10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

x Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2011

OR

o Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from  to

Commission File Number 000-24537

DYAX CORP.

(Exact name of registrant as specified in its charter)

Delaware (State of Incorporation)	04-3053198 (IRS Employer Identification No.)
55 Network Drive, Burlington, Massachusetts 01803 (Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (617) 225-2500

Securities registered pursuant to Section 12(b) of the Act:
Title of each class: Common Stock, $.01 Par Value	Name of each exchange on which registered: The NASDAQ Stock Market LLC (NASDAQ Global Market)
Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes o No x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act.  Yes o No x

Indicate by checkmark 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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   Yes x or No ¨

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  x

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 definition of "large accelerated filer," "accelerated filer," and "smaller reporting company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large accelerated filer o Accelerated filer x Non-accelerated filer o (do not check if a smaller reporting company) Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o No x

The aggregate market value of the registrant's common stock held by nonaffiliates of the registrant as of the last business day of the registrant's most recently completed fiscal second quarter, June 30, 2011, based on the last reported sale price of the registrant's common stock of $1.98 per share was $161,554,675 .  The number of shares outstanding of the registrant's Common Stock, $.01 par value, as of February 23, 2012, was 98,798,065.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Definitive Proxy Statement for its 2012 Annual Meeting of Shareholders scheduled to be held on May 9, 2012, which Definitive Proxy Statement will be filed with the Securities and Exchange Commission not later than 120 days after the registrant's fiscal year-end of December 31, 2011, are incorporated by reference into Part III of this Form 10-K.

As used in this Form 10-K, "Dyax," "the Company," "we," "our," and "us" refer to Dyax Corp., except where the context otherwise requires or as otherwise indicated.

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements, including statements regarding:

· the potential benefits and commercial potential of KALBITOR® (ecallantide) for its approved indication and any additional indications;

· our commercialization of KALBITOR, including projected revenues and costs, and the potential benefits of new sales initiatives;

· the potential for market approval for KALBITOR in markets outside the United States;

· plans and anticipated timing for pursuing additional indications and uses for ecallantide and other product candidates to address plasma kallikrein (bradykinin) mediated angioedemas;

· plans to enter into additional collaborative and licensing arrangements for ecallantide 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 revenues and operating results, including our financial guidance for 2012 and 2013.

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. These statements are not guarantees of future performance and are subject to certain risks, uncertainties, and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Such risks and uncertainties include, but are not limited to, those discussed later in this report under the section entitled "Risk Factors". Unless required by law, we undertake no obligation to update publicly any forward-looking statements, whether because of new information, future events or otherwise. However, readers should carefully review the risk factors set forth in other reports or documents we file from time to time with the Securities and Exchange Commission.

DYAX CORP.

ANNUAL REPORT ON FORM 10-K

For the year ended December 31, 2011

INDEX

Item No.		Page
PART I
1.	Business	1
1A.	Risk Factors	19
1B.	Unresolved Staff Comments	38
2.	Properties	38
3.	Legal Proceedings	38
4.	Mine Safety Disclosures	38
PART II
5.	Market for the Company's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	39
6.	Selected Consolidated Financial Data	40
7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	41
7A.	Quantitative and Qualitative Disclosures about Market Risk	52
8.	Financial Statements and Supplementary Data	53
9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	87
9A.	Controls and Procedures	87
9B.	Other Information	88
PART III
10.	Directors, Executive Officers and Corporate Governance	89
11.	Executive Compensation	89
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	89
13.	Certain Relationships and Related Transactions, and Director Independence	90
14.	Principal Accounting Fees and Services	90
PART IV
15.	Exhibits, Financial Statement Schedules	90
	Signatures	95

PART I

ITEM 1. BUSINESS

OVERVIEW

We are a biopharmaceutical company with two business elements:

· Angioedema Franchise

The principal focus of our efforts is to identify, develop and commercialize treatments for conditions identified as plasma kallikrein (bradykinin) mediated angioedema, including hereditary angioedema (HAE), ACE inhibitor-induced angioedema (ACEI-AE) and angioedema of unknown origin, or idiopathic angioedema.

We developed KALBITOR (ecallantide) on our own and since February 2010, we have been selling it in the United States for the treatment of acute attacks of HAE.  Outside of the United States, we have established partnerships to obtain regulatory approval for and commercialize KALBITOR in certain markets and we are evaluating opportunities in others.

We are expanding our franchise for the treatment of angioedemas in the following ways:

· Advancing the clinical development of ecallantide for use in the treatment of ACEI-AE.

· Developing a laboratory test that could assist in the differentiation between histamine-mediated and plasma kallikrein (bradykinin) mediated angioedema.

· Continuing our development of a fully human monoclonal antibody inhibitor of plasma kallikrein (pKal) which would be a candidate to prophylactically treat plasma kallikrein (bradykinin) mediated angioedemas.

· Phage Display Licensing and Funded Research Program

We leverage our proprietary phage display technology through our Licensing and Funded Research Program, referred to as the LFRP.  This program has provided us a portfolio of product candidates being developed by our licensees, which currently includes 18 product candidates in clinical development, including four products in Phase 3 trials.  The LFRP generated revenue of approximately $15 million in 2011 and to the extent that our licensees commercialize some of the Phase 3 product candidates according to published timelines, revenues under the LFRP are expected to experience significant growth over the next several years.

ANGIOEDEMA FRANCHISE

We are focused on identifying and developing treatments for patients who experience plasma kallikrein (bradykinin) mediated angioedema.  Using our phage display technology, we developed ecallantide, a compound shown in vitro to be a high affinity, high specificity inhibitor of human plasma kallikrein. Plasma kallikrein, an enzyme found in blood, produces bradykinin, a protein that causes blood vessels to enlarge or dilate, which can cause swelling known as angioedema.  Plasma kallikrein is believed to be a key component in the regulation of inflammation and contact activation pathways.  Excess plasma kallikrein activity is thought to play a role in a number of inflammatory diseases, including HAE, ACEI-AE and idiopathic angioedema, all of which are plasma kallikrein (bradykinin) mediated angioedemas.

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We have four key areas of activity in our angioedema franchise:

· HAE and KALBITOR.  In February 2010, we began selling KALBITOR in the United States for treatment of acute attacks of HAE in patients 16 years of age and older.  We are selling KALBITOR on our own in the United States.  Working with international partners, we intend to seek approval for and commercialize KALBITOR for HAE and other angioedema indications in markets outside of the United States.  We have entered into agreements for others to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other therapeutic indications throughout Europe, Japan, Australia, New Zealand and other countries in North Africa, the Middle East, Latin America (excluding Mexico) andthe Caribbean.

· Clinical trials for ACEI-AE.  There are two ongoing clinical studies exploring the use of ecallantide for the treatment of ACEI-AE, a life threatening inflammatory response brought on by adverse reactions to angiotensin-converting enzyme (ACE) inhibitors.  In August 2011, we commenced patient treatments in a dose-ranging Phase 2 clinical study.  There is also an investigator-sponsored trial being conducted at the University of Cincinnati, College of Medicine.

· New test for plasma kallikrein (bradykinin) mediated angioedemas.  As part of extending the angioedema franchise, we are developing a laboratory test that would measure perturbations in the kallikrein-kinin pathway, thereby assisting in differentiating plasma kallikrein (bradykinin) mediated angioedemas from histamine-mediated angioedema.  We anticipate that this laboratory test will enable the identification of plasma kallikrein (bradykinin) mediated angioedema, including Type III HAE and angioedema of unknown origin, or idiopathic angioedema.

· New antibody for plasma kallikrein (bradykinin) mediated angioedemas.  Leveraging our knowledge of angioedema and the kallikrein-kinin pathway, we are investigating the use of a fully human monoclonal antibody that is an inhibitor of plasma kallikrein and which would be a candidate to prophylactically treat plasma kallikrein (bradykinin) mediated angioedemas.  After completing a series of pharmacokinetic, tolerability and preclinical studies, we believe our pKal antibody may be effective for prophylactically treating these indications.  We expect to file an Investigational New Drug application (IND) for this antibody in mid 2013.

HAE AND KALBITOR

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 a deficiency of C1-INH activity, 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.  HAE patient association registries estimate there is an immediately addressable target population of approximately 6,500 patients in the United States.

Ecallantide was approved by the FDA under the brand name KALBITOR 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 that we discovered and developed, was the first subcutaneous HAE treatment approved in the United States.

As part of the product approval of KALBITOR, 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 required a communication plan through February 2012, which consisted of a "Dear Healthcare Professional" letter that was provided to doctors identified as likely to prescribe KALBITOR and treat HAE patients.

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In February 2010, we also initiated a 4-year, Phase 4 observational study which is being conducted with up to 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.

United States Sales and Marketing

We have a commercial organization to support sales of KALBITOR in the United States, including a field-based team of approximately 30 professionals, consisting of sales representatives and corporate account directors.  At this time, our commercial organization is sized 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.

KALBITOR Access®

To facilitate access to KALBITOR in the United States, we have the KALBITOR Access program, designed as a one-stop point of contact for information about KALBITOR.  This program offers treatment support services 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.

Distribution

KALBITOR is distributed through exclusive wholesale and co-exclusive specialty pharmacy arrangements.

We have agreements with two wholly-owned subsidiaries of AmerisourceBergen Specialty Group, Inc. (ABSG) for the distribution of KALBITOR:

· US Bioservices Corporation (US Bio), serves as a specialty pharmacy for KALBITOR and also administers KALBITOR Access, which provides comprehensive call center services for patients and healthcare providers seeking information and access to KALBITOR; and

· ASD Specialty Healthcare Inc. (ASD), serves as a wholesale distributor for KALBITOR to treating hospitals in the United States.

These agreements have a term through November 2012 which will renew for an additional two years unless amended or terminated by the parties.  Each agreement contains customary termination provisions and may be terminated by us for any reason upon six months prior written notice.

In August 2011, we expanded our distribution network to provide home infusion of KALBITOR through a specialty pharmacy arrangement with Walgreens Infusion Services, Inc. (Walgreens).  Under this renewable one-year agreement, Walgreens provides eligible HAE patients with on-demand nursing services for the home administration of KALBITOR by a healthcare professional, as well as treatment at Walgreens’ infusion centers.

Higher Strength Ecallantide Formulation

We are currently in the process of developing an even more convenient, higher strength formulation of ecallantide, which is intended to allow for a single-injection of KALBITOR, instead of the current three-injection formulation.  During the fourth quarter of 2011, we completed a bioequivalence clinical study which successfully demonstrated bioequivalence between the current formulation and the new single-shot formulation.  Upon demonstration of appropriate stability of the new formulation, we expect to file a supplemental Biologics License Application (BLA) with the FDA in 2012.

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Manufacturing

We have established a commercial supply chain, consisting of third parties to manufacture, test and transport KALBITOR.  All third party manufacturers involved in the KALBITOR manufacturing process are required to comply with current good manufacturing practices, or cGMPs.

To date, ecallantide drug substance used in the production of KALBITOR has been manufactured in the United Kingdom by Fujifilm Diosynth Biotechnologies (UK) Ltd. (Fujifilm).  Our inventories are sufficient to supply all ongoing studies relating to ecallantide and to meet anticipated KALBITOR market demand into 2014. Under existing arrangements with Fujifilm, they have agreed to conduct additional manufacturing campaigns, as necessary, to supplement existing inventory.

The shelf-life of our frozen ecallantide drug substance is four years.  Ecallantide 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 in its "filled and finished" form has additional refrigerated shelf-life of three years.

Ecallantide outside of the United States

In markets outside of the United States, we intend to work with international partners to seek approval and commercialize ecallantide for HAE and other angioedema indications.  We have entered into license or collaboration agreements with several such companies that have distribution systems and sales capabilities in their designated territories.

Sigma-Tau – We have a strategic collaboration agreement with Sigma-Tau Rare Diseases S.A. (as successor-in-interest to Defiante Farmaceutica S.A.), a subsidiary of Sigma-Tau SpA (Sigma-Tau) to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other therapeutic indications throughout Europe, North Africa, the Middle East and Russia.  Under the terms of the agreement, in 2010 Sigma-Tau made a $2.5 million upfront payment to us and also purchased 636,132 shares of our common stock for an aggregate purchase price of $2.5 million.  We are also be eligible to receive over $100 million in development and sales milestones related to ecallantide and royalties equal to 41% of net sales of product, as adjusted for product costs.

In December 2010, we amended our agreement with Sigma-Tau to expand our collaboration to commercialize KALBITOR (ecallantide) for the treatment of HAE in Australia and New Zealand.  Under the terms of the amendment, in January 2011, Sigma-Tau made a $500,000 upfront payment to us and also purchased 151,515 shares of our common stock for an aggregate purchase price of $500,000.  In December 2011, Sigma-Tau filed a pre-submission for regulatory approval in Australia and we received a $1.0 million milestone payment.  We are also be eligible to receive an additional $1.0 million commercialization milestone and royalties equal to 41% of net sales of product, as adjusted for product costs.

Under a May 2011 amendment to our agreement, Sigma-Tau now also has rights to the territories of Latin America (excluding Mexico) and the Caribbean.  We are eligible to receive up to $10.0 million in regulatory, approval and reimbursement milestones and royalties equal to 41% of net sales of product, as adjusted for product costs, in these territories.

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.

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A Marketing Authorization Application (MAA) was submitted in May 2010 to the European Medicines Agency (EMA) for ecallantide for the treatment of HAE in the European Union (EU).  In November 2011, following an Oral Explanation to the Committee for Medicinal Products for Human Use (CHMP), we and Sigma-Tau made a joint decision to withdraw the MAA filed with the EMA.  This decision was made following discussions with the CHMP and the Rapporteurs' Day 181 Joint Assessment Report indicating that the information provided was not deemed sufficient to demonstrate a positive benefit-risk balance.  We and Sigma-Tau are evaluating the appropriate path forward for resubmission to the EMA.

CMIC – In Japan, we have an agreement with CMIC Co., Ltd (CMIC) to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other angioedema indications. Under the terms of the agreement, we received a $4.0 million upfront payment.  We will also be eligible to receive up to $102 million in development and sales milestones for ecallantide in HAE and other angioedema indications and royalties of 20%-24% of net product sales. CMIC is solely responsible for all costs associated with development, regulatory activities, and commercialization of ecallantide for all angioedema indications in Japan. CMIC will purchase drug product from us on a cost-plus basis for clinical and commercial supply.

CMIC has a clinical development plan that was established in consultation with the Japanese regulatory authorities.  CMIC has completed a twelve patient pharmacokinetic study and, to fulfill submission requirements, the company is required to complete an open-label study of ten patients which is scheduled to begin in the second half of 2012. Assuming successful completion of the open-label study, CMIC plans to commercialize subcutaneous ecallantide for the treatment of HAE in Japan as early as 2014.

Neopharm - In Israel, we have an agreement with Neopharm Scientific Ltd., (Neopharm) to obtain regulatory approval and commercialize ecallantide for HAE and other angioedema indications. Under the terms of the agreement, we will provide Neopharm drug supply at a price equal to 50% of net sales.  In June 2011, Neopharm received a commercial registration license from the Israeli Ministry of Health.  Consideration for reimbursement approval is expected in late 2012.

Other than the specific licenses granted to Sigma-Tau, CMIC and Neopharm, as described above, we retain the rights to ecallantide for HAE and other angioedemas in all other territories.

ACEI-AE AND ECALLANTIDE                                                                

ACEI-AE is another form of angioedema.  It is induced by the use of medications that are inhibitors of angiotensin-converting enzyme (ACE), which medications are referred to as ACE inhibitors.  With an estimated 51 million prescriptions written annually worldwide, ACE inhibitors are widely prescribed to reduce hypertension and generally to reduce high blood pressure and vascular constriction.  It is estimated that up to 2% of patients treated with ACE inhibitors suffer from angioedema attacks, or ACEI-AE, which represent approximately 30% of all angioedema attacks treated in emergency rooms.  Research suggests that the use of ACE inhibitors increases levels of bradykinin, which in turn causes blood vessels to enlarge and can cause angioedema.  Ecallantide, a specific inhibitor of plasma kallikrein, an enzyme needed to produce bradykinin, has the potential to be effective for treating this condition.

We are conducting a Phase 2 double-blind, placebo-controlled, dose–ranging clinical study of ecallantide in 176 patients for this ACEI-AE indication.  We commenced patient treatments in this study in August 2011.  An additional double-blind, placebo-controlled, randomized clinical study using ecallantide in 50 patients for this indication is being conducted by Drs. Jonathan Bernstein and Joseph Moellman, at the University of Cincinnati, College of Medicine.  Data from both clinical studies is expected in 2012.

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PLASMA KALLIKREIN (BRADYKININ) MEDIATED ANGIOEDEMA LABORATORY TEST

We are currently developing a laboratory test to measure perturbations in the kallikrein-kinin pathway, thereby assisting in the differentiation of plasma kallikrein (bradykinin) mediated angioedema from histamine-mediated angioedema.  This laboratory test is expected to be relevant to both normal C1-INH and C1-INH deficient patients and should provide the ability to potentially diagnose and treat plasma kallikrein (bradykinin) mediated angioedema, including Type I, II, and III HAE, ACEI-AE, and idiopathic angioedema, irrespective of a patient’s C1-INH levels.

This assay will be an enzyme-linked immunosorbent assay, referred to as an ELISA assay, and is expected to be available for clinical validation in 2013.

PLASMA KALLIKREIN (PKAL) ANTIBODY

We are currently in preclinical development of a potent and specific fully human monoclonal antibody that is an inhibitor of plasma kallikrein and which would be a candidate to prophylactically treat plasma kallikrein (bradykinin) mediated angioedema.  The pKal antibody provides the potential for a subcutaneous formulation, with a half-life which could enable less frequent dosing than currently available therapies and an advantageous immunogenicity profile.  We have completed a series of preclinical pharmacokinetic and tolerability studies and found pKal to have relevant activity in animal models.  We expect to file an IND for this antibody in the first half of 2013.

ECALLANTIDE FOR OPHTHALMIC INDICATIONS

We entered into a license agreement in 2009 with Fovea Pharmaceuticals SA, a subsidiary of sanofi-aventis, for the development of ecallantide in the EU for treatment of retinal diseases. Under this agreement, Fovea fully funded development for the first indication, retinal vein occlusion-induced macular edema.  In September 2011, Fovea voluntarily suspended its ongoing Phase 1 clinical study for this indication, due to adverse changes observed in the eyes of certain monkeys exposed to ecallantide.  After performing additional non-clinical investigations and reviewing the full data set, Fovea has terminated this study.  If the license is terminated by Fovea, the rights under this agreement will return to Dyax.

LICENSING AND FUNDED RESEARCH PROGRAM

LFRP Product Development

We believe that our phage display libraries, which we have developed using our core technology and know-how, represent a leading technology in antibody discovery.  We leverage our proprietary phage display technology and libraries through our LFRP licenses and collaborations.  To date, we have received more than $165 million under the LFRP, primarily related to license fees and milestones, including approximately $15 million of revenue in 2011.  The LFRP has the potential for substantially greater revenues, if and when product candidates that are discovered by our licensees receive marketing approval and are commercialized.

There are approximately 70 ongoing LFRP license agreements.  Currently, 18 product candidates generated by our licensees or collaborators under the LFRP portfolio are in clinical development, four of which are in Phase 3 trials, four are in Phase 2 and ten are in Phase 1.  In addition, one product has received market approval from the FDA.  Furthermore, we estimate that our licensees and collaborators have over 70 additional product candidates in various stages of research and preclinical development.  Our licensees and collaborators are responsible for all costs associated with development of these product candidates.  Generally, we receive milestones and/or royalties from our licensees and collaborators to the extent these product candidates advance in development and are ultimately commercialized. We expect to receive royalties from commercial sales beginning in 2014.

Under loan arrangements with affiliates of Cowen Healthcare Royalty Partners (Cowen Healthcare), we have obtained debt funding of up to $80 million, secured exclusively by the LFRP, which is described further below under "Cowen Healthcare Financing".

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The chart below provides a summary of the clinical stage product candidates under the LFRP and is based on information publicly disclosed by licensees.

Currently, the types of licenses and collaborations that we enter into under the LFRP have one of three distinct structures:

· Library Licenses. Under our library license program, we grant our licensees rights to use our phage display libraries in connection with their internal therapeutic development programs.  We also provide these licensees with related materials and training so that they may rapidly identify compounds that bind with high affinity to therapeutic targets.  The period during which our licensees may use our libraries is typically limited to a 4 to 5 year term.  Library license agreements contain up-front license fees, annual maintenance fees, milestone payments based on successful product development, and royalties based on any future product sales.  We have approximately 20 library licensees, including Amgen, Aveo, Bayer Schering, Biogen Idec, Boehringer Ingelheim, CSL Behring, ImClone Systems (a wholly-owned subsidiary of Eli Lilly), Kadmon, Merck Serono, Novo Nordisk, sanofi-aventis and Emergent BioSolutions (formerly known as Emergent Trubion).

· Funded Research. Under our funded research program, we have performed funded research for various collaborators using our phage display technology to identify, characterize and optimize antibodies that bind to disease targets provided by the collaborators.  Funded research agreements provide for fees, technical and development milestones, and royalties based on any future product sales.  Our funded research collaborators with products currently in development include Baxter Healthcare, Biogen Idec, Merck Serono, Merrimack, and Emergent BioSolutions (formerly known as Emergent Trubion).

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· Patent Licenses. Under our patent license program, we grant other biopharmaceutical and pharmaceutical companies non-exclusive licenses to use our core phage display patents (known as the Ladner patents) to discover and develop biologic compounds for use in specified fields.  We generally grant licenses on a non-exclusive basis so that we may retain broad rights to practice our phage display technology in multiple fields.  Our license agreements generally provide for up-front license fees, annual maintenance fees, milestone payments based on successful product development, and royalties based on any future product sales.  In addition, under the terms of our license agreements, most licensees have agreed not to sue us for using phage display improvement patents which they developed and some have granted us specific access to certain phage-display technologies which they have developed or which they control.  We believe that these provisions allow us to practice enhancements to phage display developed by our licensees.  We currently have approximately 45 patent licensees worldwide.  The Ladner patents will expire in 2012.  Consequently we do not anticipate entering into additional license agreements for these patents.

We expect to continue to enter into licenses and collaborations to maximize the strategic value of our LFRP.

Cross-Licensed Technology

The use of our antibody library involves technology that we have cross-licensed from other biotechnology companies, including Affimed Therapeutics AG, Affitech A/S, Biosite, Inc. (now owned by Alere Inc.), Cambridge Antibody Technology Limited or CAT (now known as MedImmune Limited and owned by AstraZeneca), Domantis Limited (a wholly-owned subsidiary of GlaxoSmithKline), Genentech, Inc. and XOMA Ltd.  Under the terms of our cross-license agreement with CAT, we are required to pay milestone and low single-digit royalty payments to CAT in connection with antibody products developed and commercialized by our licensees.  These payments are passed through to CAT from our licensees.  None of our other cross-license agreements contain financial obligations applicable to our LFRP licensees or collaborators.

Cowen Healthcare Financing

Original Financing

In 2008, we entered into an agreement with an affiliate of Cowen Healthcare for a $50.0 million loan secured by our LFRP.  This loan is the Tranche A loan.  In March 2009, we amended and restated the loan agreement with Cowen Healthcare to include a Tranche B loan of $15.0 million.  The Tranche A and Tranche B loans (collectively referred to as, the Original Loan) have an outstanding principal balance at December 31, 2011 of $56.7 million.

The Original Loan matures 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 Original Loan may be prepaid without penalty, in whole or in part, beginning in August 2012.  In connection with the Original Loan, we entered into a security agreement granting Cowen Healthcare a security interest in the intellectual property related to the LFRP, and the revenues generated through our licensing of the intellectual property related to the LFRP.  The security agreement does not apply to our internal drug development or to any of our co-development programs.

Under the terms of the Original Loan agreement, we are required to repay the Original 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 million.  After June 30, 2013, and until the maturity date or the complete amortization of the Original 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 Original 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.  In 2013, we must repay to Cowen Healthcare all additional accumulated principal above the Original Loan, if any.  In addition, under the terms of the Agreement, we are 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 amortize principal on the Original Loan plus any applicable prepayment premium and an additional 5.0% of such proceeds will be paid to Cowen Healthcare as a cash premium. In April 2010, we sold our rights to royalties and other payments related to the commercialization of Xyntha, a product marketed by Pfizer Inc., for $9.8 million.  In addition, we have earned $2.0 million in milestones based on 2010 and 2011 Xyntha sales.

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2011 Additional Financing

In December 2011, we entered into an agreement with a second affiliate of Cowen Healthcare through which we received an additional loan of$20 million and a commitment to refinance the Original Loan at a reduced interest rate in August 2012.

The additional loan is unsecured and bears interest at an annual rate of 13% through August 2012, at which time the agreement provides that it will be combined with a second loan, subject to customary closing conditions.  The second loan will be used to refinance 102% of the outstanding principal of the Original Loan.  After the August 2012 closing, the collective loan which we anticipate will approximate $80 million, will be secured exclusively by the LFRP and will bear interest at a rate of 12%.  The collective loan will mature in August 2018 and can be repaid without penalty beginning in August 2015.  Should the second loan not close, the additional $20 million loan will continue to bear interest at a rate of 13% and will mature on June 30, 2013.

OUR PHAGE DISPLAY TECHNOLOGY

What Is Phage Display?

Living organisms, such as viruses, have the ability to display a foreign gene product, or protein, on their surfaces.  Based on this ability of organisms to display proteins, our scientists in the late 1980s invented protein phage display, a novel method to individually display up to tens of billions of human antibodies, peptides or small proteins on the surface of a small bacterial virus called a bacteriophage, or phage.  Using phage display, we have built large collections, or libraries, of antibodies, small proteins or peptides that we use to rapidly identify those compounds that bind with high affinity and high specificity to targets of interest.

Through the use of our proprietary phage display technology, we have been able to establish a broad discovery platform to identify compounds that interact with a wide array of targets, including membrane proteins and circulating proteins which have been shown to be involved in pathologic processes.  Our discovery capabilities have been further enhanced through automation, which has enabled us to evaluate a large number of molecules binding to each target.  In this way we can rapidly identify and select a specific antibody, peptide or small protein with the desired biochemical and biological characteristics.  While our discovery research efforts are focused primarily on monoclonal antibodies, we are also testing the in vitro and in vivo activity of several of our peptide and small protein compounds.

Scientists can use phage display to improve the speed and cost effectiveness of drug discovery and optimization.  Phage display offers important advantages over, and can be used to improve, other drug discovery technologies that are currently employed to identify biopharmaceutical leads.

Over the past several years, we have brought on-line high-throughput automated capacity, developed antibody phage display libraries that are a leading technology in antibody discovery, and successfully implemented a strategy under which, as of today, we believe we have obtained freedom to operate in the antibody phage display area through cross-licenses with Affimed Therapeutics, Affitech, Biosite, CAT, Domantis, Genentech and XOMA.  As a result of these activities, we now have an industry-leading technology that allows us to identify fully human antibodies with high specificity and high affinity and to move product candidates rapidly into both in vitro testing and optimization.

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Although we use this technology primarily to advance our own internal development activities, we also leverage it broadly through licenses and collaborations so that other biopharmaceutical and pharmaceutical companies can use it to discover and develop biopharmaceutical leads.

Our phage display process generally consists of the following steps:

· Generating a phage display library

· Screening the phage display library against a target of interest

· Evaluating the selected compounds that bind to the target of interest

Generating a Phage Display Library

The generation of a phage display library is based upon a single protein framework and contains tens of billions of variants of this protein.  The first step in generating a library is the selection of the protein framework upon which the library will be created.  This selection is based on the desired product properties, such as structure, size, stability, or lack of immunogenicity.  We then determine which amino acids in the framework will be varied, but do not vary amino acids that contribute to the framework structure.  We also control the exact numbers and types of different amino acids that are varied, so that the resulting phage display library consists of a diverse set of chemical entities, each of which retains the desired physical and chemical properties of the original framework.

The next step is the creation of a collection of genes that encode the designed variations of the framework protein.  We can easily generate diverse collections of up to hundreds of millions of different synthetic DNA sequences.  Each new DNA sequence, or gene, encodes a single protein sequence that may be displayed on the surface of the individual phage that contains this gene.  The scientists combine the new DNA sequences with phage genome DNA and certain enzymes so that the new DNA is inserted into a specific location of the phage genome.  The result is that the new protein is displayed on the phage surface fused to one of the naturally occurring phage proteins.  The phage acts as a physical link between the displayed protein and its gene.

In addition to fused synthetic DNA sequences, we may also use cDNA, or genomic DNA, which are sequences that represent all of the expressed genes in a cell or organism, to create a library.  We have also inserted genes from antibody expressing human cells into the phage genome.  Using these genes, we have constructed phage display libraries that express tens of billions of different human antibodies on the phage surface.  From one of these libraries, individual antibody fragments can be selected and used to express highly specific human monoclonal antibodies.

The new phage genome is then transferred into laboratory bacteria, where the phage genome directs the bacterial cells to produce thousands of copies of each new phage.  The collection of phage displaying multiple antibodies, peptides or small proteins is referred to as a phage display library.  Because we can reproduce the phage display library by infecting a new culture of laboratory bacteria to produce millions of additional copies of each phage, we can use each library for a potentially unlimited number of selections.

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Screening the Phage Display Library Against a Target of Interest

We can then select binding compounds with high affinity and high specificity by exposing the library to a specified target of interest and isolating the various phage that display compounds that bind to the target.  Each individual phage contains the gene encoding one potential binding compound, and once its displayed protein is selected in the screening procedure, it can be retrieved and amplified by growth in laboratory bacteria.

To identify specific binders from a phage display library, we expose the library to the target under desired binding conditions.  The target may be attached to a fixed surface, such as the bottom of a tube, or a bead, allowing removal of phage that do not express binding compounds that recognize the target.  Once these unbound phage are washed away, the phage containing the selected binding compounds can be released from the target.  Since the phage are still viable, they can be amplified rapidly by again infecting bacteria.  The capacity of the phage to replicate itself is an important feature that makes it particularly well suited for rapid discovery of specific binding compounds.  We can amplify a single phage by infecting bacteria and producing millions of identical phage in one day.

If the binding affinities of the compounds identified in an initial screening for a target are not considered sufficiently high, information derived from the binding compounds identified in the initial screening can be used to design a new focused library.  The design, construction and screening of a second generation library, known as affinity maturation, can lead to increases of 10- to 100-fold or more in the affinity of the binding compounds for the target.

Evaluating the Selected Compounds That Bind to the Target of Interest

Screening phage display libraries generally results in the identification of one or more groups of related binding compounds such as antibodies, peptides or small proteins.  These groups of compounds are valuable in providing information about which chemical features are necessary for binding to the target with affinity and specificity, as well as which features can be altered without affecting binding.  Using DNA sequencing, we can determine the amino acid sequences of the binding compounds and identify the essential components of desired binding properties by comparing similarities and differences in such sequences.  If desired, scientists can further optimize the binding compounds by building additional phage display libraries based on these key components and repeating this process.  We can complete the entire selection process in several weeks.  We can produce small amounts of the binding compound by growing and purifying the phage.  For production of larger amounts, we can remove the gene from the phage DNA and place it into a standard recombinant protein expression system.  Alternatively, if the identified binding compound is sufficiently small, it can be chemically synthesized.  These binding compounds can be evaluated for desired properties including affinity, specificity and stability under conditions that will be encountered during its intended use.  From each group of compounds, scientists can identify, develop and test a compound with the desired properties for utility as a biopharmaceutical, diagnostic, research reagent or affinity separations product.

The entire phage display process for identifying compounds that bind to targets of interest is nearly identical whether the ultimate product is to be used for biopharmaceuticals, diagnostics, research reagents or separations, which allows for an efficient use of scientific resources across a broad array of commercial applications.

Advantages of Phage Display Technology in Therapeutic Drug Discovery

We believe our phage display technology has the following advantages over other drug discovery technologies:

· Diversity and abundance. Many of our phage display libraries contain billions of potential binding compounds that are rationally-designed variations of a particular antibody, peptide or small protein framework.  The size and diversity of our libraries significantly increases the likelihood of identifying binding compounds with high affinity and high specificity for the target.  Once we generate libraries, we can reproduce them rapidly in phage and use them for an unlimited number of screenings.

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· Speed and cost effectiveness. We can construct phage display libraries in a few months and rapidly select binding compounds for characterization in screening assays.  Conventional or combinatorial chemistry approaches require between several months and several years to complete this process.  Similarly, mouse and human-mouse technologies generally require four to six months to identify an antibody.  As a result, our phage display technology can significantly reduce the time and expense required to identify an antibody, peptide or small protein with desired binding characteristics.

· Automated parallel screening. In an automated format, we can apply our phage display technology to many targets simultaneously to discover specific, high-affinity proteins, including human monoclonal antibodies, for each target.  In contrast, human-mouse antibody technologies identify antibodies that bind to a single target per test group of mice and are difficult to automate.  Among antibody technologies, phage display is particularly well suited for functional genomic applications, due to the large number of genetic targets that need to be screened for specific antibodies.

· Rapid optimization. We screen phage display libraries to identify binding compounds with high affinity and high specificity for the desired target and can design and produce successive generations of phage display libraries to further optimize the leads.  We have demonstrated between 10- and 1000-fold improvement in binding affinity with second-generation phage display libraries.

COMPETITION

The biopharmaceutical industry is characterized by intense competition and rapid technological change.  New developments occur and are expected to continue to occur.  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 therapeutic and diagnostic products in angioedema indications.  Therefore our principal competition  will be companies who either are already marketing products in those indications or are developing new products for those indications, as described below.

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

· Manufacturers of corticosteroids, including the manufacture of danazol, which we estimate are still used to prophylactically treat a significant number of identified HAE patients.

· ViroPharma Inc.— ViroPharma markets a plasma-derived C1-esterase inhibitor, known as Cinryze®, which is administered intravenously. Cinryze is approved in the US for routine prophylaxis against angioedema attacks in adolescent and adult patients with HAE, and has orphan drug designation from the FDA. The FDA has also approved patient labeling for Cinryze to include self-administration for routine prophylaxis once a patient is properly trained by his or her healthcare provider. ViroPharma has also received approval in the EU. The therapeutic indication in Europe is for treatment and pre-procedure prevention of angioedema attacks in adults and adolescents with HAE, and routine prevention of angioedema attacks in adults and adolescents with severe and recurrent attacks of HAE, who are intolerant to or insufficiently protected by oral prevention treatments or patients who are inadequately managed with repeated acute treatment. The EU approval includes a self-administration option for appropriately trained patients. ViroPharma has also completed two Phase 2 trials evaluating subcutaneous administration of Cinryze.  One of these trials evaluated a formulation that uses a proprietary drug delivery platform from Halozyme.

· Shire plc—Shire markets its bradykinin receptor antagonist, known as Firazyr® (icatibant), which is administered subcutaneously. Firazyr is approved in the US, Europe, and certain other countries for the treatment of acute HAE attacks in adult patients.  The US and EU labels allow for patients to self-administer Firazyr following training by their healthcare provider.  Firazyr became commercially available in the US during 2011.  Firazyr has orphan drug designations from the FDA and in Europe.

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· CSL Behring— CSL Behring markets a plasma-derived C1-esterase inhibitor, known as Berinert®, which is administered intravenously. Berinert is approved for the treatment of acute abdominal, facial or laryngeal attacks of HAE in adult and adolescent patients, and has orphan drug designation from the FDA. The FDA has also approved patient labeling for Berinert to include self-administration once a patient is properly trained by his or her healthcare provider.  Berinert is also sold in the European Union, Japan and several rest-of-world markets. Additionally, CSL Behring has completed a clinical trial evaluating subcutaneous administration of Berinert.

· Pharming Group NV— Pharming markets Ruconest™ which is approved in the EU for the treatment of acute HAE attacks in adult patients.  Ruconest is a recombinant C1-esterase inhibitor, which is delivered intravenously. In the US, Pharming's recombinant C1-esterase inhibitor is known as Rhucin®. In December 2010, Pharming and US partner Santarus announced the submission of a BLA for Rhucin. In February 2011, the companies announced the receipt of a "refusal to file" letter in which the FDA indicated that the BLA was not sufficiently complete to enable a critical medical review. Also in February 2011, the companies announced the initiation of a new Phase 3 trial.  This trial is ongoing.  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 for the treatment of HAE are companies that are developing plasma kallikrein inhibitors, including BioCryst.

Additionally, a significant number of companies compete with us in the antibody technology space by offering licenses and/or research services to pharmaceutical and biotechnology companies. Specifically, our phage display technology is one of several in vitro display technologies available to generate libraries of compounds that can be leveraged to discover new antibody products. Other companies that compete with us in the display technology space include BioInvent, XOMA, Adimab and several others. Additional platforms pharmaceutical and biotechnology companies use to identify antibodies that bind to a desired target are in vivo technology platforms which use direct immunization of mice or other species to generate fully human antibodies. Competitors in this space include GenMab, arGEN-X and several others. There are also a number of new technologies directed to the generation of candidates with novel scaffolds that may possess similar properties to monoclonal antibodies.

In addition to the technologies described above, many pharmaceutical companies have either acquired antibody discovery technologies or developed humanized murine antibodies derived from hybridomas.  Pharmaceutical companies also develop orally available small molecule compounds directed to the targets for which we and others are seeking to develop antibody, peptide and/or protein products.

We may also experience competition from companies that have acquired or may acquire other technologies from universities and other research institutions.

PATENTS AND PROPRIETARY RIGHTS

Our success is significantly dependent upon our ability to obtain patent protection for our products and technologies, to defend and enforce our issued patents, including patents related to phage display, and to avoid the infringement of patents issued to others.  Our policy generally is to file for patent protection on methods and technology useful for the display of binding molecules and on biopharmaceutical, diagnostic and separation product candidates.

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Our proprietary position in the field of phage display is based upon patent rights, technology, proprietary information, trade secrets and know-how.  Our patents and patent applications for basic phage display, commonly known as the Ladner patents, include United States Patent No. 5,403,484, which expires April 4, 2012 and issued patents in Canada,  Europe, and Japan.  These basic phage display patent rights contain claims covering inventions in the field of the surface display of proteins and certain other peptides, including surface display on bacteriophage. 

With respect to specific aspects of our phage display libraries, patent rights claiming our currently licensed antibody phage display libraries and methods of making and using such libraries include issued patents in Australia and pending patent applications in the United States and other countries.  These patent rights are expected to expire in 2021 (not including any term extension from the addition of patent term adjustment by the US Patent and Trademark Office).  Patent rights claiming our currently licensed peptide libraries include United States Patent No. 7,413,537, which expires November 29, 2012 and issued patents in Canada, Japan and Europe.  We have filed suit in the United States District Court for the District of Columbia to obtain a patent term adjustment for United States Patent No. 7,413,537 based on an erroneous calculation of the patent's term by the United States Patent Office.  This action, which is expected to be successful based on a recent ruling by the United States Court of Appeals for the Federal Circuit, could extend the patent's expiration date by 1,614 days to May 1, 2017.

With respect to KALBITOR (ecallantide), our patent rights include United States  Patent Nos. 5,795,865, which expires August 18, 2015; 5,994,125, which expires January 11, 2014: 6,057,287, which expires August 18, 2015: 6,333,402, which expires January 11, 2014: 7,064,107, which expires June 6, 2023: 7,153,829, which expires July 2, 2023: 7,166,576, which expires September 27, 2024: 7,235,530, which expires September 27, 2024: 7,276,480, which expires June 6, 2023; 7,628,983,  which expires February 11, 2015: 7,718,617, which expires November 18, 2023: 7,811,991, which expires February 26, 2024; 7,704,949, which expires June 6, 2023; 7,851,442 which expires September 9, 2023; 8,034,775 which expires June 6, 2023; and European Patent Nos. 0739355 which expires January 11, 2015; 1,531,791 which expires June 6, 2023; and 1941867 which expires June 6, 2023, as well as issued patents in Australia, Canada and Japan, claiming sequences of peptides that have human kallikrein inhibitory activity, including the sequence for KALBITOR, and polynucleotide sequences encoding these peptides, as well as methods of using such peptides.

For our other therapeutic product candidates, we file for patent protection on groups of antibodies, peptides and small proteins that we identify using phage display. 

There are no legal challenges to our phage display patent rights or our other issued or pending patent rights in any major markets.  However, we cannot assure that a challenge will not be brought in the future.  We plan to protect our patent rights in a manner consistent with our product development and business strategies.  If we bring legal action against an alleged infringer of any of our patents, we expect the alleged infringer to claim that our patent is invalid, not infringed, or not enforceable for one or more reasons, thus subjecting that patent to a judicial determination of infringement, validity and enforceability.  In addition, in certain situations, an alleged infringer could seek a declaratory judgment of non-infringement, invalidity or unenforceability of one or more of our patents.  We cannot be sure that we will have sufficient resources to enforce or defend our patents against any such challenges or that a challenge will not result in an adverse judgment against us or the loss of one or more of our patents.  Uncertainties resulting from the initiation and continuation of any patent or related litigation, including those involving our patent rights, could have a material adverse effect on our ability to maintain and expand our licensing program and collaborations, and to compete in the marketplace.

Our first phage display patent in Europe, European Patent No. 436597, known as the 597 Patent, was ultimately revoked in 2002 in a proceeding in the European Patent Office. As a result, we are not able to prevent other parties from using certain aspects of our phage display technology in Europe. 

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Our phage display patent rights are central to our non-exclusive patent licensing program and our performance under our related agreement with Cowen Healthcare.  We offer non-exclusive licenses under our phage display patent rights to companies and non-profit institutions in the fields of therapeutics, diagnostics and other select fields.  In jurisdictions where we have not applied for, obtained, or maintained patent rights, we will be unable to prevent others from developing or selling products or technologies derived using phage display.  In addition, in jurisdictions where we have phage display patent rights, we cannot assure that we will be able to prevent others from selling or importing products or technologies derived using phage display.

We are aware that other parties have patents and pending applications to various products and processes relating to phage display technology.  Through licensing our phage display patent rights, we have secured a limited ability to practice under some of the third party patent rights relating to phage display technology.  These rights are a result of our standard license agreement, which contains a covenant by the licensee that it will not sue us under the licensee's phage display improvement patents.  In addition, we have sought and obtained affirmative rights of license or ownership under certain patent rights relating to phage display technology owned by other parties.  For example, in addition to our amended license agreement with CAT, we have entered into licensing agreements with Affimed Therapeutics, Affitech, Biosite, Domantis and Genentech, Inc. under which we granted each of those companies rights to practice our phage display patents and in return received rights to practice under their phage display related patents.  These types of agreements in which each party licenses technology to the other are referred to as cross-licensing agreements.  We have also entered into a cross-licensing agreement with XOMA Ireland Limited under which we received a license to use XOMA's antibody expression technology to develop antibody products for ourselves and our collaborators.  We also received a license from XOMA to produce antibodies.  In exchange we agreed to pay XOMA a license fee and a royalty in connection with the sale of any of our antibody products.  We also granted XOMA a license to our phage display patents and agreed to provide them with limited quantities of our antibody phage display libraries.

Under the terms of our amended and restated license agreement with CAT, we were granted a worldwide license under their antibody phage display patents to discover and develop antibody products.  In consideration for this license, CAT is eligible to receive milestone payments and low single-digit royalty payments in connection with antibody products developed and commercialized by us or our licensees under the agreement.

Under the agreement, we also granted CAT a worldwide license to use our antibody libraries to discover and develop antibody products.  In consideration for this license, we will receive no milestone payments but are eligible to receive a low single-digit royalty payments on antibody products developed by CAT or its licensees under the agreement.

GOVERNMENT REGULATION

The preclinical studies and clinical testing, manufacture, labeling, storage, record keeping, advertising, promotion, export, and marketing, among other things, of our products and product candidates, including KALBITOR, are subject to extensive regulation by governmental authorities in the United States and other countries.  In the United States, pharmaceutical products are regulated by the FDA under the Federal Food, Drug, and Cosmetic Act and other laws, including, in the case of biologics, the Public Health Service Act.  KALBITOR is regulated by the FDA as a biologic.  Biologics require the submission of a BLA, and approval by FDA prior to being marketed in the United States.  Manufacturers of biologics may also be subject to state regulation.  Failure to comply with FDA requirements, both before and after product approval, may subject us and/or our partners, contract manufacturers, and suppliers to administrative or judicial sanctions, including FDA refusal to approve applications, warning letters, product recalls, product seizures, total or partial suspension of production or distribution, fines and/or criminal prosecution.

The steps required before a biologic may be approved for marketing in the United States generally include:

· preclinical laboratory tests and animal tests;

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· submission to the FDA of an IND for human clinical testing, which must become effective before human clinical trials may commence;

· adequate and well-controlled human clinical trials to establish the safety and efficacy of the product;

· submission to the FDA of a BLA;

· FDA pre-approval inspection of product manufacturers; and

· FDA review and approval of BLA.

Preclinical studies include laboratory evaluation, as well as animal studies to assess the potential safety and efficacy of the product candidate.  Preclinical safety tests must be conducted in compliance with FDA regulations regarding good laboratory practices.  The results of the preclinical tests, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND, which must become effective before human clinical trials may be commenced.  The IND will automatically become effective 30 days after receipt by the FDA, unless the FDA before that time raises concerns about the drug candidate or the conduct of the trials as outlined in the IND.  The IND sponsor and the FDA must resolve any outstanding concerns before clinical trials can proceed.  We cannot assure you that submission of an IND will result in FDA authorization to commence clinical trials or that once commenced, other concerns will not arise.

Clinical trials involve the administration of the investigational product to healthy volunteers or to patients, under the supervision of qualified principal investigators.  Each clinical study at each participating clinical site must be reviewed and approved by an independent institutional review board, prior to the recruitment of subjects.

Clinical trials are typically conducted in three sequential phases, but the phases may overlap and different trials may be initiated with the same drug candidate within the same phase of development in similar or differing patient populations.  Phase 1 studies may be conducted in a limited number of patients, but are usually conducted in healthy volunteer subjects.  The drug is usually tested for safety and, as appropriate, for absorption, metabolism, distribution, excretion, pharmaco-dynamics and pharmaco-kinetics.

Phase 2 usually involves studies in a larger, but still limited patient population to evaluate preliminarily the efficacy of the drug candidate for specific, targeted indications; to determine dosage tolerance and optimal dosage; and to identify possible short-term adverse effects and safety risks.

Phase 3 trials are undertaken to further evaluate clinical efficacy of a drug candidate against specific endpoints and to test further for safety within an expanded patient population at geographically dispersed clinical study sites.  Phase 1, Phase 2 or Phase 3 testing might not be completed successfully within any specific time period, if at all, with respect to any of our product candidates.  Results from one trial are not necessarily predictive of results from later trials.  Furthermore, the FDA may suspend clinical trials at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk.

The results of the preclinical studies and clinical trials, together with other detailed information, including information on the manufacture and composition of the product, are submitted to the FDA as part of a BLA requesting approval to market the product candidate.  Under the Prescription Drug User Fee Act, as amended, the fees payable to the FDA for reviewing a BLA, as well as annual fees for commercial manufacturing establishments and for approved products, can be substantial.  Each BLA submitted to the FDA for approval is typically reviewed for administrative completeness and reviewability within 45 to 60 days following submission of the application.  If found complete, the FDA will "file" the BLA, thus triggering a full review of the application.  The FDA may refuse to file any BLA that it deems incomplete or not properly reviewable.  The FDA's established goals for the review of a BLA are six months for Priority applications and 10 months for Standard applications, whereupon a review decision is to be made.  The FDA, however, may not approve a drug within these established guidelines and its review goals are subject to change from time to time.  Further, the outcome of the review, even if generally favorable, may not be an actual approval but an "action letter" that describes additional work that must be done before the application can be approved.  Before approving a BLA, the FDA may inspect the facilities at which the product is manufactured and will not approve the product unless current Good Manufacturing Practices, or cGMP, compliance is satisfactory.  The FDA may deny approval of a BLA if applicable statutory or regulatory criteria are not satisfied, or may require additional testing or information, which can delay the approval process.  FDA approval of any application may include many delays or never be granted.  If a product is approved, the approval will impose limitations on the indicated uses for which the product may be marketed, may require that warning statements be included in the product labeling, and may require that additional studies be conducted following approval as a condition of the approval, may impose restrictions and conditions on product distribution, prescribing or dispensing in the form of a risk management plan, or otherwise limit the scope of any approval.  To market a product for other indicated uses, or to make certain manufacturing or other changes requires FDA review and approval of a BLA Supplement or new BLA.  Further post--marketing testing and surveillance to monitor the safety or efficacy of a product is required.  Also, product approvals may be withdrawn if compliance with regulatory standards is not maintained or if safety or manufacturing problems occur following initial marketing.  In addition new government requirements may be established that could delay or prevent regulatory approval of our product candidates under development.

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Under the Patient Protection and Affordable Care Act an abbreviated approval process is currently available for generic or "follow-on" biologic products that are demonstrated to be biosimilar to or interchangeable with an FDA-licensed biological product. The FDA has issued guidance documents on biosimilar product development. The FDA will consider multiple factors as part of the biosimilarity assessment, including, but not limited to, the product's complexity, formulation, and stability; as well as usefulness of biochemical and functional characterizations. Although it is unclear how the abbreviated approval process will impact our business, it could have a material impact as follow-on products may be significantly less costly to bring to market and may be priced significantly lower than our products would be.

Both before and after the FDA approves a product, the manufacturer and the holder or holders of the BLA for the product are subject to comprehensive regulatory oversight.  For example, quality control and manufacturing procedures must conform to cGMP requirements, and the FDA periodically inspects manufacturing facilities to assess compliance with cGMP.  Accordingly, manufacturers must continue to spend time, money and effort to maintain cGMP compliance.

Orphan Drug Designation

We have received orphan drug designation from the FDA for KALBITOR.  Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a "rare disease or condition," which generally is a disease or condition that affects fewer than 200,000 individuals in the United States.  Orphan drug designation must be requested before submitting a BLA.  After the FDA grants orphan drug designation, the generic identity of the therapeutic agent and its potential orphan use are publicly disclosed by the FDA.  Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process.  If a product which has an orphan drug designation subsequently receives the first FDA approval for the indication for which it has such designation, the product is entitled to orphan exclusivity, meaning the FDA may not approve any other applications to market the same drug for the same indication for a period of seven years, except in limited circumstances.

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Foreign Regulation

In addition to regulations in the United States, we are subject to a variety of foreign regulatory requirements governing human clinical trials and marketing approval for drugs.  The foreign regulatory approval process includes all of the risks associated with FDA approval set forth above, as well as additional country-specific regulations.  Whether or not we obtain FDA approval for a product, we must obtain approval of a product by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the product in those countries.  The approval process varies from country to country, and the time may be longer or shorter than that required for FDA approval.  The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

For example, under European Union regulatory systems, we may submit marketing authorizations either under a centralized or decentralized procedure.  The centralized procedure provides for the grant of a single marketing authorization that is valid for all European Union member states.  The decentralized procedure provides for mutual recognition of national approval decisions, and the holder of a national marketing authorization may submit an application to the remaining member states.

Reimbursement

Sales of pharmaceutical products depend in significant part on the coverage and reimbursement policies of government programs, including Medicare and Medicaid in the United States, and other third-party payers.  These health insurance programs may restrict coverage of some products by using payer formularies under which only selected drugs are covered, variable co-payments that make drugs that are not preferred by the payer more expensive for patients, and by using utilization management controls, such as requirements for prior authorization or prior failure on another type of treatment.  Payers may especially impose these obstacles to coverage for higher-priced drugs, and consequently KALBITOR may be subject to payer-driven restrictions.

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.  The requirements governing drug pricing vary widely from country to country.  For example, the European Union provides options for its member states to restrict the range of medicinal products for which their national health insurance systems provide reimbursement and to control the prices and/or reimbursement of medicinal products for human use.  A member state may approve a specific price or level of reimbursement for the medicinal product, or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the medicinal product on the market.

In furtherance of our efforts to facilitate access to KALBITOR in the United States, we have created the KALBITOR Access program, a treatment support service for patients with HAE and their healthcare providers.  KALBITOR case managers provide education about HAE and KALBITOR and help facilitate solutions for reimbursement, coverage and treatment site coordination.

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OUR CORPORATE INFORMATION

We are a Delaware corporation, incorporated in 1989, and merged with Protein Engineering Corporation in 1995.  Our principal executive offices are located at 55 Network Drive, Burlington, Massachusetts 01803, and our telephone number is (617) 225-2500.  Our web site address is http://www.dyax.com.

Segment Information

We provide financial information by geographical area in Note 13 to our Consolidated Financial Statements included in Item 8 of this report.  We are incorporating that information into this section by this reference.

Employees

As of February 24, 2012, we had 120 employees, including  14 Ph.D.s and/or M.D.s.  Approximately 41 of our employees are in research and development, and 79 in marketing, business development and administration.  Our workforce is non-unionized, and we believe that our relations with employees are good.

Additional Information

We make our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 available without charge through our website, www.dyax.com, as soon as reasonably practicable after filing them with the Securities and Exchange Commission.  Information contained on the website is not part of this report.

ITEM 1A.     RISK FACTORS

You should carefully consider the following risk factors before you decide to invest in our Company and our business because these risk factors may have a significant impact on our business, operating results, financial condition, and cash flows. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impair our business operations. If any of the following risks actually occurs, our business, financial condition and results of operations could be materially and adversely affected.

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 December 31, 2011 we had an accumulated deficit of approximately $476.9 million.  We expect to incur additional net losses in 2012 as our research, development, preclinical testing, clinical trial and commercial activities continue.

We have generated limited revenue from product sales to date, and it is possible that we will never have significantly more product sales revenue.  Currently, we generate a significant amount 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 generate higher product sales from the commercialization of KALBITOR or increase licensing receipts under our LFRP.  It is possible that we will never have sufficient product sales revenue or receive sufficient royalties on our licensed product candidates or licensed technology in order to achieve or sustain future profitability.

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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 quarterly and year to year basis.  We expect these fluctuations to continue in the future.  Fluctuations in revenues and operating results will depend on:

· the amount of future sales of KALBITOR and related costs to manufacture and sell the product;

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

· the establishment of new collaboration and licensing arrangements;

· the timing and results of clinical trials, including a failure to receive the required regulatory approvals to commercialize ecallantide in additional indications and other product candidates;

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

· revenue recognition and other generally accepted accounting policies.

Our revenues and costs in any period are not reliable indicators of our future operating results.  If the revenues we recognize 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 may need additional capital in the future and may be unable to generate 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 and ecallantide in other indications.  Our future capital requirements will depend on many factors, including:
 

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

· the timing and cost to develop, obtain regulatory approvals for and commercialize other product candidates and additional indications for ecallantide;

· 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 any other product candidates;

· competing technological and market developments;

· the progress of our 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.

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We expect that existing cash, cash equivalents and investments together with anticipated cash flow from product sales and existing product development, collaborations and license fees will be sufficient to support our current operations through 2013.  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, 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.

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 who may be treated with KALBITOR;

· acceptance of KALBITOR in the medical community;

· the frequency of HAE patients' use of KALBITOR to treat their acute attacks of HAE;

· HAE patients' ability to obtain and maintain sufficient coverage or reimbursement by third-party payers for the use of KALBITOR;

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

· competition from other products that treat HAE;

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

· our maintenance of commercial manufacturing capabilities through third-party manufacturers.

If we are unable to develop substantial sales of KALBITOR in the United States and commercialize ecallantide 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 they may not utilize treatment with KALBITOR for all or any of their acute HAE attacks, all or any 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 more expensive than traditional drug treatments and most patients require some form of third party insurance coverage and/or patient assistance provided by us 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.  In addition, the number of acute attacks that are treated with KALBITOR will vary from patient to patient depending upon a variety of factors.

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.

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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:

· Manufacturers of corticosteroids, including the manufacture of danazol, which we estimate are still used to prophylactically treat a significant number of identified HAE patients.

· ViroPharma Inc.— ViroPharma markets a plasma-derived C1-esterase inhibitor, known as Cinryze®, which is administered intravenously. Cinryze is approved in the US for routine prophylaxis against angioedema attacks in adolescent and adult patients with HAE, and has orphan drug designation from the FDA. The FDA has also approved patient labeling for Cinryze to include self-administration for routine prophylaxis once a patient is properly trained by his or her healthcare provider. ViroPharma has also received approval in the EU. The therapeutic indication in Europe is for treatment and pre-procedure prevention of angioedema attacks in adults and adolescents with HAE, and routine prevention of angioedema attacks in adults and adolescents with severe and recurrent attacks of HAE, who are intolerant to or insufficiently protected by oral prevention treatments or patients who are inadequately managed with repeated acute treatment. The EU approval includes a self-administration option for appropriately trained patients. ViroPharma has also completed two Phase 2 trials evaluating subcutaneous administration of Cinryze.  One of these trials evaluated a formulation that uses a proprietary drug delivery platform from Halozyme.

· Shire plc— Shire markets its bradykinin receptor antagonist, known as Firazyr® (icatibant), which is administered subcutaneously. Firazyr, which was acquired from Jerini AG, is approved in the US, Europe, and certain other countries. Firazyr is approved in these markets for the treatment of acute HAE attacks in adult patients.  The US and EU labels allow for patients to self-administer Firazyr following training by their healthcare provider.  Firazyr became commercially available in the US during 2011.  Firazyr has orphan drug designations from the FDA and in Europe.

· CSL Behring— CSL Behring markets a plasma-derived C1-esterase inhibitor, known as Berinert®, which is administered intravenously. Berinert is approved for the treatment of acute abdominal, facial or laryngeal attacks of HAE in adult and adolescent patients, and has orphan drug designation from the FDA. The FDA has also approved patient labeling for Berinert to include self-administration once a patient is properly trained by his or her healthcare provider.  Berinert is also sold in the European Union, Japan and several rest-of-world markets. Additionally, CSL Behring has completed a clinical trial evaluating subcutaneous administration of Berinert.

· Pharming Group NV— Pharming markets Ruconest™ which is approved in the EU for the treatment of acute HAE attacks in adult patients.  Ruconest is a recombinant C1-esterase inhibitor, which is delivered intravenously. In the US, Pharming's recombinant C1-esterase inhibitor is known as Rhucin®. In December 2010, Pharming and US partner Santarus announced the submission of a Biologics License Application (BLA) for Rhucin. In February 2011, the companies announced the receipt of a "refusal to file" letter in which the FDA indicated that the BLA was not sufficiently complete to enable a critical medical review. Also in February 2011, the companies announced the initiation of a new Phase 3 trial.  This trial is ongoing.  Pharming's recombinant C1-esterase inhibitor has Fast Track status from the FDA and orphan drug designations from the FDA and in Europe. 

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Other competitors for the treatment of HAE are companies that are developing plasma kallikrein inhibitors, including BioCryst.

Additionally, a significant number of companies compete with us in the antibody technology space by offering licenses and/or research services to pharmaceutical and biotechnology companies. Specifically, our phage display technology is one of several in vitro display technologies available to generate libraries of compounds that can be leveraged to discover new antibody products. Other companies that compete with us in the display technology space include BioInvent, XOMA, Adimab and several others. Additional platforms pharmaceutical and biotechnology companies use to identify antibodies that bind to a desired target are in vivo technology platforms which use direct immunization of mice or other species to generate fully human antibodies. Competitors in this space include GenMab, arGEN-X and several others. There are also a number of new technologies directed to the generation of candidates with novel scaffolds that may possess similar properties to monoclonal antibodies.

In addition to the technologies described above, many pharmaceutical companies have either acquired antibody discovery technologies or developed humanized murine antibodies derived from hybridomas.  Pharmaceutical companies also develop orally available small molecule compounds directed to the targets for which we and others are seeking to develop antibody, peptide and/or protein products.

We may also experience competition from companies that have acquired or may acquire other technologies from universities and other research institutions.

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.

As a condition of approval for marketing KALBITOR in the United States and other jurisdictions, the FDA or governmental authorities in those jurisdictions 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 conduct 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:

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· 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 affected 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: 

· lessen the frequency with which physicians decide to prescribe KALBITOR;

· encourage physicians to stop prescribing KALBITOR to their patients who previously had been prescribed KALBITOR;

· cause serious adverse events and give rise to product liability claims against us; and

· result in our need to withdraw or recall KALBITOR from the marketplace.

Some of these risks are unknown at this time.

We have tested KALBITOR in only a limited 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 and unsolicited, 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 current regulations allow physicians to use products for off-label uses.  In addition, we expect to study ecallantide 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 modify or revoke their approvals and 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.

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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 ecallantide 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 ecallantide 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 ecallantide in territories outside the United States could have a material adverse effect on our business prospects.

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 a distribution network for KALBITOR, including a call center to support its commercialization, and to Walgreens which provides nursing services for home administration of KALBITOR.  Neither ABSG nor Walgreens set or determine demand for KALBITOR.  We expect our distribution arrangements to continue for the foreseeable future through an extension or replacement of our current agreements.  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 our distributors.  It is possible that our distributors 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 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 our distributors, 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.

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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.

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 to physicians regarding the use of KALBITOR for this indication.  Although we believe our marketing, promotional materials 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.

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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 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.  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 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 required that we implement a REMS for KALBITOR and conduct post-marketing studies to assess a risk of hypersensitivity reactions, including anaphylaxis.  The REMS consisted of a communication plan to healthcare providers which was completed in February 2012.  The FDA and other 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 or continue to sell it, successfully, or at all, which would limit our ability to generate product sales and adversely affect our results of operations and business prospects.

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.

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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 ecallantide, which may adversely affect our ability to commercialize KALBITOR and other potential ecallantide products.

We currently rely on Fujifilm to produce the bulk drug substance used in the manufacture of KALBITOR and other potential ecallantide products.  Our business, therefore, faces risks of difficulties with, and interruptions in, performance by Fujifilm, the occurrence of which could adversely impact the availability and/or sales of KALBITOR and other potential ecallantide products in the future.  The failure of Fujifilm 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 ecallantide products, could harm our relationships with our collaborators or customers and could negatively affect our revenues and operating results.  If the operations of Fujifilm 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.

We do not currently have a long-term commercial supply agreement with Fujifilm for the production of ecallantide drug substance.  We are working to establish a long-term supply contract with Fujifilm.  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 supply of the ecallantide drug substance used to manufacture KALBITOR will be sufficient to supply all ongoing studies relating to ecallantide and KALBITOR and to meet anticipated market demand into 2014. 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 inventory of ecallantide drug substance is exhausted, it could adversely affect our ability to further develop and commercialize KALBITOR and other potential ecallantide products, generate revenue from product sales, increase our costs and negatively affect our operating results.

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Any new biopharmaceutical product candidates we develop must undergo rigorous clinical trials which could substantially delay or prevent their development or marketing.

In addition to KALBITOR, we are developing ecallantide in further indications and other potential biopharmaceutical products.  Before we can commercialize any biopharmaceutical product candidate, 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 or our collaborator 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.

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.  We may also experience unexpected cost increases that are beyond our control.

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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.

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 of our product candidates in human clinical trials.

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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 or any 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.

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;

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· 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 be assured 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.

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 Alere Inc.), 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.

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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.

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.

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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 loans with affiliates of Cowen Healthcare which have an aggregate principal balance of $76.7 million at December 31, 2011.  The loans bears interest at rates ranging from 13% to 21.5%  per annum payable quarterly, and unless refinanced in August 2012 under a commitment from Cowen Healthcare, will have maturities commencing in June 2013.  In connection with the initial 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 loans 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.  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 obligation which will expire in 2015.  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.

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.

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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.

None of our business is conducted in currencies other than the United States dollar.  We do, however, rely on an international contract manufacturer for the production of our drug substance for ecallantide.  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.

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

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· 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 February 20, 2012, 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 United States and abroad;

· 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 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.

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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.

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.

ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Through January 2012, we leased approximately 43,000 square feet of space in Cambridge, Massachusetts.  This facility served as our corporate headquarters and laboratory facility.  The lease was terminated on January 28, 2012.  We had provided the lessor with a Letter of Credit of approximately $1.3 million which is expected to be fully released in the first quarter of 2012.

As of January 2012, we are leasing approximately 45,000 square feet of space in Burlington, Massachusetts in a facility whichserves as our corporate headquarters and laboratory facility.  Our lease will expire in 2022, although we have an option to extend our lease for an additional five year term.  We have provided the lessor with a Letter of Credit of approximately $1.1 million.

ITEM 3. LEGAL PROCEEDINGS

We are not a party to any material legal proceedings.

ITEM 4. MINE SAFTEY DISCLOSURES

Not applicable.

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PART II

ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Our common stock is traded on The NASDAQ Global Market under the symbol DYAX.  As of February 20, 2012, there were approximately 150 common stockholders of record.

The following table sets forth, for the periods indicated, the high and low selling prices for our common stock as reported on NASDAQ Global Market:

	High		Low
Fiscal year ended December 31, 2011
First Quarter	$	2.23	$	1.44
Second Quarter	$	2.33	$	1.51
Third Quarter	$	2.12	$	1.10
Fourth Quarter	$	1.53	$	1.17

	High		Low
Fiscal year ended December 31, 2010
First Quarter	$	4.14	$	3.10
Second Quarter	$	3.80	$	2.20
Third Quarter	$	2.58	$	2.06
Fourth Quarter	$	2.54	$	2.07

We have never declared or paid cash dividends on our capital stock.  We currently intend to retain our future earnings, if any, for use in our business and therefore do not anticipate paying cash dividends in the foreseeable future.  Payment of future dividends, if any, will be at the discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, current and anticipated cash needs and plans for expansion.

We provide equity compensation plan information in Item 12 "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters".  We are incorporating that information into this section by this reference.

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ITEM 6.  SELECTED CONSOLIDATED FINANCIAL DATA

The following table summarizes certain selected consolidated financial data, which should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our consolidated financial statements and related notes included elsewhere in this Form 10-K.  The selected consolidated financial data at December 31, 2011 and 2010, and for the years ended December 31, 2011, 2010 and 2009 have been prepared from our audited financial statements included in this Form 10-K.  The selected consolidated financial data at December 31, 2009, 2008 and 2007, and for the years ended December 31, 2008 and 2007, have been prepared from our audited financial statements not included in this Annual Report on Form 10-K.

	December 31,
	2011			2010			2009			2008			2007
	(In thousands, except share and per share data)
Consolidated Statement of Operations Data:
Revenues:
Product sales, net	$	22,884		$	8,835		$	—		$	—		$	—
Development and license fee revenues		25,853			42,564			21,643			43,429			26,096
Total revenues		48,737			51,399			21,643			43,429			26,096
Cost of product sales		1,223			505			—			—			—
Research and development expenses		34,676			31,522			46,587			68,077			57,010
Selling, general and administrative expenses		37,740			33,583			25,843			22,663			15,740
Equity loss in joint venture		—			—			—			—			3,831
Restructuring costs		—			—			2,331			4,631			—
Impairment of fixed assets		—			—			955			352			—
Total operating expenses		73,639			65,610			75,716			95,723			76,581
Loss from operations		(24,902	)		(14,211	)		(54,073	)		(52,294	)		(50,485	)
Other (expense) income, net		(9,697	)		(10,292	)		(8,346	)		(5,910	)		(5,824	)
Loss on extinguishment of debt		--			—			—			(8,264	)		—
Net loss	$	(34,599	)	$	(24,503	)	$	(62,419	)	$	(66,468	)	$	(56,309	)
Basic and diluted net loss per share	$	(0.35	)	$	(0.26	)	$	(0.90	)	$	(1.08	)	$	(1.06	)
Shares used in computing basic and diluted net loss per share		98,731,289			93,267,850			69,151,841			61,626,095			53,072,993

	December 31,
	2011			2010			2009			2008			2007
	(In thousands)
Consolidated Balance Sheet Data:
Cash and cash equivalents	$	31,468		$	18,601		$	29,386		$	27,668		$	29,356
Short-term investments		26,036			58,783			23,009			30,792			34,055
Working capital		53,087			67,869			34,126			40,736			53,115
Total assets		83,375			92,431			64,801			75,075			83,615
Long-term obligations, less current portion		75,372			56,474			58,749			48,499			30,016
Accumulated deficit		(476,921	)		(442,322	)		(417,819	)		(355,400	)		(288,932	)
Total stockholders' equity (deficit)		(27,399	)		2,633			(38,602	)		(20,044	)		29,496

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

OVERVIEW

We are a biopharmaceutical company with two business elements:

· Angioedema Franchise

The principal focus of our efforts is to identify, develop and commercialize treatments for conditions identified as plasma kallikrein (bradykinin) mediated angioedema, including hereditary angioedema (HAE), ACE inhibitor-induced angioedema (ACEI-AE) and angioedema of unknown origin, or idiopathic angioedema.

We developed KALBITOR (ecallantide) on our own and since February 2010 we have been selling it in the United States for the treatment of acute attacks of HAE.  Outside of the United States, we have established partnerships to obtain regulatory approval for and commercialize KALBITOR in certain markets and are evaluating opportunities in others.

We are expanding our franchise for the treatment of angioedemas in the following ways:

· Advancing the clinical development of ecallantide for use in the treatment of ACEI-AE.

· Developing a laboratory test that could assist in the differentiation between histamine-mediated and plasma kallikrein (bradykinin) mediated angioedema.

· Continuing our development of a fully human monoclonal antibody inhibitor of plasma kallikrein (pKal) which would be a candidate to prophylactically treat plasma kallikrein (bradykinin) mediated angioedemas.

· Phage Display Licensing and Funded Research Program

We leverage our proprietary phage display technology through our Licensing and Funded Research Program, referred to as the LFRP.  This program has provided us a portfolio of product candidates being developed by our licensees, which currently includes 18 product candidates in clinical development, including four products in Phase 3 trials.  Our LFRP generated revenue of approximately $15 million in 2011, and to the extent that our licensees commercialize some of the Phase 3 product candidates according to published timelines, revenues under the LFRP are expected to experience significant growth over the next several years.

