of resale to the qualified healthcare provider from the distributor, and we will generally issue credits for such amounts after receiving notification from the distributor.

We offer a financial assistance program, which involves the use of a patient voucher, for qualified KALBITOR patients in order to aid a patient’s access to KALBITOR.  We estimate our liability from this voucher program based on actual redemption rates.

Product Returns.  Allowances for product returns are recorded during the period in which the related product sales are recognized, resulting in a reduction to product revenue.  We do not provide customers with a general right of product return. We permit returns if the product is damaged or defective when received by the customer or if the product has expired.  We estimate product returns based upon historical trends in the pharmaceutical industry and trends for similar products sold by others.

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During the three and six months ended June 30, 2010, provisions for product sales allowances reduced gross product sales as follows (in thousands):

	Three months ended June 30, 2010			Six months ended June 30, 2010
Total gross product sales	$	2,035		$	3,347
Prompt pay and other discounts	$	64		$	90
Government rebates and chargebacks		40			73
Returns		-			10
Total product sales allowances	$	104		$	173
Total product sales, net	$	1,931		$	3,174
Total product sales allowances as a percent of gross product sales		6	%		6	%

If product sales allowances as a percentage of total gross product sales increase up to 10%, this change would not have a material impact on our results of operations or cash flows at this time.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk consists primarily of our cash and cash equivalents and short-term investments. We place our investments in high-quality financial instruments, primarily U.S. Treasury notes and bills, which we believe are subject to limited credit risk. We currently do not hedge interest rate exposure. As of June 30, 2010, we had cash, cash equivalents and investments of approximately $94.4 million. Our investments will decline by an immaterial amount if market interest rates increase, and therefore, our exposure to interest rate changes is immaterial. Declines of interest rates over time will, however, reduce our interest income from our investments.

As of June 30, 2010, we had $58.9 million outstanding under short-term and long-term obligations, including our note payable. Interest rates on all of these obligations are fixed and therefore are not subject to interest rate fluctuations.

Most of our transactions are conducted in U.S. dollars. We have collaboration and technology license agreements with parties located outside of the U.S. Transactions under certain of the agreements between us and parties located outside of the U.S. are conducted in local foreign currencies. If exchange rates undergo a change of up to 10%, we do not believe that it would have a material impact on our results of operations or cash flows.

Item 4 - CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934). Based on this evaluation, our principal executive officer and principal financial officer concluded that these disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

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Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during our fiscal quarter ended June 30, 2010 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. – RISK FACTORS

Forward-looking statements

This Quarterly Report on Form 10-Q contains forward-looking statements, including statements about:

•our commercialization of KALBITOR, including revenues and cost of product sales;

•plans to seek market approval for KALBITOR in the EU and other markets outside the United States;

•plans and anticipated timing for pursuing additional indications and uses for DX-88;

•plans to enter into additional collaborative and licensing arrangements for DX-88 and for other compounds in development;

•estimates of potential markets for our products and product candidates;

•the sufficiency of our cash, cash equivalents and short-term investments; and

•expected future operating results.

Statements that are not historical facts are based on our current expectations, beliefs, assumptions, estimates, forecasts and projections for our business and the industry and markets in which we compete. We often use the words or phrases of expectation or uncertainty like "believe," "anticipate," "plan," "expect," "intend," "project," "future," "may," "will," "could," "would" and similar words to help identify forward-looking statements. The statements contained in this report are not guarantees of future performance and involve certain risks, uncertainties and assumptions, which are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed in such forward-looking statements. Risks and uncertainties which may affect us are set forth in Item 1A of this report entitled "Risk Factors". You should carefully review the risks described therein and in other documents we file from time to time with the Securities and Exchange Commission ("SEC"), including the Quarterly Reports on Form 10-Q to be filed in 2010. We caution you not to place undue reliance on these forward looking statements, which speak only as of the date on which they are made. We undertake no intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Risks Related To Our Business

We have a history of net losses, expect to incur significant additional net losses and may never achieve or sustain profitability.

We have incurred net losses on an annual basis since our inception.  As of June 30, 2010, we had an accumulated deficit of approximately $422.1 million.  We expect to incur substantial additional net losses over the next several years as our research, development, preclinical testing, clinical trial and commercial activities increase.

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We have generated minimal revenue from product sales to date, and it is possible that we will never have significant product sales revenue.  Currently, we generate most of our revenue from collaborators through license and milestone fees, research and development funding, and maintenance fees that we receive in connection with the licensing of our phage display technology.  To become profitable, we, alone or with our collaborators, must either successfully commercialize KALBITOR or develop and commercialize our other product candidates or continue to leverage our phage display technology to generate significant research funding and licensing revenue.  It is possible that we will never have significant product sales revenue or receive significant royalties on our licensed product candidates or licensed technology in order to achieve or sustain future profitability.

We may need substantial additional capital in the future and may be unable to raise the capital that we will need to sustain our operations.

We require significant capital to fund our operations to commercialize KALBITOR and to develop and commercialize other product candidates.  Our future capital requirements will depend on many factors, including:

· future sales levels of KALBITOR and other commercial products and the profitability of such sales, if any;

· the timing and cost to develop, obtain regulatory approvals for and commercialize our pipeline products;

· maintaining or expanding our existing collaborative and license arrangements and entering into additional arrangements on terms that are favorable to us;

· the amount and timing of milestone and royalty payments from our collaborators and licensees related to their progress in developing and commercializing products;

· our decision to manufacture, or have third parties manufacture, the materials used in KALBITOR and other pipeline products;

· competing technological and market developments;

· the progress of our drug discovery and development programs;

· the costs of prosecuting, maintaining, defending and enforcing our patents and other intellectual property rights;

· the amount and timing of additional capital equipment purchases; and

· the overall condition of the financial markets.

We will need additional funds if our cash requirements exceed our current expectations or if we generate less revenue than we expect.  We may seek additional funding through collaborative arrangements, and public or private financings (including our existing equity line of credit), or other means.  We may not be able to obtain financing on acceptable terms or at all, and we may not be able to enter into additional collaborative arrangements.  Arrangements with collaborators or others may require us to relinquish rights to certain of our technologies, product candidates or products.  The terms of any financing may adversely affect the holdings or the rights of our stockholders and if we are unable to obtain funding on a timely basis, we may be required to curtail significantly our research, development or commercialization programs which could adversely affect our business prospects.

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Our revenues and operating results have fluctuated significantly in the past, and we expect this to continue in the future.

Our revenues and operating results have fluctuated significantly on a quarter to quarter basis.  We expect these fluctuations to continue in the future.  Fluctuations in revenues and operating results will depend on:

· the future sales of KALBITOR, if any, and related costs to commercialize the product;

· the cost and timing of our increased research and development, manufacturing and commercialization activities;

· the establishment of new collaborative and licensing arrangements;

· the timing and results of clinical trials, including a failure to receive the required regulatory approvals to commercialize our product candidates;

· the timing, receipt and amount of payments, if any, from current and prospective collaborators, including the completion of certain milestones; and

· revenue recognition and other accepted accounting policies.

Our revenues and costs in any period are not reliable indicators of our future operating results.  If the revenues we receive are less than the revenues we expect for a given fiscal period, then we may be unable to reduce our expenses quickly enough to compensate for the shortfall.  In addition, our fluctuating operating results may fail to meet the expectations of securities analysts or investors which may cause the price of our common stock to decline.

We depend heavily on the success of our lead product, KALBITOR, which was approved in the United States for treatment of acute attacks of HAE in patients 16 years and older.

Our ability to generate product sales will depend on commercial success of KALBITOR in the United States and whether physicians, patients and healthcare payers view KALBITOR as therapeutically effective relative to cost.  We initiated the commercial launch of KALBITOR in the United States in February 2010.

The commercial success of KALBITOR and our ability to generate and increase product sales will depend on several factors, including the following:

· the number of patients with HAE who are diagnosed with the disease and identified to us;

· the number of patients with HAE that may be treated with KALBITOR;

· HAE patients’ ability to obtain and maintain sufficient coverage or reimbursement by third-party payers;

· acceptance of KALBITOR in the medical community;

· ability to effectively market and distribute KALBITOR in the United States;

· the maintenance of marketing approval in the United States and the receipt and maintenance of marketing approval from foreign regulatory authorities; and

· establishment and maintenance of commercial manufacturing capabilities ourselves or through third-party manufacturers.

If we are unable to develop sales of KALBITOR in the United States and commercialize KALBITOR in additional countries or if we are significantly delayed or limited in doing so, our business prospects would be adversely affected.

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Because the target patient population of KALBITOR for treatment of HAE is small and has not been definitively determined, we must be able to successfully identify HAE patients and achieve a significant market share in order to achieve or maintain profitability.

The prevalence of HAE patients which has been estimated at approximately 1 in 10,000 to 1 in 50,000 people around the world, has not been definitively determined. There can be no guarantee that any of our programs will be effective at identifying HAE patients and the number of HAE patients in the United States may turn out to be lower than expected or may not otherwise utilize treatment with KALBITOR, all of which would adversely affect our results of operations and business prospects.

If HAE patients are unable to obtain and maintain reimbursement for KALBITOR from government health administration authorities, private health insurers and other organizations, KALBITOR may be too costly for regular use and our ability to generate product sales would be harmed.

We may not be able to sell KALBITOR on a profitable basis or our profitability may be reduced if we are required to sell our product at lower than anticipated prices or if reimbursement is unavailable or limited in scope or amount. KALBITOR is significantly more expensive than traditional drug treatments and most patients require some form of third party insurance coverage in order to afford its cost. Our future revenues and profitability will be adversely affected if HAE patients cannot depend on governmental, private and other third-party payers, such as Medicare and Medicaid in the United States or country specific governmental organizations, to defray the cost of KALBITOR. If these entities refuse to provide coverage and reimbursement with respect to KALBITOR or determine to provide a lower level of coverage and reimbursement than anticipated, KALBITOR may be too costly for general use, and physicians may not prescribe it.

In addition to potential restrictions on insurance coverage, the amount of reimbursement for KALBITOR may also reduce our ability to profitably commercialize KALBITOR. In the United States and elsewhere, there have been, and we expect there will continue to be, actions and proposals to control and reduce healthcare costs. Government and other third-party payers are challenging the prices charged for healthcare products and increasingly limiting and attempting to limit both coverage and level of reimbursement for prescription drugs.

It is possible that we will never have significant KALBITOR sales revenue in order to achieve or sustain future profitability.

We may not be able to gain or maintain market acceptance among the medical community or patients for KALBITOR which would prevent us from achieving or maintaining profitability in the future.

We cannot be certain that KALBITOR will gain or maintain market acceptance among physicians, patients, healthcare payers, and others.  Although we have received regulatory approval for KALBITOR in the United States, such approval does not guarantee future revenue.  We cannot predict whether physicians, other healthcare providers, government agencies or private insurers will determine that KALBITOR is safe and therapeutically effective relative to cost.  Medical doctors’ willingness to prescribe, and patients’ willingness to accept, KALBITOR depends on many factors, including prevalence and severity of adverse side effects in both clinical trials and commercial use, effectiveness of our marketing strategy and the pricing of KALBITOR, publicity concerning our products or competing products, HAE patient’s ability to obtain and maintain third-party coverage or reimbursement, and availability of alternative treatments.  If KALBITOR fails to achieve market acceptance, we may not be able to market and sell it successfully, which would limit our ability to generate revenue and adversely affect our results of operations and business prospects.

If we fail to comply with continuing regulations, we could lose our approvals to market KALBITOR, and our business would be adversely affected.

We cannot guarantee that we will be able to maintain our regulatory approval for KALBITOR in the United States. We and our future partners, contract manufacturers and suppliers are subject to rigorous and extensive regulation by the FDA, other federal and state agencies, and governmental authorities in other countries.  These regulations continue to apply after product approval, and cover, among other things, testing, manufacturing, quality control, labeling, advertising, promotion, adverse event reporting requirements, and export of biologics.

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As a condition of approval for marketing KALBITOR, the FDA or governmental authorities in other countries may require us to conduct additional clinical trials.  For example, in connection with the approval of KALBITOR in the United States, we have agreed to initiate a Phase 4 clinical study to evaluate immunogenicity and hypersensitivity with exposure to KALBITOR for treatment of acute attacks of HAE.  The FDA can propose to withdraw approval if new clinical data or information shows that KALBITOR is not safe for use or determines that such study is inadequate.  We are required to report any serious and unexpected adverse experiences and certain quality problems with KALBITOR to the FDA and other health agencies.  We, the FDA or another health agency may have to notify healthcare providers of any such developments.  The discovery of any previously unknown problems with KALBITOR, or its manufacturer may result in restrictions on KALBITOR, and the manufacturer or manufacturing facility, including withdrawal of KALBITOR from the market.  Certain changes to an approved product, including the way it is manufactured or promoted, often require prior regulatory approval before the product as modified may be marketed.

Our third-party manufacturing facilities were subjected to inspection prior to grant of marketing approval and are subject to continued review and periodic inspections by the regulatory authorities.  Any third party we would use to manufacture KALBITOR for sale must also be licensed by applicable regulatory authorities.  Although we have established a corporate compliance program, we cannot guarantee that we are and will continue to be in compliance with all applicable laws and regulations. Failure to comply with the laws, including statutes and regulations, administered by the FDA or other agencies could result in:

· administrative and judicial sanctions, including warning letters;

· fines and other civil penalties;

· withdrawal of a previously granted approval;

· interruption of production;

· operating restrictions;

· product recall or seizure; injunctions; and

· criminal prosecution.

The discovery of previously unknown problems with a product, including KALBITOR, or the facility used to produce the product could result in a regulatory authority imposing restrictions on us, or could cause us to voluntarily adopt such restrictions, including withdrawal of KALBITOR from the market.

If we do not maintain our regulatory approval for KALBITOR in the United States, our results of operations and business prospects will be materially harmed.

If the use of KALBITOR harms people, or is perceived to harm patients even when such harm is unrelated to KALBITOR, our regulatory approvals could be revoked or otherwise negatively impacted and we could be subject to costly and damaging product liability claims.

The testing, manufacturing, marketing and sale of drugs for use in humans exposes us to product liability risks.  Side effects and other problems from using KALBITOR could (1) lessen the frequency with which physicians decide to prescribe KALBITOR, (2) encourage physicians to stop prescribing KALBITOR to their patients who previously had been prescribed KALBITOR, (3) cause serious adverse events and give rise to product liability claims against us, and (4) result in our need to withdraw or recall KALBITOR from the marketplace.  Some of these risks are unknown at this time.

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We have tested KALBITOR in only a small number of patients.  As more patients begin to use KALBITOR, new risks and side effects may be discovered, and risks previously viewed as inconsequential could be determined to be significant.  Previously unknown risks and adverse effects of KALBITOR may also be discovered in connection with unapproved, or off-label, uses of KALBITOR.  We do not promote, or in any way support or encourage the promotion of KALBITOR for off-label uses in violation of relevant law, but physicians are permitted to use products for off-label uses.  In addition, we expect to study DX-88 in diseases other than HAE in controlled clinical settings, and expect independent investigators to do so as well.  In the event of any new risks or adverse effects discovered as new patients are treated for HAE, regulatory authorities may revoke their approvals; we may be required to conduct additional clinical trials, make changes in labeling of KALBITOR, reformulate KALBITOR or make changes and obtain new approvals for our and our suppliers’ manufacturing facilities.  We may also experience a significant drop in the potential sales of KALBITOR, experience harm to our reputation and the reputation of KALBITOR in the marketplace or become subject to government investigations or lawsuits, including class actions.  Any of these results could decrease or prevent any sales of KALBITOR or substantially increase the costs and expenses of commercializing and marketing KALBITOR.

We may be sued by people who use KALBITOR, whether as a prescribed therapy, during a clinical trial, during an investigator initiated study, or otherwise.  Any informed consents or waivers obtained from people who enroll in our trials or use KALBITOR may not protect us from liability or litigation.  Our product liability insurance may not cover all potential types of liabilities or may not cover certain liabilities completely.  Moreover, we may not be able to maintain our insurance on acceptable terms.  In addition, negative publicity relating to the use of KALBITOR or a product candidate, or to a product liability claim, may make it more difficult, or impossible, for us to market and sell KALBITOR.  As a result of these factors, a product liability claim, even if successfully defended, could have a material adverse effect on our business, financial condition or results of operations.

During the course of treatment, patients may suffer adverse events, including death, for reasons that may or may not be related to KALBITOR.  Such events could subject us to costly litigation, require us to pay substantial amounts of money to injured patients, delay, negatively impact or end our opportunity to receive or maintain regulatory approval to market KALBITOR, or require us to suspend or abandon our commercialization efforts.  Even in a circumstance in which we do not believe that an adverse event is related to KALBITOR, the investigation into the circumstance may be time consuming or may be inconclusive.  These investigations may interrupt our sales efforts, delay our regulatory approval process in other countries, or impact and limit the type of regulatory approvals KALBITOR receives or maintains.

Although we obtained regulatory approval of KALBITOR for treatment of acute attacks of HAE in patients 16 years and older in the United States, we may be unable to obtain regulatory approval for KALBITOR in any other territory.

Governments in countries outside the United States also regulate drugs distributed in such countries and facilities in such countries where such drugs are manufactured, and obtaining their approvals can also be lengthy, expensive and highly uncertain.  The approval process varies from country to country and the requirements governing the conduct of clinical trials, product manufacturing, product licensing, pricing and reimbursement vary greatly from country to country.  In certain jurisdictions, we are required to finalize operational, reimbursement, price approval and funding processes prior to marketing our products.  We may not receive regulatory approval for KALBITOR in countries other than the United States on a timely basis, if ever.  Even if approval is granted in any such country, the approval may require limitations on the indicated uses for which the drug may be marketed.  Failure to obtain regulatory approval for KALBITOR in territories outside the United States could have a material adverse affect on our business prospects.

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If we are unable to establish and maintain effective sales, marketing and distribution capabilities, or to enter into agreements with third parties to do so, we will be unable to successfully commercialize KALBITOR.

We are marketing and selling KALBITOR ourselves in the United States, and have only limited experience with marketing, sales or distribution of drug products. If we are unable to adequately establish the capabilities to sell, market and distribute KALBITOR, either ourselves or by entering into agreements with others, or to maintain such capabilities, we will not be able to successfully sell KALBITOR. In that event, we will not be able to generate significant product sales. We cannot guarantee that we will be able to establish and maintain our own capabilities or enter into and maintain any marketing or distribution agreements with third-party providers on acceptable terms, if at all.

In the United States, we sell KALBITOR to ABSG which provides an exclusive distribution network for KALBITOR, including a call center to support its commercialization. ABSG in turn sells KALBITOR to health-care providers and hospitals. ABSG does not set or determine demand for KALBITOR. We expect our exclusive distribution arrangement with ABSG to continue for the foreseeable future. Our ability to successfully commercialize KALBITOR will depend, in part, on the extent to which we are able to provide adequate distribution of KALBITOR to patients through ABSG. It is possible that ABSG could change their policies or fees, or both, at some time in the future. This could result in their refusal to distribute smaller volume products such as KALBITOR, or cause higher product distribution costs, lower margins or the need to find alternative methods of distributing KALBITOR. Although we have contractual remedies to mitigate these risks for the three-year term of the contract with ABSG and we also believe we can find alternative distributors on a relatively short notice, our product sales during that period of time may suffer and we may incur additional costs to replace a distributor. A significant reduction in product sales to ABSG, any cancellation of orders they have made with us or any failure to pay for the products we have shipped to them could materially and adversely affect our results of operations and financial condition.

We have hired sales and marketing professionals for the commercialization of KALBITOR throughout the United States. Even with these sales and marketing personnel, we may not have the necessary size and experience of the sales and marketing force and the appropriate distribution capabilities necessary to successfully market and sell KALBITOR. Establishing and maintaining sales, marketing and distribution capabilities are expensive and time-consuming. Our expenses associated with building up and maintaining the sales force and distribution capabilities may be disproportional compared to the revenues we may be able to generate on sales of KALBITOR. We cannot guarantee that we will be successful in commercializing KALBITOR and a failure to do so would adversely affect our business prospects.

If we market KALBITOR in a manner that violates health care fraud and abuse laws, we may be subject to civil or criminal penalties.

In addition to FDA and related regulatory requirements, we are subject to health care “fraud and abuse” laws, such as the federal False Claims Act, the anti-kickback provisions of the federal Social Security Act, and other state and federal laws and regulations. Federal and state anti-kickback laws prohibit, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce, or in return for purchasing, leasing, ordering or arranging for the purchase, lease or order of any health care item or service reimbursable under Medicare, Medicaid, or other federally or state financed health care programs. This statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, patients, purchasers and formulary managers on the other. Although there are a number of statutory exemptions and regulatory safe harbors protecting certain common activities from prosecution, the exemptions and safe harbors are drawn narrowly, and practices that involve remuneration intended to induce prescribing, purchasing, or recommending may be subject to scrutiny if they do not qualify for an exemption or safe harbor.

Federal false claims laws prohibit any person from knowingly presenting, or causing to be presented, a false claim for payment to the federal government, or knowingly making, or causing to be made, a false statement to get a false claim paid. Pharmaceutical companies have been prosecuted under these laws for a variety of alleged promotional and marketing activities, such as allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in promotion for uses that the FDA has not approved, or “off-label” uses, that caused claims to be submitted to Medicaid for non-covered off-label uses; and submitting inflated best price information to the Medicaid Rebate Program.

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Although physicians are permitted to, based on their medical judgment, prescribe products for indications other than those cleared or approved by the FDA, manufacturers are prohibited from promoting their products for such off-label uses. We market KALBITOR for acute attacks of HAE in patients 16 years and older and provide promotional materials and training programs to physicians regarding the use of KALBITOR for this indication. Although we believe our marketing, promotional materials and training programs for physicians do not constitute off-label promotion of KALBITOR, the FDA may disagree. If the FDA determines that our promotional materials, training or other activities constitute off-label promotion of KALBITOR, it could request that we modify our training or promotional materials or other activities or subject us to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure, civil fine and criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they believe that the alleged improper promotion led to the submission and payment of claims for an unapproved use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. Even if it is later determined we are not in violation of these laws, we may be faced with negative publicity, incur significant expenses defending our position and have to divert significant management resources from other matters.

The majority of states also have statutes or regulations similar to the federal anti-kickback law and false claims laws, which apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payer. Sanctions under these federal and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under government programs, criminal fines, and imprisonment. Even if we are not determined to have violated these laws, government investigations into these issues typically require the expenditure of significant resources and generate negative publicity, which would also harm our financial condition. Because of the breadth of these laws and the narrowness of the safe harbors and because government scrutiny in this area is high, it is possible that some of our business activities could come under that scrutiny.

In recent years, several states and localities, including California, the District of Columbia, Maine, Massachusetts, Minnesota, Nevada, New Mexico, Vermont, and West Virginia, have enacted legislation requiring pharmaceutical companies to establish marketing compliance programs, and file periodic reports with the state or make periodic public disclosures on sales, marketing, pricing, clinical trials, and other activities. Similar legislation is being considered in other states. Many of these requirements are new and uncertain, and the penalties for failure to comply with these requirements are unclear. Nonetheless, although we have established compliance policies that comport with the Code of Interactions with Healthcare Providers adopted by Pharmaceutical Research Manufacturers of America (PhRMA Code) and the Office of Inspector General’s (OIG) Compliance Program Guidance for Pharmaceutical Manufacturers, if we are found not to be in full compliance with these laws, we could face enforcement action and fines and other penalties, and could receive adverse publicity.

The FDA is requiring us to implement a Risk Evaluation and Mitigation Strategy (REMS) for KALBITOR. Additionally, the FDA or similar agencies in other jurisdictions may require us to restrict the distribution or use of KALBITOR or other future products or take other potentially limiting or costly actions if we or others identify side effects after the product is on the market.

The FDA is requiring that we implement a REMS for KALBITOR and conduct post-marketing studies to assess a risk of hypersensitivity reactions, including anaphylaxis. The REMS consists of a Medication Guide and a communication plan to healthcare providers.

Regulatory agencies could impose new requirements or change existing regulations or promulgate new ones at any time that may affect our ability to obtain or maintain approval of KALBITOR or future products or require significant additional costs to obtain or maintain such approvals. For example, the FDA or similar agencies in other jurisdictions may require us to restrict the distribution or use of KALBITOR, if we or others identify side effects after KALBITOR is on the market. Changes in KALBITOR’s approval or restrictions on its use could make it difficult to achieve market acceptance, and we may not be able to market and sell KALBITOR successfully, or at all, which would limit our ability to generate product sales and adversely affect our results of operations and business prospects.

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We rely on third-party manufacturers to produce our preclinical and clinical drug supplies and we intend to rely on third parties to produce commercial supplies of KALBITOR and any future approved product candidates. Any failure by a third-party manufacturer to produce supplies for us may delay or impair our ability to develop, obtain regulatory approval for or commercialize our product candidates.

We have relied upon a small number of third-party manufacturers for the manufacture of our product candidates for preclinical and clinical testing purposes and intend to continue to do so in the future. As a result, we depend on collaborators, partners, licensees and other third parties to manufacture clinical and commercial scale quantities of our biopharmaceutical candidates in a timely and effective manner and in accordance with government regulations. If these third party arrangements are not successful, it will adversely affect our ability to develop, obtain regulatory approval for or commercialize our product candidates.

We have identified only a few facilities that are capable of producing material for preclinical and clinical studies and we cannot assure you that they will be able to supply sufficient clinical materials during the clinical development of our biopharmaceutical candidates. Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including reliance on the third party for regulatory compliance and quality assurance, the possibility of breach of the manufacturing agreement by the third party because of factors beyond our control (including a failure to synthesize and manufacture our product candidates in accordance with our product specifications) and the possibility of termination or nonrenewal of the agreement by the third party, based on its own business priorities, at a time that is costly or damaging to us. In addition, the FDA and other regulatory authorities require that our product candidates be manufactured according to cGMP and similar foreign standards. Any failure by our third-party manufacturers to comply with cGMP or failure to scale up manufacturing processes, including any failure to deliver sufficient quantities of product candidates in a timely manner, could lead to a delay in, or failure to obtain, regulatory approval of any of our product candidates.

In addition, as our drug development pipeline increases and matures, we will have a greater need for clinical trial and commercial manufacturing capacity. We do not own or operate manufacturing facilities for the production of clinical or commercial quantities of our product candidates and we currently have no plans to build our own clinical or commercial scale manufacturing capabilities. To meet our projected needs for commercial manufacturing, third parties with whom we currently work will need to increase their scale of production or we will need to secure alternate suppliers.

We are dependent on a single contract manufacturer to produce drug substance for DX-88, which may adversely affect our ability to commercialize KALBITOR and other potential DX-88 products.

We currently rely on by Avecia Biologics Limited, a subsidiary of Merck & Co., Inc. (Avecia), to produce the bulk drug substance used in the manufacture of KALBITOR and other potential DX-88 products. Our business, therefore, faces risks of difficulties with, and interruptions in, performance by Avecia, the occurrence of which could adversely impact the availability and/or sales of KALBITOR and other potential DX-88 products in the future. The failure of Avecia to supply manufactured product on a timely basis or at all, or to manufacture our drug substance in compliance with our specifications or applicable quality requirements or in volumes sufficient to meet demand could adversely affect our ability to sell KALBITOR and other potential DX-88 products, could harm our relationships with our collaborators or customers and could negatively affect our revenues and operating results. If the operations of Avecia are disrupted, we may be forced to secure alternative sources of supply, which may be unavailable on commercially acceptable terms, cause delays in our ability to deliver products to our customers, increase our costs and negatively affect our operating results.

In addition, failure to comply with applicable good manufacturing practices and other governmental regulations and standards could be the basis for action by the FDA or corresponding foreign agency to withdraw approval for KALBITOR or any other product previously granted to us and for other regulatory action, including recall or seizure, fines, imposition of operating restrictions, total or partial suspension of production or injunctions.

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We do not currently have a long-term commercial supply agreement with Avecia for the production of DX-88 drug substance. We are working to establish a long-term supply contract with Avecia or an alternative contract manufacturer. However, we cannot guarantee that we will be able to enter into long-term supply contracts on commercially reasonable terms, or at all. We believe that our current supply of the DX-88 drug substance used to manufacture KALBITOR will be sufficient to meet market demand for KALBITOR well into 2011, but these estimates are subject to changes in market conditions and other factors beyond our control. If we are unable to execute a long-term supply agreement or otherwise secure a dependable source for drug substance before our current inventory of DX-88 drug substance is exhausted, it could adversely affect our ability to further develop and commercialize KALBITOR and other potential DX-88 products, generate revenue from product sales, increase our costs and negatively affect our operating results.

Our biopharmaceutical product candidates must undergo rigorous clinical trials which could substantially delay or prevent their development or marketing.

Before we can commercialize any biopharmaceutical product, we must engage in a rigorous clinical trial and regulatory approval process mandated by the FDA and analogous foreign regulatory agencies. This process is lengthy and expensive, and approval is never certain. Positive results from preclinical studies and early clinical trials do not ensure positive results in late stage clinical trials designed to permit application for regulatory approval. We cannot accurately predict when planned clinical trials will begin or be completed. Many factors affect patient enrollment, including the size of the patient population, the proximity of patients to clinical sites, the eligibility criteria for the trial, alternative therapies, competing clinical trials and new drugs approved for the conditions that we are investigating. As a result of all of these factors, our future trials may take longer to enroll patients than we anticipate. Such delays may increase our costs and slow down our product development and the regulatory approval process. Our product development costs will also increase if we need to perform more or larger clinical trials than planned. The occurrence of any of these events will delay our ability to commercialize products, generate revenue from product sales and impair our ability to become profitable, which may cause us to have insufficient capital resources to support our operations.

Products that we or our collaborators develop could take a significantly longer time to gain regulatory approval than we expect or may never gain approval. If we or our collaborators do not receive these necessary approvals, we will not be able to generate substantial product or royalty revenues and may not become profitable. We and our collaborators may encounter significant delays or excessive costs in our efforts to secure regulatory approvals. Factors that raise uncertainty in obtaining these regulatory approvals include the following:

· we must demonstrate through clinical trials that the proposed product is safe and effective for its intended use;

· we have limited experience in conducting the clinical trials necessary to obtain regulatory approval; and

· data obtained from preclinical and clinical activities are subject to varying interpretations, which could delay, limit or prevent regulatory approvals.

Regulatory authorities may delay, suspend or terminate clinical trials at any time if they believe that the patients participating in trials are being exposed to unacceptable health risks or if they find deficiencies in the clinical trial procedures. There is no guarantee that we will be able to resolve such issues, either quickly, or at all. In addition, our or our collaborators' failure to comply with applicable regulatory requirements may result in criminal prosecution, civil penalties and other actions that could impair our ability to conduct our business.

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We lack experience in and/or capacity for conducting clinical trials and handling regulatory processes. This lack of experience and/or capacity may adversely affect our ability to commercialize any biopharmaceuticals that we may develop.

We have hired experienced clinical development and regulatory staff to develop and supervise our clinical trials and regulatory processes. However, we will remain dependent upon third party contract research organizations to carry out some of our clinical and preclinical research studies for the foreseeable future. As a result, we have had and will continue to have less control over the conduct of the clinical trials, the timing and completion of the trials, the required reporting of adverse events and the management of data developed through the trials than would be the case if we were relying entirely upon our own staff. Communicating with outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. Outside parties may have staffing difficulties, may undergo changes in priorities or may become financially distressed, adversely affecting their willingness or ability to conduct our trials. For example, in 2008, the contract research organization collecting and assembling the data from our EDEMA4 trial announced that it was terminating that line of business, which forced us to find a new contractor and delay the filing of our BLA for HAE by almost two months. We may also experience unexpected cost increases that are beyond our control.

Problems with the timeliness or quality of the work of a contract research organization may lead us to seek to terminate the relationship and use an alternative service provider. However, changing our service provider may be costly and may delay our trials, and contractual restrictions may make such a change difficult or impossible. Additionally, it may be impossible to find a replacement organization that can conduct our trials in an acceptable manner and at an acceptable cost.

Government regulation of drug development is costly, time consuming and fraught with uncertainty, and our products in development cannot be sold if we do not gain regulatory approval.

We and our licensees and partners conduct research, preclinical testing and clinical trials for our product candidates. These activities are subject to extensive regulation by numerous state and federal governmental authorities in the United States, such as the FDA, as well as foreign countries, such as the EMEA in European countries, Canada and Australia. Currently, we are required in the United States and in foreign countries to obtain approval from those countries' regulatory authorities before we can manufacture (or have our third-party manufacturers produce), market and sell our products in those countries. The FDA and other United States and foreign regulatory agencies have substantial authority to fail to approve commencement of, suspend or terminate clinical trials, require additional testing and delay or withhold registration and marketing approval of our product candidates.

Obtaining regulatory approval has been and continues to be increasingly difficult and costly and takes many years, and if obtained is costly to maintain. With the occurrence of a number of high profile safety events with certain pharmaceutical products, regulatory authorities, and in particular the FDA, members of Congress, the United States Government Accountability Office (GAO), Congressional committees, private health/science foundations and organizations, medical professionals, including physicians and investigators, and the general public are increasingly concerned about potential or perceived safety issues associated with pharmaceutical and biological products, whether under study for initial approval or already marketed.

This increasing concern has produced greater scrutiny, which may lead to fewer treatments being approved by the FDA or other regulatory bodies, as well as restrictive labeling of a product or a class of products for safety reasons, potentially including a boxed warning or additional limitations on the use of products, pharmacovigilance programs for approved products or requirement of risk management activities related to the promotion and sale of a product.

If regulatory authorities determine that we or our licensees or partners conducting research and development activities on our behalf have not complied with regulations in the research and development of a product candidate, new indication for an existing product or information to support a current indication, then they may not approve the product candidate or new indication or maintain approval of the current indication in its current form or at all, and we will not be able to market and sell it. If we were unable to market and sell our product candidates, our business and results of operations would be materially and adversely affected.

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Product liability and other claims arising in connection with the testing our product candidates in human clinical trials may reduce demand for our products or result in substantial damages.

We face an inherent risk of product liability exposure related to KALBITOR and the testing our product candidates in human clinical trials.

An individual may bring a product liability claim against us if KALBITOR or one of our product candidates causes, or merely appears to have caused, an injury. Moreover, in some of our clinical trials, we test our product candidates in indications where the onset of certain symptoms or "attacks" could be fatal. Although the protocols for these trials include emergency treatments in the event a patient appears to be suffering a potentially fatal incident, patient deaths may nonetheless occur. As a result, we may face additional liability if we are found or alleged to be responsible for any such deaths.

These types of product liability claims may result in:

· decreased demand for KALBITOR and other product candidates;

· injury to our reputation;

· withdrawal of clinical trial volunteers;

· related litigation costs; and

· substantial monetary awards to plaintiffs.

Although we currently maintain product liability insurance, we may not have sufficient insurance coverage, and we may not be able to obtain sufficient coverage at a reasonable cost. Our inability to obtain product liability insurance at an acceptable cost or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of any products that we or our collaborators develop, including KALBITOR. If we are successfully sued for any injury caused by our products or processes, then our liability could exceed our product liability insurance coverage and our total assets.

Competition and technological change may make our potential products and technologies less attractive or obsolete.

We compete in industries characterized by intense competition and rapid technological change. New developments occur and are expected to continue to occur at a rapid pace. Discoveries or commercial developments by our competitors may render some or all of our technologies, products or potential products obsolete or non-competitive.

Our principal focus is on the development of human therapeutic products. We plan to conduct research and development programs to develop and test product candidates and demonstrate to appropriate regulatory agencies that these products are safe and effective for therapeutic use in particular indications. Therefore our principal competition going forward, as further described below, will be companies who either are already marketing products in those indications or are developing new products for those indications. Many of our competitors have greater financial resources and experience than we do.

For KALBITOR as a treatment for HAE, our principal competitors include:

· CSL Behring— In October 2009, CSL Behring received FDA approval for its plasma-derived C1-esterase inhibitor, known as Berinert®, which is administered intravenously. Berinert was approved for treatment of acute abdominal or facial attacks of HAE in adult and adolescent patients, and has orphan drug designation from the FDA. CSL Behring also completed Mutual Recognition Procedure in December 2008, allowing the sale of Berinert® P in more than 20 European countries. Berinert® P has been sold in a subset of European countries since 1985. Additionally, CSL Behring is also conducting a clinical trial evaluating subcutaneous administration of Berinert.

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· ViroPharma Inc.— In 2008, ViroPharma received FDA approval for its plasma-derived C1-esterase inhibitor, known as Cinryze™, which is administered intravenously. Cinryze was approved for routine prophylaxis against angioedema attacks in adolescent and adult patients with HAE, and has orphan drug designation from the FDA. In June 2009, FDA approved patient labeling for Cinryze to include self-administration for routine prophylaxis, once patients are properly trained by their healthcare provider. In March 2010, ViroPharma initiated a Phase 2 clinical trial of Cinryze for the treatment of acute HAE attacks in children under the age of 12. The company also announced plans for a Phase 2 trial evaluating subcutaneous administration of Cinryze and that it had filed an EU Marketing Authorisation Application for the use of its C1 inhibitor for acute treatment and prophylaxis against HAE.

· Jerini AG/Shire plc—Jerini AG received EU market approval in July 2008 for its bradykinin receptor antagonist, known as Firazyr® (icatibant), which is delivered by subcutaneous injection. In April 2008, the FDA issued a Not Approvable letter for icatibant. Icatibant has orphan drug designations from the FDA and in Europe. In June 2009, Jerini/Shire initiated a new Phase 3 United States trial of icatibant for acute HAE attacks. A study evaluating the safety of self-administered icatibant is ongoing in the EU.

· Pharming Group NV— In September 2009, Pharming filed for market approval from the EMA for its recombinant C1-esterase inhibitor, known as Ruconest (previously Rhucin®) which is delivered intravenously. In June 2010, Pharming announced that it received a positive opinion from the CHMP committee. The company has also reported that a pre-BLA meeting with the FDA occurred in December 2009. Pharming’s recombinant C1-esterase inhibitor has Fast Track status from the FDA and orphan drug designations from the FDA and in Europe.

Other competitors include companies that market or are developing corticosteroid drugs or other anti-inflammatory compounds.

For our potential oncology product candidates, our potential competitors include numerous pharmaceutical and biotechnology companies, many of which have greater financial resources and experience than we do.

In addition, most large pharmaceutical companies seek to develop orally available small molecule compounds against many of the targets for which we and others are seeking to develop antibody, peptide and/or small protein products.

Our phage display technology is one of several technologies available to generate libraries of compounds that can be leveraged to discover new antibody, peptide and/or small protein products. The primary competing technology platforms that pharmaceutical, diagnostics and biotechnology companies use to identify antibodies that bind to a desired target are transgenic mouse technology and the humanization of murine antibodies derived from hybridomas. Medarex (a wholly-owned subsidiary of Bristol-Myers Squibb), Genmab A/S, and PDL Biopharma are leaders in these technologies. Further, other companies such as BioInvent International AB and XOMA Ltd. have access to phage display technology and compete with us by offering licenses and research services to pharmaceutical and biotechnology companies.

In addition, we may experience competition from companies that have acquired or may acquire technology from universities and other research institutions. As these companies develop their technologies, they may develop proprietary positions that may prevent us from successfully commercializing our products.

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If we fail to establish and maintain strategic license, research and collaborative relationships, or if our collaborators are not able to successfully develop and commercialize product candidates, our ability to generate revenues could be adversely affected.

Our business strategy includes leveraging certain product candidates, as well as our proprietary phage display technology, through collaborations and licenses that are structured to generate revenues through license fees, technical and clinical milestone payments, and royalties. We have entered into, and anticipate continuing to enter into, collaborative and other similar types of arrangements with third parties to develop, manufacture and market drug candidates and drug products.

In addition, for us to continue to receive any significant payments from our LFRP related licenses and collaborations and generate sufficient revenues to meet the required payments under our agreement with Cowen Healthcare, the relevant product candidates must advance through clinical trials, establish safety and efficacy, and achieve regulatory approvals, obtain market acceptance and generate revenues.

Reliance on license and collaboration agreements involves a number of risks as our licensees and collaborators:

· are not obligated to develop or market product candidates discovered using our phage display technology;

· may not perform their obligations as expected, or may pursue alternative technologies or develop competing products;

· control many of the decisions with respect to research, clinical trials and commercialization of product candidates we discover or develop with them or have licensed to them;

· may terminate their collaborative arrangements with us under specified circumstances, including, for example, a change of control, with short notice; and

· may disagree with us as to whether a milestone or royalty payment is due or as to the amount that is due under the terms of our collaborative arrangements.

We cannot assure you that we will be able to maintain our current licensing and collaborative efforts, nor can we assure the success of any current or future licensing and collaborative relationships. An inability to establish new relationships on terms favorable to us, work successfully with current licensees and collaborators, or failure of any significant portion of our LFRP related licensing and collaborative efforts would result in a material adverse impact on our business, operating results and financial condition.

Our success depends significantly upon our ability to obtain and maintain intellectual property protection for our products and technologies and upon third parties not having or obtaining patents that would prevent us from commercializing any of our products.

We face risks and uncertainties related to our intellectual property rights. For example:

· we may be unable to obtain or maintain patent or other intellectual property protection for any products or processes that we may develop or have developed;

· third parties may obtain patents covering the manufacture, use or sale of these products or processes, which may prevent us from commercializing any of our products under development globally or in certain regions; or

· our patents or any future patents that we may obtain may not prevent other companies from competing with us by designing their products or conducting their activities so as to avoid the coverage of our patents.