ANGIOEDEMA FRANCHISE

We are focused on identifying and developing treatments for patients who experience plasma kallikrein (bradykinin) mediated angioedema.  Using our phage display technology, we developed ecallantide, a compound shown in vitro to be a high affinity, high specificity inhibitor of human plasma kallikrein. Plasma kallikrein, an enzyme found in blood, produces bradykinin, a protein that causes blood vessels to enlarge or dilate, which can cause swelling known as angioedema.  Plasma kallikrein is believed to be a key component in the regulation of inflammation and contact activation pathways.  Excess plasma kallikrein activity is thought to play a role in a number of inflammatory diseases, including HAE, ACEI-AE and idiopathic angioedema, all of which are plasma kallikrein (bradykinin) mediated angioedemas.

We have four key areas of activity in our angioedema franchise:
 

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· HAE and KALBITOR.  In February 2010, we began selling KALBITOR in the United States for treatment of acute attacks of HAE in patients 16 years of age and older.  We are selling KALBITOR on our own in the United States.  Working with international partners, we intend to seek approval for and commercialize KALBITOR for HAE and other angioedema indications in markets outside of the United States.  We have entered into agreements for others to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other therapeutic indications throughout Europe, Japan, Australia, New Zealand and other countries in North Africa, the Middle East, Latin America (excluding Mexico) andthe Caribbean.

· Clinical trials for ACEI-AE.  There are two ongoing clinical studies exploring the use of ecallantide for the treatment of ACEI-AE, a life threatening inflammatory response brought on by adverse reactions to angiotensin-converting enzyme (ACE) inhibitors.  In August 2011, we commenced patient treatments in a dose-ranging Phase 2 clinical study.  There is also an investigator-sponsored trial being conducted at the University of Cincinnati, College of Medicine.

· New test for plasma kallikrein (bradykinin) mediated angioedemas.  As part of extending the angioedema franchise, we are developing a laboratory test that would measure perturbations in the kallikrein-kinin pathway, thereby assisting in differentiating plasma kallikrein (bradykinin) mediated angioedemas from histamine-mediated angioedema.  We anticipate that this laboratory test will provide the ability to identify plasma kallikrein (bradykinin) mediated angioedema including Type III HAE and angioedema of unknown origin, or idiopathic angioedema.

· New antibody for plasma kallikrein (bradykinin) mediated angioedemas.  Leveraging our knowledge of angioedema and the kallikrein-kinin pathway, we are investigating the use of a fully human monoclonal antibody that is an inhibitor of plasma kallikrein and which would be a candidate to prophylactically treat plasma kallikrein (bradykinin) mediated angioedemas. After completing a series of pharmacokinetic, tolerability and preclinical studies, we believe our pKal antibody may be effective for prophylactically treating these indications.  We expect to file an IND for this antibody in mid 2013.

LICENSING AND FUNDED RESEARCH PROGRAM

LFRP Product Development

We believe that our phage display libraries, which we have developed using our core technology and know-how, represent a leading technology in antibody discovery.  We leverage our proprietary phage display technology and libraries through our LFRP licenses and collaborations.  To date, we have received more than $165 million under the LFRP, primarily related to license fees and milestones, including approximately $15 million of revenue in 2011.  The LFRP has the potential for substantially greater revenues if and when product candidates that are discovered by our licensees receive marketing approval and are commercialized.

There are approximately 70 ongoing LFRP license agreements.  Currently, 18 product candidates generated by our licensees or collaborators under the LFRP portfolio are in clinical development, four of which are in Phase 3 trials, four are in Phase 2 and ten are in Phase 1.  In addition, one product has received market approval from the FDA.  Furthermore, we estimate that our licensees and collaborators have over 70 additional product candidates in various stages of research and preclinical development.  Our licensees and collaborators are responsible for all costs associated with development of these product candidates.  Generally, we receive milestones and/or royalties from our licensees and collaborators to the extent these product candidates advance in development and are ultimately commercialized. We expect to receive royalties from commercial sales beginning in 2014.

Under loan arrangements with affiliates of Cowen Healthcare Royalty Partners (Cowen Healthcare), we have obtained a debt financing commitment of up to $80 million, secured exclusively by the LFRP, which is described more fully in Note 8 to Notes to Consolidated Financial Statements filed under Item 8 of this Form 10-K.

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To the extent that product candidates in the LFRP portfolio receive marketing approval and are commercialized according to published timelines, we expect to receive royalties from commercial sales beginning in 2014.  

RESULTS OF OPERATIONS

Revenues.  Total revenues for 2011 were $48.7 million, compared with $51.4 million in 2010 and $21.6 million in 2009.

Our financial guidance for total revenue in 2012 is $50 to $54 million, including KALBITOR sales of $36 to $40 million.

Product Sales.  We began commercializing KALBITOR in the United States in 2010 for treatment of acute attacks of HAE in patients 16 years of age and older.  We sell KALBITOR to our distributors, and we recognize revenue when title and risk of loss have passed to the distributor, 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 distributors will carry limited inventory.

We record product sales net of allowances and accruals related to trade prompt pay discounts, government rebates, a patient financial assistance program, product returns and other applicable allowances.  In 2011, product sales of KALBITOR increased to $22.9 million, net of product discounts and allowances of $1.1 million, compared with product sales of $8.8 million, net of product discounts and allowances of $458,000 during 2010.  The 2011 increase in product sales was primarily due to a significant increase in the volume of KALBITOR units sold in 2011 as compared to 2010.

Development and License Fees.  We also derive revenues from licensing, funded research and development fees, including milestone payments from our licensees and collaborators, in amounts that fluctuate from year-to-year due to the timing of the licensing and clinical activities of our collaborators and licensees.  This revenue was $25.9 million in 2011, $42.6 million in 2010 and $21.6 million in 2009.

Development and license fee revenue in 2011 included $10.5 million recognized under our agreement, as amended, with Sigma-Tau, compared with $2.2 recognized in 2010 (see Note 3, Significant Transactions – Sigma-Tau).

Development and license fee revenue in 2010 included the recognition of $11.3 million from the sale of rights to royalties and other payments related to Xyntha, a product 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 2010 based upon Cubist's termination of its ecallantide development program.  During 2009, we recognized $4.3 million of revenue associated with the Cubist license.

Cost of Product Sales.   We incurred $1.2 million of costs associated with product sales during 2011 and $505,000 during 2010.  This primarily includes the cost of testing, filling, packaging and distributing the KALBITOR product, as well as a royalty due on net sales of KALBITOR.  Costs associated with the manufacture of KALBITOR prior to FDA approval were previously expensed when incurred and accordingly are not included in the cost of product sales during 2010 or 2011.  The supply of KALBITOR produced prior to FDA approval is expected to meet anticipated commercial needs through 2012.  When this supply has been depleted, we expect our cost of product sales will increase, reflecting the full manufacturing cost of KALBITOR.

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

	Years Ended December 31,
	2011		2010		2009
	(In thousands)
KALBITOR development costs	$	21,474	$	17,157	$	17,429
Other research and development expenses		10,753		11,975		16,119
LFRP pass-through fees		2,449		2,390		4,440
Ecallantide drug substance manufacturing costs		--		--		8,599
Total	$	34,676	$	31,522	$	46,587

Our research and development expenses arise primarily from compensation and other related costs for our personnel dedicated to research, development, medical and pharmacovigilence activities, costs of post-approval studies and commitments and KALBITOR life cycle management, as well as fees paid and costs reimbursed to outside parties to conduct research and clinical trials.

KALBITOR development costs increased in 2011 primarily due to clinical trial costs associated with our development efforts using ecallantide for the treatment of ACEI-AE, including the Phase 2 clinical study that was initiated during 2011.  Costs associated with obtaining regulatory approval for the treatment of HAE in territories outside the United States were $2.0 million and $1.2 million during 2011 and 2010, respectively.  These amounts were reimbursed by Sigma Tau and such payments are recorded as development and license fee revenue in our results of operations.
 

The 2011 decrease in other research and development costs from 2010 was due to a shift in internal efforts from early stage development programs to KALBITOR development.  The decrease in other research and development expenses in 2010 is primarily due to $4.9 million of reduced personnel expenses resulting from our 2009 workforce reduction.

Research and development expenses may increase in future years,  due to clinical trial costs associated with our Phase 2 clinical study exploring the use of ecallantide for the treatment of ACEI-AE and costs associated with developing the plasma kallikrein antibody as a therapeutic candidate.  Until the Phase 2 clinical study is completed, we are not able to predict the future clinical costs that may be incurred for this indication.

Selling, General and Administrative. Our selling, general and administrative expenses consist primarily of the sales and marketing costs of commercializing KALBITOR, costs of our management and administrative staff, as well as expenses related to business development, protecting our intellectual property, administrative occupancy, professional fees and the reporting requirements of a public company.  Selling, general and administrative expenses were $37.7 million in 2011 compared to $33.6 million in 2010 and $25.8 million in 2009.

The 2011 increase in costs is primarily due to the expansion of infrastructure to support KALBITOR commercial efforts, primarily sales and marketing programs, and additional legal expenses to protect our intellectual property.

The 2010 increase in costs is primarily due to additional infrastructure to support the commercial launch of KALBITOR, including the expansion of sales and marketing personnel.

We do not anticipate a significant change in selling, general and administrative expenses in 2012.

Restructuring and Impairment.  In 2009, we implemented a workforce reduction to focus necessary resources on the commercialization of KALBITOR.  As a result, we recorded restructuring charges of approximately $2.3 million.

Due to the decrease in necessary facility space following the workforce reduction, we amended our facility lease, resulting in a charge of approximately $955,000 for the write-down of leasehold improvements.

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Interest Expense.  Interest expense in 2011 was $10.3 million compared to $11.9 million in 2010 and $10.1 million in 2009.  The higher 2010 expense was primarily due to additional interest expense under the Cowen Healthcare loan of approximately $1.4 million for payments due in connection with the sale of our rights to royalties and other payments related to the Xyntha product.

Interest and Other Income.  Interest income was $184,000, $209,000 and $248,000 in 2011, 2010 and 2009, respectively.  The 2011 decrease from 2010  was primarily due to lower cash balances during 2011.  The 2010 decrease from 2009 was due to lower rates of return on our short-term cash investments.

In 2010, income of $1.5 million was recognized from several grants received under the Qualifying Therapeutic Discovery Project program. Under this program, the Internal Revenue Service, in conjunction with the Department of Health and Human Services, approved our applications for projects that showed significant potential to produce new and cost-saving therapies, support jobs and increase U.S. competitiveness.  All proceeds from this grant were classified as Other Income in the Statement of Operations.

In 1999, we received an €825,000 grant from the Walloon region of Belgium, which included specific criteria regarding employment and investment levels that needed to be met.  In connection with the closure of our Liege, Belgium facility in 2008, we refunded approximately $162,000 of the grant.  In 2009, all remaining investment criteria were met and the residual grant balance of approximately $1.0 million was released from short-term liabilities on the consolidated balance sheet and recognized as Other Income in the Statement of Operations.

Net Loss.  For the year ended December 31, 2011, the net loss was $34.6 million or $0.35 per share, as compared to $24.5 million or $0.26 per share in 2010, and $62.4 million or $0.90 per share in 2009.

LIQUIDITY AND CAPITAL RESOURCES

	December 31,
	2011		2010
	(In thousands)
Cash and cash equivalents	$	31,468	$	18,601
Short-term investments		26,036		58,783
Total cash, cash equivalents and investments	$	57,504	$	77,384

The following table summarizes our cash flow activity:

	Years Ended December 31,
	2011			2010			2009
	(In thousands)
Net cash used in operating activities	$	(36,452	)	$	(34,131	)	$	(54,227	)
Net cash (used in) provided by investing activities		30,609			(35,409	)		6,989
Net cash provided by financing activities		18,710			58,755			48,942
Effect of foreign currency translation on cash balances		--			--			14
Net (decrease) increase in cash and cash equivalents	$	12,867		$	(10,785	)	$	1,718

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We require cash to fund our operating activities, make capital expenditures, acquisitions and investments, and service debt.  Through December 31, 2011, we have funded our operations through the sale of equity securities, which have provided aggregate net cash proceeds since inception of approximately $397 million, and from 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 sales and development and license fees.  Our excess funds are currently invested in short-term investments primarily consisting of United States Treasury notes and bills and money market funds backed by the United States Treasury.

Our financial guidance is that we expect to be at cash-flow breakeven during 2013.

Operating Activities.

In 2011, the principal use of cash in our operations was to fund our $34.6 million net loss.  Of this net loss, certain costs were non-cash charges, such as depreciation and amortization costs of $1.6 million and stock-based compensation expense of $4.0 million.  In addition to non-cash charges, we also had cash outflows due to changes in other operating assets and liabilities, including an increase in inventory of $5.2 million, an increase in accounts payable and accrued expenses of $1.6 and a decrease in deferred revenue of $5.4 million, due primarily to the recognition of previously deferred revenue related to our collaborations to commercialize ecallantide outside of the United States.

In July 2011, we entered into a lease agreement for new premises located in Burlington, Massachusetts.  The aggregate minimum lease commitment over the ten year term of the new lease is approximately $15.0 million.  The landlord has provided us with a tenant improvement allowance of approximately $2.6 million.  As of December 31, 2011, we have received $925,000 of reimbursements from the landlord under the tentant improvement allowance.  The remainder is expected to be received in the in the first half of 2012.  The full tenant improvement allowance will be amortized on a straight-line basis over the term of the lease as an offset to rent expense. In January 2012, we relocated our facility and terminated our prior facility lease.

In 2010, the principal use of cash in our operations was to fund our $24.5 million net loss.  Of this net loss, certain costs were non-cash charges, such as depreciation and amortization costs of $1.6 million and stock-based compensation expense of $4.1 million.  In addition to non-cash charges, we also had a net change in other operating assets and liabilities of $16.3 million, including a decrease in accounts payable and accrued expenses of $2.5 million, an increase in accounts receivable of $2.6 million, and a decrease in deferred revenue of $8.8 million.  The change in deferred revenue is primarily due to the recognition of $13.8 million of revenue associated with the 2010 termination of the license and collaboration agreement with Cubist, offset by additional deferred revenue of $7.0 million from new collaborations to commercialize ecallantide outside the United States.

In 2009, the principal use of cash in our operations was to fund our $62.4 million net loss. Of this net loss, certain costs were non-cash charges, such as depreciation and amortization costs of $2.8 million, interest expense of $1.6 million, non-cash income of $1.5 million primarily due to the recognition of $1.0 million in income related to the Walloon grant, impairment of fixed assets totaling $1.0 million, and stock-based compensation expense of $5.3 million.  In addition to non-cash charges, we also had a net change in other operating assets and liabilities which used cash of $895,000, including decreases in deferred revenue of $1.3 million and accounts payable and accrued expenses of $280,000 and deferred rent of $565,000.  These were offset by a decrease in accounts receivable of $2.0 million.

Investing Activities.

Our investing activities for 2011 consisted of investment maturities totaling approximately $35.5 million, offset by the purchase of investments of $3.0 million.  In addition, during 2011, we expended approximately $1.7 million in leasehold improvements related to the build-out of the new Burlington facility, of which $925,000 was reimbursed by the Landlord in 2011.  The residual balance will be reimbursed by the Landlord during 2012 as referenced in the Operating Activities section above.

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Net of the tenant improvement allowance, we incurred approximately $1.1 million for tenant improvements in 2011 and we expect to incur an additional $915,000 of tenant improvements during the first quarter of 2012.  In conjunction with the  Burlington lease agreement, we have provided the landlord a letter of credit of $1.1 million to secure our obligations under the lease. 

In July 2011, we entered into a lease agreement for new premises located in Burlington, Massachusetts.  The aggregate minimum lease commitment over the ten year term of the new lease is approximately $15.0 million.   The landlord has provided us with a tenant improvement allowance of approximately $2.6 million.

Our investing activities for 2010 consisted of the purchase of securities totaling approximately $82.8 million, offset by investment maturities of $47.0 million, 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.

Our investing activities for 2009 consisted of investment maturities totaling approximately $39.0 million, offset by purchases of additional securities of $31.5 million and the purchase of approximately $589,000 of fixed assets.

Financing Activities.

Our financing activities for 2011 consisted of net proceeds of $19.9 million of new debt from an affiliate of Cowen Healthcare, as well as principal repayments of long-term debt totaling $1.7 million, consisting of capital lease payments and $1.1 million to an affiliate of Cowen Healthcare.

Our financing activities for 2010 consisted of net proceeds of $61.1 million from the sale of 20,186,132 shares of our common stock, as well as principal repayments of long-term debt totaling $2.8 million, consisting of capital lease payments and $1.9 million to Cowen Healthcare.

Our financing activities for 2009 consisted of  equity offerings providing net proceeds of $38.2 million from the sale of 14,780,570 shares of our common stock and net proceeds of $14.8 million from the Tranche B loan with an affiliate of Cowen Healthcare, which was an amendment to our existing loan agreement with Cowen Healthcare.  This Tranche B loan is secured by our LFRP on the same terms as the initial Tranche A loan, which was executed in 2008.  We also repaid long-term obligations, totaling $4.6 million, primarily principal payments to Cowen Healthcare on these loans.

We expect to continue to manage our cash requirements by completing additional partnerships, collaborations, and financial and strategic transactions.  We expect that existing cash, cash equivalents, and short-term investments together with anticipated cash flow from existing development, collaborations and license agreements and product sales of KALBITOR will be sufficient to support our current operations through 2013.  We will need additional funds if our cash requirements exceed our current expectations or if we generate less revenue than we expect during this period.

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.

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Off-Balance Sheet Arrangements

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

Contractual Obligations

Contractual obligations represent future cash commitments and liabilities under agreements with third parties, and exclude contingent liabilities for which we cannot reasonably predict future payment.  The following chart represents our total contractual obligations, including principal and interest, at December 31, 2011, aggregated by type (in thousands):

	Payments due by period
Contractual obligations	Total		Less than 1  year		1-2 years		2-3 years		3-4 years		4-5 years		More than 5 years
	(In thousands)
Note Payable (1)	$	127,741	$	8,318	$	8,286	$	11,701	$	16,736	$	36,550	$	46,150
Leasehold improvement arrangements		1,089		142		104		104		104		104		531
Operating lease obligations		15,550		636		1,502		1,605		1,615		1,581		8,611
Patent and product license obligations (2)		2,792		1,328		280		280		280		272		352
Obligations for research, development and manufacturing (3)		5,108		4,339		361		368		40		--		--
Total contractual obligations	$	152,280	$	14,763	$	10,533	$	14,058	$	18,775	$	38,507	$	55,644

(1) These amounts represent projected future principal and interest payments to Cowen Healthcare based on our current LFRP projections, which are subject to uncertainties based on the timing and amounts of cash receipts under the LFRP.  See Notes to the Financial Statements, Note 8 of Item 8 "Financial Statements and Supplementary Data"

(2) These amounts exclude any royalties and milestones that may become due in connection with the development or commercialization of our product candidates.  Since the prospect of development and commercialization of any product candidate is uncertain, the timing and amount of any potential future royalties and other milestones are not currently calculable in any manner that would fairly present future obligations.

(3) These amounts represent the cash commitment due on research, development and manufacturing contracts.  We will not owe any royalties or milestones in connection with these contracts.

Critical Accounting Estimates

Our discussion and analysis of our results of operations and liquidity and capital resources are based on our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America.  The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses.  On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, receivable collectibles, royalty interest obligations, useful lives with respect to long-lived and intangible assets and valuation of common stock, related stock options, and deferred tax assets.  We base our estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events.  These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.  By their nature, estimates are subject to an inherent degree of uncertainty.  Actual results may differ from our estimates.  We believe that our judgment and assumptions with respect to the following significant accounting policies are most critical to the accounting estimates used in the preparation of our consolidated financial statements.

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Share-Based Compensation.  We apply the provisions of Accounting Standards Codification (ASC) 718, "Accounting for Stock-Based Compensation" which required us to recognize the expense related to the fair value of stock-based compensation awards in our consolidated statement of operations.  ASC 718 requires companies to estimate the fair value of stock-based awards on the date of grant using an option-pricing model.  We use the Black-Scholes option pricing model.  A number of assumptions are used by the Black-Scholes option-pricing model to compute the grant date fair value, including expected price volatility, option term, risk-free interest rate, and dividend yield.  Expected volatilities are based on historical volatilities of our stock.  The expected option term is derived from historical data on exercise behavior.  The dividend yield is based on historical dividend payments.  The risk-free rate for periods within the contractual life of the option is based on the United States treasury yield curve in effect at the time of grant.  The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in our consolidated statement of operations.  We recognize expense on a straight-line basis over the requisite service period for each separately vesting portion of the award as if the award was, in-substance, multiple awards.  The equity-based compensation expense recorded in future income statements could fluctuate based on the terms of the awards, the assumptions used in the valuation model, or the status of those employees receiving awards.

Revenue Recognition.  Our 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, collectability of the resulting receivable is reasonably assured and we have fulfilled the respective performance obligation. 

Product Sales and Allowances

Revenues from product sales are recognized when title and risk of loss have passed to the customer.  As such, product sales are recorded upon delivery of KALBITOR to the customer, our specialty and wholesale distributors.  We establish reserves for trade distributor and prompt pay discounts, government rebates, a patient assistance program, product returns and other applicable allowances.  Reserves are based on estimates of the amount earned or to be claimed on the related sales.  Our estimates take into consideration market research data related to our payer mix, actual sales data and historical experience for similar products sold by others.  If actual results vary, we may need to adjust these estimates, which could have an effect on earnings in the period of the adjustment.  

In addition to the discounts and rebates described above and classified as a reduction of revenue, we also maintain service contracts for patient service initiatives. We have established that the services are at fair value and represent a separate and identifiable benefit related to these services and, accordingly, have classified them as selling, general and administrative expense.  If we had concluded that we did not receive a separate identifiable benefit or have sufficient evidence that the fair value did not exist for these services, we would have been required to classify these costs as a reduction of revenue.

Development and License Fee Revenues

We make significant assumptions and estimates relating to revenue recognition, which include the expected term of the agreement and total expected cost. Our assumptions and estimates may prove to be inaccurate. Therefore, although we make every effort to ensure the accuracy of our estimates, any significant unanticipated changes in our estimates could have a material impact on revenues and our results of operations.

Collaboration Agreements.  The Company enters into collaboration agreements with other companies 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, payments related to manufacturing services, milestone payments and royalties on any product sales derived from collaborations.  These multiple element arrangements are analyzed to determine how the deliverables, which often include license and performance obligations such as research, steering committee and manufacturing services, are separated into units of accounting.

49

Before January 1, 2011, we evaluated license arrangements with multiple elements in accordance with ASC, 605-25 Revenue Recognition – Multiple-Element Arrangements.  In October 2009, the FASB, issued ASU 2009-13 Revenue Arrangements with Multiple Deliverables, or ASU 2009-13, which amended the accounting standards for certain multiple element arrangements to:

· Provide updated guidance on whether multiple elements exist, how the elements in an arrangement should be separated and how the arrangement considerations should be allocated to the separate elements;

· Require an entity to allocate arrangement consideration to each element based on a selling price hierarchy, also called the relative selling price method, where the selling price for an element is based on vendor-specific objective evidence (VSOE), if available; vendor objective evidence (VOE), if available and VSOE is not available; or the best estimate of selling price (BESP), if neither VSOE or VOE is available;

· Eliminate the use of the residual method and require an entity to allocate arrangement consideration using the selling price hierarchy.

The Company evaluates all deliverables within an arrangement to determine whether or not they provide value to the licensee on a stand-alone basis.  Based on this evaluation, the deliverables are separated into units of accounting.  If VSOE or VOE is not available to determine the fair value of a deliverable, the Company determines the best estimate of selling price associated with the deliverable.  The arrangement consideration, including upfront license fees and funding for research and development, is allocated to the separate units based on relative fair value.

VSOE is based on the price charged when an element is sold separately and represents the actual price charged for that deliverable.  When VSOE cannot be established, we attempt to establish the selling price of the elements of a license arrangement based on VOE.  VOE is determined based on third party evidence for similar deliverables when sold separately.  In circumstances when the Company charges a licensee for pass-through costs paid to external vendors for development services, these costs represent VOE.

When we are unable to establish the selling price of an element using VSOE or VOE, management determines BESP for that element.  The objective of BESP is to determine the price at which we would transact a sale if the element within the license agreement was sold on a stand-alone basis.  Our process for establishing BESP involves management’s judgment and considers multiple factors including discounted cash flows, estimated direct expenses and other costs and available data.

Based on the value allocated to each unit of accounting within an arrangement, upfront fees and other guaranteed payments are allocated to each unit based on relative value.  The appropriate revenue recognition method is applied to each unit and revenue is accordingly recognized as each unit is delivered.

For agreements entered into prior to 2011, revenue related to upfront license fees was spread over the full period of performance under the agreement, unless the license was determined to provide value to the licensee on a stand-alone basis and the fair value of the undelivered performance obligations, typically including research or steering committee services was determinable.

50

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

Whenever the Company determined that an arrangement should be accounted for as a single unit of accounting, it determined the period over which the performance obligations would be completed. Revenue is recognized using either an efforts-based or time-based (ie. straight-line) proportional performance method. The Company recognizes revenue using an efforts-based 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 is 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. For all milestones achieved prior to 2011, substantive milestones were included in the Company's revenue model when achievement of the milestone was achieved. Milestones that were tied to regulatory approval were not considered probable of being achieved until such approval was received. All milestones achieved after January 1, 2011 which are determined to be substantive milestones are recognized as revenue in the period in which they are met in accordance with Accounting Standards Update (ASU) No. 2010-17, Revenue Recognition – Milestone Method. Milestones tied to counter-party performance are not included in the Company's revenue model until performance conditions are met. Milestones determined to be non-substantive are allocated to each unit of accounting within an arrangement when met.  The allocation of the milestone to each unit is based on relative value and revenue related to each unit is recognized accordingly.

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

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. Milestones are recognized as revenue in the period in which the milestone is achieved and royalty revenue is recognized upon the sale of the related products as the Company has no remaining performance obligations under the agreement.

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.

51

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

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 we adopt as of the specified effective date. Unless otherwise discussed, we believe that the impact of recently issued standards that are not yet effective will not have a material impact on our financial position or results of operations upon adoption.

In May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04). This newly issued accounting standard clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This ASU is effective on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011, which for Dyax will be January 1, 2012. We do not expect that adoption of this standard will have a material impact on our financial position or results of operations.

In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05, “Comprehensive Income (Topic 220)” (ASU 2011-05). This newly issued accounting standard (1) eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity; (2) requires the consecutive presentation of the statement of net income and other comprehensive income; and (3) requires an entity to present reclassification adjustments from other comprehensive income to net income on the face of the financial statements. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income nor do the amendments affect how earnings per share is calculated or presented. This ASU is required to be applied retrospectively and is effective for fiscal years and interim periods within those years beginning after December 15, 2011, which for us will be January 1, 2012. This accounting standard will not impact our financial position or results of operations.  Furthermore, other comprehensive income amounts are currently being presented in our results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

None.

52

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

	Page
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2011 and 2010
Consolidated Statements of Operations and Comprehensive Loss for the years ended December 31, 2011, 2010 and 2009
Consolidated Statements of Changes in Stockholders' Equity (Deficit) for the years ended December 31, 2011, 2010 and 2009
Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009
Notes to Consolidated Financial Statements
Financial Statement Schedule

53

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of Dyax Corp.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations and comprehensive loss, stockholders' equity (deficit) and cash flows present fairly, in all material respects, the financial position of Dyax Corp. and its subsidiaries at December 31, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2011 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2011 based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management's Report on Internal Control over Financial Reporting appearing in Item 9A. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed 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. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

March 2, 2012

54

Dyax Corp. and Subsidiaries

Consolidated Balance Sheets

	December 31,  2011		December 31,  2010
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	31,468	$	18,601
Short-term investments		26,036		58,783
Accounts receivable, net of allowances for doubtful accounts of $115 and $45 at December 31, 2011 and 2010, respectively		6,092		5,315
Inventory		7,022		1,696
Current portion of restricted cash		1,266		922
Other current assets		4,968		3,248
Total current assets		76,852		88,565
Fixed assets, net		4,881		2,178
Restricted cash		1,100		1,266
Other assets		542		422
Total assets	$	83,375	$	92,431

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses	$	15,318	$	10,672
Current portion of deferred revenue		6,637		8,738
Current portion of long-term obligations		101		586
Other current liabilities		1,709		700
Total current liabilities		23,765		20,696
Deferred revenue		9,265		12,598
Note payable		75,372		56,406
Long-term obligations		--		68
Deferred rent and other long-term liabilities		2,372		30
Total liabilities		110,774		89,798
Commitments and Contingencies (Notes 8, 11, 14)
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; 200,000,000 shares authorized; 98,798,065 and 98,508,487 shares issued and outstanding at December 31, 2011 and 2010, respectively		988		985
Additional paid-in capital		448,527		443,926
Accumulated deficit		(476,921)		(442,322)
Accumulated other comprehensive income		7		44
Total stockholders' equity (deficit)		(27,399)		2,633
Total liabilities and stockholders' equity (deficit)	$	83,375	$	92,431

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

55

Dyax Corp.  and Subsidiaries

Consolidated Statements of Operations and Comprehensive Loss

	Years Ended December 31,
	2011			2010			2009
Revenues:	(In thousands, except share and per share data)
Product sales, net	$	22,884		$	8,835		$	—
Development and license fee revenues		25,853			42,564			21,643
Total revenues		48,737			51,399			21,643
Costs and expenses:
Cost of product sales		1,223			505			—
Research and development expenses		34,676			31,522			46,587
Selling, general and administrative expenses		37,740			33,583			25,843
Restructuring costs		—			—			2,331
Impairment of fixed assets		—			—			955
Total costs and expenses		73,639			65,610			75,716
Loss from operations		(24,902	)		(14,211	)		(54,073	)
Other income (expense):
Interest and other income		554			1,645			1,736
Interest expense		(10,251	)		(11,937	)		(10,082	)
Total other expense, net		(9,697	)		(10,292	)		(8,346	)
Net loss		(34,599	)		(24,503	)		(62,419	)
Other comprehensive (loss) income:
Foreign currency translation adjustments		—			—			(492	)
Unrealized gain (loss) on investments		(37	)		29			(137	)
Comprehensive loss		(34,636	)		(24,474	)		(63,048	)
Basic and diluted net loss per share:
Net loss	$	(0.35	)	$	(0.26	)	$	(0.90	)
Shares used in computing basic and diluted net loss per share		98,731,289			93,267,850			69,151,841

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

56

Dyax Corp.  and Subsidiaries

Consolidated Statements of Changes in Stockholders' Equity (Deficit)

For the years ended December 31, 2011, 2010 and 2009

(In thousands, except share data)

										Accumulated
	Common Stock				Additional					Other
			Par		Paid-in		Accumulated			Comprehensive
	Shares		Value		Capital		Deficit			Income			Total
Balance at January 1, 2009		63,040,420	$	630	$	334,082	$	(355,400	)	$	644		$	(20,044	)
Exercise of stock options		153,125		2		302		—			—			304
Issuance of common stock for employee stock purchase plan		99,937		1		222		—			—			223
Sale of common stock		14,780,570		148		38,054		—			—			38,202
Compensation expense associated with stock options		—		—		5,284		—			—			5,284
Issuance of warrants		—		—		477		—			—			477
Unrealized gain on investments		—		—		—		—			(137	)		(137	)
Foreign currency translation		—		—		—		—			(492	)		(492	)
Net loss		—		—		—		(62,419	)		—			(62,419	)
Balance at December 31, 2009		78,074,052		781		378,421		(417,819	)		15			(38,602	)
Exercise of stock options		148,369		1		258		—			—			259
Issuance of common stock for employee stock purchase plan		99,934		1		186		—			—			187
Sale of common stock		20,186,132		202		60,931		—			—			61,133
Compensation expense associated with stock options		—		—		4,130		—			—			4,130
Unrealized gain on investments		—		—		—		—			29			29
Net loss		—		—		—		(24,503	)		—			(24,503	)
Balance at December 31, 2010		98,508,487	$	985	$	443,926	$	(442,322	)	$	44		$	2,633
Exercise of stock options		896		--		2		—			—			2
Issuance of common stock for employee stock purchase plan		137,167		1		216		—			—			217
Sale of common stock		151,515		2		321		—			—			323
Compensation expense associated with stock options		—		—		4,062		—			—			4,062
Unrealized gain on investments		—		—		—		—			(37	)		(37	)
Net loss		—		—		—		(34,599	)		—			(34,599	)
Balance at December 31, 2011		98,798,065	$	988	$	448,527	$	(476,921	)	$	7		$	(27,399	)

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

57

Dyax Corp.  and Subsidiaries

Consolidated Statements of Cash Flows

	Years Ended December 31,
	2011			2010			2009
	(In thousands)
Cash flows from operating activities:
Net loss	$	(34,599	)	$	(24,503	)	$	(62,419	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of investment premium/discount		229			76			142
Depreciation and amortization of fixed assets and intangible assets		1,417			1,484			2,649
Non-cash interest expense		1,955			945			1,634
Impairment of fixed assets		--			—			955
Gain on disposal of fixed assets		--			43			(42	)
Compensation expenses associated with stock-based compensation plans		4,030			4,098			5,282
Provision for doubtful accounts		35			15			(42	)
Non-cash other income		--			—			(1,491	)
Changes in operating assets and liabilities
Accounts receivable		(810	)		(2,608	)		2,011
Prepaid research and development and other assets		(1,720	)		(1,143	)		(141	)
Inventory		(5,201	)		(992	)		(70	)
Other long-term assets		(122	)		179			(595	)
Accounts payable and accrued expenses		1,426			(2,478	)		(280	)
Deferred revenue		(5,434	)		(8,794	)		(1,255	)
Long-term deferred rent		1,417			(258	)		(565	)
Landlord incentive		925			—			—
Other long-term liabilities		—			(195	)		—
Net cash used in operating activities		(36,452	)		(34,131	)		(54,227	)
Cash flows from investing activities:
Purchase of investments		(3,021	)		(82,824	)		(31,501	)
Proceeds from maturity of investments		35,502			47,003			39,005
Purchase of fixed assets		(1,694	)		(326	)		(589	)
Proceeds from sale of fixed assets		--			38			74
Restricted cash		(178	)		700			—
Net cash (used in) provided by investing activities		30,609			(35,409	)		6,989
Cash flows from financing activities:
Net proceeds from common stock offerings		323			61,133			38,202
Proceeds from note payable		19,850			—			14,820
Repayment of long-term obligations		(1,682	)		(2,824	)		(4,607	)
Proceeds from the issuance of common stock under employee stock purchase plan and exercise of stock options		219			446			527
Net cash provided by financing activities		18,710			58,755			48,942
Effect of foreign currency translation on cash balances		--			--			14
Net (decrease) increase in cash and cash equivalents		12,867			(10,785	)		1,718
Cash and cash equivalents at beginning of the period		18,601			29,386			27,668
Cash and cash equivalents at end of the period	$	31,468		$	18,601		$	29,386
Supplemental disclosure of cash flow information:
Interest paid	$	9,108		$	12,211		$	8,558
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 consolidated financial statements.

58

Dyax Corp. and Subsidiaries

Notes to Consolidated Financial Statements

1. Nature of Business

Dyax Corp. (Dyax or the Company) is a biopharmaceutical company with two business elements:

· Angioedema Franchise

The principal focus of the Company's efforts is to identify, develop and commercialize treatments for conditions identified as plasma kallikrein (bradykinin) mediated angioedema, including hereditary angioedema (HAE), ACE inhibitor-induced angioedema (ACEI-AE) and angioedema of unknown origin, or idiopathic angioedema.

The Company developed KALBITOR (ecallantide) on its own  and since February 2010 the Company has been selling it in the United States for the treatment of acute attacks of HAE.  Outside of the United States, the Company has established partnerships to obtain regulatory approval for and commercialize KALBITOR in certain markets and are evaluating opportunities in others.

The Company is expanding its franchise for the treatment of angioedemas in the following ways:

· Advancing the clinical development of ecallantide for use in the treatment of ACEI-AE.

· Developing a laboratory test that could assist in the differentiation between histamine-mediated and plasma kallikrein (bradykinin) mediated angioedema.

· Continuing the development of a fully human monoclonal antibody inhibitor of plasma kallikrein (pKal) which would be a candidate to prophylactically treat plasma kallikrein (bradykinin) mediated angioedemas.

· Phage Display Licensing and Funded Research Program

The Company leverages its proprietary phage display technology through its Licensing and Funded Research Program, referred to as the LFRP.  This program has provided the Company a portfolio of product candidates being developed by its licensees, which currently includes 18 product candidates in clinical development, including four products in Phase 3 trials.  The LFRP generated revenue of approximately $15 million in 2011, and to the extent that the Company’s licensees commercialize some of the Phase 3 product candidates according to published timelines, milestone and royalty revenues under the LFRP are expected to experience significant growth over the next several years.

The Company expects that existing cash, cash equivalents, and short-term investments together with anticipated cash flow from existing development, collaborations and license agreements and product sales of KALBITOR will be sufficient to support the Company's current operations beyond 2012. If, over the longer term, the Company's cash requirements exceed its current expectations or if the Company generates less revenue than it expects, the Company will need additional funds.  The Company may seek additional funding through collaborative arrangements, and public or private financings.  However, the Company may not be able to obtain financing on acceptable terms or at all, and the Company may not be able to enter into additional collaborative arrangements.  Arrangements with collaborators or others may require the Company to relinquish rights to certain of its technologies, product candidates or products.  The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders.  If the Company needs additional funds and it is unable to obtain funding on a timely basis, the Company may be required to significantly curtail its research, development or commercialization programs in an effort to provide sufficient funds to continue its operations, which could adversely affect its business prospects.

59

Dyax Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

2. Accounting Policies

Basis of Consolidation 

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

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 December 31, 2011 and 2010, approximately 61% and 98% , respectively, 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 United States 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 distributors.  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 December 31, 2011, two customers accounted for 43% and 34% of the accounts receivable balance.  Three customers accounted for approximately 35%, 28% and 24%, of the Company's accounts receivable balance as of December 31, 2010, all of which were collected in the first quarter of 2011.

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, money market 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 at period end.  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 December 31, 2011, the Company's investments consisted of U.S. Treasury notes and bills with an amortized cost and estimated fair value of $34.9 million, and an unrealized gain of $7,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheet.  As of December 31, 2010, the Company's investments consisted of United States Treasury notes and bills with an amortized cost of $58.7 million, an estimated fair value of $58.8 million, and had an unrealized gain of $44,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheet.

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Notes to Consolidated Financial Statements (Continued)

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 ASC 718.

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.

The Company records all proceeds received from the lessor for tenant improvements under the terms of its operating lease as deferred rent. These amounts are amortized on a straight-line basis over the term of the lease as an offset to rent expense.

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.

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, collectability of the resulting receivable is reasonably assured and the Company has no further performance obligations.

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Notes to Consolidated Financial Statements (Continued)

Product Sales and Allowances

Product Sales.  Product sales are generated from the sale of KALBITOR to the Company’s wholesale and specialty distributors, and are recorded upon delivery when title and risk of loss have passed to the customer.  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.  The Company establishes reserves for trade distributor and 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, 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 service contracts with its distributors. 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 patient support 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 and Other Discounts.  The Company offers a prompt payment discount to its distributors.  Since the Company expects that its distributors 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 and the Medicare Part D Coverage Gap Program, as well as with respect to certain other qualifying federal and state government programs.  The Company estimates the amount of these reductions based on KALBITOR patient data and actual sales data.  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.  Actual rebate amounts are 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. Actual chargeback amounts for Public Health Service are 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.

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Notes to Consolidated Financial Statements (Continued)

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 distributors with a general right of product return. It permits returns if the product is damaged or defective when received by 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.

During the years  ended December 31, 2011 and 2010, provisions for product sales allowances reduced gross product sales as follows (in thousands):

	2011			2010
Total gross product sales	$	23,999		$	9,293
Prompt pay and other discounts	$	(831	)	$	(205	)
Government rebates and chargebacks		(249	)		(239	)
Returns		(35	)		(14	)
Product sales allowances	$	(1,115	)	$	(458	)
Total product sales, net	$	22,884		$	8,835
Total product sales allowances as a percent of  gross product sales		4.6	%		4.9	%

Development and License Fee Revenues

In January 2011, the Company adopted a new U.S. GAAP accounting standard which amends existing revenue recognition accounting guidance regarding agreements with multiple elements, such as many licensing and collaboration agreements.  The new standard provides accounting principles and application guidance on whether multiple deliverables exist, whether and how the deliverables should be separated, and the consideration allocated.  The new guidance amends the requirement to establish objective evidence of fair value of undelivered products and services and provides for separate revenue recognition based upon management’s best estimate of selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item.  The adoption of this standard resulted in it being applied to all new or materially amended agreements in 2011 that include multiple deliverables.  In 2011, the Company applied the amended revenue guidance to several revenue arrangements entered into during the year, including one amendment which was determined to be a material modification to an existing agreement (see Note 3, Significant Transactions – Sigma-Tau).

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Notes to Consolidated Financial Statements (Continued)

Collaboration Agreements.  The Company enters into collaboration agreements with other companies 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, payments related to manufacturing services, milestone payments and royalties on any product sales derived from collaborations.  These multiple element arrangements are analyzed to determine how the deliverables, which often include license and performance obligations such as research, steering committee and manufacturing services, are separated into units of accounting.

Before January 1, 2011, the Company evaluated license arrangements with multiple elements in accordance with ASC, 605-25 Revenue Recognition – Multiple-Element Arrangements.  In October 2009, the FASB, issued ASU 2009-13 Revenue Arrangements with Multiple Deliverables, or ASU 2009-13, which amended the accounting standards for certain multiple element arrangements to:

· Provide updated guidance on whether multiple elements exist, how the elements in an arrangement should be separated and how the arrangement considerations should be allocated to the separate elements;

· Require an entity to allocate arrangement consideration to each element based on a selling price hierarchy, also called the relative selling price method, where the selling price for an element is based on vendor-specific objective evidence (VSOE), if available; vendor objective evidence (VOE), if available and VSOE is not available; or the best estimate of selling price (BESP), if neither VSOE or VOE is available;

· Eliminate the use of the residual method and require an entity to allocate arrangement consideration using the selling price hierarchy.

The Company evaluates all deliverables within an arrangement to determine whether or not they provide value to the licensee on a stand-alone basis.  Based on this evaluation, the deliverables are separated into units of accounting.  If VSOE or VOE is not available to determine the fair value of a deliverable, the Company determines the best estimate of selling price associated with the deliverable.  The arrangement consideration, including upfront license fees and funding for research and development, is allocated to the separate units based on relative fair value.

VSOE is based on the price charged when an element is sold separately and represents the actual price charged for that deliverable.  When VSOE cannot be established, the Company attempts to establish the selling price of the elements of a license arrangement based on VOE.  VOE is determined based on third party evidence for similar deliverables when sold separately.  In circumstances when the Company charges a licensee for pass-through costs paid to external vendors for development services, these costs represent VOE.

When the Company is unable to establish the selling price of an element using VSOE or VOE, management determines BESP for that element.  The objective of BESP is to determine the price at which the Company would transact a sale if the element within the license agreement was sold on a stand-alone basis.  The Company's process for establishing BESP involves management’s judgment and considers multiple factors including discounted cash flows, estimated direct expenses and other costs and available data.

Based on the value allocated to each unit of accounting within an arrangement, upfront fees and other guaranteed payments are allocated to each unit based on relative value.  The appropriate revenue recognition method is applied to each unit and revenue is accordingly recognized as each unit is delivered.

For agreements entered into prior to 2011, revenue related to upfront license fees was spread over the full period of performance under the agreement, unless the license was determined to provide value to the licensee on a stand-alone basis and the fair value of the undelivered performance obligations, typically including research or steering committee services was determinable.

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

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Notes to Consolidated Financial Statements (Continued)

Whenever the Company determined that an arrangement should be accounted for as a single unit of accounting, it determined the period over which the performance obligations would be completed. Revenue is recognized using either an efforts-based or time-based (ie. straight-line) proportional performance method. The Company recognizes revenue using an efforts-based 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 is 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. For all milestones achieved prior to 2011, substantive milestones were included in the Company's revenue model when achievement of the milestone was achieved. Milestones that were tied to regulatory approval were not considered probable of being achieved until such approval was received. All milestones achieved after January 1, 2011 which are determined to be substantive milestones are recognized as revenue in the period in which they are met in accordance with Accounting Standards Update (ASU) No. 2010-17, Revenue Recognition – Milestone Method. Milestones tied to counter-party performance are not included in the Company's revenue model until the performance conditions are met. Milestones determined to be non-substantive are allocated to each unit of accounting within an arrangement when met.  The allocation of the milestone to each unit is based on relative value and revenue related to each unit is recognized accordingly.

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

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.  Milestones are recognized as revenue in the period in which the milestone is achieved and royalty revenue is recognized upon the sale of the related products as the Company has no remaining performance obligations under the agreement.

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 deliverables within these arrangements are determined to not provide the licensee with value on a stand-alone basis and therefore are accounted for as a single unit of accounting. 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, which are optional to the licensee, are substantive and therefore are excluded from the initial allocation of the arrangement consideration.  These payments are recognized as revenue when the license is issued upon exercise of the licensee’s option, 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.

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Notes to Consolidated Financial Statements (Continued)

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, KALBITOR units sold during the years ended December 31, 2011 and 2010 do not reflect the full cost of drug manufacturing.

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 enacted statutory tax rates.  At December 31, 2011 and 2010, there were no unrecognized tax benefits.

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. All currency translation adjustments are recorded to other income (expense) in the consolidated statement of operations.  For the years ended December 31, 2011 and 2010 the Company recorded other expense of $3,000 and $32,000, respectively, for the translation of foreign currency.
 

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Notes to Consolidated Financial Statements (Continued)

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 1998 Employee Stock Purchase Plan, as amended (the Purchase Plan).  The Company’s awards are expensed over the service period which is generally the vesting period, based on fair value on the date of grant.  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 year ended December 31, 2011 and 2010, and therefore, are excluded from the calculation of diluted net loss per share.

Stock options and warrants to purchase a total of 11,554,126 shares, 9,693,266 shares and 8,798,956 shares of common stock were outstanding at December 31, 2011,  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 requires that all components of comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements.

Accumulated other comprehensive income (loss) is calculated as follows:

	Unrealized Gain (Loss) on Investments			Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income
	(In thousands)
Balance at January 1, 2009	$	152		$	492		$	644
Change for 2009		(137	)		(492	)		(629	)
Balance at December 31, 2009		15			--			15
Change for 2010		29			--			29
Balance at December 31, 2010		44			--			44
Change for 2011		(37	)		--			(37	)
Balance at December 31, 2011	$	7		$	--		$	7

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Notes to Consolidated Financial Statements (Continued)

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 within predominantly one geographic area.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the 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 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 May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04). This newly issued accounting standard clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This ASU is effective on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011, which for Dyax will be January 1, 2012. The Company does not expect that adoption of this standard will have a material impact on its financial position or results of operations.

In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05, “Comprehensive Income (Topic 220)” (ASU 2011-05). This newly issued accounting standard (1) eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity; (2) requires the consecutive presentation of the statement of net income and other comprehensive income; and (3) requires an entity to present reclassification adjustments from other comprehensive income to net income on the face of the financial statements. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income nor do the amendments affect how earnings per share is calculated or presented. This ASU is required to be applied retrospectively and is effective for fiscal years and interim periods within those years beginning after December 15, 2011, which for Dyax will be January 1, 2012. This accounting standard will not impact the Company’s financial position or results of operations.  Furthermore, other comprehensive income amounts are currently being presented in the Company’s results of operations.

3. SIGNIFICANT TRANSACTIONS

Sigma-Tau

In June 2010, the Company entered into a strategic collaboration agreement with Defiante Farmaceutica S.A., a subsidiary of the pharmaceutical company Sigma-Tau SpA (Sigma-Tau) to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other therapeutic indications throughout Europe, North Africa, the Middle East and Russia.  In December 2010, the original agreement was amended to expand the partnership to commercialize KALBITOR for the treatment of HAE in Australia and New Zealand (the first amendment).  In May 2011, the Company further amended its agreement with Sigma-Tau to include development and commercialization rights in Latin America (excluding Mexico), the Caribbean, Taiwan, Singapore and South Korea (the second amendment).  In December 2011, a third amendment eliminated Sigma-Tau’s rights in Taiwan, Singapore and South Korea which had been previously granted under the second amendment.

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Notes to Consolidated Financial Statements (Continued)

Under the terms of the original agreement, Sigma-Tau made a $2.5 million upfront payment.  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. 

Under the terms of the first amendment, Sigma-Tau made an additional $500,000 upfront payment to the Company and also purchased 151,515 shares of the Company's common stock at a price of $3.30 per share, which represented a 50% premium over the 20-day average closing price through December 20, 2010, for an aggregate purchase price of $500,000.  Both payments were received in January 2011. 

Under the terms of the second amendment, Sigma-Tau made an additional upfront payment of $4.0 million in 2011 and was required to make an additional $3.0 million non-refundable payment to the Company by December 31, 2011.  Under the third amendment, upon elimination of Sigma-Tau’s rights to Taiwan, Singapore and South Korea, the $3.0 million payment obligation was eliminated, as were the future milestones and royalties related to these territories.

The Company is also eligible to receive over $115 million in development and sales milestones related to ecallantide 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 in the territories covered under the initial Sigma-Tau agreement. The partnership agreement may be terminated by Sigma-Tau, at will, upon 6 months’ prior written notice.  Either party may terminate the partnership agreement in the event of an uncured material breach or declaration or filing of bankruptcy by the other party.

Prior to the second amendment in May 2011, revenue related to this multiple element arrangement was being recognized in accordance with ASC 605.  The Company evaluated the terms of the second amendment relative to the entire arrangement and determined the amendment to be a material modification to the existing agreement for financial reporting purposes.  As a result, the Company evaluated the entire arrangement under the guidance of ASU No. 2009-13 which was adopted in 2011.  

Under the terms of the original agreement and first amendment, the Company analyzed this multiple element arrangement in accordance with ASC 605 and evaluated whether the performance obligations under this agreement, including the product 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 included the product license, the committed future development services and the steering committee involvement. These deliverables were grouped into one unit of accounting due to the lack of objective and reliable evidence of fair value.  The second unit of accounting related to the manufacturing services, and was determined to meet all of the criteria to be a separate unit of accounting.  The Company had the ability to estimate the scope and timing of its involvement in the future development of the program as the Company's obligations under the development period are clearly defined.  Therefore, the Company recognized 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 estimated the level of effort to be expended over the term of the agreement and recognized 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.  As of the date of the second amendment, $4.8 million of revenue had been recognized for the first unit of accounting and $2.4 million of deferred revenue remained.  To date, no revenue has been recognized related to manufacturing services, as no such services have been provided.

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Notes to Consolidated Financial Statements (Continued)

As the second amendment represented a material modification to the existing agreement under applicable accounting rules, the Company re-evaluated the entire arrangement under ASU No. 2009-13, and determined all undelivered items under the agreement and divided them into separate units of accounting based on whether the deliverable provided stand-alone value to the licensee. These units of accounting consist of (i) the license to develop and commercialize ecallantide for the treatment of HAE and other therapeutic indications in the territories granted under the original agreement and first amendment, (ii) the license to develop and commercialize ecallantide for the treatment of HAE and other therapeutic indications in the territories granted under the second amendment, (iii) steering committee services and (iv) committed future development services.  The Company then determined the best estimate selling price (BESP) for the license and steering committee services and the fair value of committed future development services was determined using vendor objective evidence.   The Company’s process for determining BESP involves management’s judgment and includes factors such as discounted cash flows, estimated direct expenses and other costs and available data.

The upfront fee of $4.0 million, the non-refundable payment of $3.0 million due in December 2011 and $2.4 million of previously deferred revenue under the Sigma-Tau contracts were allocated to the units of accounting based upon relative fair value.

The $9.2 million  allocated to the licenses was recognized during the second quarter of 2011, as the licenses had been delivered.   In the fourth quarter of 2011, based on the terms of the third amendment, Sigma-Tau’s $3.0 million payment obligation was eliminated and the full $3.0 million in revenue was recorded as a reduction of revenue.  In addition, during the fourth quarter of 2011, the Company recognized $1 million related to a regulatory filing milestone for the Austrailia territory which was determined to be substantive based on the level of effort and involvement required by the Company for the achievement of this milestone.

Revenue related to steering committee services of $190,000 was deferred and is being recognized under the proportional performance model, as meetings are held through the estimated development period for ecallantide in the Sigma-Tau Territories.  Revenues associated with future committed development services will be recognized as incurred and billed to Sigma-Tau for reimbursement.  As future milestones are achieved and to the extent they involve substantial effort on the Company’s part, revenue will be recognized in the period in which the milestone is achieved.  The manufacturing services were determined to represent a contingent deliverable and, as such, have been excluded from the current revenue model.

The Company recognized revenue of approximately $10.5 million and $2.2 million related to the Sigma-Tau agreement, as amended, for the years ended December 31, 2011 and 2010, respectively.  Revenue for the year ended December 31, 2011 would have been $7.1 million, if revenue had been recognized under the previous revenue recognition model, prior to adoption of ASU 2009-13.

As of December 31, 2011 and 2010, the Company has deferred $158,000 and $3.1 million, respectively, of revenue related to this arrangement, which is recorded in deferred revenue on the accompanying consolidated balance sheets at such dates.  The deferred revenue balance at December 31, 2011, relates to the joint steering committee obligation which is estimated to continue until 2014.  As of December 31, 2011 and 2010, the Company had receivable balances due from Sigma-Tau of $65,000 and $1.4 million, respectively.

In January 2012, the Company was notified that the collaboration agreement had been assigned by Defiante Farmaceutica S.A. to another subsidiary of Sigma-Tau, Sigma-Tau Rare Diseases S.A.

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CMIC

In September 2010, the Company entered into an agreement with CMIC Co., Ltd, (CMIC) to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other angioedema indications in Japan.

Under the terms of the agreement, the Company received a $4.0 million upfront payment.  The Company is also eligible to receive up to $102 million in development and sales milestones for ecallantide in HAE and other angioedema indications and royalties of 20%-24% of net product sales. CMIC is solely responsible for all costs associated with development, regulatory activities, and commercialization of ecallantide for all angioedema indications in Japan. CMIC will purchase drug product from the Company on a cost-plus basis for clinical and commercial supply.

The Company analyzed this multiple element arrangement in accordance with ASC 605 and evaluated whether the performance obligations under this agreement, including the product license, development of ecallantide for the treatment of HAE and other angioedema indications in Japan, 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 product license, the committed future development services and the steering committee involvement.  The second unit of accounting relates to the manufacturing services.  At this time the scope and timing of the future development of ecallantide for the treatment of HAE and other indications in the CMIC territory are the joint responsibility of the Company and CMIC and therefore, the Company cannot reasonably estimate the level of effort required to fulfill its obligations under the first unit of accounting.  As a result, the Company is recognizing revenue under the first unit of accounting on a straight-line basis over the estimated development period of ecallantide for the treatment of HAE and other indications in the CMIC territory of approximately six years.

The Company recognized revenue of approximately $595,000 and $148,000 related to this agreement for the years ended December 31, 2011 and 2010, respectively.  As of December 31, 2011 and 2010, the Company has deferred approximately $3.3 million and $3.9 million, respectively, of revenue related to this arrangement, which is recorded in deferred revenue on the accompanying consolidated balance sheets.

Sale of Xyntha Royalty Rights

In 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 Company's LFRP.  Under the terms of this sale, the Company received an upfront cash payment of $9.8 million and earned  additional  milestones payments of $1.5 million in 2010 and $500,000 in 2011, based on product sales for each respective year.  A portion of the cash payments received were required to be applied to the Company's loan with Cowen Healthcare (see Note 8 – Note Payable), totaling a $2.2 million principal reduction and interest expense of $1.4 million.  A similar proportion of the $500,000 sales milestone payment due by March 31, 2012, will also be applied to the loan. The Company has determined that it has no substantive future obligations under the arrangement.  During the years ended December 31, 2010 and 2011,the Company recognized $11.3 million and $500,000 of revenue under this arrangement, respectively.

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 ecallantide for the reduction of blood loss during surgery. Under this agreement, Cubist assumed responsibility for all further development and costs associated with ecallantide in the licensed indications in the Cubist territory and the Company received $17.5 million in upfront license and milestone fees.

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In 2010, Cubist announced its plan to stop investing in the clinical development of ecallantide and terminated the 2008 agreement.  Based upon Cubist's decision, $13.8 million of deferred revenue was recognized as revenue during the year ended December 31, 2010, as the development period had ended.  During the year ended December 31, 2009, the Company recognized revenue of $4.3 million 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 December 31, 2011 and 2010, in thousands, 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	December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	8,825	$	8,825	$	—	$	—
Marketable debt securities		26,036		—		26,036		—
Total	$	34,861	$	8,825	$	26,036	$	—

Description	December 31, 2010		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	16,932	$	16,932	$	—	$	—
Marketable debt securities		58,783		—		58,783		—
Total	$	75,715	$	16,932	$	58,783	$	—

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Notes to Consolidated Financial Statements (Continued)

The following tables summarize the Company’s marketable securities at December 31, 2011 and 2010, in thousands:

	December 31, 2011
Description	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
US Treasury Bills and Notes (due within 1 year)	$	23,013	$	7	$	—	$	23,020
US Treasury Bills and Notes (due after 1 year through 2 years)		3,016		—		—		3,016
Total	$	26,029	$	7	$	—	$	26,036

	December 31, 2010
Description	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Treasury Bills and Notes (due within 1 year)	$	35,597	$	45	$	—		$	35,642
US Treasury Bills and Notes (due after 1 year through 2 years)		23,142		—		(1	)		23,141
Total	$	58,739	$	45	$	(1	)	$	58,783

As of December 31, 2011 and 2010, the Company's cash equivalents which are invested in money market funds are valued based on Level 1 inputs.  As of December 31, 2011 and 2010, the Company’s short-term investments consisted of United States Treasury notes and bills which are valued based on Level 2 inputs.  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 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.

5.  Inventory

In December 2009, the Company received marketing approval of KALBITOR from the FDA. Costs associated with the manufacture of KALBITOR prior to regulatory approval were expensed when incurred, and therefore were not capitalized as inventory.  As a result, the Company’s finished goods inventory does not include all costs of manufacturing drug substance currently being sold.  Subsequent to FDA approval, all costs associated with the manufacture of KALBITOR have been recorded as inventory.  As of December 31, 2011, drug supply on hand is anticipated to meet KALBITOR demand in excess of one year.  Inventory consists of the following (in thousands):

	December 31, 2011		December 31, 2010
Raw Materials	$	1,429	$	766
Work in Progress		5,474		723
Finished Goods		119		207
Total	$	7,022	$	1,696

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Notes to Consolidated Financial Statements (Continued)

6. Fixed Assets

Fixed assets consist of the following:

	December 31,
	2011			2010
	(In thousands)
Laboratory equipment	$	9,103		$	8,992
Furniture and office equipment		1,095			1,096
Software and computers		4,445			4,311
Leasehold improvements		6,845			6,844
Construction in process		3,960			--
Total		25,448			21,243
Less: accumulated depreciation and amortization		(20,567	)		(19,065	)
	$	4,881		$	2,178

As of December 31, 2011 there were no assets under capital lease.  As of December 31, 2010 there were $1.2 million of assets under capital leases, which included laboratory and office equipment, with related accumulated amortization of $767,000.

Depreciation expense for the years ended December 31, 2011, 2010, and 2009 was approximately $1.4 million, $1.5 million and $2.2 million, respectively.

7. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

	December 31,
	2011		2010
	(In thousands)
Accounts payable	$	2,927		$	1,398
Accrued employee compensation and related taxes		4,529			4,847
Accrued external research and development and contract manufacturing		1,591			1,180
Accrued license fees		--			60
Accrued legal		214			500
Accrued leasehold improvements		2,472			--
Other accrued liabilities		3,585			2,687
	$	15,318		$	10,672

8. Long-term Obligations

Long-term obligations and note payable consists of the following:

	December 31,
	2011			2010
	(In thousands)
Note payable	$	75,372		$	56,406
Obligations under capital lease arrangements		--			207
Obligation under leasehold improvement arrangements		101			447
Total	$	75,473			57,060
Less: current portion		(101	)		(586	)
Long-term obligations	$	75,372		$	56,474

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Notes to Consolidated Financial Statements (Continued)

Minimum future payments under the Company's long-term obligations and note payable as of December 31, 2011 are as follows:

	(In thousands)
2012	$	8,421
2013		8,286
2014		11,701
2015		16,736
2016		36,550
Thereafter		46,150
Total future minimum payments		127,844
Less: amount representing interest		(51,093)
Present value of future minimum payments		76,751
Less: current portion		(101)
Less: unamortized portion of discount		(1,278)
Long-term obligations and note payable	$	75,372

Note Payable:

Original Financing

In 2008, the Company entered into an agreement with an affiliate of Cowen Healthcare Royalty Partners, LP (Cowen Healthcare) for a $50.0 million loan secured by the Company's LFRP (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 Tranche A and Tranche B loans (collectively, the Original 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 Original Loan may be prepaid without penalty, in whole or in part, beginning in August 2012.  In connection with the Original 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 Original Loan agreement, the Company is required to repay the Original 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 Original 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 Original 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 tranche of the Original 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 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 Original Loan plus any applicable prepayment premium and an additional 5.0% of such proceeds will be paid to Cowen Healthcare as a cash premium.  In 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.  Under the terms of the sale, the Company has received $11.8 million, including  milestone fees based on product sales (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 an exercise price of $5.50 per share.  The warrant expires in August 2016 and became exercisable in August 2009.  The Company estimated the relative fair value of the warrant to be $853,000 on the date of issuance, 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 an exercise price of $2.87 per share.  The warrant expires in August 2016 and became exercisable in March 2010.  The Company estimated the relative fair value of the warrant to be $477,000 on the date of issuance, 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 as of the date of issuance are recorded in additional paid-in capital on the Company's consolidated balance sheets.

The cash proceeds from the Original 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.

2011 Additional Financing

In December 2011, the Company entered into an agreement with a second affiliate of Cowen Healthcare and received an additional loan of$20 million and a commitment to refinance the Original Loan at a reduced interest rate in August 2012.

The additional loan is unsecured and bears interest at an annual rate of 13% through August 2012, at which time the agreement provides that the additional loan will be combined with a second loan, subject to customary closing conditions.  The second loan will be used to refinance 102% of the outstanding principal of the Original Loan.  Together, the collective loan will be secured exclusively by the Company’s LFRP and will bear interest at a rate of 12%.  It will mature in August 2018, and can be repaid without penalty beginning in August 2015.  Should the second loan not be funded in August 2012, the additional $20 million loan will continue to bear interest at a rate of 13% and will mature on June 30, 2013.

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The note payable balance related to the additional financing was reduced by $150,000 for payment of Cowen Healthcare’s legal fees in conjunction with the loan.  This amount is being accreted over the life of the note, through June 2013.

The Loan principal balance due to Cowen Healthcare at December 31, 2011 and 2010 was $76.7 million and $57.8 million, respectively.

Activity under the Original Loan and the 2011 Additional Financing, as adjusted for discounts associated with the debt issuance including warrants and fees, is presented for financial reporting purposes as follows (in thousands):

	2011			2010
Balance, January 1	$	56,406		$	58,096
Accretion of discount		246			246
Loan activity:
Net proceeds from additional loan		19,850			-
Interest expense		9,932			11,420
Payments applied to principal		(1,129	)		(1,935	)
Payments applied to interest		(8,224	)		(10,721	)
Accrued interest payable		(1,709	)		(700	)
Balance, December 31	$	75,372		$	56,406

The estimated fair value of the note payable was $82.9 million at December 31, 2011 which was calculated based on level 3 inputs due to the limited availability of comparable data points.

In August 2011, Cowen Healthcare assigned their rights and interests under the Original Loan to an affiliate, Vanderbilt Royalty Sub L.P.  Cowen Healthcare continues to act as the agent under the loan agreement and will continue to manage all obligations with respect to the Loan.

Obligations under capital lease arrangements:

The Company has signed capital lease and debt agreements for the purchase of qualified fixed assets and leasehold improvements.  Interest pursuant to these agreements ranges between 0% and 11.18%.  Principal and interest were payable ratably over 24 months to 60 months.  Capital lease obligations are collateralized by the assets under lease.  During the years ended December 31, 2011, 2010 and 2009, no equipment was sold and leased back from lenders.

As of December 31, 2011 there was no amount outstanding related to capital leases.  As of December 31 2010, there was $207,000 (included in obligations under capital lease arrangements) outstanding related to capital leases, which is included in long-term obligations, including current portion of long-term obligations, on the Company's consolidated balance sheets.

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Obligation under leasehold improvement arrangements:

In 2001, the Company entered into an agreement to lease laboratory and office space in Cambridge, Massachusetts.  Under the terms of the agreement, the landlord loaned the Company approximately $2.4 million to be used towards the cost of leasehold improvements.  The loan bears interest at a rate of 12.00% and is payable in 98 equal monthly installments through February 2012.  As of December 31, 2011, and 2010, there was $101,000 and $447,000 outstanding under the loan, which is included in long-term obligations, including current portion of long-term obligations, on the Company's consolidated balance sheets.

Operating Leases

In July 2011, the Company entered into a lease agreement for new premises located in Burlington, Massachusetts and in January 2012, the Company relocated its operations to the new facility.  The new premises, consisting of approximately 45,000 rentable square feet of office and laboratory facilities, serves as the Company’s principal offices and corporate headquarters.   The term of the new lease is ten years, and the Company has rights to extend the term for an additional five years at fair market value subject to specified terms and conditions. The aggregate minimum lease commitment over the ten year term of the new lease is approximately $15.0 million.  During 2011, the Company provided the landlord a Letter of Credit of $1.1 million to secure its obligations under the lease.  Under terms of the new lease agreement, the landlord has provided the Company with a tenant improvement allowance of up to $2.6 million to be used towards the cost of leasehold improvements. During 2011, the Company capitalized approximately $3.7 million in leasehold improvements associated with the Burlington facility.  As of December 31, 2011, $2.5 million of these costs were accrued as current liabilities of which $1.5 million will be covered by the tenant improvement allowance and approximately $1.1 million will be funded by the Company.  As of December 31, 2011, the Company had been reimbursed approximately $925,000 associated with the tenant improvement allowance and had billed receivables of $231,000 and unbilled receivables of $1.5 million.  Build out costs being reimbursed under the tenant improvement allowance have been recorded as deferred rent and will be amortized as a reduction to rent expense over the lease term.

In January, 2012, the Company’s lease agreement associated with its former facility terminated and the $1.3 million Letter of Credit which secured the Company's obligations under the lease, is expected to be fully released in the first quarter of 2012.

Gross minimum future lease payments under the Company's non-cancelable operating leases as of December 31, 2011 are as follows:

	(In thousands)
2012	$	636
2013		1,502
2014		1,605
2015		1,615
2016		1,581
Thereafter		8,611
Total	$	15,550

Rent expense for the years ended December 31, 2011, 2010, and 2009 was approximately $3.4 million, $3.6 million and $5.1 million, respectively.  Rent expense for the years ended December 31, 2011, 2010 and 2009 is reflected as net of sublease payments of $194,000, $1.5 million and $1.5 million, respectively.

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9. Restructuring and Impairment Charges

In 2009, the Company implemented a workforce reduction in order to focus necessary resources on the commercialization of its lead product candidate, ecallantide.  As a result of the restructuring, during 2009, the Company recorded charges of approximately $1.9 million, which includes severance related charges of approximately $1.6 million, outplacement costs of approximately $107,000, stock compensation expense of $237,000 for amendments to the exercise and vesting schedules to certain options and other exit costs of $26,000.  All amounts were paid as of the year ended December 31, 2009.

As a result of the decrease in necessary facility space following the workforce reduction, the Company amended its facility lease in 2009 to reduce the leased space, and a charge of approximately $1.4 million was recorded, of which approximately $955,000 was a result of the write-down of leasehold improvements.  This charge is net of $355,000 of amortization of deferred rent.  During 2009, $750,000 related to this restructuring charge was paid.  There was no residual balance to be paid as of December 31, 2009.

In 1999, the Company received an €825,000 grant from the Walloon region of Belgium, which included specific criteria regarding employment and investment levels that needed to be met.  Pursuant to the closure of the Liege, Belgium facility in 2008, the Company refunded approximately $162,000 of the grant.  In 2009, all investment criteria were met.  As a result, the residual balance of approximately $1.0 million was released from short-term liabilities on the consolidated balance sheet and recognized as Other Income in the Statement of Operations.

10. Stockholders' Deficit

Preferred Stock: As of December 31, 2011 and 2010, there were a total of 1,000,000 shares of $0.01 par value preferred stock authorized with 950,000 shares undesignated and 50,000 shares designated as Series A Junior Participating Preferred Stock.

Common Stock:  In January 2011, the Company issued 151,515 shares of its common stock for an aggregate purchase price of $500,000 in connection with an amendment to a strategic partnership (see Note 3, Significant Transactions - Sigma Tau).

In May 2011, the Company’s stockholders approved an amendment to Dyax’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock to 200,000,000 shares.

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.  In December 2010, the Company amended this transaction, resulting in the issuance of an additional 151,515 shares of common stock in January 2011 for an aggregate purchase price of $500,000 (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.

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 is 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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Notes to Consolidated Financial Statements (Continued)

The following table reflects stock compensation expense recorded, net of amounts capitalized into inventory, during the years  ended December 31, 2011 and 2010 (in thousands):

	Year Ended December 31,
Compensation expense related to:	2011		2010		2009
Equity incentive plan	$	3,984	$	4,073	$	5,136
Employee stock purchase plan		46		57		146
	$	4,030	$	4,130	$	5,282
Stock-based compensation expense charged to:
Research and development expenses	$	1,193	$	1,466	$	1,768
General and administrative expenses	$	2,837	$	2,664	$	3,277
Restructuring charges	$	--	$	--	$	237

Stock-based compensation of $31,000 was capitalized into inventory for the each of the years ended December 31, 2011 and 2010, respectively.  Capitalized stock-based compensation is recognized into cost of product sales when the related product is sold.  During 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.

Valuation Assumptions for Stock Options

For the years ended December 31, 2011, 2010 and 2009 2,624,160, 2,042,180 and 2,305,655 stock options were granted, respectively.  The fair value of each option was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Year Ended December 31,
	2011			2010			2009
Expected Option Term (in years)		5.5 – 6			5.5			5.5 – 6
Risk-free interest rate		1.28% - 2.39	%		1.76 % - 2.68	%		2.20% - 2.99	%
Expected dividend yield		0			0			0
Volatility factor		74% - 75	%		74% - 76	%		77% - 79	%

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Valuation Assumptions for Employee Stock Purchase Plans

The fair value of shares issued under the employee stock purchase plan was estimated on the commencement date of each offering period using the Black-Scholes option-pricing model with the following assumptions:

	Year Ended December 31,
	2011			2010			2009
Expected Option Term (in years)		0.5			0.5			0.5
Risk-free interest rate		0.07% - 0.11	%		0.15% - 0.22	%		0.03% - 0.33	%
Expected dividend yield		0			0			0
Volatility factor		37% - 72	%		40% - 50	%		74% - 150	%

Expected volatilities are based on historical volatilities of our common stock; the expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and our historical exercise and cancellation patterns; and the risk-free rate is based on the United States  Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option.

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 December 31, 2011, a total of 3,518,383 shares were available for future grants under the Equity Plan.

Stock Option Activity

The following table summarizes stock option activity for the year ended December 31, 2011:

	Number of Options			Weighted-Avg. Exercise Price		Weighted-Avg. Remaining Contractual Life		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2010		9,193,266		$	4.10		6.79	$	133
Granted at fair market value		2,699,160		$	1.89
Exercised		(896	)	$	1.87
Forfeited		(253,548	)	$	2.61
Expired		(583,856	)	$	7.89
Outstanding as of December 31, 2011		11,054,126		$	3.41		6.69	$	22
Exercisable as of December 31, 2011		7,488,094		$	3.88		5.79	$	2
Vested and unvested expected to vest as of December 31, 2011		10,779,008		$	3.44		6.62	$	20

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Dyax Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

The aggregate intrinsic value in the table above represents the total intrinsic value of the options outstanding, options exercisable and options vested and unvested which are expected to vest, based on the Company's common stock closing price of $1.36 as of December 31, 2011, which would have been received by the option holders had all option holders exercised their options and sold the underlying common stock as of that date.  The total number of in-the-money options exercisable as of December 31, 2011 was 15,281.

The weighted average grant date fair values of options, as determined under ASC 718, granted during the years ended December 31, 2011, 2010 and 2009 were $1.17, $2.07 and $1.81 per share, respectively.  The total intrinsic value of options exercised during years ended December 31, 2011, 2010 and 2009 was approximately $0, $120,000, and $196,000, respectively.  The total cash received from employees as a result of employee stock option exercises during the years ended December 31, 2011, 2010 and 2009 was approximately $2,000, $260,000, and $304,000, respectively.

As of December 31, 2011 future compensation cost related to non-vested stock options is approximately $5.9 million and will be recognized over an estimated weighted average period of approximately 2.42 years.

The following table summarizes unvested stock option activity for the year ended December 31, 2011:

	Non-vested Number of Options
Unvested balance at December 31, 2010		3,104,221
Granted at fair market value		2,699,160
Vested		(1,983,801	)
Forfeited		(253,548	)
Unvested balance at December 31, 2011		3,566,032

The total fair value of options vested during the years ended December 31, 2011, 2010 and 2009 were $3.7 million, $4.1 million and $3.9 million, respectively.

Employee Stock Purchase Plan

The Company's Purchase Plan 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 June 1 and December 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 years ended December 31, 2011 and 2010  was approximately $46,000 and $57,000, respectively. There were 137,167 and 99,934 shares purchased under the Plan during the years ended December 31, 2011 and 2010, respectively. At December 31, 2011, a total of 456,913 shares were reserved and available for issuance under this Plan.

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Dyax Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

11. Employee Savings and Retirement Plans

The Company has an employee savings and retirement plan (the "Retirement Plan"), qualified under Section 401(k) of the Internal Revenue Code, covering substantially all of the Company's employees.  Employees may elect to contribute a portion of their pretax compensation to the Retirement Plan up to the annual maximum allowed under the Retirement Plan.  Employees are 100% vested in company matching contributions which have been 50% of employee contributions up to 6% of eligible pay.  For the years ended December 31, 2011, 2010 and 2009, the Company's matching contributions amounted to $431,000, $410,000 and $401,000, respectively.

12. 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 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 provision for income taxes for continuing operations was calculated at rates different from the United States federal statutory income tax rate for the following reasons:

	2011			2010			2009
Statutory federal income taxes		34.00	%		34.00	%		34.00	%
State income taxes, net of federal benefit		(1.96	%)		1.74	%		(2.63	)%
Federal research and development tax credits		5.86	%		4.64	%		6.94	%
Other		(1.20	%)		(2.86	)%		(1.28	%)
Federal true up and expiring NOLs and research credits		(3.68	%)		(8.01	)%		24.10	%
Valuation allowance		(33.02	%)		(29.51	)%		(61.13	)%
Effective income tax rate		—	%		—	%		—	%

The principal components of the Company's deferred tax assets and liabilities at December 31, 2011, 2010 and 2009, respectively are as follows:

	2011			2010			2009
	(In thousands)
Net Deferred Tax Asset:
Allowance for doubtful accounts	$	44		$	18		$	10
Depreciation and amortization		2,023			1,848			1,634
Accrued expenses		173			151			49
Other		861			(205	)		100
Stock based compensation		3,615			2,561			2,294
Deferred revenue		5,898			8,249			11,438
Research credit carryforwards		61,999			58,772			58,335
Net operating loss carryforwards		124,558			116,351			106,653
Total gross deferred tax asset		199,171			187,745			180,513
Valuation allowance		(199,171	)		(187,745	)		(180,513	)
Net deferred tax asset	$	—		$	—		$	—

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Dyax Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

As of December 31, 2011 and 2010, the Company had federal tax net operating loss carryforwards (NOLs) of $339.9 million and $313.3 million, respectively, available to reduce future taxable income, which expire at various times beginning in 2012 through 2031.  The Company also had federal research and experimentation and orphan drug credit carryforwards of approximately $57.2 million and $54.5 million as of December 31 2011 and 2010, respectively, available to reduce future tax liabilities which will expire at various dates beginning in 2012 through 2031.  The Company had state tax net operating loss carryforwards of approximately $170.7 million and $186.0 million as of December 31, 2011 and 2010, respectively, available to reduce future state taxable income, which will expire at various dates beginning in 2012 through 2026.  The Company also had state research and development and investment tax credit carryforwards of approximately $7.2 million and $6.5 million as of December 31, 2011 and 2010, respectively, available to reduce future tax liabilities which expire at various dates beginning in 2012 through 2026.

The Company has recorded a deferred tax asset of approximately $1.8 million and $1.8 million, respectively, at December 31, 2011 and 2010, 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 $1.8 million 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 $199.2 million and $187.7 million has been established at December 31, 2011 and 2010, respectively.

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  December 31, 2011 , the Company had no unrecognized tax benefits or liabilities and had no accrued interest or penalties related to uncertain tax positions.

Utilization of the NOL and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986, as well as similar state and foreign provisions.  Ownership changes may limit the amount of NOL and tax credits carryforwards that can be utilized annually to offset future taxable income and tax, respectively.  In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period.  Since the Company's formation, the Company has raised capital through the issuance of capital stock on several occasions which, combined with the purchasing shareholders' subsequent disposition of those shares, may have resulted in one or more changes of control, as defined by Section 382, or could result in a change of control in the future upon subsequent disposition.  The Company has not currently completed a study to assess whether any change of control has occurred, or whether there have been multiple changes of control since the Company's formation, due to the significant complexity and cost associated with the study and that there could be additional changes in control in the future.  If the Company has experienced a change of control at any time since its formation, utilization of its NOL or tax credits carryforwards would be subject to an annual limitation under Section 382.

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Dyax Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

In addition to uncertainties surrounding the use of NOL carryforwards in a change of control, the Company has identified orphan drug and research and development credits as material components of its deferred tax asset.  The uncertainties in these components arise from judgments in the allocation of costs utilized to calculate these credits.  The Company has not conducted studies to analyze these credits to substantiate the amounts due to the significant complexity and cost associated with such study.  Any limitation may result in expiration of a portion of the NOL or tax credits carryforwards before utilization.  Further, until a study is completed and any limitation known, no amounts are being presented as an uncertain tax position.

A full valuation allowance has been provided against the Company's NOL carryforwards and research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance.  Thus there would be no impact to the consolidated balance sheet or statement of operations if an adjustment were required.

The tax years 1997 through 2011 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.

13. Business Segments

The Company discloses business segments under ASC 280, Segment Reporting.   The statement established standards for reporting information about operating segments in annual financial statements of public enterprises and in interim financial reports issued to shareholders.  It also established standards for related disclosures about products and services, geographic areas and major customers.  The Company operates as one business segment in one geographic area.

14. Subsequent Event

In February 2012, Dyax implemented a number of strategic and operational initiatives designed to provide a framework for the future growth of their business and realign their overall structure to become a more efficient and cost effective organization. As part of this initiative:

· The Company terminated certain early stage, preclinical research and development programs which they plan to out-license.

· The Company completed an 18% reduction in workforce spanning its research, development and administrative functions.

As a result of these initiatives, Dyax expects to realize annual operating expense savings, which will be offset by costs associated with initiatives to grow their angioedema and LFRP franchises.  Costs associated with the workforce reduction are primarily related to employee severance and benefits of approximately $1.1 million which are expected to be incurred and paid during the quarter ended March 31, 2012.   In addition, the Company is expected to incur charges related to the modification of certain stock options.  This restructuring has no impact on the Company’s financial position or results of operations as of December 31, 2011.

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Dyax Corp. and Subsidiaries

Notes to Consolidated Financial Statements (Continued)

15.   Litigation

As of December 31, 2011, the Company was not engaged in any active legal proceedings.  The Company makes provisions for claims specifically identified for which it believes the likelihood of an unfavorable outcome is probable and reasonably estimable.  The Company records at least the minimum estimated liability related to claims where there is a range of loss and the loss is considered probable and no estimate within the range is better than any other.  As additional information becomes available, the Company assesses the potential liability related to its pending claims and revises its estimates.  Future revisions in the estimates of the potential liability could materially impact the results of operations and financial position.  The Company maintains insurance coverage that limits the exposure for any single claim as well as total amounts incurred per policy year, and it believes that its insurance coverage is adequate.  The Company makes every effort to use the best information available in determining the level of liability reserves.

16. Unaudited Quarterly Operating Results

The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2011 and 2010:

Year ended December 31, 2011	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except share and per share)
Revenue	$	8,214		$	21,875		$	10,132		$	8,516
(Loss) Income from operations	$	(8,769	)	$	2,428		$	(7,577	)	$	(10,984	)
Net loss	$	(11,265	)	$	(76	)	$	(9,723	)	$	(13,535	)
Shares used in computing basic and diluted net loss per share		98,689,795			98,721,889			98,748,086			98,764,384
Basic and diluted net loss per share:	$	(0.11	)	$	(0.00	)	$	(0.10	)	$	(0.14	)

Year ended December 31, 2010	First Quarter		Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except share and per share)
Revenue	$	20,048	$	15,142		$	6,951		$	9,258
Income (loss) from operations	$	3,664	$	(1,356	)	$	(8,776	)	$	(7,743	)
Net (loss) income	$	954	$	(5,261	)	$	(11,254	)	$	(8,942	)
Shares used in computing basic net (loss) income per share		78,315,589		97,568,409			98,401,835			98,507,264
Shares used in computing diluted net (loss) income per share		79,690,854		97,568,409			98,401,835			98,507,264
Basic and diluted net (loss) income per share:	$	0.01	$	(0.05	)	$	(0.11	)	$	(0.09	)

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None.

ITEM 9A. CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company's reports under the Securities Exchange Act of 1934, as amended (the Exchange Act), is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosure.  In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as the Company's are designed to do, and management necessarily was required to apply its judgment in evaluating the risk related to controls and procedures.

In connection with the preparation of this Form 10-K, as of December 31, 2011, an evaluation was performed under the supervision and with the participation of our management, including the CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act).  Based on that evaluation, our management concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of December 31, 2011.  These conclusions were communicated to the Audit Committee.

Management's Report on Internal Control Over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act.  Our internal control system is designed to provide reasonable assurance to the Company's management and Board of Directors regarding the preparation and fair presentation of published financial statements.  All internal control systems, no matter how well designed, have inherent limitations.  Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

Our management has assessed the effectiveness of our internal control over financial reporting as of December 31, 2011.  In making its assessment of internal control over financial reporting, management used the criteria set forth by the Committee of Sponsoring Organizations (COSO) of the Treadway Commission in Internal Control — Integrated Framework.  Based on this assessment, our management concluded that our internal control over financial reporting was effective as of December 31, 2011 based on the criteria set forth by COSO in Internal Control — Integrated Framework.

Our independent registered public accounting firm, PricewaterhouseCoopers LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting.  This report appears in Item 8 above.

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Change in Internal Control Over Financial Reporting — There were no changes in our internal control over financial reporting that occurred during our last fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

Portions of the response to this item are incorporated herein by reference from the discussion responsive thereto under the captions "Election of Directors—Nominees for Director", "Section 16(a) Beneficial Ownership Reporting Compliance", "Executive Officers" and "Corporate Governance—Board and Committee Matters" in the Company's Definitive Proxy Statement relating to the 2012 Annual Meeting of Stockholders (the 2012 Proxy Statement).

We have adopted a Code of Business Conduct and Ethics (the code of ethics) that applies to all of our directors, officers and employees.  The code of ethics is available on our website at www.dyax.com.  In addition, if we make any substantive amendments to the code of ethics or grant any waiver, including any implicit waiver, from a provision of the code to any of our executive officers or directors, we will disclose the nature of such amendment or waiver as required by applicable law.

ITEM 11. EXECUTIVE COMPENSATION

The response to this item is incorporated herein by reference from the discussion responsive thereto under the following captions in the 2012 Proxy Statement: "Executive Compensation" and "Corporate Governance—Compensation Committee Interlocks and Insider Participation."

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The response to this item is incorporated herein by reference in part from the discussion responsive thereto under the caption "Share Ownership" in the 2012 Proxy Statement.

The following table provides information about the securities authorized for issuance under the Company's equity compensation plans as of December 31, 2011:

Equity Compensation Plan Information

Plan Category	Number of securities to be issued upon exercise of outstanding options, warrants and rights			Weighted-average exercise price of outstanding options, warrants and rights		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)			(b)		(c)
Equity compensation plans approved by security holders(1)		11,054,126		$	3.41		3,975,296
Equity compensation plans not approved by security holders:		—			—		—
Totals:		11,054,126	(2)	$	3.41		3,975,296	(3)

(1) Consists of the Amended and Restated 1995 Equity Incentive Plan, as amended, and the 1998 Employee Stock Purchase Plan, as amended.

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(2) Does not include purchase  rights currently accruing under the 1998 Employee Stock Purchase Plan, because the purchase price (and therefore the number of shares to be purchased) will not be determined until the end of the purchase period, which is May 31, 2012.

(3) Includes 456,913 shares issuable under the 1998 Employee Stock Purchase Plan, of which up to 50,000 of purchase rights are issuable in connection with the current offering period which ends on May 31, 2012.  The remaining shares consist of 3,518,383 under the 1995 Amended and Restated Equity Incentive Plan.  The plan may be amended, suspended, or terminated by the Compensation Committee of the Board of Directors at any time, subject to any required stockholder approval.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The response to this item is incorporated herein by reference from the discussion responsive thereto under the caption "Election of Directors—Certain Relationships and Related Transactions" and "Corporate Governance – Board and Committee Matters" in the 2012 Proxy Statement.

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES

The response to this item is incorporated herein by reference from the discussion responsive thereto under the captions "Corporate Governance—Board and Committee Matters" and "Audit Committee Report – Audit Fees" in the 2012 Proxy Statement.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) 1.  FINANCIAL STATEMENTS

The financial statements are included under Part II, Item 8 of this Report.

2.  FINANCIAL STATEMENTS SCHEDULE

Schedules are omitted because they are not applicable, or are not required, or because the information is included in the consolidated financial statements and notes thereto.

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3. EXHIBITS –

The exhibits are listed below under Part IV, Item 15(b) of this Report.

 (b) EXHIBITS

Exhibit No.	Description
3.1(a)	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.
3.1(b)	Certificate of Amendment of the Company’s Amended and Restated Certificate of Incorporation. Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-24537) filed May 13, 2011 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.
3.3	Certificate of Designations Designating the Series A Junior Participating Preferred Stock of the Company. Filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K (File No. 000-24537) filed on June 27, 2001 and incorporated herein by reference.
4.1	Specimen Common Stock Certificate.  Filed as Exhibit 4.1 to the Company’s Registration Statement on Form S-1 (File No. 333-37394) and incorporated herein by reference.
4.3	Form of Warrant issued to Cowen Healthcare Royalty Partners, L.P. on August 5, 2008 and March 18, 2009.  Filed as an exhibit to Exhibit 10.4 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(a)	Amended and Restated 1995 Equity Incentive Plan.  Filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 000-024537) for the quarter ended June 30, 2010, as amended, and incorporated herein by reference.
10.1(b)	Form of the Company’s Incentive Stock Option Certificate under the Company’s Amended and Restated 1995 Equity Incentive Plan for all U.S. employees, including its executive officers.  Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2004 and incorporated herein by reference.
10.1(c)	Form of the Company’s Nonstatutory Stock Option Certificate under the Company’s Amended and Restated 1995 Equity Incentive Plan for its U.S. employees, including its executive officers.  Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2004 and incorporated herein by reference.
10.1(d)	Form of the Company’s Nonstatutory Stock Option Certificate under the Company’s Amended and Restated 1995 Equity Incentive Plan for its non-employee directors.  Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2004 and incorporated herein by reference.

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10.1(e)	Form of the Company's Restricted Stock Unit Certificate under the Company's Amended and Restated 1995 Equity Incentive Plan for all U.S. employees, including its executive officers. Filed herewith.
10.2	1998 Employee Stock Purchase Plan, as amended on March 25, 2009.  Filed as Exhibit 10.2 to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2009 and incorporated herein by reference.
10.3*	Form of Indemnification Agreement by and between certain directors and executive officers of the Company and the Company.  Filed as Exhibit 10.32 to the Company’s Registration Statement on Form S-1 (File No. 333-37394) and incorporated herein by reference.
10.4	Amended and Restated Registration Rights Agreement, dated as of February 12, 2001, between holders of the Company’s capital stock named therein and the Company.  Filed as Exhibit 10.33 to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2000 and incorporated herein by reference.
10.5 †	Amended and Restated License Agreement between XOMA Ireland Limited and the Company dated as of October 27, 2006.  Filed as Exhibit 10.20(b) to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2007 and incorporated herein by reference.
10.6 †	Amended and Restated License Agreement between the Company and Cambridge Antibody Technology Limited dated as of July 30, 2007.  Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2007 and incorporated herein by reference.
10.7 †	License Agreement between Fovea Pharmaceuticals SA and the Company dated as of February 10, 2009.  Filed as Exhibit 10.19 to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2009 and incorporated herein by reference.
10.8(a) †	Distribution Agreement by and between US Bioservices Corporation dated as of November 19, 2009.  Filed as Exhibit 10.20 to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2009 and incorporated herein by reference.
10.8(b) †	First Amendment dated as of February 15, 2011 to Distribution Agreement by and between the Company and US Bioservices Corporation.  Filed herewith.
10.8(c) †	Second Amendment dated as of May 31, 2011 to Distribution Agreement by and between the Company and US Bioservices Corporation.  Filed herewith.
10.8(d) †	Third Amendment dated as of July 8, 2011 to Distribution Agreement by and between the Company and US Bioservices Corporation.  Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2011 and incorporated herein by reference.
10.9(a) †	Distribution Agreement by and between ASD Specialty Healthcare Inc. dated as of November 19, 2009.  Filed as Exhibit 10.21 to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2009 and incorporated herein by reference.
10.9(b) †	First Amendment dated as of August 25, 2011 to Distribution Agreement by and between the Company and ASD Specialty Healthcare Inc. Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2011 and incorporated herein by reference.
10.10 †	Distribution Agreement by and between Integrated Commercialization Solutions, Inc. dated as of November 19, 2009.  Filed as Exhibit 10.22 to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2009 and incorporated herein by reference.

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10.11 †	Amended and Restated Loan Agreement by and between Cowen Healthcare Royalty Partners, L.P. and the Company dated as of March 18, 2009.  Filed as Exhibit 10.1 to the Company’s Amendment No. 1 to the Quarterly Report on Form 10-Q/A (File No. 000-24537) for the quarter ended June 30, 2009 and incorporated herein by reference.
10.12 †	Royalty Interest Purchase Agreement by and between the Company and KGH Domestic III, LP dated as of April 16, 2010.  Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 000-024537) for the quarter ended June 30, 2010, as amended, and incorporated herein by reference.
10.13 †	Joint Development and License Agreement by and between the Company and Defiante Farmaceutica S.A., a subsidiary of the pharmaceutical company Sigma-Tau SpA dated as of June 18, 2010.  Filed as Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q (File No. 000-024537) for the quarter ended June 30, 2010, as amended, and incorporated herein by reference.
10.14(a) †	Amendment No. 1 to Joint Development and License Agreement by and between the Company and Defiante Farmaceutica S.A., a subsidiary of the pharmaceutical company Sigma-Tau SpA dated as of December 21, 2010.  Filed as Exhibit 10.27 to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2010 and incorporated herein by reference.
10.14(b) †	Amendment No. 2 to Joint Development and License Agreement by and between the Company and Defiante Farmaceutica S.A., a subsidiary of the pharmaceutical company Sigma-Tau SpA dated as of May 27, 2011.  Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended June 30, 2011 and incorporated herein by reference.
10.14(c)	Third Amendment, dated December 26, 2011, to Joint Development and License Agreement by and between the Company and Defiante Farmaceutica S.A., a subsidiary of the pharmaceutical company Sigma-Tau SpA dated as of June 18, 2010. Filed herewith.
10.15 †	Product Development and License Agreement by and between the Company and CMIC Co. Ltd. dated as of September 28, 2010.  Filed as Exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q (File No. 000-024537) for the quarter ended September 30, 2010 and incorporated herein by reference.
10.16*	Executive Retention Agreement by and between the Company and Gustav Christensen dated as of December 22, 2010. Filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K (File No. 000-24537) filed on December 23, 2010 and incorporated herein by reference.
10.17*	Form of Executive Retention Agreement for executive officers other than the CEO.  Filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K (File No. 000-24537) filed on December 23, 2010 and incorporated herein by reference.
10.18(a)	Lease, dated as of July 14, 2011, by and between the Company and Netview 5 and 6 LLC.  Filed as Exhibit 10.3 to the Company’s Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2011 and incorporated herein by reference.
10.18(b)	First Amendment to Lease, dated as of November 4, 2011, by and between the Company and Netview 5 and 6 LLC. Filed herewith.
10.19 †	Loan Agreement by and between the Company and LFRP Investors, L.P. dated as of December 29, 2011. Filed herewith.

93

14.1	Code of Business Conduct and Ethics of the Company.  Filed as Exhibit 14.1 to the Company’s Annual Report on Form 10-K (File No. 000-24537) for the year ended December 31, 2005 and incorporated herein by reference.
21.1	Subsidiaries of the Company. Filed herewith.
23.1	Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm.  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.
32.1	Certification pursuant to 18 U.S.C. Section 1350.  Filed herewith.
101**	The following materials from the Company’s Annual Report on Form 10-K for the year ended December 31, 2011 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets as of December 31, 2011 and December 31, 2010, (ii) Consolidated Statements of Operations and Comprehensive Loss for the for the years ended December 31, 2011, 2010 and 2009, (iii) Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the years ended December 31, 2011, 2010 and 2009 (iv) Consolidated Statements of Cash Flows for the for the years ended December 31, 2011, 2010 and 2009, and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.

*	Indicates a contract with management.
**	Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.

† 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.

94

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this second day of March, 2012.

DYAX CORP.
By:	/s/ Gustav A. Christensen
	Gustav A. Christensen
	Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company in the capacities and on the dates indicated.

Name	Title	Date
/s/ Gustav A. Christensen	President and Chief Executive Officer, and
Gustav A. Christensen	(Principal Executive Officer) and Director	March 2, 2012
/s/ George Migausky	Executive Vice President and Chief Financial
George Migausky	Officer  (Principal Financial Officer and	March 2, 2012
	Principal Accounting Officer)
/s/ Henry E. Blair
Henry E.  Blair	Chairman of the Board of Directors	March 2, 2012
/s/ Susan B. Bayh
Susan B. Bayh	Director	March 2, 2012
/s/ Ron Cohen
Ron Cohen	Director	March 2, 2012
/s/ James W. Fordyce
James W. Fordyce	Director	March 2, 2012
/s/ Mary Ann Gray
Mary Ann Gray	Director	March 2, 2012
/s/ Thomas L. Kempner
Thomas L. Kempner	Director	March 2, 2012
/s/ Henry R. Lewis
Henry R. Lewis	Director	March 2, 2012
/s/ David J. McLachlan
David J. McLachlan	Director	March 2, 2012
/s/ Paolo Pucci
Paolo Pucci	Director	March 2, 2012

95

EX-10.1(E)

Exhibit 10.1(e)

DYAX CORP.

AMENDED AND RESTATED 1995 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT CERTIFICATE

(Employees)

RSU Number:  _________ __________ Units 

This Restricted Stock Unit Certificate (this “Certificate”) confirms that Dyax Corp. (the “Company”), a Delaware corporation, has on the date set forth below (the “Award Date”) granted to the person named below (“Participant”) an award (the “Award”) of the number of Restricted Stock Units (the "Units") set forth below pursuant to the Company’s Amended and Restated 1995 Equity Incentive Plan (the “Plan”), each Restricted Stock Unit representing the right to receive one share of the Company’s Common Stock, par value $0.01 per share (the “Common Stock”), subject to the terms and conditions set forth below and on the reverse side of this Certificate.

Award Date:                                                                           _________________________________

Name of Participant:                                                             _________________________________

Address:                                                                                _________________________________

Social Security No.:                                                              _________________________________

Number of Restricted Stock Units:                                    _________________________________

Vesting Schedule:                                                                 _________________________________

By acceptance of this Award, Participant agrees to all the terms and conditions hereof, including, without limitation, those set forth in the Plan and on the reverse side of this Certificate.

DYAX CORP.

By:_______________________________

Title:

PARTICIPANT:

_______________________________

{Signature}

*  *  *  *  *

TERMS AND CONDITIONS OF RESTRICTED STOCK UNITS ("UNITS")

1.The Plan.  In the event of any conflict between the terms of the Plan and this Award, the terms of the Plan shall govern.  The Committee administers the Plan and its determinations regarding the operation of the Plan are final.  Subject to the limitations set forth in the Plan, the Committee may amend the Plan or this Award.  Capitalized terms used but not defined herein shall have the meaning set forth in the Plan.  Copies of the Plan may be obtained upon written request without charge from the Treasurer of the Company.

2.No Rights as Stockholder or Employee.  Participant shall not have any of the rights or privileges of a stockholder of the Company with respect to the Units granted pursuant to this Award unless and until shares of Common Stock have been issued and delivered to Participant.  No adjustments shall be made for dividends or distributions or other rights for which the record date is prior to the date such shares of Common Stock are issued.  The rights of Participant with respect to the Restricted Stock Units shall remain forfeitable at all times prior to the date on which such rights vest in accordance with Sections 4, 5 and 6 below.  Participant shall not have any rights to continued employment by the Company or its Affiliates by virtue of the grant of this Award.

3.Conversion of Units: Issuance of Common Stock.  No shares of Common Stock shall be issued to Participant prior to the date on which the Units vest in accordance with Sections 4, 5 and 6.  Subject to Section 10, the Company shall deliver to Participant, on or promptly after each vesting date set forth on the cover of this Certificate, the shares of Common Stock represented by the whole Units that vest on such date, less any shares withheld pursuant to Section 8 below.  The value of any fractional Unit shall be paid in cash at the time the certificate is delivered to Participant.  The shares of Common Stock issued on conversion of vested Units shall be free of all restrictions on transferability and forfeiture under this Award.

4.Vesting.  Subject to the terms and conditions of this Award, the Units shall vest and be settled according to the Vesting Schedule set forth on the cover of this Certificate, so long as Participant remains continuously employed by the Company until the corresponding vesting date for the Units.

5.Change in Control.  As provided in the Plan, in the event of a Change in Control affecting the Company’s outstanding Common Stock, the Committee shall equitably adjust the number and kind of shares subject to this Award or make provision for a cash payment. If such Change in Control involves a consolidation or merger of the Company with another entity, the sale or exchange of all or substantially all of the assets of the Company or a reorganization or liquidation of the Company, then in lieu of the foregoing, the Committee may in its discretion accelerate or waive any vesting period.

6.Termination of Employment.  If, prior to vesting of the Units pursuant to Section 4 or 5, Participant ceases to be an employee of the Company for any reason (voluntary or involuntary), then Participant’s rights to all of the unvested Units shall be immediately and irrevocably forfeited.

7.Restriction on Transfer.  The Units are not transferable by Participant otherwise than by will or the laws of descent and distribution.  The naming of a Designated Beneficiary does not constitute a transfer.

8.Income Tax Matters.  Participant shall pay to the Company, or make provision satisfactory to the Company for payment of, any taxes required by law to be withheld in respect of the Units subject to this Award no later than the date of the event creating the tax liability.  In order to comply with all applicable federal or state income tax laws or regulations, the Company may take such action as it deems appropriate to ensure that all applicable taxes are withheld or collected from Participant.  In the Company’s discretion, such tax obligations may be paid in whole or in part by having the Company withhold a portion of the shares of Common Stock otherwise to be delivered valued at their Fair Market Value, or to the extent permitted by law, deducting any such tax obligations from any payment of any kind otherwise due to Participant, including wages or other cash compensation.  Unless Participant provides advance notice to the Company in accordance with its requirements and Participant pays, or otherwise properly instructs the Company to withhold, amounts sufficient for Participant's tax withholding obligations, the Company shall have the right, but not the obligation, to withhold shares of common stock to pay such tax obligations.

9.409A.  In the event that the Committee determines that any amounts will be immediately taxable to Participant under Section 409A of the Code and related Department of Treasury guidance (or subject Participant to a penalty tax) in connection with the grant or vesting of the Restricted Stock Units or any provision of this Award or the Plan, the Company may (i) adopt such amendments to this Award (having prospective or retroactive effect), that the Committee determines to be necessary or appropriate to preserve the intended tax treatment of the Units and/or (ii) take such other actions as the Committee determines to be necessary or appropriate to comply with the requirements of Section 409A of the Code and related Department of Treasury guidance, including such Department of Treasury guidance and other interpretive materials as may be issued after the date on which such Units were granted.

10.Conditions for Issuance of Shares.  The Company shall not be required to deliver any shares of Common Stock upon vesting of any Units until (i) such shares of Common Stock have been admitted to listing on all stock exchanges on which the Common Stock is then listed and (ii) the requirements of any federal or state securities laws, rules or regulations or other laws or rules (including the rules of any securities exchange) as may be determined by the Company to be applicable are satisfied, provided however, that the Company may only so delay delivery of shares of Common Stock to the extent that such deferral complies with the provisions of Section 409A of the Code and related Department of Treasury guidance.  Except as provided in the preceding sentence, in no event will shares of Common Stock be delivered later than the date that is two and one-half (2½) months from the end of the calendar year in which the applicable Restricted Stock Units vest.  Any certificates representing shares of Common Stock delivered under this Award may contain such legends as counsel for the Company shall consider necessary to comply with any applicable law.

11.Notices.  Any written notices provided for in this Award that are sent by mail shall be deemed received three business days after mailing, but not later than the date of actual receipt.  Notices shall be directed, if to Participant, at the Participant’s address indicated by the Company’s records and, if to the Company, at the Company’s principal executive office.

12.Miscellaneous.  The right of Participant to receive shares of Common Stock pursuant to this Award is an unfunded and unsecured obligation of the Company.  The Participant shall have no rights under this Award other than those of an unsecured general creditor of the Company.  Subject to the restrictions on transfer set forth herein, this Award shall be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

13.Governing Law.  This Award shall be governed by and construed in accordance with the laws of the State of Delaware and applicable federal law, without regard to applicable conflicts of laws.

14.Severability.  If one or more of the provisions of this Award shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or revised retroactively to permit this Award to be construed so as to foster the intent of this Award and the Plan.

2

EX-10.8(B)

Dyax Corp. has requested that portions of this document be accorded confidential treatment pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.

Exhibit 10.8(b)

CONFIDENTIAL DOCUMENT

AMENDMENT TO

SERVICES AGREEMENT

(Specialty Pharmacy and Hub Services)

This Amendment to the Services Agreement (this “Amendment”) is made and entered into as of February 15, 2011 (the “Amendment Effective Date”), by and between DYAX CORP. (“Dyax”) and US BIOSERVICES CORPORATION (“US Bio”).

WHEREAS, Dyax and US Bio entered into that certain Services Agreement, dated November 19, 2009 (the “Agreement”), pursuant to which US Bio is to provide services to Dyax in connection with the product Kalbitor®; and

WHEREAS, pursuant to and in accordance with Section 17.5 of the Agreement, the parties desire to amend to the Agreement to include terms and conditions relating to the distribution of Patient-Supplied Product (defined below).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.           Defined Terms.

Any capitalized terms that are used in this Amendment but not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

2.           Amendments.

A.   Additional Definition.  A new definition is hereby added to as Section 1.16 of the Agreement as follows:

1.16 “Patient-Supplied Product” shall mean Product that is shipped to a Patient’s home and then taken by a Patient to a healthcare provider treatment site to be administered by a health care provider in accordance with the requirements of the Product label.

B. Additional Dyax Representations and Warranties.   A new paragraph is hereby added to the end of Section 13.7 of the Agreement as follows:   Dyax Representations and Warranties Related to Patient-Supplied Product.  Dyax hereby authorizes US Bio to ship Product to a Patient’s home in accordance with the requirements and processes set forth in the Statement of Work attached as Exhibit B-3.  In connection with such activities, Dyax hereby represents and warrants to US Bio that: [*****]

C.   Additional Indemnification Obligations by Dyax.  A new paragraph is hereby added to the end of Section 14.2(b) of the Agreement as follows:   Indemnification by Dyax related to Patient-Supplied Product.  Dyax shall indemnify, defend, and hold harmless the US Bio Indemnitees against any Losses incurred by or imposed upon US Bio Indemnitees or any of them in connection with any claims, suits, demands, investigations, enforcement actions, or judgments (including any governmental or regulatory agency) which arise out of: (a) a breach of the Dyax Representations and Warranties Related to Patient-Supplied Product contained in the second paragraph of Section 13.7; (b) any claim arising out of the administration of Product , including without limitation, bodily injury or death to a patient and claims for off-label promotion; in each case except for those Losses for which US Bio has an obligation to indemnify Dyax pursuant to Section 14.2(a).

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

D.   Additional Exhibit B-3.  A new Statement of Work outlining the requirements and processes applicable to Patient-Supplied Product shall be added as Exhibit B-3 to the Agreement pursuant to Section 8.1, and the services described in the new Statement of Work shall be included in the defined term “Services” under the Agreement.

3.           No Other Amendments.

Except as expressly amended hereby, the Agreement, as originally executed and delivered, remains in full force and effect.  It is agreed by the parties that all references to the Agreement hereafter made by them in any document or instrument delivered pursuant to or in connection with the Agreement shall be deemed to refer to the Agreement as amended hereby.

4.           Entire Agreement.

This Amendment and the Agreement embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter.

5.           Counterparts.

This Amendment may be executed in multiple counterparts, each of which will be considered an original, but which together will constitute one and the same document.

Page 2 of 3

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 Amendment to be executed by their duly authorized officers or representatives as of the Amendment Effective Date.

US Bioservices Corporation		Dyax Corp.
By:	/s/ Craig Miller	By:	/s/ Terese Murphy
Name:	Craig Miller	Name:	Terese Murphy
Title:	President	Title:	Associate Director, Market Access

Page 3 of 3

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

EX-10.8(C)

Dyax Corp. has requested that portions of this document be accorded confidential treatment pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.

Exhibit 10.8(c)

CONFIDENTIAL DOCUMENT

AMENDMENT TO

SERVICES AGREEMENT

(Specialty Pharmacy and Hub Services)

This Amendment to the Services Agreement (this “Amendment”) is made and entered into as of May 31, 2011 (the “Amendment Effective Date”), by and between DYAX CORP. (“Dyax”) and US BIOSERVICES CORPORATION (“US Bio”).

WHEREAS, Dyax and US Bio entered into that certain Services Agreement, dated November 19, 2009 (the “Agreement”), pursuant to which US Bio is to provide services to Dyax in connection with the product Kalbitor® (ecallantide); and

WHEREAS, pursuant to and in accordance with Section 8.1 of the Agreement, the parties desire to add a new Statement of Work to the Agreement to cover additional services provided by US Bio as of the Amendment Effective Date in the manner and upon the terms and conditions set forth below.

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

1.           Defined Terms.

Any capitalized terms that are used in this Amendment but not otherwise defined herein shall have the meanings ascribed to them in the Agreement.

2.           Amendments.

In accordance with Section 17.5 of the Agreement, Exhibit B-5 is hereby added to the Agreement and attached hereto.

3.           No Other Amendments.

Except as expressly amended hereby, the Agreement, as originally executed and delivered, remains in full force and effect.  It is agreed by the parties that all references to the Agreement hereafter made by them in any document or instrument delivered pursuant to or in connection with the Agreement shall be deemed to refer to the Agreement as amended hereby.

4.           Entire Agreement.

This Amendment and the Agreement embody the entire agreement and understanding between the parties hereto with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter.

5.           Counterparts.

This Amendment may be executed in multiple counterparts, each of which will be considered an original, but which together will constitute one and the same document.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers or representatives as of the Amendment Effective Date.

US Bioservices Corporation		Dyax Corp.
By:	/s/ Craig Miller	By:	/s/ Ivana Magovčević-Liebisch
Name:	Craig Miller	Name:	Ivana Magovčević-Liebisch
Title:	President	Title:	Executive Vice President Corporate Development and General Counsel

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

EXHIBIT B-5

Statement of Work for Kalbitor Access Expanded Copay Program

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

EX-10.14(C)

Exhibit 10.14(c)

THIRD AMENDMENT

TO

JOINT DEVELOPMENT AND LICENSE AGREEMENT

This THIRD AMENDMENT (the "Third Amendment"), dated as of December 26, 2011 (the "Third Amendment Date"), is entered into by and between Dyax Corp., with effective offices at 300 Technology Square, Cambridge, Massachusetts 02139, U.S.A. ("Dyax"), and DefianteFarmacêutica S.A., with registered offices at Rua da Alfândega, n. 78, 3° andar, 9000-059, Funchal, Madeira, Portugal ("Defiante").  This Third Amendment further amends that certain Joint Development and License Agreement (the "Original Agreement"), dated effective as of June 18, 2010 (the "Effective Date"), as amended by the First Amendment to Joint Development and License Agreement (the "First Amendment”), dated December 21, 2010 (the "First Amendment Date") and the Second Amendment to Joint Development and License Agreement (the "Second Amendment"), dated May 21, 2011 (the "Second Amendment Date").  The Original Agreement, as amended by the First Amendment and the Second Amendment, is referred to herein as the "Amended Agreement."   All capitalized terms not otherwise defined in this Third Amendment shall be as defined in the Amended Agreement.

WHEREAS, under the terms of the Amended Agreement, Dyax has granted Defiante certain rights to Develop, Manufacture and Commercialize products incorporating DX-88 for the treatment of angioedemas and certain other indications; and

WHEREAS, the parties wish to amend certain terms and conditions applicable to Defiante's rights and obligations under the Amended Agreement.

NOW, THEREFORE, in consideration of the promises and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Dyax and Defiante hereby agree as follows:

1. Exhibit A of the Amended Agreement is hereby amended to delete Taiwan, South Korea and Singapore from the Defiante Territory. Notwithstanding anything to the contrary contained in the Amended Agreement from and after the Third Amendment Date, Defiante shall have no further rights or obligations with respect to the Product in Taiwan, South Korea and Singapore, including any obligations to pay milestones, Development Cost or other compensation or reimbursement whatsoever in relation toTaiwan, South Korea and Singapore.

2. Except as expressly provided otherwise in this Third Amendment, all provisions of the Amended Agreement remain in full force and effect without modification and all such terms are hereby ratified and confirmed.

3. From and after the Third Amendment Date, the term "Agreement" as used in the Original Agreement shall mean the Original Agreement, as amended by the First Amendment, the Second Amendment and this Third Amendment.

4. This Third Amendment may be executed in one or more counterparts, each of which shall be deemed an original and all of which shall constitute one and the same instrument.

IN WITNESS WHEREOF, Dyax and Defiante have caused this Third Amendment to be duly executed by their authorized representatives under seal, effective as of the Third Amendment Date.

DYAX CORP.
By:	/s/ Ivana Magovcevic-Liebisch
	Name: Ivana Magovcevic-Liebisch
	Title: Executive Vice President, Chief Business Officer and General Counsel
DEFIANTE FARMACÊUTICA S.A.,
By:	/s/ Paulo Viegas
	Name: Paulo Viegas
	Title: CEO

EX-10.18(B)

Exhibit 10.18(b)

FIRST AMENDMENT TO LEASE

This First Amendment to Lease (“Amendment”) is made and entered into as of this 4th  day of November, 2011 (the “Effective Date”) by and between NetView 5 and 6 LLC (“Landlord”) and Dyax Corp (“Tenant”).

BACKGROUND

A.Landlord and Tenant entered into an office lease dated July 14, 2011 (the “Lease”) for premises (the “Original Premises”) containing approximately 44,568 rentable square feet on the 2nd and 3rd floors of the building located at 55 Network Drive, Burlington, Massachusetts (the “Building”), as shown on Exhibits A and A-1 to the Lease.

B.Tenant desires, and Landlord has agreed, to enlarge the Original Premises by the inclusion of other rentable space in the Building on the third floor, shown cross-hatched as the “Additional Tenant Space” on the plan attached hereto as Exhibit A  (the “Additional Space”).

NOW THEREFORE, in consideration of the Additional Space and the mutual agreements contained herein, the parties agree as follows:

1.The recitals set forth above are hereby incorporated by reference.  Capitalized terms used herein without definition shall have the meanings ascribed to them in the Lease.

2.As of the Effective Date, the Original Premises shall be enlarged by the inclusion of the Additional Space. The Additional Space shall be leased to Tenant in “as-is” condition, on all the same terms and conditions of the Lease, as hereby amended, for a term commencing on the Effective Date and running co-terminously with the Term of the Lease, to expire on the Expiration Date.  Tenant acknowledges that Landlord has no obligation to construct or prepare the Additional Space for Tenant’s use or occupancy and that Landlord has made no representations or warranties as to the condition or suitability of the Additional Space for Tenant’s use.

3.In implementation of the inclusion of the Additional Space, Section 1.1 of the Lease, the Reference Data, shall be amended as follows, as of the Effective Date:

a.   The definition of “Premises” is deleted and the following is substituted in its place:

“A portion of the 3rd floor of the Building comprised of approximately 44,343 rentable square feet and a portion of the 2nd floor of the Building comprised of approximately 397 rentable square feet, substantially as shown on Exhibit A and Exhibit A-1 attached to the Lease.”

b.   The definition of the “Rentable Floor Area of Premises” is deleted and the following is substituted in its place:  “44,740 rentable square feet.”

Exhibit 10.18(b)

c.   The definition of the “Tenant’s Percentage” is deleted and “34.23%” is substituted in its place.

d.   The rent schedule for the Annual Fixed Rent Rate1 is deleted and the following is substituted in its place:

Commencement Date – Rent Commencement Date:	$0.00
Rent Commencement Date through 2nd Lease Year:	$1,386,936.00
3rd and 4th Lease Years:	$1,498,788.00
5th and 6th Lease Years:	$1,588,272.00
7th and 8th Lease Years:	$1,677,756.00
9th and 10th Lease Years:	$1,767,228.00

e.   The rent schedule for the Monthly Fixed Rent Rate is deleted and the following is substituted in its place:

Commencement Date – Rent Commencement Date:	$0.00
Rent Commencement Date through 2nd Lease Year	$115,578.00
3rd and 4th Lease Years:	$124,899.00
5th and 6th Lease Years:	$132,356.00
7th and 8th Lease Years:	$139,813.00
9th and 10th Lease Years:	$147,269.00

4.Exhibit A to the Lease is hereby deleted, and Exhibit A attached hereto is substituted in its place.

1 The Annual Fixed Rent Rate and the Monthly Fixed Rent Rate set forth herein are net of electricity charges, which shall be paid for by Tenant during the Term commencing as of the Commencement Date, in accordance with Section 4.2.5 of the Lease.

Exhibit 10.18(b)

5.Landlord and Tenant confirm that the final construction schedule for the Base Building Work and the Tenant’s Work has been approved by the parties. The parties agree that while Section 3.2(c) of the Lease contemplates that the final approved construction schedule will be attached to the Lease as Exhibit I, the full size copy is too large to attach to the Lease and a reduced copy is illegible.  Accordingly, all references in the Lease to “Exhibit I” and the “Construction Schedule” shall mean that certain construction schedule prepared by Jones Lang LaSalle Construction, entitled “Project: Dyax Preliminary Schedule 11 Dated 9/22/11,” a full sized copy of which is on file in Landlord’s management office.

6.This Amendment may be executed in multiple counterparts, any one of which shall constitute a complete agreement binding on all parties.

7.As hereby amended, the Lease is ratified and confirmed in all respects and shall continue in full force and effect.

IN WITNESS WHEREOF, Landlord and Tenant have each duly executed this Amendment as of the Effective Date.

NETVIEW 5 AND 6 LLC, a Delaware limited liability company

By: NetView Investments LLC,

a Delaware limited liability company,

its Manager

By: NetView Holdings LLC,

a Massachusetts limited liability company, its Manager

By: Nordblom Development Company, Inc.,

a Massachusetts corporation,

its Manager

By: /s/ Ogden Hunnewell

Name: Ogden Hunnewell

Title: E.V.P.

DYAX CORP

By: /s/ Mark Sawyer

Its: SVP Tech. Ops.

Hereunto duly authorized

Exhibit 10.18(b)

EX-10.19

Dyax Corp. has requested that portions of this document be accorded confidential treatment pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934, as amended.

Exhibit 10.19

CONFIDENTIAL DOCUMENT

EXECUTION VERSION

LOAN AGREEMENT

Dated as of December 29, 2011

Between

LFRP INVESTORS, L.P.,

as Lender,

and

DYAX CORP.,

as Borrower

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

TABLE OF CONTENTS

Page

ARTICLE I CERTAIN DEFINITIONS  1

SECTION 1.01. Definitions  1

SECTION 1.02. Interpretation; Headings  17

ARTICLE II COMMITMENT; DISBURSEMENT; FEES  18

SECTION 2.01. Commitment to Lend and Borrow  18

SECTION 2.02. Notice of Borrowing  18

SECTION 2.03. Disbursement and Borrowing  19

SECTION 2.04. Commitment Not Revolving  19

ARTICLE III REPAYMENT  19

SECTION 3.01. Amortization  19

SECTION 3.02. Optional Prepayment; Mandatory Prepayment  20

SECTION 3.03. Illegality  21

ARTICLE IV INTEREST; EXPENSES  21

SECTION 4.01. Interest Rate  21

SECTION 4.02. Lockbox Account  23

SECTION 4.03. Interest on Late Payments  25

SECTION 4.04. Initial Expenses  25

SECTION 4.05. Administration and Enforcement Expenses  25

ARTICLE V TAXES  26

SECTION 5.01. Taxes  26

SECTION 5.02. Receipt of Payment  27

SECTION 5.03. Other Taxes  27

SECTION 5.04. Indemnification  27

SECTION 5.05. Loans Treated As Indebtedness  27

SECTION 5.06. Registered Obligation  28

ARTICLE VI PAYMENTS; COMPUTATIONS  28

SECTION 6.01. Making of Payments  28

SECTION 6.02. Setoff or Counterclaim  29

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-i-

Page

ARTICLE VII CLOSING  DOCUMENTATION  29

SECTION 7.01. Tranche A Loan Closing Documentation  29

SECTION 7.02. Tranche B Funding Documentation  30

SECTION 7.03. Payoff Letter, Etc  32

ARTICLE VIII REPRESENTATIONS AND WARRANTIES  32

SECTION 8.01. Representations and Warranties of Borrower  32

SECTION 8.02. Survival of Representations and Warranties  40

ARTICLE IX AFFIRMATIVE COVENANTS  41

SECTION 9.01. Maintenance of Existence  41

SECTION 9.02. Use of Proceeds  41

SECTION 9.03. Financial Statements and Information  41

SECTION 9.04. Books and Records  42

SECTION 9.05. Inspection Rights; Access  42

SECTION 9.06. Maintenance of Insurance and Properties  42

SECTION 9.07. Governmental Authorizations  43

SECTION 9.08. Compliance with Laws and Contracts  43

SECTION 9.09. Plan Assets  43

SECTION 9.10. Notices  43

SECTION 9.11. Payment of Taxes  44

SECTION 9.12. Waiver of Stay, Extension or Usury Laws  44

SECTION 9.13. Additional Covenants of Borrower  44

SECTION 9.14. [*****]  44

SECTION 9.15. Further Assurances  44

SECTION 9.16. Termination of Existing Loan Agreement; Collateral  45

ARTICLE X NEGATIVE COVENANTS  47

SECTION 10.01. Activities of Borrower  47

SECTION 10.02. Merger; Sale of Assets  47

SECTION 10.03. Liens  48

SECTION 10.04. Investment Company Act  49

SECTION 10.05. Limitation on Additional Indebtedness  49

SECTION 10.06. Limitation on Transactions with Controlled Affiliates  50

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-ii-

Page

SECTION 10.07. ERISA  50

SECTION 10.08. Restricted Payments  51

SECTION 10.09. Prepayment of Indebtedness  51

ARTICLE XI EVENTS OF DEFAULT  52

SECTION 11.01. Events of Default  52

SECTION 11.02. Default Remedies  54

SECTION 11.03. Right of Set-off; Sharing of Set-off  55

SECTION 11.04. Rights Not Exclusive  55

ARTICLE XII INDEMNIFICATION  55

SECTION 12.01. Funding Losses  55

SECTION 12.02. [Reserved]  55

SECTION 12.03. Other Losses  56

SECTION 12.04. Assumption of Defense; Settlements  56

ARTICLE XIII MISCELLANEOUS  57

SECTION 13.01. Assignments  57

SECTION 13.02. [Reserved]  58

SECTION 13.03. Successors and Assigns  58

SECTION 13.04. Notices  58

SECTION 13.05. Entire Agreement  60

SECTION 13.06. Modification  60

SECTION 13.07. No Delay; Waivers; etc  60

SECTION 13.08. Severability  60

SECTION 13.09. Determinations  61

SECTION 13.10. Replacement of Note  61

SECTION 13.11. Governing Law  61

SECTION 13.12. Jurisdiction  61

SECTION 13.13. Waiver of Jury Trial  61

SECTION 13.14. Waiver of Immunity  61

SECTION 13.15. Counterparts  61

SECTION 13.16. Limitation on Rights of Others  62

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-iii-

Page

SECTION 13.17. No Partnership  62

SECTION 13.18. Survival  62

SECTION 13.19. Patriot Act Notification  62

ARTICLE XIV SUBORDINATION  62

SECTION 14.01. Obligations Subordinated to Indebtedness Under the Existing Loan Agreement  62

SECTION 14.02. No Payment on Obligations in Certain Circumstances; Payment Held in Trust  62

SECTION 14.03. Payment Over of Proceeds upon Dissolution, Etc  63

SECTION 14.04. Subrogation  63

SECTION 14.05. Obligations of Borrower Unconditional  64

SECTION 14.06. Reliance on Judicial Order or Certificate of Liquidating Agent  64

SECTION 14.07. Lender’s Relation to Senior Indebtedness  65

SECTION 14.08. This Section Not To Prevent Events of Default  65

-iv-

Exhibits
Exhibit A	Form of Business Report
Exhibit B	Form of Lockbox Agreement
Exhibit C	Form of Quarterly Report
Exhibit D	Form of Security Agreement
Exhibit E	Form of Tranche A Note
Exhibit F	Form of Tranche B Note
Exhibit G	Form of Notice of Borrowing
Exhibit H	Lockbox Instructions
Exhibit I-1	Form of Closing Date Edwards Wildman Palmer LLP Opinion
Exhibit I-2	Form of Tranche B Closing Date Edwards Wildman Palmer LLP Opinion
Exhibit J	Form of Wolf, Greenfield & Sacks, P.C. Opinion
Exhibit K	Form of Lando & Anastasi, LLP Opinion
Exhibit L	Form of Payoff Letter
Exhibit M	Form of Assignment and Acceptance

Schedules
Schedule A	[*****]
Schedule B	[*****]
Schedule C	[*****]
Schedule D	[*****]
Schedule 8.01(k)	Indebtedness
Schedule 8.01(m)	Subsidiaries
Schedule 8.01(r)(i)	LFRP Joint Patents Owned by Borrower
Schedule 8.01(r)(ii)	[*****]
Schedule 8.01(t)	Borrower’s Principal Place of Business and Chief Executive Office
Schedule 8.01(u)(ii)	All LFRP Patents
Schedule 8.01(u)(iii)	[*****]
Schedule 8.01(u)(iv)	[*****]
Schedule 8.01(u)(vii)	[*****]
Schedule 8.01(u)(viii)	[*****]
Schedule 8.01(u)(ix)	[*****]
Schedule 8.01(u)(x)	[*****]
Schedule 8.01(u)(xi)	[*****]
Schedule 8.01(v)(i)	[*****]
Schedule 8.01(v)(iii)	[*****]
Schedule 8.01(v)(v)	[*****]
Schedule 8.01(v)(vi)	[*****]
Schedule 8.01(v)(vii)	[*****]
Schedule 8.01(v)(viii)	[*****]
Schedule 8.01(v)(x)	[*****]
Schedule 8.01(v)(xi)	[*****]
Schedule 8.01(w)	[*****]
Schedule 10.03(a)	[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-v-

This LOAN AGREEMENT (the “Agreement”), dated as of December 29, 2011, is entered into by and between LFRP INVESTORS, L.P., a Delaware limited partnership (the “Lender”), as Lender, and DYAX CORP., a Delaware corporation, as Borrower.  The Lender and Borrower are hereinafter referred to collectively as the “Parties” or individually as a “Party.”

W I T N E S S E T H:

WHEREAS, Borrower desires to borrow from the Lender and the Lender desires to lend to Borrower, the Loans;

WHEREAS, on the terms and subject to the conditions set forth herein, Borrower shall borrow from the Lender and the Lender shall lend to Borrower (i) the Tranche A Loan on the Closing Date and (ii) the Tranche B Loan on the Tranche B Closing Date;

Borrower is the owner of the LFRP Intellectual Property (as hereinafter defined) with respect to the LFRP (as hereinafter defined);

WHEREAS, Borrower has the right to payments under the License Agreements (as hereinafter defined); and

WHEREAS, Borrower will use the net proceeds from the Tranche A Loan and the Tranche B Loan in accordance with Section 9.02.

NOW, THEREFORE, in consideration of the mutual promises of the Parties, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, it is mutually agreed by the Parties as follows:

ARTICLE I

CERTAIN DEFINITIONS

SECTION 1.01.Definitions.  As used herein:

“Affiliate” means any Person that controls, is controlled by, or is under common control with another Person.  For purposes of this definition, “control” shall mean (i) in the case of corporate entities, direct or indirect ownership of at least fifty percent (50%) of the stock or shares having the right to vote for the election of directors, and (ii) in the case of non-corporate entities, direct or indirect ownership of at least fifty percent (50%) of the equity interest with the power to direct the management and policies of such non-corporate entities.

“Agreement” means this Loan Agreement (as amended, restated, supplemented or otherwise modified from time to time).

“Applicable Included Receipts” means (i) prior to September 30, 2016, the sum of (a) 75.0% of the first $15.0 million in annual Included Receipts, (b) 25.0% of annual Included Receipts greater than $15.0 million and (ii) after September 30, 2016, 90.0% of all Included Receipts until the later of the Maturity Date and the complete amortization of the Loans under Section 3.01.  “Applicable Included Receipts” shall exclude FTE Payments so long as the aggregate principal amount of the Loans prepaid pursuant to Section 3.01(a) exceeds the aggregate principal amount, if any, added to the Loans pursuant to Sections 4.01(a) and 4.01(b) (as calculated on an annual basis for each calendar year) which shall be determined at the end of any applicable calendar year and shall be applied to amortization in accordance with Section 3.01(a); provided that Borrower may, at its option, include such costs in Applicable Included Receipts on a quarterly basis to pay scheduled amortization in accordance with Section 3.01(a).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

“Assignee” has the meaning specified in Section 13.01(b).

“Assignment and Acceptance” has the meaning specified in Section 13.01(c).

“Borrower” means Dyax Corp.

“Borrower Documents” means the certificate of incorporation of Borrower certified by the Delaware Secretary of State and the by-laws of Borrower (and any similar documentation of any Subsidiary of Borrower which becomes party to the Loan Documents).

“Business Day” means any day, except a Saturday, Sunday or other day on which commercial banks in New York are required or authorized by law to close.

“Business Report” means a report in a form agreed upon between the parties and based on Exhibit A, providing information on current activities relating to the licensing of the LFRP Intellectual Property as part of the LFRP.

“Capital Stock” of any Person means any and all shares, interests, ownership interest units, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any preferred stock, but excluding any debt securities convertible into such equity.

[*****]

“[*****] Agreement” means the [*****]Agreement dated [*****]between [*****] and Borrower.

“[*****]Payments” means the specified payments that become due and payable to [*****] pursuant to the [*****] Agreement, as further described in Schedule 8.01(r)(ii).

“Change of Control” means:

                (i)the acquisition by any Person or group (within the meaning of Sections 13(d)(3) or 14(d)(2) of the Exchange Act) (other than any trustee or other fiduciary holding securities under an employee benefit plan of Borrower or any entity controlled, directly or indirectly, by Borrower) of beneficial ownership of any capital stock of Borrower, if after such acquisition, such Person or group would be the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of Borrower representing more than fifty percent (50%) of the combined voting power of Borrower then outstanding securities entitled to vote generally in the election of directors; or

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-2-

                (ii)during any period of two consecutive years, individuals who at the beginning of such period constitute the Board of Directors of Borrower (together with any new directors (other than a director designated by a Person who has entered into an agreement with Borrower to effect a transaction described in clause (i) or (ii) of this definition of “Change of Control”), whose election by such Board of Directors or nomination for election by Borrower’s shareholders, as applicable, was approved by a vote of a majority of the directors then still in office who either were directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute at least a majority of the Board of Directors of Borrower then in office.

“Closing Date” means December 29, 2011.

“Code” means the Internal Revenue Code of 1986, as amended.

“Co-Development Agreement” means any agreement between Borrower and/or any of its Subsidiaries and one or more third parties relating to the discovery, research, development, manufacturing or commercialization of a product or compound (whether or not derived from phage display) (i) which would be commonly viewed in the industry as being a co-development agreement, (ii) under which Borrower and/or any of its Subsidiaries takes a substantially different commercial role than under an agreement forming part of the LFRP and (iii) which has two or more of the following aspects:  (A) shared ownership of product-related intellectual property or sole ownership of product-related intellectual property by one party with an exclusive license to the product-related intellectual property to the other party, (B) shared management control over product development, (C) shared financial obligations, and/or (D) shared commercialization rights to the product.  Schedule A sets forth a complete list of Co-Development Agreements in existence as of the Closing Date.

“Co-Developed Product” means any product or compound (whether or not derived from phage display) which is the subject of a Co-Development Agreement and in relation to which Borrower has committed on a contingent or non-contingent basis its own financial resources and/or has committed non-reimbursed human resources to discover, research, develop, manufacture or commercialize such product or compound.

“Collateral” means, at and after the time at which Borrower executes and delivers the Security Agreement, the meaning specified in the Security Agreement, and prior thereto, the Loan Collateral.

“Company Concentration Account” means a segregated account established and maintained at the Lockbox Bank pursuant to the terms of the Lockbox Agreement and this Agreement.  The Company Concentration Account shall be the account into which funds in the Lockbox Account which are payable to Borrower pursuant to this Agreement are swept in accordance with the terms of this Agreement.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-3-

“Company LFRP Methods and Libraries” shall have the meaning set forth in Section 8.01(u)(iii).

“Confidentiality Agreement” means that certain confidentiality agreement, dated December 3, 2010, between Borrower and Lender’s affiliate, Cowen Healthcare Royalty Management, LLC.

“Contract” has the meaning specified in Section 8.01(e).

“Contract Party” means any party to a License Agreement or In License.

“Controlled Affiliate” with respect to any Person means any Person directly or indirectly controlling, controlled by or under common control with, such Person.  For the purposes of this Agreement, “control” (including, with correlative meaning, the terms “controlling” and “controlled”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities, by contract or otherwise.

“Default” means any condition or event which constitutes an Event of Default or which, with the giving of notice or the lapse of time or both would, unless cured or waived, become an Event of Default.

“Default Rate” means, for any period for which an amount is overdue, a rate per annum equal for each day in such period to the lesser of (i) 2% plus the rate otherwise applicable to the Loans as provided the Section 4.01 and (ii) the maximum rate of interest permitted under applicable Law.

“Deficiency Amount” has the meaning specified in Section 4.01(b).

“Discrepancy Notice” has the meaning specified in Section 4.02(e).

“Dispute” has the meaning specified in Section 8.01(u)(ix).

“Disqualified Capital Stock” of any Person means any class of Capital Stock of such Person that, by its terms, or by the terms of any related agreement or of any security into which it is convertible, puttable or exchangeable, is, or upon the happening of any event or the passage of time would be, required to be redeemed by such Person, whether or not at the option of the holder thereof, or matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, in whole or in part, on or prior to the date which is 91 days after the final maturity date of the Loans; provided, however, that any class of Capital Stock of such Person that, by its terms, authorizes such Person to satisfy in full its obligations with respect to the payment of dividends or upon maturity, redemption (pursuant to a sinking fund or otherwise) or repurchase thereof or otherwise by the delivery of Capital Stock that are not Disqualified Capital Stock, and that is not convertible, puttable or exchangeable for Disqualified Capital Stock or Indebtedness, will not be deemed to be Disqualified Capital Stock so long as such Person satisfies its obligations with respect thereto solely by the delivery of Capital Stock that are not Disqualified Capital Stock.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-4-

“Dollars” or “$” means lawful money of the United States of America.

“Duplicate Libraries” has the meaning specified in Section 9.16(b)(x).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and the regulations promulgated thereunder.

“ERISA Affiliate” at any time means each trade or business (whether or not incorporated) that would, at any time, be treated, together with Borrower or any of their respective Subsidiaries, as a single employer under Title IV or Section 302 of ERISA or Section 412 of the Code.

“Event of Default” has the meaning specified in Section 11.01.

“Exchange Act” means the Securities Exchange Act of 1934 and the regulations promulgated thereunder.

“Excluded Agreements” means Co-Development Agreements, Internally Developed Product Agreements and Licensed Product Agreements.  Schedule B sets forth a complete list of all Excluded Agreements in existence as of the Closing Date.

“Excluded Payments” means (i) payments under any Excluded Agreement or (ii) payments relating to or arising out of any activities relating to the research, development, manufacturing or commercialization of any Excluded Product.

“Excluded Product” means any product or compound (whether or not derived from phage display) which, at any point, was, is or becomes included in Borrower’s “pipeline” as an internal product candidate.  An Excluded Product is either an Internally Developed Product, an In-Licensed Product or a Co-Developed Product.  Schedule B sets forth a complete list of all Excluded Products in existence as of the Closing Date.  Notwithstanding the foregoing, Borrower acknowledges and agrees that under the terms of certain License Agreements, Contract Parties and their sublicensees may develop products that are the same as or similar to Excluded Products and that such same or similar products shall be not be considered Excluded Products under this Agreement.

“Excluded Taxes” means (i) any Taxes imposed on (or measured by) net income (including branch profits Taxes) of the Lender, or any franchise or similar Taxes imposed in lieu thereof, by any Governmental Authority or taxing authority by the jurisdiction under the laws of which the Lender is organized or any jurisdiction in which the Lender is a resident, has an office, conducts business or has another connection and (ii) in the case of a Foreign Lender, any withholding tax that is imposed on amounts payable to such Foreign Lender (a) under law in effect at the time such Foreign Lender becomes a party to this Agreement (or designates a new Office), except to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new Office (or assignment), to receive additional amounts from Borrower with respect to such withholding tax pursuant to Section 5.01(a) or (b) that is attributable to such Foreign Lender’s failure to comply with Section 5.01(b).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-5-

“Existing Loan” means Indebtedness of the Borrower incurred pursuant to the Existing Loan Agreement.

“Existing Loan Agreement” means the Amended and Restated Loan Agreement, dated as of March 18, 2009, by and between Borrower and Vanderbilt Royalty Sub L.P. (assignee of Cowen Healthcare Royalty Partners, L.P.).

“Existing Loan Collateral” means “Collateral” (as such term is defined in the Existing Security Agreement).

“Existing Loan Prepayment Amount” means, on any date of determination, the amount that is required to repay in full all principal, interest, premium, if any, and other amounts outstanding or otherwise payable under the Existing Loan Agreement on such date.

"Existing Loan Prepayment Date" means the date on which the Existing Loan shall cease to be outstanding or the Existing Loan Agreement shall cease to be in full force and effect.

“Existing Loan Security Agreement” means the Security Agreement, dated as of August 5, 2008, as amended and restated as of March 18, 2009, between Vanderbilt Royalty Sub L.P. (as assignee of Cowen Healthcare Royalty Partners, L.P.) and Borrower.

“FDA” means the United States Food and Drug Administration.

“Financial Statements” means, (i) as of the Closing Date, the consolidated balance sheets of Borrower and its Subsidiaries, audited at December 31, 2008, December 31, 2009 and December 31, 2010 and the related consolidated statements of operations and comprehensive loss, cash flows and changes in stockholders’ equity of Borrower and its Subsidiaries audited for the years ended December 31, 2008, December 31, 2009 and December 31, 2010, and the accompanying footnotes thereto, as filed with the SEC, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained therein, and (ii) as of the Tranche B Closing Date, the consolidated balance sheets of Borrower and its Subsidiaries, audited at December 31, 2009, December 31, 2010 and December 31, 2011 and the related consolidated statements of operations and comprehensive loss, cash flows and changes in stockholders’ equity of Borrower and its Subsidiaries audited for the years ended December 31, 2009, December 31, 2010 and December 31, 2011, and the accompanying footnotes thereto, as filed with the SEC, including the Management’s Discussion and Analysis of Financial Condition and Results of Operations contained therein.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-6-

“Foreign Lender” has the meaning specified in Section 5.01(c).

“FTE” means a full-time equivalent included in FTE Payment costs.

“FTE Payments” means all amounts received from a Contract Party under any License Agreement in payment for services relating specifically to Borrower’s and/or any of its Subsidiaries’ costs (or estimated costs) for the discovery, research and/or development of peptides, proteins and antibodies as reasonably calculated based on the subsidization of the full cost of personnel measured in full time equivalents, other comparable cost-based measures or any combination of the foregoing.  For the avoidance of doubt, FTE Payments shall not include any technical milestones that relate specifically to the completion of services, or other related events.

“Funded Research Agreements” has the meaning specified in the definition of License Agreement.

“Future Licenses” means any License Agreement entered into by Borrower and/or any of its Subsidiaries after the date hereof with any other Person, as the same may be amended, supplemented or otherwise modified from time to time.

“GAAP” means the generally accepted accounting principles in the United States of America in effect from time to time.

“Governmental Authority” means any nation or government, any state or other political subdivision thereof, and any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, government.

“Gross Payments” means all Royalties arising under or payable with respect to any License Agreement or In License and any collections, recoveries, payments or other compensation made in lieu thereof and any amounts paid or payable to Borrower and/or any of its Subsidiaries in respect of any License Agreement or In License pursuant to Section 365(n) of the United States Bankruptcy Code.  For the avoidance of doubt, the parties acknowledge and agree that Gross Payments shall specifically exclude all Excluded Payments.