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Patent rights relating to our phage display technology are central to our LFRP. As part of our LFRP, we generally seek to negotiate license agreements with parties practicing technology covered by our patents. In countries where we do not have and/or have not applied for phage display patent rights, we will be unable to prevent others from using phage display or developing or selling products or technologies derived using phage display. In addition, in jurisdictions where we have phage display patent rights, we may be unable to prevent others from selling or importing products or technologies derived elsewhere using phage display. Any inability to protect and enforce such phage display patent rights, whether by any inability to license or any invalidity of our patents or otherwise, could negatively affect future licensing opportunities and revenues from existing agreements under the LFRP.

In all of our activities, we also rely substantially upon proprietary materials, information, trade secrets and know-how to conduct our research and development activities and to attract and retain collaborators, licensees and customers. Although we take steps to protect our proprietary rights and information, including the use of confidentiality and other agreements with our employees and consultants and in our academic and commercial relationships, these steps may be inadequate, these agreements may be violated, or there may be no adequate remedy available for a violation. Also, our trade secrets or similar technology may otherwise become known to, or be independently developed or duplicated by, our competitors.

Before we and our collaborators can market some of our processes or products, we and our collaborators may need to obtain licenses from other parties who have patent or other intellectual property rights covering those processes or products. Third parties have patent rights related to phage display, particularly in the area of antibodies. While we have gained access to key patents in the antibody area through the cross licenses with Affimed Therapeutics AG, Affitech AS, Biosite Incorporated (now owned by Inverness Medical Innovations), CAT, Domantis Limited (a wholly-owned subsidiary of GlaxoSmithKline), Genentech, Inc. and XOMA Ireland Limited, other third party patent owners may contend that we need a license or other rights under their patents in order for us to commercialize a process or product. In addition, we may choose to license patent rights from other third parties. In order for us to commercialize a process or product, we may need to license the patent or other rights of other parties. If a third party does not offer us a needed license or offers us a license only on terms that are unacceptable, we may be unable to commercialize one or more of our products. If a third party does not offer a needed license to our collaborators and as a result our collaborators stop work under their agreement with us, we might lose future milestone payments and royalties, which would adversely affect us. If we decide not to seek a license, or if licenses are not available on reasonable terms, we may become subject to infringement claims or other legal proceedings, which could result in substantial legal expenses. If we are unsuccessful in these actions, adverse decisions may prevent us from commercializing the affected process or products and could require us to pay substantial monetary damages.

We seek affirmative rights of license or ownership under existing patent rights relating to phage display technology of others. For example, through our patent licensing program, we have secured a limited freedom to practice some of these patent rights pursuant to our standard license agreement, which contains a covenant by the licensee that it will not sue us under certain of the licensee's phage display improvement patents. We cannot guarantee, however, that we will be successful in enforcing any agreements from our licensees, including agreements not to sue under their phage display improvement patents, or in acquiring similar agreements in the future, or that we will be able to obtain commercially satisfactory licenses to the technology and patents of others. If we cannot obtain and maintain these licenses and enforce these agreements, this could have a material adverse impact on our business.

Proceedings to obtain, enforce or defend patents and to defend against charges of infringement are time consuming and expensive activities. Unfavorable outcomes in these proceedings could limit our patent rights and our activities, which could materially affect our business.

Obtaining, protecting and defending against patent and proprietary rights can be expensive. For example, if a competitor files a patent application claiming technology also invented by us, we may have to participate in an expensive and time-consuming interference proceeding before the United States Patent and Trademark Office to address who was first to invent the subject matter of the claim and whether that subject matter was patentable. Moreover, an unfavorable outcome in an interference proceeding could require us to cease using the technology or to attempt to license rights to it from the prevailing party. Our business would be harmed if a prevailing third party does not offer us a license on terms that are acceptable to us.

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In patent offices outside the United States, we may be forced to respond to third party challenges to our patents. For example, our first phage display patent in Europe, European Patent No. 436,597, known as the 597 Patent, was ultimately revoked in 2002 in proceedings in the European Patent Office. We are not able to prevent other parties from using certain aspects of our phage display technology in Europe.

The issues relating to the validity, enforceability and possible infringement of our patents present complex factual and legal issues that we periodically reevaluate. Third parties have patent rights related to phage display, particularly in the area of antibodies. While we have gained access to key patents in the antibody area through our cross-licensing agreements with Affimed, Affitech, Biosite, Domantis, Genentech, XOMA and CAT, other third party patent owners may contend that we need a license or other rights under their patents in order for us to commercialize a process or product. In addition, we may choose to license patent rights from third parties. While we believe that we will be able to obtain any needed licenses, we cannot assure you that these licenses, or licenses to other patent rights that we identify as necessary in the future, will be available on reasonable terms, if at all. If we decide not to seek a license, or if licenses are not available on reasonable terms, we may become subject to infringement claims or other legal proceedings, which could result in substantial legal expenses. If we are unsuccessful in these actions, adverse decisions may prevent us from commercializing the affected process or products. Moreover, if we are unable to maintain the covenants with regard to phage display improvements that we obtain from our licensees through our patent licensing program and the licenses that we have obtained to third party phage display patent rights, it could have a material adverse effect on our business.

We would expect to incur substantial costs in connection with any litigation or patent proceeding. In addition, our management's efforts would be diverted, regardless of the results of the litigation or proceeding. An unfavorable result could subject us to significant liabilities to third parties, require us to cease manufacturing or selling the affected products or using the affected processes, require us to license the disputed rights from third parties or result in awards of substantial damages against us. Our business will be harmed if we cannot obtain a license, can obtain a license only on terms we consider to be unacceptable or if we are unable to redesign our products or processes to avoid infringement.

In all of our activities, we substantially rely on proprietary materials and information, trade secrets and know-how to conduct research and development activities and to attract and retain collaborative partners, licensees and customers. Although we take steps to protect these materials and information, including the use of confidentiality and other agreements with our employees and consultants in both academic commercial relationships, we cannot assure you that these steps will be adequate, that these agreements will not be violated, or that there will be an available or sufficient remedy for any such violation, or that others will not also develop the same or similar proprietary information.

Failure to meet our Cowen Healthcare debt service obligations could adversely affect our financial condition and our loan agreement obligations could impair our operating flexibility.

We have a loan with Cowen Healthcare which has an aggregate principal balance of $57.8 million at June 30, 2010. The loan bears interest at a rate of 16% per annum for Tranche A and 21.5% per annum for Tranche B payable quarterly, all of which matures in August 2016. In connection with the loan, we have entered into a security agreement granting Cowen Healthcare a security interest in substantially all of the assets related to our LFRP. We are required to repay the loan based on a percentage of LFRP related revenues, including royalties, milestones, and license fees received by us under the LFRP. If the LFRP revenues for any quarterly period are insufficient to cover the cash interest due for that period, the deficiency may be added to the outstanding loan principal or paid in cash by us. We may prepay the loan in whole or in part at any time after August 2012. In the event of certain changes of control or mergers or sales of all or substantially all of our assets, any or all of the loan may become due and payable at Cowen Healthcare's option, including a prepayment premium prior to August 2012. We must comply with certain loan covenants which if not observed could make all loan principal, interest and all other amounts payable under the loan immediately due and payable.

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Our obligations under the Cowen Healthcare agreement require that we dedicate a substantial portion of cash flow from our LFRP receipts to service the loan, which will reduce the amount of cash flow available for other purposes. If the LFRP fails to generate sufficient receipts to fund quarterly principal and interest payments to Cowen, we will be required to fund such obligations from cash on hand or from other sources, further decreasing the funds available to operate our business. In the event that amounts due under the loan are accelerated, payment would significantly reduce our cash, cash equivalents and short-term investments and we may not have sufficient funds to pay the debt if any of it is accelerated.

As a result of the security interest granted to Cowen Healthcare, we are restricted in our ability to sell our rights to part or all of those assets, or take certain other actions, without first obtaining permission from Cowen. This requirement could delay, hinder or condition our ability to enter into corporate partnerships or strategic alliances with respect to these assets.

The obligations and restrictions under the Cowen Healthcare agreement may limit our operating flexibility, make it difficult to pursue our business strategy and make us more vulnerable to economic downturns and adverse developments in our business.

If we lose or are unable to hire and retain qualified personnel, then we may not be able to develop our products or processes.

We are highly dependent on qualified scientific and management personnel, and we face intense competition from other companies and research and academic institutions for qualified personnel. If we lose an executive officer, a manager of one of our principal business units or research programs, or a significant number of any of our staff or are unable to hire and retain qualified personnel, then our ability to develop and commercialize our products and processes may be delayed which would have an adverse effect on our business, financial condition, and results of operations.

We use and generate hazardous materials in our business, and any claims relating to the improper handling, storage, release or disposal of these materials could be time-consuming and expensive.

Our phage display research and development involves the controlled storage, use and disposal of chemicals and solvents, as well as biological and radioactive materials. We are subject to foreign, federal, state and local laws and regulations governing the use, manufacture and storage and the handling and disposal of materials and waste products. Although we believe that our safety procedures for handling and disposing of these hazardous materials comply with the standards prescribed by laws and regulations, we cannot completely eliminate the risk of contamination or injury from hazardous materials. If an accident occurs, an injured party could seek to hold us liable for any damages that result and any liability could exceed the limits or fall outside the coverage of our insurance. We may not be able to maintain insurance on acceptable terms, or at all. We may incur significant costs to comply with current or future environmental laws and regulations.

Our business is subject to risks associated with international contractors and exchange rate risk.

Since the closing of our European subsidiary operations in 2008, none of our business is conducted in currencies other than our reporting currency, the United States dollar. We do, however, rely on an international contract manufacturer for the production of our drug substance for DX-88. We recognize foreign currency gains or losses arising from our transactions in the period in which we incur those gains or losses. As a result, currency fluctuations among the United States dollar and the currencies in which we do business have caused foreign currency transaction gains and losses in the past and will likely do so in the future. Because of the variability of currency exposures and the potential volatility of currency exchange rates, we may suffer significant foreign currency transaction losses in the future due to the effect of exchange rate fluctuations.

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Compliance with changing regulations relating to corporate governance and public disclosure may result in additional expenses.

Keeping abreast of, and in compliance with, changing laws, regulations, and standards relating to corporate governance and public disclosure, including the Sarbanes-Oxley Act of 2002, new SEC regulations, and NASDAQ Global Market rules, have required an increased amount of management attention and external resources. We intend to invest all reasonably necessary resources to comply with evolving corporate governance and public disclosure standards, and this investment may result in increased general and administrative expenses and a diversion of management time and attention from revenue-generating activities to compliance activities.

We may not succeed in acquiring technology and integrating complementary businesses.

We may acquire additional technology and complementary businesses in the future. Acquisitions involve many risks, any one of which could materially harm our business, including:

· the diversion of management's attention from core business concerns;

· the failure to exploit acquired technologies effectively or integrate successfully the acquired businesses;

· the loss of key employees from either our current business or any acquired businesses; and

· the assumption of significant liabilities of acquired businesses.

We may be unable to make any future acquisitions in an effective manner. In addition, the ownership represented by the shares of our common stock held by our existing stockholders will be diluted if we issue equity securities in connection with any acquisition. If we make any significant acquisitions using cash consideration, we may be required to use a substantial portion of our available cash. If we issue debt securities to finance acquisitions, then the debt holders would have rights senior to the holders of shares of our common stock to make claims on our assets and the terms of any debt could restrict our operations, including our ability to pay dividends on our shares of common stock. Acquisition financing may not be available on acceptable terms, or at all. In addition, we may be required to amortize significant amounts of intangible assets in connection with future acquisitions. We might also have to recognize significant amounts of goodwill that will have to be tested periodically for impairment. These amounts could be significant, which could harm our operating results.

Risks Related To Our Common Stock

Our common stock may continue to have a volatile public trading price and low trading volume.

The market price of our common stock has been highly volatile. Since our initial public offering in August 2000 through June 30, 2010, the price of our common stock on the NASDAQ Global Market has ranged between $54.12 and $1.05. The market has experienced significant price and volume fluctuations for many reasons, some of which may be unrelated to our operating performance.

  Many factors may have an effect on the market price of our common stock, including:

· public announcements by us, our competitors or others;

· developments concerning proprietary rights, including patents and litigation matters;

· publicity regarding actual or potential clinical results or developments with respect to products or compounds we or our collaborators are developing;

· regulatory decisions in both the U.S. and abroad;

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· public concern about the safety or efficacy of new technologies;

· issuance of new debt or equity securities;

· general market conditions and comments by securities analysts; and

· quarterly fluctuations in our revenues and financial results.

  While we cannot predict the effect that these factors may have on the price of our common stock, these factors, either individually or in the aggregate, could result in significant variations in price during any given period of time.

Anti-takeover provisions in our governing documents and under Delaware law and our shareholder rights plan may make an acquisition of us more difficult.

  We are incorporated in Delaware. We are subject to various legal and contractual provisions that may make a change in control of us more difficult. Our board of directors has the flexibility to adopt additional anti-takeover measures.

  Our charter authorizes our board of directors to issue up to 1,000,000 shares of preferred stock and to determine the terms of those shares of stock without any further action by our stockholders. If the board of directors exercises this power to issue preferred stock, it could be more difficult for a third party to acquire a majority of our outstanding voting stock. Our charter also provides staggered terms for the members of our board of directors. This may prevent stockholders from replacing the entire board in a single proxy contest, making it more difficult for a third party to acquire control of us without the consent of our board of directors. Our equity incentive plans generally permit our board of directors to provide for acceleration of vesting of options granted under these plans in the event of certain transactions that result in a change of control. If our board of directors used its authority to accelerate vesting of options, then this action could make an acquisition more costly, and it could prevent an acquisition from going forward. Our shareholder rights plan could result in the significant dilution of the proportionate ownership of any person that engages in an unsolicited attempt to take over our company and, accordingly, could discourage potential acquirers.

  Section 203 of the Delaware General Corporation Law prohibits a person from engaging in a business combination with any holder of 15% or more of its capital stock until the holder has held the stock for three years unless, among other possibilities, the board of directors approves the transaction. This provision could have the effect of delaying or preventing a change of control of Dyax, whether or not it is desired by or beneficial to our stockholders.

  The provisions described above, as well as other provisions in our charter and bylaws and under the Delaware General Corporation Law, may make it more difficult for a third party to acquire our company, even if the acquisition attempt was at a premium over the market value of our common stock at that time.

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Item 6 – EXHIBITS

EXHIBIT NO.	DESCRIPTION
3.1	Amended and Restated Certificate of Incorporation of the Company. Filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2008 and incorporated herein by reference.
3.2	Amended and Restated By-laws of the Company. Filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2008 and incorporated herein by reference.
10.1†	Royalty Interest Purchase Agreement between the Company and KGH Domestic III, LP dated April 16, 2010. Filed herewith.
10.2†	Joint Development and License Agreement between the Company and Defiante Farmaceutica S.A. dated June 18, 2010. Filed herewith.
10.3	Company’s Amended and Restated 1995 Equity Incentive Plan. Filed herewith.
31.1	Certification of Chief Executive Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
32	Certification pursuant to 18 U.S.C. Section 1350. Filed herewith.

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

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DYAX CORP.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	DYAX CORP.
Date: August 2, 2010
	/s/ George Migausky
	George Migausky
	Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

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DYAX CORP.

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
3.1	Amended and Restated Certificate of Incorporation of the Company. Filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2008 and incorporated herein by reference.
3.2	Amended and Restated By-laws of the Company. Filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2008 and incorporated herein by reference.
10.1†	Royalty Interest Purchase Agreement between the Company and KGH Domestic III, LP dated April 16, 2010. Filed herewith.
10.2†	Joint Development and License Agreement between the Company and Defiante Farmaceutica S.A. dated June 18, 2010. Filed herewith.
10.3	Company’s Amended and Restated 1995 Equity Incentive Plan. Filed herewith.
31.1	Certification of Chief Executive Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
32	Certification pursuant to 18 U.S.C. Section 1350. Filed herewith.

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

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EX-10.1

Exhibit 10.1

EXECUTION VERSION

Confidential materials omitted and filed separately with the Securities and Exchange

Commission.  Asterisks denote such omission.

ROYALTY INTEREST PURCHASE AGREEMENT

Dated as of April 16, 2010

among

DYAX CORP.

and

KGH Domestic III, LP

Exhibit 10.1

EXECUTION VERSION

Confidential materials omitted and filed separately with the Securities and Exchange

Commission.  Asterisks denote such omission.

ROYALTY INTEREST PURCHASE AGREEMENT

ROYALTY INTEREST PURCHASE AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”) is made and entered into as of April 16, 2010 (the “Effective Date”) by and among DYAX CORP., a Delaware company ( “Dyax”) and KGH Domestic III, LP, a Delaware limited partnership (the “Buyer”).

WHEREAS, Dyax wishes to sell, assign, convey and transfer to the Buyer, and the Buyer wishes to purchase from Dyax, the Royalty Interests (as defined below), upon and subject to the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the mutual covenants, agreements representations and warranties set forth herein, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01  Definitions.

“2010 Milestone Payment” shall have the meaning set forth in Section 2.02(a)(ii)(C).

“2010 Net Sales” shall mean Worldwide Net Sales for the twelve (12) month period ending on December 31, 2010.

“2011 Milestone Payment” shall have the meaning set forth in Section 2.02(a)(iii)(B).

“2011 Net Sales” shall mean Worldwide Net Sales for the twelve (12) month period ending on December 31, 2011.

“Accelerated Payment” shall mean an amount equal to an amount that would generate an internal rate of return of [*****], less all Included Products Payments and any other amounts paid to the Buyer prior to the relevant Accelerated Payment Triggering Event.

“Accelerated Payment Triggering Event” shall mean any of the following events:

(a)           Dyax’s failure to pay any required maintenance fees and annuities for any  Dyax Patent in any country, together with all such other costs contemplated by the last sentence of Section 2.02(b) below, before the applicable due date and the expiration of any permitted grace period provided under applicable law, if such failure to pay results in (i) termination by Wyeth of the Wyeth License Agreement or (ii) a reduction in the amount of Included Product Payments made to Buyer in respect of such [*****];

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(b)           Dyax’s breach of Section 2.03(a)(i), Section 2.03(a)(iii), Section 2.06, or Section 5.09(a) and such breach is not cured within thirty (30) days of Buyer’s notice of such breach to Dyax;

(c)           Dyax’s breach of Section 3.18(c), Section 5.05, Section 5.08(a), Section 5.08(b), or the second sentence of Section 5.08(i), provided that with respect to a breach of Section 5.08(b), it shall not be deemed an Accelerated Payment Triggering Event if the breach of Section 5.08(b) was due to a waiver described in clauses (ii) or (iii) of such Section and such waiver does not result in more than [*****], in the aggregate, in the Included Product Payments;

(d)           Dyax’s failure to comply with Buyer’s directions or instructions provided to Dyax under Section 5.01(b), Section 5.08(e), or Section 5.08(g)(ii), and such failure is not cured within thirty (30) days of Buyer’s notice of such failure to Dyax; or

(e)           Dyax’s exercise of its remedy under Section 3.5 of the Wyeth License Agreement without the Buyer’s prior written consent.

“Actual Knowledge” shall mean, with respect to Dyax, the actual knowledge of an officer or senior manager or other person with similar responsibility, regardless of title, of Dyax relating to a particular matter.  For the avoidance of doubt, a person charged with responsibility for the aspect of the business relevant or related to the matter at issue shall not be deemed to have actual knowledge of a matter unless it can be shown, through written or other similarly reliable evidence (including deposition testimony), that such person was contemporaneously and actually aware of such matter, whether or not, in the prudent exercise of his or her duties and responsibilities in the ordinary course of business, such person should have known of such matter.

“Affiliate” shall mean, with respect to any Person, any other Person that, directly or indirectly, controls, is controlled by, or is under common control with, such Person.  For purposes of this definition, a Person shall be regarded as in “control” of another Person if it directly or indirectly owns or controls more than fifty percent (50%) of the voting securities of such Person, or if it possesses, directly or indirectly, the power to direct or cause the direction of management and policies of such Person or the power to elect or appoint more than fifty percent (50%) of the members of the governing body of the corporation or other entity.

“Agreement” shall have the meaning set forth in the first paragraph hereof.

“Audit Costs” shall mean, with respect to any audit of the books and records of Dyax with respect to amounts payable or paid under this Agreement or any License Party Audit, the cost of such audit, including all fees, costs and expenses incurred in connection therewith.

“Audit Reports” shall mean, with respect to a License Party Audit, any and all reports, findings and other written information related to such License Party Audit.

“Bankruptcy” means with respect to a Person:

(a)           an authorized officer of that Person admits in writing such Person’s inability to pay its debts generally, or that Person makes an assignment for the benefit of creditors or commits an act of insolvency or bankruptcy within the meaning of applicable law; or

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

2

(b)           any proceeding, voluntary or involuntary, is commenced respecting that Person pursuant to any statute relating to bankruptcy, insolvency, reorganization of debts, liquidation, winding up or dissolution; provided, however, in the case of any involuntary bankruptcy proceeding such Person shall be considered to be in “Bankruptcy” only if that Person consents to the involuntary bankruptcy or such proceeding is not dismissed within [*****] of the filing thereof; or

(c)           any receiver, manager, trustee, sequester, custodian or liquidator or person with similar powers is appointed judicially or extrajudicially for that Person or for any material portion of its property, and such receiver, manager, trustee, sequester, custodian, liquidator or other person is not dismissed within [*****] of its appointment; or

(d)           that Person ceases to carry on business in the ordinary course.

“Bill of Sale” shall mean the Bill of Sale pursuant to which Dyax shall assign to the Buyer all of its rights and interests in and to the Royalty Interests purchased hereunder, which Bill of Sale shall be substantially in the form of Exhibit A.

“BLA” shall mean a Biologics License Application, and all amendments and supplements thereto, for regulatory approval by the FDA as defined in 21 C.F.R. § 601.2 et seq., as such act or regulations may be amended, supplemented or replaced from time to time, or an equivalent application for approval filed with a Regulatory Agency in any other jurisdiction within the Territory.

“Business Day” shall mean any day other than a Saturday, a Sunday, any day which is a legal holiday under the laws of the State of New York or any day on which banking institutions located in the State of New York are required by law or other governmental action to close.

“Buyer” shall have the meaning set forth in the first paragraph hereof.

“Buyer Account” shall mean an account maintained by the Buyer at any financial institution and designated in writing by the Buyer to Dyax, as the Buyer may so designate from time to time.

“Buyer Consultants” shall mean the Buyer’s and its Affiliates’ employees, officers, directors, legal and accounting advisors, agents or other authorized representatives.

“Buyer Indemnified Party” shall have the meaning set forth in Section 8.05(a).

“Closing” shall have the meaning set forth in Section 6.01.

“Closing Date” shall have the meaning set forth in Section 6.01.

“Collateral” shall mean the property included in the definition of “Collateral” in the Security Agreement.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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“Commercially Reasonable Efforts” shall mean, with respect to Dyax or any other Dyax Entity, efforts and resources commonly used by biotechnology companies of a similar size to Dyax and the other Dyax Entities on a consolidated basis, assuming such Persons possessed all rights provided to Dyax under the Included License Agreements, had not entered into the Transaction Documents and were otherwise in a similar business position to that of Dyax and the other Dyax Entities on a consolidated basis as of the time immediately prior to the Closing, and including, without limitation taking such steps as are necessary or desirable to comply with Dyax’s obligations under the Included License Agreements.

“Competitive Product” shall mean any product (other than an Included Product) that has been approved by the FDA or with a Regulatory Agency in any country outside of the United States for substantially the same indication(s) as any Included Product.

“Confidential Information” shall mean all trade secrets and confidential know-how, confidential business information, financial data and other like information.

“Contract Party” shall mean any party to an Included License Agreement.

“Cowen Agreement” shall mean the Amended and Restated Loan Agreement dated as of March 18, 2009 between Cowen Healthcare Royalty Partners, L.P. and Dyax.

“Cowen Liens” shall mean Liens created in favor of Cowen Healthcare Royalty Partners, L.P. pursuant to the transactions contemplated by the Cowen Agreement.

“Discrepancy Notice” shall have the meaning set forth in Section 5.02(d).

“Disputes” shall have the meaning set forth in Section 3.12(m).

“Dyax” shall have the meaning set forth in the first paragraph hereof.

“Dyax Account” shall have the meaning set forth in Section 2.02(c).

“Dyax Entities” shall mean, individually and collectively, Dyax and its Affiliates.

“Dyax Indemnified Party” shall have the meaning set forth in Section 8.05(b).

“Dyax IP” shall mean the Dyax Patents and the Dyax Know-How.

“Dyax Know-How” shall mean the confidential and proprietary information of Dyax, whether or not patentable, constituting materials, methods, protocols, processes, techniques, information and data relating to any Dyax Product (in written or tangible form) under the terms of any Included License Agreement.

“Dyax Patents” shall mean the patents and patent applications set forth on Schedule 3.12(b), together with all U.S. and foreign patent applications claiming priority therefrom, and any patents, continuations, continuations-in-part, divisionals, reissues, reexaminations, renewals, or extensions thereof, and any additional patent rights which claim a Dyax Product or its manufacture or use.

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“Dyax Product” shall have the meaning attributed to such term in the Wyeth License Agreement.

“Effective Date” shall have the meaning set forth in the first paragraph hereof.

“Excluded Liabilities and Obligations” shall have the meaning set forth in Section 2.04.

“FDA” shall mean the United States Food and Drug Administration.

“Financial Model” shall mean the financial projections prepared by Dyax for the Included Product Payments, [*****].

“Financial Statements” shall mean the consolidated balance sheets of Dyax and its subsidiaries prepared in accordance with GAAP at December 31, 2008 and December 31, 2009, the related consolidated statements of operations, cash flows and changes in stockholders’ equity of Dyax and its subsidiaries audited for the years ended December 31, 2007, December 31, 2008 and December 31, 2009, and the accompanying footnotes thereto, which are included in Dyax’s Annual Report on Form 10-K for the year ended December 31, 2009 filed with the Securities and Exchange Commission on March 12, 2010.

“GAAP” shall mean United States generally accepted accounting principles.

“Generic Application” shall mean an abbreviated new drug application, ANDA, 505(b)(2) application under the United States Federal Food, Drug and Cosmetic Act and/or any similar abbreviated approval process for biologics or biosimilars filed with the FDA in the United States or with a Regulatory Agency in any other jurisdiction.

“Government Authority” shall mean any government, court, regulatory or administrative agency or commission, or other governmental authority, agency or instrumentality, whether foreign, federal, state or local (domestic or foreign), including patent and trademark agencies, the FDA or any other government authority in any country.

“Included License Agreements” shall mean, collectively, (a) the Wyeth License Agreement (including any amendments thereto), and (b) any Successor Agreement.

“Included Products” shall mean, collectively, (a) the Wyeth Licensed Products, and (b) any follow-on, comparable or related products, including combination products, in the Territory covered by or using any Dyax IP under any Included License Agreement.

“Included Products Payments” shall mean the gross amount of all royalties, royalty payments, profit payments or distributions, license fees, maintenance fees, benchmark payments, settlement payments, judgment payments and securities and any collections, recoveries, payments, supplements or other compensation made in lieu thereof and any other remuneration of any kind received or payable in accordance with the terms of any Included License Agreement in respect of (a) the Included Products (including pursuant to Section 3.2, Section 3.3 (including as may be adjusted pursuant to Section 3.5) and Section 3.4 of the Wyeth License Agreement), and (b) the Dyax IP in respect of any Competitive Product, in each case including pursuant to Section 365(n) of the U.S. Bankruptcy Code, without any deductions for any withholding, offset or other deduction by the licensee thereunder of any taxes, assessments, fees or charges of the United States or any of the individual states thereof against the stated gross royalties or other payments under such Included License Agreement.  Included Product Payments shall include any and all royalties and other payments paid to Dyax or any Dyax Entity by a Third Party in respect of any license or other rights granted to such Third Party under the Dyax IP for human therapeutic use in the event that Wyeth’s license under the Wyeth License Agreement is (x) converted to a non-exclusive license and the royalties paid by Wyeth under the Wyeth License Agreement are reduced or (y) terminated or expired.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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“Included Reports” shall mean, with respect to the relevant calendar quarter, all royalty reports, other payment information and all other correspondence received by a Dyax Entity from a Contract Party in connection with an Included License Agreement.

“IND” shall mean an investigational new drug application as defined in 21 C.F.R. Section 312 et seq. filed with the FDA in the United States or an equivalent application filed with a Regulatory Agency in any other jurisdiction within the Territory.

“Independent Accountants” shall have the meaning set forth in Section 5.02(d).

“Investment” shall mean all amounts payable to Dyax pursuant to Section 2.02(a).

“Knowledge” shall mean, with respect Dyax, the knowledge of an officer or senior manager or other person with similar responsibility, regardless of title, of Dyax relating to a particular matter; provided, however, that a person charged with responsibility for the aspect of the business relevant or related to the matter at issue shall be deemed to have knowledge of a particular matter if, in the prudent exercise of his or her duties and responsibilities in the ordinary course of business, such person should have known of such matter, it being understood that such proviso shall not be deemed to require Dyax to commission any patent clearance or validity study or any patent search of any third party patent databases not already commissioned on or prior to the Effective Date.

“License Party Audit” shall have the meaning set forth in Section 5.02(e).

“Liens” shall mean all liens, encumbrances, security interests, mortgages, rights to preferential payments or charges of any kind.

“Losses” shall mean collectively, any and all claims, damages, losses, judgments, liabilities, costs and expenses (including reasonable expenses of investigation and reasonable attorney’s fees and expenses in connection with any action, suit or proceeding).

“Material Adverse Change” shall mean (a) any material impairment of or material adverse change in (i) the validity or enforceability of any of the Transaction Documents, (ii) the ability of any Dyax Entity to satisfy and perform any of its obligations under any of the Transaction Documents or consummate the transactions contemplated thereby, (iii) the right of any Dyax Entity to receive any material payments payable under any [*****] or any other material rights and remedies of any Dyax Entity under any [*****], or (iv) the right of the Buyer [*****] or any other payment or right due to the Buyer under the Transaction Documents; (b) a material adverse change affecting the Included Products or in the level of current or expected future Included Products Payments (based upon the Financial Model); (c) any Bankruptcy of Dyax, (d) any material adverse change in the business, operations, asset or financial condition of any Dyax Entity, taken as a whole, that could reasonably be expected to have a material adverse effect on the ability of that Dyax Entity to perform any of its obligations under this Agreement or any of the Transaction Documents (if applicable to that Dyax Entity) or (e) any material impairment of the validity, enforceability or transferability of any Dyax IP, any material challenge to or any material litigation involving any Dyax IP, or any material impairment of the prospects for any renewal or extension of the term of any Dyax IP.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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“NDA” shall mean a New Drug Application, and all amendments and supplements thereto, for regulatory approval by the FDA as defined in 21 C.F.R. § 314.50 et seq., as such act or regulations may be amended, supplemented or replaced from time to time, or an equivalent application for approval filed with a Regulatory Agency in any other jurisdiction within the Territory.

“Net Sales” shall have the meaning attributed to such term in the Wyeth License Agreement, it being understood “Net Sales” be first calculated in the currency of sale and then converted into U.S. dollars at the conversation rate existing in the United States (as reported in the Wall Street Journal) on the last working day of the calendar quarter preceding the applicable calendar quarter.

“Obligations” shall mean any and all obligations of Dyax under this Agreement and the other Transaction Documents whenever arising.

“Organizational Documents” shall mean, with regard to any Dyax Entity: (a) its certificate of incorporation or other similar document, (b) its by-laws or other similar document, (c) any certificate of designation or instrument relating to the rights of preferred stockholders or other equity holders of such Dyax Entity, and (d) any stockholder rights agreement, registration rights agreement or other similar agreement relating to such Dyax Entity.

“Patent Office” shall mean the respective patent office (foreign or domestic) for any patent or patent application.

“Payment Shortfall” shall have the meaning set forth in Section 2.06.

“Permitted Liens” shall mean, collectively, (a) Liens created in favor of Buyer pursuant to the Security Agreement and any other Transaction Document, and (b) tax liens or assessments and other governmental levies that are not yet due and payable or similar non-consensual liens for amounts not yet due and payable.

“Person” shall mean an individual, corporation, partnership, association, trust or other entity or organization, but not including a government or political subdivision or any agency or instrumentality of such government or political subdivision.

“Pre-Closing Royalty Payments” shall mean (a) any and all Included Product Payments due to Dyax as a result of Net Sales of the Included Products from January 1, 2010 until the date on which the Closing shall have occurred and (b) the [*****].

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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“Regulatory Agency” shall mean a Government Authority with responsibility for the enforcement of applicable legislation and supervision of approval marketing, sale and use of drugs in any country.

“Regulatory Approvals” shall mean, collectively, all INDs, BLAs, NDAs and other regulatory approvals, registrations and associated materials (including the product dossier) issued by the FDA, a Regulatory Agency in any other jurisdiction or any other Government Authority, and all reports, correspondence and other submissions related thereto and the regulatory and clinical files and data pertaining thereto, and all information, data, know-how, formulations, assays or other intellectual property contained in such INDs, BLAs and the NDAs, together with all amendments, supplements and updates thereto and all comparable regulatory approvals, registrations and associated materials.

“Royalty Interests” shall mean (a) all Included Products Payments from January 1, 2010 and through the Royalty Interest Termination Date, and any other amounts payable to the Buyer hereunder pursuant to Section 2.03, (b) the right to receive Included Reports from Dyax, (c) the right to inspect and audit the books and records of any Person as contemplated under the Included License Agreements, and (d) the right to enforce Dyax’s rights under the Included License Agreements and the right to exercise all remedies of Dyax under the Included License Agreements, including the right to cause others to perform or subcontract the exercise of such remedies.

“Royalty Interest Termination Date” shall mean, with respect to the Included Products, the later of (a) the date on which all obligations of the Contract Parties under the Included Licensed Agreements to pay Included Product Payments expire in accordance with the terms of such agreements and (b) the date on which Dyax’s rights to enforce the Included License Agreements with respect to Included Product Payments expires.

“Security Agreement” shall mean the Security Agreement dated as of the Closing Date substantially in the form of Exhibit B by and between Dyax and the Buyer providing for, among other things, the grant by Dyax in favor of the Buyer of a valid continuing, first perfected lien on and security interest in, the Collateral described therein.

“Security Interest Release Date” shall mean for Collateral relating to a particular Included Product, the date on which no additional amounts are payable under any Included License Agreement in respect of such Included Product.

“Successor Agreement” shall mean any successor or follow-on agreement(s) to the Wyeth License Agreement covering substantially the same subject matter (i.e., covering the same or substantially the same products) as the Wyeth License Agreement.

“Term” shall mean the term of this Agreement, which shall commence on the Effective Date and terminate on the Royalty Interest Termination Date.

“Term Sheet” shall mean the letter, dated February 10, 2010, between Dyax and Paul Capital Advisors, LLC (including all exhibits and annexes thereto).

“Territory” shall mean worldwide.

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“Third Party” shall mean a Person that is not an Affiliate of any party to this Agreement.

“Transaction Documents” shall mean, collectively, this Agreement, the Security Agreement (including the Patent Security Agreement executed pursuant thereto) and the Bill of Sale.

“Transfer” or “Transferred” shall mean any sale, conveyance, assignment, disposition, license, sublicense, co-promotion agreement, or other form of transfer.

“UCC” shall mean the Uniform Commercial Code (or any similar or equivalent legislation) as in effect in any applicable jurisdiction.

“Worldwide Net Sales” shall mean Net Sales worldwide for the Included Products for which the Buyer has actually received Included Product Payments pursuant to this Agreement.

“Wyeth” shall mean Genetics Institute, Inc., and any successor company by way of merger, consolidation or otherwise.

“Wyeth Acknowledgement Letter” has the meaning set forth in Section 5.07.

“Wyeth License Agreement” shall mean the License Agreement, dated November 22, 2000, between Dyax and Wyeth, as such agreement may be amended, replaced, succeeded or substituted from time to, time with the written consent of Buyer.

“Wyeth Licensed Products” shall have the meaning given to the term “Licensed Product” in the Wyeth License Agreement, including the products currently marketed as Xyntha® and Refacto® AF, in any formulation, dosage, concentration, volume or method of delivery, together with all label expansions, line extensions, improvements and modifications thereon and thereof from time to time, and any successor, follow-on or related products, including combination products, for which any Dyax Entity is entitled pursuant to the Wyeth License Agreement to receive payments in the Territory.

Section 1.02  Rules of Construction.

(a)           The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined.

(b)           Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms.

(c)           The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.”

(d)           The word “will” shall be construed to have the same meaning and effect as the word “shall.”

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(e)           Unless the context requires otherwise (i) any definition of or reference to any agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (ii) any reference herein to any person shall be construed to include such person’s successors and assigns (subject to any restrictions on such assignments set forth herein), (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (iv) all references herein to Articles, Sections, Schedules and Exhibits shall be construed to refer to Articles and Sections of, and Schedules and Exhibits to, this Agreement, (v) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, (vi) any reference to any law, rule or regulation shall be construed to mean that law, rule or regulation as amended and in effect from time to time, and (vii) references to an agreement shall refer to such agreement as amended, restated or novated from time to time.  Where either Party’s consent or approval is required hereunder, except as otherwise specified herein, such Party’s consent or approval may be granted or withheld in such Party’s sole discretion.

(f)           Each covenant in this Agreement shall be given independent effect, and the fact that any act or omission may be permitted by one covenant and prohibited or restricted by any other covenant (whether or not dealing with the same or similar events) shall not be construed as creating any ambiguity, conflict or other basis to consider any matter other than the express terms hereof in determining the meaning or construction of such covenants and the enforcement thereof in accordance with their respective terms.

(g)           This Agreement is being entered into by and between competent and sophisticated parties who are experienced in business matters and represented by legal counsel and other advisors, and has been reviewed by the parties and their legal counsel and other advisors.  Therefore, any ambiguous language in this Agreement will not be construed against any particular party as the drafter of the language.

ARTICLE II

PURCHASE AND SALE OF ROYALTY INTERESTS

Section 2.01  Purchase and Sale.

Upon the terms and subject to the conditions set forth in this Agreement, and subject to the Closing, Dyax agrees to sell, assign, transfer and convey to the Buyer, and the Buyer agrees to purchase from Dyax, free and clear of all Liens (other than Liens created in favor of Buyer pursuant to the Security Agreement and any other Transaction Document), all of Dyax’s and the other Dyax Entities’ respective rights, title and interests in and to the Royalty Interests.

Section 2.02  Investment; Other Payments.

(a)           In full consideration for the sale, assignment, transfer and conveyance of the Royalty Interests, and subject to the terms and conditions set forth herein, the Buyer shall pay to Dyax, or its designee, upon the Closing:

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(i)           Ten million dollars ($10,000,000), less the Pre-Closing Royalty Payments, payable at Closing;

(ii)          The following milestone payment, if any:

(A)  Two million dollars ($2,000,000), payable on or before March 31, 2011, if 2010 Net Sales exceed [*****];

(B)  [*****], payable on or before March 31, 2011, if 2010 Net Sales are less than or equal to [*****] but equal or exceed [*****]; or

(C)  [*****], payable on or before March 31, 2011, if 2010 Net Sales are less than [*****] but equal or [*****] (the milestone payment, if any, made pursuant to clause (A), (B), or (C) above, the “2010 Milestone Payment”); and

(iii)         The following milestone payment, if any:

(A)  Two million dollars ($2,000,000), less the amount of any 2010 Milestone Payment, payable on or before March 31, 2012, if 2011 Net Sales exceed [*****]; or

(B)  [*****] if (x) 2011 Net Sales are less than or equal to [*****] but equal or exceed [*****] and (y) the 2010 Milestone Payment specified in Sections 2.02(a)(ii)(A) or (B) was not paid (the milestone payment, if any, made pursuant to clause (A) or (B) above, the “2011 Milestone Payment”).

For avoidance of doubt, the maximum amount of milestone payments, in the aggregate, that may be paid by Buyer to Dyax under Sections 2.02(a)(ii) and (iii) shall not exceed [*****].

(b)           From and after the Closing, the Buyer shall be responsible for the first, and only the first, [*****] of Dyax’s actual, documented out-of-pocket costs (including patent maintenance fees and reasonable attorneys’ fees and expenses) incurred by Dyax at any time after the Closing in connection with Dyax’s prosecution and maintenance of the Dyax Patents.  The Buyer shall reimburse Dyax for such costs referred to in the immediately preceding sentence, up to [*****], within thirty (30) days of Dyax’s presentation to the Buyer of invoices for such costs.  Dyax shall be responsible for all other costs incurred by or on behalf of it in connection with Dyax’s prosecution and maintenance of the Dyax Patents.

(c)           All payments to be made by the Buyer pursuant to Section 2.02(a) and Section 2.02(b) shall be paid by wire transfer of immediately available funds to the following Dyax account (the “Dyax Account”), as may be changed from time to time by written notice to Buyer:

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(d)           Dyax consents to the deduction by the Buyer from the amounts payable under Section 2.02(a)(i) of the amounts owing to the Buyer pursuant to Section 8.07.  In addition, if (i) Dyax has received, prior to the date on which the Closing shall have occurred, the [*****] payment specified in clause (b) of the definition of “Pre-Closing Royalty Payment”, then [*****] shall be deducted from the amounts payable under Section 2.02(a)(i) and (ii) Dyax has not received the [*****] payment specified in clause (b) of the definition of “Pre-Closing Royalty Payment” prior to the date on which the Closing shall have occurred, then such amount shall be deemed included in the Included Product Payments to be received by the Buyer and shall not be deducted from the amounts payable under Section 2.02(a)(i).  No later than two (2) days prior to the Closing, Dyax shall provide written notice to Buyer setting forth the amount of the Pre-Closing Royalty Payment.  If after Closing it is discovered that the actual amount of the Pre-Closing Royalty Payment was greater than the amount set forth in such notice, then Dyax shall, within two (2) days of learning thereof, pay to the Buyer the difference.