“Guarantee” means, as to any Person:  (a) any obligation, contingent or otherwise, of such Person guaranteeing or having the economic effect of guaranteeing any Indebtedness or other obligation payable or performable by another Person (the “primary obligor”) in any manner, whether directly or indirectly, and including any obligation of such Person, direct or indirect (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation, (ii) to purchase or lease property, securities or services for the purpose of assuring the obligee in respect of such Indebtedness or other obligation of the payment or performance of such Indebtedness or other obligation, (iii) to maintain working capital, equity capital or any other financial statement condition or liquidity or level of income or cash flow of the primary obligor so as to enable the primary obligor to pay such Indebtedness or other obligation, or (iv) entered into for the purpose of assuring in any other manner the obligee in respect of such Indebtedness or other obligation of the payment or performance thereof or to protect such obligee against loss in respect thereof (in whole or in part); or (b) any Lien on any assets of such Person securing any Indebtedness or other obligation of any other Person, whether or not such Indebtedness or other obligation is assumed by such Person.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-7-

“In-Licensed Product” means any product or compound (whether or not derived from phage display) in relation to which Borrower expends a substantial amount of the financial resources to used to discover, research, and develop or commercialize such product or compound, and to which Borrower acquired rights to discover, research, develop, manufacture or commercialize such product or compound (i) under a Licensed Product Agreement or (ii) under an option or similar provision expressly included within any License Agreement where the economic terms applicable to such provision are consistent with Borrower's past practices and would be recognized in the industry as being a bona fide payment for rights.

“In Licenses” means any existing or future agreement pursuant to which Borrower and/or any of its Subsidiaries obtains rights to LFRP Intellectual Property or other rights used in the LFRP.

“Included Receipts” means (a) the Gross Payments less (b) [*****]Payments and Reimbursement Payments, from the first day of the fiscal quarter of Borrower in which the Closing Date occurs; provided that for the first fiscal quarter after the Closing Date the “Included Receipts” were prorated by dividing such Included Receipts by 90 and multiplying by the number of days from and including the Closing Date through the end of such quarter.

“Indebtedness” with respect to any Person means any amount (absolute or contingent) payable by such Person as debtor, borrower, issuer, guarantor or otherwise (i) pursuant to an agreement or instrument involving or evidencing money borrowed, the advance of credit, a conditional sale or a transfer with recourse or with an obligation to repurchase, (ii) pursuant to a lease with substantially the same economic effect as any such agreement or instrument, (iii) pursuant to any equity interest with a mandatory obligation to repurchase, (iv) pursuant to indebtedness of a third party secured by (or for which the holder of such indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien on assets owned or acquired by such Person, whether or not the indebtedness secured thereby has been assumed, (v) pursuant to an interest rate protection agreement, foreign currency exchange agreement or other hedging arrangement, (vi) pursuant to a letter of credit issued for the account of such Person, or (vii) all Guarantees with respect to Indebtedness of the types specified in clauses (i) through (vi) above of another Person.  For the avoidance of doubt, the Indebtedness of any Person shall include the Indebtedness of any other entity to the extent such Person is directly liable therefor as a result of such Person’s ownership interest in or other relationship with such entity, except to the extent the terms of such Indebtedness provide that such Person is not liable therefor.

“Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses, damages, penalties, claims, costs, expenses and disbursements of any kind or nature whatsoever (including the reasonable fees and disbursements of counsel for Indemnitees in connection with any investigative, administrative or judicial proceeding commenced or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a potential party thereto, and any fees or expenses actually incurred by Indemnitees in enforcing the indemnity provided herein), whether direct, indirect or consequential and whether based on any federal, state or foreign laws, statutes, rules or regulations (including securities and commercial laws, statutes, rules or regulations), on common law or equitable cause or on contract or otherwise, imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to or arising out of this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby (including any enforcement of any of the Loan Documents (including any sale of, collection from, or other realization upon any of the Collateral).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-8-

“Indemnified Taxes” has the meaning specified in Section 5.01(a).

“Indemnitee” has the meaning specified in Section 12.03(a).

“Independent Accountants” has the meaning specified in 4.02.

“Insurance Providers” has the meaning specified in Section 9.06.

“Interest Payment Date” means quarterly on January 15, April 15, July 15 and October 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day, beginning on January 15, 2012.

“Internally Developed Product” means any product or compound or molecule which was independently identified by Borrower using its own financial and/or human resources, the intellectual property to which product or compound is owned by Borrower and/or any of its Subsidiaries.

“Internally Developed Product Agreement” means any agreement between Borrower and/or any of its Subsidiaries and one or more third parties pursuant to which Borrower and/or any of its Subsidiaries grants a third party(ies) a license, or an option to obtain a license, to research, develop and/or commercialize one or more Internally Developed Products, with or without its phage display technology and/or library.

“Knowledge” means, with respect to Borrower, as applicable, the knowledge of an officer or senior manager or other person with similar responsibility, regardless of title, of Borrower and/or any of its Subsidiaries 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.

“Law” means any federal, state, local or foreign law, including common law, and any regulation, rule, requirement, policy, judgment, order, writ, decree, ruling, award, approval, authorization, consent, license, waiver, variance, guideline or permit of, or any agreement with, any Governmental Authority.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-9-

“Lender” means the Lender (as defined in the first paragraph hereof) and any assignee under Section 13.01(b).

“Lender Bank Account” means (i) with respect to LFRP Investors, L.P., its account at JP Morgan Chase Bank, N.A. and (ii) with respect to any Assignee which has delivered or caused to be delivered to Borrower an Assignment and Acceptance in accordance with Section 13.01(c), the account set forth in such Assignment and Acceptance (or any other account for which Assignee has provided written notice to Borrower).

“Lender Concentration Account” means a segregated account established for the benefit of the Lender and maintained at the Lockbox Bank pursuant to the terms of the Lockbox Agreement and this Agreement.  The Lender Concentration Account shall be the account into which the funds held in the Lockbox Account which are payable to the Lender pursuant to this Agreement are swept in accordance with the terms of this Agreement and the Lockbox Agreement.

“LFRP” means the program under which Borrower and any of its Subsidiaries enters into License Agreements pursuant to which third parties are granted rights to the LFRP Patents, alone or in combination with LFRP Technology where the purpose is to generate revenue for Borrower and/or any of its Subsidiaries by (i) licensing to a third party rights to use the LFRP Patents and/or the LFRP Technology to identify, isolate, research and/or develop antibodies, peptides and/or proteins, or (ii) performing research on behalf of third parties to identify, isolate, research and/or develop antibodies, peptides and/or proteins.

“LFRP Intellectual Property” means:

                (i)the LFRP Patents and LFRP Technology; and

                (ii)all know-how, materials, trademarks, service marks, trade names and goodwill associated therewith, trade secrets, data, formulations, processes, franchises, inventions, software, copyrights, and all other technology and intellectual property (including biological materials), and all registrations of any of the foregoing, or applications therefor, that are (a) owned by, controlled by, issued to, licensed to, licensed by Borrower and any of its Subsidiaries and (b) necessary to the performance of the LFRP as presently conducted by Borrower and any of its Subsidiaries or as conducted by Borrower and any of its Subsidiaries as of the Closing Date or during the term of the Loans.

“LFRP Know-How” means any biological material, know-how, data, technical or other information related to the LFRP Patents and/or LFRP Libraries that is owned or controlled by Borrower and any of its Subsidiaries as described in Schedule C hereto, together with all updates and improvements provided under any Library License Agreements as of the Closing Date or during the term of the Loans.

“LFRP Libraries” means Borrower’s and/or any of its Subsidiaries’ [*****], Borrower’s and/or any of its Subsidiaries’ [*****], and Borrower’s and any of its Subsidiaries’ [*****], all of which are described in Schedule D hereto, together with all updates and improvements thereto and any other [*****] that are developed or obtained by Borrower and any of its Subsidiaries and are transferred under any Library License Agreement as of the Closing Date or during the term of the Loans.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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“LFRP Patents” means the patents and patent applications identified on Schedule 8.01(u)(ii) and any other patent application and patent that is:  (i) owned by, controlled by, issued to, licensed to or licensed by Borrower and any of its Subsidiaries, or for which Borrower and any of its Subsidiaries has obtained the benefit of a covenant not to sue, as of the Closing Date or during the term of the Loans necessary to the practice of [*****]; or (ii) licensed under the LFRP; and any patents issuing from such applications, together with any reissues, re­examinations, renewals, and extensions thereof, and all continuations, continuations-in-part and divisionals of the applications, in each case throughout the world.

“LFRP Product” means any product owned by one or more third parties that incorporates an antibody, protein or peptide that was identified through the use of LFRP Technology and with respect to which Borrower or any of its Subsidiaries is entitled, under the terms of a License Agreement or In License, to receive Royalties.

“LFRP Technology” means the LFRP Know-How and LFRP Libraries.

“Liabilities” means the liabilities of Borrower excluding deferred revenue.

“Library License Agreements” has the meaning specified in the definition of License Agreement.

“License Agreement” means any existing or future agreement under which:  (i) Borrower and/or any of its Subsidiaries licenses to a third party rights to use the technology claimed in the LFRP Patents to identify, isolate, research and develop antibodies, peptides and/or proteins (“Patent License Agreements”); (ii) Borrower and/or any of its Subsidiaries licenses to a third party rights to use the LFRP Patents and the LFRP Technology to identify, isolate, research and develop antibodies, peptides and/or proteins (“Library License Agreements”); and/or (iii) Borrower and/or any of its Subsidiaries performs funded research services for third parties using the LFRP Patents and the LFRP Technology to identify, isolate, research and develop antibodies, peptides and/or proteins on behalf of such third parties (“Funded Research Agreements”); in each case as they may be amended, supplemented or otherwise modified from time to time.  License Agreements shall specifically exclude Excluded Agreements and In Licenses.

“Licensed Product Agreements” means any product agreement (but excluding phage or phagemid or protein display technology and/or library licenses) between Borrower and/or any of its Subsidiaries and one or more third parties in which Borrower and/or any of its Subsidiaries acquires the right to develop and commercialize a product or compound (whether or not derived from phage display).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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“Lien” means any mortgage or deed of trust, pledge, hypothecation, lien, charge, attachment, set-off, encumbrance or other security interest in the nature thereof (including any conditional sale agreement, equipment trust agreement or other title retention agreement, a lease with substantially the same economic effect as any such agreement or a transfer or other restriction) or other encumbrance of any nature whatsoever.

“Loan Collateral” has the meaning specified in Section 9.16(b).

“Loan Documents” means this Agreement, the Notes, the Security Agreement and the Lockbox Agreement.

“Loans” means, as the context requires, (i) unless and until the Tranche B Funding occurs, from the Closing Date through the Tranche B Funding Date, the Tranche A Loan and all additional loans deemed to be made by the Lender pursuant to Section 4.01(a), treated as a single loan of a single tranche for all purposes and (ii) if the Tranche B Funding occurs, after the Tranche B Funding Date, the Tranche A Loan, the Tranche B Loan and any additional loans deemed to be made by the Lender pursuant to Section 4.01(b), treated as a single loan of a single tranche for all purposes, notwithstanding that the Tranche A Loan and the Tranche B Loan are evidenced by separate notes.

“Lockbox Account” means, collectively, any lockbox and segregated lockbox account established and maintained at the Lockbox Bank pursuant to a Lockbox Agreement and this Agreement.  The Lockbox Account shall be the account into which all payments made in respect of the sale of the LFRP Products are to be remitted and shall be an escrow account.

“Lockbox Agreement” means an agreement between Borrower, the Lender and the Lockbox Bank, substantially in the form, in all material respects, as the form attached hereto as Exhibit B, pursuant to which, among other things, the Lockbox Account, the Lender Concentration Account and the Company Concentration Account shall be established and maintained and any agreement with a successor Lockbox Bank entered into in accordance with Section 4.02(c)(iv).

“Lockbox Bank” means JPMorgan Chase Bank, N.A. or such other bank or financial institution approved by each of Lender and Borrower.

“Material Adverse Effect” means (i) a material adverse effect on the business, results of operations, assets or financial condition of Borrower and its Subsidiaries, taken as a whole, (ii) a material reduction or other material impairment of the value of the [*****] or (iv) an impairment of the ability of Borrower and/or any of its Subsidiaries to perform its obligations under, or affecting the validity or enforceability of, any Loan Document or Borrower Document.

“Material Licenses” means those License Agreements set forth on Schedule 8.01(w)(x).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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“Maturity Date” means the earlier of (i) August 22, 2018 and (ii) the date of any prepayment in full of the Loans.

“No-Call Date” means August 21, 2015.

“Notes” means the Tranche B Note(s) and the Tranche A Note(s).

“Notice of Borrowing” has the meaning specified in Section 2.02(a).

“Notices” has the meaning specified in Section 13.04.

“Obligations” means, without duplication, the Loans and all present and future Indebtedness, taxes, liabilities, obligations, covenants, duties, and debts, owing by Borrower to the Lender, arising under or pursuant to the Loan Documents, including all principal, interest, charges, expenses, fees and any other sums chargeable to Borrower hereunder and under the other Loan Documents (and including any interest, fees and other charges that would accrue but for the filing of a bankruptcy action with respect to Borrower, whether or not such claim is allowed in such bankruptcy action).

“Office” means, with respect to the Lender, its Stamford, Connecticut office, and with respect to any other Lender, the office of such Lender designated as its “Office” in an Assignment and Acceptance, or such other office as may be otherwise designated in writing from time to time by such Lender to Borrower.

“Party” and “Parties” have the meanings specified in the first paragraph hereof.

“Patent License Agreements” has the meaning specified in the definition of License Agreement.

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

“Patriot Act” has the meaning specified in Section 13.19.

“Payoff Letter” has the meaning specified in Section 7.03.

“Permitted Existing Loan Prepayment” has the meaning specified in Section 10.09(a).

“Permitted Liens” has the meaning specified in Section 10.03.

“Person” means an individual, corporation, association, limited liability company, limited liability partnership, partnership, estate, trust, unincorporated organization or a government or any agency or political subdivision thereof.

“Plan” has the meaning specified in Section 10.07(a).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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“Plan Assets” means assets of any (i) employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title I of ERISA, (ii) plan (as defined in Section 4975(e)(1) of the Code) subject to Section 4975 of the Code or (iii) entity whose underlying assets include assets of any such employee benefit plan or plan by reason of the investment by an employee benefit plan or other plan in such entity.

“Pledged Deposit Accounts” has the meaning specified in Section 9.16(b)(viii).

“Prepayment Premium” means (i) on any date prior to the earlier of (A) the Tranche B Funding Date and (B) the Tranche A Maturity Date, that the Tranche A Loan (or any portion thereof) is to be prepaid (other than pursuant to Section 3.02(b)), the aggregate amount of all required interest payments which would have been due on the Tranche A Loan (or the applicable portion), but for such prepayment, through the No-Call Date (assuming, for such purposes, that the Tranche A Loan outstanding on such date remained outstanding through the No-Call Date, notwithstanding anything to the contrary set forth in this Agreement), less all interest payments paid in cash on the Tranche A Loan (or the applicable portion) through the date of prepayment, and (ii) on any date on or after the Tranche B Funding Date that the Loans (or any portion thereof) are to be prepaid, the aggregate amount of all required interest payments which would have been due on the Loans (or the applicable portion), but for such prepayment, through the No-Call Date, less all interest payments paid in cash on the Loans (or applicable portion thereof) through the date of prepayment.

“Proceeding” has the meaning specified in Section 13.12.

“Product” means the products that are the subject of the License Agreements.

“Qualified Capital Stock” of any Person means Capital Stock of such Person other than Disqualified Capital Stock; provided that such Capital Stock shall not be deemed Qualified Capital Stock to the extent sold or owed to a Subsidiary of such Person or financed, directly or indirectly, using funds (i) borrowed from such Person or any Subsidiary of such Person until and to the extent such borrowing is repaid or (ii) contributed, extended, guaranteed or advanced by such Person or any Subsidiary of such Person (including, without limitation, in respect of any employee stock ownership or benefit plan).  Unless otherwise specified, Qualified Capital Stock refers to Qualified Capital Stock of Borrower.

“Quarterly Report” means, with respect to the relevant calendar quarter of Borrower:  (i) a report in a form agreed by the parties and based on Exhibit C showing all payments made by Borrower and/or any of its Subsidiaries and any Contract Party to the Lender under this Agreement during such quarter, such report showing in detail the basis for the calculation of such payments and exclusions; (ii) a reconciliation of such report referred to in clause (i) above to all information and data deliverable to Borrower and/or any of its Subsidiaries by the Contract Parties to any License Agreements, together with relevant supporting documentation, as well as a reconciliation with the consolidated total revenues of Borrower prepared in accordance with GAAP; and (iii) such additional information as the Lender may reasonably request.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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“Register” has the meaning set up in Section 5.06.

“Register Notice” has the meaning specified in Section 5.06(a).

“Regulatory Agency” means a Governmental Authority with responsibility for the regulation of the research, development, marketing or sale of drugs or pharmaceuticals in any jurisdiction, including the FDA, the U.S. National Institutes of Health and the EMEA.

“Reimbursement Payments” means all amounts received from a Contract Party under any Funded Research Agreements in reimbursement on a pure pass-through basis for out-of-pocket costs incurred and invoiced by Borrower and/or any of its Subsidiaries (other than FTE Payments) in connection with the provision of services relating to the identifying, isolating, and researching antibodies, peptides and or proteins.

“Restricted Payment” means any of the following:

                (i)the declaration or payment of any dividend or any other distribution on Capital Stock of Borrower or any Subsidiary or any payment made to the direct or indirect holders (in their capacities as such) of Capital Stock of Borrower or any Subsidiary, including, without limitation, any payment in connection with any merger or consolidation involving Borrower but excluding (a) dividends or distributions payable solely in Qualified Capital Stock or through accretion or accumulation of such dividends on such Capital Stock and (b) in the case of Subsidiaries, dividends or distributions payable to Borrower or to a Subsidiary and pro rata dividends or distributions payable to minority stockholders of any Subsidiary; or

                (ii)the redemption of any Capital Stock of Borrower or any Subsidiary, including, without limitation, any payment in connection with any merger or consolidation involving Borrower but excluding any such Capital Stock held by Borrower or any Subsidiary.

“Royalties” means the gross amount of all royalties, minimum royalty payments, profit payments, license fees, settlement payments, judgments, payments, securities, consideration or any other remuneration of any kind payable or received under any License Agreement or any In License (but in the case of an In License only to the extent such royalties, payments and fees relate to the LFRP) and all accounts (as such term is defined in the New York Uniform Commercial Code) evidencing or giving rise to any of the foregoing.

“SEC” has the meaning set forth in Section 8.01(d).

“Security Agreement” means a Security Agreement, substantially in the form of Exhibit D hereto, between the Lender and Borrower securing the Obligations of Borrower hereunder as supplemented by any amendments or joinders thereto.

“Security Interest” has the meaning specified in Section 9.16(b).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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“Set-off” has the meaning specified in Section 8.01(v)(i).

“Significant Subsidiary” means any Subsidiary of Borrower which would constitute a “significant subsidiary” as defined in Rule 1.02 of Regulation S-X under the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended.

“Subsidiary” means, with respect to any Person, at any time, any entity of which more than fifty percent (50%) of the outstanding Voting Stock or other equity interest entitled ordinarily to vote in the election of the directors or other governing body (however designated) is at the time beneficially owned or controlled directly or indirectly by such Person, by one or more such entities or by such Person and one or more such entities.

“Surviving Person” means, with respect to any Person involved in or that makes any disposition, the Person formed by or surviving such disposition or the Person to which such disposition is made.

“Taxes” has the meaning specified in Section 5.01(a).

“Tranche A Aggregate Accrual” has the meaning specified in Section 4.01(e).

“Tranche A Commitment” means $20 million.

“Tranche A Loan” means the Tranche A Loan to be made by the Lender and borrowed by Borrower on the Closing Date pursuant to Section 2.01(a).

“Tranche A Maturity Date” means June 30, 2013; provided, however, that, if the Tranche B Funding shall occur, from and after the Tranche B Funding Date, the “Tranche A Maturity Date” shall mean the Maturity Date.

“Tranche A Maximum Accrual” has the meaning specified in Section 4.01(e).

“Tranche A Note” means the note, in the form attached hereto as Exhibit E, issued by Borrower to Lender evidencing the Tranche A Loans made on the Closing Date to Borrower and any replacement(s) thereof issued in accordance with Section 13.10.

“Tranche B Aggregate Accrual” has the meaning specified in Section 4.01(f).

“Tranche B Closing Date” means August 22, 2012.

“Tranche B Commitment” means an amount equal to the lesser of (i) 102% of the Existing Loan Prepayment Amount on the Tranche B Funding Date and (ii) $61,224,489.80.

“Tranche B Funding” has the meaning set forth in Section 2.03(b).

“Tranche B Funding Date” means the date on which the Tranche B Loan is funded and borrowed in accordance herewith.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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“Tranche B Loan” means the Tranche B Loan to be made by the Lender and borrowed by Borrower on the Tranche B Funding Date pursuant to Section 2.01(b).

“Tranche B Loan Amount” has the meaning set forth in Section 2.01(b).

“Tranche B Maximum Accrual” has the meaning specified in Section 4.01(f).

“Tranche B Note” means the note, in the form attached hereto as Exhibit F, issued by Borrower to Lender evidencing the Tranche B Loan made on the Tranche B Funding Date to Borrower and any replacement(s) thereof issued in accordance with Section 13.10.

“Transaction Documents” means the Loan Documents, the License Agreements and the Borrower Documents.

“Transaction Proposal” has the meaning specified in Section 10.09(a).

“U.S.” means the United States of America.

“Voting Stock” means Capital Stock issued by a company, or equivalent interests in any other Person, the holders of which are ordinarily, in the absence of contingencies, entitled to vote for the election of directors (or persons performing similar functions) of such Person, even if the right so to vote has been suspended by the happening of such contingency.

“Webphage® Software” means Borrower’s analysis and data storage software for [*****] screening as embodied in the United States copyright registration No. TX 5989121 issued May 14, 2004, and any updates, improvements or modifications thereto (in human readable, source code and object code forms).

“Wholly Owned Subsidiary” means, as to any person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares) is at the time owned by such person and/or one or more Wholly Owned Subsidiaries of such person and (b) any partnership, association, joint venture, limited liability company or other entity in which such person and/or one or more Wholly Owned Subsidiaries of such person have a 100% equity interest at such time.

SECTION 1.02.Interpretation; Headings.  Each term used in any Exhibit to this Agreement and defined in this Agreement but not defined therein shall have the meaning set forth in this Agreement.  Unless the context otherwise requires, (a) ”including” means “including, without limitation” and (b) words in the singular include the plural and words in the plural include the singular.  A reference to any party to this Agreement, any other Transaction Document or any other agreement or document shall include such party’s successors and permitted assigns.  A reference to any agreement or order shall include any amendment of such agreement or order from time to time in accordance with the terms herewith and therewith.  A reference to any legislation, to any provision of any legislation or to any regulation issued thereunder shall include any amendment thereto, any modification or re-enactment thereof, any legislative provision or regulation substituted therefore and all regulations and statutory instruments issued thereunder or pursuant thereto.  The headings contained in this Agreement are for convenience and reference only and do not form a part of this Agreement.  Section, Article and Exhibit references in this Agreement refer to sections or articles of, or exhibits to, this Agreement unless otherwise specified.  Borrower acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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ARTICLE II

COMMITMENT; DISBURSEMENT; FEES

SECTION 2.01.Commitment to Lend and Borrow.

(a)On the terms and subject to the conditions set forth herein, on the Closing Date, the Lender shall make a loan hereunder to Borrower, and Borrower shall accept and borrow such loan from the Lender, in a principal amount equal to the Tranche A Commitment.

(b)On the terms and subject to the conditions set forth herein, including Section 2.03(b), on the Tranche B Closing Date, (i) the Lender shall make a loan hereunder to Borrower, and Borrower shall accept and borrow such loan from the Lender, in a principal amount (the “Tranche B Loan Amount”) equal to the Tranche B Commitment, (ii) Borrower shall deliver to the Lender the documents referred to in Sections 7.02(a), (c), (d), (f), (i) and (j); provided, however, that, in the case of Section 7.02(i), (A) if any event referred to in clause (i) of Section 7.02(i) has or would occur or is continuing, the certificate referred to in Section 7.02(i) shall nevertheless be delivered to the Lender on the Tranche B Closing Date and, in lieu of the certification referred to in clause (i) thereof, shall describe in reasonable detail such event and the related Default or Event of Default and (ii) if any representation and warranty referred to in clause (ii) of Section 7.02(i) shall not be true and correct as described in clause (ii) thereof, the certificate referred to in Section 7.02(i) shall nevertheless be delivered to the Lender on the Tranche B Closing Date and, in lieu of the certification referred to in clause (ii) thereof, shall identify such representation and warranty and shall provide a reasonably detailed description as to why such representation and warranty is not so true and correct, and (iii) Borrower shall have used its commercially reasonable efforts to deliver or cause to be delivered to the Lender the documents referred to in Section 7.02(b).

SECTION 2.02.Notice of Borrowing.

(a)Subject to Section 2.01(a), Borrower shall, simultaneously with the execution and delivery of this Agreement by the Parties, give the Lender irrevocable notice, substantially in the form set forth in Exhibit G (the “Notice of Borrowing”), that Borrower will borrow a principal amount equal to the Tranche A Commitment on the Closing Date.

(b)Subject to Section 2.01(b), Borrower shall, no less than 15 Business Days prior to the Tranche B Closing Date, give the Lender an irrevocable Notice of Borrowing, which shall state that Borrower wishes to and will borrow the Tranche B Loan Amount on the Tranche B Closing Date.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(c)The Tranche A Commitment shall automatically terminate on funding of the Tranche A Loan on the Closing Date, and the Tranche B Commitment shall automatically terminate upon funding of the Tranche B Loan on the Tranche B Funding Date.

SECTION 2.03.Disbursement and Borrowing.

(a)On the terms and subject to the conditions set forth herein, on the Closing Date, (i) the Lender shall credit, in same day funds, an amount equal to (A) the Tranche A Commitment less (B) the expenses referred to in Section 4.04 for which invoices have been received by Borrower, to the account of Borrower which Borrower shall have designated for such purpose in the Notice of Borrowing, and (ii) Borrower shall accept and borrow such amount.

(b)On the terms and subject to the conditions set forth herein, on the Tranche B Closing Date, (i) the Lender shall, in full satisfaction of its commitment under Section 2.01(b), credit, in same day funds, an amount equal to the lesser of (A) the Existing Loan Prepayment Amount and (B) $60,000,000 to the account of Borrower which Borrower shall have designated for such purpose in the Notice of Borrowing, and (ii) Borrower shall accept and borrow such amount (the “Tranche B Funding”).

SECTION 2.04.Commitment Not Revolving.  The Lender’s commitment to lend hereunder is not revolving in nature, and any amount of the Loans repaid or prepaid may not be reborrowed.

ARTICLE III

REPAYMENT

SECTION 3.01.Amortization.

(a)If the Tranche B Funding occurs, on each Interest Payment Date occurring thereafter (except as otherwise expressly provided herein), Borrower shall repay the portion of the outstanding principal amount of the Loans at par which is equal to (i) the Applicable Included Receipts for the fiscal quarter occurring immediately prior to such Interest Payment Date (or, in the case of the first Interest Payment Date occurring after the Tranche B Funding Date, the fiscal quarter in which the Tranche B Funding Date occurs, but only with respect to the portion of such fiscal quarter occurring from and after the Tranche B Funding Date) less (B) any portion of such Applicable Included Receipts used to pay cash interest on the Loans pursuant to Section 4.01(b).

(b)If the Tranche B Funding shall not have occurred on or prior to the Tranche B Closing Date, the outstanding principal amount of the Tranche A Loan, together with all accrued and unpaid interest thereon and all other amounts payable by Borrower hereunder, shall be due and payable in cash on the Tranche A Maturity Date.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(c)If the Tranche B Funding occurs, to the extent not previously paid, the balance of the outstanding principal amount of the Loans, together with all accrued and unpaid interest thereon and all other amounts payable by Borrower hereunder, shall be due and payable in cash on the Maturity Date.

SECTION 3.02.Optional Prepayment; Mandatory Prepayment.

(a)If the Tranche B Funding occurs, Borrower may prepay the Loans (x) in whole at any time or (y) in part from time to time after the No-Call Date, in any case at a prepayment price equal to 100% of the outstanding principal amount thereof prepaid, together with all accrued and unpaid interest on the principal amount prepaid; provided, however, that (i) the outstanding principal balance of the Loans after giving effect to any such voluntary partial prepayment shall not be less than [*****] and (ii) each voluntary partial prepayment shall be in an amount that is an integral multiple of [*****] and not less than [*****]or, if less, the outstanding principal amount of the Loans; provided, further, that, if any voluntary prepayment (in whole) pursuant to this Section 3.02(a) occurs prior to the No-Call Date, such prepayment shall be accompanied by the Prepayment Premium with respect to the entire outstanding principal amount of the Loans.  If Borrower wishes to make any voluntary prepayment (whether in whole or in part) pursuant to this Section 3.02(a), it shall give the Lender Notice to that effect not later than the 30th day before the date of the prepayment, specifying the date on which the prepayment is to be made and the principal amount to be prepaid.  Such Notice shall constitute Borrower’s irrevocable commitment to prepay the principal amount specified therein on the prepayment date specified therein, together with all accrued and unpaid interest on the principal amount prepaid to, but excluding, the prepayment date.  The Tranche A Loan shall not be prepayable on or prior to Tranche B Funding Date pursuant to this Section 3.02(a).

(b)Notwithstanding anything to the contrary set forth in Section 3.02(a), if the Tranche B Funding Date does not occur on or prior to the Tranche B Closing Date because Borrower is unable to satisfy the conditions precedent set forth in Section 7.02(i) and, as a result, the Lender elects not to make the Tranche B Loan, Borrower may prepay the Tranche A Loan, in whole but not in part, at any time after the Tranche B Closing Date and prior to the Tranche A Maturity Date at a prepayment price equal to 100% of the outstanding principal amount thereof, together with all accrued and unpaid interest thereon.  For the avoidance of doubt, no Prepayment Premium shall be due with respect to any prepayment of the Tranche A Loan pursuant to this Section 3.02(b).

(c)If (i) a Change of Control or (ii) an Event of Default occurs, then, at the option of and upon Notice from the Lender, all or any portion of the Loans, as specified by the Lender (including all accrued and unpaid interest thereon), shall be immediately due and payable hereunder, to the extent permitted by Law, and shall be deemed part of the amounts due and payable hereunder subject to acceleration (either declared or immediate as provided in Section 11.02); provided that, if such Change of Control or Event of Default occurs prior to the No-Call Date, then such prepayment shall be accompanied by the Prepayment Premium with respect to that portion of the Loans specified by the Lender to be so prepaid.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 3.03.Illegality.  If the Lender determines at any time that any Law or treaty or any change therein or in the interpretation or application thereof makes or will make it unlawful for the Lender to fulfill its commitment in accordance with Section 2.01, to maintain the Loans (including the aggregate principal amount, if any, added to the Loans pursuant to Sections 4.01(a) and 4.01(b)) or to claim or receive any amount payable to it hereunder, the Lender shall give Notice of that determination to Borrower, whereupon the obligations of the Lender hereunder shall terminate.  If any such Notice is given after the disbursement of the Loans, Borrower shall prepay the Loans in full on the Interest Payment Date following the date the Notice is given; provided, however, that if the Lender certifies to Borrower that earlier prepayment is necessary in order to enable the Lender to comply with the relevant Law, treaty or change and specifies an earlier date for the prepayment, Borrower shall make the prepayment on the date so specified.  Prepayment pursuant to this Section 3.03 shall be made together with interest accrued and unpaid on the Loans to the date of prepayment and all other amounts then payable to the Lender hereunder.  Each Notice delivered pursuant to this Section 3.03 shall be effective when sent.

ARTICLE IV

INTEREST; EXPENSES

SECTION 4.01.Interest Rate.

(a)From the Closing Date to the Existing Loan Prepayment Date, the Tranche A Loan shall bear interest at a rate equal to 13% per annum, which shall be paid in kind, on a quarterly basis, and on each Interest Payment Date occurring during each such quarter, the Lender shall be deemed to have made an additional loan in a principal amount equal to the aggregate amount of interest required to be paid on the outstanding Loans on such Interest Payment Date.  Each such deemed Loan shall (A) be deemed to be a Loan for all purposes under this Agreement and (B) accrue interest in accordance with this Section 4.01.

(b)Except as otherwise expressly provided in Section 4.03, from and after the Existing Loan Prepayment Date, the Loans shall bear interest at a rate equal to 12.00% per annum, and shall be paid in cash, as provided in Section 4.01(d), on each Interest Payment Date; provided, however, that, from and after the Tranche B Funding Date, Borrower shall be required to pay interest in cash on each Interest Payment Date only to the extent of the Applicable Included Receipts for the immediately preceding fiscal quarter (or, in the case of the first Interest Payment Date occurring after the Tranche B Funding Date, the fiscal quarter in which the Tranche B Funding Date occurs, but only with respect to the portion of such fiscal quarter occurring from and after the Tranche B Funding Date).  If Borrower is unable to pay the cash interest payments required under the first sentence of this Section 4.01(b) out of Applicable Included Receipts or otherwise pursuant to the last sentence of this Section 4.01(b) because the then Applicable Included Receipts are less than 12.00% per annum, paid quarterly, of the principal amount of the Loans (such deficiency, the “Deficiency Amount”), then any Deficiency Amount shall be paid in kind, on a quarterly basis, and on each Interest Payment Date occurring during each such quarter, the Lender shall be deemed to have made an additional loan in a principal amount equal to the aggregate amount of interest required to be paid on the outstanding Loans on such Interest  Payment Date.  Each such deemed Loan shall (A) be deemed to be a Loan for all purposes under this Agreement and (B) accrue interest in accordance with this Section 4.01.  Notwithstanding any other provision herein, Borrower may, at its option, pay all or any portion of any Deficiency Amount when due out of other funds held by Borrower.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(c)All interest hereunder shall be computed on the basis of a 360-day year of twelve 30-day months.

(d)Accrued interest on the Loans from and after the Tranche B Funding Date shall be payable to the Lender at the Lockbox Account or as otherwise notified to Borrower in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to Section 4.03 shall be payable on demand, in the same form as interest payable on the next Interest Payment Date, and (ii) in the event of any repayment or prepayment of any Loan, accrued and unpaid interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment.

(e)On each Interest Payment Date commencing with the first Interest Payment Date following the fifth (5th) anniversary of the Closing Date, if the aggregate amount that would be includible in income with respect to the Tranche A Note for periods ending on or before such Interest Payment Date (within the meaning of Section 163(i) of the Code) (the “Tranche A Aggregate Accrual”) would exceed an amount equal to the sum of (i) the aggregate amount of interest to be paid (within the meaning of Section 163(i) of the Code) under the Tranche A Note on or before such Interest Payment Date (determined without regard to the amounts payable on such Interest Payment Date under this Section 4.01(e)), and (ii) the product of (A) the issue price (as defined in Sections 1273(b) and 1274(a) of the Code) of the Tranche A Note and (B) the yield to maturity (interpreted in accordance with Section 163(i) of the Code) of the Tranche A Note (such sum, the “Tranche A Maximum Accrual”), then Borrower shall pay to the Lender in cash an amount equal to the excess, if any, of the Tranche A Aggregate Accrual over the Tranche A Maximum Accrual, and the amount of such payment shall be treated for any period ending after such Interest Payment Date as an amount of interest to be paid (within the meaning of Section 163(i) of the Code) under the Tranche A Note.

(f)On each Interest Payment Date commencing with the first Interest Payment Date following the fifth (5th) anniversary of the Tranche B Funding Date, if the aggregate amount that would be includible in income with respect to the Tranche B Note for periods ending on or before such Interest Payment Date (within the meaning of Section 163(i) of the Code) (the "Tranche B Aggregate Accrual") would exceed an amount equal to the sum of (i) the aggregate amount of interest to be paid (within the meaning of Section 163(i) of the Code) under the Tranche B Note on or before such Interest Payment Date (determined without regard to the amounts payable on such Interest Payment Date under this Section 4.01(f)), and (ii) the product of (A) the issue price (as defined in Sections 1273(b) and 1274(a) of the Code) of the Tranche B Note and (B) the yield to maturity (interpreted in accordance with Section 163(i) of the Code) of the Tranche B Note (such sum, the "Tranche B Maximum Accrual"), then Borrower shall pay to the Lender in cash an amount equal to the excess, if any, of the Tranche B Aggregate Accrual over the Tranche B Maximum Accrual, and the amount of such payment shall be treated for any period ending after such Interest Payment Date as an amount of interest to be paid (within the meaning of Section 163(i) of the Code) under the Tranche B Note.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 4.02.Lockbox Account.

(a)If the Tranche B Funding occurs, on or before the Tranche B Funding Date the Parties shall enter into the Lockbox Agreement with the Lockbox Bank.

(b)If the Tranche B Funding occurs, on or before the Tranche B Funding Date (i) the Lender shall establish the Lender Concentration Account and (ii) Borrower shall establish the Company Concentration Account.  The Lender Concentration Account shall be held solely for the benefit of the Lender, subject to the terms and conditions of this Agreement.  The Lender shall have immediate and full access to any funds held in the Lender Concentration Account and such funds shall not be subject to any conditions or restrictions whatsoever.  The Company Concentration Account shall be held solely for the benefit of Borrower, subject to the terms and conditions of this Agreement, the Security Agreement and the other Transaction Documents.  Subject to the terms and conditions of this Agreement, the Security Agreement and the other Transaction Documents, Borrower shall have immediate and full access to any funds held in the Company Concentration Account and such funds shall not be subject to any conditions or restrictions whatsoever other than those of the Lockbox Bank; provided, however, that nothing herein shall (i) affect or reduce Borrower’s obligations to pay in full all amounts due to the Lender under this Agreement, or (ii) in any manner limit the recourse of the Lender to the assets of Borrower to satisfy Borrower’s obligations.

(c)If the Tranche B Funding occurs, from and after the Tranche B Funding Date:

(i)sweeps from the Lockbox Account shall be made pursuant to Exhibit H;

(ii)Borrower shall pay all fees, expenses and charges of the Lockbox Bank by debiting the Company Concentration Account;

(iii)with respect to any License Agreement, In License or invoice entered into or issued by Borrower in relation thereto, Borrower shall immediately (A) notify the applicable Contract Party to remit to the Lockbox Account when due all Royalties that are due and payable to Borrower in respect of or derived from such License Agreement, In License or invoice and (B) in each case, provide to the Lender a copy of each such notification;

(iv)Borrower shall have no right to terminate the Lockbox Account without Lender’s prior written consent; provided, however, that any such consent, which the Lender may grant or withhold in its discretion, shall be subject to the satisfaction of each of the following conditions to the satisfaction of the Lender:  (A) the successor Lockbox Bank shall be acceptable to the Lender, (B) the Lender, Borrower and the successor Lockbox Bank shall have entered into a lockbox agreement substantially in the form of the Lockbox Agreement initially entered into and such agreement shall be considered the “Lockbox Agreement” under this Agreement and the other Loan Documents, (C) all funds and items in the accounts subject to the Lockbox Agreement to be terminated shall be transferred to the new accounts held at the successor Lockbox Bank prior to the termination of the then existing Lockbox Bank and (D) the Lender shall have received evidence that all of the applicable parties paying Royalties have been instructed to remit all future payments to the new accounts held at the successor Lockbox Bank;

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(v)all Gross Payments shall be paid into the Lockbox Account or to any other account(s) designated in writing by the Lender(s) to Borrower, and amounts deposited therein shall be treated as described in Exhibit H;

(vi)Borrower shall pay voluntary prepayments made at the election of Borrower in accordance with Section 3.02(a) or any payment made in accordance with the last sentence of Section 4.01(b) to the Lockbox Account; and

(vii)in the event any party to a License Agreement, including any party to a Future License, remits any Royalties directly to Borrower or otherwise except to the Lockbox Account, Borrower shall immediately (A) remit any such Royalties to the Lockbox Account (or, if for some reason such account is no longer in effect or payment cannot be made into such account, Borrower shall remit such Royalties by wire transfer of immediately available funds directly to Lender Bank Account), (B) notify such party to remit any future Royalties to the Lockbox Account and (C) provide to the Lender a copy of such notice.

(d)Any payments, other than from funds paid to the Lender from the Lender Concentration Account, to be made by Borrower to the Lender hereunder or under any other Transaction Document shall be made by wire transfer of immediately available funds to the Lender Bank Account.

(e)Within [*****] following delivery to the Lender by Borrower of the Quarterly Report for the fourth fiscal quarter of each calendar year during the term of the Loans, to the extent that either the Lender or Borrower has determined that there is a discrepancy as to the amounts paid to the Lender hereunder for such calendar year, then the Party who has made such determination may notify the other Party in writing of such discrepancy indicating in reasonable detail its reasons for such determination (the “Discrepancy Notice”).  In the event that a Lender or Borrower delivers to the other Party a Discrepancy Notice, such Lender and Borrower shall meet in person or by telephone conference as specified by such Lender [*****] (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.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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If the discrepancy has been resolved and, as a result thereof, it is determined that a payment is owing by the Lender to Borrower or by Borrower to Lender, then the Party owing such payment shall promptly pay such payment to the other Party.  If, within [*****] after receipt of the Discrepancy Notice, Borrower and the Lender cannot resolve any such discrepancies, then Lender and Borrower shall promptly instruct their respective firms of independent certified public accountants to select, within [*****] thereafter, a third internationally recognized accounting firm (the “Independent Accountants”).  After offering Borrower and its representatives and the Lender and their representatives the opportunity to present their positions as to the disputed items, which opportunity shall not extend for more than [*****] after the Independent Accountants have been selected, the Independent Accountants shall review the disputed matters and the materials submitted by Borrower and the Lender and, as promptly as practicable, deliver to Borrower and the Lender a statement in writing setting forth its determination of the proper treatment of the discrepancies as to which there was disagreement, and that determination will be final and binding upon the Parties without any further right of appeal.  If Borrower has delivered the Discrepancy Notice that has resulted in the selection of the Independent Accountants, Borrower will bear all the charges of the Independent Accountants.  If a Lender has delivered the Discrepancy Notice that has resulted in the selection of the Independent Accountants, such Lender will bear all the charges of the Independent Accountants unless the Independent Accountants determine that the amounts paid to the Lender for the applicable calendar year underpaid the Lender by an amount equal or in excess of [*****] of the amounts determined to be due to the Lender for such calendar year, in which event Borrower shall bear all of the charges of the Independent Accountants.

SECTION 4.03.Interest on Late Payments.  If any amount payable by Borrower to the Lender hereunder is not paid when due (whether at stated maturity, by acceleration or otherwise), interest shall accrue on any such unpaid amounts, both before and after judgment during the period from and including the applicable due date, to but excluding the day the overdue amount is paid in full, at a rate per annum equal to the Default Rate.  Interest accruing under this Section 4.03 shall be payable from time to time on demand of the Lender.

SECTION 4.04.Initial Expenses.  Borrower shall reimburse the Lender, on the Closing Date as provided in Section 2.03(a), for all (a) actual, documented out-of-pocket fees and expenses incurred by the Lender (including all fees and expenses of outside counsel to the Lender), supported by reasonable documentation, in connection with the negotiation, preparation, execution and delivery of this Agreement and the other Transaction Documents including any amendment or waiver with respect thereto and (b) reasonable fees and expenses, supported by reasonable documentation, of due diligence conducted by the Lender or other parties (including outside counsel to the Lender) at the request of the Lender; providedthat Borrower shall not be required to reimburse any amounts pursuant to this Section 4.04 in excess of [*****] in the aggregate.

SECTION 4.05.Administration and Enforcement Expenses.  Borrower shall promptly reimburse the Lender on demand for all reasonable costs and expenses incurred by the Lender (including the reasonable fees and expenses of one outside counsel to the Lenders) as a consequence of or in connection with any Default or Event of Default.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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ARTICLE V

TAXES

SECTION 5.01.Taxes.

(a)Except as otherwise required by Law, any and all payments by Borrower under this Agreement or the Notes (including payments with respect to the Loans) shall be made free and clear of and without deduction for any and all present and future taxes, levies, duties, imposts, deductions, charges, fees or withholdings, and all interest, penalties and other liabilities with respect thereto (collectively, “Taxes”) imposed by any Governmental Authority or taxing authority in any jurisdiction.  If any Taxes other than Excluded Taxes (“Indemnified Taxes”) shall be required by Law to be deducted from or in respect of any sum payable under this Agreement or the Notes to a Lender, (i) the sum payable by Borrower shall be increased as may be necessary so that after making all required deductions of Indemnified Taxes the Lender shall receive an amount equal to the sum it would have received had no such deductions been made and (ii) Borrower shall make such deductions and pay the full amount deducted to the relevant Governmental Authority or taxing authority in accordance with applicable Law.

(b)Any Lender claiming additional amounts payable pursuant to Section 5.01(a) shall use its reasonable efforts (consistent with its internal policies and applicable Law) to change the jurisdiction of its office if such a change would reduce any such additional amounts (or any similar amount that may thereafter accrue) and would not, in the sole discretion of such Lender, be otherwise disadvantageous to such Lender.

(c)If a Lender is not a “United States person” within the meaning of Section 7701(a)(30) of the Code (a “Foreign Lender”), then such Foreign Lender shall provide to Borrower (i) in the case of a Foreign Lender claiming exemption from U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with respect to payments of “portfolio interest,” (x) two accurate and complete original signed copies of IRS Form W-8BEN (or a successor form) properly completed and duly executed by such Foreign Lender and (y) a certificate to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code, (ii) if the payments receivable by the Foreign Lender are effectively connected with the conduct of a trade or business in the United States, two accurate and complete original signed copies of IRS Form W-8ECI (or a successor form), (iii) in the case of a Foreign Lender that is entitled to benefits under an income tax treaty to which the United States is a party that reduces the rate of withholding tax on payments of interest, two accurate and complete original signed copies of IRS Form W-8BEN (or a successor form) indicating that such Foreign Lender is entitled to receive payments under this Agreement and the Notes with reduced or no deduction of any United States federal income withholding tax or (iv) in the case of a Foreign Lender acting as an intermediary, two accurate and complete original signed copies of IRS Form W-8IMY (or a successor form).  Such forms shall be delivered by such Foreign Lender on or prior to the date that it becomes a Lender under this Agreement, at any time thereafter when a change in the Foreign Lender’s circumstances renders an existing form obsolete or invalid or requires a new form to be provided, and within fifteen Business Days after a reasonable written request of Borrower from time to time thereafter.  Notwithstanding any other provision of this Section 5.01(c), no Foreign Lender shall be required to deliver any form pursuant to this Section 5.01(c) that such Foreign Lender is not legally able to deliver.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(d)Each Lender that is not a Foreign Lender shall provide two properly completed and duly executed copies of Form W-9 (or successor form) at the times specified for delivery of forms under Section 5.01(c).

(e)Each Lender having assigned its rights and obligations hereunder in whole or in part shall collect from such assignee the documents described in Sections 5.01(c) and (d) as applicable.

(f)The Lender shall not file any IRS form under Section 6050P of the Code reporting any cancellation of indebtedness income of the Borrower as a result of the transactions contemplated by this Agreement and the other Transaction Documents. 

SECTION 5.02.Receipt of Payment.  Within thirty days after the date of any payment of Taxes withheld by Borrower in respect of any payment to the Lender, Borrower shall furnish to the Lender the original or a certified copy of a receipt evidencing payment thereof or other evidence reasonably satisfactory to the Lender.

SECTION 5.03.Other Taxes.  Borrower shall promptly pay any registration or transfer taxes, stamp duties or similar levies, and any penalties or interest that may be due with respect thereto, that may be imposed in connection with the execution, delivery, registration or enforcement of this Agreement, the Notes issued hereunder or any other Transaction Document or the filing, registration, recording or perfecting of any security interest contemplated by this Agreement.

SECTION 5.04.Indemnification.  If the Lender pays any Taxes that Borrower is required to pay pursuant to this Article V, Borrower shall indemnify the Lender on demand in full in the currency in which such Taxes are paid, whether or not such Taxes were correctly or legally asserted, together with interest thereon from and including the date of payment to, but excluding, the date of reimbursement at the Default Rate.  The Lender shall promptly notify Borrower if any claim is made against the Lender for any Taxes for which Borrower would be responsible to indemnify the Lender pursuant to this Section 5.04.

SECTION 5.05.Loans Treated As Indebtedness.  The Parties agree to treat the Loans as indebtedness for borrowed money of Borrower for all tax purposes.  The Parties agree not to take any position that is inconsistent with the provisions of this Section 5.05 on any tax return or in any audit or other administrative or judicial proceeding unless (i) the other Party has consented to such actions, or (ii) the Party that contemplates taking such an inconsistent position has been advised by nationally recognized tax counsel in writing that it is more likely than not that (x) there is no “reasonable basis” (within the meaning of Treasury Regulation Section 1.6662-3(b)(3)) for the position specified in this Section 5.05 or (y) taking such a position would otherwise subject the Party to penalties under the Code.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 5.06.Registered Obligation.

(a)Borrower shall establish and maintain at its address referred to in Section 13.04 (A) a record of ownership (the “Register”) in which Borrower agrees to register by book entry the interests (including any rights to receive payment hereunder) of each Lender in the Loans and any assignment of any such interest, obligation or right, and (B) accounts in the Register in accordance with its usual practice in which it shall record (1) the name, address and Lender Account of each Lender, (2) the Tranche B Commitment of each Lender, (3) the amount of the Loans held by each Lender, (4) the amount of any principal or interest due and payable or paid, and (5) any other payment received and its application to the Loans.  On each Interest Payment Date occurring on or after the first date on which Borrower shall have received an Assignment and Acceptance in accordance with Section 13.01, Borrower shall, not later than 10:00 a.m., New York time, on such Interest Payment Date, deliver to the Lockbox Bank in writing the information set forth in clauses (A), (B)(1) and (B)(3) of this Section 5.06(a) (each, a “Register Notice”).

(b)Notwithstanding anything to the contrary contained in this Agreement, the Loans (including any Note evidencing such Loan) are registered obligations, the right, title and interest of the Lender and its assignees in and to such Loans shall be transferable only upon notation of such transfer in the Register and no assignment thereof shall be effective until recorded therein.  This Section 5.06 shall be construed so that the Loans are at all times maintained in “registered form” within the meaning of Sections 163(f), 871(h)(2) and 881(c)(2) of the Code and any related regulations (and any successor provisions).

ARTICLE VI

PAYMENTS; COMPUTATIONS

SECTION 6.01.Making of Payments.

(a)From and after the Tranche B Closing, to the extent (i) that Applicable Included Receipts received into the Lockbox Account during any fiscal quarter are less than the total amount of Applicable Included Receipts required for purposes of calculating the interest that Borrower is required to pay to Lender under Section 4.01(b) on any Interest Payment Date or (ii) Borrower exercises its option to pay any Deficiency Amount out of other funds of Borrower and/or any of its Subsidiaries as described in the last sentence of Section 4.01(b), then such deficiency shall be made in Dollars, by deposit in same day funds by 3:00 p.m., New York time, on the date the interest payment is due, to the Lockbox Account, for the account of the applicable Office(s), or to any other account designated by the Lenders by Notice to Borrower.

(b)Notwithstanding anything to the contrary contained herein, any payment stated to be due hereunder or under any Note on a given day in a specified month shall be made or shall end (as the case may be), (i) if there is no such given day or corresponding day, on the last Business Day of such month or (ii) if such given day or corresponding day is not a Business Day, on the next succeeding Business Day, unless such next succeeding Business Day falls in a different calendar month, in which case such payment shall be made on the next preceding Business Day.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 6.02.Setoff or Counterclaim.  Each payment by Borrower under this Agreement or under any Note shall be made without setoff or counterclaim.  The Lenders shall have the right to setoff any and all amounts owed by Borrower and/or any of its Subsidiaries under this Agreement as provided in Section 11.03.

ARTICLE VII

CLOSING  DOCUMENTATION

SECTION 7.01.Tranche A Loan Closing Documentation.  The obligation of the Lender to make the Tranche A Loan shall be subject to the following conditions precedent:

(a)Borrower shall have executed and delivered to the Lender the Tranche A Note, dated the Closing Date.

(b)Borrower shall have delivered to the Lender an executed copy of:

(i)an opinion of Edwards Wildman Palmer LLP, counsel to Borrower, dated the Closing Date, substantially in the form of Exhibit I-1 and otherwise in form and substance satisfactory to the Lender;

(ii)an opinion of Wolf, Greenfield & Sacks, P.C., counsel of Borrower, dated the Closing Date, substantially in the form of Exhibit J and otherwise in form and substance satisfactory to the Lender; and

(iii)an opinion of Lando & Anastasi, LLP, counsel of Borrower, dated the Closing Date, substantially in the form of Exhibit K and in form and substance satisfactory to the Lender.

(c)Borrower shall have delivered to the Lender a certificate, dated the Closing Date, of a senior officer of Borrower (the statements made in which to have been true and correct on and as of the Closing Date): (i) attaching copies, certified by such officer as true and complete, of Borrower’s certificate of incorporation or other organizational documents (together with any and all amendments thereto) certified by the appropriate Governmental 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 Borrower authorizing and approving the execution, delivery and performance by Borrower of this Agreement, the other Loan Documents and the transactions contemplated herein and therein; (iii) setting forth the incumbency of the officer of Borrower who executed and delivered this Agreement, including therein a signature specimen of each such officer; and (iv) attaching copies, certified by such officer as true and complete, of certificates of the appropriate Governmental Authority of the jurisdiction of formation, stating that Borrower was in good standing under the laws of such jurisdiction as of the Closing Date.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(d)Borrower shall have executed and delivered to the Lender this Agreement and such other documents as the Lender reasonably requested, in each case, in form and substance satisfactory to the Lender.

(e)The Lender shall have received all fees and expenses due and payable to the Lender on the Closing Date under Section 4.04.

(f)Borrower shall have delivered to the Lender a certificate, dated the Closing Date, of a senior officer of Borrower (the statements in which shall be true and correct on and as of the Closing Date) certifying that:  (i) no event has occurred and is continuing that would constitute a Default or an Event of Default under this Agreement and no such event occurred or would occur by reason of the incurrence of the Tranche A Loan or the performance by Borrower of its obligations under this Agreement or any other Loan Document; (ii) no default or event of default has occurred and is continuing under the Existing Loan Agreement; and (iii) each of the representations and warranties made by Borrower in Article VIII of this Agreement are true and correct as of the Closing Date, before and after giving effect to the Tranche A Loan.

(g)Borrower shall have delivered to the Lender true copies of the License Agreements in existence as of the Closing Date, including all amendments, supplements or other modifications thereto which, as of the Closing Date, were in full force and effect; provided that Borrower shall not be required to deliver any License Agreement, amendment, supplement or modification which was delivered in any Business Report pursuant to the Existing Loan Agreement.

(h)All necessary governmental and third-party approvals, consents and filings, including in connection with this Agreement and the Tranche A Note, shall have been obtained or made and be in full force and effect.

(i)The Lender shall have received all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including without limitation, the Patriot Act, including, without limitation, the information described in Section 13.19.

SECTION 7.02.Tranche B Funding Documentation.  The obligation of the Lender to make the Tranche B Loan shall be subject to the following conditions precedent:

(a)Borrower shall have executed and delivered to the Lender the Tranche B Note.

(b)Borrower shall have delivered to the Lender an executed copy of:

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(i)an opinion of Edwards Wildman Palmer LLP, counsel to Borrower, dated the Tranche B Funding Date, substantially in the form of Exhibit I-2 hereto;

(ii)an opinion of Wolf, Greenfield & Sacks, P.C., counsel of Borrower, dated the Tranche B Funding Date, substantially in the form of Exhibit J hereto; and

(iii)an opinion of Lando & Anastasi, LLP, counsel of Borrower, dated the Tranche B Funding Date, substantially in the form of Exhibit K hereto.

(c)Borrower shall have executed and delivered to the Lender a certificate, dated the Tranche B Funding Date, of a senior officer of Borrower (the statements made in which shall be true and correct on and as of the Tranche B Funding Date): (i) attaching copies, certified by such officer as true and complete, of Borrower’s certificate of incorporation or other organizational documents (together with any and all amendments thereto) certified by the appropriate Governmental Authority as being true, correct and complete copies; (ii) setting forth the incumbency of the officer or officers of Borrower who have executed and delivered the agreements and documents referred to in Section 7.02(d), including therein a signature specimen of each such officer or officers; and (iii) attaching copies, certified by such officer as true and complete, of certificates of the appropriate Governmental Authority of the jurisdiction of formation, stating that Borrower is in good standing under the laws of such jurisdiction.

(d)Borrower shall have executed and delivered to the Lender the duly executed copies of the Security Agreement (including the schedules thereto) and the Lockbox Agreement, in each case which shall be in full force and effect.

(e)All filings, recordings and other actions that are necessary or reasonably requested by the Lender in order to establish, protect, preserve and perfect the security interest in the assets of Borrower as provided in the Security Agreement as a valid and perfected first priority security interest with respect to such assets shall have been duly effected, including the filing of a UCC-1 financing statement, a Patent Security Agreement (as defined in the Security Agreement) and a Copyright Security Agreement (as defined in the Security Agreement).

(f)Borrower shall have delivered to the Lender true copies of any and all License Agreements and amendments, supplements or other modifications thereto entered into or coming into effect after the Closing Date, and each such License Agreement, amendment, supplement or modification shall be in full force and effect; provided that Borrower shall not be required to deliver any License Agreement, amendment, supplement or modification which was delivered to the Lender in any Business Report.

(g)All necessary governmental and third-party approvals, consents and filings, including in connection with the Tranche B Loan, the Tranche B Note, the Security Agreement and the Lockbox Agreement shall have been obtained or made and be in full force and effect.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(h)Borrower shall have applied the proceeds of the Tranche B Loan to repay in full the Existing Loan Prepayment Amount.

(i)Borrower shall have delivered to the Lender a certificate, dated the Tranche B Closing Date, of a senior officer of Borrower (the statements in which shall be true and correct on and as of the Tranche B Closing Date) stating that:  (i) no event shall have occurred or be continuing that would constitute a Default or an Event of Default under this Agreement or a similar event under the other Loan Documents and no such event would occur by reason of the Tranche B Funding; and (ii) each of the representations and warranties made by Borrower in Article VIII of this Agreement (read without giving effect to any qualifications or exceptions therein regarding materiality, Material Adverse Effect or words of similar effect) are true and correct in all respects, on and as of the Tranche B Closing Date and after giving effect to the Tranche B Funding (and without giving effect to any update or change to the Schedules referred to therein), except for any such failure to be true and correct has not had, and could not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

SECTION 7.03.Payoff Letter, Etc.  In addition to the conditions precedent described in Section 7.02 above, on or prior to the Tranche B Funding Date, the Lender shall cause the lender under the Existing Loan Agreement to deliver (i) a “payoff letter” executed by such lender, in the form attached hereto as Exhibit L (the “Payoff Letter”), and (ii) from each Person holding any Lien on any Existing Loan Collateral securing the Existing Loan or any other obligation under the Existing Loan Agreement, such UCC termination statements, releases of security interests in intellectual property and other instruments, in proper form for recording to release and terminate of record such Liens.  In the event the Lender is unable to obtain the Payoff Letter or the termination statements, releases and other instruments described herein on or prior to the Tranche B Funding Date, the Parties shall use their respective commercially reasonable efforts to obtain the same promptly following the Tranche B Funding Date, but the failure to have obtained such items shall not relieve the Lender of its obligation to make the Tranche B Loan on the Tranche B Closing Date, nor shall it be deemed to constitute a breach of the covenants of the Borrower set forth herein.

ARTICLE VIII

REPRESENTATIONS AND WARRANTIES

SECTION 8.01.Representations and Warranties of Borrower.  Borrower hereby represents and warrants to Lender as follows (with such representations and warranties qualified to the extent of the Schedules referred to therein and delivered to the Lender concurrently with the execution and delivery of this Agreement):

(a)Borrower is a corporation duly organized, validly existing and in good standing under the laws of Delaware and is duly qualified as a foreign corporation and, where legally applicable, is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect, and has the power and authority (including any required license, permit or other approval from any Governmental Authority) to own its assets, to carry on its business as currently conducted and to consummate the transactions contemplated in, and to perform its obligations under, this Agreement and the other Transaction Documents to which it is party or by which it is bound.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(b)Borrower has taken all necessary action to authorize its execution and delivery of this Agreement and the other Transaction Documents to which it is, or pursuant to the terms of this Agreement shall become, a party, the performance of its obligations under this Agreement and the other Transaction Documents to which it is, or pursuant to the terms of this Agreement shall become, a party or by which it is bound, or pursuant to the terms of this Agreement shall become bound, and the consummation of the transactions contemplated hereby and thereby.

(c)This Agreement and each other Transaction Document to which Borrower is party has been or will be on the Tranche B Closing Date, as applicable, duly executed and delivered by Borrower, and each constitutes or will constitute, as applicable, a valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors’ rights generally, and subject to general principles of equity (regardless of whether enforcement is sought in a proceeding in equity or at law).

(d)No authorization or action of any kind by any Governmental Authority is necessary to authorize the transactions contemplated by this Agreement and each other Transaction Document or required for the validity or enforceability against Borrower of this Agreement and each other Transaction Document, except any filings with a Governmental Authority required to perfect the Lender’s security interest under the Security Agreement and any filings with the United States Securities and Exchange Commission (“SEC”).

(e)No consent or approval of, or notice to, any Person is required by the terms of any agreement, contract, lease, commitment, license and other arrangement (each a “Contract”) for the execution or delivery of, or the performance of the obligations of Borrower under, this Agreement and the other Transaction Documents to which Borrower is party or the consummation of the transactions contemplated hereby or thereby, and such execution, delivery, performance and consummation will not result in any breach or violation of, or constitute a default under Borrower Documents or any material Contract, instrument or Law applicable to Borrower, any of its Subsidiaries or any of its assets.

(f)There are no actions, proceedings or claims pending or, to the actual knowledge of Borrower, threatened the adverse determination of which could reasonably be expected to have a Material Adverse Effect.

(g)No Default or Event of Default has occurred and is continuing, and no such event will occur upon the making of the Loan.

(h)With respect to each Contract that is material to the conduct of the LFRP, (i) each such Contract is a valid and binding agreement and each such Contract is in full force and effect, and (ii) Borrower and/or any of its Subsidiaries is in compliance with each such Contract and has no actual knowledge of any default under any such Contract which default has not been cured or waived.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(i)All written information heretofore, herein or hereafter supplied to the Lender by or on behalf of Borrower in connection with the Loans and the other transactions contemplated hereby has been, is and will be accurate and complete in all material respects.  All representations and warranties made by Borrower in any of the other Transaction Documents to which it is party are true and correct in all material respects.

(j)The Financial Statements (reported on and accompanied by an unqualified report from Borrower’s independent auditor) are complete and accurate in all material respects, were prepared in conformity with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) 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 Borrower and its Subsidiaries as of the dates and for the periods covered thereby and the consolidated statements of cash flows of Borrower and its Subsidiaries for the periods presented therein.  Except as disclosed in Borrower’s SEC filings made prior to the date of this Agreement, since December 31, 2010, there has been no Material Adverse Effect.

(k)Borrower and its Subsidiaries have no Indebtedness other than (i) identified in the Financial Statements or (ii) incurred by Borrower or its Subsidiaries in the ordinary course of business since December 31, 2010 or (c) otherwise listed and described on Schedule 8.01(k).

(l)After giving effect to the making of the Loans:

(i)The aggregate value of the assets of Borrower, at fair value and present fair salable value, exceeds (i) its Liabilities and (ii) the amount required to pay such Liabilities as they become absolute and matured in the normal course of business;

(ii)Borrower has the ability to pay its debts and Liabilities as they become absolute and matured in the normal course of business; and

(iii)Borrower does not have an unreasonably small amount of capital with which to conduct its business.

(m)Borrower’s Subsidiaries are set forth on Schedule 8.01(m).

(n)(i)  Borrower and its Subsidiaries are in compliance with all applicable Laws except where the failure to be in compliance could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.  No prospective change in any applicable laws, rules, ordinances or regulations has been proposed or adopted which, when made effective, could individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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                (ii)Borrower possesses all material certificates, authorizations and permits issued or required by the appropriate federal, state, local or foreign regulatory authorities, including any effective investigational new drug application or its equivalent, necessary to conduct the LFRP, including all such certificates, authorizations and permits required by the FDA or any other federal, state, local or foreign agencies or bodies engaged in the regulation of pharmaceuticals or biohazardous substances or materials except where the failure to possess such certificates, authorizations and permits, individually or in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  Borrower has not received any notice of proceedings relating to, and to the Knowledge of Borrower there are no facts or circumstances that could reasonably be expected to lead to, the revocation, suspension, termination or modification of any such certificate, authorization or permit.

                (iii)To the actual knowledge of Borrower, there has been no indication that the FDA or any other Regulatory Agency has any material concerns with any Product or may not approve any Product, nor has any Product, to the actual knowledge of Borrower, suffered any material adverse events in any clinical trial.

(o)Borrower is not an investment company subject to regulation under the Investment Company Act of 1940.

(p)Borrower has timely filed all tax returns required to be filed by it and has paid all taxes due reported on such returns or pursuant to any assessment received by Borrower, except for failures to file tax returns or pay taxes that, individually, and in the aggregate, are not reasonably expected to result in a Material Adverse Effect.  Any charges, accruals or reserves on the books of Borrower in respect of taxes are adequate except for inadequacies that, individually, and in the aggregate, are not reasonably expected to result in a Material Adverse Effect.  Borrower has had no material liability for any taxes imposed on or with respect to its net income (except for state or local income or franchise taxes).  Borrower has fulfilled all its obligations with respect to withholding taxes except for failures that, individually, and in the aggregate, are not reasonably expected to result in a Material Adverse Effect.  No deduction or withholding for or on account of any tax has been made, or was required under applicable Law to be made, from any payment to Borrower under the License Agreements in effect on the Closing Date.

(q)Neither Borrower nor any ERISA Affiliate has ever incurred any unsatisfied liability or expects to incur any liability under Title IV or Section 302 of ERISA or Section 412 of the Code or any similar non-U.S. law or maintains or contributes to, or is or has been required to maintain or contribute to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code or any non-U.S. law.  The consummation of the transactions contemplated by this Agreement will not constitute or result in any non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code or substantially similar provisions under any foreign or U.S. federal, state or local laws, rules or regulations.  Neither Borrower nor any of its Subsidiaries has incurred any material liability with respect to any obligation to provide benefits, including death or medical benefits, with respect to any person beyond their retirement or the termination of service other than coverage mandated by law.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(r)(i)  Except as set forth on Schedule 8.01(r)(i), all of the LFRP Intellectual Property owned by Borrower is solely (and not jointly) owned by Borrower and is free and clear of any and all Liens, except those Liens created in favor of Lender pursuant to the Transaction Documents. The Included Receipts and all of the rights of Borrower under the In Licenses and License Agreements and all other rights in and to the LFRP are free and clear of any and all Liens, except those Liens created in favor of Lender pursuant to the Transaction Documents.

(ii)           Borrower owns, and is the sole holder of, all the Included Receipts.  Borrower owns, and is the sole holder of, and/or has and holds a valid, enforceable and subsisting license to, all assets (including LFRP Intellectual Property) that are required to produce or receive any payments from any Contract Party or payor under and pursuant to, and subject to the terms of any License Agreements.  Borrower has not transferred, sold, or otherwise disposed of, or agreed to transfer, sell, or otherwise dispose of any portion of its respective rights to receive payment of Royalties.  Except as set forth on Schedule 8.01(r)(ii), no Person other than Borrower has any right to receive the payments payable under any License Agreement entered into from and after the Closing Date through Closing Date, other than, in respect of the Included Receipts, Lender.

(s)From and after the Tranche B Closing Date, the claims and rights of the Lender created by this Agreement and any other Transaction Document in and to the Collateral will be senior to any Indebtedness or other obligation of Borrower, with respect to such Collateral.

(t)Borrower’s principal place of business and chief executive office are set forth on Schedule 8.01(t).

(u)(i)  Borrower has provided the Lender all material information in its possession, or otherwise known to it with respect to the LFRP Patents.

(ii)           Schedule 8.01(u)(ii) sets forth an accurate and complete list of all LFRP Patents (including all LFRP Patents not owned by Borrower).  For each item of the LFRP Patents listed on Schedule 8.01(u)(ii), Borrower has indicated (A) the countries in each case in which such item is patented, registered or in which an application for patent or registration is pending, (B) the application numbers, (C) the registration or patent numbers, (D) the scheduled expiration date of the issued patents, and (E) the owner of such item of LFRP Patents.

(iii)           The issued LFRP Patents owned by Borrower are valid, enforceable and subsisting.  To the Knowledge of Borrower, each individual associated with the filing and prosecution of the LFRP Patents owned by Borrower, including the named inventors of such LFRP Patents, has complied in all material respects with all applicable duties of candor and good faith in dealing with any Patent Office, including any duty to disclose to any Patent Office all information known to be material to the patentability of each of such LFRP Patents, in those jurisdictions where such duties exist.  [*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(iv)           Schedule 8.01(u)(iv) sets forth an accurate and complete list of all LFRP Patents owned by Borrower that have issued with at least one claim covering the Company LFRP Methods and Libraries.

(v)           Borrower has not sold or otherwise transferred any patents or patent applications that have issued or may issue with at least one claim covering the Company LFRP Methods and Libraries or falling within the scope of the patents licensed under the Patent License Agreements.

(vi)           There are no unpaid maintenance or renewal fees payable by Borrower to any third party that are currently overdue for any of the LFRP Patents or other LFRP Intellectual Property owned by Borrower.  To the Knowledge of Borrower no material applications for LFRP Patents owned by Borrower in whole or in part have lapsed or been abandoned, cancelled or expired, other than as described in Schedule 8.01(u)(ii).

(vii)           Borrower has not undertaken and, to the Knowledge of Borrower, no licensee has undertaken or omitted to undertake any acts, and no conduct, circumstances or grounds exist that would void, invalidate or eliminate, in whole or in part, the enforceability of any of the LFRP Intellectual Property.  [*****]

(viii)           Except as set forth on Schedule 8.01(u)(viii), Borrower has not 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 Company LFRP Methods and Libraries that are not the subject of an In License.

(ix)           Except as set forth on Schedule 8.01(u)(ix), to the Knowledge of Borrower there is, and has been, no 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 against Borrower (collectively referred to hereinafter as “Disputes”), nor, to the Knowledge of Borrower, has any such Dispute been threatened, challenging the scope, legality, validity, enforceability or ownership of any LFRP Intellectual Property or which would give rise to a credit against the payments due to Borrower from the applicable License Agreements for the use of the related licensed LFRP Intellectual Property, and no such scheduled Dispute is (or would be if adversely determined) material to the LFRP.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(x)           To the Knowledge of Borrower, there are no Disputes by any third party against Borrower, any licensor under an In License or any licensee under a License Agreement relating to the LFRP.  Borrower has not received or given, and to the Knowledge of Borrower, no such licensee or licensor has received or given any notice of any such Dispute and, to the Knowledge of Borrower, there exist no circumstances or grounds upon which any such claim could be asserted.  [*****]

(xi)           There is no pending or, to the Knowledge of Borrower, threatened action, suit, or proceeding, or any investigation or claim by any Governmental Authority to which Borrower or, to the Knowledge of Borrower, to which any licensee under any License Agreement or any party to a In License is a party (i) that would be the subject of a claim for indemnification, if any, by or against Borrower or (ii) that the Company LFRP Methods and Libraries do or will infringe on any patent or other intellectual property rights of any other Person.  [*****]

(v)(i)  Schedule 8.01(v)(i) sets forth an accurate and complete list of all agreements relating to LFRP in the following categories whether oral or written (provided such oral agreements are to the Knowledge of Borrower):  manufacturing and supply agreements, In Licenses and License Agreements, options (not part of License Agreements or In Licenses), agreements not to enforce (not part of License Agreements or In Licenses), consents, settlements, assignments, security interests, liens and other encumbrances or mortgages, and any amendment(s), renewal(s), novation(s) and termination(s) pertaining thereto, true and correct copies of which have been provided to Lender.  For each agreement specified on Schedule 8.01(v)(i), Borrower has indicated (A) whether such agreement relates to inbound licenses of LFRP Intellectual Property to Borrower or outbound licenses of LFRP Intellectual Property by Borrower and (B) the specific LFRP Intellectual Property relating to such agreement.  Each agreement specified on Schedule 8.01(v)(i), whether or not terminated prior to the Closing Date, constitutes a valid and binding obligation, enforceable in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or general equitable principles.  Borrower is not in breach of such agreements and, to the Knowledge of Borrower, no circumstances or grounds exist that would give rise to a claim of breach or right of rescission, termination (other than existing rights under any License Agreement for a party to terminate for convenience), revision, or amendment of any of the agreements specified on Schedule 8.01(v)(i), including the signing of this Agreement.  None of the Excluded Agreements fall within the scope of an In License or License Agreement as each is defined; provided that the intellectual property or technology which is the subject of an In License may be assigned in connection with an Excluded Agreement.  None of the Excluded Agreements was used in the calculation of the revenue forecasts provided by Borrower to Lender on December 22, 2011.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(ii)           With respect to the License Agreements and In Licenses, there has been no correspondence or other written or, to the Knowledge of Borrower, oral communication sent by or on behalf of Borrower to, or received by or on behalf of Borrower from, any Contract Party, the subject matter of which could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(iii)           Except as set forth on Schedule 8.01(v)(iii), each such License Agreement or In License is in full force and effect and has not been impaired, waived, altered or modified in any respect, whether by consent or otherwise, and no scheduled item could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(iv)           Except as set forth on Schedule 8.01(v)(iii), the Contract Party under each such License Agreement or In License has not been released, in whole or in part, from any of its obligations under such License Agreement.

(v)           Borrower has not received (A) any notice or other written or, to the Knowledge of Borrower, oral communication of any Contract Party’s intention to terminate such License Agreement or In License in whole or in part, or consideration of any such termination, or (B) except as set forth on Schedule 8.01(v)(v), any notice or other written or, to the Knowledge of Borrower, oral communication requesting any amendment, alteration or modification of such License Agreement or In License or any sublicense or assignment thereunder, and no scheduled item could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(vi)           To the Knowledge of Borrower, nothing has occurred and no condition exists that would adversely impact the right of Borrower to receive any payments payable under any License Agreement except where such occurrence or condition could not reasonably be expected to result in a Material Adverse Effect.  Other than as set forth on Schedule 8.01(v)(vi), Borrower, or, to the Knowledge of Borrower, any Contract Party has not taken any action or omitted to take any action, that would adversely impact the right of Lender to take a security interest in the LFRP Technology, and no scheduled item could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(vii)           [*****]

(viii)           Except as set forth on Schedule 8.01(v)(viii), no License Agreement has been satisfied in full, discharged, canceled, terminated, subordinated or rescinded, in whole or in part.  Each License Agreement is the entire agreement between the parties thereto relating to the subject matter thereof, and no scheduled item could, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(ix)           The execution, delivery and performance of each License Agreement and In License was and is within the corporate powers or other organizational power of Borrower and, to the Knowledge of Borrower, the Contract Party thereto.  Each License Agreement and In License was duly authorized by all necessary action on the part of, and validly executed and delivered by, Borrower and, to the Knowledge of Borrower, 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 such License Agreement or In License by Borrower or, to the Knowledge of Borrower, the Contract Party thereto.

(x)           The representations and warranties made in each existing Material License and In License by Borrower were as of the date made true and correct in all material respects except where the failure to be true and correct could not reasonably be expected to have a Material Adverse Effect.

(xi)           The royalty rates and the duration of such royalty rates in each country under each existing License Agreement set forth on Schedule 8.01(v)(xi) are true and correct in all material respects.  There are no royalties due to Contract Parties under In Licenses with respect to Royalties under the License Agreements except to [*****].

(xii)           [*****]

(xiii)           No software is necessary for use in the LFRP other than commercially available software.

(xiv)           Schedule C sets forth all the biological material, know-how, data, technical and other information other than the LFRP Libraries described in Schedule D that is provided to Contract Parties under Library License Agreements, other than in oral form.

(xv)           The LFRP Libraries described in Schedule D are all the libraries used in the LFRP within the twelve (12) months prior to the Closing Date with the exception of affinity maturation libraries.

(w)Borrower and Borrower’s Subsidiaries have the insurance policies with the coverages and limits set forth on Schedule 8.01(w), carried with the insurance companies also set forth therein.

SECTION 8.02.Survival of Representations and Warranties.  All representations and warranties of Borrower contained in this Agreement shall survive the execution, delivery and acceptance thereof by the Parties and the closing of the transactions described in this Agreement.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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ARTICLE IX

AFFIRMATIVE COVENANTS

SECTION 9.01.Maintenance of Existence.  Borrower and/or any of its Subsidiaries party to the Loan Documents shall at all times (a) preserve, renew and maintain in full force and effect its legal existence and good standing as a corporation under the Laws of the jurisdiction of its organization; (b) not change its name or its chief executive office as set forth herein without having given the Lender simultaneous notice thereof; (c) take all reasonable action to maintain all rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct of its business, except to the extent that failure to do so could not reasonably be expected to have a Material Adverse Effect; and (d) preserve or renew all LFRP Intellectual Property, the non-preservation of which could reasonably be expected to have a Material Adverse Effect.

SECTION 9.02.Use of Proceeds.

(a)Borrower shall use the net proceeds of the Tranche A Loan received by it for general corporate purposes.

(b)Borrower shall use all of the net proceeds of the Tranche B Loan received by it, together, if necessary, with other cash, proceeds or amounts possessed by Borrower, to repay in full the Existing Loan Prepayment Amount on the Tranche B Funding Date.

SECTION 9.03.Financial Statements and Information.

(a)In the event that any such information need not to be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, Borrower shall furnish to the Lender, on or before the forty-fifth day after the close of each quarter of each fiscal year, the unaudited consolidated balance sheet of Borrower as at the close of such quarter and unaudited consolidated statement of operations and comprehensive loss and cash flows of Borrower for such quarter, duly certified by the chief financial officer of Borrower as having been prepared in accordance with GAAP.  Concurrently with the delivery or filing of the documents described in the preceding sentence, Borrower shall furnish to the Lender a certificate of the chief financial officer, chief accounting officer or treasurer of Borrower, which certificate shall include a statement that such officer has no knowledge, except as specifically stated, of any condition, event or act which constitutes a Default or Event of Default.

(b)In the event that any such information need not be filed with the SEC pursuant to Section 13 or 15(d) of the Exchange Act, Borrower shall furnish to the Lender, on or before the sixtieth day after the close of each fiscal year, Borrower’s audited financial statements as at the close of such fiscal year, including the consolidated balance sheet as at the end of such fiscal year and consolidated statement of operations and cash flows of Borrower for such fiscal year, in each case accompanied by the report thereon of independent registered public accountant of nationally recognized standing.  Concurrently with the delivery or filing of the documents described in the preceding sentence, Borrower shall furnish to the Lender a certificate of the chief financial officer, chief accounting officer or treasurer of Borrower, which certificate shall include a statement that such officer has no knowledge, except as specifically stated, of any condition, event or act which constitutes a Default or Event of Default.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(c)Borrower shall, promptly upon receipt thereof, forward or cause to be forwarded to the Lender copies of all notices, reports, updates and other information regarding the License Agreements and Included Receipts received from the Contract Parties which could reasonably be expected to have a Material Adverse Effect.

(d)Borrower shall furnish or cause to be furnished to the Lender from time to time such other information regarding the financial position, assets or business of Borrower or any other Subsidiary or its compliance with any Transaction Document to which it is a party or the LFRP as the Lender may from time to time reasonably request.

(e)Borrower shall, promptly after the end of each fiscal quarter of Borrower (but in no event later than [*****] following the end of such quarter), produce and deliver to the Lender a Quarterly Report and Business Report for such quarter, together with a certificate of a senior officer of Borrower, certifying that to the Knowledge of Borrower that such Quarterly Report and Business Report are true, correct and accurate in all material respects. Following receipt of any Business Report, the Lenders shall have the right to require a meeting in person or by phone with management of Borrower to discuss matters related to the LFRP.  With each Quarterly Report, Borrower shall provide a copy to the Lenders of each new executed License Agreement, In License and a copy of any amendment or other action (and notification of any action not in writing) as described in Section 9.15.

SECTION 9.04.Books and Records.  Borrower shall keep proper books, records and accounts in which entries in conformity with sound business practices and all requirements of Law applicable to it shall be made of all dealings and transactions in relation to its business, assets and activities and as shall permit the preparation of the consolidated financial statements of Borrower in accordance with GAAP.

SECTION 9.05.Inspection Rights; Access.  Borrower shall, on [*****], or, at any time during which a Default or Event of Default shall have occurred and be continuing, permit representatives of the Lender to examine its or its Subsidiaries’ assets, books and records upon reasonable Notice during normal business hours.  Borrower shall allow the Lender reasonable access to its managers and/or officers.  To the extent any License Agreement contains provisions requiring confidential treatment of any information, including financial information, that would prohibit Borrower from providing such information to the Lender, in connection with any audit permitted hereunder, Borrower shall have its independent certified public accountants provide a summary of the relevant information and certify that such information is true and correct in all respects.

SECTION 9.06.Maintenance of Insurance and Properties.  Borrower and its Subsidiaries shall maintain and preserve all of its properties that are used and useful in the conduct of the LFRP in good working order and condition, ordinary wear and tear excepted.  Borrower shall maintain insurance policies with the same or better coverages and limits as those set forth on Schedule 8.01(w) with the insurance companies set forth therein (the “Insurance Providers”) or with insurance companies rated at least as high as the Insurance Providers as of the Closing Date (according to A.M. Best Company, Inc.).  Borrower shall furnish to the Lender from time to time upon written request full information as to the insurance carried.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 9.07.Governmental Authorizations.  Borrower shall obtain, make and keep in full force and effect all authorizations from and registrations with Governmental Authorities that may be required for the validity or enforceability against Borrower of this Agreement and the other Transaction Documents to which it is a party.

SECTION 9.08.Compliance with Laws and Contracts.

(a)Borrower and any its Subsidiaries shall comply with all applicable Laws and perform its obligations under all Contracts relative to the conduct of its business, including the Transaction Documents to which it is party in all material respects.

(b)Borrower shall at all times comply with the margin requirements set forth in Section 7 of the Exchange Act and any regulations issued pursuant thereto, including, without limitation, Regulations T, U and X of the Board of Governors of the Federal Reserve System, 12 C.F.R., Chapter II.

SECTION 9.09.Plan Assets.  Borrower shall not take any action that causes its assets to be deemed to be Plan Assets at any time.

SECTION 9.10.Notices.

(a)Borrower shall promptly give written Notice to the Lender of each Default or Event of Default and each other event that has or could reasonably be expected to have a Material Adverse Effect; provided that in any situation where Borrower knows a press release or other public disclosure is to be made, Borrower shall use all commercially reasonable efforts to provide such information to the Lender as early as possible but in no event later than simultaneously with such release or other public disclosure.

(b)Borrower shall promptly give written Notice to the Lender upon receiving notice, or otherwise becoming aware, of any default or event of default under the License Agreements.

(c)Borrower shall, promptly after becoming aware thereof, give written Notice to the Lender of any litigation or proceedings to which Borrower or any of its Subsidiaries is a party or which could reasonably be expected to have a Material Adverse Effect.

(d)Borrower shall, promptly after becoming aware thereof, give written Notice to the Lender of any litigation or proceedings challenging the validity of the License Agreements, the LFRP Intellectual Property or any of the transactions contemplated therein.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(e)Borrower shall, promptly after becoming aware thereof, give written Notice to the Lender of any representation or warranty made or deemed made by Borrower in any of the Transaction Documents or in any certificate delivered to the Lender pursuant hereto shall prove to be untrue, inaccurate or incomplete in any material respect on the date as of which made or deemed made.

SECTION 9.11.Payment of Taxes.  Borrower shall pay all material taxes of any kind imposed on or in respect of its income or assets before any penalty or interest accrues on the amount payable and before any Lien on any of its assets exists as a result of nonpayment except as provided in Section 10.03 hereof and except for taxes contested in good faith by appropriate proceedings and for which adequate reserves are maintained in accordance with GAAP.

SECTION 9.12.Waiver of Stay, Extension or Usury Laws.  Borrower will not at any time, to the extent that it may lawfully not do so, insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law or any usury law or other law that would prohibit or forgive Borrower from paying all or any portion of the principal of or premium, if any, or interest on the Loans as contemplated herein, wherever enacted, now or at any time hereafter in force, or that may affect the covenants or the performance of this Agreement; and, to the extent that it may lawfully do so, Borrower hereby expressly waives all benefit or advantage of any such law and expressly agrees that it will not hinder, delay or impede the execution of any power herein granted to the Lender, but will suffer and permit the execution of every such power as though no such law had been enacted.

SECTION 9.13.Additional Covenants of Borrower.

(a)[*****]

(b)[*****]

SECTION 9.14.[*****].

SECTION 9.15.Further Assurances

(a).  Borrower shall promptly, at its sole cost and expense, execute and deliver to the Lender such further instruments and documents, and take such further action, as the Lender may, at any time and from time to time, reasonably request in order to carry out the intent and purpose of this Agreement and the other Transaction Documents to which it is a party and to establish and protect the rights, interests and remedies created, or intended to be created, in favor of the Lender hereby and thereby. [*****]From and after the Existing Loan Prepayment Date, in the event that any of the Collateral is, directly or indirectly, sold, leased, licensed, transferred or otherwise disposed of to a Subsidiary of Borrower, Borrower shall cause such Subsidiary to execute a joinder to the Security Agreement confirming that the Collateral continues to be subject to the Lien granted to the Lender thereunder and such other documentation that the Lender shall reasonably request.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 9.16.Termination of Existing Loan Agreement; Collateral.

(a)If the Existing Loan Prepayment Date shall occur prior to the Tranche B Funding Date, (i) Borrower shall promptly and duly execute and deliver to the Lender the Security Agreement (including the schedules thereto), the Lockbox Agreement and such other documents as the Lender shall reasonably request, in each case in form and substance satisfactory to the Lender, which shall be in full force and effect, and (ii) all filings, recordings and other actions that are necessary or reasonably requested by the Lender in order to establish, protect, preserve and perfect the security interest in the assets of Borrower as provided in the Security Agreement as a valid and perfected first priority security interest with respect to such assets shall be duly effected, including the filing of a UCC-1 financing statement and a Patent Security Agreement (as defined in the Security Agreement) and Copyright Security Agreement (as defined in the Security Agreement).

(b)As collateral security for the due and punctual payment or performance in full (including the payment of amounts that would become due but for the operation of the automatic stay under Subsection 362(a) of the United States Bankruptcy Code) of all Obligations, Borrower hereby grants to Lender, effective as of the Existing Loan Prepayment Date, a security interest (the "Security Interest") in all of the Borrower’s right, title and interest in and to the following personal property, whether now or hereafter existing, and wherever the same may be located (all such property, collectively, the “Loan Collateral”) (all terms used in this Section 9.16(b) and not otherwise defined herein shall have the meanings given to such terms in the Uniform Commercial Code, as in effect from time to time in the State of New York):

(i)the Gross Payments and Included Receipts;

(ii)the LFRP Patents, including those set forth on Schedule 8.01(u)(iv), and LFRP Know-How, including that described in Schedule C, and all other know-how, materials, trademarks, service marks, trade names and goodwill associated therewith, trade secrets, data, formulations, processes, franchises, inventions, software, copyrights, and all intellectual property (including biological materials), and all registrations of any of the foregoing, or applications therefor, that are (A) owned by, controlled by, issued to, licensed to, or licensed by Borrower and (B) used in the performance of the LFRP as presently conducted by Borrower or as conducted by Borrower as of the Closing Date or during the term of the Loans (but specifically excluding the biological material, individually or collectively, comprising each of the LFRP Libraries in the possession of the Borrower, it being the intent of the Parties that while intellectual property covering or embodied in the LFRP Libraries be within the scope of the Loan Collateral, all biological material comprising the LFRP Libraries, except for the Duplicate Libraries (as defined below), is excluded from the Loan Collateral);

(iii)the License Agreements;

(iv)the In Licenses;

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(v)all books, records, data bases, and information related to the LFRP;

(vi)all general intangibles, including all payment intangibles and all documents (notwithstanding any other provisions herein, as that term is defined in the UCC), instruments (including promissory notes), accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, in each case related to the Gross Payments and Included Receipts;

(vii)any other general intangibles necessary to the performance of or forming part of the LFRP;

(viii)(A) the Borrower’s interests in the Lockbox Account, (B) the Company Concentration Account, and (C) any other deposit account or securities account containing proceeds of Loan Collateral and into which a party to a License Agreement has remitted Royalties (the accounts referred to in clauses (A), (B) and (C) collectively, the “Pledged Deposit Accounts”), all funds on deposit in each such account, all investments arising out of such funds, all claims thereunder or in connection therewith and special purpose subaccounts maintained therein, and all monies and credit balances from time to time held in the Pledged Deposit Accounts or such subaccounts; all notes, certificates of deposit, deposit accounts, checks and other instruments from time to time hereafter delivered to or otherwise possessed by Borrower in substitution for or in addition to any or all of the then existing items described in this subsection (viii); and all interest, dividends, cash, securities, rights, instruments and other property at any time and from time to time received, receivable or otherwise distributed in respect of such accounts, such funds, or such investments or received in exchange for any or all of the items described in this subsection;

(ix)all money now or at any time in the possession or under the control of, or in transit to, the Lockbox Bank, or the Borrower relating to any of the foregoing in this Section 9.16(b);

(x)quantities of biological material comprising a complete copy of each of the LFRP Libraries that are sufficient to be used to create a reproducible supply of the LFRP Libraries (the “Duplicate Libraries”); and

(xi)all Proceeds.

(c)The Parties agree that the Security Interest in the Loan Collateral granted hereunder shall not attach to such Loan Collateral and shall not become effective until the Existing Loan Prepayment Date.  Without limiting the obligations of Borrower to enter into the Security Agreement and take the other actions required pursuant to Section 9.16(a), the Security Interest shall automatically attach to the Loan Collateral and become effective on the Existing Loan Prepayment Date without any action or consent of any Person.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(d)Borrower hereby authorizes the Lender to file a UCC financing statement describing the Loan Collateral and specifying that the Security Interest in the Loan Collateral will be granted to the Lender as of the Existing Loan Prepayment Date only.  Borrower hereby agrees to notify the Lender in writing of any change in its name, identity or corporate structure at least fifteen (15) days prior to such change and give the Lender thirty (30) days’ prior written notice of any change in its chief place of business, chief executive office or residence or the office where Borrower keeps its records regarding the Loan Collateral or a reincorporation, reorganization or other action that results in a change of the jurisdiction of organization of Borrower.

(e)In the event that, notwithstanding this Section 9.16, Borrower shall grant a Lien on the Collateral to any Person (other than as expressly permitted pursuant to Section 10.03) such Person shall be deemed to hold such Lien on behalf and for the benefit of the Lender and the Lender hereby appoints any such Person as its representative for the purposes of holding such Lien on its behalf.

ARTICLE X

NEGATIVE COVENANTS

SECTION 10.01.Activities of Borrower.

(a)Neither Borrower nor any of its Subsidiaries shall amend, modify or waive or terminate any provision of, or permit or agree to the amendment, modification, waiver or termination of any provision of, any of the Loan Documents, License Agreements or any material Contract related to the LFRP that could reasonably be expected to have a Material Adverse Effect without the prior written consent of the Lender.

(b)Neither Borrower nor any of its Subsidiaries shall use any current or future protein, peptide or antibody selection technology to establish a business or business unit competing with the LFRP or enable a third party to use for funded research or license out any such technology in a way that would compete with the LFRP.

SECTION 10.02.Merger; Sale of Assets.

(a)Borrower shall not merge or consolidate with or into (whether or not Borrower is the Surviving Person) any other Person and Borrower will not, and will not cause or permit any Subsidiary to, sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of Borrower’s and its Subsidiaries assets (determined on a consolidated basis for Borrower and its Subsidiaries) to any Person in a single transaction or series of related transactions, unless (1) either (A) Borrower will be the Surviving Person or (B) the Surviving Person (if other than Borrower) will be an entity organized and validly existing under the laws of Delaware, and will, in any such case, expressly assume the due and punctual payment of the principal of, premium, if any, and interest on the Loans and the performance and observance of every covenant of the Loan Documents to be performed or observed on the part of Borrower and shall use its commercially reasonable efforts to actively market and promote the LFRP and to seek out and exploit opportunities for entering into Future Licenses; and (2) immediately thereafter, on a pro forma basis after giving effect to such transaction (and treating any Indebtedness not previously an obligation of Borrower or any Subsidiary of Borrower in connection with or as a result of such transaction as having been incurred at the time of such transaction), no Default or Event of Default will have occurred and be continuing.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(b)Neither Borrower nor any of its Subsidiaries shall directly or indirectly sell, lease, license, transfer or otherwise dispose of all or any part of its assets consisting of or used in the LFRP Technology or the LFRP, except (i) licenses of intellectual property rights of Borrower or any of its Subsidiaries in connection with services provided by Borrower or such Subsidiary for fair value in an arm’s-length transaction in the ordinary course of its business; (ii) sales of equipment not needed for Borrower’s business to one or more third parties for fair value in an arm’s-length transaction; provided any assets received in return from such transaction are subject to the Lien created by the Security Agreement; (iii) sales of equipment to one or more third parties for fair value in an arm’s-length transaction, the proceeds of which are used to purchase replacement or other assets useful in Borrower’s LFRP business within [*****] of such sale and (iv) other sales, leases, licenses, transfers or other dispositions in an aggregate amount not to exceed [*****] from the Closing Date through the term of this Agreement.

SECTION 10.03.Liens.  Neither Borrower nor any of its Subsidiaries shall create or suffer to exist any Lien on or with respect to the Collateral other than (i) pursuant to or to the extent permitted under this Agreement and, from and after the Existing Loan Prepayment Date, the Security Agreement and (ii) Liens on the Existing Loan Collateral under the Existing Loan Security Agreement, as in effect on the date hereof.  Borrower shall not create or suffer to exist any Lien on or with respect to any of its assets that are not Collateral, whether now owned or hereafter acquired, other than the following (collectively, “Permitted Liens”):

(a)Liens existing on the Closing Date set forth in Schedule 10.03(a) to the extent and in the manner such Liens are in effect on the Closing Date;

(b)any Lien granted to collaboration or development partners of Borrower or its Affiliates in connection with funded research, development and commercialization activities (other than on or with respect to the LFRP Intellectual Property or the Included Receipts); provided that any such Lien is limited to Borrower’s and/or any applicable Subsidiaries’ interest in products developed in such collaboration;

(c)any Lien on any asset securing Indebtedness incurred or assumed for the purpose of financing all or any part of the cost of acquiring such asset; provided that such Lien attaches to such asset concurrently with or within [*****] after the acquisition thereof;

(d)any Lien existing on any asset prior to the acquisition thereof by Borrower or any Subsidiary of Borrower and not created in contemplation of such acquisition;

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(e)any Lien created after the Closing Date in connection with capitalized lease obligations, but only to the extent that such Lien encumbers property financed by such capital lease obligation and the principal component of such capitalized lease obligation is not increased;

(f)Liens arising in the ordinary course of its business (other than on or with respect to the LFRP Intellectual Property or the Included Receipts) which (i) do not secure Indebtedness and (ii) do not in the aggregate materially impair the operation of the business of Borrower or impair the value of the Included Receipts;

(g)easements, rights-of-way, zoning restrictions and other similar charges or encumbrances in respect of real property not interfering with the ordinary conduct of the business of Borrower;

(h)any Lien on assets that are not Collateral arising out of the refinancing, extension, renewal or refunding of any Indebtedness secured by any Lien permitted by any of the foregoing clauses (a) through (g) of this Section 10.03; provided that such Indebtedness is not increased and is not secured by any additional assets;

(i)Liens securing taxes, assessments, fees or other governmental charges or levies, Liens securing the claims of materialmen, mechanics, carriers’ landlords, warehousemen and similar Persons, Liens in the ordinary course of business in connection with workmen’s compensation, unemployment insurance and other similar Laws, Liens to secure surety, appeal and performance bonds and other similar obligations not incurred in connection with the borrowing of money, and attachment, judgment and other similar Liens arising in connection with court proceedings so long as the enforcement of such Liens is effectively stayed and the claims secured thereby are being contested in good faith by appropriate proceedings.

SECTION 10.04.Investment Company Act.  Neither Borrower nor any of its Subsidiaries shall be or become an investment company subject to registration under the Investment Company Act of 1940.

SECTION 10.05.Limitation on Additional Indebtedness.  Neither Borrower nor any of its Subsidiaries shall, directly or indirectly, incur or suffer to exist any Indebtedness; provided that Borrower and its Subsidiaries may incur:

(a)Indebtedness under this Agreement;

(b)Indebtedness under the Existing Loan Agreement, as in effect on the date hereof, in an aggregate principal amount not to exceed (i) the aggregate principal amount outstanding on the date hereof less (ii) any reduction or repayment thereof expressly required pursuant to Section 3.01(a) of the Existing Loan Agreement, as in effect on the date hereof;

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(c)Indebtedness secured by Liens permitted under Section 10.03 other than Section 10.03(b) (but, in the case of Liens permitted under Section 10.03(a), only to the extent of the Indebtedness related thereto);

(d)any other Indebtedness of Borrower, which by its terms (or by the terms of any agreement governing such Indebtedness) is fully subordinated in right of payment to the Loans;

(e)capital leases and leasehold improvements consistent with past practices; or

(f)other unsecured Indebtedness of Borrower not to exceed [*****].

SECTION 10.06.Limitation on Transactions with Controlled Affiliates.  Neither Borrower nor any of its Subsidiaries shall, directly or indirectly, enter into any transaction or series of related transactions or participate in any arrangement (including any purchase, sale, lease or exchange of assets or the rendering of any service) with, or for the benefit of, any Controlled Affiliate other than the Transaction Documents or in the ordinary course of business of Borrower upon fair and reasonable terms no less favorable to Borrower than it would obtain in a comparable arm’s-length transaction with a non-Controlled Affiliate; provided that Borrower and its Subsidiaries may engage in the following transactions:

(a)reasonable and customary director, officer and employee compensation (including bonuses) and other benefits (including retirement, health, stock option and other benefit plans) and indemnification arrangements, in each case approved in good faith by the Board of Directors of Borrower;

(b)transactions with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods and services, in each case in the ordinary course of business and otherwise not prohibited by the Loan Documents;

(c)dividends permitted by Section 10.08;

(d)transactions among Borrower and its Wholly Owned Subsidiaries.

SECTION 10.07.ERISA.

(a)Neither Borrower nor any of its Subsidiaries shall maintain or contribute to, or agree to maintain or contribute to or otherwise incur any liability with respect to, any employee benefit plan (as defined in Section 3(3) of ERISA) subject to Title IV or Section 302 of ERISA or Section 412 of the Code or any similar plan under non-U.S. law (a “Plan”) that could reasonably be expected to have a Material Adverse Effect.

(b)Neither Borrower nor any of its Subsidiaries shall engage in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Code, or substantially similar provisions under foreign or U.S. federal, state or local laws, rules or regulations or in any transaction that would cause any obligation or action taken or to be taken hereunder (or the exercise by the Lender of any of its rights under the Notes, this Agreement or the Security Agreement) to be a non-exempt prohibited transaction under such provisions.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(c)Neither Borrower nor any of its Subsidiaries will incur any material liability with respect to any obligation to provide medical benefits with respect to any person beyond their retirement or other termination of service other than coverage mandated by law.

SECTION 10.08.Restricted Payments.  Borrower will not, and will not permit any Subsidiary to, directly or indirectly, make any Restricted Payment other than pursuant to clauses (a) through (b) below; provided that Borrower and its Subsidiaries may not make any Restricted Payments while an Event of Default has not occurred and is continuing:

(a)Restricted Payments not to exceed [*****] in the aggregate from the Closing Date through the Maturity Date; and

(b)the redemption of any Capital Stock of Borrower or any Subsidiary in exchange for, or out of the proceeds of the substantially concurrent issuance and sale of, Qualified Capital Stock.

SECTION 10.09.Prepayment of Indebtedness.

(a)Borrower will not, and will not permit any Subsidiary to, directly or indirectly, make any payment on or in respect of the Existing Loan, except for any such payment (i) expressly required pursuant to Sections 3.01(a) and 4.01(a) of the Existing Loan Agreement, as in effect on the date hereof, or (ii) made by Borrower on the Tranche B Funding Date using the net proceeds of the Tranche B Loan (any such prepayment pursuant to this clause (ii), a “Permitted Existing Loan Prepayment”); provided, however, that, notwithstanding anything to the contrary set forth in this Section 10.09(a), Borrower may, at any time after the Tranche B Closing Date, prepay the Existing Loan, in whole but not in part (in accordance with the terms thereof), from cash on hand or from the proceeds of any financing transaction of any kind and with any Person, and any such prepayment shall constitute a Permitted Existing Loan Prepayment for all purposes hereunder, if (x) the Tranche B Funding Date does not occur on or prior to the Tranche B Closing Date because Borrower is unable to satisfy the conditions precedent set forth in Section 7.02(i) and, as a result, the Lender elects not to make the Tranche B Loan and (y) no Default or Event of Default shall have occurred and be continuing at the time of such prepayment or shall occur as a result thereof or immediately after giving effect thereto.

(b)Prior to the Tranche B Closing Date, neither Borrower nor any of its Affiliates will, and Borrower shall cause its agents and representatives (including any financial advisor, attorney or accountant retained by it or any of its Affiliates) not to, directly or indirectly, (i) solicit, initiate, encourage or facilitate (including by way of furnishing information or data) any inquiries or the making of any proposal or offer (except for any proposal or offer from the Lender) with respect to (A) any financing transaction of any kind or nature in connection with or in contemplation of, or the proceeds of which are intended or expected by Borrower to be used, in whole or in part, to make, any payment on or in respect of the Existing Loan, (B) any sale, transfer, assignment or other disposition of, or incurrence or granting of any Lien on, Borrower's interest in the Existing Loan Collateral or (C) any similar transaction (any such proposal or offer referred to in clauses (A), (B) and (C), a "Transaction Proposal"), (ii) have any discussions with or provide any confidential information or data to any Person (other than the Lender) relating to a Transaction Proposal or engage in any negotiations with any Person (other than the Lender) concerning a Transaction Proposal, (iii) facilitate any effort or attempt to make or implement a Transaction Proposal by any Person (other than the Lender) or (iv) accept any Transaction Proposal (other than from the Lender).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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ARTICLE XI

EVENTS OF DEFAULT

SECTION 11.01.Events of Default.  If one or more of the following events of default (each, an “Event of Default”) occurs and is continuing, the Lender shall be entitled to the remedies set forth in Section 11.02:

(a)Borrower fails to pay any principal of the Loans when due, whether on the Tranche A Maturity Date or the Maturity Date, as applicable, or otherwise.

(b)Except as permitted by Section 4.01, Borrower fails to pay any interest on the Loans or make payment of any other amounts payable under this Agreement within three Business Days after the same becomes due and payable.

(c)Any representation or warranty of Borrower or any of its Subsidiaries in any Loan Document to which it is party or in any certificate, financial statement or other document delivered by Borrower or such Subsidiary in connection with this Agreement proves to have not been true and correct either at the time it was made and the failure of such statement to be true and correct, individually or in the aggregate, results in a Material Adverse Effect or could reasonably be expected to have a Material Adverse Effect (except that any representation or warranty that is qualified as to “materiality” or “Material Adverse Effect” shall be true and correct in all respects).

(d)Borrower fails to perform or observe any covenant or agreement contained in Section 2,01(b), 9.02(b), 9.03(a), (c) or (d), 9.10, 9.16, 10.02 or 10.09.

(e)Borrower or any of its Subsidiaries party to the Loan Documents fails to perform or observe any other covenant or agreement contained in this Agreement, the Notes or the Security Agreement (other than those referred to in the preceding clauses of this Section 11.01) if (i) such failure is not remedied on or before the thirtieth day after Notice thereof from the Lender and (ii) the failure to perform or observe any such covenant or agreement, individually or in the aggregate, results in a Material Adverse Effect or could reasonably be expected to have a Material Adverse Effect.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(f)Borrower or any of its Subsidiaries (i) fails to pay when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) any Indebtedness (other than the Obligations hereunder) having an aggregate principal amount in excess of [*****] or (ii) fails to perform or observe any covenant or agreement to be performed or observed by it contained in any agreement or in any instrument evidencing any of its Indebtedness having an aggregate principal amount in excess of [*****] and, as a result of such failure, any other party to that agreement or instrument is entitled to exercise the right to accelerate the maturity of any Indebtedness thereunder and such Indebtedness is accelerated; provided, however, that a failure under items (i) or (ii) shall not constitute an Event of Default under this clause (f) if (x) the obligation to pay the overdue amounts has not resulted from acceleration and (z) the failure is remedied on or before the greater of (I) the thirtieth day after it occurs, or (II) any grace period applicable to such overdue amounts.

(g)Borrower and/or any of its Subsidiaries shall sell, assign, lease, license, transfer or otherwise dispose of the LFRP Intellectual Property or any Included Receipts, or Borrower and/or any of its Subsidiaries takes any action which could reasonably be expected to impair the Lender’s Lien on any of the foregoing from and after the Existing Loan Prepayment Date, except to the extent permitted under Section 10.02(b).

(h)Any uninsured judgment, decree or order in excess of [*****] shall be rendered against Borrower and any of its Subsidiaries and either (i) enforcement proceedings shall have been commenced upon such judgment, decree or order or (ii) such judgment, decree or order shall not have been vacated or discharged within thirty days from entry.

(i)Borrower or any Significant Subsidiary (i) is dissolved or commences proceedings for dissolution, (ii) fails or is unable to pay its debts generally as they become due, (iii) commences a voluntary case in bankruptcy or any other action or proceeding for any other relief under any law affecting creditors’ rights that is similar to a bankruptcy law or (iv) consents by answer or otherwise to the commencement against it of an involuntary case in bankruptcy or any other such action or proceeding; or a court enters an order for relief or a decree in an involuntary case in bankruptcy or any other such action or proceeding in respect of any such Person or any of the assets of any such Person if such order or decree is not dismissed or withdrawn on or before the sixtieth day after the entry thereof or if any such dismissal or withdrawal ceases to remain in effect.

(j)Any of the Transaction Documents (other than any License Agreement and, prior to the Existing Loan Prepayment Date, the Security Agreement and the Lockbox Agreement) shall cease to be in full force and effect or its validity or enforceability is disaffirmed or challenged in writing by any Person other than the Lender, or, from and after the Existing Loan Prepayment Date, this Agreement or the Security Agreement shall cease to give the Lender the rights purported to be created hereby or thereby (including a first priority perfected Lien on the assets of Borrower or any of its Subsidiaries party to the Loan Documents) other than as a direct result of any action by a Lender or failure of a Lender to perform an obligation.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(k)Borrower and/or any of its Subsidiaries fails to perform or observe any covenant or agreement contained in any License Agreement or Borrower Documents, as applicable, and such failure is not cured or waived within any applicable grace period except where such failure could not reasonably be expected to have a Material Adverse Effect.

(l)In connection with a challenge to the validity of the Included Receipts or any LFRP Intellectual Property or any transaction contemplated under the License Agreements, any judgment, decree or order is issued that (i) halts or suspends the payment by any Contract Party of any amount payable in respect of the Included Receipts, or (ii) otherwise determines that the Included Receipts have not been duly authorized or validly issued or that the Included Receipts are not enforceable in accordance with the terms of the applicable License Agreement, and such judgment, decree or order shall not have been vacated or discharged within 10 days from entry.

(m)From and after the Existing Loan Prepayment Date, any security interest purported to be created by this Agreement or the Security Agreement shall cease to be in full force and effect, or shall cease to give the rights, powers and privileges purported to be created and granted hereunder or thereunder (including a perfected first priority security interest in and Lien on all of the Collateral thereunder (except as otherwise expressly provided herein and therein)) in favor of the party secured on behalf of the Lenders pursuant hereto or thereto, or shall be asserted by Borrower and/or any of its Subsidiaries not to be a valid, perfected, first priority (except as otherwise expressly provided in this Agreement or such Security Agreement) security interest in the Collateral covered thereby.

(n)A default shall occur under the Existing Loan Agreement.

SECTION 11.02.Default Remedies.  If any Event of Default shall occur, the Lender may, by Notice to Borrower, (a) exercise all rights and remedies available to the Lender hereunder and under the Security Agreement, including enforcement of the security interests created thereby, (b) declare the Loans, all interest thereon and all other amounts payable hereunder and under the applicable Note(s) by Borrower to be immediately due and payable, whereupon all such amounts shall become immediately due and payable, all without diligence, presentment, demand of payment, protest or further notice of any kind, which are expressly waived by Borrower and (c) declare the obligations of the Lender hereunder to be terminated, whereupon such obligations shall terminate; provided, however, that if any event of any kind referred to in Section 11.01(i) occurs, the obligations of the Lender hereunder shall immediately terminate, all amounts payable hereunder by Borrower shall become immediately due and payable and the Lender shall be entitled to exercise rights and remedies under the Security Agreement without diligence, presentment, demand of payment, protest or notice of any kind, all of which are hereby expressly waived by Borrower.  Each Notice delivered pursuant to this Section 11.02 shall be effective when sent.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 11.03.Right of Set-off; Sharing of Set-off.

(a)If any amount payable hereunder is not paid as and when due, Borrower irrevocably authorizes the Lender and each Affiliate of the Lender (i) to proceed, to the fullest extent permitted by applicable Law, without prior notice, by right of set-off, bankers’ lien, counterclaim or otherwise, against any assets of Borrower in any currency that may at any time be in the possession of the Lender or such Affiliate, to the full extent of all amounts payable to the Lender hereunder or (ii) to charge to Borrower’s account with Lender the full extent of all amounts payable by Borrower to the Lender hereunder; provided, however, that the Lender shall notify Borrower of the exercise of such right promptly following such exercise.

(b)If any Lender shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other obligations owed to such Lender resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other obligations owed to such Lender greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the other Lenders of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them; provided that the provisions of this Section 11.03(b) shall not be construed to apply to (x) any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans to any assignee.

SECTION 11.04.Rights Not Exclusive.  The rights provided for herein are cumulative and are not exclusive of any other rights, powers, privileges or remedies provided by Law.

ARTICLE XII

INDEMNIFICATION

SECTION 12.01.Funding Losses.  If Borrower fails to borrow the Tranche A Loan on the Closing Date or the Tranche B Loan on the Tranche B Funding Date, in each case after the applicable Notice of Borrowing has been given to the Lender in accordance herewith, Borrower shall reimburse the Lender within three Business Days after demand for any resulting loss or expense incurred by the Lender including any loss incurred in obtaining, liquidating or redeploying deposits from third parties; provided that the Lender shall have delivered to Borrower a certificate as to the amount of such loss or expense.

SECTION 12.02.[Reserved].

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 12.03.Other Losses.

(a)Borrower agrees to defend (subject to Indemnitees’ selection of counsel), indemnify, pay and hold harmless, the Lender and its Affiliates and their respective officers, partners, directors, trustees, employees and agents (each, an “Indemnitee”), from and against any and all Indemnified Liabilities, in all cases, whether or not caused by or arising, in whole or in part, out of the comparative, contributory or sole negligence of such Indemnitee; provided Borrower shall not have any obligation to any Indemnitee hereunder with respect to any Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful misconduct of such Indemnitee.  To the extent that the undertakings to defend, indemnify, pay and hold harmless set forth in this Section 12.03 may be unenforceable in whole or in part because they are violative of any law or public policy, Borrower shall contribute the maximum portion that it is permitted to pay and satisfy under applicable law to the payment and satisfaction of all Indemnified Liabilities incurred by Indemnitees or any of them.

(b)To the extent permitted by applicable law, no Party shall assert, and each Party hereby waives, any claim against each other Party and such Party’s Affiliates, directors, employees, attorneys or agents, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether or not the claim therefor is based on contract, tort or duty imposed by any applicable legal requirement) arising out of, in connection with, as a result of, or in any way related to, this Agreement or any Loan Document or any agreement or instrument contemplated hereby or thereby or referred to herein or therein, the transactions contemplated hereby or thereby, the Loans or the use of the proceeds thereof or any act or omission or event occurring in connection therewith, and each Party hereby waives, releases and agrees not to sue upon any such claim or any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

SECTION 12.04.Assumption of Defense; Settlements.  If the Lender is entitled to indemnification under this Article XII with respect to any action or proceeding brought by a third party that is also brought against Borrower, Borrower shall be entitled to assume the defense of any such action or proceeding with counsel reasonably satisfactory to the Lender.  Upon assumption by Borrower of the defense of any such action or proceeding, Borrower shall have the right to participate in such action or proceeding and to retain its own counsel but Borrower shall not be liable for any legal expenses of other counsel subsequently incurred by the Lender in connection with the defense thereof unless (i) Borrower has otherwise agreed to pay such fees and expenses, (ii) Borrower shall have failed to employ counsel reasonably satisfactory to the Lender in a timely manner or (iii) the Lender shall have been advised by counsel that there are actual or potential conflicting interests between Borrower and the Lender, including situations in which there are one or more legal defenses available to the Lender that are different from or additional to those available to Borrower; provided, however, that Borrower shall not, in connection with any one such action or proceeding or separate but substantially similar actions or proceedings arising out of the same general allegations, be liable for the fees and expenses of more than one separate firm of attorneys at any time for the Lender, except to the extent that local counsel, in addition to its regular counsel, is required in order to effectively defend against such action or proceeding.  Borrower shall not consent to the terms of any compromise or settlement of any action defended by Borrower in accordance with the foregoing without the prior written consent of the Lender unless such compromise or settlement (x) includes an unconditional release of the Lender from all liability arising out of such action and (y) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of the Lender.  Borrower shall not be required to indemnify the Lender for any amount paid or payable by the Lender in the settlement of any action, proceeding or investigation without the written consent of Borrower, which consent shall not be unreasonably withheld.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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ARTICLE XIII

MISCELLANEOUS

SECTION 13.01.Assignments.

(a)Borrower shall not be permitted to assign this Agreement without the prior written consent of the Lender and any purported assignment in violation of this Section 13.01 shall be null and void.

(b)Lender may at any time assign all its rights and obligations hereunder, in whole or in part, to any other Person (each an “Assignee”).

(c)The parties to each assignment shall execute and deliver to Borrower a written instrument of assignment in the form set forth in Exhibit M, containing the agreement of the assignee to be bound by the terms of this Agreement (an “Assignment and Acceptance”).  Upon the effectiveness of a permitted assignment hereunder, (i) each reference in this Agreement to “Lender” shall be deemed to be a reference to the assignor and the assignee to the extent of their respective interests, (ii) such assignee shall be a Lender party to this Agreement and shall have all the rights and obligations of a Lender and (iii) the assignor shall be released from its obligations hereunder to a corresponding extent of the assignment, and no further consent or action by any party shall be required.

(d)In the event there are multiple Lenders, all payments of principal, interest, fees and any other amounts payable pursuant to the Loan Documents shall be allocated on a pro rata basis among the Lenders according to their proportionate interests in the applicable Loans.

(e)Borrower shall, from time to time at the request of the Lender, execute and deliver any documents that are necessary to give full force and effect to an assignment permitted hereunder, including new Notes in exchange for the Notes held by the Lender.

(f)Except in the case of an assignment to a Lender or an Affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Loans of any Tranche, the amount of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Acceptance with respect to such assignment is delivered to Borrower) shall not be less than [*****] unless Borrower otherwise consents, provided that no such consent of Borrower shall be required if a Default has occurred and is continuing.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 13.02.[Reserved].

SECTION 13.03.Successors and Assigns.  This Agreement shall be binding upon and inure to the benefit of the Parties and their respective successors and permitted assigns.

SECTION 13.04.Notices.  All notices, consents, approvals, reports, designations, requests, waivers, elections and other communications (collectively, “Notices”) authorized or required to be given pursuant to this Agreement shall be given in writing and either personally delivered to the Party to whom it is given or delivered by an established delivery service by which receipts are given or mailed by registered or certified mail, postage prepaid, or sent by facsimile or electronic mail with a copy sent on the following Business Day by one of the other methods of giving notice described herein, addressed to the Party at its address listed below:

(a)If to Borrower on or before January 28, 2012:

Dyax Corp.

300 Technology Square

Cambridge, MA  02139

Attention:  George Migausky

Facsimile:  (617) 225-7708

E-mail:  gmigausky@dyax.com

with a copy (which shall not constitute notice) to:

Dyax Corp.

300 Technology Square

Cambridge, MA  02139

Attention:  Ivana Magovcevic-Liebisch

Facsimile:  (617) 225-7708

E-mail:  imagovcevic@dyax.com

with a copy (which shall not constitute notice) to:

Dyax Corp.

300 Technology Square

Cambridge, MA  02139

Attention:  Andrew Ashe

Facsimile:  (617) 225-7708

E-mail:  aashe@dyax.com

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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If to Borrower after January 28, 2012:

Dyax Corp.

55 Network Drive

Burlington, MA 01803

Attention:  George Migausky

Facsimile:  (617) 225-7708

E-mail:  gmigausky@dyax.com

with a copy (which shall not constitute notice) to:

Dyax Corp.

55 Network Drive

Burlington, MA 01803

Attention:  Ivana Magovcevic-Liebisch

Facsimile:  (617) 225-7708

E-mail:  imagovcevic@dyax.com

with a copy (which shall not constitute notice) to:

Dyax Corp.

55 Network Drive

Burlington, MA 01803

Attention:  Andrew Ashe

Facsimile:  (617) 225-7708

E-mail:  aashe@dyax.com

in each case with a copy (which shall not constitute notice) to:

Edwards Wildman Palmer LLP

111 Huntington Avenue

Boston, MA  02199

Attention:  Stacie S. Aarestad

Facsimile:  (617) 227-4420

E-mail:  saarestad@edwardswildman.com

(b)           If to a Lender:

LFRP Investors, L.P.

177 Broad Street, Suite 1101

Stamford, CT  06901

Attention:  Gregory B. Brown, M.D.

Facsimile:  (203) 388-9084

Email:  greg.brown@cowen.com

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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with a copy (which shall not constitute notice) to:

Vanderbilt Overflow GP, LLC

177 Broad Street, Suite 1101

Stamford, CT  06901

Attention:  Vice President – Legal

Facsimile:  (203) 388-9080

Email: Royalty@Cowen.com

with a copy (which shall not constitute notice) to:

Cahill Gordon & Reindel llp

80 Pine Street

New York, NY  10005

Attn:  Christopher T. Cox

Facsimile:  (212) 396-0136

E-mail:  ccox@cahill.com

Any Party may change its address for the receipt of Notices at any time by giving Notice thereof to the other Parties.  Except as otherwise provided herein, any Notice authorized or required to be given by this Agreement shall be effective when received.

SECTION 13.05.Entire Agreement.  This Agreement, the other Transaction Documents and the Confidentiality Agreement contain the entire agreement between the Parties relating to the subject matter hereof and supersede all oral statements and prior writings with respect thereto.

SECTION 13.06.Modification.  No Loan Document or provision thereof may be waived, amended or modified except, in the case of this Agreement, by an agreement or agreements in writing executed by Borrower and the Lender or, in the case of any other Loan Document, by an agreement or agreements in writing entered into by the parties thereto with the consent of the Lender.

SECTION 13.07.No Delay; Waivers; etc.

  No delay on the part of the Lender in exercising any power or right hereunder shall operate as a waiver thereof nor shall any single or partial exercise of any power or right hereunder preclude other or further exercise thereof or the exercise of any other power or right.  The Lender shall not be deemed to have waived any rights hereunder unless such waiver shall be in writing and signed by the Lender.

SECTION 13.08.Severability.  If any provision of this Agreement shall be held to be invalid, illegal or unenforceable, then, to the fullest extent permitted by law, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 13.09.Determinations.  Each determination or calculation by the Lender hereunder shall, in the absence of manifest error, be conclusive and binding on the Parties.

SECTION 13.10.Replacement of Note.  Upon the loss, theft, destruction, or mutilation of any Note and (a) in the case of loss, theft or destruction, upon receipt by Borrower of indemnity or security reasonably satisfactory to it (except that if the holder of such Note is the Lender or any other financial institution of recognized responsibility, the holder’s own agreement of indemnity shall be deemed to be satisfactory) or (b) in the case of mutilation, upon surrender to Borrower of any mutilated Note, Borrower shall execute and deliver in lieu thereof a new Note, dated the Closing Date, in the case of the Tranche A Note, or dated the Tranche B Funding Date, in the case of the Tranche B Note, in the same principal amount.

SECTION 13.11.Governing Law.  THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

SECTION 13.12.Jurisdiction.  Borrower irrevocably submits to the jurisdiction of the courts of the State of New York and of the United States sitting in the State of New York, and of the courts of its own corporate domicile with respect to actions or proceedings brought against it as a defendant, for purposes of all legal proceedings arising out of or relating to this Agreement or the transactions contemplated hereby (a “Proceeding”).  Borrower irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any Proceeding and any claim that any Proceeding has been brought in an inconvenient forum.  Any process or summons for purposes of any Proceeding may be served on Borrower by mailing a copy thereof by registered mail, or a form of mail substantially equivalent thereto, addressed to it at its address as provided for Notices hereunder.

SECTION 13.13.Waiver of Jury Trial.  BORROWER HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

SECTION 13.14.Waiver of Immunity.  To the extent that Borrower has or hereafter may be entitled to claim or may acquire, for itself or any of its assets, any immunity from suit, jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, or otherwise) with respect to itself or any of its property, Borrower hereby irrevocably waives such immunity in respect of its obligations hereunder and under the Notes to the fullest extent permitted by law.

SECTION 13.15.Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 13.16.Limitation on Rights of Others.  Except for the Indemnitees referred to in Section 12.03, no Person other than a Party shall have any legal or equitable right, remedy or claim under or in respect of this Agreement.

SECTION 13.17.No Partnership.  Nothing in this Agreement or any other Transaction Document shall be read to create any agency, partnership or joint venture of the Lender (or any of its Affiliates) and Borrower (or any of its Affiliates).  Each Party agrees not to refer to the other as a “partner” or the relationship as “partnership” or “joint venture.”

SECTION 13.18.Survival.  The obligations of Borrower contained in Sections 4.04, 4.05, Article V and Article XII shall survive the repayment of the Loans and the cancellation of the Notes and the termination of the other obligations of Borrower hereunder.

SECTION 13.19.Patriot Act Notification.  Lender hereby notifies Borrower that, consistent with the USA Patriot Act, Public Law No. 107-56 (the “Patriot Act”), regulations promulgated thereunder and under other applicable Law, the Lender’s procedures and customer due diligence standards require it to obtain, verify and record information that identifies Borrower, including among other things name, address, information regarding persons with authority or control over Borrower, and other information regarding Borrower, its operations and transactions with the Lender.  Borrower agrees to provide such information and take such actions as are reasonably requested by the Lender in order to assist the Lender in maintaining compliance with its procedures, the Patriot Act and any other applicable Laws.

ARTICLE XIV

SUBORDINATION

SECTION 14.01.Obligations Subordinated to Indebtedness Under the Existing Loan Agreement.  Borrower covenants and agrees, and the Lender by its acceptance hereof likewise covenants and agrees, that all Obligations shall be issued subject to the provisions of this Article XIV; and each Person holding any Obligations, whether upon original issue or upon transfer, assignment or exchange thereof, accepts and agrees that all payments of the principal of and interest on the Obligations by Borrower shall, to the extent and in the manner set forth in this Article XIV be subordinated and junior in right of payment to the prior payment in full in cash of the Existing Loan.

SECTION 14.02.No Payment on Obligations in Certain Circumstances; Payment Held in Trust.

(a)No Payments in Certain Circumstances.  No direct or indirect payment by or on behalf of Borrower of principal of or interest on the Loans, whether pursuant to the terms of the Obligations, upon acceleration, or otherwise, shall be made if, at the time of such payment, there exists a default in the payment of all or any portion of the obligations under the Existing Loan Agreement, whether at maturity, on account of mandatory redemption or prepayment or acceleration, and such default shall not have been cured or waived or the benefits of this sentence waived by or on behalf of lender under the Existing Loan Agreement.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(b)Payments Held in Trust.  In the event that, notwithstanding the foregoing, any payment shall be received by the Lender when such payment is prohibited by Section 14.02(a), such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the lender under the Existing Loan Agreement, but only to the extent that, upon notice from the Lender to the lender under the Existing Loan Agreement that such prohibited payment has been made, such lender notifies the Lender in writing of the amounts then due and owing on Existing Loan, if any, and only the amounts specified in such notice to the Lender shall be paid to such lender.

SECTION 14.03.Payment Over of Proceeds upon Dissolution, Etc.

(a)Payment Over.  Upon any payment or distribution of assets or securities of Borrower of any kind or character, whether in cash, property or securities, upon any dissolution or winding-up or liquidation or reorganization of Borrower, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, the Existing Loan shall first be paid in full in cash before the Lender shall be entitled to receive any payment by Borrower of the principal of or interest on the Obligations, or any payment by Borrower to acquire any of the Obligations for cash, property or securities, or any distribution with respect to the Obligations of any cash, property or securities.  Before any payment may be made by, or on behalf of, Borrower of the principal of or interest on the Obligations upon any such dissolution or winding-up or liquidation or reorganization, any payment or distribution of assets or securities of Borrower of any kind or character, whether in cash, property or securities, to which the Lender would be entitled, but for the subordination provisions of this Agreement, shall be made by Borrower or by any receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, directly to the lender under the Existing Loan Agreement, to the extent necessary to pay the Existing Loan in full in cash after giving effect to any prior or concurrent payment, distribution or provision therefor to or for the lender under the Existing Loan Agreement.

(b)Payments Held in Trust.  In the event that, notwithstanding the foregoing provision prohibiting such payment or distribution, any payment or distribution of assets or securities of Borrower of any kind or character, whether in cash, property or securities, shall be received by the Lender at a time when such payment or distribution is prohibited by Section 14.03(a) and before all obligations in respect of Existing Loan are paid in full in cash, or payment provided for, such payment or distribution shall be received and held in trust for the benefit of, and shall be paid over or delivered to, the lender under the Existing Loan Agreement, for application to the payment of Existing Loan remaining unpaid until the Existing Loan has been paid in full in cash after giving effect to any prior or concurrent payment, distribution or provision therefor to or for the lender under the Existing Loan Agreement.

SECTION 14.04.Subrogation.  Upon the payment in full in cash of the Existing Loan, or provision for payment, the Lender shall be subrogated to the rights of the lender under the Existing Loan Agreement to receive payments or distributions of cash, property or securities of Borrower made on the Existing Loan until the principal of and interest on the Obligations shall be paid in full in cash; and, for the purposes of such subrogation, no payments or distributions to the lender under the Existing Loan Agreement of any cash, property or securities to which the Lender would be entitled except for the provisions of this Article XIV, and no payment over pursuant to the provisions of this Article XIV to the lender under the Existing Loan Agreement by the Lender shall, as between Borrower, its creditors other than the lender under the Existing Loan Agreement, and the Lender, be deemed to be a payment by Borrower to or on account of the Existing Loan.  It is understood that the provisions of this Article XIV are and are intended solely for the purpose of defining the relative rights of the Lender, on the one hand, and the lender under the Existing Loan Agreement, on the other hand.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(a)If any payment or distribution to which the Lender would otherwise have been entitled but for the provisions of this Article XIV shall have been applied, pursuant to the provisions of this Article XIV, to the payment of all amounts payable under Existing Loan, then and in such case, the Lender shall be entitled to receive from the lender under the Existing Loan Agreement any payments or distributions received by such lender in excess of the amount required to make payment in full, or provision for payment, of the Existing Loan.

SECTION 14.05.Obligations of Borrower Unconditional.  Nothing contained in this Article XIV or elsewhere in this Agreement is intended to or shall impair, as among Borrower and the Lender, the obligation of Borrower, which is absolute and unconditional, to pay to the Lender the principal of and interest on the Obligations as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Lender and creditors of Borrower other than the lender under the Existing Loan Agreement, nor shall anything herein or therein prevent the Lender from exercising all remedies otherwise permitted by applicable Law upon Default under this Agreement, subject to the rights, if any, under this Article XIV of the lender under the Existing Loan Agreement in respect of cash, property or securities of Borrower received upon the exercise of any such remedy.

Without limiting the generality of the foregoing, nothing contained in this Article XIV shall restrict the right of the Lender to take any action to declare the Obligations to be due and payable prior to the Tranche A Maturity Date or the Maturity Date, as the case may be, or to pursue any rights or remedies hereunder; provided, however, that Existing Loan then due and payable shall first be paid in full before the Lender is entitled to receive any direct or indirect payment from Borrower of principal of or interest on the Obligations.

SECTION 14.06.Reliance on Judicial Order or Certificate of Liquidating Agent.  Upon any payment or distribution of assets or securities referred to in this Article XIV, the Lender shall be entitled to rely upon any order or decree made by any court of competent jurisdiction in which bankruptcy, dissolution, winding-up, liquidation or reorganization proceedings are pending, or upon a certificate of the receiver, trustee in bankruptcy, liquidating trustee, agent or other person making such payment or distribution, delivered to the Lender for the purpose of ascertaining the Persons entitled to participate in such distribution, the lender under the Existing Loan Agreement and other indebtedness of Borrower, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XIV.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECTION 14.07.Lender’s Relation to Senior Indebtedness.  The Lender shall be entitled to all the rights set forth in this Article XIV with respect to any portion of the Existing Loan which may at any time be held by it in its individual or any other capacity to the same extent as the lender under the Existing Loan Agreement, and nothing in this Agreement shall deprive the Lender of any of its rights thereunder.

With respect to the lender under the Existing Loan Agreement, the Lender undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XIV, and no implied covenants or obligations with respect to such lender shall be read into this Agreement against the Lender.  The Lender shall not be deemed to owe any fiduciary duty to the lender under the Existing Loan Agreement (except to the extent provided in Section 14.03(b)).  The Lender shall not be liable to such lender if the Lender shall in good faith mistakenly pay over or distribute to Borrower or to any other Person cash, property or securities to which such lender shall be entitled by virtue of this Article XIV or otherwise.

SECTION 14.08.This Section Not To Prevent Events of Default.  The failure to make a payment on account of principal of or interest on the Obligations by reason of any provision of this Article XIV shall not be construed as preventing the occurrence of an Event of Default.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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IN WITNESS WHEREOF, the Parties have duly executed this Agreement as of the day and year first above written.

LFRP INVESTORS, L.P.,
as Lender
By:	CHRP Overflow Fund GP, LLC, its General Partner
By:	/s/ Gregory B. Brown, M.D.
	Name:   Gregory B. Brown, M.D.
	Title:     Authorized Signatory
DYAX CORP.,
as Borrower
By:	/s/ Ivana Magovcevic-Liebisch ________
	Name:   Ivana Magovcevic-Liebisch
	Title:     EVP, Chief Business Officer & General Counsel

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT A

Form of Business Report

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT B

LOCKBOX AGREEMENT

This LOCKBOX AGREEMENT (as amended, supplemented or otherwise modified from time to time, this “Agreement”) is dated as of [           ] and entered into by and among Dyax Corp., a Delaware corporation, both in its individual capacity (as such, “Company”) and as initial calculation agent hereunder (as such, the “Lockbox Calculation Agent”), LFRP Investors, L.P., a Delaware limited partnership (“Lender”), and JPMorgan Chase Bank, N.A., both in its capacity as a depositary bank and in its capacity as a “bank” (as defined in Section 9-102(a)(8) of the UCC) (in such capacities, the “Financial Institution”), and in its capacity as escrow agent hereunder (the “Lockbox Escrow Agent”).

RECITALS

WHEREAS, Company and Lender are parties to that certain Loan Agreement, dated as of December [  ], 2011 (as amended, supplemented or otherwise modified from time to time, the “Loan Agreement”), pursuant to which Company has agreed, inter alia, to make certain payments to Lender, and to provide Lender with certain collateral to secure Company’s payment and performance obligations under the Loan Agreement and related documents;

WHEREAS, the Loan Agreement provides that Lender shall receive a certain amount of cash in respect of the Included Receipts, the calculation of which is set forth in the Loan Agreement;

WHEREAS, Company and Lender wish to (i) appoint the Lockbox Escrow Agent to serve as escrow agent hereunder and, in such capacity, to administer the Lockbox Account in accordance with the terms hereof; (ii) authorize the Lockbox Escrow Agent to appoint Company to serve as the initial calculation agent hereunder and, in such capacity, to calculate the portions of amounts deposited in the Lockbox Account to be paid into Company Concentration Account and the Lender Concentration Account in accordance with the terms of this Agreement, and to provide the Lockbox Escrow Agent with the information necessary for the Lockbox Escrow Agent to make such transfers in accordance with the terms of this Agreement; and (iii) provide for the establishment with the Financial Institution of each of the Lockbox Account, Company Concentration Account and the Lender Concentration Account;

WHEREAS, all Gross Payments are to be distributed from the Lockbox Account by the Lockbox Escrow Agent to Company Concentration Account and the Lender Concentration Account in accordance with the terms hereof;

WHEREAS, Company and Lender are parties to the Security Agreement, dated as of [] (as amended, supplemented or otherwise modified from time to time, the “Security Agreement”), pursuant to which, inter alia, Company granted in favor of Lender a security interest in an undivided interest in Company Concentration Account and all Deposit Funds held therein or credited thereto from time to time, and Company’s interest in the Lockbox Account;

WHEREAS, each of the Financial Institution and the Lockbox Escrow Agent acknowledges the grant by Company in favor of Lender of the above described security interests; and

WHEREAS, since Lender is a secured party and holds a security interest in certain property of Company pursuant to the Security Agreement, Company and Lender intend to enter into this Agreement in order (i) to perfect Lender’s security interest in Company Concentration Account by “control” pursuant to Section 9-104 and Section 8-106 of the UCC, and (ii) to set forth their respective rights and obligations with respect to the Deposit Accounts;

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Section 1.          Certain Terms.  Capitalized terms when used in this Agreement, including its preamble, recitals and schedules, shall have the meanings set forth in Annex A attached hereto.  Other capitalized terms have the meanings set forth in the Loan Agreement.

Section 2.          Appointment of Agents; Establishment of Accounts.

(a)           Each of Company and Lender hereby appoints the Lockbox Escrow Agent to act as escrow agent hereunder in accordance with the terms hereof, to establish the Lockbox Account in the name of the Lockbox Escrow Agent, as escrow agent for Lender and Company, and under the sole dominion and control of the Lockbox Escrow Agent, to receive, hold, invest and disburse funds on deposit therein from time to time pursuant to the terms hereof and to otherwise perform the duties assumed by the Lockbox Escrow Agent hereunder.  The Lockbox Escrow Agent hereby accepts such appointment and agrees to be bound by the terms and conditions of this Agreement.

(b)           Each of Company and Lender hereby authorizes the Lockbox Escrow Agent to appoint, and the Lockbox Escrow Agent hereby appoints, the Lockbox Calculation Agent as the sub-agent of the Lockbox Escrow Agent, to provide calculations in relation to amounts on deposit in the Lockbox Account from time to time pursuant to the terms hereof and to otherwise perform the duties assumed by the Lockbox Calculation Agent hereunder.  The Lockbox Calculation Agent hereby accepts such appointment and agrees to be bound by the terms and conditions of this Agreement.

(c)           The Lockbox Escrow Agent hereby confirms that it has established a special escrow account in its name as Escrow Agent, designated as the “Lockbox Account”, and bearing account number [] (the “Lockbox Account”), which account shall be non interest-bearing.  The Lockbox Escrow Agent shall keep the Lockbox Account separate and apart from all other funds and moneys held by it, and shall hold all funds on deposit therein from time to time for the benefit of Company and Lender, in accordance with their respective interests.  The Lockbox Escrow Agent shall administer the Lockbox Account in accordance with the terms hereof.

(d)           Company and Lender have caused the Financial Institution to establish, and the Financial Institution hereby confirms that it has established, the following deposit accounts at the Financial Institution (collectively, the “Concentration Accounts”; each a “Concentration Account”; and together with the Lockbox Account, the “Deposit Accounts” and each, a “Deposit Account”) designated as indicated below:

(i)            the account in the name of Company, bearing account number [                  ] (the “Company Concentration Account”), which account shall be interest-bearing; and

(ii)           the account in the name of Lender, bearing account number [      ] (the “Lender Concentration Account”), which account shall be interest-bearing.

(e)           Neither the Financial Institution nor the Lockbox Escrow Agent shall change the name or account number of any Deposit Account without the prior written consent of (x) Company and Lender, in the case of the Lockbox Account, (y) Company and Lender, in the case of Company Concentration Account, and (z) Lender, in the case of the Lender Concentration Account.

(f)           The parties hereto acknowledge and agree that each Deposit Account is a “deposit account” within the meaning of Section 9-102(a)(29) of the UCC and that the Financial Institution’s jurisdiction for purposes of the Deposit Accounts under the UCC shall be New York.

(g)           Lockbox Escrow Agent shall furnish to Company and Lender periodic reports, which account for all such investments and interest and income earned thereon.  Such reports shall be furnished monthly or, more frequently, upon the request of Company and Lender.

(h)           Each of Company and Lender acknowledges and agrees that (i) the Lockbox Account has been established for the benefit of Company and Lender, (ii) the Lockbox Account and all Deposit Funds relating thereto are the property of the Lockbox Escrow Agent, for the benefit of Company and Lender in accordance with their respective interests and (iii) it shall, at its own cost and expense, defend the Lockbox Account (and all Deposit Funds relating thereto) against any and all claims of its creditors, whether threatened or actual.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(i)           The Deposit Funds in each Concentration Account shall be invested by Financial Institution in Permitted Investments.  All Permitted Investments shall be registered in the name of Financial Institution for the benefit of Lender or Company, as applicable, and held by Financial Institution as part of such Concentration Account.  Financial Institution may make investments through its investment division or short-term investment department.  Financial Institution shall sell and reduce to cash a sufficient amount of Permitted Investments whenever the cash balance of the Concentration Accounts is insufficient to pay the amounts required to be paid therefrom.  Financial Institution shall, without further direction from any person, sell such investments as and when required to make any payments from the Concentration Accounts.  Financial Institution shall not be responsible or liable for any loss suffered in connection with any investment of moneys made by Financial Institution in accordance with this Section 2(i).

Section 3.          Operation of and Disbursements from the Lockbox Account.

(a)           The parties acknowledge and agree that the Gross Payments (as defined in the Loan Agreement) shall be paid into the Lockbox Account.

(b)           The Lockbox Escrow Agent will provide the Lockbox Calculation Agent with a daily report showing each payment received in the Lockbox Account on the previous Business Day via online access.  From time to time, at a period to be defined by Company but in any event no less frequently than once per month, the Lockbox Calculation Agent shall submit a report to the Lockbox Escrow Agent and the Financial Institution (with a copy to Company) in respect of the amounts on deposit in the Lockbox Account as of the end of the relevant calculation period (each, a “Lockbox Calculation Report”), which Lockbox Calculation Report shall specify the portion thereof which is allocable to Lender and Company, respectively, by way of allocations between the Lender Concentration Account and Company Concentration Account.  Such allocations shall be calculated by the Lockbox Calculation Agent as set forth on Schedule 5.  Company shall provide immediately to Lockbox Calculation Agent, on request, any data or information requested by Lockbox Calculation Agent to prepare the Lockbox Calculation Report.  The Lockbox Calculation Agent shall be responsible for preparing the Lockbox Calculation Report in good faith and in a consistent and reasonable manner in accordance with the terms of the Loan Agreement.