(e)           For purposes of determining whether any 2010 Milestone Payment or 2011 Milestone Payment is due, Worldwide Net Sales shall be determined [*****].

Section 2.03  Included Products Payments.

(a)           Payments.

(i)           Pursuant to the Wyeth Letter described in Section 6.02(f), Dyax has instructed Wyeth to pay all Included Products Payments due and payable under the terms of the Wyeth License Agreement after the Effective Date in respect of the Included Products (including pursuant to Section 3.2, Section 3.3, Section 3.4 and Section 3.5 of the Wyeth License Agreement) directly to Buyer.  Notwithstanding the Wyeth Letter, Dyax agrees that if and to the extent it receives any Included Products Payments due and payable under the terms of the Wyeth License Agreement or under the terms of any Included License Agreement after the Effective Date in respect of the Included Products (including pursuant to Section 3.2, Section 3.3, Section 3.4 and Section 3.5 of the Wyeth License Agreement), such amounts shall be promptly (and in any event within five (5) Business Days) paid over to Buyer.

(ii)          If (A) an Accelerated Payment Triggering Event occurs and (B) Buyer, in its absolute and sole discretion, notifies Dyax in writing within 10 Business Days following Buyer’s first learning of any Accelerated Payment Triggering Event that Buyer wishes to receive the Accelerated Payment from Dyax, then Dyax shall pay to the Buyer the Accelerated Payment, in immediately available funds, within 10 Business Days following receipt of the written notice from Buyer referred to in clause (B) of this sentence.  The Accelerated Payment shall not be a penalty but shall constitute liquidated damages (in addition to any other remedies available at law or in equity).  The amount of liquidated damages in this subsection (ii) is so fixed and agreed upon because of the impracticability and difficulty in fixing and ascertaining the actual damages that the Buyer would sustain in the event of a termination of the Wyeth License Agreement by the Contract Party thereto as a result of an Accelerated Payment Triggering Event. Upon payment in full of the Accelerated Payment, this Agreement shall be immediately terminated, and thereafter (i) Dyax shall have no further obligation to Buyer, and (ii) Buyer shall immediately release any Liens on the Royalty Interests and other Collateral described in the Security Agreement.

(iii)         Dyax further agrees that one hundred percent (100%) of amounts received by Dyax as a damages award (or pursuant to a settlement agreement) in connection with an infringement claim or other cause of action involving any of the Dyax IP (net of litigation costs) in the Territory related to the Included Products and/or as payments pursuant to indemnification obligations to Dyax related to the Included Products, shall be promptly (and in any event within five (5) Business Days) paid over to Buyer.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(b)           Amounts payable pursuant to this Section 2.03 shall not be subject to any setoff or other deduction by reason of any amounts otherwise payable under this Agreement or any other agreement, provided that the Buyer acknowledges and agrees that Wyeth may deduct [*****].

(c)           Without limitation of Section 5.08(f), in the event that Wyeth’s license under the Wyeth License Agreement is converted to a non-exclusive license and the royalties paid by Wyeth under the Wyeth License Agreement are reduced, Dyax further agrees that one hundred percent (100%) of any royalties paid to Dyax or any Dyax Entity by a Third Party in respect of any license or other rights granted to such Third Party under the Dyax IP [*****] use shall be promptly (and in any event within five (5) Business Days) paid over to Buyer.

(d)           Any payments to be made by Dyax or any other Dyax Entity to the Buyer hereunder or under any other Transaction Document shall be made by wire transfer of immediately available funds to the Buyer Account.

(e)           All payments payable by Dyax or any other Dyax Entity to Buyer pursuant to this Section 2.03 shall be made without any deduction or withholding on account of any tax imposed, levied, collected, withheld or assess by or within the United States, any political subdivisions in or of the United States, or any foreign country or other jurisdiction.

Section 2.04  No Assumed Obligations.

Notwithstanding any provision in this Agreement or any other writing to the contrary, the Buyer is acquiring only the Royalty Interests and is not assuming any liability or obligation of Dyax or any Dyax Entity of whatever nature, whether presently in existence or arising or asserted hereafter, whether under any Included License Agreement, Transaction Document or otherwise, including all tax liens or assessments and other governmental levies that are not yet due and payable or similar non-consensual liens for amounts not yet due and payable in respect of the Royalty Interests on or prior to the Closing Date, except for the Buyer’s obligation to reimburse Dyax for its reasonable out-of-pocket costs and expenses pursuant to Section 2.02(b), Sections 5.01, 5.02(e), 5.08(d), 5.08(e), 5.08(g), 5.08(h), 5.08(i), 5.08(j), and 5.08(k).  All such liabilities and obligations shall be retained by and remain obligations and liabilities of Dyax (the “Excluded Liabilities and Obligations”).

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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Section 2.05  Sale.

Dyax, the other Dyax Entities and the Buyer intend that the sale, assignment, transfer and conveyance of the Royalty Interests pursuant to this Agreement shall be a sale and not a financing transaction, borrowing or loan; and accordingly Dyax and the other Dyax Entities will treat the conveyance of the Royalty Interests as a sale of an “account” or “payment intangible” in accordance with the UCC and Dyax and the other Dyax Entities hereby authorize the Buyer to file financing statements (and continuation statements with respect to such financing statements when applicable) naming Dyax as a seller and the Buyer as the buyer of the accounts and payment intangibles related to the Royalty Interests.  If, notwithstanding the intent of Dyax and the Buyer in this regard, the sale, assignment, transfer and conveyance of the Royalty Interests contemplated by this Agreement is held not to be a sale, this Agreement shall constitute a valid, perfected, first priority security agreement and Dyax does hereby grant to the Buyer a first priority security interest in and to all of Dyax’s right, title and interest in, to and under the Royalty Interests.

Section 2.06  Offsets.

In the event that any Contract Party offsets all or any part of the Included Product Payments against any amounts owed by Dyax to such Contract Party and such offset actually reduces the amount of any payment on the Royalty Interests (any such reduction, a “Payment Shortfall”), Dyax will pay the Buyer the amount of the Payment Shortfall within three (3) Business Days.  After Dyax makes the payment to the Buyer contemplated in the preceding sentence, Dyax shall be entitled to retain any amount subsequently recovered from such Contract Party in respect of such offset.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF DYAX

Dyax hereby represents and warrants to the Buyer the following as of the Effective Date and as of the Closing Date:

Section 3.01  Organization.

Dyax is incorporated and validly existing under the laws of the jurisdiction of its incorporation or organization and has all corporate powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted and as proposed to be conducted in connection with the transactions contemplated hereby and by the other Transaction Documents.

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Section 3.02  Corporate Authorization.

Dyax has all necessary power and authority to enter into, execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereunder and thereunder.  This Agreement and the other Transaction Documents have been duly authorized, executed and delivered by Dyax and this Agreement and the other Transaction Document constitutes the valid and binding obligation of Dyax, enforceable against each such Person in accordance with their respective terms subject to bankruptcy, insolvency, reorganization or similar laws affecting creditors’ rights generally or general equitable principles.  No limit on the powers of Dyax will be exceeded as a result of the grant of the Security Agreement or other Transaction Documents or indemnities contemplated by the Transaction Documents.

Section 3.03  Governmental Authorization.

The execution and delivery by Dyax of this Agreement and the other Transaction Documents to which it is a party, and the performance by Dyax of its obligations hereunder and thereunder, does not require any notice to, action or consent by, or in respect of, or filing with, any Government Authority, except for (i) the release of the Cowen Liens, which release has been obtained by Dyax and which release is effective as of the Closing, and (ii) the filing of financing statements under the UCC and filings with the United States Patent and Trademark Office with respect to the Collateral pursuant to the Transaction Documents.

Section 3.04  Ownership.

(a)           Dyax is the sole holder of all of those assets that are required to produce or receive all of the Included Products Payments, in each case free and clear of any and all Liens, except for the Cowen Liens, which shall be released in full as of the Closing, and Permitted Liens.  Within three (3) Business Days following the Closing, financing termination statements will be filed under the UCC, and releases will be recorded with the United States Patent and Trademark Office, for all Cowen Liens that have been filed or recorded prior to the date hereof under the UCC or with the United States Patent and Trademark Office with respect to the Dyax IP, the Included License Agreements and the Royalty Interests.  True and correct copies of such financing termination statements and releases have been provided to the Buyer.  Except pursuant to the Cowen Agreement (until termination of the Cowen Liens on the Closing), no Person other than Dyax has any right to receive the payments payable under any Included License Agreement or any Included Products Payments other than, in respect of the Royalty Interests, the Buyer.  Dyax has not transferred, sold, or otherwise disposed of, or agreed to transfer, sell, or otherwise dispose of any Dyax IP or any portion of their respective rights to receive payment of Included Products Payments other than as contemplated by this Agreement.  Dyax’s rights in and to the Included Product Payments are valid, subsisting and enforceable.

(b)           Except for the Cowen Liens, which shall be released on the Closing, Dyax, immediately prior to the sale of the Royalty Interests, owns, and is the sole holder of, all the Royalty Interests.  No other Dyax Entity or any other Person (except for the Cowen Liens, which shall be released on the Closing) has any right, title, interest or claim in or to the Royalty Interests or any portion thereof.  The Royalty Interests and all of the rights of Dyax in and to the Dyax IP, under the Included License Agreements and all other rights in and to the other Collateral are free and clear of any and all Liens, except Permitted Liens.  None of the Collateral is in the possession of Cowen Healthcare Royalty Partners, L.P.  Dyax has the full right to sell, transfer, convey and assign to the Buyer all of Dyax’s rights and interests in and to the Royalty Interests being sold, transferred, conveyed and assigned to the Buyer pursuant to this Agreement without any requirement to obtain the consent of any Person.  By the delivery to the Buyer of the executed Bill of Sale, Dyax shall transfer, convey and assign to the Buyer all Dyax’s rights and interests in and to the Royalty Interests free and clear of any Liens.

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Section 3.05  Financial Statements; Material Adverse Change.

The Financial Statements are complete and accurate in all material respects, were prepared in conformity with GAAP applied on a consistent basis during the periods involved and present fairly in all material respects, in accordance with applicable requirements of GAAP, the consolidated financial position and the consolidated financial results of the operations of Dyax and its subsidiaries as of the dates and for the periods covered thereby and the consolidated statements of cash flows of Dyax and its subsidiaries for the periods presented therein.  Since January 1, 2010, there has been no Material Adverse Change, and no event that could reasonably be expected to cause or result in a Material Adverse Change has occurred.

Section 3.06  No Undisclosed Liabilities.

Except for those liabilities identified in the Financial Statements there are no material liabilities of any Dyax Entity taken as a whole or separately of any kind whatsoever, whether accrued, contingent, absolute, determined or determinable.

Section 3.07  Solvency.

Dyax has not applied for an order, and no order is made, declaring it bankrupt, or granting it a moratorium or suspension of payments, and no liquidator is appointed for and no other equivalent event has occurred with respect to it or any substantial part of its assets in any jurisdiction or is insolvent as defined in the United States Bankruptcy Code or in the fraudulent conveyance or fraudulent transfer statutes of the States of Delaware.  Dyax is not insolvent as defined in any statute of the U.S. Bankruptcy Code or in the fraudulent conveyance or fraudulent transfer statutes of any applicable state of incorporation.  Assuming consummation of the transactions contemplated by this Agreement and the other Transaction Documents, (a) the present fair saleable value of each Dyax Entity’s assets is greater than the amount required to pay its debts as they become due, (b) no Dyax Entity has unreasonably small capital with which to engage in its business, and (c) no Dyax Entity has incurred, or has present plans to or intends to, incur, debts or liabilities beyond its ability to pay such debts or liabilities as they become absolute and matured.  Dyax is entering into this Agreement with no contemplation of insolvency and with no intent to hinder, delay or defraud any of its present or future creditors.

Section 3.08  Litigation.

(a)           There is no (i) action, suit, arbitration proceeding, claim, investigation or other proceeding pending or, to the Knowledge of Dyax, threatened against Dyax or any other Dyax Entity or any of its directors or officers relating to Dyax or any other Dyax Entity or (ii) any governmental inquiry pending or, to the Actual Knowledge of Dyax, threatened against Dyax or any other Dyax Entity or any of its directors or officers, that reasonably could be expected to result in a Material Adverse Change or in the breach of Section 3.07.

(b)           [*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(c)           [*****]

Section 3.09  Compliance with Laws.

No Dyax Entity (a) is in violation of, has violated, or to the Knowledge of Dyax, is under investigation with respect to, or (b) has been threatened to be charged with or been given notice of any violation of, any law, rule, ordinance or regulation of, or any judgment, order, writ decree, permit or license entered by any Government Authority applicable to the Royalty Interests or which could reasonable be expected to adversely affect the consummation of the transactions contemplated by the Transaction Documents or the performance by Dyax of its obligations under the Transaction Documents.

Section 3.10  Conflicts.

Neither the execution and delivery of this Agreement or any other Transaction Document nor the performance or consummation of the transactions contemplated hereby or thereby will:  (a) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any material respects any provisions of: (i) any law, rule, ordinance or regulation of any Government Authority, or any judgment, order, writ, decree, material permit or license of any Government Authority, to which any Dyax Entity or any of their respective assets, including the Dyax IP, or properties may be subject or bound; or (ii) any contract, agreement, commitment or instrument to which any Dyax Entity is a party or by which any Dyax Entity or any of their respective assets or properties is bound or committed, including the Wyeth License Agreement and the Cowen Agreement; (b) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any respects any provisions of the certificate of incorporation or by-laws (or other Organizational Documents) of any Dyax Entity; (c) except for the filing of the UCC-1 financing statements required hereunder and filings with the United States Patent and Trademark, require any notification to, filing with, or consent of, any Person or Government Authority; (d) give rise to any right of termination, cancellation or acceleration of any right or obligation of any Dyax Entity or any other Person or to a loss of any benefit relating to the Included Products Payments or of any Included License Agreement; or (e) result in the creation or imposition of any Lien on (i) the assets or properties of any Dyax Entity or (ii) the Royalty Interests or any other Collateral, other than, with respect to clauses (e)(i) and (e)(ii) above, pursuant to the Security Agreement.

Section 3.11  Material Contracts.

None of the Dyax Entities is party to any agreement pursuant to which any Dyax Entity in-licenses any Dyax IP from a third party or has out-licensed the Dyax IP to a third party (other than to Wyeth pursuant to the Wyeth License Agreement.

Section 3.12  IP.

(a)           The Dyax Entities have provided the Buyer all material information in their possession, or otherwise known to them, with respect to validity and enforceability of the Dyax IP, Third Party intellectual property that may affect or cover the Dyax Product and its use.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

17

(b)           Schedule 3.12(b) lists the Dyax Patents.  For each Dyax Patent listed on Schedule 3.12(b), Dyax has identified, where applicable, (A) the owner, (B) the countries in which such listed item is valid, patented or registered or in which an application for patent or registration is pending, (C) the application number, (D) the patent number, (E) the expiration date thereof, as applicable, excluding any patent term extensions or supplemental protection certificates, and (F) the date on which any applicable maintenance, annuity or renewal fee is due or payable.

(c)           To the Actual Knowledge of Dyax, each item of Dyax IP listed on Schedule 3.12(b) is valid, enforceable and subsisting.

(d)           Schedule 3.12(d) lists all agreements, whether oral or written, express or implied, including licenses, options, franchise, distribution, marketing and manufacturing agreements, supply agreements, sponsorships, royalty agreements, agreements not to enforce, consents, settlements, assignments, security interests, liens and other encumbrances or mortgages (other than the Permitted Liens), and any amendments(s) renewal(s), novation(s) and termination(s) pertaining thereto, which relates to the Dyax IP or the Dyax Product, including all Included License Agreements.  There are no unpaid fees or royalties under any agreement listed on Schedule 3.12(d) that have become due as of the Closing Date or are expected to become overdue, except as disclosed on Schedule 3.12(d).  

(e)           No Dyax Entity has received or otherwise been the beneficiary of any written opinions of counsel with respect to infringement, non-infringement or invalidity of third party intellectual property with respect to the Dyax IP or the Dyax Product.  To the Actual Knowledge of Dyax, there are no pending published or unpublished United States, international or foreign national patent applications owned by any other Person, which, if issued, would limit or prohibit, in any material respect, the use of the Dyax IP or the Dyax Product.

(f)           Dyax owns sole, exclusive, valid and unencumbered title to the Dyax IP and has not granted any Liens on or to any of the Dyax IP or Included License Agreements, all right title and interest in all of the Dyax IP, free and clear of any and all Liens, except for the Cowen Liens, which shall be released in full as of the Closing, and Permitted Liens.  The inventors of the Dyax IP have assigned all their rights to a Dyax.  Dyax has not Transferred any Dyax Patents or Dyax Know-How to any Third Party.

(g)           There are no unpaid maintenance or renewal fees currently overdue for any of the Dyax Patents, and except as disclosed on Schedule 3.12(g), no application or registration for any Dyax Patent has lapsed or been abandoned, cancelled or expired.

(h)           Each Dyax Entity (to the extent such Dyax Entity is an applicant or is otherwise involved in the patent prosecution in respect of any patent included in the Dyax IP) and, to the Knowledge of Dyax, each inventor of the patents included in the Dyax IP or his or her employer, has complied in all material respects with all applicable Patent Office duties of candor and good faith in dealing with any Patent Office, including the duty to disclose to any Patent Office all information known to be material to the patentability of each of the patents and patent applications included in the Dyax IP.

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(i)            No inventor of any patent contained in the Dyax IP was or is under any conflicting obligation with any academic institution or other Third Party that would affect Dyax’s title or license to any such patent.

(j)            Subsequent to the issuance of the Dyax Patents, no Dyax Entity, nor to the Knowledge of any Dyax Entity, the Contract Party to the Included License Agreements, has filed any disclaimer or made or permitted any other voluntary reduction in the scope of such Dyax Patents.

(k)           No payments by any Dyax Entity or any Contract Party are, or at any time in the future are expected to become due, to any other Person in respect of the Dyax IP.

(l)            No Dyax Entity and, to the Knowledge of any Dyax Entity, no Contract Party under any Included License Agreement, has undertaken or omitted to undertake any acts, and to the Knowledge of any Dyax Entity, no circumstance or grounds exist, that would invalidate, reduce or eliminate, in whole or in part, the enforceability or scope of any of the Dyax IP or Dyax’s entitlement to exclusively exploit the Dyax IP.

(m)          There is not, and has not been, any pending, decided or settled opposition, interference, reexamination, injunction, claim, lawsuit, proceeding, hearing, investigation, complaint, arbitration, mediation, demand, International Trade Commission investigation, decree, or any other dispute, disagreement, or claim challenging the legality, validity, enforceability or ownership of any Dyax IP (collectively referred to hereinafter as “Disputes”).  No Dyax Entity has received any written notice or claim of any such Dispute.  To the Knowledge of Dyax, no such Dispute has been threatened, no circumstances or grounds exist that would give rise to such a Dispute, and, to the Actual Knowledge of Dyax, there exists no circumstances or grounds upon which any such claim could be asserted.  No Dyax IP is subject to any outstanding injunction, judgment, order, decree, ruling charge, settlement or other disposition of Dispute, and each Dyax Entity has fully complied with, paid and otherwise satisfied all such obligations.

(n)           Dyax has taken all [*****] measures and precautions necessary to protect and maintain (i) the confidentiality of all Dyax IP (except such Dyax IP whose value would be unimpaired by public disclosure) and (ii) the value of all Dyax IP.

(o)           To the Knowledge of Dyax, Wyeth uses the Dyax Product and the Dyax IP in the manufacture of Wyeth Licensed Products, and Dyax has no Actual Knowledge that Wyeth is planning to or intends to cease the use of the Dyax Product or the Dyax IP in the manufacture of the Wyeth Licensed Products.

Section 3.13  Regulatory.

Dyax has not received from Wyeth (or any of its predecessors who were a party to the Wyeth License Agreement) any correspondence, files or other information (a) relating to any Regulatory Approvals for the Wyeth Licensed Products, (b) regarding nonclinical, clinical or manufacturing activities or any notices and forms received from Regulatory Agencies relating to compliance, developmental (including safety, efficacy and potency), marketing, promotion and manufacturing activities concerning Xyntha or Refacto AF, (c) relating to adverse experience reports or data relating to Xyntha or Refacto AF, including any correspondence, reports or other documents relating thereto or (d) that would indicate that any Regulatory Agency (i) is likely to revise or revoke any current approval granted by any such Regulatory Agency with respect to Xyntha or Refacto AF; (ii) is likely to pursue compliance actions against Wyeth or a suspension, recall or withdrawal of Xyntha or Refacto AF from the market(s); or (iii) is likely to pursue any compliance action with respect to manufacture of Xyntha or Refacto AF or active pharmaceutical ingredient thereof.  To the Actual Knowledge of Dyax, (x) there has been no indication that any Regulatory Agency has any material concerns with Xyntha or Refacto AF or may not approve Xyntha or Refacto AF, and (y) Xyntha and Refacto AF has not suffered any material adverse events in any clinical trial.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

19

Section 3.14  Subordination.

The claims and rights of the Buyer created by this Agreement and any other Transaction Document in and to the Royalty Interests are not and shall not be subordinated to any creditor of Dyax or to any other Person.

Section 3.15  Place of Business.

The principal place of business and chief executive office of Dyax are set forth on Schedule 3.15.

Section 3.16  Broker’s Fees.

Dyax has not taken any action which would entitle any Person to any commission or broker’s fee in connection with the transactions contemplated by this Agreement or the other Transaction Documents.

Section 3.17  Other Information.

The Financial Model has been prepared by Dyax in good faith and based upon assumptions that Dyax believes to be commercially reasonable; it being understood and agreed that Dyax makes no guarantee as to the accuracy of the Financial Model forecast.

Section 3.18  Wyeth License Agreement.  

(a)           With respect to the Wyeth License Agreement:

(i)           The Wyeth License Agreement is in full force and effect and has not been impaired, waived, altered or modified in any respect.

(ii)          The Contract Party under the Wyeth License Agreement has not been released, in whole or in part, from any of its obligations thereunder such Included License Agreement.

(iii)         There has been no correspondence or any other communication sent by or on behalf of any Dyax Entity to, or received by or on behalf of any Dyax Entity from, any Contract Party, the subject matter of which has resulted in or would reasonably be expected to result in a Material Adverse Change and no breach or dispute has occurred with respect to any payment or other obligations.

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(iv)        No Dyax Entity has received (A) any notice of any Contract Party’s intention to terminate the Wyeth License Agreement in whole or in part or (B), any notice requesting any amendment, alteration or modification of the Wyeth License Agreement or any sublicense or assignment thereunder that has not either been withdrawn in writing or reflected in the Wyeth License Agreement.

(v)         To the Knowledge of Dyax, nothing has occurred and no condition exists that would reasonably be expected to adversely affect the right of any Dyax Entity to receive any payments payable or materials or products provided under the Wyeth License Agreement. No Dyax Entity and, to the Actual Knowledge of Dyax, no Contract Party has taken any action or omitted to take any action, that would reasonably be expected to adversely impact the sale of the Included Products or the Included Products Payments.

(vi)        [*****]

(vii)       The Wyeth License Agreement is the entire agreement between the applicable Dyax Entity and the Contract Party thereto relating to the subject matter thereof, and Dyax has provided true and correct copies of the Wyeth License Agreement is to Buyer, including all amendments thereto.

(viii)      The Wyeth License Agreement is valid and binding on Dyax, and to the Knowledge of Dyax the Contract Party thereto, enforceable against Dyax and to the Knowledge of Dyax such Contract Party in accordance with its terms and is in full force and effect.  The execution, delivery and performance of the Wyeth License Agreement was and is within the respective corporate powers of Dyax and, to the Knowledge of Dyax, the Contract Party thereto.  The Wyeth License Agreement was duly authorized by all necessary action on the part of, and validly executed and delivered by, Dyax and, to the Knowledge of Dyax, the Contract Party thereto.  There is no breach or default, or event which upon notice or the passage of time, or both, could give rise to any breach or default, in the performance of the Wyeth License Agreement by Dyax or, to the Knowledge of Dyax, the Contract Party thereto.

(ix)         Other than the Wyeth License Agreement and that [*****] Dyax has not entered into any agreement with any Affiliate of Wyeth or any other Person relating to the Dyax IP, the Dyax Product or any Included Products.

(x)          The representations and warranties made by Dyax under the Wyeth License Agreement were as of the date made true and correct.  The Dyax IP is necessary for Wyeth to make the Wyeth Licensed Products.

(xi)         To Dyax's Knowledge, all Included License Agreements entered into by Dyax have been negotiated on an arms-length basis.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

21

(xii)        No note, account, instrument, document, contract right, general intangible, chattel paper or other form of obligation other that which has been assigned to Buyer hereunder exists which evidences any Royalty Interests.

(xiii)       As of the date hereof, no Contract Party to an Included License Agreement has any defense or claim against any Dyax Entity regardless of whether such defense or claim arises under an Included License Agreement or otherwise.

(b)           To Dyax’s Actual Knowledge, Wyeth has not entered into any licenses, sublicenses, co-marketing arrangements, co-distribution arrangements or any other agreements or arrangements with a Third Party relating to the Wyeth Licensed Products where Net Sales for the Licensed Products are not booked by Wyeth.

(c)           [*****]

(d)           To Dyax’s Knowledge, Wyeth’s obligation to pay royalties for Net Sales of Wyeth Licensed Products and to pay other Included Product Payments under the Wyeth License Agreement is valid, binding and legally enforceable, and there exists no fact, law, condition or other circumstance that could entitle Wyeth to reasonably challenge any such obligations.

(e)           Under the terms of the Wyeth License Agreement, Wyeth’s obligation to pay royalties for Net Sales of each Wyeth Licensed Product shall be in effect, on a country-by-country basis, for no less than fifteen (15) years from the First Commercial Sale (as defined in the Wyeth License Agreement) of such Wyeth Licensed Product in such country.

Section 3.19  Tax.

Each Dyax Entity has paid all sales, use and income taxes on the Included Product Payments when due and is in compliance with all tax laws and regulations.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF THE BUYER

The Buyer represents and warrants to Dyax the following:

Section 4.01  Organization.

The Buyer is a limited partnership, duly formed, validly existing and, to the extent legally applicable, in good standing under the laws of the Delaware.  The Buyer has all powers and all licenses, authorizations, consents and approvals required to carry on its business as now conducted and as proposed to be conducted in connection with the transactions contemplated hereby and by the other Transaction Documents.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

22

Section 4.02  Authorization.

The Buyer has all necessary power and authority to enter into, execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform all of the obligations to be performed by it hereunder and thereunder and to consummate the transactions contemplated hereby and thereby.  This Agreement has been duly authorized, executed and delivered by the Buyer and constitutes the valid and binding obligation of the Buyer, enforceable against the Buyer in accordance with its terms, subject to bankruptcy, insolvency, reorganization, moratorium, ad hoc representative appointment, conciliation, safeguard proceedings, judicial receivership, or similar laws affecting creditors’ rights generally and general equitable principles.

Section 4.03  Broker’s Fees.

The Buyer has not taken any action that would entitle any Person to any commission or broker’s fee in connection with the transactions contemplated by this Agreement.

Section 4.04  Conflicts.

Neither the execution and delivery of this Agreement or the other Transaction Documents nor the performance or consummation of the transactions contemplated hereby or thereby will: (a) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any material respects any provisions of: (i) any law, rule or regulation of any Government Authority, or any judgment, order, writ, decree, permit or license of any Government Authority, to which  the Buyer or any of its assets or properties may be subject or bound; or (ii) any material contract, agreement, commitment or instrument to which the Buyer is a party or by which the Buyer or any of its assets or properties is bound or committed; or (b) contravene, conflict with, result in a breach or violation of, constitute a default under, or accelerate the performance provided by, in any respects any provisions of organizational or constitutional documents of the Buyer.

Section 4.05  Consents.

The execution and delivery by the Buyer of this Agreement and the other Transaction Documents to which it is a party, and the performance by the Buyer of its obligations hereunder and thereunder, does not require any notice to, action or consent by, or in respect of, or filing with, any Government Authority or Person.

ARTICLE V

COVENANTS

During the Term, the following covenants shall apply:

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Section 5.01  Ongoing Rights and Obligations.

(a)           Unless otherwise directed by Buyer, and subject to the other provisions of this Article V, Dyax shall pursue all rights and remedies available to it under any Included License Agreement.  Except as provided in Section 2.02(b), and except with respect to Dyax’s exercise of its remedies for breach by Wyeth of Article V of the Wyeth License Agreement or indemnification under Section 7.2 of the Wyeth License Agreement, Buyer shall be responsible for any and all reasonable, out-of-pocket costs and expenses incurred by Dyax in connection therewith and shall fully and promptly reimburse Dyax if and to the extent that any such costs or expenses are incurred by Dyax and submitted to the Buyer for approval by Dyax prior to being incurred.

(b)           Unless otherwise directed by Buyer, Dyax shall (i) perform, at its sole cost and expense (except as provided in Section 2.02(b)), all ongoing obligations required of it under the Wyeth License Agreement (including its obligation to indemnify Wyeth under Section 7.2 of the Wyeth License Agreement) and any other Included License Agreement, and (ii) upon the occurrence of a material breach of any Included License Agreement by any other party thereto, which is not cured as provided therein, Dyax shall use its best efforts to seek to enforce all of its rights and remedies thereunder; provided however, that except as provided in Section 2.02(b), Buyer shall be responsible for any and all reasonable out of pocket costs and expenses (including reasonable attorneys’ fees and expenses) arising in connection with Dyax’s enforcement of its rights and remedies under the Included License Agreement and shall fully and promptly reimburse Dyax if and to the extent that any such costs or expenses are incurred by Dyax and preapproved by the Buyer prior to being incurred by Dyax.

(c)           Furthermore, upon agreement by the Parties, the Buyer may, to the extent permitted by the terms of the relevant Included License Agreement, elect (in its sole discretion and at it expense) to directly (in Dyax’s name if necessary) (i) pursue all rights and remedies available to Dyax under such Included License Agreement, and (ii) perform all ongoing obligations required of Dyax under such Included License Agreement.  

(d)           Without limiting those conditions to the Closing set forth herein, each Dyax Entity shall use commercially reasonable best efforts to obtain any required consents, acknowledgements, certificates or waivers so that the transactions contemplated by this Agreement or any other Transaction Document may be consummated and shall not result in any default or breach or termination of any of the Included License Agreements.  All expenses (including attorneys’ fees and expenses) incurred in connection with obtaining such consents, acknowledgements, certificates or waivers shall be borne by Dyax.

Section 5.02  Access; Books and Records.

(a)           Within [*****] after receipt by an Dyax Entity of notice of any action, claim, investigation or proceeding (commenced or threatened) relating to the transactions contemplated by this Agreement, any other Transaction Document, the Royalty Interests or any Included License Agreements or any Included Product, Dyax shall inform the Buyer of the receipt of such notice and the substance of such action, claim, investigation or proceeding and, if in writing shall furnish the Buyer with a copy of such notice and any related materials with respect to such action, claim, investigation or proceeding.

(b)           Each Dyax Entity shall keep and maintain, or cause to be kept and maintained, at all times full and accurate books of account and records adequate to correctly reflect all payments paid and/or payable with respect to the Royalty Interests and all deposits made into the Deposit Account.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

24

(c)           The Buyer and any of the Buyer Consultants shall have the right, from time to time, to visit Dyax’ offices and properties where Dyax keep and maintain their books and records relating or pertaining to Included Products Payments, the Royalty Interests and the other Collateral for purposes of conducting an audit of such books and records, and to inspect, copy and audit such books and records, during normal business hours, and, [*****] written notice given by the Buyer to a Dyax Entity, the Dyax Entity will provide the Buyer and any of the Buyer Consultants reasonable access to such books and records, and shall permit the Buyer and any of the Buyer Consultants to discuss the business, operations, properties and financial and other condition of Dyax relating or pertaining to the Royalty Interests and the other Collateral with officers of such parties, and with their independent certified public accountants.  The Buyer’s visits to Dyax’s offices pursuant to this Subsection (c) shall occur not more than two (2) times for Dyax per calendar year; provided, however, that the Buyer may so visit more frequently to the extent that there has occurred an event that has resulted in a Material Adverse Change, or a reasonably foreseeable consequence of which is a Material Adverse Change, and the Buyer’s visit or visits to Dyax’ offices in connection therewith are for purposes related to such event.

(d)           To the extent that either the Buyer or Dyax has determined that there is a discrepancy as to the amounts paid to the Buyer hereunder for such calendar year, then the Person who has made such determination may notify the other in writing of such discrepancy indicating in reasonable detail its reasons for such determination (the “Discrepancy Notice”).  In the event that either the Buyer or Dyax deliver to the other party a Discrepancy Notice, the Buyer and Dyax shall meet within ten (10) Business Days (or such other time as mutually agreed by the parties) after the receiving party has received a Discrepancy Notice to resolve in good faith such discrepancy.  If the discrepancy has been resolved and, as a result thereof, it is determined that a payment is owing by the Buyer to Dyax or by Dyax to the Buyer, then the party owing such payment shall promptly pay such payment to the other party.  If, within forty-five (45) days after receipt of the Discrepancy Notice, Dyax and the Buyer cannot resolve any such discrepancies, then the Buyer and Dyax shall promptly instruct their respective firms of independent certified public accountants to select, within five (5) Business Days thereafter, a third nationally recognized accounting firm (the “Independent Accountants”).  After offering Dyax and its representatives and the Buyer and its representatives the opportunity to present their positions as to the disputed items, which opportunity shall not extend for more than ten (10) calendar days after the Independent Accountants have been selected, the Independent Accountants shall review the disputed matters and the materials submitted by Dyax and the Buyer and, as promptly as practicable, deliver to Dyax and the Buyer a statement in writing setting forth its determination of the proper treatment of the discrepancies as to which there was disagreement, and that determination shall be final and binding upon the parties hereto without any further right of appeal.  If Dyax has delivered the Discrepancy Notice that has resulted in the selection of the Independent Accountants, Dyax shall bear all the charges of the Independent Accountants.  If the Buyer has delivered the Discrepancy Notice that has resulted in the selection of the Independent Accountants, the Buyer shall bear all the charges of the Independent Accountants unless the Independent Accountants determine that the amounts paid to the Buyer for the applicable calendar year underpaid the Buyer by an amount equal or in excess of [*****] of the amounts determined to be due to the Buyer for such calendar year, in which event Dyax shall bear all of the charges of the Independent Accountants.  [*****].

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

25

(e)           To the extent any Dyax Entity has the right to perform or cause to be performed inspections or audits under any of the Included License Agreements regarding payments payable and/or paid to any Dyax Entity thereunder (each, a “License Party Audit”), Dyax shall, at the request and expense of the Buyer, cause such License Party Audit to be promptly performed. In conducting a License Party Audit, Dyax shall engage an independent public accounting firm and other personnel directed by the Buyer.  Promptly after completion of any License Party Audit (whether or not requested by the Buyer), Dyax shall promptly deliver to the Buyer an Audit Report in respect of such License Party Audit.

Section 5.03  Confidentiality; Public Announcement.

(a)           Except as set forth in Section 5.03(b), all Confidential Information furnished by the Buyer to any Dyax Entity or by any Dyax Entity to the Buyer in connection with this Agreement and any other Transaction Document and the transactions contemplated hereby and thereby, as well as the terms, conditions and provisions of this Agreement and any other Transaction Document, shall be kept confidential by the recipient thereof, and shall be used by the recipient thereof only in connection with this Agreement and any other Transaction Document and the transactions contemplated hereby and thereby.  Notwithstanding the foregoing, each Dyax Entity and the Buyer may disclose such information to their partners, directors, employees, managers, officers, actual and potential investors, underwriters, rating agencies, permitted assignees and sources of finance and bankers, advisors, trustees and representatives (including, for the avoidance of doubt, in any private placement memorandum, offering memorandum or other offering document prepared in connection with an offering of securities backed by, among other things, the Royalty Interests under Rule 144A of the Securities Act) on a need-to-know basis, provided that such Persons shall be informed of the confidential nature of such information and shall be obligated to keep such information confidential according to at least a reasonable standard of confidentiality.

(b)           The Parties’ obligations of confidentiality and non-use with respect to Confidential Information shall not apply to information which (i) is or becomes generally available to the public other than as a result of a disclosure directly or indirectly by the receiving party, (ii) was within the receiving party’s possession prior to it being furnished to the receiving party, provided that such information is not subject to another confidentiality agreement with or other contractual, legal or fiduciary obligation of confidentiality to the receiving party, (iii) becomes available to the receiving party on a non-confidential basis from a person who is not, to the receiving party’s knowledge, otherwise bound by an obligation of confidentiality, (iv) is required to be disclosed in any document to be filed with any Government Authority or (v) is required to be disclosed under securities laws, rules and regulations applicable to the Dyax Entity or the Buyer, as the case may be, provided, however, that if a Party is required to make any such disclosure of the other Party’s Confidential Information pursuant to clauses (iv) or (v) above, it shall give reasonable advance notice to the other Party of such disclosure requirement and shall use reasonable efforts to assist such other Party in efforts to secure confidential treatment of such information required to be disclosed.

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(c)           Except as required by law or the rules and regulations of any securities exchange or trading system or any Government Authority, or except with the prior written consent of the other parties (such consent not to be unreasonably withheld or delayed), neither the Buyer nor any of Dyax shall issue any press release or make any other public disclosure with respect to the transactions contemplated by this Agreement or any other Transaction Document; provided, however that Dyax and the Buyer shall, on or prior to the Closing, upon the form and content of an initial press release to be issued by each of Dyax and the Buyer following the Closing.

(d)           Notwithstanding anything herein to the contrary, any party to this Agreement (and each employee, representative, or other agent of such party) may disclose to any and all persons, without limitation of any kinds, the tax treatment and tax structure of the transactions contemplated by this Agreement or any other Transaction Document and all materials of any kind (including opinions and other tax analyses) that are provided to the party relating to such tax treatment and tax structure.

Section 5.04  Included Reports.

Dyax shall promptly deliver to the Buyer all Included Reports received by Dyax.  Dyax shall use its Commercially Reasonable Efforts to obtain from Wyeth or any other Contract Party any other information which Dyax has a right to receive under the terms of any Included License Agreement.

Section 5.05  Security Agreement.

(a)           Dyax shall at all times until the applicable Security Interest Release Date grant and maintain in favor of the Buyer a valid, continuing, first perfected lien (subject to Permitted Liens) on and security interest in the Royalty Interests and the other Collateral described in the Security Agreement.

(b)           Dyax shall not grant a Lien (except a Permitted Lien) in or assign or otherwise transfer any of its property that is Collateral under Security Agreement to any party other than the Buyer.

Section 5.06  Best Efforts; Further Assurance.

(a)           Subject to the terms and conditions of this Agreement, each party hereto will use its commercially reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary under applicable laws and regulations to consummate the transactions contemplated by this Agreement and any other Transaction Document.  Each party agrees to, and shall cause its Affiliates to, execute and deliver such other documents, certificates, agreements and other writings (including any financing statement filings requested by the Buyer) and to perform such additional acts, as may be reasonably requested and necessary or appropriate to carry out and effectuate all of the provisions of this Agreement and any other Transaction Document and to consummate all of the transactions contemplated by this Agreement and any other Transaction Document.

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(b)           The parties hereto shall cooperate and provide assistance as reasonably requested by the other parties in connection with any litigation, arbitration or other proceeding (whether threatened, existing, initiated, or contemplated prior to, on or after the Effective Date) to which any party hereto or any of its officers, directors, shareholders, agents or employees is or may become a party or is or may become otherwise directly or indirectly affected or as to which any such Persons have a direct or indirect interests, in each case relating to this Agreement, any other Transaction Document, the Royalty Interests or any other Collateral, or the transactions described herein or therein but in all cases excluding any litigation brought any party against any other party to any Transaction Document (except as provided in any indemnity provision pursuant hereto or thereto).

(c)           Dyax agrees to, and shall cause its respective Affiliates to, deliver such additional information, execute such additional agreements and other writings, and to perform such additional acts as may be reasonably requested by Buyer in connection with the transfer of all or a portion of the Royalty Interests to a bankruptcy-remote Affiliate of the Buyer, the preparation of materials for due diligence, and the provision of information to third parties, including governmental agencies and rating agencies in connection with the borrowing of money or issuance of securities backed, in whole or part, by the Royalty Interests.

Section 5.07  Wyeth Acknowledgment.

Promptly after the Closing Date, Dyax shall deliver to Wyeth the payment instruction acknowledgement letter, the form of which is attached hereto as Exhibit F (“Wyeth Acknowledgement Letter”), and Dyax shall use its commercially reasonable efforts to obtain an executed copy of the Wyeth Acknowledgement Letter from Wyeth.

Section 5.08  Additional Covenants of Dyax.

(a)           [*****]

(b)           [*****]:

(c)           [*****]

(d)           [*****]

(e)           [*****]

(f)            Dyax shall not exercise its remedy under Section 3.5 of the Wyeth License Agreement without the Buyer’s prior written consent.