(c)           At the time the Lockbox Calculation Agent submits any Lockbox Calculation Report in relation to the Lockbox Account, the Lockbox Calculation Agent shall also provide the Lockbox Escrow Agent with supporting calculations and other back-up information in reasonable detail, certified by a senior financial officer of the Lockbox Calculation Agent.

(d)           Following receipt of a Lockbox Calculation Report, the Lockbox Escrow Agent shall, within one (1) Business Day thereof, (i) allocate among the applicable Concentration Accounts the amounts received in the Lockbox Account that are covered by such Lockbox Calculation Report and (ii) make corresponding wire transfers of such amounts from the Lockbox Account in accordance with the terms hereof.  Only the Lockbox Escrow Agent will have the authority to make transfers from the Lockbox Account and only in accordance with the terms of this Agreement.  Within five (5) days of the close of any calendar quarter, the Lockbox Escrow Agent will provide Lender copies of each Lockbox Calculation Report and any other information or certificates received from the Lockbox Calculation Agent during the preceding quarter.

(e)           In the event the Lockbox Calculation Agent determines that a Lockbox Calculation Report contains any incorrect calculations, the Lockbox Calculation Agent shall promptly notify the Lockbox Escrow Agent, and provide a revised Lockbox Calculation Report to the Lockbox Escrow Agent together with information of the type specified in Section 3(c) above.  If the revised Lockbox Calculation Report is received by the Lockbox Escrow Agent prior to its distribution of the sums covered thereby, then the Lockbox Escrow Agent shall distribute such sums in accordance with the revised Lockbox Calculation Report; if not, then the Lockbox Escrow Agent will make appropriate offsets/credits with respect to future distributions from the Lockbox Account, based on information provided to it by the Lockbox Calculation Agent (which the Lockbox Calculation Agent undertakes to do on a prompt basis).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(f)           The Lockbox Escrow Agent shall rely on the information contained in any Lockbox Calculation Report provided to it from time to time by the Lockbox Calculation Agent, and shall, on the next Business Day after receipt thereof, transfer amounts on deposit in the Lockbox Account in accordance with the information contained in any such Lockbox Calculation Report, without any duty to investigate.  The Lockbox Escrow Agent shall have no liability to any party hereto on account of disbursing funds in the Lockbox Account on the basis of information contained in any such Lockbox Calculation Report.

Section 4.          Control of the Concentration Accounts.

(a)           In order to perfect Lender’s security interest in Company Concentration Account (and any and all Deposit Funds held therein or credited thereto from time to time) by “control” pursuant to Section 9-104 of the UCC, Company, Lender and the Financial Institution agree as follows: So long as no Event of Default or Termination Event shall have occurred and be continuing, Company shall be entitled to give Account Instructions to the Financial Institution directing the disposition, transfer, withdrawal, disbursement, investment or redemption of any Deposit Funds in or credited to Company Concentration Account, and the Financial Institution shall comply with such Account Instructions from Company (without any consent being required from Lender).  Upon receiving notice from Lender, however (which, for the avoidance of doubt, may be given by Lender upon the occurrence and during the continuance of an Event of Default or a Termination Event), the Financial Institution shall cease complying with any and all Account Instructions from Company pertaining to or concerning Company Concentration Account or any Deposit Funds therein or credited thereto.  At such time, only Lender shall be entitled to give Account Instructions to the Financial Institution directing the disposition, transfer, withdrawal, disbursement, investment or redemption of any Deposit Funds in or credited to Company Concentration Account until such time as Lender otherwise advises in writing (which, for the avoidance of doubt, shall be given promptly following the cure or waiver of such Event of Default or Termination Event).

(b)           (1) Only Lender shall be entitled to give Account Instructions directing the disposition, transfer, withdrawal, disbursement, investment or redemption of any Deposit Funds in or credited to the Lender Concentration Account, and the Financial Institution shall comply with such Account Instructions from Lender from time to time.  The parties acknowledge that the Lender Concentration Account is the unencumbered property of the Lender.

(2)           Only Company shall be entitled to give Account Instructions directing the disposition, transfer, withdrawal, disbursement, investment or redemption of any Deposit Funds in or credited to Company Concentration Account prior to an Event of Default and the Financial Institution shall comply with such Account Instructions from Company from time to time.

(c)           The Financial Institution shall not, and shall not agree with any Third Party to, comply with any Account Instructions or other instructions, orders or directions from a Third Party  pertaining to or concerning any Concentration Account or any Deposit Funds therein or credited thereto, without the prior written consent of Lender and Company (in the case of Company Concentration Account, prior to the earlier of an Event of Default or a Termination Event) and Lender (in the case of the Lender Concentration Account and, from and after the earlier of an Event of Default or a Termination Event that has not been cured or waived, Company Concentration Account).

Section 5.          Financial Institution’s Obligations with respect to the Deposit Accounts.

(a)           The Financial Institution agrees to maintain each Deposit Account separately, in accordance with the terms of this Agreement and agrees not to commingle the Deposit Funds in or credited to, or designated for deposit in, any Deposit Account with any other Deposit Funds held on behalf of Company, Lender or any other person or entity.  The Financial Institution shall not apply any Deposit Funds received in the Deposit Accounts and not to make disbursements from or debits to the Deposit Accounts other than in accordance with this Agreement.  In the event there are multiple Lenders, the Financial Institution shall distribute Deposit Funds in the Lender Concentration Account on a pro rata basis to the Lenders according to their proportionate interests in the Loan as required by Section 13.01(d) of the Loan Agreement and in accordance with the applicable Register Notice, if any, delivered by Company pursuant to Section 5.06(a) of the Loan Agreement.  Prior to making any distributions to a new Lender, the Financial Institution will require such Lender to deliver to the Lockbox Escrow Agent and Financial Institution a W-8 or W-9 Internal Revenue Service form or any other similar form issued by the relevant taxing authority duly executed by it.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(b)           The Financial Institution acknowledges that Company Concentration Account and Company’s interest in the Lockbox Account, and any Deposit Funds therein or credited thereto, are subject to the security interest of Lender therein.  Each of the Lockbox Escrow Agent and the Financial Institution acknowledges that Company has granted Lender a security interest over Company Concentration Account and Company’s interest in the Lockbox Account.

(c)           The parties hereto acknowledge and agree that items deposited in any Deposit Account shall be deemed to bear the valid and legally binding endorsement of the payee and to comply with all of the Financial Institution’s requirements for the supplying of missing endorsements, now or hereafter in effect.  Any deposit made into any Deposit Account shall be deemed deposited therein when the funds in respect of such deposit shall become cleared funds.

(d)           The Financial Institution shall redeposit with advice any item returned for any reason.  If any item is returned a second time, the Financial Institution will charge the amount of such item against the Lockbox Account if the same contains sufficient funds to pay the amount of the returned item.  If the balance in the Lockbox Account is not sufficient to pay the amount of the returned item, the Financial Institution shall notify Company and Lender.  Company agrees to reimburse the Financial Institution for the same promptly after such notification.  The Financial Institution shall also notify Company and Lender of its current standard charges for returned items and Company agrees to pay the Financial Institution such charges promptly after such notification.  The Financial Institution shall return the item along with the debit advice to Company, with a copy to Lender.  The Financial Institution is granted the further right to debit from any Deposit Account any amounts deposited therein in error or as necessary to correct processing errors.

(e)           Each week that the Financial Institution receives any Deposit Funds in any Deposit Account, the Financial Institution shall notify Company and Lender in writing that it has received such Deposit Funds into such account or accounts, and the Financial Institution shall set forth in such writing (i) the names of the accounts into which such Deposit Funds were received, if such payments have been received, (ii) the date of receipt of such Deposit Funds, (iii) the amount of such receipt and (iv) the name of the payor.

(f)           The Financial Institution shall at all times provide the parties hereto with online computer access, in a format or formats reasonably acceptable to Company and Lender, to account balances, collection and remittance information relative to the Deposit Accounts and within five (5) Business Days following the end of each month, shall cause to be made available to Company and Lender by means of online computer access, and within ten (10) Business Days following the end of each month shall send or cause to be sent a statement for such month to Company and Lender in each case outlining a list of (i) the amounts, if any, transferred into or from any Deposit Account during the preceding month, the dates of each such transfer and the accounts into which such transfers were made, (ii) the balance, if any, in each Deposit Account as of the end of such month, and (iii) any other debits or credits made during the month to each Deposit Account together with a description thereof.

(g)           Any transfer of funds from the Lockbox Account to Company Concentration Account shall be made by wire transfer or similar method of transfer of immediately available funds, unless otherwise agreed to in writing by Company.  Any transfer of funds from the Lockbox Account to the Lender Concentration Account shall be made by wire transfer or similar method of transfer of immediately available funds, unless otherwise agreed to in writing by Lender.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 6.          Resignation and Replacement of Lockbox Escrow Agent.

(a)           The Lockbox Escrow Agent shall have the right at any time, by giving written notice to the Financial Institution, Company and Lender, to resign and be discharged of the responsibilities hereby created, such resignation to become effective upon (i) the appointment of a successor Lockbox Escrow Agent by Company and Lender and (ii) the acceptance of such appointment by such successor Lockbox Escrow Agent.  If no successor Lockbox Escrow Agent shall be appointed and shall have accepted such appointment within ninety (90) days after the date the Lockbox Escrow Agent gives the aforesaid notice of resignation, the Lockbox Escrow Agent may apply to any court of competent jurisdiction to appoint a successor Lockbox Escrow Agent to act until such time, if any, as a successor Lockbox Escrow Agent shall have been appointed as provided in this Section.  Any successor so appointed by such court shall immediately and without further act be superseded by any successor Lockbox Escrow Agent appointed by Company and Lender.

(b)           Company and Lender shall have the right, upon mutual agreement, at any time, to remove the Lockbox Escrow Agent and appoint a successor Lockbox Escrow Agent, such removal to be effective upon the acceptance of such appointment by the successor Lockbox Escrow Agent.

(c)           Any resigning or removed Lockbox Escrow Agent shall be entitled to the fees and indemnities set forth herein to the extent incurred or arising, or relating to events occurring, before such resignation or removal.

Section 7.          Resignation and Replacement of Lockbox Calculation Agent.

(a)           The Lockbox Calculation Agent shall have the right, at any time, by giving written notice to the Financial Institution, Company and Lender, to resign and be discharged of the responsibilities hereby created, such resignation to become effective upon (i) the appointment of a successor Lockbox Calculation Agent by Lender and Company, and (ii) the acceptance of such appointment by such successor Lockbox Calculation Agent.  If no successor Lockbox Calculation Agent shall be appointed and shall have accepted such appointment within ninety (90) days after the date the Lockbox Calculation Agent gives the aforesaid notice of resignation, the Lockbox Calculation Agent or Lender may apply to any court of competent jurisdiction to appoint a successor Lockbox Calculation Agent to act until such time, if any, as a successor Lockbox Calculation Agent shall have been appointed as provided in this Section.  Any successor so appointed by such court shall immediately and without further act be superseded by any successor Lockbox Calculation Agent appointed by Lender and Company.

(b)           Upon the determination by Lender or, if the Lockbox Calculation Agent at such time is not Company or an Affiliate thereof, Company (in each case, whether Lender or Company, acting reasonably and in good faith), that a Termination Event has occurred (or, where Company is acting as Lockbox Calculation Agent, an Event of Default has occurred), Lender or Company, as the case may be, shall have the right to remove the Lockbox Calculation Agent by providing written notice of such determination to the other parties hereto; provided that, at Lender’s option, the Lockbox Calculation Agent may immediately be suspended pending the resolution of any dispute regarding the provision of such a notice as described in this Section 7(b).  In the event such a determination is made, Lender or Company, as the case may be, may dispute such determination by providing written notice to the other party within ten (10) Business Days of receipt of the removal notice.  If no such dispute notice is so provided, the Lockbox Calculation Agent shall be removed and a successor Lockbox Calculation Agent shall be selected in accordance with Section 7(c).  If such a dispute notice is timely provided, then the relevant parties shall first attempt to reach an amicable settlement through mutual consultations and negotiations.  If the parties are unable to reach an amicable settlement within ten (10) Business Days from the date on which the dispute was first notified in writing, then any party shall be entitled to submit the dispute to litigation proceedings in accordance with the terms hereof.  Pending the resolution of any such dispute, (unless the Lockbox Calculation Agent has been suspended as described above) the party then serving as Lockbox Calculation Agent may continue to serve in such role, provided that, during the pendency of any such dispute, it delivers Lockbox Calculation Reports no less frequently than once per week to each of the Lockbox Escrow Agent, Company and Lender.  If, following the commencement of any dispute regarding the existence of a Termination Event, Company and Lender agree to remove the Lockbox Calculation Agent or it is finally determined by a court of competent jurisdiction that a Termination Event has in fact occurred, then the Lockbox Calculation Agent shall be removed and a replacement selected in accordance with Section 7(c).  In all events, removal of the Lockbox Calculation Agent shall only become effective upon the acceptance by the successor Lockbox Calculation Agent of its appointment.  Any resigning or removed Lockbox Calculation Agent shall be entitled to the fees and indemnities set forth herein to the extent incurred or arising, or relating to events occurring, before such resignation or removal.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(c)           In connection with removal of the Lockbox Calculation Agent pursuant to Section 7(b), a successor Lockbox Calculation Agent shall be selected by Lender and Company, unless the removed Lockbox Calculation Agent shall be Company or an Affiliate thereof, in which event such Agent shall be chosen by Lender;provided,however, that such successor shall be chosen from the list on Schedule 6 to this Agreement or be a similar entity with a national reputation in the United States.  When required to mutually agree, in the event that Company and Lender do not agree upon a successor within thirty (30) days of the date on which a party notified the others of its decision to remove the Lockbox Calculation Agent (or, if such removal is disputed in accordance with Section 7(b) hereof, within thirty (30) days of the resolution of such dispute), Company, using its reasonable discretion, shall promptly appoint a successor Lockbox Calculation Agent from among those persons listed on Schedule 6 or a similar entity with a national reputation in the United States (excluding, for those purposes, any Person previously removed as Lockbox Calculation Agent or any Person that is the subject of a pending dispute).

Section 8.          Subordination of Lien; Waiver of Set-Off.  In the event that the Financial Institution has obtained or subsequently obtains by agreement, by operation of law or otherwise a security interest in, lien on, or encumbrance, claim or (except as provided in the next sentence) right of set-off against, any Deposit Account or any security entitlement or any Deposit Funds therein or credited thereto, the Financial Institution hereby agrees that such security interest, lien, encumbrance, claim, and right of set-off shall be subordinate to any security interest or other interest of Lender therein and the security entitlement or any Deposit Funds therein or credited thereto.  The Financial Institution agrees not to exercise any present or future right of recoupment or set-off against any Deposit Account or to assert against any Deposit Account any present or future security interest, banker’s lien or any other lien or claim (including claim for penalties) that the Financial Institution may at any time have against or in any Deposit Account or any security entitlement or any Deposit Funds therein or credited thereto; provided, however, that, the Financial Institution may set-off against the Lockbox Account the face amount of any checks which have been credited to any Deposit Account but are subsequently returned unpaid because of uncollected or insufficient funds in accordance with Section 5(d).

Section 9.          Certain Matters Affecting the Financial Institution, Lockbox Escrow Agent and Lockbox Calculation Agent.

(a)           Each of the Financial Institution, the Lockbox Escrow Agent and the Lockbox Calculation Agent (in its capacity as such) shall perform only such duties and obligations as are expressly set forth herein with respect to it and no implied duties or obligations shall be read into this Agreement (it being understood that the foregoing shall not otherwise limit any duty or obligation of Company in its individual capacity).  None of the Financial Institution, the Lockbox Escrow Agent or the Lockbox Calculation Agent (in its capacity as such) shall have any liability under any agreement other than this Agreement, nor shall the Financial Institution or the Lockbox Calculation Agent have any duty to inquire as to the provisions of any agreement other than this Agreement.

(b)           Each of the Financial Institution and the Lockbox Escrow Agent may rely upon, and shall not be liable for acting in accordance with this Agreement upon, any written notice, instruction or request furnished to it hereunder and reasonably believed by it to be genuine and to have been signed or presented by the proper party or parties, or for refraining from acting if and to the extent that such written notice, instruction or request requires it to refrain from acting.  Neither the Financial Institution nor the Lockbox Escrow Agent shall be under a duty to inquire into or investigate the validity, accuracy or content of any such document.

(c)           In the event any Account Instruction, Lockbox Calculation Report or other notice is given to the Lockbox Escrow Agent or Financial Institution by Company or Lender, whether in writing, by facsimile or telecopier, or otherwise, each of the Lockbox Escrow Agent and Financial Institution is authorized to seek confirmation thereof by telephone call-back to, as applicable, from one or more of such Person’s Authorized Representatives, and each of the Financial Institution and Lockbox Escrow Agent may rely upon the confirmation of anyone purporting to be the Authorized Representative so designated.  The Authorized Representatives and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Financial Institution and the Lockbox Escrow Agent.  The parties to this Agreement acknowledge and agree that such security procedures are commercially reasonable.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(d)           Company and Lender acknowledge that repetitive funds transfer instructions may be given to the Lockbox Escrow Agent or Financial Institution for one or more beneficiaries where only the date of the requested transfer, the amount of funds to be transferred, and/or the description of the payment shall change within the repetitive instructions (“Standing Settlement Instructions”).  According, Company and Lender shall deliver to Lockbox Escrow Agent or Financial Institution such specific Standing Settlement Instructions only for each respective beneficiary as set forth in Exhibit A to this Escrow Agreement, by facsimile or other written instructions.  Lockbox Escrow Agent or Financial Institution may rely solely upon such Standing Settlement Instructions and all identifying information set forth therein for each beneficiary.  Lockbox Escrow Agent or Financial Institution and Company or Lender agree that such Standing Settlement Instructions shall be effective as the funds transfer instructions of Company or Lender, without requiring a verifying callback, whether or not authorized, if such Standing Settlement Instructions are consistent with previously authenticated Standing Settlement Instructions for that beneficiary.  The parties acknowledge that such Standing Settlement Instructions are a security procedure and are commercially reasonable.

(e)           Neither the Financial Institution nor the Lockbox Escrow Agent shall be liable for any action taken or omitted by it except to the extent that a court of competent jurisdiction determines that the Financial Institution’s or the Lockbox Escrow Agent’s (as applicable) gross negligence or willful misconduct was the cause of any loss, expense, cost, damage or liability to either or both of Company or Lender.

(f)            Each of the Financial Institution and the Lockbox Escrow Agent (i) shall have the right to execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys (which, in the case of the Lockbox Escrow Agent, may be in addition to the Lockbox Calculation Agent), the appointment of which will be approved in writing by Company and Lender (and the Financial Institution or Lockbox Escrow Agent (as applicable) shall be liable only for its gross negligence or willful misconduct (as finally adjudicated in a court of competent jurisdiction) in the selection of any such agent or attorney) and (ii) shall have the right to consult with counsel, accountants and other skilled persons to be selected and retained by it.

(g)           Any legal entity into which the Financial Institution or the Lockbox Escrow Agent, in each case in its individual capacity, may be merged or converted or with which it may be consolidated, or any legal entity resulting from any merger, conversion or consolidation to which the Financial Institution or the Lockbox Escrow Agent, in each case in its individual capacity, shall be a party, or any legal entity to which substantially all the corporate trust business of the Financial Institution or the Lockbox Escrow Agent may be transferred, shall be the Financial Institution or Lockbox Escrow Agent, as applicable, under this Agreement without further act or notice, other than that the Financial Institution or Lockbox Escrow Agent, as applicable, shall endeavor to give prompt notice thereof to the other parties hereto (it being understood that it shall not have any liability for failure to do so).

(h)           In the event that the Financial Institution or the Lockbox Escrow Agent is unable to perform its obligations under the terms of this Agreement (x) because of acts of God, strikes, electrical outages, equipment or transmission failure or damage reasonably beyond its control, or any other cause reasonably beyond its control, or (y) because, upon advice of its counsel, performance would violate any applicable guideline, rule or regulation of any governmental authority having jurisdiction over it, then, in each case with respect to the foregoing clauses (x) and (y) in this subsection (g), the Financial Institution or the Lockbox Escrow Agent, as applicable, shall promptly notify Company and Lender thereof in writing and shall not be liable for damages to the other parties for any unforeseeable damages resulting from such failure to perform or otherwise from such causes.  Performance under this Agreement by the Financial Institution shall resume when it is able to perform substantially its duties hereunder.

(i)            Anything in this Agreement to the contrary notwithstanding, in no event shall any of the Financial Institution, Lockbox Escrow Agent or Lockbox Calculation Agent (other than Company or its Affiliates) (in its capacity as such) be liable for any special, indirect, exemplary or consequential loss or damage of any kind whatsoever (including, but not limited to, lost profits), even if it has been advised of the likelihood of such loss or damage and regardless of the form of action (it being understood that the foregoing shall not otherwise limit any duty or obligation of Company in its individual capacity).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(j)           If Company and Lender shall be in a disagreement about the interpretation of this Agreement, or about the rights and obligations, or the propriety of any action contemplated by the Lockbox Escrow Agent hereunder, the Lockbox Escrow Agent may, but shall not be required to, file an appropriate civil action to resolve the disagreement.  The Lockbox Escrow Agent shall be indemnified, jointly and severally, by Company and Lender for all costs, including, reasonable attorneys’ fees, in connection with such civil action, and shall continue, and be fully protected in continuing, to perform its responsibilities under this Agreement until a final judgment, without any further right of appeal, is received or the Lockbox Escrow Agent is replaced pursuant to Section 6 of this Agreement; provided, that Lender’s liability under this Section 9(j) shall be limited to costs and/or fees incurred solely as a result of Lockbox Escrow Agent’s action or inaction taken pursuant to Lender’s instructions.  If there is any disagreement as to the propriety of any action of the Lockbox Escrow Agent, Company and Lender shall meet promptly to discuss and, if so agreed, to initiate the procedure to replace the Lockbox Escrow Agent in accordance with Section 6 of this Agreement.

Section 10.        Conflict with Other Agreements; Adverse Claims.

(a)           In the event of any conflict between this Agreement (or any portion hereof) and any other agreement now existing or hereafter entered into, the terms of this Agreement shall prevail; provided, that Company and Lender confirm to each other that nothing herein is intended to expand, modify or limit the rights and/or obligations of Company and Lender under the Loan Agreement and/or the Security Agreement; and provided, further, that in the event of any inconsistency between this Agreement and the terms of the Loan Agreement and/or the Security Agreement, the terms and provisions of the Loan Agreement and/or the Security Agreement, as applicable, shall control as between Company and Lender, with the Loan Agreement taking priority over the Security Agreement.

(b)           The Financial Institution hereby confirms that:

(i)           there are no agreements entered into between the Financial Institution and any other person or entity with respect to any Deposit Account except for this Agreement;

(ii)          it has not entered into, and until the termination of this Agreement will not enter into, any agreement with any person or entity (other than Lockbox Escrow Agent, Company and Lender) relating to the Deposit Accounts and/or any Deposit Funds therein or credited thereto pursuant to which it has agreed to comply with any “entitlement orders” (as defined in Section 8-102(a)(8) of the UCC), orders, directions or any instructions of such person or entity concerning any of the Deposit Accounts or the disposition, withdrawal or disbursement of any Deposit Funds therein or credited thereto; and

(iii)         except for the claims and interests of Lockbox Escrow Agent, Company and Lender in the Deposit Accounts and the Deposit Funds therein or credited thereto, the Financial Institution does not know of any security interest in, lien on, claim to, or interest in any Deposit Account or in any “financial asset” (as defined in Section 8-102(a)(9) of the UCC), funds, monies, checks or other items in or credited to the Deposit Accounts.  If any person or entity asserts any security interest, lien, encumbrance or adverse claim (including any writ, garnishment, judgment, warrant of attachment, execution or similar process) against any of the Deposit Accounts or any Deposit Funds therein or credited thereto, other than the security interest of Lender therein, the Financial Institution will promptly notify Lockbox Escrow Agent, Company and Lender thereof in writing.

Section 11.           Authorized Representatives.  Each individual designated as an authorized representative of Company or of Lender, respectively (an “Authorized Representative”), is authorized to give and receive notices, requests and instructions and to deliver certificates and documents in connection with this Agreement on behalf of Company or Lender, as the case may be.  The specimen signature for each Authorized Representative of Company initially authorized hereunder is set forth on Schedule 2.  The specimen signature for each Authorized Representative of Lender initially authorized hereunder is set forth on Schedule 3.  The specimen signature for each Authorized Representative of the Lockbox Calculation Agent initially authorized hereunder is set forth on Schedule 4.  From time to time, Company, Lender or the Lockbox Calculation Agent may, by delivering to each other, the Lockbox Escrow Agent and the Financial Institution a revised Schedule 2 or 3 or 4 (as applicable), change the information previously given pursuant to this Section 11, but each of the parties hereto shall be entitled to rely conclusively on the then current Schedule until receipt of a superseding Schedule.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 12.           Representations, Warranties and Covenants.

(a)           Representations, Warranties and Covenants of the Financial Institution.  The Financial Institution hereby represents, warrants and covenants to Company and Lender that:

(i)           the Deposit Accounts have each been established as set forth in Section 2, and the Financial Institution covenants that the Deposit Accounts will be maintained in the manner set forth herein until termination of this Agreement;

(ii)          it has not assigned, pledged or granted a security interest in any of the Deposit Accounts or any Deposit Funds in or credited in such Deposit Accounts; and

(iii)         this Agreement constitutes the legal, valid and binding obligation of the Financial Institution, enforceable against the Financial Institution in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law).

(b)           Representations, Warranties and Covenants of the Lockbox Escrow Agent.  The Lockbox Escrow Agent hereby represents, warrants and covenants to Company and Lender that:

(i)           the Lockbox Account has been established as set forth in Section 2, and the Lockbox Escrow Agent covenants that the Lockbox Account will be maintained in the manner set forth herein until termination of this Agreement;

(ii)          it has not assigned, pledged or granted a security interest in the Lockbox Account or any Deposit Funds therein or credited thereto; and

(iii)         this Agreement constitutes the legal, valid and binding obligation of the Lockbox Escrow Agent, enforceable against the Lockbox Escrow Agent in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law).

(c)           Representations, Warranties and Covenants of the Lockbox Calculation Agent.  The Lockbox Calculation Agent hereby represents, warrants and covenants to Lockbox Escrow Agent, Company and Lender that:

(i)           solely in its capacity as Lockbox Calculation Agent hereunder, it does not have, hereby waives, and shall not assert, any ownership interest or other right or interest in and to the Lockbox Account or Deposit Amounts relating thereto;

(ii)          this Agreement constitutes the legal, valid and binding obligation of the Lockbox Calculation Agent, enforceable against the Lockbox Calculation Agent in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(iii)         the execution, delivery and performance by Lockbox Calculation Agent of its obligations under this Agreement do not and will not constitute or result in a breach of (A) Lockbox Calculation Agent’s organizational documents, or (B) the provisions of any material contract to which Lockbox Calculation Agent is a party or by which Lockbox Calculation Agent is bound; and

(iv)         all approvals and authorizations required to permit the execution, delivery and performance by Lockbox Calculation Agent of this Agreement have been obtained.

(d)           Representations, Warranties and Covenants of Company.  Company hereby represents, warrants and covenants to the Financial Institution, Lockbox Escrow Agent, Lockbox Calculation Agent and Lender that:

(i)           the execution, delivery and performance by Company of this Agreement have been duly authorized by all necessary action;

(ii)          this Agreement has been duly executed and delivered by Company;

(iii)         this Agreement constitutes the legal, valid and binding obligation of Company, enforceable against Company in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law);

(iv)         the execution, delivery and performance by Company of its obligations under this Agreement do not and will not constitute or result in a breach of (A) Company’s organizational documents, or (B) the provisions of any material contract to which Company is a party or by which Company is bound (other than any such provisions that have been waived by the other parties thereto); and

(v)          all approvals and authorizations required to permit the execution, delivery and performance by Company of this Agreement have been obtained.

(e)           Representations, Warranties and Covenants of Lender.  Lender hereby represents, warrants and covenants to the Financial Institution, Lockbox Escrow Agent, Lockbox Calculation Agent and Company that:

(i)           the execution, delivery and performance by Lender of this Agreement have been duly authorized by all necessary action;

(ii)          this Agreement has been duly executed and delivered by Lender;

(iii)         this Agreement constitutes the legal, valid and binding obligation of Lender, enforceable against Lender in accordance with its terms, except as enforcement may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws affecting the enforcement of creditors’ rights generally or by general equitable principles (regardless of whether enforcement is sought in a proceeding in equity or at law);

(iv)         the execution, delivery and performance by Lender of its obligations under this Agreement do not and will not constitute or result in a breach of (A) Lender’s partnership agreement or other organizational documents, or (B) the provisions of any material contract to which Lender is a party or by which Lender is bound; and

(v)          all approvals and authorizations required to permit the execution, delivery and performance by Lender of this Agreement have been obtained.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 13.           Termination of this Agreement.

(a)           Except as otherwise provided in this Section 13, this Agreement shall continue in effect until Lender confirms in writing that all amounts payable under the Loan Agreement and all of the other Transaction Documents (as defined in the Loan Agreement) have been indefeasibly paid in full (other than indemnification obligations and other contingent obligations that, by their terms, survive the termination of this Agreement).

(b)           Lender may terminate this Agreement at any time upon its delivery of written notice of such termination to the Financial Institution, the Lockbox Escrow Agent and Company.

(c)           Company may not terminate this Agreement for any reason without the prior written consent of Lender.

(d)           Prior to any termination of this Agreement, the Financial Institution hereby agrees that it shall promptly take, at the expense of Company, all reasonable actions necessary to facilitate the transfer of any Deposit Funds in or credited to the Deposit Accounts as follows: (i) in the case of a termination of this Agreement under Section 13(a), to the depository institution designated in writing by Company; and (ii) in all other cases, to the depository institution designated in writing by Lender, which depository institution will (in all cases) be so designated prior to termination hereof.

(e)           No termination of this Agreement shall impair the rights of any party hereto with respect to checks processed prior to the effective date of termination.

Section 14.           Fees and Expenses.  Any Lockbox Calculation Agent, other than Company or its Affiliate, will receive a monthly fee for its services hereunder, which shall be paid by Company and charged, on a pro rata basis, against amounts on deposit in the Lockbox Account which would otherwise be transferred to Company Concentration Account.  Each of the Lockbox Escrow Agent, Lockbox Calculation Agent and Financial Institution agrees to look solely to Company Concentration Account (or to Company or amounts which are otherwise payable to or for the benefit of Company or to Company Concentration Account) for payment of its applicable fee referred to below and any other fees in connection with its services hereunder, and Company agrees to pay such fees on demand therefor; provided, however, that the fees which such parties may charge Company shall not exceed the fees and charges customarily charged by them for comparable services, and will be adjusted upon replacement of any such party hereunder.  Company acknowledges and agrees that it solely shall be, and at all times remain, liable to the Lockbox Escrow Agent, Lockbox Calculation Agent and Financial Institution in connection with its payment of such amounts.  The fees of the Lockbox Escrow Agent are five thousand dollars ($5,000) per annum without pro-ration for partial years.

Section 15.           Indemnity.

(a)           Each of Company and Lender agrees that it shall be jointly and severally liable to indemnify and hold harmless each of the Lockbox Escrow Agent and the Financial Institution and its respective successors, assigns, directors, officers, managers, attorneys, accountants, experts, agents and employees (collectively, the “Indemnitees”) from and against any and all Liabilities incurred by any Indemnitee arising out of or in connection with (i) this Agreement or (ii) the Financial Institution or Lockbox Escrow Agent’s performance of its obligations and services under this Agreement, including, without limitation, the compliance with any Account Instruction, Lockbox Calculation Report or other instructions, orders, directions or notices given hereunder, other than those Liabilities that are due to or caused by the gross negligence or willful misconduct of any Indemnitee; provided, that Lender’s liability under this Section 15(a) shall be limited to Liabilities  incurred solely as a result of any Indemnitee’s action or inaction taken pursuant to Lender’s instructions.

(b)           Company and Lender each agrees that it shall be jointly and severally liable to indemnify and hold harmless any Lockbox Calculation Agent from and against any and all Liabilities incurred by the Lockbox Calculation Agent arising out of or in connection with (i) this Agreement or (ii) the Lockbox Calculation Agent’s performance of its obligations and services under this Agreement, other than those Liabilities that are due to or caused by the Lockbox Calculation Agent’s gross negligence or willful misconduct; provided, however, that Lender shall not have any obligation under this subsection with respect to any Lockbox Calculation Agent which is the same Person as, or which is an Affiliate of, Company; and, provided, further, that Lender’s liability under this Section 15(b) shall be limited to Liabilities  incurred solely as a result of Lockbox Calculation Agent’s action or inaction taken pursuant to Lender’s instructions.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(c)           The parties hereto acknowledge and agree that the foregoing indemnities shall survive the resignation, replacement or removal of the Financial Institution or any agent hereunder and the termination of this Agreement until the expiration of the applicable statute of limitations.

Section 16.           TINs and Patriot Act Disclosure.

(a)           Company and Lender each represent to the Lockbox Escrow Agent and Financial Institution and to each other that its respective correct taxpayer identification number (“TIN”) assigned by the Internal Revenue Service or any other taxing authority is set forth in Schedule 1.  Upon execution of this Agreement, each of Company and Lender shall deliver to the Lockbox Escrow Agent and Financial Institution a W-8 or W-9 Internal Revenue Service form or any other similar form issued by the relevant taxing authority duly executed by it.

(b)           All interest or other income earned in the Lockbox Account (i) shall be allocated and/or paid in accordance with the allocations made in accordance with this Agreement and (ii) shall be reported to the Internal Revenue Service or any other applicable taxing authority by Lockbox Escrow Agent.  Notwithstanding such written directions, the Financial Institution shall report and, if required, withhold any taxes as it reasonably determines may be required by any law or regulation in effect at the time of the distribution.  In the event that any earnings in the Lockbox Account remain undistributed at the end of any calendar year, the Financial Institution shall report to the Internal Revenue Service or such other taxing authority such earnings as it deems appropriate or as required by any applicable law or regulation or, to the extent consistent therewith, as directed in writing by Lender.  In addition, the Financial Institution shall withhold from the Lockbox Account any taxes required by law to be withheld and shall remit such taxes to the appropriate authorities.  Any taxes withheld by the Financial Institution shall be included in the statement required by Section 5(f).

(c)           All items of income, gain, expense and loss recognized in Company Concentration Account shall be reported to the Internal Revenue Service and all state and local taxing authorities under the name and TIN of Company.  All items of income, gain, expense and loss recognized in the Lender Concentration Account allocable to each Lender shall be reported to the Internal Revenue Service and all state and local taxing authorities under the name and TIN of such Lender.

(d)           Section 326 of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (“USA PATRIOT Act”) requires the Lockbox Escrow Agent and Financial Institution to implement reasonable procedures to verify the identity of any person that opens a new account with it.  Accordingly, the parties acknowledge that Section 326 of the USA PATRIOT Act and the Lockbox Escrow Agent’s and Financial Institution’s identity verification procedures require the Lockbox Escrow Agent and Financial Institution to obtain information which may be used to confirm the parties identity including without limitation name, address and organizational documents (“identifying information”). The parties agree to provide the Lockbox Escrow Agent and Financial Institution with and consent to the Lockbox Escrow Agent and Financial Institution obtaining from third parties any such identifying information required as a condition of opening an account with or using any service provided by the Lockbox Escrow Agent and Financial Institution.

Section 17.           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.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 18.           Notices.  All notices, consents, waivers and communications hereunder given by any party to any other party shall be in writing (including facsimile transmission) and delivered personally, by telegraph, telecopy, telex or facsimile, by a recognized overnight courier, or by dispatching the same by certified or registered mail, return receipt requested, with postage prepaid, in each case addressed to the appropriate notice address set forth on Schedule 1 or to such other address or addresses as the parties 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, (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 when delivery is confirmed by such courier’s tracking system or (d) when sent by e-mail, upon receipt of a confirmatory return e-mail from the recipient.

Section 19.           Entire Agreement.  This Agreement, together with the other Transaction Documents and the Annexes and Schedules hereto and thereto (which are incorporated herein by reference), constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, among 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 Annexes or Schedules hereto) has been made or relied upon by any 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 20.           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; provided, that the parties hereto agree that they will cooperate with LFRP Investors, L.P. to amend this agreement in order to add mechanics related to syndication of the Loan to one or more additional Lenders under the Loan Agreement.  Lender may take any action that is permitted under the Loan Agreement at the direction of Required Lenders.  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.

(b)           No failure or delay by any 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 21.           Successors and Assigns.The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and any reference herein to a party shall be deemed a reference to such party’s successors and assigns, if any.  Company, Financial Institution and Lockbox Escrow Agent shall not be entitled to assign any of their obligations and rights hereunder or any other Transaction Documents without the prior written consent of Lender.  Lender may assign this Agreement and any of its rights hereunder without restriction.

Section 22.           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 23.           Recharacterization.The parties intend that this Agreement (in so far as it relates to the Lockbox Account) constitute an escrow agreement for all purposes, including, without limitation, for purposes of Sections 541 and 544 of the United States Bankruptcy Code, Title 11, United States Code (the “Bankruptcy Code”).  To the extent that a court shall, notwithstanding such intent, construe this Agreement (insofar as it relates to the Lockbox Account) as constituting a security arrangement, the following provisions shall be deemed to apply:

(a)           Company hereby grants to Lender a security interest in the Lockbox Account and all funds, monies, checks and other items from time to time credited thereto or on deposit therein, to secure the Secured Obligations as defined in the Security Agreement;

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(b)           The Lockbox Escrow Agent shall hold funds in the Lockbox Account as bailee for Lender for purposes of perfecting such security interest by control of such accounts.

(c)           Financial Institution shall comply with all Account Instructions originated by the Lender with respect to the Lockbox Account without further consent by Company.

Section 24.           Interpretation.  When a reference is made in this Agreement to Sections, subsections, Annexes or Schedules, such reference shall be to a Section, subsection, Annex or Schedule to this Agreement unless otherwise indicated.  The terms “Agreement”, “herein”, “hereto”, “hereof” and words of similar import shall, unless the context otherwise requires, mean this Agreement, as amended, supplemented or otherwise modified from time to time.  The words “include”, “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation”.  No party hereto shall be or be deemed to be the drafter of this Agreement for the purposes of construing this Agreement against any other party.

Section 25.           Headings and Captions.  The headings and captions in this Agreement are for convenience and reference purposes only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.

Section 26.           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 THAT WOULD REQUIRE THE APPLICATION OF LAWS OTHER THAN THOSE 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 NON−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 26 IN ANY SUCH 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 ACTION OR PROCEEDING COMMENCED HEREUNDER 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 27.           Waiver of Jury Trial; Exclusion of Punitive Damages.  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 OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  IN ADDITION, WITHOUT LIMITING COMPANY’S OBLIGATION TO INDEMNIFY LENDER FOR ANY THIRD PARTY CLAIM FOR PUNITIVE DAMAGES, IN ANY LITIGATION OR ARBITRATION BETWEEN THE PARTIES HEREUNDER NEITHER PARTY SHALL BE ENTITLED TO SEEK PUNITIVE DAMAGES FROM THE OTHER PARTY.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 28.           Waiver of Immunity.  To the extent that Company has or hereafter may be entitled to claim or may acquire, for itself or any of its assets, any immunity from suit, jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, or otherwise) with respect to itself or any of its property, Company hereby irrevocably waives such immunity in respect of its obligations hereunder to the fullest extent permitted by law.

Section 29.           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.

[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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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.

FINANCIAL INSTITUTION:	JPMORGAN CHASE BANK, N.A.
	By:	__________________________________________
		Name:           Rola Tseng
		Title:           Vice President
COMPANY	DYAX CORP.
	By:	__________________________________________
		Name:
		Title:
LENDER:	LFRP INVESTORS, L.P.,
	By:	Vanderbilt Overflow GP, LLC,
		its General Partner
	By:	__________________________________________
		Name:
		Title:
LOCKBOX ESCROW AGENT:	JPMORGAN CHASE BANK, N.A.
	By:	__________________________________________
		Name: Rola Tseng
		Title: Vice President
INITIAL LOCKBOX	DYAX CORP.
CALCULATION AGENT:	By:	__________________________________________
		Name:
		Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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ANNEX A

to Agreement

DEFINITIONS

“Account Instruction” shall mean, with respect to any Deposit Account, any entitlement order, order, direction or instruction concerning or directing the disposition, transfer, withdrawal, disbursement or redemption of any Deposit Funds in or credited to such Deposit Account, or otherwise relating to any matters pertaining to or concerning such Deposit Account, and/or any Deposit Funds therein or credited thereto.

“Agreement” shall have the meaning set forth in the preamble (first paragraph) of this Agreement.

“Authorized Representative” shall have the meaning set forth in Section 11.

“Business Day” shall mean any day other than (a) a Saturday (b) a Sunday or (c) any other day on which the Financial Institution located at the address set forth on Schedule 1 is authorized or required by law or executive order to remain closed.

“Company Concentration Account” shall have the meaning set forth in Section 2(d).

“Concentration Accounts” shall have the meaning set forth in Section 2(d).

“Deposit Account” and “Deposit Accounts” shall have the meaning set forth in Section 2.

“Deposit Funds” shall mean any and all financial assets, funds, monies, checks or other items, including all Permitted Investments.

“Event of Default” shall have the meaning set forth in the Loan Agreement.

“Financial Institution” shall have the meaning set forth in the preamble (first paragraph) of this Agreement.

“Fiscal Year” shall mean the calendar year.

“Indemnitees” shall have the meaning set forth in Section 15.

“Lender Concentration Account” shall have the meaning set forth in Section 2(d).

“Liabilities” shall mean any and all losses, liabilities, damages, claims, penalties, judgments, settlements, litigation, investigations, suits, actions, costs or expenses (including the reasonable fees and expenses of in-house counsel and of outside counsel and their staff and all expense of document location, duplication and shipment) (each a “Liability”).

 “Loan Agreement” shall have the meaning set forth in the Recitals to this Agreement.

“Lockbox Calculation Agent” shall have the meaning set forth in the preamble to this Agreement.

“Lockbox Calculation Report” shall have the meaning set forth in Section 3(b).

“Lockbox Escrow Agent” shall have the meaning set forth in the preamble to this Agreement.

“Lockbox Account” shall have the meaning set forth in Section 2(c).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

A-1

“Permitted Investments” shall mean either (i) the investments in the Cash Compensation Account with the JPMorgan Chase Bank, N.A. or (ii) subject to Section 2 of this Agreement, such other investments as Company or Lender, as applicable, may select from time to time, in each case together with all interest and other earnings thereon.  Cash Compensation Accounts have rates of compensation that may vary from time to time based upon market conditions.

 “Person” shall have the meaning set forth in the Loan Agreement.

“Security Agreement” shall have the meaning set forth in the Recitals to this Agreement.

“Termination Event” shall mean the occurrence or existence of any of the following events: (a) the Lockbox Calculation Agent’s material failure to comply with its agreements and duties under this Agreement in accordance with the terms hereof and such failure continues for more than thirty (30) Business Days after written notice from Lender to the Lockbox Calculation Agent or (b) such a material failure occurs in any four (4) calendar quarters regardless of the duration for which such failure continues.

“Third Party” shall mean any person or entity other than Company or Lender.

“TIN” shall have the meaning set forth in Section 16.

“UCC” shall mean the Uniform Commercial Code as in effect from time to time in the State of New York.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

A-2

SCHEDULE 1

to Agreement

TAXPAYER IDENTIFICATION NUMBERS

Company’s TIN is:                  04-3053198

Lender’s  TIN is:                      [           ]

The following contact information can be used to contact all representatives on schedules that list representatives:

Dyax Corporation

300 Technology Square

Cambridge, MA  02139

Main:      (617) 225-2500

LFRP Investors, L.P.

[           ]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

SCHEDULE 2

to Agreement

SPECIMEN SIGNATURE

FOR EACH AUTHORIZED REPRESENTATIVE

OF COMPANY

[           ]

__________________________

Name:

Title:

[           ]

__________________________

Name:

Title:

[           ]

__________________________

Name:           

Title:

[           ]

__________________________

Name:

Title:

[           ]

__________________________

Name:

Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

SCHEDULE 3

to Agreement

SPECIMEN SIGNATURE

FOR EACH AUTHORIZED REPRESENTATIVE

OF LENDER

[            ]

__________________________

Name:

Title:

[            ]

__________________________

Name:

Title:

[            ]

__________________________

Name:

Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

SCHEDULE 4

to Agreement

SPECIMEN SIGNATURE

FOR EACH AUTHORIZED REPRESENTATIVE

OF LOCKBOX CALCULATION AGENT

[           ]

__________________________

Name:

Title:

[           ]

__________________________

Name:

Title:

[           ]

__________________________

Name:

Title:

[           ]

__________________________

Name:

Title:

[           ]

__________________________

Name:

Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

SCHEDULE 5

to Agreement

CALCULATION OF ALLOCATIONS

Lockbox Account Payment Procedures

During each calendar quarter, all Gross Payments deposited into the Lockbox Account shall be treated in the following priority with sweeps to occur not less frequently than monthly:

I.	Any amounts shall be swept into Company Concentration Account until Company  shall have received an amount equal to any CAT Payments due to MedImmune Limited as a result of, or in connection with, such Gross Payments.
II.	Any remaining amounts shall be swept into Company Concentration Account for the payment of any Reimbursement Payments in the amounts received from Contract Parties;
III.	Any remaining amounts shall be swept as follows:
	A.	The remaining amounts shall be swept into the Assignee Concentration Account until Assignee shall have received an amount equal to Applicable Included Receipts1; and
	B.	The remainder of the remaining amounts shall be swept into Company Concentration Account.

For the avoidance of doubt, on the first day of any calendar quarter, that process above shall be reset and repeated.

1   As provided in the Loan Agreement, “Applicable Included Receipts” shall exclude FTE Payments so long as the principal amount of the Loan prepaid pursuant to Section 3.01(a) of the Loan Agreement exceeds the aggregate principal amount, if any, added to the Loans pursuant to Section 4.01(a) and 4.01(b) of the Loan Agreement (as calculated on an annual basis for each calendar year) which shall be determined at the end of any applicable calendar year and shall be applied to amortization in accordance with Section 3.01(a); provided that Borrower may, at its option, include such costs in Applicable Included Receipts on a quarterly basis to pay scheduled amortization in accordance with Section 3.01(a).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

SCHEDULE 6

to Agreement

ELIGIBLE LOCKBOX  CALCULATION AGENTS

Any accounting firm with a national reputation in the United States.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT C

Quarterly Report Format

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT D

SECURITY AGREEMENT

Dated as of [_________]

between

LFRP INVESTORS, L.P.

and

DYAX CORP.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

TABLE OF CONTENTS

		Page
Section 1.	Definitions	1
Section 2.	Grant of Security	1
Section 3.	Security for Obligations	3
Section 4.	Borrower to Remain Liable	3
Section 5.	Promissory Notes and Tangible Chattel Paper	3
Section 6.	Pledged Deposit Accounts	3
Section 7.	Investment Property	3
Section 8.	Collateral in the Possession of a Bailee	3
Section 9.	Electronic Chattel Paper and Transferable Records	4
Section 10.	Letter-of-credit Rights	4
Section 11.	Representations and Warranties	4
Section 12.	Further Assurances	6
Section 13.	Certain Covenants of Borrower	6
Section 14.	Special Covenants With Respect to the Collateral	8
Section 15.	Lender Appointed Attorney-in-Fact	13
Section 16.	Standard of Care	14
Section 17.	Remedies Upon Event of Default	14
Section 18.	Application of Proceeds	16
Section 19.	Expenses	16
Section 20.	Continuing Security Interest; Termination and Release	16
Section 21.	Miscellaneous	17

Schedules

Schedule 1 Definitions

Schedule 2(b)(i) LFRP Patents

Schedule 2(b)(ii) LFRP Know-How

Schedule 2(c) License Agreements

Schedule 2(e) In Licenses

Schedule 2(j)(i) and (ii) Pledged Deposit Accounts

Schedule 11(b) Filing Jurisdictions

Schedule 11(c)(i) Excluded Agreements

Exhibits

Exhibit A Form of Special Power of Attorney

Exhibit B Form of Copyright Security Agreement

Exhibit C Form of Patent Security Agreement

Exhibit D Form of Perfection Certificate

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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SECURITY AGREEMENT

This SECURITY AGREEMENT (the “Agreement”) is dated as of [_________] (the “Effective Date”) by and between Dyax Corp., a Delaware corporation (including its permitted successors and assigns, “Borrower”), and LFRP Lenders, L.P., a Delaware limited partnership (including its successors and assigns, “Lender”).

W I T N E S S E T H:

WHEREAS, Borrower and Lender are parties to that certain Loan Agreement, dated as of December [__], 2011 (as amended, supplemented and otherwise modified from time to time, the “Loan Agreement”) pursuant to which Lender has agreed, subject to the terms and conditions set forth therein, to make the Loans (as defined in the Loan Agreement) to Borrower; and

WHEREAS, as a condition to the making of the Loans, the Loan Agreement requires that on the Existing Loan Prepayment Date (as defined in the Loan Agreement), as a condition to the Tranche B Funding (as defined in the Loan Agreement), Borrower execute and deliver to Lender this Security Agreement.

NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

Section 1.          Definitions.  For purposes of this Agreement, capitalized terms and certain other terms used herein shall have the meanings set forth in Schedule 1 hereto.  Capitalized terms used herein and not otherwise defined herein or in Schedule 1 shall have the meanings given such terms in the Loan Agreement.  Terms used herein and defined in the UCC shall have the meaning ascribed to such terms in the UCC unless the context clearly requires otherwise.

Section 2.          Grant of Security.  Borrower hereby grants Lender, for the benefit of the Lenders, and confirm its grant of, a security interest in all of the Borrower’s right, title and interest in and to the following personal property, whether now or hereafter existing, and wherever the same may be located (all such property, collectively, the “Collateral”):

(a)           the Gross Payments and Included Receipts;

(b)           the LFRP Patents, including those set forth on Schedule 2(b)(i) and LFRP Know-How, including that described in Schedule 2(b)(ii), and all other know-how, materials, trademarks, service marks, trade names and goodwill associated therewith, trade secrets, data, formulations, processes, franchises, inventions, software, copyrights, and all intellectual property (including biological materials), and all registrations of any of the foregoing, or applications therefor, that are (i) owned by, controlled by, issued to, licensed to, or licensed by Borrower and (ii) used in the performance of the LFRP as presently conducted by Borrower or as conducted by Borrower as of the Closing Date or during the term of the Loan (but specifically excluding the biological material comprising the Company Physical Libraries, it being the intent of the parties that while intellectual property covering or embodied in the LFRP Libraries be within the scope of the Collateral, all biological material comprising the LFRP Libraries except for the Duplicate Libraries is excluded from the Collateral);

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

(c)           the License Agreements, including those set forth on Schedule 2(c);

(d)           the In Licenses including those set forth on Schedule 2(d);

(e)           books, records, data bases, and information related to the LFRP;

(f)           all general intangibles, including all payment intangibles and all documents (notwithstanding any other provisions herein, as that term is defined in the UCC), instruments (including promissory notes), accounts, letter-of-credit rights (whether or not the letter of credit is evidenced by a writing), commercial tort claims, securities and all other investment property, supporting obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds, in each case related to the Gross Payments and Included Receipts;

(g)           any other general intangibles necessary to the performance of or forming part of the LFRP;

(h)           (A) the Borrower’s interests in the Lockbox Account, details of which are provided on Schedule 2(h)(i), and any successor account, (B) the Company Concentration Account, details of which are provided on Schedule 2(h)(ii), and any successor account, and (C) any other deposit account or securities account containing proceeds of Collateral and into which a party to a License Agreement has remitted Royalties (the accounts referred to in clauses (A), (B) and (C) collectively, the “Pledged Deposit Accounts”), all funds on deposit in each such account, all investments arising out of such funds, all claims thereunder or in connection therewith and special purpose subaccounts maintained therein, and all monies and credit balances from time to time held in the Pledged Deposit Accounts or such subaccounts; all notes, certificates of deposit, deposit accounts, checks and other instruments from time to time hereafter delivered to or otherwise possessed by Borrower in substitution for or in addition to any or all of the then existing items described in this subsection (h); and all interest, dividends, cash, securities, rights, instruments and other property at any time and from time to time received, receivable or otherwise distributed in respect of such accounts, such funds, or such investments or received in exchange for any or all of the items described in this subsection;

(i)           all money now or at any time in the possession or under the control of, or in transit to, the Lockbox Bank, or the Borrower relating to any of the foregoing in this Section 2;

(j)           quantities of biological material comprising a complete copy of each of the LFRP Libraries that are sufficient to be used to create a reproducible supply of the LFRP Libraries (the “Duplicate Libraries”); and

(k)           all Proceeds.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 3.          Security for Obligations.  This Agreement secures, and the Collateral pledged by Borrower is collateral security for, the due and punctual payment or performance in full (including the payment of amounts that would become due but for the operation of the automatic stay under Subsection 362(a) of the United States Bankruptcy Code) of all Secured Obligations of Borrower.

Section 4.          Borrower to Remain Liable.  Notwithstanding anything to the contrary contained herein, (a) Borrower shall remain liable to perform all of its duties and other obligations under the Loan Agreement to the same extent as if this Agreement had not been executed, and (b) the exercise by Lender of any of its rights hereunder shall not release Borrower from any of its duties or other obligations under the Loan Agreement.

Section 5.          Promissory Notes and Tangible Chattel Paper.  If Borrower at any time shall hold or acquire any promissory notes or tangible chattel paper constituting Collateral having a face value greater than twenty-five thousand dollars ($25,000), Borrower shall forthwith endorse, assign and deliver the same to Lender, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify.

Section 6.          Pledged Deposit Accounts.  Borrower shall follow the procedures and payment mechanisms relating to the Pledged Deposit Accounts set forth in Section 4.02 of the Loan Agreement.

Section 7.          Investment Property.  If Borrower shall at any time hold or acquire any certificated securities constituting Collateral, Borrower shall forthwith endorse, assign and deliver the same to Lender, accompanied by such instruments of transfer or assignment duly executed in blank as Lender may from time to time specify.  If any securities constituting Collateral now or hereafter acquired by Borrower are uncertificated and are issued to Borrower or its nominee directly by the issuer thereof, Borrower shall promptly notify Lender thereof and, at Lender’s request, pursuant to an agreement in form and substance satisfactory to Lender in its discretion reasonably exercised, cause the issuer of such securities to agree to comply with instructions from Lender as to such securities, without further consent of Borrower or such nominee.  If any securities constituting Collateral, whether certificated or uncertificated, or other investment property now or hereafter acquired by Borrower are held by Borrower or its nominee through a securities intermediary or commodity intermediary, Borrower shall promptly notify Lender thereof and, at Lender’s request, pursuant to an agreement in form and substance satisfactory to Lender in its discretion reasonably exercised, cause such securities intermediary or (as the case may be) commodity intermediary to agree to comply with entitlement orders or other instructions from Lender to such securities intermediary as to such securities or other investment property, or (as the case may be) to apply any value distributed on account of any commodity contract as directed by Lender to such commodity intermediary, in each case without further consent of Borrower or such nominee.

Section 8.          Collateral in the Possession of a Bailee.  If any property constituting Collateral is at any time in the possession of a bailee, Borrower shall promptly notify Lender thereof and, if requested by Lender, shall promptly obtain an acknowledgement from the bailee, in form and substance satisfactory to Lender in its discretion reasonably exercised, that the bailee holds such Collateral for the benefit of Lender and shall act upon the instructions of Lender, without the further consent of Borrower.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 9.          Electronic Chattel Paper and Transferable Records.  If Borrower at any time holds or acquires an interest in any electronic chattel paper or any “transferable record,” as that term is defined in Section 201 of the federal Electronic Signatures in Global and National Commerce Act, or in § 16 of the Uniform Electronic Transactions Act as in effect in any relevant jurisdiction, constituting Collateral, Borrower shall promptly notify Lender thereof and, at the request of Lender, shall take such action as Lender may reasonably request to vest in Lender control under UCC § 9-105 of such electronic chattel paper or control under Section 201 of the federal Electronic Signatures in Global and National Commerce Act or, as the case may be, § 16 of the Uniform Electronic Transactions Act, as so in effect in such jurisdiction, of such transferable record.

Section 10.        Letter-of-credit Rights.  If Borrower is at any time a beneficiary under a letter of credit now or hereafter issued in favor of Borrower constituting Collateral, Borrower shall promptly notify Lender thereof and, at the request of Lender, Borrower shall, pursuant to an agreement in form and substance satisfactory to Lender in its discretion reasonably exercised, arrange for the issuer and any confirmer of such letter of credit to consent to an assignment to Lender of the proceeds of any drawing under the letter of credit.

Section 11.        Representations and Warranties.

(a)       Borrower represents and warrants to Lender as of the date hereof, Borrower (or any predecessor by merger or otherwise) has not, within the five (5) year period preceding the date hereof, had a different name from the name listed on the signature pages hereof.

(b)       Borrower represents and warrants to Lender as of the date hereof, and represents and warrants to Lender in all material respects on each date it acquires rights in Collateral in which a security interest is purported to be granted hereunder, as follows:

(i)       Ownership of Collateral.  Borrower has the power to grant a lien and security interest in each item of Collateral upon which it purports to grant a lien or security interest hereunder and the grant of such security interest shall not constitute or result in (A) the abandonment, invalidation or unenforceability of any right, title or interest of Borrower under any lease, license or contract to which it is a party or (B) a breach or termination pursuant to the terms of, or a default under, any such lease, license, contract or agreement (other than to the extent that any such term would be rendered ineffective pursuant to Sections 9-406, 9-407, 9-408 or 9-409 of the UCC).  Other than such as may have been filed in favor of Lender relating to this Agreement or as contemplated by the Loan Agreement, no effective UCC financing statement or other instrument similar in effect covering all or any part of the Collateral or the LFRP Patents is on file in any filing or recording office.

(ii)       Validity.  This Agreement creates a valid security interest in the Collateral, and upon the filing of the appropriate UCC financing statements naming Lender as secured party and describing the Collateral in the applicable filing office(s) in the jurisdiction(s) listed in Schedule 11(b), such security interest will be perfected in all Collateral in which a security interest can be perfected by the filing of a UCC-1 Uniform Commercial Code financing statement.  Other than Permitted Liens which have priority under law, the security interest in the Collateral granted herein is prior to any and all other Liens.  As of the date hereof, there are no Liens other than Permitted Liens on or with respect to the Collateral.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-4-

(iii)       Authorization, Approval.  No authorization, approval, or other action by, and no notice to or filing with, any government or agency of any government or other Person is required either (A) for the assignment, pledge and grant by Borrower of the security interest granted hereby or for the execution, delivery and performance of this Agreement by Borrower; or (B) for the perfection of, the pledge, assignment and grant of the security interest created hereby or the exercise by Lender of its rights and remedies hereunder (provided, however, that the exercise by Lender of certain rights and remedies relating to certain licenses or leases of the Borrower may require the consent of the other parties to such licenses or leases), other than (X) the filing of financing statements in the appropriate office(s) located in the jurisdiction(s) listed on Schedule 11(b) and (Y) the filing of the Patent Security Agreement with the United States Patent and Trademark Office and the filing of the Copyright Security Agreement in the United States Copyright Office and any supplements or amendments thereto.

(iv)       Enforceability.  This Agreement is the legally valid and binding obligation of Borrower, enforceable against Borrower in accordance with its terms, subject, as to enforcement of remedies, to bankruptcy, insolvency, reorganization, moratorium or similar laws affecting creditors’ rights generally or general equitable principles.

(c)         Other Representations and Warranties.  As of the date hereof and as of the earlier of the date on which the Business Report is delivered or the date on which such Business Report is due in each fiscal year:

(i)       Schedules.  (i) (A) Schedule 2(b)(i) shall set forth all of the LFRP Patents, (B) Schedule 2(b)(ii) shall set forth a description of the LFRP Know-How; (C) Schedule 11(c)(i) shall set forth all of the Excluded Agreements; (D) Schedule 2(c) shall set forth all of the License Agreements; (E) Schedule 2(d) shall set forth all of the In Licenses; and (F) Schedule 2(h)(i) and (ii) shall set forth details of the Pledged Deposit Accounts; and

(ii)       Perfection Certificate.  (A) Borrower’s exact legal name is that indicated on the Perfection Certificate and on the signature page thereof; (B) Borrower is an organization of the type and organized in the jurisdiction set forth in the Perfection Certificate; (C) the Perfection Certificate accurately sets forth Borrower’s organizational identification number or accurately states that Borrower has none; (D) the Perfection Certificate accurately sets forth each place of Borrower’s business or, if more than one, its chief executive office as well as its mailing address (if different) and where Collateral is located; (E) Borrower’s FEIN is accurately set forth in the Perfection Certificate; and, (F) all other information set forth on the Perfection Certificate is accurate and complete in all material respects.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-5-

Section 12.        Further Assurances.  Borrower agrees that, from time to time, at its cost and expense, Borrower will promptly execute and deliver all further instruments and documents, and take all further action that may be necessary or desirable, or that Lender may reasonably request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Lender to exercise and enforce its rights and remedies hereunder with respect to any Collateral.  Without limiting the generality of the foregoing, Borrower will:  (a) (i) execute and file such financing or continuation statements, or amendments thereto, as well as documents for filing in the Unites States Patent Office and United States Copyright Office (ii) execute and deliver, and cause to be executed and delivered, agreements establishing that Lender has control of specified items of Collateral, including the Lockbox Agreement, and (iii) deliver such other instruments or notices, in each case, as may be necessary or desirable, or as Lender may reasonably request, in order to perfect and preserve the security interests granted or purported to be granted hereby; (b) furnish to Lender from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Lender may reasonably request, all in reasonable detail; (c) at Lender’s reasonable request, appear in and defend any action or proceeding that may affect Borrower’s title to or Lender’s security interest in all or any part of the Collateral, including any proceeding in which the issue is whether any property in which Borrower has rights constitutes Collateral; and (d) use commercially reasonable efforts to obtain any necessary consents of third parties to the assignment and perfection of a security interest to Lender with respect to any Collateral.  Borrower hereby authorizes Lender to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Collateral without the signature of Borrower.  Borrower agrees that a carbon, photographic or other reproduction of this Agreement or of a financing statement signed by Borrower shall be sufficient as a financing statement and may be filed as a financing statement in any and all jurisdictions.  Notwithstanding the foregoing, so long as there exists no Event of Default, the Borrower shall not be required to obtain the consent of the other parties to the existing License Agreements and In Licenses.

Section 13.        Certain Covenants of Borrower.  Borrower shall:

(a)           not use or permit any Collateral to be used unlawfully or in violation of any applicable statute, regulation or ordinance or any policy of insurance covering the Collateral to the extent the same could reasonably be expected to have a Material Adverse Effect;

(b)           at its own cost and expense, with respect to each property that it leases on which any Collateral is located, use commercially reasonable efforts to obtain, at Lender’s request, an agreement satisfactory to Lender with the landlord of such leased property, (i) subordinating such landlord’s lien in any Collateral to the security interest purported to be granted hereunder and (ii) granting access to such leased property;

(c)           maintain insurance as provided in Section 9.06 the Loan Agreement;

(d)           notify Lender of any change in its name, identity or corporate structure at least fifteen (15) days prior to such change;

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-6-

(e)           give Lender thirty (30) days’ prior written notice of any change in its chief place of business, chief executive office or residence or the office where Borrower keeps its records regarding the Collateral or a reincorporation, reorganization or other action that results in a change of the jurisdiction of organization of Borrower;

(f)           pay promptly when due all taxes, assessments and governmental charges or levies imposed upon, and all claims against, the Collateral, except to the extent the validity thereof is being contested in good faith; provided, however, that Borrower shall in any event pay such taxes, assessments, charges, levies or claims not later than five (5) days prior to the date of any proposed sale under any judgment, writ or warrant of attachment entered or filed against Borrower or any of the Collateral as a result of the failure to make such payment;

(g)           except for licenses of LFRP Intellectual Property and In Licenses in effect on the date hereof, not suffer to exist any license, lease, contract or agreement to which it is a party forming part of or used in the LFRP that contains any provision that purports to prohibit Borrower from granting to Lender a security interest in any item of Collateral including any such license, lease, contract or agreement itself;

(h)           comply with all of its obligations with respect to any personal property owned or leased by it and used in the LFRP, including capital leases, operating leases and purchase money indebtedness except to the extent non-compliance could not reasonably be expected to have a Material Adverse Effect;

(i)           from and after the date that the Duplicate Libraries are delivered to the location specified in Section 14(f), in the event that there are any updates or improvements to the LFRP Libraries, or other libraries as set forth in the definition of LFRP Libraries, promptly deliver sufficient quantities of such updated, improved or other LFRP Libraries as necessary to maintain the Duplicate Libraries as a duplicate reproducible supply of the LFRP Libraries at such location; and

(j)           not transfer, sell, convey, assign, dispose of or license the Company Physical Libraries, except (x) in the ordinary course of business of the LFRP consistent with past practices, or (y) outside the scope of the LFRP the non-exclusive licensing of the Company Physical Libraries but limited to a scope or for a use so as to not compete with the LFRP, provided, that non-exclusive licensing of the Company Physical Libraries under Internally Developed Product Agreements or under Co-Development Agreements shall not be considered in breach hereof, so long as in no event shall any third party or Affiliate be granted a license or other rights under the Company Physical Libraries in a way that would allow such third party or Affiliate to operate a funded research or licensing program that would compete with the LFRP.

(k)           concurrently with Borrower’s delivery of a Business Report pursuant to Section 9.03(e) of the Loan Agreement, confirm the attachment of the security interest in the registered intellectual property of Borrower created by this Agreement by execution of Copyright Security Agreement or a Patent Security Agreement, as applicable, with respect to any such registered intellectual property not subject at such time to a Patent Security Agreement or a Copyright Security Agreement, as applicable, and the filing of such agreement with the patent office or any other Governmental Authority as shall be necessary to create, preserve, protect or perfect Lender’s security interest in such intellectual property as may be reasonably requested by Lender.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-7-

Section 14.        Special Covenants With Respect to the Collateral.

(a)        Borrower shall:

(i)       diligently keep records in reasonable detail respecting the Collateral at its chief executive office or principal place of business;

(ii)       not locate any Collateral in any location other than (1) those owned by Borrower or for which it has delivered an agreement described in Section 13(b) hereof, (2) the deposit accounts as contemplated by the Lockbox Agreement, or (3) in the locations as contemplated in Section 14(f), and shall not relocate any collateral from its location as of the Closing Date to another such location without first notifying Lender in writing of such relocation;

(iii)       give thirty (30) days’ prior written notice to Lender of its intent to establish any additional place of business;

(iv)       other than items deposited for collection in the Lockbox Account, forthwith turn over (with any required endorsement and assignment requested by Lender), any instrument or cash constituting Collateral;

(v)       not create, incur, assume or suffer to exist any Lien with respect to Collateral, other than Permitted Liens;

(vi)       not Transfer the Collateral, other than the Proceeds the Borrower is permitted to receive in accordance with the Lockbox Agreement, except (x) with respect to the LFRP, licensing out in the ordinary course of business of the LFRP consistent with past practices, or (y) outside the scope of the LFRP, non-exclusive licensing out of LFRP Intellectual Property (including the provision of LFRP Libraries or other biological material) but limited to a scope or for a use so as not to compete with the LFRP; provided, that non-exclusive licensing of LFRP Intellectual Property under Internally Developed Product Agreements or under Co-Development Agreements shall not be considered in breach hereof, so long as in no event shall any third party or Affiliate be granted a license or other rights under the LFRP Intellectual Property (including the provision of LFRP Libraries or other biological material) in a way that would allow such third party or Affiliate to operate a funded research or licensing program that would compete with the LFRP.

(vii)      in the event that Borrower has rights to a commercial tort claim constituting Collateral, notify Lender and provide a detailed description of the claim and shall grant Lender a security interest therein in a manner specified by Lender; and

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(viii)     in the event that Borrower shall have a security interest in any property securing any Collateral, promptly execute an assignment of such security interest to Lender.

(b)           Borrower shall, at Borrower's sole cost and expense, (A) take any and all actions and make all payments, which are necessary and desirable to diligently maintain the LFRP Patents owned by it; (B) defend such LFRP Patents against any claims of invalidity or unenforceability; and (C) take commercially reasonable measures to protect the proprietary nature of each item of LFRP Intellectual Property and to maintain in confidence all confidential information compromising a part thereof; provided, that in no event shall Borrower be required to take any action under subsection (B) or (C) if: (i) the failure to take action could not reasonably be expected to result in a Material Adverse Effect, (ii) the reasonably estimated cost to Borrower associated with pursuing such action would outweigh the reasonably estimated extent by which the Included Receipts and the interest in the Royalties retained by the Borrower would benefit as a result of successfully pursuing such action, or (iii) Borrower obtains the requisite written consent of Lenders required under the Loan Agreement, which shall not be unreasonably withheld (as in the case, for example, where pursuing such action would jeopardize the LFRP Intellectual Property or adversely effect the LFRP as a whole). Consent hereunder shall be provided or denied within ten (10) Business Days after notice and provision of such information as may be reasonably requested by the Lender from the Borrower. Borrower shall immediately notify Lender of such claim. The parties shall consult as to strategy regarding any response to such claim. Borrower shall not abandon, or fail to take any action necessary or desirable to prevent the disclaimer or abandonment of material LFRP Patents owned by it.