(g)           [*****]

(h)           [*****]

(i)            [*****]

(j)            [*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(k)           Each Dyax Entity shall cause each Contract Party under any Included License Agreement to provide, promptly following the end of each calendar quarter, all information with respect to sales (including all components of information required to calculate Included Product Payments) under each such agreement for inclusion in the Included Report for such quarter, and each Dyax Entity shall cause such obligation to be included in every Included License Agreement it enters into following the Closing Date.  Buyer shall be responsible for reasonable out of pocket costs and expenses (including reasonable attorneys’ fees and expenses) arising in connection with such efforts and shall fully and promptly reimburse Dyax if and to the extent that any such costs or expenses are incurred by Dyax and preapproved by the Buyer prior to being incurred by Dyax.

(l)           Each Dyax Entity, as applicable, shall ensure that the claims and rights of the Buyer created by this Agreement and any other Transaction Document in and to the Royalty Interests and any other Collateral are and shall remain senior to any creditor of any Dyax Entity or any other Person.

(m)           Each Dyax Entity, as applicable, shall assign, to Dyax or its designee all improvements of or to the Included Products and the Dyax IP and inventions relating thereto that arise on or after the Closing Date and agrees to execute and deliver, and agrees to cause all other Dyax Entities to execute and deliver, all instruments, documents and agreements as are reasonably required to effectuate such assignment.

Section 5.09  Future Agreements.

(a)           Dyax shall be the counterparty to any and all Included License Agreements entered into after the Closing, and no other Dyax Entity shall be a beneficiary under any such agreement.  No Dyax Entity shall enter into an Included License Agreement after the Closing without the prior written consent of the Buyer.  Dyax shall provide the Buyer a copy of each proposed Included License Agreement by Dyax and any Contract Party for Buyer’s written approval.  If Buyer grants its approval to any Included License Agreement, Dyax shall be permitted to enter into such Included License Agreement without modification from the version of such agreement provided to and approved by Buyer.

(b)           Any future Included License Agreement shall (i) be assignable in connection with the assets of the product line to which it relates; and (ii) expressly permit the assignment of a Royalty Interest and the grant of a security interest in favor of the Buyer.

ARTICLE VI

THE CLOSING; CONDITIONS TO CLOSING AND FUNDING

Section 6.01  Closing.

Subject to the closing conditions set forth in Sections 6.02 and 6.03, the closing of the purchase and sale of the Royalty Interests (the “Closing”) shall take place at the offices of Dechert LLP, New York, New York, United States, at 10:00 a.m. New York time on April 16, 2010, or, if the conditions to the Closing set forth in Sections 6.02 and 6.03 shall not have been satisfied by such date, on a date mutually agreed by the parties hereto that is as soon as practicable after such conditions shall have been satisfied (the “Closing Date”).

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Section 6.02  Conditions Applicable to the Buyer.

The obligations of the Buyer to effect the Closing and the payment of the Investment shall be subject to the satisfaction of each of the following conditions, any of which may be waived by the Buyer in its sole discretion:

(a)           Accuracy of Representations and Warranties.  The representations and warranties of Dyax set forth in this Agreement and the other Transaction Documents shall be true, correct and complete as of the Closing Date.

(b)           Covenants.  Dyax and the other Dyax Entities party to this Agreement or any Transaction Document shall have complied in all material respects with the covenants set forth in this Agreement and each other Transaction Document.

(c)           No Adverse Circumstances.  No Material Adverse Change, nor any event that could reasonably be expected to cause or result in a Material Adverse Change, shall have occurred.

(d)           Litigation.  No action, suit, litigation, proceeding or investigation shall have been instituted, be pending or threatened (i) challenging or seeking to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions contemplated by this Agreement or any of the Transaction Documents, or seeking to obtain damages in connection with the transactions contemplated by this Agreement, or (ii) seeking to restrain or prohibit the Buyer’s acquisition or future receipt of the Royalty Interests.

(e)           Consents.  Dyax shall have obtained at its own expense (and shall have provided copies thereof to the Buyer) all of the waivers, permits, consents, approvals or other authorizations, and effected all of the registrations, filings and notices, referred to in Section 5.01 which are required on the part of Dyax.

(f)           [*****].

(g)           Maintenance Fees.  Any and all maintenance fees and annuities due and payable on or prior to the Effective Date with respect to the Dyax Patents shall have been paid in full, including for U.S. Patents 6,492,105 and 7,112,438.

(h)           Bill of Sale.  A Bill of Sale shall have been executed and delivered by Dyax to the Buyer and shall be in the form attached hereto as Exhibit A.

(i)            Security Agreement.  The Security Agreement shall have been duly executed and delivered by all the parties thereto and shall be in the form attached hereto as Exhibit B, together with proper financing statements (including Form UCC-1s), notifications and registrations for filing with any regulatory agency or under the UCC and/or any other applicable law, rule, statute or regulation relating to the perfection of a security interest in filing offices in the United States.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(j)            Corporate Documents of Dyax.  The Buyer shall have received on the Closing Date, a certificate, dated the Closing Date, of the Secretary of Dyax (the statements made in which shall be true and correct on and as of the Closing Date): (i) attaching copies, certified by such officer as true and complete, of Dyax’s certificate of incorporation and bylaws or other organizational documents (together with any and all amendments thereto) certified by the appropriate Government Authority as being true, correct and complete copies; (ii) attaching copies, certified by such officer as true and complete, of resolutions of the board of directors of Dyax authorizing and approving the execution, delivery and performance by such Dyax of this Agreement, the other Transaction Documents and the transactions contemplated herein and therein; (iii) setting forth the incumbency of the officer or officers of Dyax who have executed and delivered this Agreement and the other Transaction Documents including therein a signature specimen of each such officer or officers; and (iv) attaching copies, certified by such officer as true and complete, of certificates of the appropriate Government Authority of the jurisdiction of formation, stating that Dyax is in good standing under the laws of such jurisdiction.

(k)           Officer’s Certificates.  The Buyer shall have received at the Closing a certificate of an executive officer of Dyax pursuant to which such officer certifies that the conditions set forth in Sections 6.02(a) – (g) have been satisfied in all respects as of the Closing Date.

(l)            Legal Opinions.  The Buyer shall have received an opinion of Edwards Angell Palmer & Dodge LLP, counsel to Dyax, dated the Closing Date, in form and substance satisfactory to the Buyer and its counsel, to the effect set forth in Exhibit D.  The Buyer shall have received an opinion of Lando & Anastasi, special patent counsel to Dyax, dated the Closing Date, in form and substance satisfactory to the Buyer and its counsel, to the effect set forth in Exhibit E.

Section 6.03  Conditions Applicable to Dyax Entities.

The obligations of Dyax to effect the Closing shall be subject to the satisfaction of each of the following conditions, any of which may be waived by Dyax in its sole discretion:

(a)           Accuracy of Representations and Warranties.  The representations and warranties of the Buyer set forth in this Agreement shall be true, correct and complete as of the Closing Date.

(b)           Litigation.  No action, suit, litigation, proceeding or investigation shall have been formally instituted, be pending or threatened (i) challenging or seeking to make illegal, to delay or otherwise directly or indirectly to restrain or prohibit the consummation of the transactions contemplated by this Agreement, or seeking to obtain damages in connection with the transactions contemplated by this Agreement, or (ii) seeking to restrain or prohibit the Buyer’s acquisition or future receipt of the Royalty Interests.

(c)           Officer’s Certificate.  Dyax shall have received at the Closing a certificate of an officer or member of the general partner of the Buyer certifying that the conditions set forth in Sections 6.03(a) and (b) have been satisfied, in all respects as of the Closing Date.

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(d)           Full Payment.  The Investment shall have been tendered by the Buyer to Dyax by wire transfer of immediately available funds to Dyax Account identified to the Buyer on or prior to the Closing.

ARTICLE VII

TERMINATION

Section 7.01  Term.

Unless this Agreement is terminated prior to the Closing or later in accordance with Section 2.03(a)(ii) in accordance with the express terms of this Agreement, the Parties’ obligations under this Agreement shall continue to be effective after the Closing until the Royalty Interest Termination Date; provided, however, that if any Obligations under this Agreement remain unpaid or any payments are required to be made by one of the Parties hereunder after the Royalty Interest Termination Date, this Agreement shall remain in full force and effect until any and all such payments have been made in full, and solely for that purpose.

ARTICLE VIII

MISCELLANEOUS

Section 8.01  Survival.

(a)           All representations and warranties made as of their respective dates herein and in any other Transaction Document, any certificates or in any other writing delivered pursuant hereto or in connection herewith as of Closing shall survive the execution and delivery of this Agreement and the Closing and shall continue to survive until the Royalty Interest Termination Date.  Notwithstanding anything in this Agreement or implied by law to the contrary, all the agreements contained in Section 5.04 (Confidentiality; Public Announcement), Section 8.01 (Survival), Section 8.04 (Successors and Assigns) and Section 8.05 (Indemnification) shall survive indefinitely following the execution and delivery of this Agreement and the Closing and the termination of this Agreement.

(b)           Any investigation or other examination that may have been made or may be made at any time by or on behalf of the party to whom representations and warranties are made shall not limit, diminish or in any way affect the representations and warranties in this Agreement and the other Transaction Documents, and the parties may rely on the representations and warranties in this Agreement and the other Transaction Documents irrespective of any information obtained by them by any investigation, examination or otherwise.

Section 8.02  Specific Performance.

Each of the parties hereto acknowledges that the other party will have no adequate remedy at law if it fails to perform any of its obligations under this Agreement or any of the other Transaction Documents.  In such event, each of the parties agrees that the other party shall have the right, in addition to any other rights it may have (whether at law or in equity), to specific performance of this Agreement.

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Section 8.03  Notices.

All notices, consents, waivers and communications hereunder given by any party to the other shall be in writing (including facsimile transmission and email) and delivered personally, by email or facsimile (provided in each case that receipt is confirmed and that a copy is provided in addition by personal delivery, by courier or by mail as provided herein), by a recognized overnight courier, or by dispatching the same by certified or registered air mail, return receipt requested, with postage prepaid, in each case addressed:

If to the Buyer to:

c/o Paul Capital Management, L.L.C.

50 California Street

Suite 3000

San Francisco, California  94111

USA

[*****]

with copies to (which shall not constitute notice):

Paul Capital Partners

140th East 45th Street, 44th Floor

New York, New York 10017

USA

[*****]

and

Dechert LLP

1095 Avenue of the Americas

New York, New York 10036

[*****]

If to Dyax to:

Dyax Corp.

300 Technology Square

Cambridge, MA 02139

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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or to such other address or addresses as the Buyer or Dyax may from time to time designate by notice as provided herein, except that notices of changes of address shall be effective only upon receipt.  All such notices consents, waivers and communications shall: (a) when posted by certified or registered mail, postage prepaid, return receipt requested, be effective three (3) Business Days after dispatch, unless such communication is sent trans-Atlantic, in which case shall be deemed effective five (5) Business Days after dispatch, (b) when telegraphed, telecopied, telexed or facsimiled, be effective upon receipt by the transmitting party of confirmation of complete transmission, (c) when delivered by a recognized overnight courier or in person, be effective upon receipt when hand delivered, or (d) or when sent by email, upon receipt of confirmatory hard copies from the sender or return email from the recipient.

Section 8.04  Successors and Assigns.

The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective permitted successors and assigns.  Dyax shall not be entitled to assign any of its obligations and rights hereunder or any other Transaction Documents without the prior written consent of the Buyer, it being understood and agreed that a sale of the capital stock of Dyax (including acquisition of existing stock) shall not be deemed an assignment for purposes of this sentence.  The Buyer may assign, subcontract or delegate any of its rights hereunder without restriction, but shall not be entitled to assign any of its obligations hereunder or any other Transaction Documents without the prior written consent of Dyax.  Any assignment in violation hereof shall be null and void, ab initio.

Section 8.05  Indemnification.

(a)           Dyax hereby indemnifies and holds the Buyer and its Affiliates and any of their respective partners, directors, managers, officers, employees and agents (each a “Buyer Indemnified Party”) harmless from and against any and all Losses incurred or suffered by any Buyer Indemnified Party arising out of (i) any breach of any representation, warranty or certification made by Dyax in any of the Transaction Documents or certificates given in writing pursuant thereto or any breach of or default under any covenant or agreement by Dyax pursuant to this Agreement or any Transaction Document, (ii) any failure by Dyax to satisfy any of the Obligations, or (iii) any Excluded Liabilities and Obligations.

(b)           The Buyer hereby indemnifies and holds Dyax and its Affiliates and any of their respective partners, directors, managers, officers, employees and agents (each a “Dyax Indemnified Party”) harmless from and against any and all Losses incurred or suffered by any Dyax Indemnified Party arising out of any breach of any representation, warranty or certification made by the Buyer in any of the Transaction Documents or certificates given by the Buyer in writing pursuant thereto or any breach of or default under any covenant or agreement by the Buyer pursuant to this Agreement or any Transaction Document.

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(c)           If any claim, demand, action or proceeding (including any investigation by any Government Authority) shall be brought or alleged against an indemnified party in respect of which indemnity is to be sought against an indemnifying party pursuant to the preceding paragraphs, the indemnified party shall, promptly after receipt of notice of the commencement of any such claim, demand, action or proceeding, notify the indemnifying party in writing of the commencement of such claim, demand, action or proceeding, enclosing a copy of all papers served, if any; provided, that, the omission to so notify such indemnifying party will not relieve the indemnifying party from any liability that it may have to any indemnified party under the foregoing provisions of this Section 8.05 unless, and only to the extent that, such omission results in the forfeiture of substantive rights or defenses by the indemnifying party.  In case any such action is brought against an indemnified party and it notifies the indemnifying party of the commencement thereof, the indemnifying party will be entitled to participate therein and, to the extent that it may wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel reasonably satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), provided however that (i) the action solely seeks monetary damages and (ii) the indemnifying party expressly agrees in writing that as between the indemnifying party and the indemnified party, the indemnifying party shall be solely obligated to satisfy and discharge the action in full, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party will not be liable to such indemnified party under this Section 8.05 for any legal or other expenses subsequently incurred by such indemnified party in connection with the defense thereof other than reasonable costs of investigation.  The indemnified party may, at any time, assume all such defense of any action that does meet the requirements of clauses (i) and (ii) above.  In any such proceeding, an indemnified party shall have the right to retain its own counsel, but the reasonable fees and expenses of such counsel shall be at the expense of such indemnified party unless (A) the indemnifying party and the indemnified party shall have mutually agreed to the retention of such counsel, (B) the indemnifying party has assumed the defense of such proceeding and has failed within a reasonable time to retain counsel reasonably satisfactory to such indemnified party, (C) the named parties to any such proceeding (including any impleaded parties) include both the indemnifying party and the indemnified party and representation of both parties by the same counsel would be inappropriate due to actual or potential conflicts of interests between them based on the advice of such counsel, or (D) the indemnified party assumes the defense of any action that does meet the requirements of clauses (i) and (ii) above.  It is agreed that the indemnifying party shall not, in connection with any proceeding or related proceedings in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate law firm (in addition to local counsel where necessary) for all such indemnified parties.  The indemnifying party shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party from and against any loss or liability by reason of such settlement or judgment.  No indemnifying party shall, without the prior written consent of the indemnified party, effect any settlement of any pending or threatened proceeding in respect of which any indemnified party is or could have been a party and indemnity could have been sought hereunder by such indemnified party, unless such settlement includes an unconditional release of such indemnified party from all liability on claims that are the subject matter of such proceeding.

Section 8.06  Performance by the Buyer.

(a)           In the event that any Dyax Entity is in breach of or in default under any Included License Agreement and such breach or default continues beyond any applicable cure period, the Buyer may, but shall not be obligated to, cure or attempt to cure such breach or default on behalf of such Dyax Entity.  In such event, Dyax shall, at the request of the Buyer promptly pay any amount expended by the Buyer in such performance unless and to the extent that any such breach or default arose out of an action taken, or not taken, at the request or instruction of Buyer, in which case Buyer shall be solely responsible for any such expenses.

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(b)           To the fullest extent possible, the Buyer shall have the right to enforce, or to cause Dyax to enforce, any rights of Dyax under any Included License Agreement.

(c)           Notwithstanding clauses (a) and (b) above, it is expressly understood that the Buyer assumes no liability or responsibility for the performance of any duties of Dyax or any other Contract Party under any Included License Agreement.

(d)           Buyer shall have the right (but not the obligation) to assume responsibility for maintenance of any Dyax Patents, at Dyax’s expense (except as provided in Section 2.02(b)), if Dyax or any other Person fails to maintain such Dyax Patent, provided that if Buyer chooses to exercise such right, Buyer shall notify Dyax thereof in writing within a reasonable period of time and Buyer’s exercise of such right shall not release Dyax from any liability for breach of this Agreement, including Section 5.08(h).

Section 8.07  Expenses.

(a)           Except as otherwise provided specifically herein, each party hereto will pay all of its own fees and expenses in connection with entering into and consummating the transactions contemplated by this Agreement.

(b)           Dyax shall pay all reasonable out-of-pocket expenses (including reasonable attorneys’ fees and costs and reasonable accounting, appraisal, investment banking and similar professional fees and charges) incurred by the Buyer in connection with the enforcement of or preservation of rights under any of the Transaction Documents against Dyax or of the granting of any waivers or amendments to any of the Transaction Documents that are requested by Dyax.

Section 8.08  Independent Nature of Relationship.

(a)           The relationship between Dyax, on the one hand, and the Buyer, on the other hand, is solely that of seller and purchaser, and neither Dyax, on the one hand, nor the Buyer, on the other hand, has any fiduciary or other special relationship with the other party or any of their respective Affiliates.  Nothing contained herein or in any other Transaction Document shall be deemed to constitute any Dyax Entity and the Buyer, as a partnership, an association, a joint venture or other kind of entity or legal form.

(b)           No manager or other representative of the Buyer will be located at the premises of any Dyax Entity, except in connection with an audit performed pursuant to Section 5.02.  No manager or other representative of the Buyer shall engage in any commercial activity with Dyax other than as contemplated herein and in the other Transaction Documents.

(c)           Dyax shall not at any time obligate the Buyer, or impose on the Buyer any obligation, in any manner or respect to any Person not a party hereto.

(d)           No Dyax Entity is transferring to the Buyer any ownership interest in any Dyax Patent or other intellectual property of any Dyax Entity.

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Section 8.09  Tax.

The Buyer shall provide to Dyax, upon reasonable request by Dyax, Internal Revenue Service Form W-9 if required in order to allow Dyax to make payment under this Agreement without any deduction or withholding for or on account of any tax.

Section 8.10  Entire Agreement.

This Agreement, together with the Exhibits and Schedules hereto (which are incorporated herein by reference), and the other Transaction Documents constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements (including the Letter of Intent), understandings and negotiations, both written and oral, between the parties with respect to the subject matter of this Agreement.  No representation, inducement, promise, understanding, condition or warranty not set forth herein (or in the Exhibits, Schedules or other Transaction Documents) has been made or relied upon by either party hereto.  None of this Agreement, nor any provision hereof, is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder.

Section 8.11  Performance by Affiliates.

Any right or obligation of the Buyer under or pursuant to this Agreement or the Transaction Documents may be exercised, satisfied, met or fulfilled, in whole or in part, at the Buyer’s sole and exclusive option, by an independent manager appointed by the Buyer.

Section 8.12  Amendments; No Waivers.

(a)           This Agreement or any term or provision hereof may not be amended, changed or modified except with the written consent of the parties hereto.  No waiver of any right hereunder shall be effective unless such waiver is signed in writing by the party against whom such waiver is sought to be enforced. All expenses (including attorneys’ fees and expenses) incurred in connection with the amendment or modification of this Agreement or any of the Transaction Documents, if requested by Dyax, shall be borne solely by Dyax (unless the terms of this Agreement expressly provide to the contrary), and requested by Buyer, shall be borne solely by Buyer (unless the terms of this Agreement expressly provide to the contrary).  For any amendment or modification of this Agreement mutually determined to be necessary to clarify any provision hereof, each party shall bear their own expenses (including attorneys’ fees and expenses).

(b)           No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

Section 8.13  Counterparts; Effectiveness.

This Agreement may be executed in two or more counterparts, each of which shall be an original, but all of which together shall constitute one and the same instrument.  This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other parties hereto.

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Section 8.14  Severability.

If any provision of this Agreement is held to be invalid or unenforceable, the remaining provisions shall nevertheless be given full force and effect.

Section 8.15  Governing Law; Jurisdiction.

(a)           THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED, INTERPRETED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK).

(b)           ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK.  BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO AND ACCEPTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION OF SUCH COURTS.  EACH PARTY HERETO HEREBY FURTHER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

(c)           EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN SUBSECTION (b) ABOVE OF THIS SECTION 8.15 IN ANY SUCH SUIT, ACTION OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID, TO IT AT ITS ADDRESS SET FORTH IN THIS AGREEMENT.  EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUIT, ACTION OR PROCEEDING COMMENCED HEREUNDER OR UNDER ANY OTHER TRANSACTION DOCUMENT THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.  NOTHING HEREIN SHALL AFFECT THE RIGHT OF A PARTY TO SERVE PROCESS ON THE OTHER PARTY IN ANY OTHER MANNER PERMITTED BY LAW.

Section 8.16  Waiver of Jury Trial.

EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT.

38

Exhibit 10.1

EXECUTION VERSION

Confidential materials omitted and filed separately with the Securities and Exchange

Commission.  Asterisks denote such omission.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.

DYAX:
	DYAX CORP.
	By:	/s/ George Migausky
		Name: George Migausky
		Title: Chief Financial Officer
BUYER:
	KGH DOMESTIC III, LP
	By: Paul Capital Healthcare Management, L.P.
	Its: General Partner
	By: Paul Capital Fund Management , L.L.C.
	Its: General Partner
	By:	/s/ Lionel Leventhal
		Name: Lionel Leventhal
		Title: Manager

39

Schedule 3.08 (c)

Litigation

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

40

Schedule 3.12 (b)

Dyax Patent Rights

FACTOR VIII AND FACTOR VIII-LIKE PROTEINS
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	Annuity Due Date	EXPIRATION
099001	US	09/224,785	6,197,526		POLYPEPTIDES FOR BINDING HUMAN FACTOR VIII AND FRAGMENTS OF HUMAN FACTOR VIII	ISSUED	3/6/2001	3/6/2012	1/4/2019
099002	US	09/756,594	6,492,105	US 2001-0014456 A1	POLYPEPTIDES FOR BINDING HUMAN FACTOR VIII AND FRAGMENTS OF HUMAN FACTOR VIII	ISSUED	12/10/2002	6/10/2010	2/18/2019
099AT2	AT	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099AU1	AU	25982/00	769745	769745	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	5/27/2004	1/3/2011	1/3/2020
099AU2	AU	2004201830	2004201830		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	7/19/2007	1/3/2011	1/3/2020
099BE2	BE	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
[*****]	[*****]	[*****]			[*****]	[*****]		[*****]	[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

41

099CH2	CH	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099DE2	DE	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099DK2	DK	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
[*****]	[*****]	[*****]		[*****]	[*****]	[*****]		[*****]
099EP2	EP	06009040.4	EP1705183	EP1705183	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099EP3	EP	09155033.5		EP2090582	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED		1/3/2011	1/3/2020
099ES2	ES	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099FI2	FI	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

42

[*****]	[*****]	[*****]		[*****]	[*****]		[*****]	[*****]
099GB2	GB	06009040.4	EP1705183	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099GR2	GR	06009040.4	EP1705183	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
[*****]	[*****]	[*****]		[*****]	[*****]		[*****]	[*****]
[*****]	[*****]	[*****]	[*****]	[*****]	[*****]	[*****]	[*****]	[*****]
[*****]	[*****]	[*****]		[*****]	[*****]		[*****]	[*****]
099IE2	IE	06009040.4	EP1705183	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099IT2	IT	06009040.4	EP1705183	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

43

099JP1	JP	2000-592310		P2002-536297A	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED		No Annuity Due	1/3/2020
099LI2	LI	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED		1/3/2011	1/3/2020
099LU2	LU	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099MC2	MC	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099NL2	NL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099PT2	PT	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099SE2	SE	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	6/17/2009	1/3/2011	1/3/2020
099WO1	WO	PCT/US00/00043		WO00/40602	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED		No Annuity Due

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

44

100001	US	10/272,497	7,112,438	US 2003-0165822 A1	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	9/26/2006	9/26/2013	1/4/2019
**100002	US	11/345,031	7,691,565	US 2006-0193829 A1	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	4/6/2010	4/6/2013	2/18/2019
[*****]	[*****]	[*****]			[*****]	[*****]		[*****]	[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

** New Issued Patent

45

Schedule 3.12 (d)

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

46

Schedule 3.12 (g)

Abandoned, Cancelled or Expired Patents

See Schedule 3.12(b)

47

Schedule 3.15

Dyax's Principal Place of Business and CEO

Principal Place of Business:

300 Technology Square

Cambridge, MA 02139

Chief Executive Officer:

Gustav Christensen

48

Schedule 3.18(c)

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

49

Schedule 5.08

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

50

EX-10.2

Exhibit 10.2

EXECUTION VERSION

Confidential materials omitted and filed separately with the Securities and Exchange

Commission.  Asterisks denote such omission.

JOINT DEVELOPMENT AND LICENSE AGREEMENT

BY AND BETWEEN

DYAX CORP.

AND

DEFIANTE FARMACÊUTICA S.A.,

DATED AS OF JUNE 18, 2010

Exhibit 10.2

EXECUTION VERSION

Confidential materials omitted and filed separately with the Securities and Exchange

Commission.  Asterisks denote such omission.

JOINT DEVELOPMENT AND LICENSE AGREEMENT

This Joint Development and License Agreement (this "Agreement") is made and effective as of June 18, 2010 (the "Effective Date") by and between Dyax Corp., with principal offices at 300 Technology Square, Cambridge, Massachusetts 02139, U.S.A. ("Dyax"), and Defiante Farmacêutica S.A., with registered offices at Rua da Alfândega, n. 78, 3° andar, 9000-059, Funchal, Madeira, Portugal ("Defiante").

INTRODUCTION

WHEREAS, Dyax owns or controls certain patents, know-how and other rights related to its proprietary novel plasma kallikrein inhibitor known as DX-88 (ecallantide);

WHEREAS, Defiante is engaged in the development and commercialization of pharmaceutical products;

WHEREAS, Defiante desires to collaborate with Dyax for the development and commercialization of products incorporating DX-88 for the treatment of angioedemas and certain other indications in the Defiante Territory (as such terms are defined herein); and

WHEREAS, Dyax is willing to enter into such collaboration on the terms and conditions set forth herein.

NOW, THEREFORE, for and in consideration of the mutual covenants contained herein, Dyax and Defiante hereby agree as follows:

ARTICLE I

DEFINITIONS

As used in this Agreement, the following terms shall have the meanings set forth below:

1.1             "Additional Countries". Additional Countries shall mean the People’s Republic of China, Hong Kong, Macao, India.

1.2             "Additional Indication". Additional Indication shall mean use in the treatment of any Indication in the Field other than HAE.  For the avoidance of doubt, acquired angioedema, drug-induced angioedema and idiopathic angioedema shall each be considered an Additional Indication.

1.3             "Additional Indication Development Plan".  Additional Indication Development Plan shall have the meaning given to that term under Section 4.3(e).

1.4             "Affiliate".  Affiliate shall mean with respect to any Person, any Person controlling, controlled by or under common control with such first Person.  For purposes of this Section 1.3, "control" shall mean (a) in the case of a Person that is a corporate entity, direct or indirect ownership of more than fifty percent (50%) of the stock or shares having the right to vote for the election of directors of such Person and (b) in the case of a Person that is an entity, but is not a corporate entity, the possession, directly or indirectly, of the power to direct, or cause the direction of, the management or policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

1.5             "Alliance Manager".  Alliance Manager shall have the meaning given to that term under Section 2.6.

1.6             "Bankruptcy Code".  Bankruptcy Code shall mean Title 11 of the United States Code.

1.7             "Batch".  Batch shall mean a quantity of Drug Substance manufactured by Dyax (or its CMO) that (a) is expected to have uniform character and quality within specified limits, and (b) is produced according to a single manufacturing run during the same cycle.

-1-

1.8             "Blocking Third Party Patent Rights".  Blocking Third Party Patent Rights shall mean, with respect to any country in the Defiante Territory, on a country-by-country basis, Patent Rights in such country owned or controlled by a Third Party that Cover the Product or its Manufacture or Commercialization in the Field.  Notwithstanding the foregoing, the [*****]

1.9             "Breaching Party".  Breaching Party shall have the meaning given to that term under Section 12.2(b).

1.10           "Business Day".  Business Day shall mean a day that is not a Saturday, Sunday or a day on which banking institutions in Cambridge, Massachusetts, USA, Madeira, Portugal or Rome, Italy are authorized by law to remain closed.

1.11           "Calendar Quarter".  Calendar Quarter shall mean each of the periods ending on March 31, June 30, September 30 and December 31 of any year.

1.12           "Challenging Party".  Challenging Party shall have the meaning given to that term under Section 12.2(d).

1.13           "CMO".  CMO shall mean a contract manufacturing organization contracting with Dyax to supply the Parties with Drug Substance or Drug Product pursuant to Article VI.

1.14           "Commercialization" or "Commercialize".  Commercialization or Commercialize shall mean activities to market, promote, label, package, store, import, export, offer to sell and sell Product, including conducting any Post-Approval Studies to support Commercialization.  Commercialization shall not include any activities that are otherwise covered by the definitions of "Development" or "Manufacturing" or "Post-Filing Activities".

1.15           "Commercially Reasonable Efforts".  Commercially Reasonable Efforts shall mean the conduct and completion of an activity by a Party in a diligent and commercially reasonable manner, using efforts not less than the efforts such Party devotes to other similar activities based on conditions then prevailing and any other technical, legal, scientific, medical or commercial factors that such Party deems in good faith to be relevant.

1.16           "Competitive Infringement".  Competitive Infringement shall have the meaning given to that term under Section 8.3(a).

1.17           "Complaint".  Complaint shall mean any information concerning any side effect, injury, toxicity or sensitivity reaction, or any unexpected incident, adverse drug experience (as that term is defined in Section 505-1 of the FDCA) or adverse event (as that term is defined under the ICH Guidelines) in or involving a subject or, in the case of pre-clinical studies, an animal in a toxicology study, and the seriousness thereof, whether or not determined to be attributable to Compound or Product, including any such information received by either Party from its Related Parties or other Third Parties.

1.18           "Compound".  Compound shall mean DX-88.  To the extent that the Parties agree to jointly develop any Product Improvement in accordance with Section 4.4, the term "Compound" shall also include the active pharmaceutical ingredient of such Product Improvement.

1.19           "Confidential Information".  Confidential Information shall have the meaning given to that term under Section 9.1.

1.20           "Confidentiality Agreement".  Confidentiality Agreement shall mean the Confidentiality Agreement, dated effective November 27, 2009.

1.21           "Contribution Payments".  Contribution Payments shall mean the payments due from Defiante to Dyax in respect of Net Sales of Product, as described in Section 7.5.

1.22           "Contribution Payment Term".  Contribution Payment Term shall have the meaning given to that term under Section 7.5(b).

1.23           "Control" or "Controlled".  Control or Controlled shall mean, with respect to any intellectual property right or other intangible property, or Know-How, the possession (whether by license or ownership, or by control over an Affiliate having possession by license or ownership, other than pursuant to this Agreement) by a Party of the ability to grant to the other Party access, ownership and/or a license or sublicense as provided herein without violating the terms of any agreement with any Third Party; [*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

-2-

1.24           "Cover", "Covering" or "Covered".  Cover, Covering or Covered shall mean, with respect to Compound, Product and/or technology, that (a) in the absence of a license granted under a Valid Claim of an issued patent, the making, use, offering for sale, sale, or importation of Compound or Product, or the practice of such technology would infringe such Valid Claim, and (b) in the absence of a license granted under a Valid Claim of a patent application, the making, use, offering for sale, sale, or importation of Compound or Product or the practice of such technology would infringe such Valid Claim if it were to issue in a patent.

1.25           "Defiante Development Data". Defiante Development Data shall mean, as it pertains to Product or its use, all pharmacology and toxicology data and information, pre-clinical study data, clinical trial data, protocols, safety data, quality data and other regulatory information and reports, whether in written or electronic form, generated or developed by Defiante or any of its Affiliates in the course of performing activities under this Agreement during the Term.

1.26           "Defiante Intellectual Property".  Defiante Intellectual Property shall mean Defiante Know-How and Defiante Patent Rights, collectively.

1.27           "Defiante Know-How".  Defiante Know-How shall mean any Know-How that (a) [*****] and (b) is [*****] for the Development, Manufacture and/or Commercialization of Compound or Product as contemplated by this Agreement.

1.28           "Defiante Patent Rights".  Defiante Patent Rights shall mean Patent Rights, including Defiante's rights in Joint Patent Rights that (a) claim Defiante Know-How, and (b) [*****].  Defiante Patent Rights shall include Defiante's rights in Joint Patent Rights as well as any Patent Rights applicable to Defiante Sole Inventions.

1.29           "Defiante Product Trademarks".  Defiante Product Trademarks shall have the meaning given to that term under Section 8.8(c)

1.30           "Defiante Promotional Materials".  Defiante Promotional Materials shall have the meaning given to that term in Section 5.2.

1.31           "Defiante Sole Inventions".  Defiante Sole Inventions shall have the meaning given to that term under Section 8.1(b).

1.32           "Defiante Territory".  Defiante Territory shall mean countries listed on Exhibit A, together with (a) any additional countries that join the EU after the Effective Date, and (b) any new countries or territories created or arising after the Effective Date that reside within the geographical boundaries of the countries listed on Exhibit A.

1.33           "Development" or "Develop".  Development or Develop shall mean, in respect of a Compound or Product, pre-clinical and clinical research and drug development activities, including toxicology, test method development and stability testing and studies, process development, formulation development, delivery system development, quality assurance and quality control development, statistical analysis, clinical studies (other than post-approval studies), regulatory affairs, and product approval and regulatory activities (excluding regulatory activities directed to obtaining pricing and reimbursement approvals).

1.34           "Development Costs".  Development Costs shall mean, with respect to Compound or Product, all out-of-pocket and internal costs and expenses incurred by or on behalf of the Parties after the Effective Date in connection with the Development of Compound or Product for use in the Field.  Development Costs shall consist of:

(a) Manufacturing Costs associated with obtaining Drug Substance and/or Drug Product in connection with the Development of Product;

(b) costs of studies on the preclinical, toxicological, pharmacokinetic, metabolic, clinical and/or stability aspects of Compound or Product;

(c) costs of conducting clinical studies for a Product (other than Post-Approval Studies), including the costs of clinical supplies for such efforts, including all internal and external costs incurred in purchasing and/or packaging comparator drugs, disposal of clinical samples, related regulatory compliance, quality control, medical affairs, clinical operations, study subject recruitment and the preparation, collation and/or validation of data from such clinical studies;

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

-3-

(d) costs of preparing, submitting, reviewing or developing data or information, including the preparation of medical writing, for the purpose of submission to a Regulatory Authority to obtain approval to commence clinical studies (other than Post-Approval Studies) or to obtain Regulatory Approval for Product and costs associated with submitting, amending or maintaining such approval(s); and

(e) the fully allocated costs of internal clinical, regulatory, scientific, or technical personnel engaged in such efforts.

Development Costs shall not include any costs associated with Post-Filing Activities or Post-Approval Studies, which shall be included in Regulatory Activities Costs.

1.35           "Drug Product".  Drug Product shall mean the finished Product formulation containing Drug Substance filled into unlabelled vials.

1.36           "Drug Product Order Limit".  Drug Product Order Limit shall mean, with respect to any order for Drug Product placed during a Calendar Quarter, a quantity equal to [*****].

1.37           "Drug Substance".  Drug Substance shall mean Compound in bulk form manufactured for use as an active pharmaceutical ingredient in Drug Product.

1.38           "Drug Substance Inventory".  Drug Substance Inventory shall mean Drug Substance that (i) has been Manufactured by Dyax pursuant to an order placed by Defiante in accordance with Section 6.1(c), and (ii) is being held by Dyax (or its contractor) on behalf of Defiante for use in the Manufacture of Drug Product ordered by Defiante in accordance with Section 6.1(d).

1.39           "Drug Substance Order Limit".  Drug Substance Order Limit shall mean, with respect to any order for Drug Substance placed during a Calendar Quarter, a quantity equal to the lower of:

(a) the quantity of Drug Substance forecasted for order during such Calendar Quarter in the most recent forecast provided by Defiante to Dyax plus one additional Batch; and

(b) one hundred twenty percent (120%) of the average of the quantity of Drug Substance forecasted for order during such Calendar Quarter in the four (4) most recent forecasts provided by Defiante to Dyax.

1.40           "DX-88".  DX-88 shall mean the compound known as DX-88 (ecallantide) with the amino acid sequence described in Exhibit B.

1.41           "Dyax Development Data".  Dyax Development Data shall mean, as it pertains to Product or its use, all pharmacology and toxicology data and information, pre-clinical study data, clinical trial data, protocols, safety data, quality data and other regulatory information and reports, whether in written or electronic form, generated or developed by Dyax or its Affiliates in the course of performing activities under this Agreement during the Term.  Dyax Development Data shall include the HAE Development Data.

1.42           "Dyax Intellectual Property".  Dyax Intellectual Property shall mean Dyax Know-How and Dyax Patent Rights.

1.43           "Dyax Know-How".  Dyax Know-How shall mean any Know-How that (a) either is owned or Controlled by Dyax on the Effective Date [*****] and (b) is necessary for the Development, Manufacture and/or Commercialization of Product as contemplated by this Agreement, including all Know-How generated by or for Dyax in the course of Development of Product.  Notwithstanding the foregoing, Dyax Know-How shall specifically exclude:

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

-4-

1.44           "Dyax Patent Rights".  Dyax Patent Rights shall mean any Patent Rights that (a) Cover Dyax Know-How and (b) are owned or Controlled by Dyax on the Effective Date or come within Dyax's Control during the Term, including the Existing Dyax Patent Rights, Dyax's rights in Joint Patent Rights, and any Patent Rights applicable to Dyax Sole Inventions.  Notwithstanding the foregoing, Dyax Patent Rights shall specifically exclude the [*****].

1.45           "Dyax Product Trademarks".  Dyax Product Trademarks shall have the meaning given to that term under Section 8.8(b).

1.46           "Dyax Sole Inventions".  Dyax Sole Inventions shall have the meaning given to that term under Section 8.1(b).

1.47           "Dyax Territory".  Dyax Territory shall mean all the countries of the world outside the Defiante Territory.

1.48           "EMA".  EMA shall mean the European Medicines Agency or any successor agency thereto.

1.49           "European Union" or "EU".  European Union or EU shall mean the countries of the European Union, as it is constituted as of the Effective Date and as it may be expanded from time to time.

1.50           "Executive Officers". Executive Officers shall mean the Chief Executive Officer of Dyax (or a senior executive officer of Dyax designated by Dyax's Chief Executive Officer) and the Chief Executive Officer of Defiante (or a senior executive officer of Defiante designated by Defiante's Chief Executive Officer).

1.51           "Existing Dyax Patent Rights".  Existing Dyax Patent Rights shall mean those Dyax Patent Rights specifically listed on Exhibit C.

1.52           "FDA".  FDA shall mean the United States Food and Drug Administration or any successor agency thereto.

1.53           "FDCA".  FDCA shall mean the United States Federal Food, Drug and Cosmetic Act, as amended.

1.54           "Field".  Field shall mean use in the HAE Indication; provided that if and to the extent that:

(a) Dyax and Defiante agree to jointly develop Product for an Additional Indication in accordance with Section 4.3(e), then the Field shall be automatically expanded to include the use of Product in such Additional Indication; or

(b) Defiante elects to independently develop Product for an Additional Indication in accordance with Section 4.3(c) (i.e. following Defiante's submission to the JSC of a proposal under Section 4.3(b) and Dyax's election not to join Defiante in such Development), then the Field shall be automatically expanded to include the use of Product in such Additional Indication.

For the avoidance of doubt, the Field shall specifically exclude any use in the Opthalmic Field and the Surgical Field (except to the extent the Field is expressly expanded to include the Surgical Field under the terms and conditions set forth in Section 3.6).

1.55           "First Commercial Sale".  First Commercial Sale shall mean, with respect to Product in a country, the first commercial sale of such Product in such country.

1.56           "GAAP".  GAAP shall mean (a) with respect to Dyax, generally accepted accounting principles in the United States as consistently applied by Dyax in the preparation of its financial statements and (b) with respect to Defiante, generally accepted accounting principles in Portugal as consistently applied by Defiante in the preparation of its financial statements.

1.57           "HAE".  HAE shall mean hereditary angioedema.

1.58           "HAE Development Data".  HAE Development Data shall have the meaning given to that term in Section 4.2(b)(i).

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

-5-

1.59           "HAE Development Plan".  HAE Development Plan shall have the meaning given to that term in Section 4.2(a).

1.60           "ICH Guidelines". ICH Guidelines shall mean the International Conference on Harmonisation guidelines, including E2A, E2B, E2C and E2D as amended and any replacement thereof from time to time.

1.61           "IND".  IND shall mean an Investigational New Drug Application filed with FDA or a similar application to conduct Clinical Studies filed with an applicable Regulatory Authority outside of the United States.

1.62           "Indemnified Parties".  Indemnified Parties shall have the meaning given to that term in Section 11.3.

1.63           "Indemnifying Parties".  Indemnifying Parties shall have the meaning given to that term in Section 11.3.

1.64           "Independent Development" or "Independently Developed".  Independent Development or Independently Developed shall mean any development conducted by one Party independently of the other Party in accordance with Sections 4.3(b) and/or 4.4(b).

1.65           "Indication".  Indication shall mean a use of a Product approved by a Regulatory Authority (whether through a label expansion or a separate Regulatory Approval).

1.66           "In-License".  In-License shall mean an agreement between a Party or its Affiliate and a Third Party pursuant to which such Party or its Affiliate has licensed Blocking Third Party Patent Rights for use by either Party or both Parties in accordance with Section 3.4.

1.67           "Invention".  Invention shall mean any Know-How or Patent Right that is generated, conceived, reduced to practice and/or developed during the Term related to a Compound or Product (or the use thereof).

1.68           "Joint Development".  Joint Development shall mean any Development jointly conducted by the Parties under (i) the HAE Development Plan (ii) any Additional Indication Development Plan and/or (iii) any Product Improvement Development Plan.

1.69           "Joint Development Plan". Joint Development Plan shall mean the HAE Development Plan, (ii) any Additional Indication Development Plan approved by the JSC under Sections 4.3(d), and/or (iii) any Product Improvement Development Plan approved by the JSC under Sections 4.4(d).

1.70           "Joint Intellectual Property".  Joint Intellectual Property shall mean Joint Know-How and Joint Patent Rights, collectively.

1.71           "Joint Inventions".  Joint Inventions shall have the meaning given to that term under Section 8.1(b).

1.72           "Joint Know-How".  Joint Know-How shall mean any Know-How that is developed or acquired jointly by the Parties in the course of performing activities pursuant to this Agreement, including Joint Inventions.

1.73           "Joint Patent Rights".  Joint Patent Rights shall mean Patent Rights that Cover Joint Inventions.

1.74           "Know-How".  Know-How shall mean any information and materials, whether proprietary or not and whether patentable or not, including ideas, concepts, inventions, formulas, methods, protocols, procedures, knowledge, know-how, trade secrets, processes, assays, skills, experience, techniques, designs, compositions, plans, documents, results of experimentation and testing, including pharmacological, toxicological, and pre-clinical and clinical test data and analytical and quality control data, improvements, discoveries and works of authorship.

1.75           "Knowledge."  Knowledge shall mean, with respect to a Party or its Affiliates, the actual awarness of a fact or information by an officer or senior manager or other person with similar responsibility, regardless of title, of such Party or Affiliate.

1.76           "Major EU Country".  Major EU Country shall mean each of France, Germany, Italy, Spain, and the United Kingdom.

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1.77           "Manufacturing" or "Manufacture".  Manufacturing or Manufacture shall mean activities directed to producing, manufacturing, processing, filling and finishing (excluding packaging and labeling) any product or component thereof.

1.78           "Manufacturing Costs".  Manufacturing Cost shall mean with respect to Drug Substance or Drug Product, the manufacturing Party's [*****] costs, determined in accordance with GAAP by such manufacturing Party in the ordinary course of its business and incurred in the course of Manufacturing and such Drug Substance or Drug Product,which costs shall include:

(a) costs associated with [*****]; and

(b) [*****].

1.79           "Marketing Authorization Application" means the application submitted to the EMA to market and sell Product in the Field in one or more countries within the Territory.

1.80           "Net Sales".  Net Sales shall mean, with respect to Product, the gross invoiced sales of such Product in the Defiante Territory by Defiante and its Related Parties, less the following deductions to the extent included in the gross invoiced sales price for such Product or otherwise directly paid or incurred by Defiante and its Related Parties with respect to the sale of such Product:

[*****]

In the case of any sale or other disposal of Product between or among Defiante, it's Affiliates or Sublicensees for resale, Net Sales shall be calculated as above only on the value charged or invoiced on the first arm's-length sale thereafter to a Third Party.

Notwithstanding the foregoing, in any case where Product is sold or otherwise disposed of in a transaction that is not an arm's length sale of Product exclusively for cash that is separate from any sale or disposition of other products or of services, Net Sales shall mean the greatest of:

[*****]

1.81           "Non-Breaching Party".  Non-Breaching Party shall have the meaning given to that term in Section 12.2(b).

1.82           "Non-Proposing Party".  Non-Proposing Party shall mean (i) Defiante if the Proposing Party under Sections 4.3(b) or 4.4(a) is Dyax, or (ii) Dyax if the Proposing Party under Sections 4.3(b) or 4.4(a) is Defiante.

1.83           "Ophthalmic Field".  Ophthalmic Field shall mean all uses in the therapeutic treatment or prevention of any ophthalmic disease, infection or other ophthalmic condition.

1.84           "Other Angioedema". Other Angioedema shall mean acquired angioedema, drug-induced angioedema and idiopathic angioedema.

1.85           "Parties".  Parties shall mean Dyax and Defiante.

1.86           "Party".  Party shall mean either Dyax or Defiante.

1.87           "Patent Rights".  Patent Rights shall mean any and all patents and patent applications anywhere in the world, including provisional, utility, substitution, divisional, continuation and continuation-in-part applications, and reissues, reexaminations and extensions thereof, patents of addition and any Supplementary Protection Certificates, restoration of patent term and other similar rights.

1.88           "Person".  Person shall mean any natural person, corporation, firm, business trust, limited liability company, joint venture, association, organization, company, partnership or other business entity, or any government, or any agency or political subdivisions thereof.

1.89           "Phase II Clinical Study".  Phase II Clinical Study shall mean a human clinical study in any country in the world that would satisfy the requirements of 21 C.F.R. §312.21(b) as amended from time to time.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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1.90           "Post-Approval Studies".  Post-Approval Studies shall mean those studies and activities subsequent to the granting of a Regulatory Approval that are required or necessary for the maintenance of such Regulatory Approval.

1.91           "Post-Filing Activities".  Post-Filing Activities shall mean all studies and activities subsequent to a filing of application for Regulatory Approval in the Defiante Territory but prior to obtaining such Regulatory Approval that are required, or are necessary to comply with a requirement, by a Regulatory Authority for obtaining Regulatory Approval in the Defiante Territory.

1.92           "Product". Product shall mean any pharmaceutical product containing the Compound for subcutaneous administration; provided that if and to the extent that both Parties agree to Develop and/or Commercialize any Product Improvement in accordance with Section 4.4, then the term "Product" shall also include such Product Improvement.

1.93           "Product Competitor".  Product Competitor shall mean any Third Party that is engaged [*****].  As of the Effective Date, Product Competitors consist of: [*****]

1.94           "Product Improvement".  Product Improvement shall mean, with respect to any Compound or Product, [*****] including [*****]:

(a) [*****];

(b) [*****]; and

(c) [*****].

1.95           "Product Improvement Development Plan".  Product Improvement Development Plan shall mean any development plan approved by the JSC under Sections 4.4(d) that governs specific activities of the Parties to jointly Develop Product Improvements.

1.96           "Product Manufacturing Process".  Product Manufacturing Process shall mean the processes used to complete the Manufacture of unlabeled vials of Product for Defiante under this Agreement, which processes shall include the Manufacture of Drug Substance and Drug Product.

1.97           "Product Trademark(s)".  Product Trademark(s) shall mean the trademark(s) and service mark(s) distinguishing the Product, and used in connection with the Commercialization and/or any other distribution, marketing, promotion and sale activities of or for Product according to Section 8.8, and/or accompanying logos, trade dress and/or indicia of origin.

1.98           "Proposing Party".  Proposing Party shall mean the Party proposing to Develop, as the case may be (i) a Product for an Additional Indication under Section 4.3(b), or (ii) any Product Improvement under Section 4.4(a).

1.99           "Prosecuting Party".  Prosecuting Party shall have the meaning given to that term in Section 8.2(a).

1.100         "Quality Agreement".  Quality Agreement shall have the meaning given to that term under Section 6.5.

1.101         [*****]

1.102         [*****] License Agreement".  [*****] License Agreement shall mean the License Agreement effective April 3, 1997 [*****].

1.103         "[*****] Intellectual Property".  [*****] Intellectual Property shall mean the "[*****] Expression System", the "[*****] Expression Technology" and the "[*****] Patent Rights" as such terms are defined in Paragraphs 1.3, 1.5 and 1.8 of the [*****] License Agreement.

1.104         "Regulatory Activities".  Regulatory Activities shall mean all activities associated with the submission of a Regulatory Filing, including (i) preparing and drafting reports for and correspondence with, holding meetings and conversations with Regulatory Authorities, (ii) Post-Filing Activities, (iii) activities relating to the maintenance of a Regulatory Approval and (iv) the performance of Post-Approval Studies.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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1.105         "Regulatory Activities Costs".  Regulatory Activities Costs shall mean all costs and expenses (excluding Development Costs) connected with Regulatory Activities, including (i) the fully allocated costs of both Parties' internal clinical, regulatory and technical personnel engaged in such efforts, (ii) fees and other amounts to be paid to a Regulatory Authority in connection therewith, and (iii) costs associated with any Post-Filing Activities or Post-Approval Studies.

1.106         "Regulatory Approval".  Regulatory Approval shall mean all governmental and regulatory approvals required to Commercialize a Product for a particular indication in a country, including any permit, authorization, license or approval (or waiver) from any Regulatory Authority required for the Commercialization of Product and separate pricing and/or reimbursement approvals from Regulatory Authorities even if not legally required for the Commercialization of Product.

1.107         "Regulatory Authority". Regulatory Authority shall mean any federal, national, multinational, state, provincial or local regulatory agency, department, bureau or other governmental entity with authority over the clinical testing, marketing and/or sale of a pharmaceutical product in a country, including the FDA in the United States and EMA in the EU.

1.108         "Regulatory Exclusivity".  Regulatory Exclusivity shall have the meaning given to that term in Section 8.6.

1.109         "Regulatory Filings". Regulatory Filings shall mean all applications and registrations, including any INDs, submitted to any Regulatory Authority with respect to the Product to obtain Regulatory Approval in a country.

1.110         "Related Party". Related Party shall mean any of a Party's Affiliates and Sublicensees.

1.111         "Safety Data".  Safety Data means adverse event or adverse experience information, as defined under 21 C.F.R. §600.80 or the ICH Guidelines, as applicable, or the equivalent under any other applicable law, and other information regarding health risks posed by Product, including Complaints.

1.112         "Sole Inventions".  Sole Inventions shall have the meaning given to that term under Section 8.1(b).

1.113         "Specifications". Specifications shall mean the specifications, including the necessary documentation, certificates of analysis and test results, for the Drug Substance and Drug Product, as mutually agreed upon by the Parties.  For the sake of clarity, the Specifications for the Drug Substance and Drug Product may vary by country, depending on the countries for which Product will be Developed or in which Product will be Commercialized.

1.114         "Sublicensee".  Sublicensee shall mean a Third Party to whom a license or sublicense under any Dyax Intellectual Property or Defiante Intellectual Property, as the case may be, has been granted pursuant to this Agreement to Develop, Manufacture or Commercialize products containing the Compound.

1.115         "Sublicensee Development Data". Sublicensee Development Data shall, as it pertains to Product or its use, mean all pharmacology and toxicology data and information, pre-clinical study data, clinical trial data, protocols, safety data, quality data and other regulatory information and reports, whether in written or electronic form, generated or developed by generated or developed by a Sublicensee of either Party, in the course of performing activities under this Agreement during the Term.

1.116         "Subsidiary".  Subsidiary shall mean any Person (a) as to which Defiante or Dyax (as applicable) is the beneficial owner of at least fifty percent (50%) of the voting share capital, and/or (b) of which Defiante or Dyax (as applicable) has the ability to control the policies (or to control the hiring and firing of the management who determine the policies) through a voting agreement or other contract.

1.117         "Supply Agreement".  Supply Agreement shall have the meaning given to that term under Section 6.5.

1.118         "Surgical Field".  Surgical Field shall mean use of a product to prevent or treat bleeding during the conduct of any procedure involving the use of instruments (including lasers) to cut, abrade, suture or otherwise physically change body tissues and/or organs, including without limitation the following specific surgical procedures:

(a) on pump cardiopulmonary bypass procedures;

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(b) off pump cardiopulmonary bypass procedures;

(c) spinal surgeries;

(d) hip surgeries;

(e) shoulder surgeries;

(f) oncology surgeries;

(g) radical prostatectomy;

(h) radical hysterectomy;

(i) whipple procedures (pancreaticoduodenonectomy);

(j) intracranial procedures;

(k) esophagogastrectomy;

(l) thoracotomy, lung reduction surgery, and lobe/pneumonectomy;

(m) liver resection;

(n) organ transplants; and

(o) knee surgeries.

Notwithstanding anything to the contrary, the Surgical Field shall specifically exclude all uses in the treatment of HAE and/or other angioedemas (even during surgery).

1.119         "Term".  Term shall have the meaning given to that term under Section 12.1.

1.120         "Territory".  Territory shall mean the Defiante Territory or the Dyax Territory, as the context requires.

1.121         "Third Party".  Third Party shall mean any Person other than a Party or any of its Affiliates.

1.122         "Transfer Price".  Transfer Price shall mean, with respect to any amount of Drug Substance or Drug Product delivered to Defiante for use in the Independent Development of Product or the Commercialization of Product, the [*****].

1.123         "United States".  United States shall mean the United States of America and its territories and possessions.

1.124         "Valid Claim".  Valid Claim shall mean a claim (a) of any issued, unexpired patent that has not been revoked or held unenforceable or invalid by a decision of a court or governmental agency of competent jurisdiction from which no appeal can be taken, or with respect to which an appeal is not taken within the time allowed for appeal, and that has not been disclaimed or admitted to be invalid or unenforceable through reissue, disclaimer or otherwise or (b) of any patent application that has not been cancelled, withdrawn or abandoned or been pending for [*****].

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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ARTICLE II

MANAGEMENT OF AGREEMENT ACTIVITIES

2.1           Joint Steering Committee.

  (a) Formation; Purposes and Principles.  Within thirty (30) days after the Effective Date, Dyax and Defiante shall establish a joint steering committee (the "JSC"), which shall have overall responsibility for the oversight of the Parties' activities in the Field in accordance with the terms of this Agreement.

  (b) Specific Responsibilities.  In addition to its overall responsibility for such oversight as established by this Agreement, the JSC shall in particular:

(i) review, discuss and agree on the activities of each Party with respect to the Joint Development of Product under this Agreement;

(ii) review, discuss and agree on the strategy to seek and obtain Regulatory Approval of the Product, as well as related pricing and reimbursement approvals, in the Field in the Defiante Territory;

(iii) review and monitor the progress in seeking and obtaining Regulatory Approval of the Product, as well as related pricing and reimbursement approvals, in the Field in the Defiante Territory;

(iv) review, discuss and agree on the Trademarks that will be used in connection with the Commercialization of Products in the Field in the Defiante Territory;

(v) review, discuss and comment on the Commercialization plans and strategies for the Product in the Field in the Defiante Territory;

(vi) review, discuss and comment on Defiante's Manufacturing forecasts and commercial supply requirements;

(vii) facilitate the exchange of data, information, material and results that may be required for the purposes of obtaining appropriate Regulatory Approvals;

(viii) facilitate the exchange of data, information, material and results related to the Product both in the Defiante Territory and in the Dyax Territory; and

(ix) perform such other functions as are expressly provided for elsewhere in this Agreement or as are appropriate to further the purposes of this Agreement as determined by the Parties, including periodic evaluations of performance against goals.

2.2           Working Groups.  From time to time, the JSC may establish working groups (each, a "Working Group") to oversee particular projects or activities, and each such Working Group shall be constituted and shall operate as the JSC determines.

2.3           Membership.  Each of the JSC and any Working Groups shall be composed of an equal number of representatives appointed by each of Dyax and Defiante.  The JSC shall initially have three (3) representatives of each Party, but the JSC may change the size of the JSC from time to time by mutual consent of the members of the JSC.  Each Party may replace its JSC and Working Group representatives at any time upon written notice to the other Party. The chairperson [*****].  The chairperson shall be responsible for calling meetings, preparing and circulating an agenda in advance of each meeting, and preparing and issuing minutes of each meeting [*****] thereafter.  Meetings shall be called by the chairperson upon the request of either Party.

2.4           Decision-Making.  The JSC and any Working Group shall [*****].  With respect to decisions of the JSC and any Working Group, the representatives of each Party shall have collectively one vote on behalf of such Party.  Should the members of a Working Group maintain their disagreement on any matter [*****].

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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2.5           Meetings of the JSC and Working Groups.  The JSC and any Working Groups shall hold meetings at such times as the JSC shall determine, but in no event shall such meetings of the JSC be held less frequently than [*****].  The JSC and any Working Groups shall meet alternately at Dyax's facilities in Cambridge, Massachusetts and Defiante's facilities in Rome, Italy or at such locations as the Parties may otherwise agree.  Other representatives of each Party or, with approval of the JSC and subject to confidentiality and non-use provisions which are no less stringent than those set forth in Article IX of this Agreement, representatives of Third Parties involved in the Development, Manufacture or Commercialization of Product (or the conduct of Regulatory Activities relating thereto), may attend meetings of the JSC or such Working Group as nonvoting observers.  Meetings of the JSC and any Working Groups may be held by audio or video teleconference with the consent of each Party.  Each Party shall be responsible for all of its own expenses of participating in the JSC and any Working Groups.  No action taken at a meeting of the JSC or a Working Group shall be effective unless a representative of each Party is present or participating.

2.6           Alliance Managers.  Each Party shall designate a single alliance manager, which may be a member of the JSC and/or any Working Group (the "Alliance Manager") for all of the activities contemplated under this Agreement.  Such alliance managers will be responsible for the day-to-day worldwide coordination of the activities contemplated by this Agreement and will serve to facilitate communication between the Parties.  Such alliance managers shall have experience and knowledge appropriate for managers with such project management responsibilities.  Each Party may change its designated alliance manager from time to time upon written notice to the other Party.

2.7           Third Party Performance of Agreement Activities.

  (a) Defiante shall be entitled to utilize the services of Third Parties to Develop and Commercialize Product (and conduct Regulatory Activities in connection therewith) under the following conditions:

(i) any use of a Third Party that is a Product Competitor shall be subject to Dyax's prior written approval;

(ii) Defiante shall remain at all times fully liable for its responsibilities under this Agreement;

(iii) Defiante shall not use Third Party contract resources to conduct part or all of its obligations under this Agreement unless Defiante's rights under the agreement with the Third Party guarantee Dyax the same rights under this Agreement, as if Defiante had done the work itself; and

(iv) any such Third Party agreement shall include confidentiality and non-use provisions which are no less stringent than those set forth in Article IX of this Agreement.

  (b) Dyax shall be entitled to utilize the services of Third Parties to Develop, Manufacture and Commercialize Product (and conduct Regulatory Activities in connection therewith) in accordance with the provisions of this Agreement; provided that:

(i) Dyax shall remain at all times fully liable for its responsibilities under this Agreement;

(ii) Dyax shall not use Third Party contract resources to conduct part or all of its obligations under this Agreement unless Dyax's rights under the agreement with the Third Party guarantee Defiante the same rights under this Agreement, as if Dyax had done the work itself; and

(iii) any such Third Party agreement shall include confidentiality and non-use provisions which are no less stringent than those set forth in Article IX of this Agreement.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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ARTICLE III

LICENSE GRANTS; TRANSFERS AND ASSIGNMENTS

3.1           Dyax Grants.

  (a) Grant of Rights for Development. Subject to the terms and conditions of this Agreement, Dyax hereby grants to Defiante an exclusive license under the Dyax Intellectual Property, with the right to grant sublicenses solely as set forth in Section 3.1(d), to Develop and have Developed the Compound and Product for use in the Field in the Defiante Territory.  Notwithstanding the foregoing, the exclusive license granted by Dyax to Defiante does not exclude or limit the right of Dyax to use and exploit itself the Dyax Intellectual Property, according to this Agreement, or to license the Dyax Intellectual Property to Related Parties to Develop Compound or Product for use in the Field in the Defiante Territory, in either case to the extent necessary for Dyax to perform its obligations under this Agreement.

  (b) Grant of Rights for Manufacture.  Subject to the terms and conditions of this Agreement, Dyax hereby grants to Defiante an exclusive license under the Dyax Intellectual Property, with the right to grant sublicenses solely as set forth in Section 3.1(d), to Manufacture and have Manufactured Drug Substance and Drug Product for use by or on behalf of Defiante, its Affiliates, Sublicensees and Third Party contractors in the Development and Commercialization of Product in the Field for the Defiante Territory; provided that Defiante will not exercise any of the rights granted to it under this Section 3.1(b) unless and until Defiante exercises its step-in rights in accordance with Article VI hereof.

  (c) Grant of Rights for Commercialization.  Subject to the terms and conditions of this Agreement, Dyax hereby grants to Defiante an exclusive license under Dyax Intellectual Property, with the right to grant sublicenses solely as set forth in Section 3.1(d), to Commercialize Product for use in the Field in the Defiante Territory.

  (d) Sublicense Rights.  Defiante shall be entitled to grant sublicenses under the licenses granted to it under Sections 3.1(a), (b) and (c) to Affiliates and Third Parties under the following conditions:

(i) [*****];

(ii) Defiante may only grant a sublicense [*****];

(iii) Each permitted sublicense under this Section 3.1(d) shall be in writing, shall not contravene or be inconsistent or in conflict with the terms of this Agreement and shall include provisions requiring the applicable Sublicensee to acknowledge and agree that such sublicense is subject to the applicable license(s) granted hereunder and to the relevant terms of this Agreement;

(iv) Defiante shall at all times remain responsible for the performance of its Sublicensees; and

(v) Defiante shall provide, or cause to be provided, to Dyax a copy of each such sublicense agreement [*****]; provided that Defiante shall have the right to redact any terms contained in such sublicense agreement that are not material to Dyax's assessment of whether the sublicense agreement complies with the requirements of this Section 3.1(d).

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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3.2           Grant Back License.

  (a) Subject to the terms and conditions of this Agreement, Defiante hereby grants to Dyax a non-exclusive, fully paid, royalty-free license, with the right to grant sublicenses as set forth in Section 3.2(b), under the Defiante Intellectual Property, to Develop, conduct Regulatory Activities, Manufacture and Commercialize the Compound or Product (i) in the Field in the Dyax Territory, and (ii) outside the Field in all countries of the world.

  (b) Dyax shall have the right to grant sublicenses under the non-exclusive licenses granted to it pursuant to Section 3.2(a) to its Affiliates and to Third Parties under the following conditions:

(i) Each sublicense agreement shall be in writing, shall not contravene or be inconsistent or in conflict with the terms of this Agreement, and shall include provisions requiring the applicable Sublicensee to acknowledge and agree that such sublicense is subject to the applicable license(s) granted hereunder and to the relevant terms of this Agreement;

(ii) Dyax may only grant a sublicense to a Sublicensee who has granted Dyax an assignment or a fully paid, royalty-free, exclusive or non-exclusive license with the right to grant further sublicenses through multiple tiers, or an assignment, under all Sublicensee Development Data, to Develop, Manufacture and Commercialize Product in the Field in the Defiante Territory.  For clarity, any Patent Rights or Know-How so licensed or assigned to Dyax by any such Sublicensee shall be deemed to be Dyax Intellectual Property hereunder;

(iii) Dyax shall at all times remain responsible for the performance of its Sublicensees; and

(iv) Dyax shall provide, or cause to be provided, to Defiante a copy of each such sublicense agreement promptly following its execution; provided that Dyax shall have the right to redact any terms contained in such sublicense agreement that are not material to Defiante's assessment of whether the sublicense agreement complies with the requirements of this Section 3.2(b).

3.3           Retained Rights.  Any rights of a Party, not expressly granted by such Party to the other Party, or otherwise expressly restricted or limited, under this Agreement shall be retained by that Party.  Without limiting the generality of the immediately preceding sentence, Dyax shall retain the right to (i) exploit and license Dyax Intellectual Property to Develop, Manufacture and Commercialize the Compound and Product for use in the Field in the Dyax Territory, without any duty to account to Defiante or to obtain Defiante's consent for such exploitation or license; (ii) exploit and license Dyax Intellectual Property to Develop, Manufacture and Commercialize the Compound and Product outside the Field in the Defiante Territory, without any duty to account to Defiante or obtain Defiante's consent for such exploitation or license, (iii) exploit Dyax Intellectual Property for purposes unrelated to Compound or Product without any duty to account to Defiante or obtain Defiante's consent for such exploitation or license, and (iv) otherwise exercise Dyax's rights and perform Dyax's obligations under this Agreement.

3.4           [*****]

For clarity, the Parties agree that the [*****] License Agreement shall not be considered an In-License subject to this Section 3.4.

3.5           Scope of Agreement; Activities in the Dyax Territory.  The Parties acknowledge and agree that, unless otherwise expressly stated herein:

  (a) this Agreement sets forth the terms and conditions pursuant to which (i) the Parties will jointly Develop and seek Regulatory Approval for Product in the Field, and (ii) Defiante will Commercialize Products in the Defiante Territory; and

  (b) the activities of Dyax to Develop, Manufacture and/or Commercialize Compound and/or Product in the Field in the Dyax Territory and outside the Field in all countries of the world shall be outside the scope of this Agreement and under the sole responsibility of Dyax at its cost and expense (except where it is expressly otherwise provided in this Agreement, such as with respect to Development activities carried out under a Joint Development Plan).

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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3.6         Right of First Offer; Surgical Field.  Prior to granting any Third Party rights to Develop and/or Commercialize Product in the Surgical Field (other than rights granted to Cubist Pharmaceuticals, Inc. or its assignees or sublicensees pursuant to that certain License and Collaboration Agreement dated April 23, 2008 if and as long as this agreement is in place), Dyax shall first offer to grant such license to Defiante (the " Surgical Field Right of First Offer").  The Surgical Field Right of First Offer shall set forth [*****].  Within [*****] following its receipt of the Surgical Field Right of First Offer, Defiante will notify Dyax in writing whether it wishes to obtain such license on the terms set forth therein.  If Defiante does wish to obtain such license on the terms set forth therein, the parties will negotiate in good faith for a [*****] regarding any additional terms (other than those set forth herein) applicable to such license.  If Defiante does not wish to obtain such license on the terms set forth therein or if the parties fail to reach full agreement on such additional terms within [*****], Dyax shall be free to offer the license to any Third Party, provided however that the terms so granted to such Third Party are not more favorable to such Third Party than the terms offered to Defiante.  If Defiante does wish to obtain such license on the terms set forth therein and the parties reach full agreement on such additional terms within [*****], then such additional terms shall be incorporated herein.  Furthermore, subject to such additional terms, the Field (as defined herein) shall thereafter include the Surgical Field.

3.7         Right of First Offer; Additional Countries.  Prior to granting any Third Party rights to Develop and/or Commercialize Product in the Additional Countries, Dyax shall first offer to grant such license to Defiante (the " Additional Countries Right of First Offer").  The Additional Countries Right of First Offer shall set forth [*****].  Within [*****] following its receipt of the Additional Countries Right of First Offer, Defiante will notify Dyax in writing whether it wishes to obtain such license on the terms set forth therein.  If Defiante does wish to obtain such license on the terms set forth therein, the parties will negotiate in good faith for [*****] regarding any additional terms (other than those set forth herein) applicable to such license.  If Defiante does not wish to obtain such license on the terms set forth therein or if the parties fail to reach full agreement on such additional terms within [*****], Dyax shall be free to offer the license to any Third Party, provided however that the terms so granted to such Third Party are not more favorable to such Third Party than the terms offered to Defiante.  If Defiante does wish to obtain such license on the terms set forth therein and the parties reach full agreement on such additional terms within [*****], then such additional terms shall be incorporated herein.  Furthermore, subject to such additional terms, the Defiante Territory (as defined herein) shall thereafter include the Additional Countries.

ARTICLE IV

DEVELOPMENT AND REGULATORY MATTERS

4.1         Status of Clinical Development by Dyax.  All clinical studies relating to DX-88 conducted or initiated by Dyax prior to the Effective Date are set forth more specifically in Exhibit D.

4.2         HAE Indication.

(a) HAE Development Plan. As soon as practicable after the Effective Date, the JSC shall convene to review and discuss the activities that are necessary to obtain Regulatory Approval of the Product for the treatment of HAE in the Defiante Territory.  Following this process, but in any event no later that [*****]after the Effective Date, Defiante and Dyax shall jointly complete, and the JSC shall approve, a formal plan to obtain Regulatory Approval for Product in the Defiante Territory for the HAE Indication (the "HAE Development Plan").  The HAE Development Plan shall set forth all further activities that are necessary to obtain Regulatory Approval of the Product for the treatment of HAE in the Defiante Territory, strategies and timelines for completing such activities, together with the annual budget for expenses related thereto. The HAE Development Plan shall also allocate responsibility between the Parties for such activities, subject to Section 4.2(c), (d) and (e) below and each Party's financial obligations under Section 7.3.

The JSC shall review and monitor the activities conducted by the Parties under the HAE Development Plan, which shall be updated and modified from time to time to include any additional studies required by any Regulatory Authority in the Defiante Territory, up until filing of application for Regulatory Approval, and any Post-Filing Activities required to obtain Regulatory Approval for the treatment of HAE in the Defiante Territory, in accordance with the following process:

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(i) each Party shall review the HAE Development Plan not less frequently than quarterly and shall develop detailed and specific updates to the HAE Development Plan, until the completion of the activities covered thereunder;

(ii) each Party shall submit all such updates to the JSC for review and approval at each meeting of the JSC; and

(iii) the JSC shall review proposed updates to the HAE Development Plan at the next scheduled meeting of the JSC, or earlier if the JSC so agrees, and may approve such proposed updates in its discretion and, upon such approval by the JSC, the HAE Development Plan shall be amended accordingly.

(b) Roles and Responsibilities.  Subject to each Party's respective financial obligations under Section 7.3:

(i) HAE Development Data. Dyax shall provide Defiante with all protocols, pharmacology and toxicology data and information, pre-clinical and clinical data and information and all other data and information developed by or available to Dyax and which are relevant, required, or useful for Regulatory Approval of DX-88 in the HAE Indication in the Defiante Territory to safety and efficacy response and a discussion of safety as well as efficacy in the context of alternative treatments (collectively, the "HAE Development Data").

(ii) Marketing Authorization Application.  Dyax shall remain responsible for completing the remaining preparation and drafting of the Marketing Authorization Application for the Product in the HAE Indication and for correspondence, meetings and conversations with Regulatory Authorities until the date the Regulatory Approval is granted by EMA in the name of Defiante. Responsibility for the obtaining and maintenance of such Regulatory Approval shall be assigned to Defiante as soon as practicable according to the above and to a process approved by the JSC.

(iii) Pediatric Study. Until the date the Regulatory Approval is granted by the EMA in Defiante’s name, Dyax shall remain responsible for the ongoing preparations relating to the clinical study included in the EMA approved Pediatric Investigational Plan (currently scheduled to be initiated in [*****]).  Thereafter, responsibility for the preparation and conduct of such study shall be assigned to Defiante as soon as practicable according to a process approved by the JSC.

(iv) Reformulation.  Dyax shall remain responsible for any activities relating to the reformulation of the Product, including those that are conducted in connection with the EMA approved Pediatric Investigational Plan.

(v) Post-Filing Activities.  Defiante shall be solely responsible for all Post-Filing Activities required to obtain Regulatory Approval for Product for the HAE Indication in the Defiante Territory.

4.3         Additional Indications.

(a) Current Status.  The status of development in all Other Angioedema Indications as of the Effective Date is set forth more specifically in Exhibit E.

(b) Development Proposals.  After the Effective Date, any Party engaged in Developing Product for any Additional Indication shall, prior to filing a Party-sponsored IND for Product in such Additional Indication, submit to the JSC a proposal outlining a strategy for such Development activities, which proposal shall include reasonable budgets and timelines prepared by such Party in good faith.  If, after reviewing any such proposal and discussing it in good faith, the Parties agree to jointly Develop Product for such Additional Indication, then all further Development activities shall be carried out in accordance with an Additional Indication Development Plan referred to in Section 4.3(e) below.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(c) Independent Development.   If [*****] following a Party's submission to the JSC of a proposal under Section 4.3(b), the Non-Proposing Party does not elect to join the Proposing Party in the Development of Product for the proposed Additional Indication, then the Proposing Party shall be free to independently Develop, Manufacture (to the extent such Party has a right to Manufacture under this Agreement) and Commercialize Product in such Additional Indication in the Defiante Territory at its own cost; provided that the following terms of this Agreement shall continue to apply, as applicable and mutatis mutandis, to all Development, Manufacturing or Commercialization activities conducted by such Party in connection with such proposed Additional Indication (as if such activities were being conducted with respect to a Product in the Field):

(i) If Dyax is the Proposing Party, Sections 3.2, 4.6(a), 4.6(d), 4.9, 5.3(b), 5.4(b), 5.5, 10.7 and Articles VI, VIII, IX, XI, XII and XIII;  and

(ii) If Defiante is the Proposing Party, Sections 3.1, 3.2, 4.6(b), 4.6(d), 4.9, 5.1, 5.2, 5.3(a), 5.4(b), 5.5, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 10.7, and Articles VI, VIII, IX, XI, XII and XIII.

(d) Right to Opt-In.

(i) Within [*****] following the date of the presentation by the Proposing Party of the release of top-line data from the first Phase II Clinical Study in such Additional Indication, the Non-Proposing Party shall have the option to join the Proposing Party in the Development of Product in such Additional Indication, in which case all further Development of Product in such Additional Indication shall be jointly carried out by the Parties in accordance with the Additional Indication Development Plan under Section 4.3(e) below.

(ii) It is understood and agreed that if the Non-Proposing Party does not elect to join the Proposing Party in the Development of  Product for the proposed Additional Indication in accordance with Section 4.3(c) or (d), then the Non-Proposing Party shall not otherwise take any action to independently Develop such Additional Indication in the Defiante Territory.

(iii) If a Non-Proposing Party exercises its right to opt-in pursuant to this Section 4.3(d), such Non-Proposing Party shall make to the Proposing Party a [*****] of the Development Costs incurred by the Proposing Party in the Development of the Product in such Additional Indication prior to the effective date of such opt-in.  Within [*****] after the effective date of such opt-in, the Proposing Party shall provide to the Non-Proposing Party a written accounting of such Development Costs (accompanied by supportive documentary evidence). The Non-Proposing Party shall then have thirty (30) days to verify such accounting and pay the Proposing Party.  In case of disagreement on the amount stated in the written accounting: (i) each Party shall be entitled to refer the disputed matter to the audit procedure under Section 7.7, (ii) any undisputed amount shall be paid within such thirty (30) day period, and (iii) the balance shall become due and payable upon, and in conformity with, the exhaustion of the audit procedure under Section 7.7 or, upon issuance of a final arbitration award, under Section 13.3 as the case may be.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(e) Joint Development; Additional Indication Development Plan.  If the proposal submitted by the Proposing Party under Section 4.3(b) is accepted by the Non-Proposing Party or such Non-Proposing Party elects to exercise its opt-in rights under Section 4.3(d), then all further Development of Product in such Additional Indication shall be governed by a development plan jointly developed by Defiante and Dyax and approved by the JSC (each, an "Additional Indication Development Plan").  Each Additional Indication Development Plan shall set forth Development activities that are necessary or appropriate to obtain Regulatory Approval for Product for such Additional Indication in the Dyax Territory and the Defiante Territory, as well as allocation of such activities between the Parties, strategies and timelines for completing such activities, together with a reasonable forecast of the Development Costs and the annual budget for expenses related thereto. The JSC shall review and monitor the Development activities conducted by the Parties under such Additional Indication Development Plan, which shall be updated and modified from time to time to include any studies required by the  FDA and/or any Regulatory Authority in the Defiante Territory up until filing of the relevant application for Regulatory Approval and any Post-Filing Activities required (or necessary to comply with a requirement by a Regulatory Authority) to obtain Regulatory Approval in the Defiante Territory for treatment in such Additional Indication, in accordance with the following process:

(i) each Party shall review such Additional Indication Development Plan not less frequently than quarterly and shall develop detailed and specific updates to such Additional Indication Development Plan, until the completion of the Development activities covered thereunder;

(ii) each Party shall submit all such updates to the JSC for review and approval at each meeting of the JSC; and

(iii) the JSC shall review proposed updates to such Additional Indication Development Plan at the next scheduled meeting of the JSC, or earlier if the JSC so agrees, and may approve such proposed updates in its discretion and, upon such approval by the JSC, such Additional Indication Development Plan shall be amended accordingly.

4.4         Product Improvements.

(a) Development Proposal.  If at any point during the Term of this Agreement, a Proposing Party intends to engage in the development of any Product Improvement for use in the Field, such Party shall submit to the JSC a proposal outlining a strategy to Develop such Product Improvement, which proposal shall include reasonable budgets and timelines prepared by such Party in good faith. If, after reviewing any such proposal and discussing it in good faith, the Parties agree to jointly Develop such Product Improvement for use in the Field in the Dyax Territory and the Defiante Territory, then such Product Improvement shall thereafter be deemed to be a Product for all purposes of this Agreement as that term is defined in Section 1.92, and all then all further Development activities shall be carried out in accordance with a Product Improvement Development Plan referred to in Section 4.4(d) below.

(b) Independent Development. Subject to Section 4.4(d) below, if, ninety (90) days  following a Party's submission to the JSC of a proposal under Section 4.4(a), the Non-Proposing Party does not then elect to join the Proposing Party in the Development of such Product Improvement, then the Proposing Party shall be free to independently develop, manufacture, conduct regulatory activities and commercialize such Product Improvement in the Field in the Defiante Territory at its own cost, without regard for terms and conditions of this Agreement.

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(c) Right to Opt-In.

(i) Within [*****]following the date of the presentation by the Proposing Party of the release of top-line data from the first Phase II Clinical Study relating to the proposed Product Improvement, the Non-Proposing Party shall have the option to join the Proposing Party for any further Development of the proposed Product Improvement, in which case such Product Improvement shall thereafter be deemed to be a Product for all purposes of this Agreement as that term is defined in Section 1.92 and all further Development of such Product Improvement shall be jointly carried out by the Parties in accordance with the Product Improvement Development Plan referred to in Section 4.4(d) below.

(ii) It is understood and agreed that if the Non-Proposing Party does not elect to join the Proposing Party in the Development of a Product Improvement in accordance with Section 4.4(b) or (c), then the Non-Proposing Party shall not otherwise take any action to independently Develop such Product Improvement in the Field in the Defiante Territory.

(iii) If a Non-Proposing Party exercises its right to opt-in pursuant to Section 4.4(c), such Non-Proposing Party shall make to the Proposing Party a [*****]of the Development Costs incurred by the Proposing Party in the Development of the Product in such Product Improvement prior to the effective date of such opt-in.  Within [*****]after the effective date of such opt-in, the Proposing Party shall provide to the Non-Proposing Party a written accounting of such Development Costs (accompanied by supportive documentary evidence). The Non-Proposing Party shall then have thirty (30) days to verify such accounting and pay the Proposing Party.  In case of disagreement on the amount stated in the written accounting: (i) each Party shall be entitled to refer the disputed matter to the audit procedure under Section 7.7, (ii) any undisputed amount shall be paid within [*****], and (iii) the balance shall become due and payable upon, and in conformity with, the exhaustion of the audit procedure under Section 7.7 or, upon issuance of a final arbitration award, under Section 13.3 as the case may be.

(d) Joint Development; Product Improvement Development Plan. If the Parties agree to jointly Develop the Product Improvement pursuant to Section 4.4(b) or the Non-Proposing Party elects to exercise its option under Section 4.4(c), then all further Development of the Product Improvement shall be governed by a development plan jointly developed by Defiante and Dyax and approved by the JSC (each, a "Product Improvement Development Plan").  Each Product Improvement Development Plan shall set forth Development activities that are necessary or appropriate to obtain Regulatory Approval for such Product Improvement in the Dyax Territory and the Defiante Territory up until filing of the relevant application for Regulatory Approval, as well as allocation of such activities between the Parties, strategies and timelines for completing such activities, together with a reasonable forecast of the Development Costs and the annual budget for expenses related thereto. The JSC shall review and monitor the Development activities conducted by the Parties under such Product Improvement Development Plan, which shall be updated and modified from time to time to include any studies required by any Regulatory Authority in the Defiante Territory and/or the FDA up until filing of the relevant application for Regulatory Approval and any Post-Filing Activities required (or necessary to comply with a requirement by a Regulatory Authority) to obtain Regulatory Approval in the Defiante Territory, in accordance with the following process:

(i) each Party shall review such Product Improvement Development Plan not less frequently than quarterly and shall develop detailed and specific updates to such Product Improvement Development Plan, until the completion of the Development activities covered thereunder;

(ii) each Party shall submit all such updates to the JSC for review and approval at each meeting of the JSC; and

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(iii) the JSC shall review proposed updates to such Product Improvement Development Plan at the next scheduled meeting of the JSC, or earlier if the JSC so agrees, and may approve such proposed updates in its discretion and, upon such approval by the JSC, such Product Improvement Development Plan shall be amended accordingly.

4.5         Development Efforts; Manner of Performance; Reports.

(a) Each Party shall use Commercially Reasonable Efforts to execute and to perform, or cause to be performed, the activities for which it is responsible under any Joint Development Plan and to cooperate with the other Party in carrying out the activities described therein, in accordance with the budgets and timetables set forth therein and in good scientific manner and in compliance with all applicable laws and regulations and good clinical and laboratory practice.

(b) Each Party agrees to keep the other Party fully informed as to its progress, results (including the development of any technology or inventions), status and plans for performing and implementing the activities for which it is responsible under any Joint Development Plan.  In addition, within thirty (30) days after the end of each Calendar Quarter in which Development activities are performed and at least ten (10) days prior to the quarterly meeting of the JSC, each Party will provide to the JSC a written progress report, which will describe the Development activities that such Party has performed or caused to be performed during such Calendar Quarter, evaluate the work performed in relation to any established Development goals, and provide such other information as may be reasonably requested by the JSC with respect to such Development activities.