(c)           Unless there shall occur and be continuing any Event of Default and the Lender has accelerated the Obligations under the Loan Agreement, Borrower shall have the right to commence and prosecute in its own name, as the party in interest, for its own benefit and at the sole cost and expense of the Borrower, such applications for protection of the LFRP Intellectual Property and suits, proceedings or other actions to prevent the infringement, counterfeiting, unfair competition, dilution, diminution in value or other damage as are necessary to protect the LFRP Intellectual Property.  Upon the occurrence and during the continuance of any Event of Default, the Lender shall have the right but shall in no way be obligated to file applications for protection of the LFRP Intellectual Property and/or bring suit in the name of the Borrower or Lender to enforce the LFRP Intellectual Property and any license thereunder.  In the event of such suit, the Borrower shall, at the reasonable request of the Lender, do any and all lawful acts and execute any and all documents requested by the Lender in aid of such enforcement and the Borrower shall promptly reimburse and indemnify the Lender for all costs and expenses incurred by the Lender in the exercise of its rights under this Section 14(c) in accordance with the Loan Agreement.  In the event that the Lender shall elect not to bring suit to enforce the LFRP Intellectual Property, the Borrower agrees, at the reasonable request of the Lender, to take all commercially reasonable actions necessary, whether by suit, proceeding or other action, to prevent the infringement, counterfeiting, unfair competition, dilution, diminution in value of or other damage to any of the LFRP Intellectual Property by any person.

(d)           Borrower shall, concurrently with the execution and delivery of this Agreement, execute and deliver to Lender five (5) originals of a Special Power of Attorney in the form of Exhibit A annexed hereto for execution of an assignment of the Collateral to Lender, or the implementation of the sale or other disposition of the Collateral pursuant to Lender’s good faith exercise of the rights and remedies granted hereunder; provided, however, Lender agrees that it will not exercise its rights under such Special Power of Attorney unless an Event of Default has occurred and is continuing.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(e)           Borrower shall, concurrently with the execution and delivery of this Agreement, execute and deliver to Lender the Patent Security Agreement and the Copyright Security Agreement (in respect of intellectual property not covered by the filings made promptly after the Closing Date) and all other documents, instruments and other items as may be necessary for Lender to file such agreements with the United States Patent and Trademark Office and United States Copyright Office and any similar domestic or foreign office, department or agency.  Borrower shall upon and after the occurrence of an Event of Default, use its commercially reasonable efforts to obtain any consents, waivers and agreements requested by Lender that are necessary to enable Lender to exercise its remedies with respect to the Collateral.

(f)           Certain Rights upon an Event of Default before and following a Foreclosure.

(i)       Upon the occurrence and during the continuance of an Event of Default and upon notice by Lender (the “Notice Event”):

(1)           Borrower hereby agrees to grant and hereby grants to Lender effective upon the Notice Event an exclusive worldwide royalty-free license, with the right to sublicense, under the Shared Intellectual Property (the “Marks”)) to the extent permitted under the In Licenses solely to carry out the LFRP program (including through a designee other than a phage-display company that competes with Borrower) in the same general manner as carried out by Borrower immediately prior to any such Event of Default; provided that such license shall be subject to any licenses granted by Borrower to third parties (not in violation of the Loan Agreement) prior to the date of the grant to Lender hereunder;

(2)           Borrower hereby agrees to grant and hereby grants to Lender effective upon the Notice Event an exclusive royalty-free limited license to use and display the Marks, solely in association with any product or service used or provided in connection with the LFRP in the same general manner and at least as high a level of quality as carried out by Borrower immediately prior to any such Event of Default; provided, that (I) Borrower shall have the right to monitor any such product or service for the purpose of protecting and maintaining the level of quality established by Borrower prior to any such Event of Default; (II) Lender acknowledges that the goodwill and other benefits associated with such Marks shall inure to the benefit of Borrower; and (III) Lender shall not use or omit use of the Marks in any manner which would injure or destroy their value or diminish Borrower’s property rights; and provided, further, that, in the event Borrower advises Lender of any discrepancy in the level of quality of such products or services, Borrower shall have the right to terminate the use and display of the Marks by Lender (but not the other rights licensed hereunder) until such time as the discrepancy is corrected; and

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(3)           For the avoidance of doubt, the Parties agree and acknowledge that (A) Lender shall not practice the licenses set forth in this Section 14(f)(i) unless and until the occurrence of an Event of Default and only for so long as such Event of Default continues; provided that such licenses shall immediately terminate on the date that the security interest granted under this Agreement is terminated in accordance with Section 20 hereof, and (B) subject to the grant of the security interest under and the other provisions of this Agreement and the Loan Agreement, Borrower shall retain ownership of its rights under the Shared Intellectual Property (including the Marks) and shall be free to practice, exploit and license the Shared Intellectual Property on a non-exclusive basis outside the scope of the LFRP but limited to a scope or for a use so as to not compete with the LFRP; provided that non-exclusive licensing of Shared Intellectual Property under Internally Developed Product Agreements or under Co-Development Agreements shall not be considered in breach hereof, so long as in no event shall any third party or Affiliate be granted a license or other rights under the Shared Intellectual Property in a way that would allow such third party or Affiliate to operate a funded research or licensing program that would compete with the LFRP.

(ii)       Upon the occurrence and during the continuance of an Event of Default, following or in connection with Lender’s exercise of the foreclosure remedies hereunder:

(1)           Lender hereby agrees to grant and hereby grants to Borrower a non-exclusive, perpetual, royalty-free worldwide license, with the right to sublicense, under the Shared Intellectual Property (other than the Marks) to the extent permitted under the In Licenses, for any purpose outside the LFRP on a non-exclusive basis, but limited to a scope or for a use so as to not compete with the LFRP; provided that non-exclusive licensing of Shared Intellectual Property under Internally Developed Product Agreements or under Co-Development Agreements shall not be considered in breach hereof, so long as in no event shall any third party or Affiliate be granted a license or other rights under the Shared Intellectual Property in a way that would allow such third party or Affiliate to operate a funded research or licensing program that would compete with the LFRP.

(2)           Lender hereby agrees to grant and hereby grants to Borrower a non-exclusive, perpetual, royalty-free limited license to use and display the Marks in association with any product or service used or provided in connection with the Borrower’s business outside of the LFRP, within the scope permitted under Section 14(f)(ii)(1), above, in the same general manner and at least as high a level of quality as carried out by Borrower immediately prior to any such foreclosure; provided, that (I) Lender shall have the right to monitor any such product or service for the purpose of protecting and maintaining the level of quality established by Borrower prior to any such foreclosure; (II) Borrower acknowledges that the goodwill and other benefits associated with such Marks shall inure to the benefit of Lender; and (III) Borrower shall not use or omit use of the Marks in any manner which would injure or destroy their value or diminish Lender’s property rights; and provided, further, that, in the event Lender advises Borrower of any discrepancy in the level of quality of such products or services, Lender shall have the right to terminate the use and display of the Marks (but not the other rights licensed hereunder) by Borrower until such time as the discrepancy is corrected; and

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(3)           Lender hereby agrees, at Borrower’s sole cost and expense, to make, or to permit Borrower to make, copies of all books, records, data bases, and information (including the handbooks, manuals and sequence information) related to the LFRP and to use all Shared Intellectual Property solely for the purpose of the conduct of the business of Borrower outside the LFRP within the scope permitted under Section 14(f)(ii)(1), above.  For avoidance of doubt, the licenses granted to the Borrower in Section 14(f)(ii) shall survive the termination of this Agreement.  The parties acknowledge that such licenses are licenses of “intellectual property” for the purposes of Section 365 (n) of the Bankruptcy Code.

(g)           Borrower prepared the Duplicate Libraries and delivered the Duplicate Libraries to Fisher Clinical Services, 631 Lofstrand Lane, Rockville, MD 20850 (phone:  (301) 315-2238) or such other secure location or locations as are reasonably acceptable to Borrower and Lender, clearly identified as the Duplicate Libraries prepared for the benefit of Lender, and segregated from property of Borrower.

(h)           Borrower shall:  (i) maintain copies of all source and object codes for all Software at one or more safe and secure locations reasonably acceptable to Lender, (ii) keep Lender fully informed of each such location, and (iii) maintain the currency of all such Software stored thereat.

(i)           Borrower shall, concurrently with the execution and delivery of this Agreement, execute and deliver to Lender (to the extent there have been any changes in the information required to be included therein since the Closing Date) the Perfection Certificate.

(j)           Borrower agrees that a breach of any of the covenants contained in this Agreement will cause irreparable injury to Lender, that Lender has no adequate remedy at law in respect of such breach and, as a consequence, that each and every covenant contained herein shall be specifically enforceable against Borrower, and Borrower hereby waives and agrees not to assert any defenses against an action for specific performance of such covenants.

(k)           The Borrower shall:  (a) notify in reasonable detail Lender promptly, but in no event later than quarterly (on the earlier of the date on which the Business Report is delivered by the Borrower or the date on which such Business Report is due in each fiscal quarter) after the acquisition, execution or filing thereof, of any (i) License Agreements, LFRP Patents, Co-Development Agreements, payments under which form part of the Collateral, and In Licenses, and (b) on the last day of each quarter provide, in reasonable detail, updates to Schedules 2(b)(i), 2(b)(ii) 2(c), 2(d), 2(h)(i) and 2(h)(ii), which would make the representations and warranties contained in Section 11(c)(i) true, correct and complete as of such date of the delivery of such Business Report.  Upon the delivery and acceptance of such updated schedules by Lender, such schedules will be automatically deemed to amend and restate Schedules 2(b)(i), 2(b)(ii), 2(c), 2(d), 2(h)(i) and 2(h)(ii) hereto.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 15.        Lender Appointed Attorney-in-Fact.  Borrower hereby irrevocably appoints Lender, or any person or agent as Lender may designate as such, Borrower’s attorney-in-fact, with full authority in the place and stead of Borrower and in the name of Borrower, Lender or otherwise, from time to time in Lender’s discretion to take any action and to execute any instrument that Lender may in its good faith sole discretion deem necessary or advisable to accomplish the following:

(a)           upon the occurrence and during the continuance of an Event of Default, to ask for, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for monies due and to become due under or in respect of any of the Collateral, and to manage the LFRP, including taking actions under the License Agreements and In Licenses;

(b)           upon the occurrence and during the continuance of an Event of Default, to receive, direct payment of, endorse and collect any drafts or other instruments, documents and chattel paper in connection with clause (a) above;

(c)           upon the occurrence and during the continuance of an Event of Default, to file any claims or take any action or institute any proceedings that Lender may in its good faith sole discretion deem necessary or desirable for the collection of any of the Collateral or otherwise to enforce the rights of Lender with respect to any of the Collateral;

(d)           upon the occurrence and during the continuance of an Event of Default, to pay or discharge taxes or liens levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by Lender in its sole discretion, any such payments made by Lender to become obligations of Borrower to Lender, due and payable immediately without demand;

(e)           upon the occurrence and during the continuance of an Event of Default, to sign and endorse any invoices, drafts against debtors, assignments, verifications, notices and other documents relating to the Collateral; and

(f)           upon the occurrence and during the continuance of an Event of Default, to perform any obligations of the Borrower under the Transaction Documents with the Borrower which the Borrower has not performed.

(g)           upon and at any time after the occurrence and during the continuance of an Event of Default, to prepare, file and sign Borrower’s name on an assignment document in such form as Lender may in its sole discretion deem necessary or desirable to transfer ownership of the Collateral to Lender or an assignee or transferee of Lender, which transfer expressly shall be subject to the rights of the Borrower in such Collateral set forth in Section 14(e) hereof.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 16.        Standard of Care.  The powers conferred on Lender hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers.  Except for the exercise of good faith and of reasonable care in the accounting for monies actually received by Lender hereunder, Lender shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral.  Lender shall be deemed to have exercised reasonable care in the custody and preservation of Collateral in its possession if such Collateral is accorded treatment substantially equal to that which Lender accords its own property.  The Lender shall act as agent hereunder for any other Lenders that become a party to the Loan Agreement after the date hereof and the security interest granted hereunder to the Lender is also granted to the Lender for the benefit of other Lenders.  Except as provided in the Loan Agreement, the Lender shall have no duty to any Lender hereunder and its sole responsibility shall be limited to (i) being named as a secured party hereunder and in any UCC financing statement, intellectual property filing, Lockbox Agreement, any escrow agreement or other documents, instrument or agreement entered into or filed pursuant hereto and (ii) holding any possessory Collateral delivered to it by the Company pursuant hereto, in each case for the benefit of all Lenders.  The Lender is entitled to, but has no obligation to exercise any rights or remedies hereunder or under applicable law.

Section 17.        Remedies Upon Event of Default.

(a)        If, and only if, any Event of Default shall have occurred and be continuing, Lender may exercise in respect of the Collateral (i) all rights and remedies provided for herein, under the Loan Agreement or otherwise available to it, (ii) all the rights and remedies of a secured party on default under the UCC (whether or not the UCC applies to the Collateral), in all relevant jurisdictions, and (iii) the rights to:

(i)       require Borrower to, and Borrower hereby agrees that it will at its cost and expense and upon request of Lender forthwith, assemble all or part of the Collateral as directed by Lender and make it available to Lender at a place to be designated by Lender that is reasonably convenient to both parties;

(ii)       personally or by agents or attorneys, immediately take possession of the Collateral or any part thereof, from Borrower or any other person who has possession of any part thereof, with or without notice or process of law, and for that purpose may enter upon Borrower’s premises where any of the Collateral is located and remove same;

(iii)       foreclose or otherwise enforce Lender’s security interest in any manner permitted by law or provided for in this Agreement;

(iv)       without notice except as may be required by applicable law and that cannot be waived, sell the Collateral or any part thereof in one or more parcels at public or private sale, at any place or places for cash, on credit, or for future delivery, and upon such other terms as Lender may deem commercially reasonable; and

(v)       without notice, exercise any right to set-off or offset provided by law.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(b)           Until an Event of Default has occurred and is continuing, Borrower shall, subject to the provisions of the Loan Agreement and the Lockbox Agreement, continue to collect, at its own cost and expense, all amounts due or to become due Borrower in respect of the Collateral; it being understood and agreed that any and all such collections shall be held in trust for, and be for the benefit of, Lender.  In connection with such collections; provided, no Event of Default shall have occurred and be continuing, Borrower may, subject to the provisions of the Loan Agreement, take such action as Borrower reasonably may deem necessary or advisable to enforce collection of the Collateral.  At any time after an Event of Default has occurred and is continuing, Lender shall have the right to notify the account debtors or obligors under any Collateral of the security interest of Lender in such Collateral and to direct such account debtors or obligors to make payment to Lender (or its designee) of any amounts due or to become due thereunder and enforce collection of any of the Collateral by suit or otherwise and surrender, release or exchange all or any part thereof, or adjust, settle or compromise or extend or renew for any period (whether or not longer than the original period) any indebtedness thereunder or evidence thereby.  If an Event of Default has occurred and is continuing, upon the request of Lender, Borrower shall, at its own cost and expense, notify any parties obligated on any of the Collateral to make payment to Lender (or its designee) of any amounts due or to become due thereunder, and in such event, Lender is authorized to endorse, in the name of Borrower, any item representing any payment on or other proceeds of any of the Collateral.  Borrower irrevocably directs and requires all licensees and account debtors to honor Lender’s request for direct payment and comply with any such request, notwithstanding any directions or instructions to the contrary that may be given by Borrower and agrees that the compliance by such licensee or account debtor with the provisions of this Section shall not be deemed a violation of such party’s contractual agreements with Borrower.

(c)           After delivery to Borrower by Lender of a notice that an Event of Default has occurred and so long as such Event of Default is continuing: (i) all amounts and proceeds (including instruments) received by Borrower in respect of any Collateral shall be received in trust for the benefit of Lender hereunder, shall be segregated from other funds of Borrower, and shall be forthwith paid over to Lender in the same form as so received (with any necessary endorsements) to be held as cash collateral and applied as provided by this Security Agreement; and (ii) Borrower shall not adjust, settle, or compromise the amount or payment of any Collateral, or release wholly or partly any account debtor or obligor thereof, or allow any credit or discount thereon.

(d)           After the occurrence and during the continuation of an Event of Default, (i) Lender may in its own name or in the name of others communicate with account debtors (including Contract Parties to License Agreements and In License Agreements) in order to verify with them to Lender’s reasonable satisfaction the existence, amount and terms of any Collateral and (ii) Lender shall have the right, at Borrower’s cost and expense, to make test verifications of the Collateral in any reasonable manner and through any medium that it considers advisable, and Borrower agrees to furnish all such assistance as Lender may reasonably require in connection therewith.

(e)           Anything contained herein to the contrary notwithstanding, upon the occurrence and during the continuation of an Event of Default, Lender shall have the right (but not the obligation) to bring suit, in the name of Borrower, Lender or otherwise, to enforce any Collateral, in which event Borrower shall, at the request of Lender, do any and all lawful acts and execute any and all documents required by Lender in aid of such enforcement and Borrower shall promptly, upon demand, reimburse and indemnify Lender as provided in the Loan Agreement and Section 19 hereof, as applicable, in connection with the exercise of its rights under this Section 17.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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Section 18.        Application of Proceeds.  Except as expressly provided elsewhere in this Agreement, all proceeds received by Lender in respect of any sale of, collection from, or other realization upon all or any part of the Collateral shall be applied in good faith to satisfy (to the extent of the net cash proceeds received by Lender) the payment in full in cash of amounts constituting Secured Obligations, in each case equally and ratably to the holders of the Tranche A Loans and Tranche B Loans, in accordance with the amounts of such Loans then outstanding, respectively.

Section 19.        Expenses.

(a)           Borrower agrees to pay to Lender upon demand the amount of any and all costs and expenses, including the reasonable fees and expenses of its counsel and of any experts and agents, that Lender may incur in connection with (i) the custody, preservation, management, enforcement, use or operation of, or the sale of, collection from, or other realization upon, any of the Collateral, (ii) the exercise or enforcement of any of the rights of Lender hereunder, or (iii) the failure by Borrower to perform or observe any of the provisions hereof.  Any costs and expenses payable hereunder shall be deemed to be Secured Obligations and entitled to the security interest hereunder.

(b)           The obligations of Borrower in this Section 19 shall survive the termination of this Agreement and the discharge of Borrower’s other obligations under this Agreement and the Loan Agreement.

Section 20.        Continuing Security Interest; Termination and Release.

(a)           This Agreement shall (i) create a continuing security interest in the Collateral, (ii) remain in full force and effect until the later of the indefeasible payment and performance in full of the Secured Obligations and the expiration or termination of the Loan Agreement (other than indemnification obligations that are unasserted at the time of expiration or termination of Loan Agreement and other contingent obligations that, by their terms, survive the termination hereof and thereof), (iii) be binding upon Borrower and its respective successors and assigns, and (iv) inure, together with the rights and remedies of Lender hereunder, to the benefit of Lender and its successors, transferees and assigns.  The Borrower agrees that its obligations hereunder and the security interest created hereunder shall continue to be effective or be reinstated, as applicable, if at any time payment, or any part thereof, of all or any part of the Secured Obligations is rescinded or must otherwise be restored by the Lender upon the bankruptcy or reorganization of the Borrower or otherwise.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(b)           Upon the payment and performance in full of all Secured Obligations (other than indemnification obligations that are unasserted as of the expiration or termination of the Loan Agreement and other contingent obligations not then due and payable that, by their terms, survive the termination hereof), the security interest granted hereby shall terminate and all rights to the Collateral shall revert to Borrower.  Upon such termination or any release of Collateral or any part thereof in accordance with the provisions of Section 10.02(b) of the Loan Agreement, the Lender shall, upon the request and at the sole cost and expense of the Borrower, assign, transfer and deliver to Borrower, against receipt and without recourse to or warranty by the Lender except as to the fact that the Lender has not encumbered the released assets, such of the Collateral or any part thereof to be released (in the case of a release) as may be in possession of the Lender and as shall not have been sold or otherwise applied pursuant to the terms hereof, and, with respect to any other Collateral, proper documents and instruments (including UCC 3 termination financing statements or releases) acknowledging the termination hereof and the security interest granted hereby or the release of such Collateral, as the case may be.

Section 21.        Miscellaneous.

(a)           Notices.  All notices, consents, waivers and communications hereunder given by any party to any other party shall be given pursuant to Section 13.04 of the Loan Agreement.

(b)           Effectiveness; Entire Agreement.  This Agreement, together with the other Transaction Documents and Schedules and Exhibits hereto and thereto (which are incorporated herein by reference), constitutes the entire agreement among the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings and negotiations, both written and oral, among 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 Schedules or Exhibits hereto) has been made or relied upon by any 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.

(c)           Amendments; No Waivers.

(i)       This Agreement or any term or provision hereof may not be amended, changed or modified except with the written consent of the parties hereto and subject to any consent required under the Loan Agreement; provided, that Lender may amend this agreement without the consent of the Borrower in order to add mechanics related to syndication of the Loan to one or more additional Lenders so long as such amendments do not in any way alter Borrower’s rights or obligations hereunder. Lender may take any action that is permitted under the Loan Agreement or hereunder.  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.  To the extent Borrower transfers any of the Collateral to any of its Subsidiaries, then such Subsidiaries shall execute a joinder to this Agreement or a new agreement substantially similar to this Agreement and any other applicable Loan Documents, in each case in form and substance reasonably satisfactory to the Lender, to confirm the continued security interest of the Lender in such Collateral.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(ii)       No failure or delay by any 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.

(d)           Successors and Assigns.  The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, and any reference herein to a party shall be deemed a reference to such party’s successors and assigns, if any.  Borrower shall not be entitled to assign any of its obligations and rights hereunder or any other Transaction Documents without the prior written consent of Lender.  Lender may assign this Agreement and any of its rights hereunder without restriction.

(e)           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.

(f)           Interpretation.  When a reference is made in this Agreement to Sections, subsections, Schedules or Exhibits, such reference shall be to a Section, subsection, Schedule or Exhibit to this Agreement unless otherwise indicated.  The terms “Agreement”, “herein”, “hereto”, “hereof” and words of similar import shall, unless the context otherwise requires, mean this Agreement, as amended, supplemented or otherwise modified from time to time.  The words “include”, “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation”.  No party hereto shall be or be deemed to be the drafter of this Agreement for the purposes of construing this Agreement against any other party.

(g)           Headings and Captions.  The headings and captions in this Agreement are for convenience and reference purposes only and shall not be considered a part of or affect the construction or interpretation of any provision of this Agreement.

(h)           Governing Law; Jurisdiction.

(i)       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 THAT WOULD REQUIRE THE APPLICATION OF LAWS OTHER THAN THOSE OF THE STATE OF NEW YORK.

(ii)       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 NON-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.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

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(iii)       EACH PARTY HERETO HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE COURTS REFERRED TO IN SUBSECTION (ii) ABOVE OF THIS SECTION 21(h) IN ANY SUCH 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 ACTION OR PROCEEDING COMMENCED HEREUNDER 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.

(i)           Waiver of Jury Trial; Exclusion of Punitive Damages.  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 OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.  THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT.  IN ADDITION, WITHOUT LIMITING BORROWER’S OBLIGATION TO INDEMNIFY LENDER FOR ANY THIRD PARTY CLAIM FOR PUNITIVE DAMAGES, IN ANY LITIGATION OR ARBITRATION BETWEEN THE PARTIES HEREUNDER NEITHER PARTY SHALL BE ENTITLED TO SEEK PUNITIVE DAMAGES FROM THE OTHER PARTY.

(j)           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.

[REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGE FOLLOWS]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-19-

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.

BORROWER:	DYAX CORP.
	By:	___________________________________
		Name:
		Title:
LENDER:	LFRP INVESTORS, L.P., as Lender
	By:	Vanderbilt Overflow GP, LLC, its General Partner
	By:	___________________________________
		Name:
		Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

SCHEDULE 1

TO

SECURITY AGREEMENT

Definitions

Unless otherwise defined herein or the context otherwise requires, terms for which meanings are provided in the UCC are used in this Security Agreement, including its preamble and recitals, with such meanings; provided, however, that the term “instrument” shall be such term as defined in Article 9 of the UCC rather than Article 3 of the UCC.

“Collateral” has the meaning set forth in Section 2 of this Agreement.

“Company Physical Libraries” shall mean the biological material, individually or collectively, comprising each of the LFRP Libraries in the possession of the Borrower.

“Copyright Security Agreement” means an agreement substantially in the form set forth in Exhibit B and suitable for filing with the United States Copyright Office, including the executed Copyright Security Agreement, executed in counterparts, dated [].

“Duplicate Libraries” has the meaning specified in Section 2(j).

“Marks” has the meaning specified in Section 14(f).

“Notice Event” has the meaning specified in Section 14(f).

“Patent Security Agreement” means an agreement substantially in the form set forth in Exhibit C and suitable for filing with the United States Patent and Trademark Office, including the executed Patent Security Agreement, executed in counterparts, dated [].

“Perfection Certificate” means a document in the form set forth on Exhibit D hereto.

“Permitted Liens” means 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, which also qualify as “Permitted Liens” as defined in the Loan Agreement.

“Pledged Deposit Accounts” has the meaning specified in Section 2(h).

“Proceeds” or “proceeds” includes whatever is receivable or received when Collateral is sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

“Secured Obligations” means any and all Obligations of Borrower under the Transaction Documents including all amounts owing under the Loan Agreement, including the payment to Lender of the amounts of the Included Receipts with respect to any Royalties or other payments received by the Borrower, damages, interest (including interest that, but for the filing of a petition in bankruptcy with respect to Borrower, would accrue on such obligations, whether or not a claim is allowed against Borrower for such interest in the related bankruptcy proceeding), reimbursement of fees, costs, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such liabilities and other obligations that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Lender as a preference, fraudulent transfer or otherwise, and all obligations of every nature of Borrower now or hereafter existing under this Agreement.

“Shared Intellectual Property” means, collectively, those items identified in Sections 2(b), 2(d), 2(e), 2(f) and 2(g) hereof.

“Transfer” means any sale, conveyance, assignment, disposition or license either to a third party or to an Affiliate.

“UCC” means the Uniform Commercial Code as in effect from time to time in the State of New York or Delaware, as applicable.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

-2-

EXHIBIT E

Form of Tranche A Note

THIS TRANCHE A NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272, 1273, AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  THE ISSUE DATE FOR THIS NOTE IS THE TRANCHE A FUNDING DATE.  FOR INFORMATION REGARDING THE ISSUE PRICE, YIELD TO MATURITY AND AMOUNT OF ORIGINAL ISSUE DISCOUNT FOR THIS NOTE, A HOLDER SHOULD CONTACT THE BORROWER AT:  DYAX CORP., 300 TECHNOLOGY SQUARE, CAMBRIDGE, MA 02139, ATTN:  CHIEF FINANCIAL OFFICER.

US $20,000,000 New York, New York December [  ], 2011

FOR VALUE RECEIVED, DYAX CORP., a Delaware corporation (the “Borrower”), hereby promises to pay to LFRP Investors, L.P., a Delaware limited partnership, or its registered assigns (the “Lender”), in lawful money of the United States of America, in same day funds on the Tranche A Maturity Date the principal sum of (x) twenty million dollars (US$20,000,000) plus (y) any principal added to the Loan pursuant to Sections 4.01(a) or 4.01(b) of the Loan Agreement (as defined below) less (z) any payments of principal made prior to the Tranche A Maturity Date as provided in the Loan Agreement.

The Borrower also promises to pay interest on the unpaid principal amount hereof in like money, from the date hereof until such unpaid principal is paid in full, at the rates, at the times and in the manner provided in the Loan Agreement referred to below.

This Tranche A Note is the Tranche A Note referred to in the Loan Agreement, dated as of December [  ], 2011, by and between the Borrower and the Lender (as may be amended from time to time, the “Loan Agreement”) and is entitled to the benefits thereof and of the other Loan Documents.  This Tranche A Note is secured as provided in the Loan Documents.  This Tranche A Note is subject to optional prepayment, in whole or in part, prior to the Tranche A Maturity Date as provided in the Loan Agreement.

This Tranche A Note is secured as provided in the Security Agreement and other Loan Documents.  Reference is hereby made to the Security Agreement for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security, the terms and conditions upon which the security interest was granted and the rights of the holder of this Tranche A Note in respect thereof.

If an Event of Default shall occur and be continuing, the principal of and accrued interest on this Tranche A Note may become or be declared to be due and payable in the manner and with the effect provided in the Loan Agreement.

The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Tranche A Note.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement.

THIS TRANCHE A NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

DYAX CORP.
By:	___________________________
	Name:
	Title:

EXHIBIT F

Form of Tranche B Note

THIS TRANCHE B NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT FOR PURPOSES OF SECTIONS 1272, 1273, AND 1275 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.  THE ISSUE DATE FOR THIS NOTE IS THE TRANCHE B FUNDING DATE.  FOR INFORMATION REGARDING THE ISSUE PRICE, YIELD TO MATURITY AND AMOUNT OF ORIGINAL ISSUE DISCOUNT FOR THIS NOTE, A HOLDER SHOULD CONTACT THE BORROWER AT:  DYAX CORP., 300 TECHNOLOGY SQUARE, CAMBRIDGE, MA 02139, ATTN:  CHIEF FINANCIAL OFFICER.

US $[               ] New York, New York August 22, 2012

FOR VALUE RECEIVED, DYAX CORP., a Delaware corporation (the “Borrower”), hereby promises to pay to LFRP Investors, L.P. or its registered assigns (the “Lender”), in lawful money of the United States of America, in same day funds on the Maturity Date the principal sum of (x) [ ]1 dollars (US$[ ]) plus (y) any principal added to the Loan pursuant to Section 4.01(b) of the Loan Agreement (as defined below) less (z) any payments of principal made prior to the Maturity Date as provided in the Loan Agreement.

The Borrower also promises to pay interest on the unpaid principal amount hereof in like money, from the date hereof until such unpaid principal is paid in full, at the rates, at the times and in the manner provided in the Loan Agreement.

This Tranche B Note is the Tranche B Note referred to in the Loan Agreement, dated as of December [    ], 2011, by and between the Borrower and the Lender (as may be amended from time to time, the “Loan Agreement”) and is entitled to the benefits thereof and of the other Loan Documents.  This Tranche B Note is secured as provided in the Loan Documents.  This Tranche B Note is subject to optional prepayment, in whole or in part, prior to the Maturity Date as provided in the Loan Agreement.

This Tranche B Note is secured as provided in the Security Agreement and other Loan Documents.  Reference is hereby made to the Security Agreement for a description of the properties and assets in which a security interest has been granted, the nature and extent of the security, the terms and conditions upon which the security interest was granted and the rights of the holder of this Tranche B Note in respect thereof.

If an Event of Default shall occur and be continuing, the principal of and accrued interest on this Tranche B Note may become or be declared to be due and payable in the manner and with the effect provided in the Loan Agreement.

1 Amount to be completed on the Tranche B Funding Date

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

The Borrower hereby waives presentment, demand, protest or notice of any kind in connection with this Tranche B Note.

Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement.

THIS TRANCHE B NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT OF LAWS PRINCIPLES THAT WOULD REQUIRE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION).

DYAX CORP.
By:	___________________________
	Name:
	Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT G

Form of Notice of Borrowing

Dyax Corp.

[300 Technology Square

Cambridge, MA 02139]

[55 Network Drive

Burlington, MA 01803]

[           ], 20[  ]

LFRP Investors, L.P.

177 Broad Street, Suite 1101

Stamford, CT  06901

Attention:  Gregory B. Brown, M.D.

Ladies and Gentlemen:

The undersigned (the “Borrower”) refers to the Loan Agreement, dated as of December [  ], 2011 (as may be amended from time to time, the “Loan Agreement”), between the Borrower and LFRP Investors, L.P. (the “Lender”).  Capitalized terms used but not defined herein shall have the meanings given to them in the Loan Agreement.

The Borrower hereby gives you irrevocable notice, pursuant to [Section 2.02(a)] [Section 2.02(b)] of the Loan Agreement, that it hereby requests to borrow a principal amount of Tranche [A][B] Loans equal to $[] (the “Borrowing”), which amount shall be delivered to Borrower on the [Closing Date] [Tranche B Funding Date] in accordance with the terms of the Loan Agreement.

The bank and account to which the proceeds payable to the Borrower pursuant to Section 2.03 of the Loan Agreement should be sent are:

Beneficiary Bank ABA #	[                 ]
Beneficiary Bank Name	[                 ]
	[                 ]
	[                 ]
Contact Name	[                 ]
	[                 ]
Beneficiary Name	[                 ]
Beneficiary Account #	[                 ]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Very truly yours,
DYAX CORP.
By:	_______________________
	Name: Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT H

Lockbox Instructions

Lockbox Account Payment Procedures

During each calendar quarter, all Gross Payments deposited into the Lockbox Account shall be treated in the following priority with sweeps to occur not less frequently than monthly:

I.	Any amounts shall be swept into the Company Concentration Account until Company shall have received an amount equal to any CAT Payments due to MedImmune Limited as a result of, or in connection with, such Gross Payments.
II.	Any remaining amounts shall be swept into the Company Concentration Account for the payment of any Reimbursement Payments in the amounts received from Contract Parties;
III.	Any remaining amounts shall be swept as follows:
	A.	The remaining amounts shall be swept into the Assignee Concentration Account until Assignee shall have received an amount equal to Applicable Included Receipts1; and
	B.	The remainder of the remaining amounts shall be swept into the Company Concentration Account.

For the avoidance of doubt, on the first day of any calendar quarter, that process above shall be reset and repeated.

1    As provided in the Loan Agreement, “Applicable Included Receipts” shall exclude FTE Payments so long as the principal amount of the Loan prepaid pursuant to Section 3.01(a) of the Loan Agreement exceeds the aggregate principal amount, if any, added to the Loans pursuant to Section 4.01(a) and 4.01(b) of the Loan Agreement (as calculated on an annual basis for each calendar year) which shall be determined at the end of any applicable calendar year and shall be applied to amortization in accordance with Section 3.01(a); provided that Borrower may, at its option, include such costs in Applicable Included Receipts on a quarterly basis to pay scheduled amortization in accordance with Section 3.01(a).

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT I-1

FORM OF CLOSING DATE OPINION

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT I-2

FORM OF TRANCHE B CLOSING DATE OPINION

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT J

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT K

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT L

Form of Payoff Letter

Vanderbilt Royalty Sub L.P.

[TO BE PROVIDED]

August __, 2012

Dyax Corp.

55 Network Drive

Burlington, MA  01803

Attention:  Chief Financial Officer

Re:           Payoff Letter

Ladies and Gentlemen:

Reference is made to (i) that certain Loan Agreement, dated as of August 5, 2008, as amended and restated as of March 18, 2009, between Vanderbilt Royalty Sub L.P., a Delaware limited partnership (the “Lender,” as assignee to Cowen Healthcare Royalty Partners, L.P., the “Agent”), and Dyax Corp., a Delaware corporation (the “Borrower”) (as amended, supplemented or otherwise modified from time to time in accordance with the provisions thereof, the “Loan Agreement”); and (ii) that certain Notice of Prepayment, dated as of July ___, 2012, delivered by Borrower to the Lender pursuant to Section 3.02(a) of the Loan Agreement (the “Notice of Prepayment”).  Each capitalized term used but not defined herein shall have the meaning given to it in the Loan Agreement.

1.           Payments.  Pursuant to the Notice of Prepayment, Borrower has advised the Lender that, on August 22, 2012 (the “Payoff Date”), it intends to prepay in full all amounts outstanding under the Loan Agreement, terminate its obligations and liabilities under the Loan Agreement and the other Loan Documents, and obtain the release of all Liens granted to the Lender on the Collateral.  The total amount of principal and accrued but unpaid interest, any prepayment premium and all fees, expenses and other amounts owing under the Loan Documents, if paid to and received in the Lender Bank Account by wire transfer of immediately available funds at or prior to 4:00 p.m. (New York City time) on the Payoff Date, will be $­­­­­­­­_________, in the aggregate, as itemized on Schedule I hereto (the “Payoff Amount”).  If the Payoff Amount is not so received at or prior to 4:00 p.m. (New York City time) on the Payoff Date, interest shall accrue at a per diem rate of $_____ (the “Per Diem Amount”), and shall be added to the Payoff Amount.

This letter agreement (this “Letter Agreement”) confirms that upon, and effective as of the time of, receipt by the Lender of (i) the Payoff Amount and the Per Diem Amount, if any; and (ii) a counterpart of this Letter Agreement duly executed by Borrower (the time at which the foregoing conditions shall first be satisfied is herein referred to as the “Payoff Effective Time”), (A) the Liens and security interests granted pursuant to the Loan Documents shall be deemed to have been automatically and irrevocably released and terminated at the Payoff Effective Time, (B) excluding those obligations that are specified in the Loan Agreement or any other Loan Document as surviving the termination thereof (which shall, as so specified, survive without prejudice and remain in full force and effect), all liabilities and obligations of Borrower under the Loan Documents, including principal, interest, premium, fees, expenses and other amounts owing under the Loan Agreement and the other Loan Documents, shall have been irrevocably discharged, repaid in full and terminated, all Loan Documents shall be automatically terminated and of no further force and effect and all commitments thereunder shall be terminated, all without any further action being required to effectuate the foregoing, (C) Borrower or its designee will be authorized to file UCC termination statements in order to evidence the termination of the Liens and security interests granted pursuant to the Loan Documents and the Lender and Agent will, at Borrower’s expense, execute and deliver such intellectual property releases, deposit account control agreement terminations and other documents as Borrower may reasonably request in order to evidence the termination of the Liens and security interests granted pursuant to the Loan Documents, in each case, without recourse and without representation or warranty of any kind (either express or implied), and (D) the Lender and Agent will, at Borrower’s expense, promptly deliver any Collateral in its possession to Borrower or such party as Borrower may direct in writing.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

The Lender hereby confirms that the Lender Bank Account is as follows:

Bank Name:	J.P. Morgan Chase Bank, N.A.
ABA:
Account Number:
Reference:
Attn:	Vanderbilt Royalty Sub, L.P.

2.           Headings.  The headings contained in this Letter Agreement are for reference purposes only and shall not constitute a part hereof.

3.           Governing Law.  This Letter Agreement shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to any conflict of laws principles that would require application of the laws of another jurisdiction).

5.           Termination.  This Letter Agreement shall, without further action or notice, automatically terminate at, and shall not be effective after, 4:00 p.m. (New York City time) on August 27, 2012 unless the Payoff Effective Time has occurred at or prior to such time.  No party may assign its rights, duties or obligations under this Letter Agreement without the prior written consent of the other party.  This Letter Agreement supersedes any and all of our prior discussions and correspondence regarding the Payoff Amount or the Per Diem Amount.  This Letter Agreement shall inure to the benefit of the Lender and Borrower, and each of their respective successors and permitted assigns.  In addition, this Letter Agreement may be executed in multiple counterparts, all of which taken together shall constitute one and the same agreement, and either of the parties hereto may execute this Letter Agreement by signing such counterpart.  Delivery of an executed signature page of the Letter Agreement by e-mail or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.

[Signature Page Follows]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Kindly acknowledge your acceptance of and agreement to the foregoing by executing a counterpart of this Letter Agreement.

Very truly yours,
VANDERBILT ROYALTY SUB, L.P.,
as Lender
By:	[                                                       ],
	its General Partner
By:	___________________________________
	Name:
	Title:
COWEN HEALTHCARE ROYALTY PARTNERS, L.P., as Agent
By: Cowen Healthcare Royalty GP, LLC, its General Partner
By:	___________________________________
	Name:
	Title:

Accepted and agreed as of

the date first written above:

DYAX CORP.

By: 

Name:

Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 1

Aggregate outstanding principal amount of Loans as of the August 22, 2012	$________
Aggregate amount of accrued and unpaid interest as of August 22, 2012	$________
Aggregate of other amounts as of August 22, 2012	$________
Total	$________

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

EXHIBIT M

Form of Assignment and Acceptance

[date]

[Lender]

[                 ]

[                 ]

Attention:        [          ]

Facsimile:         [          ]

Dyax Corp.

55 Network Drive

Burlington, MA 01803

Attention:        [          ]

Facsimile:         [          ]

Ladies and Gentlemen:

Re: Assignment Pursuant to the Loan Agreement

We refer to the Loan Agreement, dated as of December [  ], 2011 (as may be further amended from time to time, the “Loan Agreement”), providing for Tranche A Loans and Tranche B Loans to DYAX CORP.  _______ (the “Seller”) and _______ (the “Buyer”) are delivering this instrument to you in connection with an assignment by the Seller of its rights and obligations under the Loan Agreement pursuant to Section 13.01 thereof. Capitalized terms used and not otherwise defined herein have the meanings given to them in the Loan Agreement.

1.           The Seller and the Buyer hereby advise you that (a) the Seller will assign to the Buyer the Seller’s right, title and interest in respect of the Loan Agreement described below as the “Assigned Rights” and the Buyer will accept that assignment and assume the Seller’s related obligations described below as the “Assumed Obligations,” and (b) as between the Seller and the Buyer that assignment and assumption will be effective as of the date identified below as the “Effective Date.”

2.           In connection with the assignment referred to herein, the Buyer hereby confirms to you that the Buyer agrees to be bound as a Lender by the terms of the Loan Agreement to the extent of the assignment and assumption referred to herein.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

3.           The Buyer (a) represents and warrants that (i) it is sophisticated with respect to decisions to acquire assets of the type represented by the Assigned Rights and Assumed Obligations and either it, or the Person exercising discretion in making its decision to acquire the Assigned Rights and Assumed Obligations, is experienced in acquiring assets of such type, (ii) it has received a copy of the Loan Agreement, together with copies of the most recent financial statements delivered pursuant to Sections 9.03 thereof, as applicable, and such other documents and information as it has deemed appropriate to make its own credit analysis and decision to enter into this Assignment and Acceptance and to purchase the Assigned Rights and Assumed Obligations on the basis of which it has made such analysis and decision independently and without reliance on the Seller or any other Lender; and (b) agrees that (i) it will, independently and without reliance on the Seller or any other Lender, and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit decisions in taking or not taking action under the Loan Documents, and (ii) it will perform in accordance with their terms all of the obligations that by the terms of the Loan Documents are required to be performed by it as a Lender.

4.           Buyer hereby appoints LFRP Investors, L.P. to act as its agent under the Security Agreement which grants a security interest on terms specified in Section 16 of the Security Agreement, including for the purpose of filings related to the security interest granted under the Security Agreement and other Loan Documents which grant a security interest.

5.           Unless otherwise specified in writing to DYAX CORP., the bank account to which all payments to the Buyer under the Loan Documents are to be made is as follows:

Bank Name:

ABA:

Account Number:

Reference:

Attn:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Terms Relating to the Assignment and Acceptance

Effective Date:

Assigned Rights:

[A ___% undivided interest in (i) the Tranche A Loan of the Seller outstanding on the Effective Date, (ii) all related rights of the Seller to interest accruing on such portion of the Tranche A Loan from and after the Effective Date, and (iii) all related rights of the Seller under the Agreement and the Tranche A Note delivered to the Seller thereunder from and after the Effective Date.]

[and

A ___% undivided interest in (i) the Tranche B Loan of the Seller outstanding on the Effective Date, (ii) all related rights of the Seller to interest accruing on such portion of the Tranche B Loan from and after the Effective Date, and (iii) all related rights of the Seller under the Agreement and the Tranche B Note delivered to the Seller thereunder from and after the Effective Date.]

Assumed Obligations:

All obligations of the Seller relating to the Assigned Rights that arise under the Agreement on or after the Effective Date

[Tranche A Loan of the Seller:

Before the Effective Date: $______________

After giving effect to the assignment referred to herein: $______________]

[Tranche B Loan of the Seller:

Before the Effective Date: $______________

After giving effect to the assignment referred to herein: $______________]

[Tranche A Loan of the Buyer:

Before the Effective Date:  $______________

After giving effect to the assignment referred to herein: $______________]

[Tranche B Loan of the Buyer:

Before the Effective Date:  $______________

After giving effect to the assignment referred to herein: $______________]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

For these purposes, the Buyer hereby informs you that the address for notices and account for payments in connection with the Agreement are as set forth below.

[LENDER]	___________________
By:	By:
Name:	Name:
Title:	Title:
	[Include Notice and account information for Buyer.]
By:
Name:
Title:

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule A

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

SCHEDULE B

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

1

Schedule C

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule D

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(k)

Indebtedness

Dyax Corp. Indebtedness

as of September 30, 2011 *

	Balance			YTD Activity					Balance
	Per G/L @					Principal			Per G/L @
Debt	12/31/2010			Additions		Payments			9/30/2011
MIT Loan		447,114			0		(247,845	)		199,269		(1)
GE Capital Leases		206,580			0		(206,580	)		0
Cowen		56,821,908			7,587,990		(8,589,015	)		55,820,884		(2)
Cowen Discount (debt issuance costs)		(415,725	)		55,798		0			(359,927	)
	$	57,059,877		$	7,643,788	$	(9,043,440	)		55,660,225

* There have been no increases to the loan balances above since 9/30/2011.

1)	The Cowen note payable balance per the Dyax financial statements, which have been prepared in accordance with GAAP, excludes the unamortized portion of the warrants outstanding which represents the fair value of the warrants on the date of issuance.  The principal balance of the Cowen note payable as of 9/30/11 is $56,650,605.55, which represents the amount outstanding and due on the Cowen loan.
2)	Cowen note payable additions represent annual interest as well as warrant accretion.

Note:  In addition to the schedule above, Dyax has the right to borrow up to $668,520 from Netview 5 and 6 LLC for tenant improvements associated with the build out of Dyax’s new Corporate Headquarters in Burlington, MA.  The planned move date for the Corporate Headquarters is January 16, 2012.  As of December 21, 2011, Dyax has neither borrowed nor committed to borrow any of these funds.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01 (m)

Subsidiaries

Subsidiaries

Dyax SA

Bld de Gerardchamps 156

B-4800 VERVIERS

Belgium

Dyax B.V. and Holding B.V.

Woudenbergseweg 11 Maarsbergen

POB 193

NL 3950 AD Maarn

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01 (r)(i)

LFRP Joint Patents Owned by Borrower

AZ APPLICATIONS (ANTIBODIES)
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
AZ-03-01-CIP-PCT-AR	AR	04 01 04408		1890266A	Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-AU	AU	2004293180			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-BD	BD	277/2004	1004419		Antibodies	ISSUED	8 /13/2006	11/26/2020
AZ-03-01-CIP-PCT-BR	BR	PI0417023-7			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-CA	CA	PCT/EP04/013426			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-CL	CL	2004-3047			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-CN	CN	200480035257.5			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-CO	CO	06062058			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-EG	EG	493/200600			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-EP	EP	04819225.6		EP1687336	Antibodies	PUBLISHED		11/26/2024
AZ-03-01-CIP-PCT-GB	GB	0426043.6		GB2408508	Antibodies	PUBLISHED		11/26/2024
AZ-03-01-CIP-PCT-GC	GC	GCC/P/2004/4030			Antibodies	PENDING		11/26/2020
AZ-03-01-CIP-PCT-ID	ID	W-00 2006 01433			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-IL	IL	175608			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-IN	IN	3699			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-JP	JP	2006-540392		2008-502311	Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-KR	KR	10-2006-7010370			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-MT	MT	2503	2503		Antibodies	ABANDONED	6 /2 /2005	9 /13/2008
AZ-03-01-CIP-PCT-MX	MX	PCT/EP04/013426			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-MY	MY	PI 20044918			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-NO	NO	20063026			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-NZ	NZ	546935			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-PH	PH	PCT/EP04/013426			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-PK	PK	0948/04			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-RU	RU	2006122946			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-SG	SG	200603049-8			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-TH	TH	095716			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-TW	TW	093136755		200530267	Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-UA	UA	200607109			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-PRV	US	60/525,174			Antibodies	PENDING
AZ-03-01-CIP-PCT-US	US	10/579,445	7,612,179		Antibodies	ISSUED	11/3 /2009	11/26/2024
AZ-03-01-CIP-PCT-US CON1	US	12/585,180	8,058,016		ANTIBODIES BINDING TO A C-TERMIANL FRAGMENT OF APOLIPOPROTEIN E"	ISSUED	11/15/2011	11/26/2024
AZ-03-01-CIP-PCT-UY	UY	28.641		UY28641	Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-VE	VE	2004-002036			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-PCT	WO	PCT/EP04/013426		WO05/051998	Antibodies	NAT PHASE		7 /7 /2005
AZ-03-01-CIP-PCT-ZA	ZA	2006/03671			Antibodies	PENDING		11/26/2024

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01 (r)(i)

LFRP Joint Patents Owned by Borrower

EPIX (FIBRIN)
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
077AT1	AT	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		3 /25/2009
077AU1	AU	66122/00	768859		BINDING MOIETIES FOR FIBRIN	ISSUED	4 /29/2004	7 /28/2020
077AU2	AU	2004201485	2004201485		BINDING MOIETIES FOR FIBRIN	ISSUED	11/22/2007	7 /28/2020
077BE1	BE	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		3 /25/2009
077CA1	CA	2376245			BINDING MOIETIES FOR FIBRIN	Abandoned		7 /28/2020
077CH1	CH	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		3 /25/2009
077CY1	CY	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		3 /25/2009
077DK1	DK	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077EP1	EP	00953721.8		EP1203026	BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077ES1	ES	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077FI1	FI	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077FR1	FR	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077GB1	GB	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077GR1	GR	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077IE1	IE	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077IT1	IT	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077JP1	JP	2001-513994			BINDING MOIETIES FOR FIBRIN	PENDING		7 /28/2020
077LI1	LI	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077LU1	LU	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077MC1	MC	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077NL1	NL	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077PT1	PT	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077SE1	SE	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077TW1	TW	089115153	I 290146		BINDING MOIETIES FOR FIBRIN	-ABANDONED	11/21/2007	7 /28/2020
077P01	US	60/146,425			BINDING MOIETIES FOR FIBRIN	EXPIRED		7 /29/2000
077001	US	09/627,806			BINDING MOIETIES FOR FIBRIN	ABANDONED		10/20/2008
077002	US	10/649,229		US 2005-0261472 A1	BINDING MOIETIES FOR FIBRIN	ABANDONED		4 /3 /2009
077WO1	WO	PCT/US00/20612		WO01/09188	BINDING MOIETIES FOR FIBRIN	NAT PHASE

EPIX (COLLAGEN)
MATTER		TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION
008P01	US	PRV	60/755,710			COLLAGEN BINDING PEPTIDES	EXPIRED	12/29/2006
008P02	US	PRV	60/844,768			COLLAGEN BINDING PEPTIDES	EXPIRED	9 /16/2007
008001	US	UTL	11/618,564		20070293656	COLLAGEN BINDING PEPTIDES	ABANDONED	9 /17/2009
012001	US	UTL	11/618,458	8,034,898	20080044360	METHODS OF COLLAGEN IMAGING	ISSUED	12/29/2025
009001	US	UTL	11/618,556		20080058636	METHODS OF MYOCARDIAL IMAGING	ABANDONED	9 /18/2009
009WO1	WO	UTL	PCT/US2006/062760		WO07084264	METHODS FOR MYOCARDIAL IMAGING	PUBLISHED
009P01	US	PRV	60/755,709			AGENTS AND METHODS FOR CALLAGEN AND MYOCARDIAL IMAGING	EXPIRED	12/29/2006
009PO2	US	PRV	60/845,118			COLLAGEN BINDING PEPTIDES	EXPIRED	12/29/2006

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

2

Schedule 8.01 (r)(i)

LFRP Joint Patents Owned by Borrower

HUMAN GENOME SCIENCE, INC. (BLYS)
MATTER		TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION
078AU1	AU	UTL	2001285066	2001285066	2001285066	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) XFERRED TO HUMAN GENOME SCIENCES	ISSUED	8 /17/2021
078CA1	CA	UTL	2418006			BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) XFERRED TO HUMAN GENOME SCIENCES	PENDING	8 /17/2021
078EP1	EP	UTL	01964181.0		EP1339746	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) XFERRED TO HUMAN GENOME SCIENCES	PUBLISHED	8 /17/2021
078EP2	EP	UTL	06005641.3		EP1674477	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) XFERRED TO HUMAN GENOME SCIENCES	PUBLISHED	8 /17/2021
078JP1	JP	UTL	2002-521507			BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) XFERRED TO HUMAN GENOME SCIENCES	PENDING	8 /17/2021
078P01	US	PRV	60/226,489			BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) XFERRED TO HUMAN GENOME SCIENCES	EXPIRED
078001	US	UTL	09/932,322	7,118,872	US 2003-0194743 A1	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) XFERRED TO HUMAN GENOME SCIENCES	ISSUED-PTA = 333	8 /18/2020 7/16/2022
078WO1	WO	UTL	PCT/US01/25891		WO02/16412	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) XFERRED TO HUMAN GENOME SCIENCES	NAT PHASE	1 /5 /2010
080AU1	AU	UTL	PCT/US01/25850		AU8830101 A	BINDING POLYPEPTIDES AND METHODS BASED THEREON (HGS) NOT IN OUR SYSTEM	PENDING	8 /17/2021
080P01	US	PRV	60/266,489			BINDING POLYPEPTIDES AND METHODS BASED THEREON (HGS) NOT IN OUR SYSTEM	EXPIRED	8 /18/2001
080001	US	UTL	09/932,613		20030091565	BINDING POLYPEPTIDES AND METHODS BASED THEREON	ABANDONED
080002	US	UTL	11/232,439		US20060084608	BINDING POLYPEPTIDES AND METHODS BASED THEREON XFERRED TO LEYDIG, VOIT	ABANDONED
080WO1	WO	UTL	PCT/US01/25850		WO0216411	BINDING POLYPEPTIDES AND METHODS BASED THEREON	NAT PHASE

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

3

Schedule 8.01 (r)(i)

LFRP Joint Patents Owned by Borrower

WYETH (FACTOR VIII)
MATTER		TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION
099001	US	UTL	09/224,785	6,197,526		POLYPEPTIDES FOR BINDING HUMAN FACTOR VIII AND FRAGMENTS OF HUMAN FACTOR VIII	ISSUED	1 /4 /2019
099002	US	UTL	09/756,594	6,492,105	20010014456	POLYPEPTIDES FOR BINDING HUMAN FACTOR VIII AND FRAGMENTS OF HUMAN FACTOR VIII	ISSUED	2/18/2019
099AT2	AT	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099AU1	AU	UTL	25982/00	769745	769745	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099AU2	AU	UTL	2004201830	2004201830		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099BE2	BE	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099CA1	CA	UTL	2354599			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING
099CH2	CH	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099DE2	DE	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099DK2	DK	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099EP1	EP	UTL	00904186.4		EP1147128	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ABANDONED
099EP2	EP	UTL	06009040.4	EP1705183	EP1705183	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099EP3	EP	UTL	09155033.5		EP2090582	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED
099EP5	EP	UTL	10182747.5		EP2301953	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED
099EP6	EP	UTL	10182741.8		EP2298791	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED
099ES2	ES	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099FI2	FI	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099FR2	FR	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099GB2	GB	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099GR2	GR	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099HK1	HK	UTL	02100182.6	HK1038756		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING – TO BE ABANDONED
099HK2	HK	UTL	07100794.1	HK1093750		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099HK3	HK	UTL	09110140.9			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED
099HK5	HK	UTL	11109350.2			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING
099HK6	HK	UTL	11109856.1			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING
099IE2	IE	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099IT2	IT	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099JP1	JP	UTL	2000-592310	4733272		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099JP2	JP	UTL	2010-108017			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING
099LI2	LI	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099LU2	LU	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099MC2	MC	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099NL2	NL	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099PT2	PT	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099SE2	SE	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099WO1	WO	UTL	PCT/US00/00043		WO00/40602	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	NAT PHASE
100001	US	UTL	10/272,497	7,112,438	US 2003-0165822 A1	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /4 /2019
100002	US	UTL	11/345,031	7,691,565	US 2006-0193829 A1	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1/4/2019
100003	US	UTL	12/692,353	8,058,017	20100292440	METHODS AND COMPOSITIONS FOR PURIFYING HUMAN FACTOR VIII, FACTOR VIII-LIKE PROTEINS OR FRAGMENTS THEREOF	ISSUED	1 /4 /2019
100004	US	UTL	13/243,761			BINDING MILECULES FOR HUMAN FACTOR VIII and FACTOR VIII-LIKE PROTEINS	PENDING

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

4

Schedule 8.01 (r)(i)

LFRP Joint Patents Owned by Borrower

BRACCO (MULTIVALENT CONSTRUCTS)
MATTER		TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION
57637/01194	AU	UTL	2003276884			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01190	AU	UTL	2003228276			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/1603 AU	AU	UTL	2005328644			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01187	CA	UTL	2477935			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01193	CA	UTL	2512780			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/1600	CA	UTL	PCT/US05/28127			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	8 /9 /2025
57637/1601 EP	EP	UTL	05857561.4		WO2006096207	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01192	EP	UTL	03815479.5		EP1587523	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01188	EP	UTL	03726024.7		EP1482987	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	3 /3 /2023
57637/01191	HK	UTL	05104699.1		1071999A	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/1602 JP	JP	UTL	PCT/US05/28127			MULTIVALENT CONSTRUCVTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01189	JP	UTL	2003-581813			MULTIVALENT CONSTRUCVTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01180	US	PRV	60/360,821			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	EXPIRED	3 /1 /2003
57637/01181	US	PRV	60/440,201			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	EXPIRED	10/10/2010
57637/01182	US	UTL	10/379,287	7,211,240	US2004-0018974-A1	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	ISSUED	10/10/2010
57637/01185	US	UTL	10/661,032	7,261,876	US20050027105 A9	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	ISSUED	10/10/2010
57637/01186	US	UTL	10/916,155		US2005-0147555-A1	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01196	US	UTL	11/624,894			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01195	WO	UTL	PCT/US05/28127			MULTIVALENT CONSTRUCVTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING
57637/01184	WO	UTL	PCT/US03/28838		WO2004/064595 A2	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	NAT PHASE
57637/01183	WO	UTL	PCT/US03/06656		WO03084574	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	NAT PHASE

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

5

Schedule 8.01 (r)(i)

LFRP Joint Patents Owned by Borrower

BRACCO (KDR/VEGF)
MATTER		TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION
D0617.70011AU00	AU	UTL	2003213730			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	ABANDONED	2 /7 /2009
D0617.70011AU00	AU	UTL	2003278807			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	LAPSED	2 /7 /2009
D0617.70011CA00	CA	UTL	2477836			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	PENDING	4 /17/2009
D0617.70011EP00	EP	UTL	03711418.8		1572724	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY [2005/37]	PENDING	4 /17/2009
D0617.70011EP01	EP	UTL	08008365.2		EP2014310	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY [2005/37]	PENDING	4 /17/2009
D0617.70011JP00	JP	UTL	2003-572527		2006-514915	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	PENDING	2 /7 /2009
D0617.70011US00	US	PRV	60/360,851			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	EXPIRED	4 /17/2009
D0617.70011US01	US	UTL	60/440,411			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	EXPIRED	4 /17/2009
D0617.70011US02	US	UTL	10/382,082			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	PENDING	4 /17/2009
D0617.70011WO00	WO	UTL	PCT/US03/06731		WO03074005-A2	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	NAT PHASE	4 /17/2009
D0617.70012AU00	AU	UTL	2003278807			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY ..ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	2 /13/2009
D0617.70012CA00	CA	UTL	2513044			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY ..ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	2 /13/2009
D0617.70012EP00	EP	UTL	03770325.3		EP1587944	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY ..ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	2 /13/2009
D0617.70012US00	US	UTL	10/661,156		20050100963-A1	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY ..ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	10/7 /2010
D0617.70012WO00	WO	UTL	PCT/US03/28787			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY .....ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	2 /13/2009
D0617.70014US00	US	UTL	10/939,890		20050250700-A1	KDR AND VEGF/KDR BINDING PEPTIDES	ABANDONED	11/16/2006
D0617.70014WO00	WO	UTL	PCT/US05/032740		WO06031885	KDR AND VEGF/KDR BINDING PEPTIDES	ABANDONED	1 /7 /2007

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

6

Schedule 8.01(r)(ii)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

1

Schedule 8.01 (t)

Borrower’s Principal Place of Business

and Chief Executive Office

On and before January 28, 2012:

300 Technology Square, Cambridge, MA 02139, USA

After January 28, 2012:

55 Network Drive, Burlington, MA 01803, USA

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX PHAGE DISPLAY PATENT RIGHTS
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
Ladner 1	US	07/240,160			GENERATION AND SELECTION OF NOVEL DNA-BINDING PROTEINS AND POLYPEPTIDES	ABANDONED		7 /15/1991
Ladner 1 CA	CA	610176	1340288		GENERATION AND SELECTION OF NOVEL DNA-BINDING PROTEINS AND POLYPEPTIDES	ISSUED	12/29/1998	12/29/2015
Ladner 1 Div 1 EP	EP	96112867.5		EP0768377	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	ABANDONED		1 /17/2005
Ladner 1 Div 2 EP	EP	00106289.2		EP1026240	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	ABANDONED		1 /18/2006
Ladner 1 Div 3 EP	EP	05000796.2		EP1541682	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	ABANDONED		7 /31/2008
Ladner 1 Div 4 EP	EP	07122683.1			GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	ABANDONED		9 /17/2008
Ladner 1 Div 5 EP	EP	08105351.4		EP1997891	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	ABANDONED		9 /1 /2009
Ladner 1 EP	EP	89910702.3	0436597	EP0436597	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	Revoked	4 /2 /1997	7 /2 /2002
Ladner 1 IE	IE	2834/89	85261		GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	EXPIRED	5 /19/2009	9 /4 /2009
Ladner 1 IL	IL	91501	91501		GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	EXPIRED	6 /11/1998	9 /1 /2009
Ladner 1 JP	JP	510087/1989	3771253		GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	EXPIRED	2 /17/2006	9 /1 /2009
Ladner 1 PCT	WO	PCT/US89/03731		WO9002809	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	NAT PHASE
Ladner 1.1 IL	IL	120941	120941	120941	CHIMERIC BINDING PROTEIN	EXPIRED	9 /20/2005	9 /1 /2009
Ladner 1.2 IL	IL	120940	120940		FUSION PROTEINS DISPLAYED DISPLAYABLE ON THE SURFACE OF FILAMENTOUS PHAGE AND A RECOMBINANT FILAMENTOUS PHAGE BEARING SAME	EXPIRED	9 /20/2005	9 /1 /2009
Ladner 1.3 IL	IL	120939	120939		METHOD FOR OBTAINING NUCLEIC ACID ENCODING A PROTEINACOUS BINDING DOMAIN	EXPIRED	10/25/2001	9 /1 /2009

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

1

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX PHAGE DISPLAY PATENT RIGHTS
MATTER	SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION

Ladner 7	US	07/664,989	5,223,409		DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS	EXPIRED	6 /29/1993	6 /29/2010
Ladner 7A CA	CA	2105300	2105300		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	12/23/2008	2 /27/2012
Ladner 7A Div 1 AT	AT	02015673.3	1279731	E363532	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 BE	BE	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 CH	CH	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 DE	DE	02015673.3	1279731	69233697.4-08	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED		2 /27/2012
Ladner 7A Div 1 DK	DK	02015673.3	DK/EP1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 EP	EP	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 ES	ES	02015673.3	2.287.206	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 FR	FR	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 GB	GB	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 IT	IT	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 LI	LI	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 LU	LU	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 MC	MC	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 1 NL	NL	02015673.3	1279731	1279731	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	5 /30/2007	2 /27/2012
Ladner 7A Div 2 AT	AT	07010609.1	1820858	E439435	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 BE	BE	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

2

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX PHAGE DISPLAY PATENT RIGHTS
MATTER	SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION

Ladner 7A Div 2 CH	CH	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 DE	DE	07010609.1	69233769.5-08		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 DK	DK	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 EP	EP	07010609.1	1820858	EP1820858	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 ES	ES	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 FR	FR	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 GB	GB	07010609.1	3070320		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 GR	GR	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 IT	IT	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 LI	LI	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 LU	LU	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 MC	MC	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 NL	NL	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A Div 2 SE	SE	07010609.1	1820858		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	8 /12/2009	2 /27/2012
Ladner 7A EP	EP	92908057.0		EP0575485	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ABANDONED		4 /1 /2003
Ladner 7A JP	JP	507558/1992	4,146,512		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	6 /27/2008	2 /27/2012
Ladner 7A JP DIV 1	JP	2008-115016	4,618,570		PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ISSUED	11/5 /2010	2 /27/2012
Ladner 7A JP Div 2	JP	2010-81857		2010183908	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	ABANDONED		3 /25/2011
Ladner 7A PCT	WO	PCT/US92/01456		WO9215677	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	NAT PHASE

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

3

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX PHAGE DISPLAY PATENT RIGHTS
MATTER	SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION

Ladner 7B AT	AT	92908799.7	0573611	262036	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B BE	BE	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B CA	CA	2105303			DISPLAY PHAGE	ABANDONED		5 /24/2004
Ladner 7B CH	CH	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B DE	DE	92908799.7	69233325.8-08	DE 69233325.8-08	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B DK	DK	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B EP	EP	92908799.7	0573611	EP0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B EP Div 1	EP	04006079.0	1452599	EP1452599	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 AT	AT	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 BE	BE	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 CH	CH	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 DE	DE	69233795.4	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 DK	DK	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 ES	ES	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 FR	FR	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 GB	GB	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 GR	GR	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 IT	IT	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 LI	LI	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 LU	LU	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 MC	MC	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 NL	NL	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 1 SE	SE	04006079.0	1452599		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	8 /25/2010	2 /28/2012
Ladner 7B EP Div 2	EP	10004494.0		2224001	IMPROVED EPITOPE DISPLAYING PHAGE	PUBLISHED		2 /28/2012
Ladner 7B ES	ES	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B FR	FR	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B GB	GB	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

4

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX PHAGE DISPLAY PATENT RIGHTS
MATTER	SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION

Ladner 7B GR	GR	92908799.7	3049248	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B IT	IT	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B JP	JP	508216/1992	3447731	3447731	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	7 /4 /2003	2 /28/2012
Ladner 7B JP Div 1	JP	238311/2002			IMPROVED EPITOPE DISPLAYING PHAGE	ABANDONED		12/12/2003
Ladner 7B JP Div 2	JP	130929/2003	4451611	2004-221	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	2 /5 /2010	2 /28/2012
Ladner 7B LI	LI	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B LU	LU	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B MC	MC	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B NL	NL	92908799.7	0573611	0573611	IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7B PCT	WO	PCT/US92/01539		WO9215679	IMPROVED DISPLAY PHAGE	NAT PHASE
Ladner 7B SE	SE	92908799.7	0573611		IMPROVED EPITOPE DISPLAYING PHAGE	ISSUED	3 /17/2004	2 /28/2012
Ladner 7D	US	08/009,319	5,403,484		VIRUSES EXPRESSING CHIMERIC BINDING PROTEINS	ISSUED	4 /4 /1995	4 /4 /2012
Ladner 7E	US	08/057,667	5,571,698		DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS	EXPIRED	11/5 /1996	6 /29/2010
Ladner 7F	US	08/415,922	5,837,500		DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS	EXPIRED	11/17/1998	6 /29/2010
Ladner 7J	US	09/781,988	6,979,538	20020150881	DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS	EXPIRED	12/27/2005	6 /29/2010
Ladner 7M	US	09/893,878	7,208,293	20030113717	DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS	EXPIRED	4 /24/2007	6 /29/2010
Ladner 7O	US	10/126,544	7,118,879	20040023205	METHOD OF RECOVERING A NUCLEIC ACID ENCODING A PROTEINACEOUS BINDING DOMAIN WHICH BINDS A TARGET MATERIAL	EXPIRED	10/10/2006	6 /29/2010
Ladner 7R	US	10/207,797	7,413,537	20060084113	DIRECTED EVOLUTION OF DISULFIDE BONDED MICROPROTEINS	ISSUED	8 /19/2008	11/29/2012
Ladner 7S	US	10/414,643			METHOD OF RECOVERING A NUCLEIC ACID ENCODING A PROTEINACEOUS BINDING DOMAIN WHICH BINDS A TARGET MATERIAL	ABANDONED		10/23/2006
Ladner 7T	US	11/745,199		20070259417	DIRECTED EVOLUTION OF DISULFIDE BONDED PROTEINS	ABANDONED		2 /22/2010
Ladner 7U	US	12/255,793	7,893,007	20090234101	DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS	EXPIRED	2 /22/2011	3 /1 /2011

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

5

Schedule 8.01 (u) (ii)

All LFRP Patents

 

DYAX ANTIBODY REFORMATTING PATENT RIGHTS
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
042P01	US	60/362,403			LIGAND SCREENING AND DISCOVERY	EXPIRED		3 /7 /2003
042001	US	10/383,902	7,244,592	20030224408	LIGAND SCREENING AND DISCOVERY	ISSUED	7 /17/2007	5 /14/2024
042002	US	11/763,251		20090105083	LIGAND SCREENING AND DISCOVERY	PUBLISHED