4.6         Exchange of Development Information.  In accordance with and subject to the terms of Article IX, on an ongoing basis during the Term:

(a) Dyax shall disclose to Defiante all Dyax Development Data necessary or useful to the Development of the Compound or Product for use in the Field in the Defiante Territory in accordance with this Agreement and shall update such disclosure at least once semi-annually.  Dyax acknowledges and agrees that all data generated in connection with Development activities conducted by Dyax and/or its Related Parties with respect to the Compound or Product in the Field may be used by Defiante to obtain Regulatory Approval for Product in the Field for the Defiante Territory.

(b) Defiante shall disclose to Dyax all Defiante Development Data necessary or useful to the Development of the Compound or Product for use in the Field in the Dyax Territory or outside the Field in any country in the world in accordance with this Agreement and shall update such disclosure at least once semi-annually.  Defiante acknowledges and agrees that all such data may be used by Dyax to obtain Regulatory Approval for Product in the Field in the Dyax Territory or outside the Field in any country of the world.

(c) Upon reasonable notice during normal business hours as coordinated through the Alliance Managers and the JSC, each Party shall provide the other Party with such assistance and access to its employees, consultants and subcontractors as may be reasonably necessary for such other Party to exercise its rights and perform its obligations with respect to the Development, Manufacture and/or Commercialization of Product (or the conduct of Regulatory Activities related thereto) under this Agreement.

(d) Notwithstanding anything to the contrary in this Agreement: (i) Dyax shall not have any rights hereunder to any Defiante Development Data arising out of any Independent Development conducted by Defiante, and (ii) Defiante shall not have any rights hereunder to any Dyax Development Data arising out of any Independent Development conducted by Dyax; except in each case as it pertains to Safety Data.

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4.7         Regulatory Submissions and Regulatory Approvals.

(a) Each Party will have access to all Regulatory Filings by the other Party related to any Development activities conducted under any Joint Development Plan.

(b) Defiante shall own all Regulatory Filings and Regulatory Approvals for Product in the Field for the Defiante Territory, and shall be responsible for the Regulatory Activities in Field in the Defiante Territory; provided that unless Dyax otherwise agrees in good faith, any Regulatory Filings for Product in the HAE Indication in the Defiante Territory shall be consistent (to the extent permitted by applicable law) with Regulatory Filings for Product in the HAE Indication in the United States. Dyax and its Related Parties shall have the right to access all data contained or referenced in such Regulatory Filings, including all reports, correspondence and conversation logs, and Defiante shall provide appropriate notification of Dyax's and its Related Parties' access and reference rights to the Regulatory Authorities. Defiante hereby grants, and shall ensure that its Related Parties grant, to Dyax a "Right of Reference or Use," as that term is defined in 21 C.F.R. §314.3(b) as amended from time to time, and any foreign equivalents, to any and all data contained or referenced in any Regulatory Filing, including all reports, correspondence and conversation logs, and Defiante shall provide appropriate notification of Dyax's and its Related Parties' access and reference rights to the Regulatory Authorities.

(c) Dyax shall own all Regulatory Filings and Regulatory Approvals for Compound and for Product (i) inside the Field for the Dyax Territory and (ii) outside the Field, and shall be responsible for all Regulatory Activities in the Field in the Dyax Territory and outside the Field in any country of the world.  Defiante and its and its Related Parties shall have the right to access all data contained or referenced in the Regulatory Filings (other than data arising out any Independent Development conducted by Dyax), including all reports, correspondence and conversation logs, and Dyax shall provide appropriate notification of Defiante's and its Related Parties access and reference rights to the Regulatory Authorities.  Dyax hereby grants, and shall ensure that its Related Parties grant, to Defiante a "Right of Reference or Use," as that term is defined in 21 C.F.R. §314.3(b), and any foreign equivalents, to any and all data contained or referenced in any such Regulatory Filings relating to any Compound or Product, including all reports, correspondence and conversation logs, and Dyax shall provide appropriate notification of Defiante's and its Related Parties' access and reference rights to the Regulatory Authorities.

(d) Upon reasonable advance notice from Defiante, Dyax shall participate in any scheduled meeting or phone conference with any applicable Regulatory Authority necessary for obtaining or maintaining Regulatory Approval for Product in the Defiante Territory.

4.8         Orphan Drug Designation. Following the date the Marketing Authorization Application for Product in the HAE Indication is submitted to the EMA, and subject to Article 5(11) of Regulation (EC) No 141/2000 and other applicable laws and guidelines, Dyax shall transfer to Defiante any rights of Dyax in any orphan drug designation for the Product in the Defiante Territory according to a process approved by the JSC.

4.9         Complaints; Adverse Event Reporting Procedures; Notice of Adverse Events Affecting Compound; Global Safety Database.

(a) Each Party will have access to all Safety Data generated by the other Party and/or its Related Parties and contractors in connection with the Development, Manufacture and Commercialization of Product (or the conduct of Regulatory Activities relating thereto), subject to and to the extent provided for in this Agreement.

(b) Each Party will maintain a record of any and all Complaints and other Safety Data it receives with respect to Compound or Product.  Each Party will notify the other Party in reasonable detail of any Complaint or other Safety Data received by the Party with respect to Product within sufficient time to allow the other Party and/or it Related Parties to comply with any and all regulatory and other requirements imposed upon them in any jurisdiction in which or for which such Product is being Developed in Clinical Studies or Commercialized.

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(c) Each Party shall require its Related Parties to provide it with all Complaints and Safety Data relating to any Product in the control of such Related Parties. Each Party will provide the other Party with all Complaints and Safety Data in its control relating to any Product which information is necessary or desirable for the other Party to comply with all applicable laws, rules and regulations with respect to Product.  Each Party will provide such information to the other Party within [*****]after its first receipt; provided that any information relating to a serious adverse experience (SAE), as that term is defined at 21 C.F.R. §600.80, in the ICH Guidelines and/or in the Directive 2001/83/EC, shall be provided to the other Party within [*****] after its first receipt.  The Party providing the Complaint or Safety Data shall make all reasonable efforts to assist the receiving Party with any follow-up investigation necessary to comply with applicable laws, rules and regulations with respect to Product.

(d) Dyax shall maintain, or Dyax shall enter into an Agreement with a Third Party to maintain, a global adverse event database for Product (the "AE Database") and shall generate adverse event reports for Defiante's use in the Defiante Territory. Defiante shall have access to all data in the AE Database.  [*****].

(e) With respect to Product in the Field for the Defiante Territory, Defiante shall be responsible for submitting adverse event reports to the applicable Regulatory Authorities.  With respect to Product for use in the Field for the Dyax Territory and outside the Field in all countries, Dyax shall be responsible for submitting adverse event reports to the applicable Regulatory Authorities.

(f) Within [*****] after the Effective Date, the Parties will develop and agree in writing upon safety data exchange procedures governing the coordination of collection, investigation, reporting, and exchange of information concerning any adverse experiences, and any product quality and product complaints involving adverse experiences, and any other Safety Data, related to Product, sufficient to enable each Party to comply with its legal and regulatory obligations (the "Pharmacovigilance Agreement"). The form of the Pharmacovigilance Agreement shall be substantially similar to that attached hereto as Exhibit F.  Dyax shall establish pharmacovigilance agreements with Defiante and any future Related Parties involved in the Development, Manufacture or Commercialization of Product.  Such pharmacovigilance agreements shall conform in all material respects with the Pharmacovigilance Agreement to be established between Dyax and Defiante.

(g) The Parties acknowledge and agree that all safety data maintained in the AE Database for Product may be used by both Parties and their respective Related Parties (i) to obtain all applicable Regulatory Approvals in accordance with the terms of this Agreement and (ii) in connection with any litigation relating to a Product.

(h) Dyax will use Commercially Reasonable Efforts to cause its Related Parties involved in the Commercialization of Product to agree to annual meetings with Defiante and its Related Parties involved in the Commercialization of Product to discuss the exchange of safety data with respect to Product.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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ARTICLE V

COMMERCIALIZATION

5.1         [*****]Efforts.

(a) Defiante shall use [*****] Efforts to obtain Regulatory Approval and Commercialize Product in the Defiante Territory for the HAE Indication and any Additional Indications that are Jointly Developed by the Parties in the Field.  The foregoing provisions of this Section 5.1 notwithstanding, it is understood that the [*****] Efforts obligations set forth in this Section 5.1 do not require that Defiante obtain Regulatory Approval and Commercialize Product in all countries in the Defiante Territory, or in any particular country of the Defiante Territory if undertaking such efforts to obtain Regulatory Approval and Commercialize Product in such country would not be advisable in the exercise of reasonable business judgment; provided that such obligation to exercise [*****] Efforts shall nonetheless require that Defiante exercise such [*****] Efforts to obtain Regulatory Approval and Commercialize Product in all the Major EU Countries for the Product in HAE and all other Indications that are Jointly Developed by the Parties in the Field.

(b) In connection with its obligation to use [*****] Efforts to obtain Regulatory Approval and Commercialize Product in the Defiante Territory for the HAE Indication and any Additional Indications that are Jointly Developed by the Parties in the Field, Defiante acknowledges and agrees that it shall not directly or indirectly engage in the commercialization of a therapeutic or prophylactic product that competes with the Product in the Field in the Defiante Territory.

5.2         Advertising and Promotional Materials.  Defiante shall be responsible, at its own cost and expense, for the creation, preparation, production, reproduction and filing with the applicable Regulatory Authorities, of relevant written sales, promotion and advertising materials relating to Product ("Defiante Promotional Materials") for Commercialization in the Field for the Defiante Territory.  All such Promotional Materials shall be compliant in all material respects with all applicable laws, rules and regulations and any guidelines established by the pharmaceutical industry in the applicable country in the Defiante Territory.  When distributing information related to Product or its use (including information contained in scientific articles, reference publications and publicly available healthcare economic information), Defiante shall comply in all material respects with all applicable laws, rules and regulations and any guidelines established by the pharmaceutical industry in the applicable country in the Defiante Territory. [*****]

5.3         Sales and Distribution.

(a) Defiante and its Related Parties shall be responsible for booking sales of Product in the Field in the Defiante Territory and for all aspects of Product order processing, invoicing and collection, distribution, inventory and receivables, and for handling (at its own cost and expense) all returns, recalls, field alerts and other withdrawals of Product sold for use in the Field in the Defiante Territory.

(b) Dyax and its Related Parties shall be responsible for booking sales of Product in the Field in the Dyax Territory and outside the Field in any country in the world and for all aspects of Product order processing, invoicing and collection, distribution, inventory and receivables, and for handling (at its own cost and expense) all returns, recalls, field alerts and other withdrawals of Product sold for use in the Field in the Dyax Territory and outside the Field in any country in the world.

5.4         Cross-Territory and Cross-Field Sales.  

(a) Dyax shall not, and shall ensure that its Related Parties agree not to, sell the Product in the Field in the Defiante Territory, as well as any Product Improvement.  Defiante shall be a third party beneficiary of the agreements between or among Dyax, its Affiliates, licensees, distributors and wholesalers with respect to such restriction, with the right to enforce such agreements.

(b) Defiante shall not, and shall ensure that its Related Parties agree not to, sell Product in the Field in the Dyax Territory or outside the Field in any country in the world.  Dyax shall be a third party beneficiary of the agreements between or among Defiante, its Affiliates, licensees, distributors and wholesalers with respect to such restriction, with the right to enforce such agreements.

(c) Subject to applicable laws and regulations, Defiante shall take commercially reasonable steps to restrict the ability of any Third Parties to export Product outside of the Defiante Territory for sale and or use in the Field in the Dyax Territory or outside the Field in any country of the world.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(d) The Parties acknowledge and agree that their respective obligations under this Section 5.4 are all considered to be material conditions to this Agreement.

5.5         Recalls, Market Withdrawals or Corrective Actions.  If any Regulatory Authority issues or requests a recall or takes a similar action in connection with Product anywhere in the world, or if either Party determines that an event, incident or circumstance has occurred that may result in the need for a recall or market withdrawal of Product, the Party notified of such recall or similar action, or the Party that desires such recall or similar action, shall, within [*****]advise the other Party thereof by e-mail, overnight courier or facsimile.  Defiante shall, in consultation with Dyax, determine whether to conduct a recall of Product in the Field in the Defiante Territory and the manner in which any such recall shall be conducted (except in the case of a government mandated recall, when Defiante may act without such advance notice but shall notify Dyax as soon as possible).  Similarly, Dyax shall, in consultation with Defiante, determine whether to conduct a recall of Product in the Field in the Dyax Territory, and shall determine the manner in which such recall shall be conducted (except in the case of a government mandated recall, when Dyax may act without such advance notice but shall notify Defiante as soon as possible).  Each Party will make available all of its pertinent records that may be reasonably requested in order to affect a recall conducted by the other Party. Costs and expenses for the recall shall be borne by the Party whose action or omission caused the recall.

ARTICLE VI

MANUFACTURE AND SUPPLY OF DRUG PRODUCT

6.1         Manufacture of Drug Substance and Drug Product.  During the Term, Dyax shall Manufacture Drug Substance and Drug Product for Defiante (or its designee) in sufficient quantities to satisfy all the requirements of Defiante and its Related Parties for use in Developing, obtaining Regulatory Approval and in Commercializing Product in the Field in the Defiante Territory pursuant to this Agreement; provided that the foregoing obligation of Dyax to manufacture Drug Substance and Drug Product shall be subject to the following terms and conditions:

(a) Exclusivity.  Dyax shall be Defiante's sole and exclusive manufacturer of all Drug Substance and Drug Product requirements of Defiante and its Related Parties, unless otherwise agreed by Dyax in writing.

(b) Forecasts.  On or before [*****]and [*****] following the commencement of each Calendar Quarter occurring thereafter, Defiante will give to Dyax a forecast, determined in good faith based upon commercially reasonable estimates of Product Sales, for the next [*****].  Each such forecast shall summarize projected Product demand, inventory targets, projected inventory levels (including Drug Substance Inventory levels) and the estimated quantities of Drug Substance and Drug Product that Defiante expects to order, in accordance with Sections 6.1(c) and (e).

(c) Orders for Drug Substance; Delivery.

In the event Defiante purchases Drug Substance in accordance with the terms and conditions of this Agreement:

(i) For quantities of Drug Substance required by Defiante, Defiante shall provide Dyax with binding purchase orders for Drug Substance.  Defiante may place [*****].

(ii) Upon Defiante's issuance of a binding order for Drug Substance:

(A) Each such order shall be considered accepted by and binding upon Dyax, unless such order exceeds the Drug Substance Order Limit for the relevant Calendar Quarter, in which case such order shall be considered accepted by Dyax unless Dyax provides written notice objecting to such order within fifteen (15) Business Days after Dyax's receipt of such order. In case of objection, Dyax shall provide the quantity requested up to the Drug Substance Order Limit for the relevant Calendar Quarter and shall use [*****] Efforts to provide the additional requested quantity.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(B) Dyax shall have fifteen (15) Business Days after Dyax's receipt of such order to provide Defiante the latest start and completion date for that order. In turn, Defiante will have fifteen (15) Business Days thereafter to acknowledge and accept this schedule, negotiate a change, or cancel the order. In order to keep cost of goods as low as possible, the preference will be to combine all binding orders for Drug Substance into single campaigns. Any binding order placed per the above conditions will be scheduled to begin production [*****].

(iii) All Drug Substance manufactured by Dyax shall, at the option of Defiante, either be held as Drug Substance Inventory by Dyax (or its Third Party contractor) on behalf of Defiante pursuant to Section 6.1(d) or delivered [*****].  All Drug Substance shall be delivered within [*****] following the quality release of such Drug Substance (but not later than [*****] the manufacturing of such Drug Substance is completed).

(d) Drug Substance Inventory.  If and to the extent that Defiante requests that Drug Substance manufactured by Dyax for Defiante be held as Drug Substance Inventory, then Dyax shall be responsible for the handling and custody of such Drug Substance Inventory (including insurance to cover risk of loss of such Drug Substance Inventory); provided that all costs directly related to the handling, custody and insurance of the Drug Substance Inventory shall be reimbursed by Defiante.

(e) Orders for Drug Product; Delivery.

In the event Defiante purchases Drug Product in accordance with the terms and conditions of this Agreement:

(i) For quantities of Drug Product required by Defiante, Defiante shall provide Dyax with binding purchase orders for Drug Product.  Defiante shall place no more than [*****].

(ii) Upon Defiante's issuance of a binding order for Drug Product:

(A) Each such order shall be considered accepted by and binding upon Dyax, unless such order exceeds the Drug Product Order Limit for the relevant Calendar Quarter, in which case such order shall be considered accepted by Dyax unless Dyax provides written notice objecting to such order within fifteen (15) Business Days after Dyax's receipt of such order. In case of objection, Dyax shall provide the quantity requested up to the Drug Product Order Limit for the relevant Calendar Quarter and shall use [*****] to provide the additional requested quantity.

(B) Dyax shall have fifteen (15) Business Days after Dyax's receipt of such order to provide Defiante the latest start and completion date for that order. In turn, Defiante will have fifteen (15) Business Days thereafter to acknowledge and accept this schedule, negotiate a change, or cancel the order. In order to keep cost of goods as low as possible, the preference will be to combine all binding orders for Drug Product into single campaigns. Any binding order placed per the above conditions will be scheduled to begin production [*****].

(iii) All Drug Product manufactured by Dyax shall be delivered [*****].  All Drug Product shall be delivered within [*****] following the quality release of such Drug Product (but not later than [*****] after such Drug Product is filled).  [*****].

(f) Supply Shortage; Allocation of Drug Substance and Drug Product.  Dyax shall promptly notify Defiante of any event that causes or may cause the amount of Drug Substance and/or Drug Product Manufactured to be insufficient to fully meet the quantities ordered by Defiante under Section 6.1(c) and (e) ..  Thereafter:

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(i) if such a supply shortage was caused by manufacturing failures or delays in fulfilling orders properly placed by Defiante, available supply shall be allocated between the Parties and Dyax's other Sublicensees of Drug Substance or Drug Product on a pro-rata basis based on the then current good faith forecasted requirements of such entities; and

(ii) if such a product shortage was caused by one or more inaccurate Defiante forecasts or otherwise arose as a result of orders placed for Drug Substance in excess of the Drug Substance Order Limit or orders for Drug Product in excess of the Drug Product Order Limit, then the allocation available supply under Section 6.1(f)(i) above shall not be required.

(g) Pricing. With respect to any amount of Drug Substance or Drug Product delivered by Dyax to Defiante for use in the Independent Development of Product or the Commercialization of Product, Defiante shall pay to Dyax the applicable Transfer Price for such Drug Substance or Drug Product.  Such Transfer Price shall be paid as follows:

(i) if and to the extent external Manufacturing Costs are incurred by Dyax in advance of actual delivery of Drug Product to Defiante, such Manufacturing Costs shall be invoiced to Defiante and Defiante shall pay such invoice within thirty (30) days after receipt thereof; and

(ii) the balance of the Transfer Price shall be paid by Defiante within thirty (30) days after receipt of the relevant invoice to be issued by Dyax after the quality release (duly documented) of such Drug Product.

6.2         Quality.

(a) Certificates of Analysis.  Dyax shall provide Defiante with certificates of analysis related to each batch of Drug Substance or Drug Product delivered to Defiante hereunder.  These certificates will document that each batch delivered to Defiante conforms to the Specifications and meets the requirements of cGMPsat the time of delivery. These certificates shall include the date of Manufacture and applicable expiry date.

(b) Quality Control Testing.  Dyax shall perform, or have performed such quality control tests as are indicated in the Specifications.  Dyax shall make the results of its quality control tests available to Defiante on or before the date that Drug Substance or Drug Product is delivered to Defiante hereunder.  No production batch shall be released for delivery unless such quality control tests show that such Drug Substance or Drug Product meets the Specifications.  Defiante shall not perform or re-perform the control quality tests that support any certificate of analysis. Should a Regulatory Authority in the Territory require Drug Substance or Drug Product testing beyond that currently included in the process specification, the Parties shall evaluate the GMP and regulatory issues associated with modifying the specification to include such testing.

6.3         Responsibility for Product Manufacturing Process.  At all times during which Dyax is manufacturing Drug Substance and Drug Product for Defiante (or its designee) under Section 6.1, Dyax shall have sole authority over the Product Manufacturing Process under this Agreement, subject however to approval by the Regulatory Authority in the Defiante Territory, and shall be fully responsible for all costs and expenses incurred in connection therewith, except to the extent that Dyax is to be reimbursed by Defiante for such costs and expenses as provided herein.  Without in any way limiting the foregoing, Dyax shall have the sole authority to (i) select contract manufacturers involved in Product Manufacturing Process, (ii) terminate contract manufacturers involved in Product Manufacturing Process, and/or (iii) internalize Product Manufacturing Process by Manufacturing Drug Substance and/or Drug Product within facilities owned or controlled by Dyax.

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6.4         Step-in Rights.

(a) For Cause.  Notwithstanding the restrictions set forth in Section 3.1(b) that preclude Defiante from Manufacturing or having Manufactured Drug Substance and Drug Product in or for the Defiante Territory, Defiante shall have the option, exercisable at any time after the occurrence of any of the following events, to enter into a direct contractual relationship with Dyax's CMO(s) to have Manufactured Drug Substance and/or Drug Product as necessary to meet the requirements of Defiante and its Related Parties for Development and Commercialization of Product in the Field in the Defiante Territory:

(i) the quantity of Drug Substance and/or Drug Product supplied by Dyax pursuant to binding orders placed by Defiante under Sections 6.1(c) or (e) is less than [*****] of the quantity ordered by Defiante, [*****]; provided that, for the purposes of this Section 6.4(a)(i), the amount of any order placed by Defiante under Section 6.1(c) that is in excess of the Drug Substance Order Limit or the amount of any order placed by Defiante under Section 6.1(e) that is in excess of the Drug Product Order Limit may not be applied toward the calculation of any supply shortage;

(ii) a Regulatory Authority notifies Dyax or Defiante in writing that the Product Manufacturing Process does not comply with Applicable Law in the Defiante Territory and [*****]; or

(iii) Dyax informs Defiante that it elects to discontinue the Manufacture of Drug Substance and Drug Product for Defiante.

If Defiante elects to exercise its option under this Section 6.4(a), then all of Dyax's obligations under Section 6.1 shall terminate; provided that:

(iv) Dyax shall provide reasonable assistance and documentation, at its expense, to enable Defiante to assume responsibility for Product Manufacturing Process. Such assistance shall include introducing Defiante to Dyax's CMOs and working with Defiante and such CMO to coordinate any actions reasonably required in order to enable Defiante to enter into a direct contractual relationship with, and receive supply directly from, any such CMO. Any Drug Substance or Drug Product Manufactured by Defiante may be used solely in Development and Commercialization of Product in the Field and in the Defiante Territory conducted in accordance with the terms of this Agreement.

(v) At Defiante's option and request, Dyax shall continue to Manufacture and supply Drug Product [*****] for a period of [*****], or until such time as all of the technology transfer under Section 6.4(a)(iv) has been completed.

(vi) Each Party will appoint at least one manufacturing logistics and quality assurance manager to support the Parties' respective Manufacturing activities, and to function as a liaison with the other Party's manufacturing logistics and quality assurance manager on matters relating to the Manufacture and supply of Drug Substance and Drug Product under this Agreement.

(b) For Convenience.  Notwithstanding the restrictions set forth in Section 3.1(b) that preclude Defiante from Manufacturing or having Manufactured Drug Product in or for the Defiante Territory, Defiante shall have the right, exercisable at its convenience, to assume from Dyax the right to Manufacture and have Manufactured Drug Product  (but not Drug Substance) as necessary to meet the requirements of Defiante and its Related Parties for Development and Commercialization of Product in the Field in the Defiante Territory.  If Defiante elects to exercise its option under this Section 6.4(b), then all of Dyax's obligations with respect to the Manufacture of Drug Product (but not Drug Substance) under Section 6.1 shall terminate; provided that:

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(i) Dyax shall provide reasonable assistance and documentation, at Defiante's expense (such expenses to be documented and approved in advance by Defiante), to enable Defiante to assume responsibility for the Manufacture of Drug Product. Such assistance shall include introducing Defiante to Dyax's CMOs and working with Defiante and such CMOs to coordinate any necessary technology transfers and taking such other actions as may be reasonably required in order to enable Defiante to assume responsibility for the Manufacture of Drug Product. Any Drug Product Manufactured by Defiante may be used solely in Development and Commercialization of Product conducted in accordance with the terms of this Agreement.

(ii) Each Party will appoint at least one manufacturing logistics and quality assurance manager to support the Parties' respective Manufacturing activities, and to function as a liaison with the other Party's manufacturing logistics and quality assurance manager on matters relating to the Manufacture of Drug Substance and Drug Product under this Agreement.

Notwithstanding any election by Defiante to assume the Manufacture of Drug Product under this Section 6.4(b), Dyax shall remain responsible for the Manufacture of Drug Substance and, in lieu of holding all Drug Substance ordered by Defiante under Section6.1(d) as Drug Substance Inventory, Dyax shall deliver all such Drug Substance directly to Defiante (or its designee).  In consideration for Drug Substance delivered by Dyax to Defiante, Defiante shall pay to Dyax the applicable Transfer Price for such Drug Substance.  The Transfer Price shall be paid as follows:

(i) if and to the extent external Manufacturing Costs are incurred by Dyax in advance of actual delivery of Drug Substance to Defiante, such Manufacturing Costs shall be invoiced to Defiante and Defiante shall pay such invoice within thirty (30) days after receipt thereof; and

(ii) the balance of the Transfer Price shall be paid by Defiante within thirty (30) days after receipt of the relevant invoice to be issued by Dyax after the quality release (duly documented) of such Drug Substance.

6.5         Supply and Quality Agreements.  As soon as possible after the Effective Date, the Parties shall negotiate in good faith and enter into a comprehensive supply agreement pursuant to which Dyax will supply Drug Substance and Drug Product to Sigma Tau (the "Supply Agreement") together with a quality agreement in accordance with industry standards governing the Drug Substance and Drug Product supplied pursuant to the Supply Agreement (the "Quality Agreement").  The Supply Agreement and the Quality Agreement shall include terms similar to those set forth in Sections 6.1 through 6.4 of this Agreement and shall contain such other terms and conditions that the Parties mutually agree upon that are customary for supply agreements and quality agreements of this type.  Pending the execution and delivery of a Supply Agreement and a Quality Agreement, Manufacture of Product shall be conducted in accordance with the terms and conditions of this Article VI.

6.6         [*****]

ARTICLE VII

FINANCIAL PROVISIONS

7.1         Initial Consideration.

(a) License Fee. As soon as possible following the Effective Date (but in no event no later than thirty (30) days thereafter), Defiante shall pay to Dyax an upfront license fee in the amount of Two Million Five Hundred Thousand Dollars ($2,500,000) as partial consideration for the rights granted by Dyax to Defiante under this Agreement.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(b) Equity Investment.  Simultaneous with the execution of this Agreement,, Defiante and Dyax will enter into a Stock Purchase Agreement attached hereto as Exhibit G (the "Stock Purchase Agreement"), under which Defiante will purchase, in a private transaction, shares of Dyax common stock for a total of Two Million Five Hundred Thousand Dollars ($2,500,000) at a price per share to be calculated by applying a 50% premium to the average closing price of the Dyax common shares for the preceding twenty (20) Business Days.  It is acknowledged that the premium paid by Defiante shall be paid as additional consideration for the rights granted by Dyax to Defiante under this Agreement.

7.2         Milestone Payments.

(a) Approval Milestone. Within [*****] following Regulatory Approval in Defiante’s name of the Product for the HAE Indication by the EMA, Defiante shall pay to Dyax a one-time milestone payment in the amount of [*****].

(b) Commercialization Milestone. Within twenty (20) Business Days following the First Commercial Sale of the Product in the Major EU Countries, Defiante shall pay to Dyax a one-time milestone payment in the amount of [*****].

7.3         Ongoing Costs.

(a) Development Costs. From and after the Effective Date, the Parties shall share equally (50/50) in all Development Costs incurred by either Party in the conduct of activities pursuant to any Joint Development Plan (the "Shared Costs").  Shared Costs shall also include any costs described in Section 7.3(b)(iv)(A) below.  Within thirty (30) days after the end of each Calendar Quarter during the Term of this Agreement, each Party shall provide to the other Party a written accounting of the Shared Costs incurred by such Party during such Calendar Quarter, accompanied by supportive documentary evidence.  Each Party shall then have ten (10) Business Days to verify such accountings, after which the Party who is entitled to reimbursement under this Section 7.3 shall issue an invoice to the other Party (payable within thirty (30) days after receipt thereof), such that each Party pays for fifty percent (50%) of all Shared Costs subject to this Section 7.3.  In case of disagreement on the amount previously stated in the written accounting: (i) each Party shall be entitled to refer the disputed matter to the audit procedure under Section 7.7, (ii) any undisputed amount shall be paid within 30 (thirty) days of the receipt of the relevant invoice and (iii) the balance shall become due and payable upon, and in conformity with, the exhaustion of the audit procedure under Section 7.7 or, upon issuance of a final arbitration award, under Section 13.3 as the case may be.

(b) Regulatory Activities Costs.  From and after the Effective Date, each Party shall be fully and independently responsible for all Regulatory Activities Costs associated with obtaining Regulatory Approval for Product in the Field in the Territory of such Party.

(c) Commercialization Costs.  From and after the Effective Date, each Party shall be fully and independently responsible for all costs associated with the promotion, marketing and sale of Product in the Territory of such Party.

7.4         Sales Milestones.  Within thirty (30) days after the first occurrence of each of the following events with respect to annual Net Sales of Product (cumulative for all Indications) in the Defiante Territory, Defiante shall make the following payments to Dyax:

Milestone Event	Payment
First calendar year in which Net Sales for Product in the Defiante Territory are greater than [*****]	[*****]
First calendar year in which Net Sales for all Product in the Defiante Territory are greater than [*****]	[*****]
First calendar year in which Net Sales for all Product in the Defiante Territory are greater than [*****]	[*****]
First calendar year in which Net Sales for all Product in the Defiante Territory are greater than [*****]	[*****]
First calendar year in which Net Sales for all Product in the Defiante Territory are greater than [*****]	[*****]
First calendar year in which Net Sales for all Product in the Defiante Territory are greater than [*****]	[*****]
First calendar year in which Net Sales for all Product in the Defiante Territory are greater than [*****]	[*****]
First calendar year in which Net Sales for all Product in the Defiante Territory are greater than [*****]	[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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For the avoidance of doubt, each of the foregoing milestone payments is a separate payment and shall be paid only once by Defiante.  Consequently, the maximum amount that Defiante is obligated to pay to Dyax under this Section 7.4 is [*****].

7.5         Contribution Payments.

(a) Calculation of Contribution Payments; Transfer Price Deduction.  During the Term of this Agreement, Defiante shall pay to Dyax forty-one percent (41%) of the Net Sales of Product in the Defiante Territory; provided however that Defiante shall be entitled to first deduct the amount of the Transfer Price: i) previously paid by Defiante to Dyax for the supply of the Drug Product or of the Drug Substance, as the case may be; and ii) borne by Defiante as Manufacturing Costs in the course of Manufacturing the Drug Product, as the case may be.

(b) Term of Contribution Payments.  The obligations of Defiante with respect to Contribution Payments in the Defiante Territory at the rates set forth in Section 7.5(a) shall be determined on a product by product and on a country-by-country basis and shall continue until the later of (i) the expiration of the last Valid Claim of the Dyax Patent Rights Covering the use or sale of the applicable Product commercialized in the Field in such country of the Defiante Territory or Covering the composition of matter of Compound included in such Product in such country of the Defiante Territory, or (ii) the tenth anniversary of the First Commercial Sale of such Product in the Field in the Defiante Territory (the "Contribution Payment Term").

(c) Blocking Third Party Patent Rights; In-Licenses.

(i) Dyax shall be responsible for paying any milestones, royalties or other payments due under any In-License of Blocking Third Party Patent Rights that are allocable to the Development, Manufacture or Commercialization of Product (in its existing form as of the Effective Date) in the HAE Indication in the Defiante Territory.

(ii) Defiante shall be responsible for paying any milestones, royalties or other payments due under any In-License of Blocking Third Party Patent Rights that are allocable to the Development, Manufacture or Commercialization of Product for any Additional Indications or any Product Improvement in the Defiante Territory.

(d) Royalties to [*****].  Dyax shall be responsible for all royalties payable to [*****] under the [*****] License Agreement with respect to Net Sales of Product by Defiante and its Related Parties in the Field in the Defiante Territory, except for royalties payable to [*****]  on Net Sales of Product Independently Developed by Defiante, for which Defiante shall be solely responsible.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(e) General.

Contribution Payments shall be calculated (and paid) only once with respect to the same unit of Product.

(i) No Contribution Payment shall be due upon the sale or other transfer of Product among Defiante or its Related Parties, but in such cases the Contribution Payment shall be due and calculated upon Defiante's or its Related Party's Net Sales to the first independent Third Party.

(ii) No Contribution Payment shall accrue on the disposition of Product by Defiante or its Related Parties as samples (promotion or otherwise).

7.6         Net Sales Reports and Contribution Payments.  Within [*****] after the end of each Calendar Quarter for which Contribution Payments are due from Defiante pursuant to Section 7.5, Defiante shall submit to Dyax a report, on a country-by-country basis, providing an accounting of the Net Sales of Product made during such Calendar Quarter, and the calculation of the Contribution Payments due under Section 7.5.  Concurrently with the submission of such report, Defiante shall pay to Dyax all Contribution Payments payable by it under Section 7.5, as indicated in the report.

7.7         Audits.  Each Party shall, and shall require its Related Parties to, keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable under this Agreement, including Contribution Payment due under Section 7.5.  Those records and books of account shall be kept for at least [*****] following the end of the calendar year to which they relate.  Upon the other Party's  written request (the "Requesting Party"), an international firm of independent certified public accountants appointed by agreement between the Parties or, failing such agreement within [*****] after the initiation of discussions between them on this point, by the Requesting Party, among such firms that have not performed auditing or other services for either Party or their Affiliates in the [*****], shall inspect such records and books of account of the other Party (the "Audited Party") and carry out the following activities:

(a) such independent accounting firm shall be given access to and shall be permitted to examine and copy such books and records of the Audited Party and its Affiliates and any other documentation that may be relevant for the purposes hereof upon [*****] notice having been given by the Requesting Party and at all reasonable times on Business Days for the purpose of certifying  (i) if the Audited Party is Defiante, that the Net Sales or other relevant sums calculated by Defiante and its Affiliates during any calendar year were reasonably calculated, true and accurate in conformity with this Agreement or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in its judgment and evaluation is true and correct; (ii) if the Audited Party is Dyax, that the Manufacturing Costs charged by Dyax to Defiante during any calendar year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Manufacturing Costs figure for such period which in its judgment and evaluation is true and correct; or (iii) that the Shared Costs and any other sums subject to reimbursement under this Agreement calculated by either Party and its Affiliates during any calendar year were reasonably calculated, true and accurate in conformity with this Agreement or, if this is not their opinion, certify the Shared Costs or other relevant sums for such period which in its judgment and evaluation  is true and correct;

(b) prior to any such examination taking place, such accounting firm shall undertake to the Audited Party in writing that it shall keep all information and data contained in such books and records strictly confidential and shall not disclose such information or copies of such books and records to any Person, including the Requesting Party, but shall only use the same for the purpose of performing the calculations referred to in Section 7.7(a);

(c) any such access examination and certification shall occur no more than once per calendar year;

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(d) the Audited Party and its Affiliates shall make available personnel to answer such accounting firm's reasonable queries on all books and records required for the purpose of calculating the amounts referred to in Section 7.7(a);

(e) any amount that is found by the independent accounting firm to be due by a Party to the other Party, shall be paid by the owing Party within sixty (60) days of the final determination of such independent accounting firm, provided that in the event either Party disagree with such determination, such Party may refer the matter to arbitration pursuant to Section 13.3 within thirty (30) days of the date of the accounting firm's determination; and

(f) the reasonable cost of the accounting firm shall be the responsibility of the Audited Party if the certification shows either (i) that the Audited Party has underpaid monies due to the other Party hereunder by more than [*****] over a calendar year, or (ii) that the Audited Party has overcharged the other Party for Manufacturing Costs, Development Costs or other relevant sums subject to reimbursement under this Agreement by more than [*****] over a calendar year.  In all other instances, the reasonable cost of the accounting firm shall be the responsibility of the Requesting Party.

7.8         Taxes; Deductions and Set-Offs.  Any taxes (other than value added taxes) Defiante is required by the local authorities to pay or withhold on behalf of Dyax with respect to the money payable to Dyax under this Agreement shall be deducted from the amount of such payments, provided, however, that with regard to any such deduction Defiante shall give Dyax such assistance as may be necessary to enable or assist Dyax to claim exception therefore (under any applicable laws as well as any applicable treaties or conventions) and shall give Dyax proper evidence as to payment of the tax.  Any other taxes due in the Defiante Territory and arising out of or in connection with Defiante exercise of the rights granted herein shall be borne by Defiante.

7.9         United States Dollars.  All dollar ($) amounts specified in this Agreement are United States dollar amounts.

7.10       Currency Exchange.  With respect to Net Sales invoiced or expenses incurred in U.S. dollars, the Net Sales or expense amounts and the amounts due to the receiving Party hereunder shall be expressed in U.S. dollars.  With respect to Net Sales invoiced or expenses incurred in a currency other than U.S. dollars, the Net Sales or expense shall be expressed in the currency in which such Net Sales were invoiced or such expense was incurred together with the U.S. dollar equivalent, calculated using the average of the spot rate on the first and last Business Days of the Calendar Quarter in which the Net Sales were made or the expense was incurred.  The "closing mid-point rates" found in the "dollar spot forward against the dollar" table published by The Financial Times or any other publication as agreed to by the Parties shall be used as the source of spot rates.  All payments shall be made in U.S. dollars.

7.11       Blocked Payments.  If, by reason of applicable laws, rules or regulations in any country, it becomes impossible or illegal for Defiante or its Related Parties to transfer, or have transferred on their behalf, Contribution Payments or other payments to Dyax, Defiante shall promptly notify Dyax of the conditions preventing such transfer and such Contribution Payments or other payments shall be deposited in local currency in the relevant country to the credit of Dyax in a recognized banking institution designated by Dyax or, if none is designated by Dyax within a period of thirty (30) days, in a recognized banking institution selected by Defiante or its Related Party, as the case may be, and identified in a notice given to Dyax.

7.12       Late Payments.  The owing Party shall pay interest to the owed Party on the aggregate amount of any payments that are not paid on or before thirty (30) days after the date such payments are due under this Agreement at a rate per annum equal to LIBOR plus [*****], calculated on the number of days such payments are paid after the date such payments are due and compounded monthly.

7.13       Invoice.   All payments hereunder shall be made by Defiante after receipt of the relevant invoice/s.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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ARTICLE VIII

INTELLECTUAL PROPERTY OWNERSHIP, PROTECTION AND RELATED MATTERS

8.1         Ownership of Inventions.

(a) Ownership of Product Intellectual Property.   Notwithstanding anything to the contrary contained in this Agreement or elsewhere, the Parties acknowledge and agree that Dyax is, and throughout the Term of this Agreement shall remain, the owner of:

(i) the Existing Dyax Patent Rights; and

(ii) all other Know-How, Patent Rights and other intellectual property that Covers the  Compound or its manufacture, including without limitation any such intellectual property generated, developed, conceived or reduced to practice by or on behalf of Defiante or any of its Related Parties.

(b) Sole Inventions.  Except as set forth in Section 8.1(a), each Party shall exclusively own all Inventions generated, conceived or reduced to practice in the course of performing activities under this Agreement (including any Independent Development) solely by such Party, its Affiliates and its and their employees, agents, consultants and contractors ("Sole Inventions").  Sole Inventions generated, conceived or reduced to practice solely by Defiante, its Affiliates, and its and their employees, agents, consultants and contractors are referred to herein as "Defiante Sole Inventions".  Sole Inventions generated, conceived or reduced to practice solely by Dyax, its Affiliates, and its and their employees, agents and consultants and contractors, as well as [*****] are referred to herein as "Dyax Sole Inventions".

(c) Joint Inventions and Joint Know-How.  Except as set forth in Sections 8.1(a) and 8.1 (b), the Parties shall jointly own all Inventions generated, conceived or reduced to practice in the course of performing activities under this Agreement jointly by employees, agents, consultants, and contractors of Defiante and its Affiliates on the one hand, and by employees, agents, consultants and contractors of Dyax and its Affiliates on the other hand, on the basis of each Party having an undivided interest in the whole ("Joint Inventions").  The Parties shall jointly own all Joint Know-How and Joint Patent Rights on a worldwide basis in accordance with and bearing with it the same rights as the joint ownership interests of co-inventors named on U.S. patents under U.S. patent laws, including the right to practice the Joint Know-How or Joint Patents and to license others to do the same, without obtaining the consent of or accounting to the other Party.

(d) Inventorship; Implementation of Joint Ownership.

(i) For purposes of determining whether an Invention is a Defiante Sole Invention, a Dyax Sole Invention or a Joint Invention, questions of inventorship shall be resolved in accordance with United States patent laws.  If a dispute among the Parties as to an inventorship determination, which cannot be resolved by counsel to the Parties, the Parties shall refer the determination to a third patent counsel reasonably acceptable to the Parties, who shall make a final determination of inventorship which shall be binding upon the Parties and their respective inventors.

(ii) In order to implement the rights of joint ownership throughout the world as provided for in Section 8.1(c), each Party hereby assigns to the other Party, and hereby grants to the other Party all consents, licenses and waivers, in each case that are necessary to achieve such joint ownership and the rights associated with such sole or joint ownership worldwide, and agrees to provide documents evidencing or that may be required to record such assignments, consents, licenses and waivers promptly upon the other Party's request.  Promptly after being requested in writing, each Party shall provide to the other all documents and instruments required to evidence or record any such assignments, consents, licenses or waivers, or (to the extent otherwise consistent with this Agreement) to enforce rights in the assigned Joint Patent Rights.  Each Party hereby appoints the other Party as the appointing Party's attorney-in-fact to execute and deliver each of the foregoing documents and instruments if the other Party is unable, after making reasonable inquiry, to obtain the appointing Party's signature on any such documents and instruments.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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8.2         Prosecution and Maintenance of Patent Rights.

(a) As used in this Section 8.2(a), the term "Prosecuting Party" shall mean (i) Dyax with respect to the filing, prosecution and maintenance of the Dyax Patent Rights, and any Joint Patent Rights that [*****], and (ii) Defiante with respect to the filing, prosecution and maintenance of the Defiante Patent Rights and of all other Joint Patent Rights in the Defiante Territory.  The Prosecuting Party shall use reasonable efforts to prepare, file, prosecute and maintain the Patent Rights for which it is responsible and shall confer with and keep the other Party reasonably informed regarding the status of such activities. In addition, the Prosecuting Party shall have the following obligations with respect to the filing, prosecution and maintenance of any Patent Rights for which it is responsible:

(i) the Prosecuting Party shall use reasonable efforts to provide to the other Party for review and comment a substantially completed draft of any patent application included within the Patent Rights for which it is responsible at least thirty (30) days prior to the filing of any such patent application and consider [*****] any comment from such Party;

(ii) the Prosecuting Party shall provide the other Party promptly with copies of all material communications received from or filed in patent offices with respect to such filings; and

(iii) the Prosecuting Party shall consult with the other Party a reasonable time prior to taking or failing to take action that would materially affect the scope, validity, enforceability, or maintenance of any Valid Claim included within the Patent Rights for which it is responsible, including providing access by the other Party to the complete files of any patent nullification, opposition, interference, re-examination, reissue or patent term extension proceedings instituted anywhere in the world without regard to Territory or Field under this Agreement.

Furthermore, if the Prosecuting Party elects not to undertake the preparation, filing, prosecution, defense and/or maintenance of any Patent Right for which it is made a Prosecuting Party hereunder(or, after commencement of such filing, prosecution, defense and/or maintenance, desires to cease the prosecution or the maintenance of any Patent Rights for which it is responsible and which Cover Product), then the Prosecuting Party shall promptly notify the other Party of such election and the other Party shall be entitled (but not obligated), at its expense, to assume the preparation, filing, prosecution, defense and/or maintenance of such Patent Rights.  Notwithstanding the foregoing, Defiante shall not be entitled to assume the preparation, filing, prosecution, defense and/or maintenance of any Dyax Patent Rights that Cover Compound or its use in the Field.

(b) Costs and Expenses.  Any costs and expenses incurred by a Party in preparing, filing, prosecuting, maintaining or defending the Joint Patent Rights shall be borne by Defiante for the Defiante Territory and by Dyax for the Dyax Territory.  Any costs and expenses incurred by Dyax in preparing, filing, prosecuting, maintaining or defending the Dyax Patent Rights in any Territory shall be paid solely by Dyax.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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8.3         Third Party Infringement.

(a) Notice.  Each Party shall promptly report in writing to the other Party during the Term any known or suspected (i) infringement of any of the Dyax Patent Rights, Defiante Patent Rights or Joint Patent Rights or (ii) unauthorized use of any of the Dyax Know-How, Defiante Know-How or Joint Know-How that, in each case, involves activities of Third Parties that may adversely affect the Commercialization of the Product in the Field (a "Competitive Infringement") of which such Party becomes aware and shall provide the other Party with all available evidence supporting such known or suspected Competitive Infringement. Dyax shall keep Defiante informed of any disputes or proceedings involving any of the Dyax Patent Rights anywhere in the world where such infringement involves a product containing any Compound.

(b) Cooperation with Respect to Competitive Infringements.  With respect to any Competitive Infringement described in paragraph (a) above, the Parties shall at all times cooperate, share all material notices and filings in a timely manner, provide all reasonable assistance to each other and use Commercially Reasonable Efforts to mutually agree upon an appropriate course of action, including, as appropriate, the preparation of material court filings and any discussions concerning prosecution and/or settlement of any such claim.

(c) Final Authority.  Final decisions on whether to initiate a proceeding, and the course of action in such proceeding, including settlement negotiations and terms with respect to any Competitive Infringement will be made (i) with respect to Dyax Patent Rights and any Patent Rights owed by Dyax under this Agreement [*****], (ii) with respect to any Defiante Patent Rights, [*****], and (iii) with respect to all other Joint Patent Rights [*****]. Any disagreement between the Parties concerning the enforcement of Joint Patent Rights shall be referred to the Executive Officers for resolution pursuant to Section 13.1 and if they are unable to decide as provided in Sections 13.2 and 13.3.   

(d) Conduct of Litigation; Costs.  The Party initiating suit with respect to any Competitive Infringement, shall have the sole and exclusive right to select counsel for any suit initiated by it, which selected counsel shall be reasonably acceptable to the other Party and not previously or presently adverse to such other Party.  If and to the extent that the initiating Party is unable to initiate or prosecute such suit solely in its own name or it is otherwise advisable in order to obtain an effective remedy, the other Party will join such action and will execute and cause its Related Parties to execute all documents necessary for the initiating Party to initiate litigation to prosecute and maintain such action; provided that Defiante shall be required to join any action initiated by Dyax only to the extent such action relates to Competitive Infringement in the Defiante Territory.  Such other Party shall offer reasonable assistance to the initiating Party in connection therewith at no charge to the initiating Party except for reimbursement of reasonable out-of-pocket expenses incurred in rendering such assistance; provided that Defiante shall be required to offer such assistance only to the extent relating to an action in connection with a Competitive Infringement in the Defiante Territory  The initiating Party shall assume and pay all of its own out-of-pocket costs incurred in connection with any litigation or proceedings initiated by it, including the fees and expenses of the counsel selected by it.  The other Party shall have the right to participate and be represented in any such suit that is based on a Competitive Infringement in the Defiante Territory by its own counsel at its own expense.  

(e) Recoveries. With respect to any suit or action that is based on a Competitive Infringement in the Defiante Territory, any recovery obtained as a result of any such proceeding, by settlement or otherwise, shall be applied in the following order of priority:

(i)           first, the [*****]

(ii) second, [*****]

8.4         Claimed Infringement; Patent Invalidity Claims.  If a Party becomes aware of any claim that the Development, Manufacture or Commercialization of Product infringes the intellectual property rights of any Third Party, such Party shall promptly notify the other Party.  In any such instance, the Parties shall cooperate and shall mutually agree upon an appropriate course of action.  The costs and expenses of any action instituted pursuant to this Section 8.4, (including reasonable fees of attorneys and other professionals) shall be borne by the Party defending the claim.  The other Party may, at its own expense and with its own counsel, join in defending the claim. Each Party shall provide to the other Party copies of any notices it receives from Third Parties regarding any patent nullity actions, any declaratory judgment actions and any alleged infringement or misappropriation of Third Party intellectual property relating to the Development, Manufacture or Commercialization of Product.  Such notices shall be provided promptly, but in no event after more than [*****] following receipt thereof.  Neither Party will enter into any settlement without the prior written consent of the other Party (which consent will not unreasonably be withheld, delayed or conditioned) if such settlement includes a finding, stipulation or agreement that any Dyax Intellectual Property or Defiante Intellectual Property is invalid or unenforceable, or results in or requires a reduction in the scope or abandonment of a claim or enforceable right in such Dyax Intellectual Property or Defiante Intellectual Property.  Any disputes under this Section shall be determined in accordance with the provisions of Section 13.3.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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8.5         Patent Term Extensions.  The Parties shall cooperate, if necessary and appropriate, with each other in gaining patent term extensions and supplemental protection certificates wherever applicable to Patent Rights in the Defiante Territory Controlled by either Party that Cover Compound, Product or their method of manufacture or use.  The Parties shall, if necessary and appropriate, [*****].

8.6         Non-Patent Regulatory Exclusivity.  Defiante shall have the exclusive right to apply for Regulatory Exclusivity for Product in the Field for the Defiante Territory.  As used in this Section 8.6, "Regulatory Exclusivity" shall mean a government-granted right to exclude others from manufacturing, using or marketing a pharmaceutical product, other than a right conferred solely by a Patent Right.

8.7         Patent Marking.  To the extent customary in the pharmaceutical industry in each Party's respective Territory and where notice is required to accrue damages or other rights, each Party agrees to comply with the patent marking statutes in each country in its Territory in which Product is sold by such Party and/or its Affiliates, licensees or Sublicensees.

8.8         Trademarks.

(a) Each Party and its Affiliates shall retain all right, title and interest in and to its and their respective corporate names and logos.

(b) Dyax will be responsible, at its cost and expense, for establishing and maintaining Product Trademarks applicable to Product in the Field in the Dyax Territory or outside of the Field in all countries of the world during the Term ("Dyax Product Trademarks").  Dyax shall own all Dyax Product Trademarks and all goodwill associated therewith.

(c) Dyax hereby grants Defiante a royalty-free license to use the Dyax Product Trademarks in connection with the Commercialization of Products in the Field in the Defiante Territory.  Defiante shall use Dyax Product Trademarks in accordance with sound trademark and trade name usage principles and any reasonable guidelines provided by Dyax in connection therewith.

(d) If and to the extent that the Dyax Product Trademarks are not capable of being used in connection with the Commercialization of Products in the Field in any country of the Defiante Territory, then Defiante will be free to select and utilize trademarks of its own  (the "Defiante Product Trademarks") in connection with the Commercialization of Products in the Field; provided that any such trademark or its use in the Commercialization of Product shall not adversely affect Dyax's own trademark or other rights. The Defiante Product Trademarks shall be owned by Defiante.

(e) If Dyax or Defiante has Knowledge of any suspected infringement of the Product Trademarks by Third Parties, the Party having such Knowledge shall promptly inform the other Party of such infringement.  Dyax and Defiante shall thereafter consult and cooperate fully to determine a course of action.  In any event Dyax shall have the sole right to take such steps as may be required to enforce Dyax Product Trademarks in any Territory, and Defiante shall have the sole right to take such steps as may be required to enforce Defiante Product Trademarks.  Each Party shall keep the other informed of developments in any court action or proceeding, including the status of any settlement negotiations and the terms of any offer related thereto.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(f) Defiante shall have sole responsibility and authority for, and control of, all package labeling and all package inserts (and any changes or supplements thereto) for Product for Commercialization in the Defiante Territory, including determining packaging and trade dress for such Product.

 ARTICLE IX

CONFIDENTIALITY AND PUBLICITY

9.1         Confidential Information.  Each Party shall keep in confidence and not disclose to any Third Party, or use for any purpose, except pursuant to, and in order to carry out, the terms and objectives of this Agreement, any Confidential Information of the other Party.  As used herein, "Confidential Information" shall mean all trade secrets or confidential or proprietary information designated as such in writing by the disclosing Party, including any Defiante Know-How and Dyax Know-How, whether by letter or by the use of an appropriate stamp or legend, prior to or at the time any such trade secret or confidential or proprietary information is disclosed by the disclosing Party to the receiving Party.  Notwithstanding the foregoing, information which is orally or visually disclosed to the receiving Party by the disclosing Party, or is disclosed in writing without an appropriate letter, stamp or legend, shall constitute Confidential Information if (x) it would be apparent to a reasonable person, familiar with the disclosing Party's business and the industry in which it operates, that such information is of a confidential or proprietary nature, the maintenance of which is important to the disclosing Party, or (y) the disclosing Party, within [*****] after such disclosure, delivers to the receiving Party a written document or documents describing such information and referencing the place and date of such oral, visual or written disclosure and the names of the employees or officers of the receiving Party to whom such disclosure was made.  Confidential Information shall also include all Proprietary Information (as such term is defined in the Confidentiality Agreement) disclosed by the disclosing Party pursuant to the Confidentiality Agreement prior to the Effective Date.  The restrictions on the disclosure and use of Confidential Information set forth in this Section 9.1 shall not apply to any Confidential Information that:

(a) was known by the receiving Party or its Affiliates prior to disclosure by the disclosing Party or its Affiliates hereunder or under the Confidentiality Agreement (as evidenced by the receiving Party's or its Affiliates' written records);

(b) is part of the public domain or otherwise publicly known prior to disclosure by the disclosing Party or its Affiliates, or becomes part of the public domain or otherwise publicly known through no fault of the receiving Party or its Affiliates;

(c) is disclosed to the receiving Party or its Affiliates by a Third Party having a legal right to make such a disclosure without violating any confidentiality or non-use obligation that such Third Party has to the disclosing Party or its Affiliates; or

(d) is independently developed by the receiving Party or its Affiliates (as evidenced by the receiving Party's or its Affiliates' written records).

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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Notwithstanding the obligations of confidentiality and non-use set forth above, a receiving Party may provide Confidential Information disclosed to it to (i) Regulatory Authorities or other governmental authorities in order to seek or obtain patents or to gain or maintain authorization to conduct Clinical Studies or to otherwise Develop, Manufacture or Commercialize Product; provided that such Confidential Information shall be disclosed only to the extent reasonably necessary to seek or obtain Regulatory Approvals, patents or such authorizations or to otherwise Develop, Manufacture or Commercialize Product in accordance with this Agreement, (ii) the extent required by applicable law, including by the rules or regulations of the United States Securities and Exchange Commission or similar Regulatory Authority in a country other than the United States or of any stock exchange or listing entity, (iii) any bona fide actual or prospective underwriters, investors, lenders, other financing sources, collaborators, licensees, sublicensees, strategic partners or acquirors, in each case who are subject to obligations of confidentiality and non-use with respect to such Confidential Information no less strict than those set forth in this Section 9.1, to the extent reasonably necessary to enable such actual or prospective underwriters, investors, lenders, other financing sources, collaborators, licensees, sublicensees, strategic partners or acquirors to determine their interest in underwriting or making an investment in, or otherwise providing financing to, collaborating or partnering with, licensing intellectual property from, or acquiring, the receiving Party.  In addition, if either Party is required to disclose Confidential Information of the other Party by regulation, law or legal process, including by the rules or regulations of the FDA, any similar Regulatory Authority in a country other than the United States, the United States Securities and Exchange Commission or of any stock exchange or listing entity, such Party shall, if practicable under the circumstances, provide to such other Party, prior to such intended disclosure, a copy of the proposed text of any such written disclosure or the proposed content of any non-written disclosure, and the disclosing Party shall consider in good faith any comments received from such other Party with respect to such proposed disclosure and shall disclose only such Confidential Information of such other Party as is required to be disclosed.  The Parties agree and acknowledge that each Party is subject to disclosure requirements under the Securities Exchange Act of 1934 and related laws and regulations.  Therefore, in addition to the foregoing obligations, if a Party is required to publicly disclose the other Party's Confidential Information in accordance with such laws or regulations, the Party subject to such disclosure obligations shall, at least two (2) Business Days prior to such intended disclosure (unless impracticable under the circumstances), provide to such other Party a copy of the proposed text of any such disclosure, so as to permit such other Party to publicly disclose such Confidential Information on or before the date on which the Party originally subject to such disclosure obligations publicly discloses such Confidential Information in accordance with such laws or regulations. The confidentiality obligations set forth in this Section 9.1 and in the Confidentiality Agreement shall survive the expiration or termination of this Agreement until the Confidential Information becomes of public domain

9.2         Related Party, Employee, Consultant and Advisor Obligations.  Except as set forth in Section 9.1, each Party agrees that it and its Affiliates shall provide or permit access to Confidential Information received from the other Party only to the receiving Party's Affiliates, licensees and Sublicensees, and to the employees, consultants, advisors and permitted subcontractors of the receiving Party and its Affiliates, licensees and Sublicenses, who have a need to know such Confidential Information to assist the receiving Party, its Affiliates, licensees and Sublicensees with the Development, Manufacture and Commercialization of Product in accordance with this Agreement and who are subject to obligations of confidentiality and non-use with respect to such Confidential Information no less strict than the obligations of confidentiality and non-use of the receiving Party set forth in to Section 9.1; provided that Dyax and Defiante shall each remain responsible for any failure by its Affiliates, licensees and Sublicensees, and its and its Affiliates', licensees', and Sublicensees' respective employees, consultants, advisors and permitted subcontractors, to treat such Confidential Information as required under this Section 9.2.

9.3         Publicity; Terms of Agreement.

(a) Following the Effective Date, the Parties shall at a mutually agreeable time issue a mutually agreeable joint press release regarding the subject matter of this Agreement, in the form attached hereto as Exhibit H.  After issuance of such initial joint press release, neither Party shall issue any other press release or public announcement regarding the execution or terms of this Agreement without the prior written approval of the other Party, which approval shall not be unreasonably withheld, conditioned or delayed, except that a Party may (i) issue such a press release or public announcement regarding the execution or terms of this Agreement if the contents of such press release or public announcement have previously been made public other than through a breach of this Agreement by the issuing Party; and (ii) issue such a press release or public announcement regarding the execution or terms of this Agreement if required by applicable regulation or law, including by the rules or regulations of the FDA, United States Securities and Exchange Commission or similar Regulatory Authority in a country other than the United States or of any stock exchange or listing entity; provided that with respect to press releases and public announcements made pursuant to the foregoing clause (ii), the Party subject to the requirement includes in such press release or public announcement only such information relating to Compound, Product or this Agreement as is required by such applicable regulation or law, and shall comply with the last three (3) sentences of Section 9.1.

(b) In addition, if at any time a Party is legally required to file a copy of this Agreement with the Securities and Exchange Commission (or its counterpart in any country other than the U.S.), such Party shall attempt to obtain confidential treatment of economic and trade secret information for which such treatment is reasonably available in accordance with applicable laws and regulations and SEC (or its counterpart's) practice.  To that end, the filing Party shall, at least fifteen (15) days in advance of any such filing, provide the other Party with a draft set of redactions to the Agreement for which confidential treatment will be sought, and incorporate such other Party's reasonable comments as to additional terms it would like to see redacted, and seek confidential treatment for such additional terms.

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 (c) Either Party may further disclose the terms of this Agreement which have been publicly disclosed pursuant to Sections 9.3(a) or (b).  Otherwise, the terms of this Agreement shall be treated as Confidential Information of both Parties.  Such undisclosed terms may be disclosed by a Party to its prospective and actual licensees, Sublicensees, employees, consultants, agents, accountants, lawyers, advisers, bankers, lenders and investors who are bound to obligations of confidentiality and non-use substantially equivalent in scope to those set forth in this Article IX.

9.4           Publications.  During the Term, if either Dyax or Defiante desires to publicly disclose any New Information in scientific journals or publications or through scientific presentations, the publishing Party shall provide the other Party an advance copy of any such proposed abstracts, posters, scientific presentations and scientific publications incorporating the New Information prior to submission for publication.  With regard to abstracts, posters, and scientific presentations, the advance copy shall be provided to the other Party at [*****] to submission.  With regard to scientific publications, the advance copy shall be provided to the other Party at least [*****] submission.  The other Party shall have a reasonable opportunity to recommend any changes [*****].  Disputes concerning publication shall be referred to the Executive Officers for resolution pursuant to Section 13.1 and if they are unable to decide as provided in Sections 13.2 and 13.3.  For the purposes of this Section 9.4, "New Information" shall mean any and all new ideas, inventions, data, writings, protocols, discoveries, improvements, trade secrets, materials or other proprietary information which has not been previously disclosed to the public, which may arise or be conceived or developed by the Parties or their Related Parties during the Term pursuant to this Agreement to the extent specifically related to the Development, Manufacture or Commercialization of Product.

ARTICLE X

REPRESENTATIONS AND WARRANTIES

10.1         Representations of Authority.  Dyax and Defiante each represents and warrants to the other Party that, as of the Effective Date, it has full corporate right, power and authority to enter into this Agreement and to perform its respective obligations under this Agreement; that it has the right to grant to the other Party the licenses and sublicenses granted pursuant to this Agreement; and that this Agreement has been duly executed by such Party.

10.2         Consents.  Dyax and Defiante each represents and warrants to the other Party that, except for any Regulatory Approvals, pricing and/or reimbursement approvals, manufacturing approvals and/or similar approvals necessary for the Development, Manufacture or Commercialization of Product, all necessary consents, approvals and authorizations of all government authorities and other persons required to be obtained by it as of the Effective Date in connection with the execution, delivery and performance of this Agreement have been obtained by the Effective Date.

10.3         No Conflict.  Dyax and Defiante each represents and warrants to the other Party that, notwithstanding anything to the contrary in this Agreement, the execution and delivery of this Agreement by such Party, the performance of such Party's obligations hereunder and the licenses and sublicenses to be granted by such Party pursuant to this Agreement (a) do not conflict with or violate any requirement of any laws, rules or regulations existing as of the Effective Date and applicable to such Party and (b) do not conflict with, violate, breach or constitute a default under any contractual obligations of such Party or any of its Affiliates existing as of the Effective Date.

10.4         Enforceability.  Dyax and Defiante each represents and warrants to the other Party that, as of the Effective Date, this Agreement is a legal and valid obligation binding upon it and is enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable insolvency and other applicable laws affecting creditors' rights generally or by the availability of equitable remedies.

10.5         No Debarment.  Each Party warrants to the other that neither it nor any of its Affiliates has been debarred or is subject to debarment under applicable laws of any country in any Territory. Each Party agrees that neither it nor any of its Affiliates will use in any capacity, in connection with the Development, Manufacture or Commercialization of Products, any person who has been debarred under applicable laws of any country in any Territory.  Each Party agrees to inform the other Party in writing immediately if it or any person who is performing services hereunder is debarred or is the subject of a conviction, or if any action, suit, claim, investigation or legal or administrative proceeding is pending or, to the best of such Party's Knowledge, is threatened, relating to the debarment or conviction of such Party or any person used in any capacity by such Party or any of its Affiliates in connection with the Development, Manufacture or Commercialization of any Products.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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10.6        Additional Representations and Warranties of Dyax.  Dyax represents and warrants to Defiante that, as of the Effective Date:

(a) Dyax has not granted and will not grant during the Term, any rights, licenses or interests in or to Dyax Intellectual Property or any other intellectual property that conflicts with any of the rights or licenses granted to Defiante under this Agreement;

(b) except for the [*****] License Agreement, there is no agreement between Dyax and any Third Party that imposes an obligation to pay royalties or any other amounts to a Third Party based on the Development, Manufacture or Commercialization of Product in the Field in the Defiante Territory;

(c) Exhibit C sets forth a complete and correct list of all Dyax Patent Rights existing as of the Effective Date that claim DX-88, its formulation or method of manufacture or use; except for the Dyax Patent Rights licensed under the [*****] License Agreement, Dyax is the sole and exclusive owner (as listed in the records of the relevant governmental entities) of all rights, title and interests in and to the Existing Dyax Patent Rights and any other Dyax Intellectual Property;

(d) Dyax has not granted and shall not grant any lien, security interest, mortgage or other encumbrance (excluding any licenses) with respect to any Dyax Intellectual Property, and has not permitted and shall not permit such a lien, security interest or other encumbrance (excluding any licenses) to attach to such Dyax Intellectual Property;

(e) Dyax has obtained the effective assignment of all rights, title and interests of any and all Third Parties (including employees) in and to the Existing Dyax Patent Rights (and all Inventions claimed thereunder); all inventors of any Dyax Patent Rights have executed or will have executed effective assignments or their inventions to Dyax, and all such assignments are and shall be valid and enforceable;

(f) the issued Existing Dyax Patent Rights are in full force and to the Knowledge of Dyax: (i) all necessary registration, maintenance and renewal fees and any other payment due and owed with respect to such Patent Right have been fully paid and all necessary documents and certificates have been filed with the relevant governmental entities for the purpose of maintaining such Patent Right; (ii) such Patent Right discloses patentable subject matter under 35 U.S.C. Section 101 and its counterparts under the laws of jurisdictions outside the United States; and (iii) Dyax and each Affiliate have complied with the required duty of candor and good faith in dealing with the U.S. Patent and Trademark Offices and similar governmental entities in other countries (collectively, "Patent Offices"), including the duty to disclose to the Patent Offices all information required to be disclosed under all applicable laws and regulations;

(g) there are no claims or demands of any Third Party or any actions, suits or other proceedings (including re-examination, opposition or interference proceedings) pending or threatened against Dyax or any of its Affiliates with respect to [*****]; and

(h) to the Knowledge of Dyax, the Development, Manufacture, Commercialization, use or sale of Product (as it exists on the Effective Date) in the HAE Indication as contemplated hereunder [*****].

10.7        No Warranties.  EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, NEITHER PARTY MAKES ANY REPRESENTATION OR EXTENDS ANY WARRANTIES OF ANY KIND, EITHER EXPRESS OR IMPLIED, TO THE OTHER PARTY, AND EACH PARTY HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NON-INFRINGEMENT WITH RESPECT TO THE COMPOUND AND THE PRODUCT.  EACH PARTY HEREBY DISCLAIMS ANY REPRESENTATION OR WARRANTY THAT THE DEVELOPMENT, MANUFACTURE AND COMMERCIALIZATION OF PRODUCT PURSUANT TO THIS AGREEMENT WILL BE SUCCESSFUL.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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ARTICLE XI

INDEMNIFICATION, DAMAGES AND INSURANCE

11.1        By Defiante.  Defiante will defend, indemnify and hold harmless Dyax, its Affiliates and Sublicensees and their respective directors, officers, employees and agents (the "Dyax Indemnified Parties") from and against all claims, demands, liabilities, damages, penalties, fines, costs and expenses, including reasonable attorneys' and expert fees and costs, and costs or amounts paid to settle (collectively, "Losses"), arising from or occurring as a result of a Third Party's claim (including any Third Party product liability or infringement claim), action, suit, judgment or settlement to the extent such Losses are due to or based upon:

(a) the negligence, recklessness, bad faith, intentional wrongful acts or omissions or violations of applicable law or regulation by or of Defiante or its Related Parties or their respective directors, officers, employees or agents, including in connection with the Development or Commercialization of Product by Defiante or its Related Parties; or

(b) the breach by Defiante of the terms of, or the inaccuracy of any representation or warranty made by it in this Agreement; or

(c) the Development or Commercialization of Product by Defiante or its Related Parties except to the extent that such Losses arise out of, and are allocable to any cause set forth in Section 11.2(a) or (b) or (c).

11.2       By Dyax.  Dyax will defend, indemnify and hold harmless Defiante, its Affiliates or Sublicensees and their respective directors, officers, employees and agents (the "Defiante Indemnified Parties") from and against all Losses arising from or occurring as a result of a Third Party's claim (including any Third Party product liability or infringement claim), action, suit, judgment or settlement to the extent such Losses are due to or based upon:

(a) the negligence, recklessness, bad faith, intentional wrongful acts or omissions or violations of applicable law or regulation by or of Dyax or its Related Parties or their respective directors, officers, employees or agents, including in connection with the Development, Manufacture or Commercialization of Product by Dyax or its Related Parties; or

(b) the breach by Dyax of the terms of, or the inaccuracy of any representation or warranty made by it in this Agreement; or

(c) the Development, Manufacture or Commercialization of Product by Dyax or its Related Parties except to the extent that such Losses arise out of, and are allocable to any cause set forth in Section 11.1(a), (b) or (c).

 

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11.3        Claims for Indemnification.

(d) A Person entitled to indemnification under Sections 11.1 or 11.2 (an "Indemnified Party") shall give prompt written notification to the Party from whom indemnification is sought (the "Indemnifying Party") of the commencement of any action, suit or proceeding relating to a Third Party claim for which indemnification may be sought or, if earlier, upon the assertion of any such claim by a Third Party (it being understood and agreed, however, that the failure by an Indemnified Party to give notice of a Third Party claim as provided in this Section 11.3 shall not relieve the Indemnifying Party of its indemnification obligation under this Agreement except and only to the extent that such Indemnifying Party is actually prejudiced as a result of such failure to give notice).

(e) Within [*****] after delivery of such notification, the Indemnifying Party may, upon written notice thereof to the Indemnified Party, assume control of the defense of such action, suit, proceeding or claim with counsel reasonably satisfactory to the Indemnified Party.  If the Indemnifying Party does not assume control of such defense, the Indemnified Party shall control such defense.

(f) The Party not controlling such defense may participate therein at its own expense; provided that if the Indemnifying Party assumes control of such defense and the Indemnified Party reasonably concludes, based on advice from counsel, that the Indemnifying Party and the Indemnified Party have conflicting interests with respect to such action, suit, proceeding or claim, the Indemnifying Party shall be responsible for the reasonable fees and expenses of counsel to the Indemnified Party solely in connection therewith; provided further that in no event shall the Indemnifying Party be responsible for the fees and expenses of more than one counsel in any one jurisdiction for all Indemnified Parties.

(g) The Party controlling such defense shall keep the other Party advised of the status of such action, suit, proceeding or claim and the defense thereof and shall consider recommendations made by the other Party with respect thereto.

(h) The Indemnified Party shall not agree to any settlement of such action, suit, proceeding or claim without the prior written consent of the Indemnifying Party, which shall not be unreasonably withheld or delayed.  The Indemnifying Party shall not, without the prior written consent of the Indemnified Party, agree to any settlement of such action, suit, proceeding or claim or consent to any judgment in respect thereof that does not include a complete and unconditional release of the Indemnified Party from all liability with respect thereto or that imposes any liability or obligation on the Indemnified Party.

11.4        No Consequential or Punitive Damages.  NEITHER PARTY HERETO WILL BE LIABLE FOR INDIRECT, INCIDENTAL, CONSEQUENTIAL, SPECIAL, EXEMPLARY, OR PUNITIVE DAMAGES ARISING OUT OF THIS AGREEMENT OR THE EXERCISE OF ITS RIGHTS HEREUNDER, OR FOR LOST PROFITS ARISING FROM OR RELATING TO ANY BREACH OF THIS AGREEMENT, REGARDLESS OF ANY NOTICE OF SUCH DAMAGES; PROVIDED THAT NOTHING IN THIS SECTION 11.4 IS INTENDED TO LIMIT OR RESTRICT (A) THE INDEMNIFICATION RIGHTS OR OBLIGATIONS OF EITHER PARTY WITH

RESPECT TO THIRD PARTY CLAIMS, OR (B) ANY CLAIMS WITH RESPECT TO A BREACH OF A PARTY'S OBLIGATIONS OF CONFIDENTIALITY OR NON-USE IN ARTICLE IX.

11.5        Insurance.  During the Term and for a period of three (3) years after the expiration of this Agreement or the earlier termination thereof, each Party shall obtain and/or maintain, respectively, at its sole cost and expense, product liability insurance (including any self-insured arrangements); provided that clinical trial insurance policies will be required only while trials are ongoing. Such product liability insurance or self-insured arrangements shall insure against all reasonably anticipated liability, including personal injury, physical injury and/or property damage arising out of the manufacture, sale, distribution or marketing of Product in such Party's Territory.  Such insurance will not be construed to create a limit of either Party's liability with respect to its indemnification obligations under this Article XI.  Each Party will provide the other Party with a copy of the certificate of insurance or other evidence of such insurance and/or self-insurance, upon request.  Each Party will use Commercially Reasonable Efforts to provide the other Party with written notice at least thirty (30) days prior to the cancellation of, non-renewal of or material change in, such insurance or self-insurance that materially adversely affects the rights of the other Party hereunder.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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ARTICLE XII

TERM AND TERMINATION

12.1        Term.  Unless terminated earlier in accordance with this Article XII, this Agreement shall remain in force for the period commencing on the Effective Date and ending on the expiration of the last Contribution Payment Term to expire under this Agreement (the "Term").  After the expiration of the Term the licenses granted in Sections 3.1, 3.2 and 8.8(c) hereof shall survive as perpetual, fully paid-up, non-royalty-bearing licenses, and any exclusive license in such Sections shall convert to a nonexclusive license.

12.2        Termination Rights.

(a) Termination for Convenience.  Defiante shall have the right to terminate this Agreement at any time after the Effective Date on [*****] prior written notice to Dyax.

(b) Termination For Breach.

(i) Upon any material breach of this Agreement by a Party (the "Breaching Party"), the other Party (the "Non-Breaching Party") may seek to terminate this Agreement by providing written notice to the Breaching Party specifying the nature of the material breach (a "Termination Notice").

(ii) The termination shall become effective [*****] following receipt of the Termination Notice by the Breaching Party unless the Breaching Party cures the noticed material breach during such notice period.  Notwithstanding the foregoing, (i) if such material breach, by its nature, is incurable, the Non-Breaching Party may terminate this Agreement immediately upon receipt of the Termination Notice by the Breaching Party and (ii) if such material breach (other than a payment breach), by its nature, is curable, but not within the foregoing cure period, then such cure period shall be extended if the Breaching Party provides a written plan for curing such material breach to the Non-Breaching Party and uses Commercially Reasonable Efforts to cure such material breach in accordance with such written plan; provided that no such extension shall exceed [*****] without the written consent of the Non-Breaching Party.

(iii) Notwithstanding the provisions of Sections 12.2(b)(i) and (ii), if either Party gives a Termination Notice to the other Party pursuant to Section 12.2(a)(i), and, as of the end of the cure period set forth in Section 12.2(a)(ii) above, the Parties are engaged in an arbitration pursuant to Section 13.3 in which the Non-Breaching Party is disputing the basis for such termination pursuant to this Section 12.2(b), then this Agreement shall not terminate unless and until the arbitrator issues an award upholding such basis for termination (or unless the Breaching Party is no longer disputing such basis in good faith, if earlier, and the Breaching Party cures such material breach within thirty (30) days after the issuance of such award).

(c) Termination for Bankruptcy. A Party may terminate this Agreement should the other Party commit an act of bankruptcy, be declared bankrupt, voluntarily file or have filed against it a petition for bankruptcy or reorganization unless such petition is dismissed within [*****] of filing or such petition is for a reorganization under Chapter 11 of the Bankruptcy Code (as defined below) or any relevant foreign equivalent thereof and such Party is not in default at the time of the filing of such petition or at any time during such reorganization of any of its obligations under this Agreement, enter into a procedure of winding up to dissolution, or should a trustee or receiver be appointed for its business assets or operations. All rights and licenses granted under or pursuant to this Agreement are, and shall otherwise be deemed to be, for the purposes of Section 365(n) of Title 11 of the Bankruptcy Code, license rights to "intellectual property" as defined under Section 101(60) of the Bankruptcy Code. The Parties agree that any Party, as a licensee hereunder, shall retain and may fully exercise all of its rights and elections under the Bankruptcy Code or any relevant foreign equivalent thereof.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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12.3        Consequences of Termination.

(a) Termination by Dyax for Cause.

(i) Without limiting any other legal or equitable remedies that Dyax may have, if Dyax terminates this Agreement in accordance with Sections 12.2(b), (c) or (d) then:

(A) Defiante's obligations under Section 5.1(b) shall survive for a period of [*****] after termination;

(B) Defiante shall, as promptly as practicable, transfer to Dyax or Dyax's designee all records and materials in Defiante's possession or Control containing Confidential Information of Dyax;

(C) to the extent necessary and permitted under applicable law, Defiante shall appoint Dyax as Defiante's and/or Defiante's Related Parties' agent for all Product-related matters involving Regulatory Authorities in the Defiante Territory until all Regulatory Approvals and other regulatory filings have been transferred to Dyax or its designee;

(D) if the effective date of termination is after First Commercial Sale, to the extent necessary and permitted under applicable law, Defiante shall appoint Dyax as its exclusive distributor of Product in the Defiante Territory and grant Dyax the right to appoint sub-distributors, until such time as all Regulatory Approvals in the Defiante Territory have been transferred to Dyax or its designee;

(E) Defiante shall transfer to Dyax or Dyax's designee possession and ownership of all Regulatory Approvals and pricing and reimbursement approvals in Defiante's possession or Control relating to Product in the Defiante Territory subject to reimbursement by Dyax of all costs and expenses incurred by Defiante, or its Related Parties, for obtaining such Regulatory Approval; the amount to be paid by Dyax to Defiante under this Section 12.3(a)(i)(E) shall be first off set against any outstanding amounts due from Defiante to Dyax under Article VII;

(F) if Dyax so requests and subject to Dyax acquiring the relevant Regulatory Approvals under Section 12.3(a)(i)(E) above, Defiante shall provide reasonable assistance to allow the transfer to Dyax of any Third Party agreements relating to the Commercialization of Product in the Defiante Territory to which Defiante is a party, to the extent that such transfer is not expressly prohibited by the terms of such Third Party agreements;

(G) Defiante shall grant Dyax an exclusive license, with the right to grant sublicenses through multiple tiers, under the Defiante Development Data that relate solely to the Product to Develop, Manufacture and/or Commercialize Products (or conduct Regulatory Activities related thereto) in the Field and throughout the world. The license granted pursuant to this Section 12.3(a)(i)(G) shall be royalty-free, fully-paid and perpetual; provided that:

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(1) if the effective date of termination occurs at any time after the Regulatory Approval of the Product has been obtained in any country in the Defiante Territory, then Dyax will be obligated to pay to Defiante [*****] of the net sales of such Product by Dyax and its Related Parties (to be calculated consistently with the definition of Net Sales under Section 1.80) in such country in the Defiante Territory; and

(2) if and to the extent that any such license includes any sublicense of Third Party intellectual property licensed by Defiante, then such sublicense shall be subject to the terms and conditions of the license between Defiante and such Third Party and Dyax shall be responsible for the payment to such Third Party of any and all fees, payments and royalties due under the license between Defiante and such Third Party as a result of the practice by Dyax and its Related Parties of such sublicensed Third Party intellectual property.

(b) Termination by Defiante for Convenience.  If Defiante terminates this Agreement in accordance with Section 12.2(a), then:

(i) the provisions of Section 12.3(a)(i)(A)-(F) shall apply; and

(ii) Defiante shall grant to Dyax (x) an exclusive license, with the right to grant sublicenses, under the Defiante Development Data that relates solely to Product, to develop, manufacture, conduct regulatory activities and commercialize products containing Compound inside and outside the Field and throughout the world and (y) a non-exclusive license, with the right to grant sublicenses, under all other Defiante Development Data to develop, manufacture, conduct regulatory activities and commercialize products containing Compound inside and outside the Field and throughout the world.  The licenses granted pursuant to this Section 12.3(b) shall be royalty-free, fully-paid and perpetual; provided that if and to the extent that any such license includes any sublicense of Third Party intellectual property licensed by Defiante, then such sublicense shall be subject to the terms and conditions of the license between Defiante and such Third Party and Dyax shall be responsible for the payment to such Third Party of any and all fees, payments and royalties due under the license between Defiante and such Third Party as a result of the practice by Dyax and its Related Parties of such sublicensed Third Party intellectual property.

(c) Termination by Defiante for Cause.  Without limiting any other legal or equitable remedies that Defiante may have (but subject to the provisions set forth below in this Section 12.3(c)), if it is determined that Defiante has the right to terminate this Agreement in accordance with Section 12.2(b), (c) or (d), then Defiante may, by notice to Dyax, elect to continue this Agreement or terminate this Agreement, with the consequences set forth in either Section 12.3(c)(i) or Section 12.3(c)(ii), as applicable.

(i) If Defiante elects to continue this Agreement:  (A) all payments that become due and payable by Defiante to Dyax under Article VII after date the Dyax receives written notice of such election shall be reduced, as liquidated damages to be paid to Defiante, and not a as penalty to be paid by Dyax, to [*****] of the amounts that otherwise would have been payable to Dyax; and (B) all other provisions of this Agreement shall remain in full force and effect without change.

(ii) If Defiante elects to terminate this Agreement, as of the effective date of such termination, all rights and obligations of the Parties under this Agreement shall terminate except as set forth in Section 12.4 and without prejudice for Defiante to seek and obtain damages.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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12.4        Survival.  In the event of any expiration or termination of this Agreement, (a) all financial obligations under Article VII owed as of the effective date of such expiration or termination shall remain in effect, (b) all obligations to pay damages in connection with any material breach of this Agreement that has not been cured or otherwise resolved or settled as of the effective date of such expiration or termination shall remain in effect, (c) the provisions set forth in Sections 4.9(a), 4.9(b), 5.5, 7.7, 7.8, 7.9, 7.10, 7.11, 7.12, 7.13, 8.1, 9.1, 9.2, 9.3, 10.7, 11.1, 11.2, 11.3, 11.4, 12.1, 12.3, 12.4 and to the limited extent necessary to implement any of the other surviving provisions, ARTICLE I, ARTICLE XIII and ARTICLE XIV and the Exhibits, and  (d) all other provisions contained in this Agreement that by their terms survive expiration or termination of this Agreement, shall survive.

ARTICLE XIII

DISPUTE RESOLUTION

13.1        Referral to Executive Officers.  If for any reason the JSC cannot resolve any matter properly referred to it, either Party may refer the matter to the Executive Officers for resolution.  If after discussing such matter, or any other matter to be resolved pursuant to this Section 13.1 pursuant to this Agreement, in good faith and attempting to find a mutually satisfactory resolution to the issue, the Executive Officers fail to come to consensus within [*****] after the date on which the matter is referred to the Executive Officers, the provisions of Section ARTICLE IV13.2 shall apply.  The resolutions so reached through the provisions of Section ARTICLE IV13.1 or ARTICLE IV13.2 shall be binding on the Parties.

13.2        Final Decision-Making Authority Allocated to a Single Party.  If the Executive Officers fail to come to consensus on any matter referred to the Executive Officers (other than those matters properly referred to the JSC under Sections 3.4, 4.3 and 4.4) within the period for resolution set forth in Section 13.1, then:

(a) on matters solely relating to the Development, Regulatory Approval, and Commercialization of Products in the Field in the Defiante Territory, Defiante shall have the final decision-making authority; provided that:

(i) with respect to any such matters that Dyax reasonably concludes could adversely impact the Regulatory Approval of the Product for the treatment of HAE in the United States (including the timing of such Regulatory Approval), Dyax shall have the final decision-making authority; and

(ii) with respect to any activities relating to any reformulation of the Product (including those that are conducted in connection with the EMA approved Pediatric Investigational Plan), Dyax shall have the final decision-making authority;

(b) on matters solely relating to the Development, Regulatory Approval, and Commercialization of Products in the Field in the Dyax Territory or outside the Field in any country of the world; Dyax shall have the final decision-making authority;

(c) on any matter that is reasonably likely to materially and adversely impact the safety profile of Product in or outside the Field (including matters relating to Product formulation and safety), Dyax shall have the final decision-making authority; and

(d) notwithstanding the foregoing provisions of this Section 13.2, neither Party shall have final decision-making authority pursuant to this Section 13.2 with respect to matters (i) over which the other Party is expressly allocated final decision-making authority elsewhere in this Agreement and (ii) for which this Agreement expressly provides that a decision shall not be made without the approval or consent of the other Party.

13.3        Arbitration.  Any dispute arising out of or relating to this Agreement that is not finally resolved through the provisions of Sections 13.1 or 13.2, including the interpretation of this Agreement and any breach or alleged breach of this Agreement, shall be resolved through binding arbitration as described below; provided that specific matters for which this Agreement expressly provides that a decision shall not be made without the approval or consent of one or both of the Parties shall not be subject to resolution under this Section 13.3.  Furthermore, the following procedures will apply to all arbitration proceedings pursuant to this Agreement:

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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(a) A Party may submit such dispute to arbitration by notifying the other Party, in writing, of such dispute.  Within [*****] after receipt of such notice, the Parties shall designate in writing a single arbitrator to resolve the dispute; provided that if the Parties cannot agree on an arbitrator within such [*****], the arbitrator shall be selected by the International Court of Arbitration of the International Chamber of Commerce ("ICC").  The arbitrator shall be a lawyer knowledgeable and experienced in the law concerning the subject matter of the dispute and a technical expert in the applicable field if the subject matter of the dispute involves a technical issue, and shall not be an Affiliate, employee, consultant, officer, director or stockholder of either Party or of a licensee of either Party.

(b) Within [*****] after the designation of the arbitrator, the arbitrator and the Parties shall meet, at which time the Parties shall be required to set forth in writing all disputed issues and a proposed ruling on the merits of each such issue.

(c) The arbitrator shall set a date for a hearing, which shall be no later than forty-five (45) days after the submission of written proposals pursuant to Section 13.2(b), to discuss each of the issues identified by the Parties.  The Parties shall have the right to be represented by counsel.  Except as provided herein, the arbitration shall be governed by the Arbitration Rules of the ICC applicable at the time of the notice of arbitration pursuant to Section 13.3(a); provided that the arbitration shall be conducted by a single arbitrator.

(d) The arbitrator shall use his or her best efforts to rule on each disputed issue within [*****] after the completion of the hearings described in this Section 13.2.  The determination of the arbitrator as to the resolution of any dispute shall be binding and conclusive upon all Parties.  All rulings of the arbitrator shall be in writing and shall be delivered to the Parties.

(e) The (i) attorneys' fees of the Parties in any arbitration, (ii) fees of the arbitrator and (iii) costs and expenses of the arbitration shall be borne by the Parties as determined by the arbitrator.

(f) Any arbitration pursuant to this Section 13.2 (including the meeting under (b) and the hearing under (c) of this Section 13.2) shall be conducted in Paris, France.

(g) Nothing in this Section 13.2 shall be construed as limiting in any way the right of a Party to seek injunctive relief with respect to any actual or threatened breach of this Agreement from, or to bring an action in aid of arbitration in, a court in accordance with Section 14.8.  Should any Party seek injunctive relief, then for purposes of determining whether to grant such injunctive relief, the dispute underlying the request for such injunctive relief may be heard by a court in accordance with Section 14.8.

(h) The arbitrator shall not award damages excluded pursuant to Section 11.4.

(i) The Parties agree to continue performing under the Agreement in accordance with its provisions, pending the final resolution of any dispute, and, without limiting the foregoing, shall continue to cooperate and participate in the committees provided for in the Agreement.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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ARTICLE XIV

MISCELLANEOUS

14.1        Choice of Law; Jurisdiction.  This Agreement shall be governed by and interpreted under, and any court action in accordance with Section 14.8 shall apply, the laws of the Commonwealth of Massachusetts excluding: (a) its conflicts of laws principles; (b) the United Nations Conventions on Contracts for the International Sale of Goods; (c) the 1974 Convention on the Limitation Period in the International Sale of Goods; and (d) the Protocol amending such 1974 Convention, done at Vienna April 11, 1980.  Each Party submits to the non-exclusive jurisdiction of the state and federal courts sitting in Boston, Massachusetts, with respect to any actions or proceedings (other than those described in Section 13.3) arising out of or relating to this Agreement.  Each Party waives any defense of inconvenient forum to the maintenance of any action or proceeding so brought and waives any bond, surety or other security that might be required of the other Party with respect thereto.  Each Party may make service on the other Party by sending or delivering a copy of the process to the Party to be served at the address and in the manner provided for the giving of notices in Section 14.2.  Nothing in this Section 14.1, however, shall affect the right of any Party to serve legal process in any other manner permitted by law.

14.2        Notices.  Any notice or report required or permitted to be given or made under this Agreement by one of the Parties to the other shall be in writing and shall be deemed to have been delivered upon personal delivery or (a) four (4) days after deposit in the mail or the Business Day next following deposit with a reputable overnight courier and (b) in the case of notices provided by facsimile (which notice shall be followed immediately by an additional notice pursuant to clause (a) above if the notice is of a default hereunder), upon completion of transmissions to the addressee's facsimile number, as follows (or at such other addresses or facsimile numbers as may have been furnished in writing by one of the Parties to the other as provided in this Section 14.2):

If to Dyax:	Dyax Corp. 300 Technology Square Cambridge, Massachusetts 02139 U.S.A. [*****]
With a copy to:	Dyax Corp. 300 Technology Square Cambridge, Massachusetts 02139 U.S.A. [*****]
If to Defiante:	Defiante Farmacêutica SA Operating Office R. da Alfândega, 78, 3º 9000-056 Funchal Portugal [*****]

14.3        Construction.  This Agreement has been prepared jointly and shall not be strictly construed against either Party.  Any reference in this Agreement to an Article, Section, subsection, paragraph, clause, Schedule or Exhibit shall be deemed to be a reference to any Article, Section, subsection, paragraph, clause, Schedule or Exhibit, of or to, as the case may be, this Agreement.  Except where the context otherwise requires, (a) any definition of or reference to any agreement, instrument or other document refers to such agreement, instrument other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein or therein), (b) any reference to any laws refers to such laws as from time to time enacted, repealed or amended, (c) the words "herein," "hereof" and "hereunder," and words of similar import, refer to this Agreement in its entirety and not to any particular provision hereof, and (d) the words "include," "includes" and "including" shall be deemed to be followed by the phrase "but not limited to," "without limitation" or words of similar import.

14.4        Severability.  If, under applicable law or regulation, any provision of this Agreement is invalid or unenforceable, or otherwise directly or indirectly affects the validity of any other material provision(s) of this Agreement (such invalid or unenforceable provision, a "Severed Clause"), it is mutually agreed that this Agreement shall endure except for the Severed Clause.  The Parties shall consult one another and use their Commercially Reasonable Efforts to agree upon a valid and enforceable provision that is a reasonable substitute for the Severed Clause in view of the intent of this Agreement.

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

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14.5        Captions.  All captions herein are for convenience only and shall not be interpreted as having any substantive meaning.

14.6        Integration.  This Agreement (together with all Exhibits), constitutes the entire agreement between the Parties hereto with respect to the within subject matter and supersedes all previous agreements, whether written or oral.  This Agreement may be amended only in writing signed by properly authorized representatives of each of Dyax and Defiante.

14.7        Independent Contractors; No Agency.  Neither Party shall have any responsibility for the hiring, firing or compensation of the other Party's employees or for any employee benefits.  No employee or representative of a Party shall have any authority to bind or obligate the other Party to this Agreement for any sum or in any manner whatsoever, or to create or impose any contractual or other liability on the other Party without said Party's written approval.  For all purposes, and notwithstanding any other provision of this Agreement to the contrary, Defiante's legal relationship under this Agreement to Dyax shall be that of independent contractor.

14.8       Assignment; Successors.  Neither Dyax nor Defiante may assign this Agreement in whole or in part, nor any rights hereunder, without the prior written consent of the other Party; provided that:

(a) either Party may assign this Agreement to an Affiliate for the period that such Affiliate remains an Affiliate of such assigning Party on the condition that the assigning Party shall remain primarily liable hereunder for the prompt and punctual payment and performance of all obligations of the assignee;

(b) this Agreement may be assigned by Defiante in connection with a sale or transfer of all or substantially all of Defiante's business or assets to which this Agreement relates to any Third Party who is not a Product Competitor;

(c) this Agreement may be assigned by Dyax to a Third Party in connection with a sale or transfer of all or substantially all of Dyax's business or assets to which this Agreement relates.

This Agreement shall be binding upon, and shall inure to the benefit of, all permitted successors and assigns.

14.9        Execution in Counterparts; Facsimile Signatures.  This Agreement may be executed in counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original, and all of which counterparts, taken together, shall constitute one and the same instrument even if both Parties have not executed the same counterpart.  Signatures provided by facsimile transmission shall be deemed to be original signatures.

14.10      Waiver.  The waiver by either Party hereto of any right hereunder, or of the failure of the other Party to perform, or of a breach by the other Party, shall not be deemed a waiver of any other right hereunder or of any other breach or failure by such other Party whether of a similar nature or otherwise.

14.11      Performance by Affiliates.  To the extent that this Agreement imposes obligations on Affiliates of a Party, such Party agrees to cause its Affiliates to perform such obligations.  Either Party may use one or more of its Affiliates to perform its obligations and duties hereunder and Affiliates of a Party are expressly granted certain rights herein; provided that each such Affiliate shall be bound by the corresponding obligations of such Party and the Parties shall remain liable hereunder for the prompt payment and performance of all their respective obligations hereunder.

14.12      Force Majeure.  Neither Party shall be held liable to the other Party nor be deemed to have defaulted under or breached the Agreement for failure or delay in performing any obligation under this Agreement when such failure or delay is caused by or results from causes beyond the reasonable control of the affected Party, which may include embargoes, war, acts of war (whether war be declared or not), insurrections, riots, civil commotions, strikes, lockouts or other labor disturbances, fire, floods, or other acts of God, or acts, omissions or delays in acting by any governmental authority or the other Party.  The affected Party shall notify the other Party of such force majeure circumstances as soon as reasonably practical, and shall promptly undertake all reasonable efforts necessary to cure such force majeure circumstances.

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14.13      Export Control.  This Agreement is made subject to any restrictions concerning the export of products or technical information from the United States of America or other countries which may be imposed upon or related to Dyax or Defiante from time to time.  Each Party agrees that it shall not export, directly or indirectly, any technical information acquired from the other Party under this Agreement or any products using such technical information to a location or in a manner that at the time of export requires an export license or other governmental approval, without first obtaining the written consent to do so from the appropriate agency or other governmental entity.

14.14      Costs.  Each Party shall bear its own legal costs of and incidental to the preparation, negotiation and execution of this Agreement.

14.15      Counterparts.  This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

[Remainder of page intentionally left blank.]

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IN WITNESS WHEREOF, Dyax and Defiante have caused this Agreement to be duly executed by their authorized representatives under seal, effective as of the Effective Date.

DYAX CORP.
By:	/s/ George Migausky
	Name: George Migausky
	Title: Executive Vice President and Chief Financial Officer
DEFIANTE FARMACÊUTICA S.A.,
By:	/s/ Paulo Viegas
	Name: Paulo Viegas
	Title: Chief Executive Officer

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CONFIDENTIAL DOCUMENT

EXHIBIT A

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

Exhibit A

CONFIDENTIAL DOCUMENT

EXHIBIT B

Amino Acid Sequence of DX-88

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

Exhibit B 

CONFIDENTIAL DOCUMENT

EXHIBIT C

Existing Dyax Patent Rights

DX-88
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
094003	US	11/323,261	7,276,480	20070249807	PREVENTION AND REDUCTION OF BLOOD LOSS	ISSUED	10/2 /2007	6 /6 /2023
[*****]	[*****]	[*****]			[*****]	[*****]		[*****]
094007	US	11/930,012		20090082267	PREVENTION AND REDUCTION OF BLOOD LOSS	PUBLISHED		6 /6 /2023
094011	US	11/931,373		20080200646	PREVENTION AND REDUCTION OF BLOOD LOSS	PUBLISHED		6 /6 /2023
094EP2	EP	07023364.8		EP1941867	PREVENTION AND REDUCTION OF BLOOD LOSS	PUBLISHED		6 /6 /2023
094HK2	HK	08114131.3		EP1941867	PREVENTION AND REDUCTION OF BLOOD LOSS	PUBLISHED		6 /6 /2023
096001	US	08/208,264	6,057,287		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	5 /2 /2000	8 /18/2015
096002	US	09/421,097	6,333,402		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEROF	ISSUED	12/25/2001	1 /11/2014
[*****]	[*****]	[*****]			[*****]	[*****]		[*****]
096004	US	09/136,012	5,994,125		KALLIKREIN-INHIBITING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	11/30/1999	1 /11/2014
[*****]	[*****]	[*****]		[*****]	[*****]	[*****]		[*****]
096AT1	AT	95909223.0	E 275 583	739355	KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096BE1	BE	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096CA1	CA	2180950	2180950		KALLIKREIN-INHIBITING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	3 /29/2005	1 /11/2015
096CH1	CH	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

Exhibit C

DX-88
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
096DE1	DE	95909223.0	69533472.7		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096DK1	DK	95909223.0	0739355	739355	KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096EP1	EP	95909223.0	0739355	EP0739355	KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
[*****]	[*****]	[*****]		[*****]	[*****]	[*****]		[*****]
096EP3	EP	08018863.4		EP2055716	KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	PUBLISHED		1 /11/2015
096ES1	ES	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096FR1	FR	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096GB1	GB	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096GR1	GR	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096HK2	HK	05104679.5		1071899A	KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	PUBLISHED		1 /11/2015
096IE1	IE	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096IT1	IT	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096JP1	JP	7-518726	3805785	9511131	KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	5 /19/2006	1 /11/2015

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

Exhibit C

DX-88
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
[*****]	[*****]	[*****]	[*****]		[*****]	[*****]	[*****]	[*****]
096LU1	LU	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096MC1	MC	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096NL1	NL	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096PT1	PT	95909223.0	0739355	739355	KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096SE1	SE	95909223.0	0739355		KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	9 /8 /2004	1 /11/2015
096US1	US	08/676,125	5,795,865		KALLIKREIN-INHIBITING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	ISSUED	8 /18/1998	8 /18/2015
096WO1	WO	PCT/US95/00299		WO9521601	KALLIKREIN-BINDING "KUNITZ DOMAIN" PROTEINS AND ANALOGUES THEREOF	PUBLISHED
143001	US	11/716,278		20070213275	FORMULATIONS FOR ECALLANTIDE	PUBLISHED		3 /10/2026
[*****]	[*****]	[*****]			[*****]	[*****]		[*****]
143CA1	CA	2,643,693		CA2643693	FORMULATIONS FOR ECALLANTIDE	PUBLISHED		3 /9 /2027
143EP1	EP	07758271.6		EP2001500	FORMULATIONS FOR ECALLANTIDE	PUBLISHED		3 /9 /2027
143HK1	HK	09100264.0		1119964	FORMULATIONS FOR ECALLANTIDE	PUBLISHED		3 /9 /2027
143IN1	IN	PCT/US07/63703		7659/DELNP/2008	FORMULATIONS FOR ECALLANTIDE	PUBLISHED		3 /9 /2027
[*****]	[*****]	[*****]			[*****]	[*****]		[*****]
[*****]	[*****]	[*****]			[*****]	[*****]		[*****]
143WO1	WO	2008-558556		WO07106746	FORMULATIONS FOR ECALLANTIDE	PUBLISHED

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

Exhibit C

 

CONFIDENTIAL DOCUMENT

EXHIBIT D

Clinical Development of DX-88

Completed Studies:

DX-88/1: Double blind placebo controlled single ascending intravenous dose study to assess the tolerability and pharmacokinetic parameters of DX-88 (plasma kallikrein inhibitor) in healthy volunteers

DX-88/2:  Open label single ascending intravenous dose study to assess the tolerability and efficacy of DX-88 (plasma kallikrein inhibitor) administered following onset of peripheral and/or facial edema or abdominal symptoms in patients with angioedema

DX-88/3:  A double-blind, placebo-controlled, exploratory study examining the pharmacokinetic behavior of DX-88, a kallikrein inhibitor, its effects on coagulation and safety in patients undergoing cardiopulmonary bypass procedures

DX-88/4:  EDEMA 1: Evaluation of DX-88's effects in Mitigating Angioedema.  An ascending four dose placebo controlled study to assess the efficacy and tolerability of DX-88 (recombinant plasma kallikrein inhibitor) administered following onset of acute attacks of hereditary angioedema

DX-88/5:  EDEMA 2: Evaluation of DX-88's effects in Mitigating Angioedema.  An open label study to assess the efficacy and tolerability of repeated doses of DX-88 (recombinant plasma kallikrein inhibitor) in patients with hereditary angioedema

DX-88/6:  An open label study designed to assess the pharmacokinetic profiles and safety of repeated dosing DX-88 in volunteers given 4 intravenous dose regimens of DX-88.

DX-88/13: An open label study designed to assess and compare the pharmacokinetic profiles and safety of intravenous vs. subcutaneous dosing of DX-88, recombinant inhibitor of human plasma kallikrein, in volunteers

DX-88/14: EDEMA 3: Evaluation of DX-88's effects in Mitigating Angioedema.  A double-blind, placebo-controlled study followed by a repeat dosing phase to assess the efficacy and safety of DX-88 (recombinant plasma kallikrein inhibitor) for the treatment of acute attacks of Hereditary Angioedema

DX-88/15:  A randomized, double-blind crossover study to assess the bioequivalence and safety profiles of 30mg DX-88 liquid vs. lyophilized formulations in healthy volunteers

Exhibit D 

DX-88/16:  Ecallantide for the reduction of blood loss associated with cardiopulmonary bypass: a phase II randomized, double-blind, placebo-controlled, multicenter study in patients undergoing primary coronary artery bypass grafting, single valve repair, or single valve replacement

DX-88/19:  Open-label Patient Continuation of DX-88 (Ecallantide) for Acute Hereditary Angioedema Attacks.

DX-88/20: EDEMA 4: Evaluation of DX-88's effects in Mitigating Angioedema.  A randomized, double-blind, placebo-controlled multi-center study to assess the efficacy and safety of DX-88 (ecallantide) for the treatment of acute attacks of Hereditary Angioedema

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

Exhibit D 

CONFIDENTIAL DOCUMENT

EXHIBIT E

[*****]

* Confidential Treatment Requested.  Omitted portions filed with the Commission.

Exhibit E 

EX-10.3

EXHIBIT 10.3

As amended through March 24, 2010

DYAX CORP.

AMENDED AND RESTATED 1995 EQUITY INCENTIVE PLAN

Section 1.  Purpose

The purpose of the Dyax Corp. 1995 Equity Incentive Plan (the “Plan”) is to attract and retain key employees and directors and consultants of the Company and its Affiliates, to provide an incentive for them to assist the Company to achieve long-range performance goals, and to enable them to participate in the long-term growth of the Company.

Section 2.  Definitions

“Affiliate” means any business entity in which the Company owns directly or indirectly 50% or more of the total combined voting power or has a significant financial interest as determined by the Committee.

“Award” means any Option, Stock Appreciation Right, Performance Share, Restricted Stock, Stock Unit or Other Stock-Based Award awarded under the Plan.

“Board” means the Board of Directors of the Company.

“Code” means the Internal Revenue Code of 1986, as amended from time to time, and any successor to such Code.

“Committee” means the Compensation Committee of the Board or such other committee of the Board appointed by the Board to administer the Plan or a specified portion thereof; provided, however, that in any instance the Board of Directors may take away any action delegated to the Committee hereunder.  If a Committee is authorized to grant Awards to a Reporting Person or a “covered employee” within the meaning of Section 162(m) of the Code, each member shall be a “Non-Employee Director” or the equivalent within the meaning of Rule 16b-3 under the Exchange Act or an “outside director” or the equivalent within the meaning of Section 162(m) of the Code, respectively.

“Common Stock” or “Stock” means the Common Stock, $0.01 par value, of the Company.

“Company” means Dyax Corp.,a Delaware corporation.

“Designated Beneficiary” means the beneficiary designated by a Participant, in a manner determined by the Committee, to receive amounts due or exercise rights of the Participant in the event of the Participant’s death.  In the absence of an effective designation by a Participant, “Designated Beneficiary” shall mean the Participant’s estate.

“Effective Date” means July 13, 1995.

“Fair Market Value” means, with respect to Common Stock or any other property, the fair market value of such property as determined by the Committee in good faith or in the manner established by the Committee from time to time.  Unless otherwise determined by the Committee in good faith, the per share Fair Market Value of the Common Stock as of any date shall mean (i) if the Common Stock is then listed or admitted to trading on a national securities exchange, the last reported sale price on such date on the principal national securities exchange on which the Common Stock is then listed or admitted to trading or, if no such reported sale takes place on such date, the average of the closing bid and asked prices on such exchange on such date or (ii) if the Common Stock is then traded in the over-the-counter market, the average of the closing bid and asked prices on such date, as reported by The Wall Street Journal or other appropriate publication selected by the Committee, for the over-the-counter market.

“Incentive Stock Option” means an option to purchase shares of Common Stock awarded to a Participant under Section 6 that is intended to meet the requirements of Section 422 of the Code or any successor provision, and any regulation thereunder.

“Nonstatutory Stock Option” means an option to purchase shares of Common Stock awarded to a Participant under Section 6 that is not intended to be an Incentive Stock Option.

“Option” means an Incentive Stock Option or a Nonstatutory Stock Option.

“Other Stock-Based Award” means an Award, other than an Option, Stock Appreciation Right, Performance Share, Restricted Stock or Stock Unit, having a Common Stock element and awarded to a Participant under Section 11.

“Participant” means a person selected by the Committee to receive an Award under the Plan.

“Performance Cycle” or “Cycle” means the period of time selected by the Committee during which performance is measured for the purpose of determining the extent to which an award of Performance Shares has been earned.

“Performance Goals” means with respect to any Performance Cycle, one or more objective performance goals based on one or more of the following objective criteria established by the Committee prior to the beginning of such Performance Cycle or within such period after the beginning of the Performance Cycle as shall meet the requirements to be considered “pre-established performance goals” for purposes of Code Section 162(m):  (i) increases in the price of the Common Stock, (ii) product or service sales or market share, (iii) revenues, (iv) return on equity, assets, or capital, (v) economic profit (economic value added), (vi) total shareholder return, (vii) costs, (viii) expenses, (ix) margins, (x) earnings or earnings per share, (xi) cash flow, (xii) cash balances (xiii) customer satisfaction, (xiv) operating profit, (xv) research and development progress, (xvi) clinical trial progress, (xvii) licensing, (xviii) product development, (xix) manufacturing, or (xx) any combination of the foregoing, including without limitation, goals based on any of such measures relative to appropriate peer groups or market indices.  Such Performance Goals may be particular to a Participant or may be based, in whole or in part, on theperformance of the division, department, line of business, subsidiary, or other business unit, whether or not legally constituted, in which the Participant works or on the performance of the Company generally.

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“Performance Shares” mean shares of Common Stock, which may be earned by the achievement of performance goals, awarded to a Participant under Section 8.

“Reporting Person” means a person subject to Section 16 of the Securities Exchange Act of 1934 or any successor provision.

“Restricted Period” means the period of time selected by the Committee during which an Award may be forfeited to the Company pursuant to the terms and conditions of such Award.

“Restricted Stock” means shares of Common Stock subject to forfeiture awarded to a Participant under Section 9.

“Stock Appreciation Right” or “SAR” means a right to receive any excess in value of shares of Common Stock over the exercise price awarded to a Participant under Section 7.

“Stock Unit” means an award of Common Stock or units, including without limitation units of Restricted Stock, that are valued in whole or in part by reference to, or otherwise based on, the value of Common Stock, awarded to a Participant under Section 10.

“Transferable for value” means a transfer on terms that would prevent the Company from relying on Securities and Exchange Commission Form S-8 (or any successor form) with respect to the issuance of the Common Stock underlying the respective Award.

Section 3.  Administration

The Plan shall be administered by the Committee; provided, however, that in any instance the Board of Directors may take any action delegated hereunder to the Committee.  The Committee shall have authority to adopt, alter and repeal such administrative rules, guidelines and practices governing the operation of the Plan as it shall from time to time consider advisable, and to interpret the provisions of the Plan.  The Committee’s decisions shall be final and binding.  To the extent permitted by applicable law, the Committee may delegate to one or more executive officers of the Company the power to make Awards to Participants who are not Reporting Persons or covered employees and all determinations under the Plan with respect thereto, provided that the Committee shall fix the maximum amount of such Awards for all such Participants and a maximum for any one Participant.

Section 4.  Eligibility

All employees and, in the case of Awards other than Incentive Stock Options, directors and consultants of the Company or any Affiliate, capable of contributing significantly to the successful performance of the Company, other than a person who has irrevocably elected not to be eligible, are eligible to be Participants in the Plan.  Incentive Stock Options may be awarded only to persons eligible to receive such Options under the Code.

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Section 5.  Stock Available for Awards

(a)           Subject to adjustment under subsection (b), and after giving effect to the 0.652-for-one reverse stock split of the Company’s Common Stock affected in March 1998, Awards may be made under the Plan for up to Eighteen Million Three Hundred FiftyThousand (18,350,000) shares of Common Stock, which number includes shares previously issued upon exercise of options granted under the Plan.  The maximum number of shares of Common Stock subject to Awards that may be granted to any Participant shall not exceed 750,000 shares in the aggregate in any calendar year, except that for grants to a new employee during the calendar year in which his or her service as an employee first commences such number shall not exceed 1,500,000 shares, and that both limits are subject to adjustment under subsection (b).  If any Award in respect of shares of Common Stock expires or is terminated unexercised or is forfeited, the shares subject to such Award, to the extent of such expiration, termination or forfeiture, shall again be available for award under the Plan.  Common Stock issued through the assumption or substitution of outstanding grants from an acquired company shall not reduce the shares available for Awards under the Plan.  Shares issued under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.

(b)           In the event that any stock dividend, extraordinary cash dividend, creation of a class of equity securities, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Common Stock at a price substantially below fair market value, or other similar transaction affects the Common Stock then an equitable adjustment shall be made (subject, in the case of Incentive Stock Options, to any limitation required under the Code) to any or all of (i) the number and kind of shares in respect of which Awards may be made under the Plan, (ii) the number and kind of shares subject to outstanding Awards, and (iii) the award, exercise or conversion price with respect to any of the foregoingas determined by the Committee to be appropriate, and if considered appropriate, the Committee may make provision for a cash payment with respect to an outstanding Award, provided that the number of shares subject to any Award shall always be a whole number.

Section 6.  Stock Options

(a)           Subject to the provisions of the Plan, the Committee may award Incentive Stock Options and Nonstatutory Stock Options and determine the number of shares to be covered by each Option, the option price therefor and the conditions and limitations applicable to the exercise of the Option.  The terms and conditions of Incentive Stock Options shall be subject to and comply with Section 422 of the Code or any successor provision and any regulations thereunder.  No Incentive Stock Option may be granted hereunder more than ten years after the last date on which the Plan was approved for purposes of Section 422 of the Code.

(b)           The Committee shall establish the option price at the time each Option is awarded, which price shall not be less than 100% of the Fair Market Value of the Common Stock on the date of award.

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(c)           Each Option shall be exercisable at such times and subject to such terms and conditions as the Committee may specify in the applicable Award or thereafter.  The Committee may impose such conditions with respect to the exercise of Options, including conditions relating to applicable federal or state securities laws, as it considers necessary or advisable.

(d)           No shares shall be delivered pursuant to any exercise of an Option until payment in full of the option price therefor is received by the Company.  Such payment may be made in whole or in part in cash or, to the extent permitted by the Committee at or after the award of the Option, by delivery of a note or shares of Common Stock owned by the optionee, including Restricted Stock, or by retaining shares otherwise issuable pursuant to the Option, in each case valued at their Fair Market Value on the date of delivery or retention, or such other lawful consideration as the Committee may determine.

(e)           The Committee may provide that, subject to such conditions as it considers appropriate, upon the delivery or retention of shares to the Company in payment of an Option, the Participant automatically be awarded an Option for up to the number of shares so delivered.

Section 7.  Stock Appreciation Rights

(a)           Subject to the provisions of the Plan, the Committee may award SARs in tandem with an Option (at or after the award of the Option), or alone and unrelated to an Option.  SARs in tandem with an Option shall terminate to the extent that the related Option is exercised, and the related Option shall terminate to the extent that the tandem SARs are exercised.  SARs granted in tandem with Options shall have an exercise price not less than the exercise price of the related Option.  SARs granted alone and unrelated to an Optionshall have an exercise price not less than 100% of the Fair Market Value of the Common Stock on the date of awardmay be granted at such exercise prices as the Committee may determine.  The Committee shall determine the manner of calculating the excess in value of the shares of Common Stock over the exercise price of a Stock Appreciation Right.

(b)           An SAR related to an Option, which SAR can only be exercised upon or during limited periods following a change in control of the Company, may entitle the Participant to receive an amount based upon the highest price paid or offered for Common Stock in any transaction relating to the change in control or paid during the thirty-day period immediately preceding the occurrence of the change in control in any transaction reported in any stock market in which the Common Stock is usually traded.

Section 8.  Performance Shares

(a)           Subject to the provisions of the Plan, the Committee may award Performance Shares and determine the number of such shares for each Performance Cycle and the duration of each Performance Cycle.  There may be more than one Performance Cycle in existence at any one time, and the duration of Performance Cycles may differ from each other.  The payment value of Performance Shares shall be equal to the Fair Market Value of the Common Stock on the date the Performance Shares are earned or, in the discretion of the Committee, on the date the Committee determines that the Performance Shares have been earned.

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(b)           The Committee shall establish Performance Goals for each Cycle, for the purpose of determining the extent to which Performance Shares awarded for such Cycle are earned, on the basis of such criteria and to accomplish such objectives as the Committee may from time to time select.  During any Cycle, the Committee may adjust the performance goals for such Cycle as it deems equitable in recognition of unusual or non-recurring events affecting the Company, changes in applicable tax laws or accounting principles, or such other factors as the Committee may determine.

(c)           As soon as practicable after the end of a Performance Cycle, the Committee shall determine the number of Performance Shares that have been earned on the basis of performance in relation to the established performance goals.  The payment values of earned Performance Shares shall be distributed to the Participant or, if the Participant has died, to the Participant’s Designated Beneficiary, as soon as practicable thereafter.  The Committee shall determine, at or after the time of award, whether payment values will be settled in whole or in part in cash or other property, including Common Stock or Awards.

Section 9.  Restricted Stock

(a)           Subject to the provisions of the Plan, the Committee may award shares of Restricted Stock and determine the duration of the Restricted Period during which, and the conditions under which, the shares may be forfeited to the Company and the other terms and conditions of such Awards.  Shares of Restricted Stock may be issued for no cash consideration or such minimum consideration as may be required by applicable law.

(b)           Shares of Restricted Stock may not be sold, assigned, transferred, pledged or otherwise encumbered, except as permitted by the Committee, during the Restricted Period.  Shares of Restricted Stock shall be evidenced in such manner as the Committee may determine.  Any certificates issued in respect of shares of Restricted Stock shall be registered in the name of the Participant and unless otherwise determined by the Committee, deposited by the Participant, together with a stock power endorsed in blank, with the Company.  At the expiration of the Restricted Period, the Company shall deliver such certificates to the Participant or if the Participant has died, to the Participant’s Designated Beneficiary.

Section 10.  Stock Units

(a)           Subject to the provisions of the Plan, the Committee may award Stock Units subject to such terms, restrictions, conditions, performance criteria, vesting requirements and payment rules as the Committee shall determine.

(b)           Shares of Common Stock awarded in connection with a Stock Unit Award shall be issued for no cash consideration or such minimum consideration as may be required by applicable law.

Section 11.            Other Stock-Based Awards

(a)           Subject to the provisions of the Plan, the Committee may make other awards of Common Stock and other awards that are valued in whole or in part by reference to, or are otherwise based on, Common Stock, including without limitation convertible preferred stock, convertible debentures, exchangeable securities and Common Stock awards or options.  Other Stock-Based Awards may be granted either alone or in tandem with other Awards granted under the Plan and/or cash awards made outside of the Plan.

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(b)           The Committee may establish performance goals, which may be based on performance goals related to book value, subsidiary performance or such other criteria as the Committee may determine, Restricted Periods, Performance Cycles, conversion prices, maturities and security, if any, for any Other Stock-Based Award.  Other Stock-Based Awards may be sold to Participants at the face value thereof or any discount therefrom or awarded for no consideration or such minimum consideration as may be required by applicable law.

Section 12.  General Provisions Applicable to Awards

(a)           Documentation.  Each Award under the Plan shall be evidenced by a writing delivered to the Participant specifying the terms and conditions thereof and containing such other terms and conditions not inconsistent with the provisions of the Plan as the Committee considers necessary or advisable to achieve the purposes of the Plan or to comply with applicable tax and regulatory laws and accounting principles.

(b)           Committee Discretion.  Each type of Award may be made alone, in addition to or in relation to any other type of Award, in the discretion of the Committee.  The terms of each type of Award need not be identical, and the Committee need not treat Participants uniformly.   Except as otherwise provided by the Plan or a particular Award, any determination with respect to an Award may be made by the Committee at the time of award or at any time thereafter, including without limitation any determination regarding the achievement or satisfaction of any Performance Goals, restrictions or other conditions to vesting, exercise, or settlement of an Award.

(c)           Settlement.  The Committee shall determine whether Awards are settled in whole or in part in cash, Common Stock, other securities of the Company, Awards or other property, and the manner of determining the amount or value thereof.   Without limiting the foregoing, the Committee may, subject to applicable law, permit such payment to be made in whole or in part in cash or by surrender of shares of Common Stock (which may be shares retained from the respective Award) valued at their Fair Market Value on the date of surrender, or such other lawful consideration, including a payment commitment of a financial or brokerage institution, as the Committee may determine.  The Company may accept, in lieu of actual delivery of stock certificates, an attestation by the Participant in form acceptable to the Committee that he or she owns of record the shares to be tendered free and clear of claims and other encumbrances. The Committee may permit a Participant to defer all or any portion of a payment under the Plan, including the crediting of interest on deferred amounts denominated in cash and dividend equivalents on amounts denominated in Common Stock.

(d)           Dividends and Cash Awards.  In the discretion of the Committee, any Award under the Plan may provide the Participant with (i) dividends or dividend equivalents payable currently or deferred with or without interest, and (ii) cash payments in lieu of or in addition to an Award.

 (e)           Termination of Service.  The Committee shall determine the effect on an Award of the disability, death, retirement or other termination of employment or other service of a Participant and the extent to which, and the period during which, the Participant’s legal representative, guardian or Designated Beneficiary may receive payment of an Award or exercise rights thereunder.  Unless the Committee otherwise provides in any case, a Participant’s employment or other service shall have terminated for purposes of this Plan at the time the entity by which the Participant is employed or to which he or she renders such service ceases to be an Affiliate of the Company.

7

(f)           Change in Control.  In order to preserve a Participant’s rights under an Award in the event of a change in control of the Company (as defined by the Committee), the Committee in its discretion may, at the time an Award is made or at any time thereafter, take one or more of the following actions: (i) provide for the acceleration of any time period relating to the exercise or realization of the Award, (ii) provide for the purchase of the Award upon the Participant’s request for an amount of cash or other property that could have been received upon the exercise or realization of the Award had the Award been currently exercisable or payable, (iii) adjust the terms of the Award in a manner determined by the Committee to reflect the change in control, (iv) cause the Award to be assumed, or new rights substituted therefor, by another entity, or (v) make such other provision as the Committee may consider equitable and in the best interests of the Company.

(g)           Loans.  The Committee may authorize the making of loans or cash payments to Participants in connection with any Award under the Plan, which loans may be secured by any security, including Common Stock, underlying or related to such Award (provided that such Loan shall not exceed the Fair Market Value of the security subject to such Award), and which may be forgiven upon such terms and conditions as the Committee may establish at the time of such loan or at any time thereafter.

(h)           Withholding Taxes.  The Participant shall pay to the Company, or make provision satisfactory to the Committee for payment of, any taxes required by law to be withheld in respect of Awards under the Plan no later than the date of the event creating the tax liability.  In the Committee’s discretion, such tax obligations may be paid in whole or in part in shares of Common Stock, including shares retained from the Award creating the tax obligation, valued at their Fair Market Value on the date of delivery.  The Company and its Affiliates may, to the extent permitted by law, deduct any such tax obligations from any payment of any kind otherwise due to the Participant.

(i)           Foreign Nationals.  Awards may be made to Participants who are foreign nationals or employed outside the United States on such terms and conditions different from those specified in the Plan as the Committee considers necessary or advisable to achieve the purposes of the Plan or to comply with applicable laws.

(j)           Amendment of Award.  The Committee may amend, modify or terminate any outstanding Award, including changing the date of vesting, exercise or settlement, causing the Award to be assumed by another entity,and converting an Incentive Stock Option to a Nonstatutory Stock Option, provided that the Participant’s consent to such action shall be required unless the Committee determines that the action, taking into account any related action, would not materially and adversely affect the Participant.  The foregoing notwithstanding, without further approval of the stockholders of the Company, the Committee shall not authorize the amendment of any outstanding Option or Stock Appreciation Right to reduce the exercise price and no Option or Stock Appreciation Right shall be canceled and replaced with an Award exercisable for Common Stock at a lower exercise price.

8

(k)           Limitations onTransferability of Awards.  No Award shall be transferable except upon such terms and conditions and to such extent as the Committee determines, provided that no Award shall be transferable for value and Incentive Stock Options may be transferable only to the extent permitted by the Code.

(l)           Section 409A.    No Award to any Participant subject to United States income taxation shall provide for the deferral of compensation that does not comply with Section 409A of the Code and any regulations thereunder.

Section 13.  Miscellaneous

(a)           No Right To Employment.  No person shall have any claim or right to be granted an Award, and the grant of an Award shall not be construed as giving a Participant the right to continued employment  Neither the adoption, maintenance, or operation of the Plan nor any Award hereunder shall confer upon any person any right with respect to the continuance of his or her employment by or other service with the Company or any Affiliate nor shall they interfere with the rights of the Company or any Affiliate to terminate or otherwise change the terms of such service at any time, including, without limitation, the right to promote, demote or otherwise re-assign any person from one position to another within the Company or any Affiliate.  Unless the Committee otherwise provides in any case, the service of a Participant with an Affiliate shall be deemed to terminate for purposes of the Plan when such Affiliate ceases to be an Affiliate of the Company.

(b)           No Rights As Stockholder.  Subject to the provisions of the applicable Award, no Participant or Designated Beneficiary shall have any rights as a stockholder with respect to any shares of Common Stock to be distributed under the Plan until he or she becomes the holder thereof.  A Participant to whom Common Stock is awarded shall be considered the holder of the Stock at the time of the Award except as otherwise provided in the applicable Award.

(c)           Effective Date.  Subject to the approval of the stockholders of the Company, the Plan shall be effective on the Effective Date.  Before such approval, Awards may be made under the Plan expressly subject to such approval.

(d)           Amendment of Plan.  The Committee may amend, suspend or terminate the Plan or any portion thereof at any time, subject to any stockholder approval that the Committee determines to be necessary or advisable.

(e)           Governing Law.  The provisions of the Plan shall be governed by and interpreted in accordance with the laws of the State of Delaware.

9

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 240.13a-14 or 240.15d-14

of the Securities Exchange Act of 1934, as amended

I, Gustav A. Christensen, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Dyax Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f))for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 2, 2010	/s/Gustav A. Christensen
	Gustav A. Christensen
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 240.13a-14 or 240.15d-14 

of the Securities Exchange Act of 1934, as amended

I, George Migausky, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Dyax Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: August 2, 2010	/s/George Migausky
	George Migausky
	Executive Vice President and
	Chief Financial Officer

EX-32

Exhibit 32

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

Each of the undersigned officers of Dyax Corp. (the “Company”) certifies, under the standards set forth in and solely for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of the Company for the quarter ended June 30, 2010 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: August 2, 2010	/s/Gustav. A Christensen
	Gustav A. Christensen
	President and Chief Executive Officer
Dated: August 2, 2010	/s/George Migausky
	George Migausky
	Executive Vice President and
	Chief Financial Officer