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

6

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX NOVEL FAB FRAGMENT PATENT RIGHTS - HOOGENBOOM
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
139AT1	AT	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28 /2009	5 /18/2019
139AU1	AU	51422/00	780145		NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	6 /16/2005	5 /18/2020
139BE1	BE	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139CA1	CA	2372582			NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	PENDING
139CH1	CH	99201558.6	1054018		NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139DE1	DE	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139DK1	DK	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139EP1	EP	99201558.6	1054018	EP1054018	FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139EP2	EP	09151233.5		EP2067788	FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	PUBLISHED
139ES1	ES	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139FR1	FR	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139GB1	GB	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139GR1	GR	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139HK2	HK	09111645.7		1134303A	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	PUBLISHED
139IT1	IT	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139JP1	JP	2000-618429	4741086		NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	5 /13/2011	5 /18/2020
139JP2	JP	2010-178912		2010-273689	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	PUBLISHED
139LU1	LU	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139MC1	MC	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139NL1	NL	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139PT1	PT	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139SE1	SE	99201558.6	1054018		FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ISSUED	1 /28/2009	5 /18/2019
139001	US	09/988,899		20020102613	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	ABANDONED
139002	US	11/862,791		20080108514	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	PUBLISHED
139WO1	WO	PCT/US00/13682		WO0070023	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	NAT PHASE

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

7

Schedule 8.01 (u) (ii)

All LFRP Patents

 

DYAX CJ LIBRARY PATENT RIGHTS
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
140001	US	09/837,306		0040029113	NOVEL METHODS OF CONSTRUCTING LIBRARES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND NOVEL LIBRARIES	ABANDONED
140002	US	10/000,516			NOVEL METHODS OF CONSTRUCTING LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	ABANDONED
140003	US	10/045,674		20030232333	NOVEL METHODS OF CONSTRUCTING LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	PUBLISHED
140004	US	11/365,556		20060166252	NOVEL METHODS OF CONSTRUCTING LIBRARES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND NOVEL LIBRARIES	PUBLISHED
140005	US	13/161,445			NOVEL METHODS OF CONSTRUCTING LIBRARES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND NOVEL LIBRARIES	PENDING
140AU1	AU	2001253589	2001253589		NOVEL METHODS OF CONSTRUCTING LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE (CJ Library)	ISSUED	11/29/2007	4 /17/2021
140AU2	AU	2002307422	2002307422	2002307422	NOVEL METHODS OF CONSTRUCTING LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	ISSUED	1 /22/2009	4 /17/2022
140AU3	AU	2007211861	2007211861	2007211861	NOVEL METHODS OF CONSTRUCTING LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE (CJ Library)	ISSUED	9 /24/2009	4 /17/2021
140AU4	AU	2009200092			NOVEL METHODS OF CONSTRUCTING LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE	PUBLISHED
140CA1	CA	2406236			NOVEL METHODS OF CONSTRUCTING LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE	PENDING
140CA2	CA	2458462	2458462		NOVEL METHODS OF CONSTRUCTING LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	ISSUED	10/11/2011	4 /17/2022
140CA3	CA	2747868			NOVEL METHODS OF CONSTRUCTING LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	PENDING
140EP1	EP	01927108.9		EP1276855	NOVEL METHODS OF CONSTRUCTING LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE	PUBLISHED

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

8

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX CJ LIBRARY PATENT RIGHTS
MATTER	SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION

140EP2	EP	02762148.1	EP1578903	NOVEL METHODS OF CONSTRUCTING LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	ALLOWED
140EP3	EP	10156326.0	EP2199393	METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	PUBLISHED
140EP4	EP	10179786.8	EP2308982	METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	PUBLISHED
140EP5	EP	10179777.7	EP2295580	METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	PENDING
140HK2	HK	10111983.4	1145515A	METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	PUBLISHED
140HK3	HK	11108853.6		METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	PENDING
140JP1	JP	2001-577464		METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	PENDING
140JP2	JP	2011-44525		METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	PUBLISHED
140P01	US	60/198,069		NOVEL METHODS OF CONSTRUCTING LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE	EXPIRED	4 /17/2001
140WO1	WO	PCT/US01/12454	WO0179481	METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	NAT PHASE
140WO2	WO	PCT/US02/12405	WO02083872	METHODS OF CONSTRUCTING DISPLAY LIBRARIES OF GENETIC PACKAGES FOR MEMBERS OF A DIVERSE FAMILY OF PEPTIDES	NAT PHASE

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

9

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX SYNTHETIC CDR PATENT RIGHTS
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
141AT1	AT	01998098.6	1360288	E498718	FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141AU1	AU	2002249854	2002249854		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	1 /10/2008	12/18/2021
141AU2	AU	2007214299		2007214299	FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING
141AU3	AU	2011223997			FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING
141BE1	BE	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141CA1	CA	2432377			FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING	2 /16/2011
141CH1	CH	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141DE1	DE	01998098.6	60144063.3-08	1360288	FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141DK1	DK	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141EP1	EP	01998098.6	1360288	EP1360288	FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141EP2	EP	10182768.1		EP2316940	FOCUSED LIBRARIES OF GENETIC PACKAGES	PUBLISHED
141ES1	ES	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141FI1	FI	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141FR1	FR	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141GB1	GB	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141GR1	GR	01998098.6	3074603	1360288	FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141HK2	HK	11110875.6			FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING	2 /16/2011
141IE1	IE	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141IT1	IT	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141JP1	JP	2002-561628		2004-518432	FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING
141JP2	JP	2008-99833		2008-183014	FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING
141LI1	LI	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141LU1	LU	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141MC1	MC	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141NL1	NL	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141PT1	PT	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021
141SE1	SE	01998098.6	1360288		FOCUSED LIBRARIES OF GENETIC PACKAGES	ISSUED	2 /16/2011	12/18/2021

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

10

Schedule 8.01 (u) (ii)

All LFRP Patents

DYAX SYNTHETIC CDR PATENT RIGHTS
MATTER	SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION

141P01	US	60/256,380		FOCUSED LIBRARIES OF GENETIC PACKAGES	EXPIRED	12/18/2001
141001	US	10/026,925	20030119056	FOCUSED LIBRARIES OF GENETIC PACKAGES	ABANDONED	9 /8 /2006
141002	US	11/416,460	20060257937	FOCUSED LIBRARIES OF GENETIC PACKAGES	ABANDONED	10/15/2010
141003	US	12/762,051	20100292103	FOCUSED LIBRARIES OF GENETIC PACKAGES	PUBLISHED
141004	US	13/161,441		FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING
141005	US	13/161,445		FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING
141006	US	13/194,667		FOCUSED LIBRARIES OF GENETIC PACKAGES	ABANDONED
141007	US	13/250,520		FOCUSED LIBRARIES OF GENETIC PACKAGES	PENDING
141WO1	WO	PCT/US01/50297	WO02061071	FOCUSED LIBRARIES OF GENETIC PACKAGES	NAT PHASE

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

11

Schedule 8.01 (u) (ii)

All LFRP Patents

 

AFFIMED PATENT RIGHTS-LICENSED TO DYAX

	PREPARATION AND USE OF GENE BANKS OF HUMAN ANTIBODIES	PREPARATION AND USE OF GENE BANKS OF SYNTHETIC HUMAN ANTIBODIES
US	US-B 6,319,690 ISSUED Nov. 20, 2001, EXPIRES Nov. 20, 2018	US-B 5,840,479 ISSUED Nov. 24, 1998, EXPIRES Nov. 24, 2015
AUSTRALIA	AU 633682, AU 7011391 PENDING, EXPIRES Jan. 28, 2011	AU638535, AU7011591 PENDING, EXPIRES Jan. 28, 2011
CANADA	CA-A 2035381 PENDING, EXPIRES Jan. 28, 2011	CA-A 2035384 PENDING, EXPIRES Jan. 28, 2011
EUROPE	EP-A 0 440 147 GRANTED, EXPIRES Jan. 28, 2011 (Opposition appears to be pending)	EP-B 0 440 146 GRANTED Nov 20 1996, EXPIRES Jan. 28, 2011
EUROPE	EP 1566442, PENDING, EXPIRES Jan. 28, 2011
JAPAN	JP-AA 4211394 PENDING, EXPIRES Jan. 28, 2011	JP-AA 4211395 PENDING, EXPIRES Jan. 28, 2011
SOUTH KOREA	KR 186823 PENDING, EXPIRES Jan. 28, 2011	KR 221897 PENDING, EXPIRES Jan. 28, 2011

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

12

Schedule 8.01 (u) (ii)

All LFRP Patents
 

BIOSITE PATENT RIGHTS-LICENSED TO DYAX

Country	Serial Number	Filing Date	Patent Number	Issue Date	Expires	Status
US	07/517,659	05/01/90	5,427,908	06/27/95	6/27/2012	Issued
US	08/376,326	01/20/95	5,580,717	12/03/96	6/27/2012 (TD)	Issued
US	08/450,754	05/25/95	---			Abandoned
US		02/13/02	7,094,579	08/22/06	7/29/2022 (166 day PTA)	Issued
US	10/367,169	2/13/03	Publication # US20030228660		Expected 2/13/2022 (if no PTA or TD)	Pending
US	12/020,482				Expected 2/13/2022 (if no PTA or TD)	Pending
US	12/021,098				Expected 2/13/2022 (if no PTA or TD)	Pending
PCT	US03/04791	2/13/03	----			National Phase
AU	AU2003225578	2/13/03			Expected 2/13/2023	Pending
CA	CA20032475929	2/13/03			Expected 2/13/2023	Pending
EPO	03739833.6	2/13/03	EP1481059		Expected 2/13/2023	Pending
Japan	JP20030568071T	2/13/03			Expected 2/13/2023	Pending
PCT	US91/02989	05/01/91	---			National Phase
EPO	91908963.1	05/01/91	0527839	12/02/98	05/11/2011	Issued
EPO	98200770.0	03/11/98	EP 0 866 136 B1	01/12/05	05/11/2011	Issued
Japan	3-508896	05/01/91	JP 3344584 B2	11/11/02	05/11/2011	Issued

United States patent application filed by Biosite Incorporated, February 13, 2002, relating to antibody expression technology, listing Gray, Buechler, and Veeramallu as inventors.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

13

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

* = terminal disclaimer
 

PRIORITY	TITLE	PATENT	FILING DATE	PUB OR ISSUE DATE	EXPIRATION
Family 1 PCT/GB89/01344	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	US 6248516	6-Jun-95	19-Jun-01	19-Jun-2018
	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	US 6545142	28-Nov-00	8-Apr-03	11-Sep-2010
	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	US 7306907	08-Nov-02	11-Dec-07	19-Jun-2018*
	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	US 20030130496	08-Nov-02	Allowed 24-Jan-08	19-Jun-2018
	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	US 20040110941	08-Nov-02	Allowed 24-Jan-08	19-Jun-2018
	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	AU634186B2	13-Nov-89	18-Feb-93	13-Nov-2009
	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	CA2002868 C	14-Nov-89	11-May-90	14-Nov-2009
	Enkelt-domaene-ligander, receptorer omfattende disse lignader, fremgangsmaader til fremstilling af demo g anvendelse af disse ligander og receptorer (Danish)	DK 175392 B1			LAPSED

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

14

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

	Cloning immunoglobulin variable domain sequences	EP 368684 (validated in AT, BE, CH, DE, ES, FR, GB, GR, IT, LI, LU, NL, SE)	13-Nov-89	16-May-90	13-Nov-2009
	Cloning immunoglobulin variable domains for expression by polymerase	GB 8826444 A0	11-Nov-88
	Recombinant DNA method	GB 8906034 A0	16-May-89
	Antibody Binding	GB 8911047 A0	15-May-89
	Antibody Binding	GB 8912652 A0	02-Jun-89
	Antibody Binding	GB 8913900 A0	16-Jun-89
	Antibody Binding	GB 8918543 A0	15-Aug-89
	Antibody Binding	GB 899217 A0	22-Apr-89
		FI199003489			LAPSED
		JP 2919890 B2	13-Nov-89	19-Jul-99	13-Nov-2009
		JP 3502801 T2	13-Nov-89	27-Jun-91	13-Nov-2009
	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	KR 184860 B1	10-Jul-90	1-Apr-99
	LIGANDER OG RESEPTORER OMFATTENDE NEVNTE LIGANDER, FREMGANGSMAATE FOR DERES FREMSTILLING OG ANVENDELSE	NO199003059	09-Jul-90	09-Jul-90
	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors	WO9005144	13-Nov-89	17-May-90	NATIONALIZED
Family 2 PCT/US90/02890  PCT/US90/02835  PCT/US90/02836	A new method for tapping the immunological repertoire	AU 643948 B2	16-May-90	02-Dec-93	16-May-2010
	Method for isolating receptors having a preselected specificity	AU 651065B2	16-May-90	14-Jul-94	16-May-2010

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

15

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

Co-expression of heteromeric receptors	AU 652539	15-May-90	01-Sep-94	15-May-2010
A method for producing polymers having a preselected activity	CA 2016841 C	15-May-90	16-Nov-90	15-May-2010
Method for tapping the immunological repertoire	CA 2016842	16-May-90	16-Nov-90	16-May-2010
Co-expression of heteromeric receptors	CA 2057923	15-May-90	17-Nov-90	15-May-2010
Co-expression of heteromeric receptors	EP 478627 (application withdrawn)	15-May-90	8-Apr-92	15-May-2010
Method for isolating receptors having a preselected specificity	EP 472638 (validated in AT, BE, CH, DE, DK, ES, FR, GB, IT, LI, LU, NL (now lapsed), SE)	16-May-90	4-Mar-92	16-May-2010
A new method for tapping the immunological repertoire	EP 425661 (validated in AT, BE, CH, DE, DK, ES, GB, IT, LI, LU, NL (now lapsed), SE)	16-May-90	8-May-91	16-May-2010
A new method for tapping the immunological repertoire	EP 1026239 A2/A3 (validated in AT, BE, CH, DE, DK, ES, FR, GB, IT, LI, LU, NL, SE)	16-May-90	09-Aug-00	16-May-2010
	FI199105411			LAPSED
Method for producing polymers having a preselected activity	GR 1002149 B	16-May-90	20-Feb-96	16-May-2010
Method for tapping the immunological repertoire	GR 1002158 B	16-May-90	23-Feb-96	16-May-2010
Method for isolating receptors having a preselected specificity	JP 3321159 B2	16-May-90	03-Sep-93	16-May-2010
A new method for tapping the immunological repertoire	JP 4500607 T2	16-May-90	06-Feb-92	16-May-2010
	JP 4506600 T2	15-May-90	19-Nov-92	15-May-2010
Method for isolating receptors having a preselected specificity	JP 5501348 T2	16-May-90	18-Mar-93	16-May-2010
Method for Exploiting Novel Immunological Repertory	JP2007185058	10-Jan-07	12-Jul-07	16-May-2010

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

16

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

	A new method for tapping the immunological repertoire	JP3992290	16-May-90	17-Oct-07	16-May-2010
	Processo de producao de um acido nucleico conservado e de um receptor codificado pelo referido acido	PT 94065 B	16-May-90	08-Jan-91	LAPSED
	Processo para a producao de vectores de and de cadeia dupla e de um sistema de clonacao compreenadendo os referidos vectores	PT 94066 B	16-May-90	31-Jan-97	16-May-2010
	Method for tapping the immunological repertoire	US 6291158	21-Aug-92	18-Sep-01	18-Sep-2018
	Method for producing polymers having a preselected activity	US 6291159	21-Aug-92	18-Sep-01	18-Sep-2018
	Method for producing polymers having a preselected activity	US 6291160	25-Nov-92	18-Sep-01	18-Sep-2018
	Method for tapping the immunological repertoire	US 6291161	4-Sep-92	18-Sep-01	*No later  than 18-Sep-2018
	Method for producing polymers having a preselected activity	US 6680192	28-Nov-00	20-Jan-04	*No later  than 18-Sep-2018
	Method for tapping the immunological repertoire	US 6969586	28-Nov-00	29-Nov-05	02-Jan-2010 (PTA 231 days)
	Method for tapping the immunological repertoire	US 7189841	02-Aug-04	13-Mar-07	10-Aug-2009 (PTA 86 days)
	Method for isolating receptors having a preselected specificity	WO 9014424	16-May-90	29-Nov-90	NATIONALIZED
	A new method for tapping the immunological repertoire	WO 9014430	16-May-90	29-Nov-90	NATIONALIZED
	Co-expression of heteromeric receptors	WO 9014443	15-May-90	29-Nov-90	NATIONALIZED
Family 3 PCT/GB92/00883 PCT/GB91/01134 PCT/GB92/01755 PCT/GB92/02240	Methods for producing members of specific binding pairs	AU 664155 B2	10-Jul-91	11-Nov-95	10-Jul-2011
PCT/GB93/00605 PCT/GB96/03043	Production of chimeric antibodies – a combinatorial approach	AU 665025 B2	23-Sep-92	14-Dec-95	23-Sep-2012
	Methods for producing members of specific binding pairs	AU 665190 B2	15-May-92	21-Dec-95	15-May-2012

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

17

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

Production of anti-self antibodies from antibody segment repertoires and displayed on phage	AU 665221 B2	2-Dec-92	21-Dec-95	2-Dec-2012
Methods for producing members of specific binding pairs	AU 673515 B2	24-Mar-93	14-Nov-96	24-Mar-2013
Specific binding members for human carcinoembryonic antigen, materials and methods	AU 703319 B2	09-Dec-96	25-Mar-99	09-Dec-2016
Methods for producing members of specific binding pairs	CA 2086936 C	10-Jul-91	11-Jan-92	10-Jul-2011
Methods for producing members of specific binding pairs	CA 2109602 C	15-May-92	26-Nov-92	15-May-2012
Production of chimeric antibodies – a combinatorial approach	CA 2119930 C	23-Sep-92	01-Apr-93	23-Sep-2012
Production of anti-self antibodies from antibody segment repertoires and displayed on phage	CA 2124460	2-Dec-92	10-Jun-93	2-Dec-2012
Methods for producing members of specific binding pairs	CA 2131151	24-Mar-93	30-Sep-94	24-Mar-2013
Specific binding members for human carcinoembryonic antigen, materials and methods	CA2239519	09-Dec-96	12-Jun-97	09-Dec-2016
Methods for producing members of specific binding pairs	EP 585287 B1 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IT, LI, LU, MC, NL, SE)	15-May-92	9-Mar-94	15-May-2012
Methods for producing members of specific binding pairs	EP 589877 B2 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IT, LI, LU, NL, SE)	10-Jul-91	6-Apr-94	10-Jul-2011
Production of chimeric antibodies - a combinatorial approach	EP 605522 B1 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IE, IT, LI, LU, MC, NL, SE)	23-Sep-92	13-Jul-94	23-Sep-2012

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

18

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

Production of anti-self antibodies from antibody seqment repertoires and displayed on phage	EP 616640 B1 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IE, IT, LI, LU, MC, NL, PT, SE)	2-Dec-92	28-Sep-94	2-Dec-2012
Methods for producing members of specific binding pairs	EP 656941 B1 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IE, IT, LI, LU, MC, NL, PT, SE)	24-Mar-93	14-Jun-95	24-Mar-2013
Phagemid-based method of producing filamentous bacteriophage particles displaying antibody molecules and the corresponding bacteriophage paricles	EP 774511 B1 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IT, LI, LU, NL, SE)	10-Jul-91	21-May-97	10-Jul-2011
Methods for producing members of specific binding pairs	EP844306 B1 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IT, LI, LU, NL, SE)	10-Jul-91	13-Sep-06	10-Jul-2011
Specific binding members for human carcinoembryonic antigen, materials and methods	EP 865492 B1 (validated in AT, BE, CH, DE, DK, ES, FI, FR, GB, IE, IT, LI, LU, MC, NL, SE)	09-Dec-96	11-Apr-01	09-Dec-2016
Phagemid-based method of producing filamentous bacteriophage particles displaying antibody molecules and the corresponding bacteriophage paricles	EP 1433846 B1 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IT, LI, LU, NL, SE)	10-Jul-91	04-Apr-07	10-Jul-2011
Production of anti-self antibodies from antibody seqment repertoires and displayed on phage	EP 1024191 A2/A3	2-Dec-92	31-Mar-04	2-Dec-2012 (grant intended)

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

19

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

Methods for producing members of specific binding pairs	EP 1754787 A2	10-Jul-91	18-Jun-08	10-Jul-2011 (pending)
Binding substance	GB 9015198 A0
Antibodies	GB 9022845 A0
Binding substance	GB 9024503 A0
Binding substance	GB 9104744 A0
Binding substance	GB 9110549 A0
Improvement binding substances	GB 9120252 A0
Improvement binding substances	GB 9120377 A0
Binding Molecules 1	GB 9125579 A0
Binding Molecules 2	GB 9125582 A0
Binding substances	GB 9206318 A0
Binding substances	GB 9206372 A0
Specific binding members, materials and methods	GB 9525004 A0
Specific binding members, materials and methods	GB 9610824 A0
Specific binding members, materials and methods	GB 9621295 A0
Methods for producing members of specific binding pairs	JP 3176917 B2	10-Jul-91	18-Nov-93	10-Jul-2011
Methods for producing members of specific binding pairs	JP 3507073 B2 JP 5508076 T2	24-Mar-93	08-Jun-95	24-Mar-2013
Production of chimeric antibodies - a combinatorial approach	JP 3540315 B2 JP 7505055 T2	23-Sep-92	07-Jul-04	23-Sep-2012
Method for producing members of specific binding pairs	JP 6508511 T2	15-May-92	29-Sep-94	15-May-2012
Production of chimeric antibodies - a combinatorial approach	JP 6510671 T2	23-Sep-92	01-Dec-94	23-Sep-2012
Production of anti-self antibodies from antibody seqment repertoires and displayed on phage	JP 7502167 T2	2-Dec-92	09-Mar-95	2-Dec-2012
Specific binding members for human carcinoembryonic antigen, materials and methods	JP 2000504204 T2	09-Dec-96	11-Apr-00	09-Dec-2016
Method for producing members of specific binding pairs	KR 222326 B1	09-Jan-93	01-Oct-99

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

20

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

Production of chimeric antibodies - a combinatorial approach	US 5565332	24-Jun-94	15-Oct-96	15-Oct-2013
Methods for producing members of specific binding pairs	US 5733743	18-Nov-94	31-Mar-98	31-Mar-2015
Methods for producing members of specific binding pairs	US 5858657	7-Jun-95	12-Jan-99	12-Jan-2016
Methods for producing members of specific binding pairs	US 5871907	31-Mar-94	16-Feb-99	12-Jan-2016
Speific binding members, materials and methods	US 5872215	23-May-96	16-Feb-99	2-Dec-2012
Production of anti-self antibodies from antibody segment repertoires and displayed on phage	US 5885793	26-Oct-94	23-Mar-99	23-Mar-2016
Methods for producing recombinant vectors	US 5962255	5-Dec-94	5-Oct-99	*No later than 05-Oct-2016
Methods for producing members of specific binding pairs	US 5969108	8-Jan-93	19-Oct-99	19-Oct-2016
Methods for producing members of specific binding pairs	US 6140471	30-Mar-98	31-Oct-00	24-Mar-2013
Methods for producing members of specific binding pairs	US 6172197	7-Jun-95	9-Jan-01	*No later than 19-Oct-2016
Methods for producing members of specific binding pairs	US 6225447	17-Jun-98	1-May-01	*No later than 15-May-2012
Methods for producing members of specific binding pairs	US 6291650	25-Jun-98	18-Sep-01	*No later than 15-May-2012
Methods for producing members of specific binding pairs	US 6492160	25-Jun-98	10-Dec-02	*No later than 15-May-2012
Production of anti-self antibodies from antibody segment repertoires and displayed on phage	US 6521404	20-Nov-98	18-Feb-03	*
Production of anti-self antibodies from antibody segment repertoires and displayed on phage	US 6544731	20-Nov-98	08-Apr-03	*
Production of anti-self antibodies from antibody segment repertoires and displayed on phage	US 6555313	16-May-00	29-Apr-03	*

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

21

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

	Production of anti-self antibodies from antibody segment repertoires and displayed on phage	US 6582915	20-Nov-98	24-Jun-03	*
	Production of anti-self antibodies from antibody segment repertoires and displayed on phage	US 6593081	21-Mar-00	15-Jul-03	*
	Methods for producing members of specific binding pairs	US 6806079	20-Nov-98	19-Oct-04	*
	Methods for producing members of specific binding pairs	US 6916605	20-Nov-98	12-Jul-05	*
	Methods for producing members of specific binding pairs	US 7063943	20-Nov-98	20-Jun-06	8-Jan-2013
	Production of anti-self antibodies from antibody segment repertoires and displayed on phage	US 7195866	19-Dec-02	27-Mar-07	*
	Methods for producing members of specific binding pairs	US20040157214	18-Mar-04	12-Aug-04	PENDING
	Methods for producing members of specific binding pairs	US20040157215	18-Mar-04	12-Aug-04	PENDING
	Methods for producing members of specific binding pairs	WO 9201047	10-Jul-91	23-Jan-92	NATIONALIZED
	Methods for producing members of specific binding pairs	WO 9220791	15-May-92	26-Nov-92	NATIONALIZED
	Production of chimeric antibodies – a combinatorial approach	WO 9306213	23-Sep-92	01-Apr-93	NATIONALIZED
	Production of anti-self antibodies from antibody segment repertoires and displayed on phage	WO 9311236	02-Dec-92	10-Jun-93	NATIONALIZED
	Methods for producing members of specific binding pairs	WO 9319172	24-Mar-93	30-Sep-93	NATIONALIZED
	Specific binding members of human carcinoembryonic	WO 9720932	09-Dec-96	12-Jun-97	NATIONALIZED
Family 4 PCT/GB92/01483	Treatment of cell populations	AU 665365	10-Aug-92	04-Jan-96	10-Aug-2012

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

22

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

	Treatment of cell populations	EP 597960 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IE, IT, LI, LU, MC, NL, SE)	10-Aug-92	25-May-94	10-Aug-2012
	Recombinant DNA method	GB 9117352 A0
	Recombinant DNA method	GB 9212419 A0
	Treatment of cell populations	JP 6509473 T2	10-Aug-92	27-Oct-97	10-Aug-2012
	In situ recombinant PCR within single cells	US 5830663	13-Jul-94	3-Nov-98	3-Nov-2015
	Treatment of cell populations	WO 9303151	10-Aug-92	18-Feb-93	NATIONALIZED
Family 5 PCT/GB94/01422	SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof	AU 691817 B2	30-Jun-94	28-May-98	30-Jun-2014
	SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof	AU 7006894	30-Jun-94	24-Jan-95	30-Jun-2014
	SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof	EP 706569 (validated in AT, BE, CH, DE, DK, ES, FR, GB, IE, IT, LI, LU, MC, NL, SE)	30-Jun-94	17-Apr-96	30-Jun-2014
	Chemisynthetic libraries	GB 9313509 A0
	SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof	JP 9500016 T2	30-Jun-94	07-Jan-97	30-Jun-2014
	Bacteriophage library displaying immunoglobulin repertoires with a chemical moiety covalently bound within the binding site: production and selection thereof	US 6017732	04-Sep-97	25-Jan-00	25-Jan-2017

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

23

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

	SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof	WO 9501438	30-Jun-94	12-Jan-95	NATIONALIZED
Family 6 PCT/GB94/02662	Improved method for the refolding of proteins	AU 674568	04-Feb-94	02-Jan-97	04-Feb-2014
	Retargeting antibodies	AU 680685	16-Sep-94	07-Aug-97	16-Sep-2014
	Recombinant binding proteins and peptides	AU 690171	05-Dec-94	23-Apr-98	05-Dec-2014
	Multivalent and multispecific binding proteins, their manufacture and use	AU 690528	03-Dec-93	30-Apr-98	03-Dec-2013
	Improved method for the refolding of proteins	CA 2155335 C	04-Feb-94	18-Aug-94	04-Feb-2014
	Multivalent and multispecific binding proteins, their manufacture and use	CA2150262	03-Dec-93	23-Jun-94	03-Dec-2013
	Retargeting antibodies	CA2169620	16-Sep-94	30-Mar-95	16-Sep-2014
	Recombinant binding proteins and peptides	CA2177367	05-Dec-94	08-Jun-95	05-Dec-2014
	Multivalent and multispecific binding proteins, their manufacture and use	EP 672142 B1 (Validated in AT, BE, CH, DE, DK, ES, FR, GB, IE, IT, LI, LU, MC, NL, SE; MC, LU lapsed)	03-Dec-93	20-Sep-95	03-Dec-2013
	Improved method for the refolding of proteins	EP 686162 B1 (validated AT, BE, CH, DE, DK, ES, FR, GB, GR, IE, IT, LI, LU, MC, NL, PT, SE; GR, PT, LU, MC lapsed)	04-Feb-94	13-Dec-95	04-Feb-2014

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

24

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

Retargeting antibodies	EP 720624 B1 (validated in AT, BE, CH, DE, DK, ES, FR, GB, GR, IE, IT, LI, LU, MC, NL, PT, SE)	16-Sep-94	10-Jul-06	16-Sep-2014
Recombinant binding proteins and peptides	EP 731842 A1 (application withdrawn)	5-Dec-94	18-Sep-96	5-Dec-2014 WITHDRAWN
Parannettu proteiinien laskostamismenetelma forbattrat forfarande for veckning av proteiner (Swedish)	FI 113272 B1
Binding proteins	GB 9225453
Improvements in or relating to binding proteins	GB 9300816
Binding proteins IV	GB 9319969
Recombinant binding proteins and peptides	GB 9412147
Retargeting antibodies	GB 9412166
	JP 3695467
Multivalent and multispecific binding proteins, their manufacture and use	JP  3720353	03-Dec-93	24-Nov-05	03-Dec-2013
Multivalent and multispecific binding proteins, their manufacture and use	JP  8504100	03-Dec-93	07-May-96	03-Dec-2013
Improved method for the refolding of proteins	JP  8506243	04-Feb-94	09-Jul-96	04-Feb-2014
Retargeting antibodies	JP  9503759	16-Sep-94	15-Apr-97	16-Sep-2014
Recombinant binding proteins and peptides	JP  9506508	05-Dec-94	30-Jun-97	05-Dec-2014

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

25

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

	Fremgangsmate til refolding av proteiner (Norwegian)	NO 316274
	Interative method of at least three cycles for the refolding of proteins	US 5739281	06-Jun-95	14-Apr-98	06-Jun-2015
	Multivalent and multispecific binding proteins, their manufacture and use	US 5837242	14-May-96	17-Nov-98	03-Dec-2013
	Interative method of at least five cycles for the refolding proteins	US 5917018	18-Sep-95	29-Jun-99	04-Feb-2014
	Recombinant binding proteins and peptides	US 6010884	29-May-96	04-Jan-00	EXPIRED DUE TO NONPAYMENT OF MAINTENANCE
	Multivalent and multispecific binding proteins, their manufacture and use	US 6492123	03-Sep-98	10-Dec-02	03-Dec-2013
	Retargeting antibodies	US 6589527 (con of PCT filed 16-Sep-94)	33-Mar-96	08-Jul-03	16-Sep-2014
	Multivalent and multispecific binding proteins, their manufacture and use	US 7122646	20-Sep-02	17-Oct-06	03-Dec-2013
	Multivalent and multispecific binding proteins, their manufacture and use	WO 9413804	03-Dec-93	23-Jun-94	NATIONALIZED
	Improved method for the refolding of proteins	WO 9418227	04-Feb-94	18-Aug-94	NATIONALIZED
	Retargeting antibodies	WO 9508577	16-Sep-94	30-Mar-95	NATIONALIZED
	Recombinant binding proteins and peptides	WO 9515388	05-Dec-94	08-Jun-95	NATIONALIZED
Family 7 PCT/GB97/01835	Labelling and selection of molecules	AU 715796	08-Jul-97	10-Feb-00	08-Jul-2017
	Labelling and selection of molecules	AU3452797	08-Jul-97	02-Feb-98	08-Jul-2017

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

26

Schedule 8.01 (u) (ii)

All LFRP Patents

CAT PATENTS LICENSED TO DYAX

PRIORITY TITLE PATENT FILING DATE PUB OR ISSUE DATE EXPIRATION

Labelling and selection of molecules	EP 906571 (validated in DE, FR, SE, NL; appears to have lapsed in 2003 in AT, BE, CH, DK, ES, FI, GR, IE, IT, LI, LU, MC,  PT)	08-Jul-97	07-Apr-99	08-Jul-2017
Labelling and selection of molecules	EP 1353180 (validated DE, FR, NL, SE; appears to have lapsed in NL and SE)	08-Jul-97	15-Oct-03	08-Jul-2017
Labelling and selection of specific binding molecules	GB 9614292
Labelling and selection of specific binding molecules	GB 9624880
Labelling and selection of specific  molecules	GB 9712818
Labelling and selection of molecules	GB 9714397 (GB2315125)	08-Jul-97	21-Jan-98	08-Jul-2017
Labelling and selection of molecules	GB9900205 (GB 2330909)	08-Jul-97	05-May-99	08-Jul-2017
Labelling and selection of molecules	JP 2000517046	08-Jul-97	19-Dec-00	08-Jul-2017
Labelling and selection of molecules	US 5994519	08-Jul-97	30-Nov-99	08-Jul-2017
Labelling and selection of molecules	US 6180336	17-Aug-98	20-Jan-01	08-Jul-2017
Labelling and selection of molecules	US 6342588	16-Aug-99	29-Jan-02	08-Jul-2017
Labelling and selection of molecules	US 6489123	23-Jan-01	3-Dec-02	08-Jul-2017
Labelling and selection of molecules	WO 981757	08-Jul-97		NATIONALIZED

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

27

Schedule 8.01 (u) (ii)

DOMANTIS PATENT RIGHTS - LICENSED TO DYAX

COUNTRY	FILING DATE	FILING NO.	PUB DATE	PUB NO.	ISSUE DATE	PATENT	STATUS	EXPIRATION
AU	10/20/1998	95487/98	05/10/1999	AU9548798A1	09/19/2002	AU0748223B2	GRANTED	10/20/2018
CA	10/20/1998	2308791	04/29/1999	CA2308791AA			PENDING	10/20/2018
EP	10/20/1998	98949106.3	08/09/2000	EP1025218A1			PENDING	Will be 10/20/2018
EP	05/17/2004	4076441.7	11/24/2004	EP1479771A2			PENDING	Will be 10/20/2018
JP	10/20/1998	2000-517070	10/20/2001	JP2001520397T2			PENDING	Will be 10/20/2018
US	11/17/1998	09/192854	06/06/2002	US22068276A1	02/24/2004	US6696245	GRANTED	11/17/2018
US	02/24/2000	09/511939			01/25/2005	US6846634	GRANTED	10/20/2018
US	10/20/1998	09/968744	08/07/2003	2003-0148372A1			PENDING	Depends on outcome of prosecution
US	10/20/1998	09/968561	11/07/2002	2002-0164642 A1			PENDING	Depends on outcome of prosecution
				2004-0038921 A2
				REPUBLISHED
US	04/27/2005	11/115682	09/15/2005	2005-0202512A1			PENDING	Depends on outcome of prosecution
US	09/01/2006	11/469556	05/17/2007	2007-0111282			PENDING	Depends on outcome of prosecution
AU	05/13/1999	39413/99	11/19/1999	AU3941399A1	07/03/2003	AU0762814B2	GRANTED	05/13/2019
CA	05/13/1999	2328422	11/18/1999	CA2328422AA			PENDING	Will be 05/13/2019
GB	05/13/1999	227323.3			12/31/2002	GB2379933B	GRANTED	05/13/2019
EP	05/13/1999	99922306.8	02/28/2001	EP1078051A2			PENDING	Will be 05/13/2019
JP	05/13/1999	2000-548446	05/21/2002	JP2002514413T2			PENDING	Will be 05/13/2019 Will be 05/13/2019
NO	11/08/2000	20005628	01/12/2001	NO20005628A			PENDING	Will be 05/13/2019
US	11/10/2000	09/710444					PENDING	Depends on outcome of prosecution

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

28

Schedule 8.01 (u) (ii)

All LFRP Patents

GENENTECH PATENT RIGHTS - LICENSED TO DYAX

Country	Status	Appln. No.	Appln. Date	Patent No.		Granted	Expiration Date
Austria	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Belgium	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Canada	PEN	2095633	Dec 03 1991				Dec 03 2011
Switzerland	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Germany	GRA	92902109.5	Dec 03 1991		69129154.3	Mar 25 1998	Dec 03 2011
Denmark	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
European Patent	NAT	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Spain	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
France	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
United Kingdom	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Greece	GRA	92902109.5	Dec 03 1991		3026468	Mar 25 1998	Dec 03 2011
Italy	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Japan	GRA	502710/92	Dec 03 1991		3267293	Jan 11 2002	Dec 03 2011
Luxembourg	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Monaco	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Netherlands	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
Sweden	GRA	92902109.5	Dec 03 1991		0564531	Mar 25 1998	Dec 03 2011
United States of America	GRA	08/050058	Apr 30 1993		5750373	May 12 1998	May 12 2015
PCT	NAT	PCT/US91/09133	Dec 03 1991
Japan	PEN	256931/01	Aug 27 2001
Japan	PEN	256932/2001	Aug 27 2001
United States of America	GRA	08/463587	Jun 05 1995		5821047	Oct 13 1998	May 12 2015
United States of America	GRA	08/923854	Sep 03 1997		6040136	Mar 21 2000	Dec 03 2010
United States of America	PEN	09/717641	Nov 21 2000
United States of America	GRA	08/418928	Apr 05 1995		5780279	Jul 14 1998	May 12 2015
United States of America	GRA	08/441871	May 16 1995		5846765	Dec 08 1998	Dec 08 2015

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

29

Schedule 8.01 (u) (ii)

KANG, BARBAS, AND LERNER (SCRIPPS) PATENTS

US 5,658,727

EP 0 580 737

WO 92/18619

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

30

Schedule 8.01 (u) (ii)

All LFRP Patents

XOMA PATENT RIGHTS - LICENSED TO DYAX

PRIORITY		TITLE	SERIAL	PATENT	EXPIRES
PCT/US86/02269 (WO8702671), October 27, 1986 which is a continuation-in-part of U.S. Application No. 06/793,980 filed November 1, 1985 (abandoned).
	AU	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	65981/86	Issued  606,320 Expired	October 27, 2006
	DK	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	3385/87	Issued PR 175680 B1 Expired	October 27, 2006
	TW	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	75105650	Expired	October 27, 2006
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	06/793,980	Abandoned
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	U.S. National Phase of PCT/US86/02269	Abandoned
PCT/US88/02514 (WO8900999), filed July 25, 1988, which corresponds to U.S. Application No. 07/077,528, which is a continuation-in-part PCT/US86/02269 (abandoned), which is a continuation-in-part of U.S. Application No. 06/793,980 (abandoned).
	AU	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	23244/88	Issued   632,462	July 25, 2008
	CA	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	572,398	Granted 1,341,235	July 25, 2008
	DK	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	192/90	Granted 174824	July 25, 2008
	DK	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	200301155	Granted PR 175654 B1	July 25, 2008
	DK	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	200301156	Granted PR 175581 B1	July 25, 2008
	EP	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use (AT, BE, FR, DE, IT, LU, NL, SE, CH, LI, GB)	EP 88907510.7	Granted EP 0371998	July 25, 2008
	EP	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use (AT, BE, FR, DE, IT, LU, NL, SE, CH, LI, GB)	EP 93100041.8	Granted EP 0550400	July 25, 2008
	EP	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use (AT, BE, FR, DE, IT, LU, NL, SE, CH, GB, LI)	EP 95119798.7	Granted EP 0731167	July 25, 2008
	JP	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	506481/88	Granted 2991720	July 25, 2008
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	07/077,528	Abandoned
Based on U.S. Application No. 07/501,092 filed March 29, 1990, which is a continuation-in-part of U.S. Application No. 07/077,528; and of U.S. Application No. 07/142,039
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	07/501,092	Abandoned

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

31

Schedule 8.01 (u) (ii)

All LFRP Patents

XOMA PATENT RIGHTS (…CONTINUED)

PRIORITY		TITLE	SERIAL	PATENT	EXPIRES
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	07/987,555	Abandoned
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	07/870,404	Abandoned
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	08/020,671	Abandoned
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	09/722,425	Abandoned
	*US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	09/722,315	Abandoned
	US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	08/235,225	5,618,920	April 8, 2014
	US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	08/299,085	5,595,898	January 21, 2014
	US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	08/472,691	6,204,023	December 2, 2014
	US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	08/467,140	5,698,435	January 21, 2014
	US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	08/450,731	5,693,493	December 2, 2014
	US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	08/466,203	5,698,417	December 2, 2014
	US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	10/040,945	Abandoned
	US	Modular Assembly of Antibody Genes, Antibodies Prepared Thereby and Use	11/582,563	Pending
Based on PCT/US86/00131 (WO8604356), filed January 24, 1986, which is a continuation-in-part of U.S. Application No. 06/695,309 filed January 28, 1985 (abandoned).	PCT	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques
	EP	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques (AT, BE, FR, DE, IT, LU, NL, SE, CH, LI, GB)	EP 86900983.7	Granted EP 0211047 Expired	January 24, 2006
	FI	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	863891	Granted 94774 Expired	January 24, 2006
	JP	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	500818/86	Granted 2095930 Expired	January 24, 2006
	JP	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	094753/94	Granted 2121896 Expired	January 24, 2006
	NO	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	863806	Granted 175870 Expired	January 24, 2006
	*US	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	06/695,309	Abandoned
	*US	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	06/797,472	Abandoned

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

32

Schedule 8.01 (u) (ii)

All LFRP Patents

XOMA PATENT RIGHTS (…CONTINUED)

PRIORITY		TITLE	SERIAL	PATENT	EXPIRES
	US	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	07/474,304	Granted 5,028,530 Expired	July 2, 2007
	US	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	07/637,199	Granted 5,206,154 Expired	Expired due to nonpayment of maintenance fees
	US	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	08/010,672	Granted 5,344,765 Expired	January 25, 2005
	US	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	08/016,303	Granted 5,357,044 Expired	Expired due to nonpayment of maintenance fees
	*US	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	08/248,889	Abandoned
	*US	AraB Promoters and Method of Producing Polypeptides, Including Cecropins, by Microbiological Techniques	08/296,137	Abandoned
Based on U.S. Application No. 07/142,039 filed January 11, 1988 and PCT/US89/00077 (WO8906283), filed January 9, 1989.	PCT	Novel Plasmid Vector with Pectate Lyase Signal Sequence
	AU	Novel Plasmid Vector with Pectate Lyase Signal Sequence	29377/89	Issued/627443	January 9, 2009
	CA	Novel Plasmid Vector with Pectate Lyase Signal Sequence	587,885	1,338,807	January 9, 2009
	EP	Novel Plasmid Vector with Pectate Lyase Signal Sequence (AT, BE, FR, DE, IT, LU, NL, SE, CH, LI, GB)	EP 89901763.6	Granted EP 0396612	January 9, 2009
	JP	Novel Plasmid Vector with Pectate Lyase Signal Sequence	501661/89	Granted 2980626	January 9, 2009
	*US	Novel Plasmid Vector with Pectate Lyase Signal Sequence	07/142,039	Abandoned
	US	Novel Plasmid Vector with Pectate Lyase Signal Sequence	08/472,696	5,846,818	November 19, 2013
	US	Novel Plasmid Vector with Pectate Lyase Signal Sequence	08/357,234	5,576,195	November 19, 2013

*Cases abandoned in favor of a continuing application.

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

33

Schedule 8.01 (u) (ii)

All LFRP Patents

IP JOINTLY-OWNED BY DYAX AND DYAX PARTNERS UNDER CERTAIN

FUNDED RESEARCH AGREEMENTS

AZ APPLICATIONS (ANTIBODIES)
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
AZ-03-01-CIP-PCT-AR	AR	04 01 04408		1890266A	Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-AU	AU	2004293180			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-BD	BD	277/2004	1004419		Antibodies	ISSUED	8 /13/2006	11/26/2020
AZ-03-01-CIP-PCT-BR	BR	PI0417023-7			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-CA	CA	PCT/EP04/013426			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-CL	CL	2004-3047			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-CN	CN	200480035257.5			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-CO	CO	06062058			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-EG	EG	493/200600			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-EP	EP	04819225.6		EP1687336	Antibodies	PUBLISHED		11/26/2024
AZ-03-01-CIP-PCT-GB	GB	0426043.6		GB2408508	Antibodies	PUBLISHED		11/26/2024
AZ-03-01-CIP-PCT-GC	GC	GCC/P/2004/4030			Antibodies	PENDING		11/26/2020
AZ-03-01-CIP-PCT-ID	ID	W-00 2006 01433			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-IL	IL	175608			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-IN	IN	3699			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-JP	JP	2006-540392		2008-502311	Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-KR	KR	10-2006-7010370			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-MT	MT	2503	2503		Antibodies	ABANDONED	6 /2 /2005	9 /13/2008
AZ-03-01-CIP-PCT-MX	MX	PCT/EP04/013426			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-MY	MY	PI 20044918			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-NO	NO	20063026			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-NZ	NZ	546935			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-PH	PH	PCT/EP04/013426			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-PK	PK	0948/04			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-RU	RU	2006122946			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-SG	SG	200603049-8			Antibodies	PENDING		11/26/2024
AZ-03-01-CIP-PCT-TH	TH	095716			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-TW	TW	093136755		200530267	Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-UA	UA	200607109			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-PRV	US	60/525,174			Antibodies	PENDING
AZ-03-01-CIP-PCT-US	US	10/579,445	7,612,179		Antibodies	ISSUED	11/3 /2009	11/26/2024
AZ-03-01-CIP-PCT-US CON1	US	12/585,180	8,058,016		ANTIBODIES BINDING TO A C-TERMIANL FRAGMENT OF APOLIPOPROTEIN E"	ISSUED	11/15/2011	11/26/2024
AZ-03-01-CIP-PCT-UY	UY	28.641		UY28641	Antibodies	ABANDONED		9 /13/2008
AZ-03-01-CIP-PCT-VE	VE	2004-002036			Antibodies	ABANDONED		9 /13/2008
AZ-03-01-PCT	WO	PCT/EP04/013426		WO05/051998	Antibodies	NAT PHASE		7 /7 /2005
AZ-03-01-CIP-PCT-ZA	ZA	2006/03671			Antibodies	PENDING		11/26/2024

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

34

Schedule 8.01 (u) (ii)

All LFRP Patents

EPIX (FIBRIN)
MATTER		SERIAL	PATENT	PUBL	TITLE	STATUS	ISSUE	EXPIRATION
077AT1	AT	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		3 /25/2009
077AU1	AU	66122/00	768859		BINDING MOIETIES FOR FIBRIN	ISSUED	4 /29/2004	7 /28/2020
077AU2	AU	2004201485	2004201485		BINDING MOIETIES FOR FIBRIN	ISSUED	11/22/2007	7 /28/2020
077BE1	BE	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		3 /25/2009
077CA1	CA	2376245			BINDING MOIETIES FOR FIBRIN	PENDING		7 /28/2020
077CH1	CH	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		3 /25/2009
077CY1	CY	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		3 /25/2009
077DK1	DK	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077EP1	EP	00953721.8		EP1203026	BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077ES1	ES	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077FI1	FI	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077FR1	FR	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077GB1	GB	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077GR1	GR	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077IE1	IE	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077IT1	IT	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077JP1	JP	2001-513994			BINDING MOIETIES FOR FIBRIN	PENDING		7 /28/2020
077LI1	LI	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077LU1	LU	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077MC1	MC	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077NL1	NL	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077PT1	PT	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077SE1	SE	00953721.8			BINDING MOIETIES FOR FIBRIN	ABANDONED		2 /25/2009
077TW1	TW	089115153	I 290146		BINDING MOIETIES FOR FIBRIN	ISSUED	11/21/2007	7 /28/2020
077P01	US	60/146,425			BINDING MOIETIES FOR FIBRIN	EXPIRED		7 /29/2000
077001	US	09/627,806			BINDING MOIETIES FOR FIBRIN	ABANDONED		10/20/2008
077002	US	10/649,229		US 2005-0261472 A1	BINDING MOIETIES FOR FIBRIN	ABANDONED		4 /3 /2009
077WO1	WO	PCT/US00/20612		WO01/09188	BINDING MOIETIES FOR FIBRIN	NAT PHASE

EPIX (COLLAGEN)
MATTER		TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION
008P01	US	PRV	60/755,710			COLLAGEN BINDING PEPTIDES	EXPIRED	12/29/2006
008P02	US	PRV	60/844,768			COLLAGEN BINDING PEPTIDES	EXPIRED	9 /16/2007

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

35

Schedule 8.01 (u) (ii)

All LFRP Patents

EPIX (COLLAGEN)
MATTER	TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION

008001	US	UTL	11/618,564		20070293656	COLLAGEN BINDING PEPTIDES	ABANDONED	9 /17/2009
012001	US	UTL	11/618,458	8,034,898	20080044360	METHODS OF COLLAGEN IMAGING	ISSUED	12/29/2025
009001	US	UTL	11/618,556		20080058636	METHODS OF MYOCARDIAL IMAGING	ABANDONED	9 /18/2009
009WO1	WO	UTL	PCT/US2006/062760		WO07084264	METHODS FOR MYOCARDIAL IMAGING	PUBLISHED
009P01	US	PRV	60/755,709			AGENTS AND METHODS FOR CALLAGEN AND MYOCARDIAL IMAGING	EXPIRED	12/29/2006
009PO2	US	PRV	60/845,118			COLLAGEN BINDING PEPTIDES	EXPIRED	12/29/2006

HUMAN GENOME SCIENCE, INC. (BLYS)
MATTER		TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION
078AU1	AU	UTL	2001285066	2001285066	2001285066	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) APRIL 9, 2009 ASKED KHOOVER AT HGS IF THEY APPROVE OF ABANDONMENT OF AU/CA/EP	ISSUED	8 /17/2021
078CA1	CA	UTL	2418006			BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) APRIL 9, 2009 ASKED KHOOVER AT HGS IF THEY APPROVE OF ABANDONMENT OF AU/CA/EP	PENDING	8 /17/2021
078EP1	EP	UTL	01964181.0		EP1339746	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) APRIL 9, 2009 ASKED KHOOVER AT HGS IF THEY APPROVE OF ABANDONMENT OF AU/CA/EP	PUBLISHED	8 /17/2021
078EP2	EP	UTL	06005641.3		EP1674477	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) APRIL 9, 2009 ASKED KHOOVER AT HGS IF THEY APPROVE OF ABANDONMENT OF AU/CA/EP	PUBLISHED	8 /17/2021
078JP1	JP	UTL	2002-521507		P2004-532604A	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) APRIL 9, 2009 ASKED KHOOVER AT HGS IF THEY APPROVE OF ABANDONMENT OF AU/CA/EP	PUBLISHED	8 /17/2021
078P01	US	PRV	60/226,489			BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) APRIL 9, 2009 ASKED KHOOVER AT HGS IF THEY APPROVE OF ABANDONMENT OF AU/CA/EP	EXPIRED	8 /18/2001
078001	US	UTL	09/932,322	7,118,872	US 2003-0194743 A1	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) APRIL 9, 2009 ASKED KHOOVER AT HGS IF THEY APPROVE OF ABANDONMENT OF AU/CA/EP	ISSUED	8 /18/2020
078WO1	WO	UTL	PCT/US01/25891		WO02/16412	BINDING POLYPEPTIDES FOR B LYMPHOCYTE STIMULATOR PROTEIN (BLYS) APRIL 9, 2009 ASKED KHOOVER AT HGS IF THEY APPROVE OF ABANDONMENT OF AU/CA/EP	NAT PHASE	1 /5 /2010
080AU1	AU	UTL	PCT/US01/25850		AU8830101 A	BINDING POLYPEPTIDES AND METHODS BASED THEREON (HGS)	PENDING	8 /17/2021
080P01	US	PRV	60/266,489			BINDING POLYPEPTIDES AND METHODS BASED THEREON (HGS)	EXPIRED	8 /18/2001
080001	US	UTL	09/932,613		20030091565	BINDING POLYPEPTIDES AND METHODS BASED THEREON (HGS)	ABANDONED	11/30/2005

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

36

Schedule 8.01 (u) (ii)

All LFRP Patents

HUMAN GENOME SCIENCE, INC. (BLYS)
MATTER	TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION

080002	US	UTL	11/232,439	US20060084608	BINDING POLYPEPTIDES AND METHODS BASED THEREON (HGS)	ABANDONED	5 /17/2010
080WO1	WO	UTL	PCT/US01/25850	WO0216411	BINDING POLYPEPTIDES AND METHODS BASED THEREON (HGS)	NAT PHASE

WYETH (FACTOR VIII)
MATTER	TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION

099001	US	UTL	09/224,785	6,197,526		POLYPEPTIDES FOR BINDING HUMAN FACTOR VIII AND FRAGMENTS OF HUMAN FACTOR VIII	ISSUED	1 /4 /2019
099002	US	UTL	09/756,594	6,492,105	20010014456	POLYPEPTIDES FOR BINDING HUMAN FACTOR VIII AND FRAGMENTS OF HUMAN FACTOR VIII	ISSUED	2 /18/2019
099AT2	AT	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099AU1	AU	UTL	25982/00	769745	769745	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099AU2	AU	UTL	2004201830	2004201830		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099BE2	BE	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099CA1	CA	UTL	2354599			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING	1 /3 /2020
099CH2	CH	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099DE2	DE	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099DK2	DK	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099EP1	EP	UTL	00904186.4		EP1147128	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ABANDONED	5 /2 /2006
099EP2	EP	UTL	06009040.4	EP1705183	EP1705183	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099EP3	EP	UTL	09155033.5		EP2090582	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED	1 /3 /2020
099EP5	EP	UTL	10182747.5		EP2301953	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED	1 /3 /2020
099EP6	EP	UTL	10182741.8		EP2298791	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED	1 /3 /2020
099ES2	ES	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099FI2	FI	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099FR2	FR	UTL	06009040.4			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING	1 /3 /2020
099GB2	GB	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099GR2	GR	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099HK1	HK	UTL	02100182.6			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING	1 /3 /2020

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

37

Schedule 8.01 (u) (ii)

All LFRP Patents

WYETH (FACTOR VIII)
MATTER	TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION

099HK2	HK	UTL	07100794.1	HK1093750		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099HK3	HK	UTL	09110140.9		EP2090582A	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED	1 /3 /2020
099HK5	HK	UTL	11109350.2			BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PENDING	1 /3 /2020
099IE2	IE	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099IT2	IT	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099JP1	JP	UTL	2000-592310	4733272	P2002-536297A	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099JP2	JP	UTL	2010-108017		2010-254694	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	PUBLISHED	1 /3 /2020
099LI2	LI	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099LU2	LU	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099MC2	MC	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099NL2	NL	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099PT2	PT	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099SE2	SE	UTL	06009040.4	EP1705183		BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /3 /2020
099WO1	WO	UTL	PCT/US00/00043		WO00/40602	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	NAT PHASE
100001	US	UTL	10/272,497	7,112,438	US 2003-0165822 A1	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	1 /4 /2019
100002	US	UTL	11/345,031	7,691,565	US 2006-0193829 A1	BINDING MOLECULES FOR HUMAN FACTOR VIII AND FACTOR VIII-LIKE PROTEINS	ISSUED	2 /18/2019
100003	US	UTL	12/692,353	8,058,017	20100292440	BINDING MILECULES FOR HUMAN FACTOR VIII and FACTOR VIII-LIKE PROTEINS	ISSUED	1 /4 /2019
100004	US	UTL	13/243,761			BINDING MILECULES FOR HUMAN FACTOR VIII and FACTOR VIII-LIKE PROTEINS	PENDING	4 /21/2018

BRACCO (MULTIVALENT CONSTRUCTS)
MATTER	TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION

57637/01194	AU	UTL	2003276884	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01190	AU	UTL	2003228276	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/1603 AU	AU	UTL	2005328644	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01187	CA	UTL	2477935	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01193	CA	UTL	2512780	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/1600	CA	UTL	PCT/US05/28127	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	8 /9 /2025

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

38

Schedule 8.01 (u) (ii)

All LFRP Patents

BRACCO (MULTIVALENT CONSTRUCTS)
MATTER	TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION

57637/1601 EP	EP	UTL	05857561.4		WO2006096207	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01192	EP	UTL	03815479.5		EP1587523	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01188	EP	UTL	03726024.7		EP1482987	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	3 /3 /2023
57637/01191	HK	UTL	05104699.1		1071999A	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/1602 JP	JP	UTL	PCT/US05/28127			MULTIVALENT CONSTRUCVTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01189	JP	UTL	2003-581813			MULTIVALENT CONSTRUCVTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01180	US	PRV	60/360,821			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	EXPIRED	3 /1 /2003
57637/01181	US	PRV	60/440,201			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	EXPIRED	10/10/2010
57637/01182	US	UTL	10/379,287	7,211,240	US2004-0018974-A1	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	ISSUED	10/10/2010
57637/01185	US	UTL	10/661,032	7,261,876	US20050027105 A9	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	ISSUED	10/10/2010
57637/01186	US	UTL	10/916,155		US2005-0147555-A1	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01196	US	UTL	11/624,894			MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING	10/10/2010
57637/01195	WO	UTL	PCT/US05/28127			MULTIVALENT CONSTRUCVTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	PENDING
57637/01184	WO	UTL	PCT/US03/28838		WO2004/064595 A2	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	NAT PHASE
57637/01183	WO	UTL	PCT/US03/06656		WO03084574	MULTIVALENT CONSTRUCTS FOR THERAPEUTIC AND DIAGNOSTIC APPLICATIONS	NAT PHASE

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

39

Schedule 8.01 (u) (ii)

All LFRP Patents

BRACCO (KDR/VEGF)
MATTER		TYPE	SERIAL	PATENT	PUBL	TITLE	STATUS	EXPIRATION
D0617.70011AU00	AU	UTL	2003213730			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	ABANDONED	2 /7 /2009
D0617.70011AU00	AU	UTL	2003278807			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	LAPSED	2 /7 /2009
D0617.70011CA00	CA	UTL	2477836			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	PENDING	4 /17/2009
D0617.70011EP00	EP	UTL	03711418.8		1572724	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY [2005/37]	PENDING	4 /17/2009
D0617.70011EP01	EP	UTL	08008365.2		EP2014310	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY [2005/37]	PENDING	4 /17/2009
D0617.70011JP00	JP	UTL	2003-572527		2006-514915	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	PENDING	2 /7 /2009
D0617.70011US00	US	PRV	60/360,851			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	EXPIRED	4 /17/2009
D0617.70011US01	US	UTL	60/440,411			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	EXPIRED	4 /17/2009
D0617.70011US02	US	UTL	10/382,082			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	PENDING	4 /17/2009
D0617.70011WO00	WO	UTL	PCT/US03/06731		WO03074005-A2	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY	NAT PHASE	4 /17/2009
D0617.70012AU00	AU	UTL	2003278807			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY ..ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	2 /13/2009
D0617.70012CA00	CA	UTL	2513044			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY ..ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	2 /13/2009
D0617.70012EP00	EP	UTL	03770325.3		EP1587944	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY ..ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	2 /13/2009
D0617.70012US00	US	UTL	10/661,156		20050100963-A1	KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY ..ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	10/7 /2010
D0617.70012WO00	WO	UTL	PCT/US03/28787			KDR AND VEGF/KDR BINDING PEPTIDES AND THEIR USE IN DIAGNOSIS AND THERAPY .....ABANDONED PER BRACCO AMENDMENT DATED FEBRUARY 2009	ABANDONED	2 /13/2009
D0617.70014US00	US	UTL	10/939,890		20050250700-A1	KDR AND VEGF/KDR BINDING PEPTIDES	ABANDONED	11/16/2006
D0617.70014WO00	WO	UTL	PCT/US05/032740		WO06031885	KDR AND VEGF/KDR BINDING PEPTIDES	ABANDONED	1 /7 /2007

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

40

Schedule 8.01(u)(iii)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01 (u)(iv)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(u)(vii)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(u)(viii)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(u)(ix)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(u)(x)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(u)(xi)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01 (v) (i)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(v)(iii)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(v)(v)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(v)(vi)

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(v)(vii)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01 (v) (viii)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01 (v)(x)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(v)(xi)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 8.01(w)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote such omission.

Schedule 10.03(a)

[*****]

Confidential materials omitted and filed separately with the Securities and Exchange Commission.  Asterisks denote such omission.

EX-21.1

Exhibit 21.1

Dyax Corp.

Subsidiaries of the Company

NAME	PARENT	STATE OR COUNTRY OF INCORPORATION
Dyax Holdings B.V.	Dyax Corp.	Netherlands
Dyax B.V.	Dyax Holdings B.V.	Netherlands
Dyax S.A.	Dyax Corp.	Belgium

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-171405) and Form S-8 (Nos. 333-168567, 333-168566, 333-146155, 333-146154, 333-119607, 333-105842, 333-131416, 333-49852, 333-49856, 333-97523, and 333-97527) of Dyax Corp. of our report dated March 2, 2012 relating to the financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers LLP

Boston, Massachusetts

March 2, 2012

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 annual report on Form 10-K 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: March 2, 2012
	/s/ Gustav A. Christensen
	Gustav A. Christensen
	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 annual report on Form 10-K 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: March 2, 2012
	/s/ George Migausky
	George Migausky
	Chief Financial Officer

EX-32.1

Exhibit 32.1

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 Annual Report on Form 10-K of the Company for the year ended December 31, 2011fully 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-K fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: March 2, 2012	/s/ Gustav A. Christensen
	Gustav A.  Christensen
	Chief Executive Officer
Dated: March 2, 2012	/s/ George Migausky
	George Migausky
	Chief Financial Officer

XML

SIGNIFICANT TRANSACTIONS

12 Months Ended

Dec. 31, 2011

SIGNIFICANT TRANSACTIONS

3. SIGNIFICANT TRANSACTIONS

Sigma-Tau

In June 2010, the Company entered into a strategic collaboration agreement with Defiante Farmaceutica S.A., a subsidiary of the pharmaceutical company Sigma-Tau SpA (Sigma-Tau) to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other therapeutic indications throughout Europe, North Africa, the Middle East and Russia.  In December 2010, the original agreement was amended to expand the partnership to commercialize KALBITOR for the treatment of HAE in Australia and New Zealand (the first amendment).  In May 2011, the Company further amended its agreement with Sigma-Tau to include development and commercialization rights in Latin America (excluding Mexico), the Caribbean, Taiwan, Singapore and South Korea (the second amendment).  In December 2011, a third amendment eliminated Sigma-Tau’s rights in Taiwan, Singapore and South Korea which had been previously granted under the second amendment.

Under the terms of the original agreement, Sigma-Tau made a $2.5 million upfront payment.  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. 

Under the terms of the first amendment, Sigma-Tau made an additional $500,000 upfront payment to the Company and also purchased 151,515 shares of the Company's common stock at a price of $3.30 per share, which represented a 50% premium over the 20-day average closing price through December 20, 2010, for an aggregate purchase price of $500,000.  Both payments were received in January 2011. 

Under the terms of the second amendment, Sigma-Tau made an additional upfront payment of $4.0 million in 2011 and was required to make an additional $3.0 million non-refundable payment to the Company by December 31, 2011.  Under the third amendment, upon elimination of Sigma-Tau’s rights to Taiwan, Singapore and South Korea, the $3.0 million payment obligation was eliminated, as were the future milestones and royalties related to these territories.

The Company is also eligible to receive over $115 million in development and sales milestones related to ecallantide 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 in the territories covered under the initial Sigma-Tau agreement. The partnership agreement may be terminated by Sigma-Tau, at will, upon 6 months’ prior written notice.  Either party may terminate the partnership agreement in the event of an uncured material breach or declaration or filing of bankruptcy by the other party.

Prior to the second amendment in May 2011, revenue related to this multiple element arrangement was being recognized in accordance with ASC 605.  The Company evaluated the terms of the second amendment relative to the entire arrangement and determined the amendment to be a material modification to the existing agreement for financial reporting purposes.  As a result, the Company evaluated the entire arrangement under the guidance of ASU No. 2009-13 which was adopted in 2011.  

Under the terms of the original agreement and first amendment, the Company analyzed this multiple element arrangement in accordance with ASC 605 and evaluated whether the performance obligations under this agreement, including the product 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 included the product license, the committed future development services and the steering committee involvement. These deliverables were grouped into one unit of accounting due to the lack of objective and reliable evidence of fair value.  The second unit of accounting related to the manufacturing services, and was determined to meet all of the criteria to be a separate unit of accounting.  The Company had the ability to estimate the scope and timing of its involvement in the future development of the program as the Company's obligations under the development period are clearly defined.  Therefore, the Company recognized 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 estimated the level of effort to be expended over the term of the agreement and recognized 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.  As of the date of the second amendment, $4.8 million of revenue had been recognized for the first unit of accounting and $2.4 million of deferred revenue remained.  To date, no revenue has been recognized related to manufacturing services, as no such services have been provided.

As the second amendment represented a material modification to the existing agreement under applicable accounting rules, the Company re-evaluated the entire arrangement under ASU No. 2009-13, and determined all undelivered items under the agreement and divided them into separate units of accounting based on whether the deliverable provided stand-alone value to the licensee. These units of accounting consist of (i) the license to develop and commercialize ecallantide for the treatment of HAE and other therapeutic indications in the territories granted under the original agreement and first amendment, (ii) the license to develop and commercialize ecallantide for the treatment of HAE and other therapeutic indications in the territories granted under the second amendment, (iii) steering committee services and (iv) committed future development services.  The Company then determined the best estimate selling price (BESP) for the license and steering committee services and the fair value of committed future development services was determined using vendor objective evidence.   The Company’s process for determining BESP involves management’s judgment and includes factors such as discounted cash flows, estimated direct expenses and other costs and available data.

The upfront fee of $4.0 million, the non-refundable payment of $3.0 million due in December 2011 and $2.4 million of previously deferred revenue under the Sigma-Tau contracts were allocated to the units of accounting based upon relative fair value.

The $9.2 million  allocated to the licenses was recognized during the second quarter of 2011, as the licenses had been delivered.   In the fourth quarter of 2011, based on the terms of the third amendment, Sigma-Tau’s $3.0 million payment obligation was eliminated and the full $3.0 million in revenue was recorded as a reduction of revenue.  In addition, during the fourth quarter of 2011, the Company recognized $1 million related to a regulatory filing milestone for the Austrailia territory which was determined to be substantive based on the level of effort and involvement required by the Company for the achievement of this milestone.

Revenue related to steering committee services of $190,000 was deferred and is being recognized under the proportional performance model, as meetings are held through the estimated development period for ecallantide in the Sigma-Tau Territories.  Revenues associated with future committed development services will be recognized as incurred and billed to Sigma-Tau for reimbursement.  As future milestones are achieved and to the extent they involve substantial effort on the Company’s part, revenue will be recognized in the period in which the milestone is achieved.  The manufacturing services were determined to represent a contingent deliverable and, as such, have been excluded from the current revenue model.

The Company recognized revenue of approximately $10.5 million and $2.2 million related to the Sigma-Tau agreement, as amended, for the years ended December 31, 2011 and 2010, respectively.  Revenue for the year ended December 31, 2011 would have been $7.1 million, if revenue had been recognized under the previous revenue recognition model, prior to adoption of ASU 2009-13.

As of December 31, 2011 and 2010, the Company has deferred $158,000 and $3.1 million, respectively, of revenue related to this arrangement, which is recorded in deferred revenue on the accompanying consolidated balance sheets at such dates.  The deferred revenue balance at December 31, 2011, relates to the joint steering committee obligation which is estimated to continue until 2014.  As of December 31, 2011 and 2010, the Company had receivable balances due from Sigma-Tau of $65,000 and $1.4 million, respectively.

In January 2012, the Company was notified that the collaboration agreement had been assigned by Defiante Farmaceutica S.A. to another subsidiary of Sigma-Tau, Sigma-Tau Rare Diseases S.A.

CMIC

In September 2010, the Company entered into an agreement with CMIC Co., Ltd, (CMIC) to develop and commercialize subcutaneous ecallantide for the treatment of HAE and other angioedema indications in Japan.

Under the terms of the agreement, the Company received a $4.0 million upfront payment.  The Company is also eligible to receive up to $102 million in development and sales milestones for ecallantide in HAE and other angioedema indications and royalties of 20%-24% of net product sales. CMIC is solely responsible for all costs associated with development, regulatory activities, and commercialization of ecallantide for all angioedema indications in Japan. CMIC will purchase drug product from the Company on a cost-plus basis for clinical and commercial supply.

The Company analyzed this multiple element arrangement in accordance with ASC 605 and evaluated whether the performance obligations under this agreement, including the product license, development of ecallantide for the treatment of HAE and other angioedema indications in Japan, 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 product license, the committed future development services and the steering committee involvement.  The second unit of accounting relates to the manufacturing services.  At this time the scope and timing of the future development of ecallantide for the treatment of HAE and other indications in the CMIC territory are the joint responsibility of the Company and CMIC and therefore, the Company cannot reasonably estimate the level of effort required to fulfill its obligations under the first unit of accounting.  As a result, the Company is recognizing revenue under the first unit of accounting on a straight-line basis over the estimated development period of ecallantide for the treatment of HAE and other indications in the CMIC territory of approximately six years.

The Company recognized revenue of approximately $595,000 and $148,000 related to this agreement for the years ended December 31, 2011 and 2010, respectively.  As of December 31, 2011 and 2010, the Company has deferred approximately $3.3 million and $3.9 million, respectively, of revenue related to this arrangement, which is recorded in deferred revenue on the accompanying consolidated balance sheets.

Sale of Xyntha Royalty Rights

In 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 Company's LFRP.  Under the terms of this sale, the Company received an upfront cash payment of $9.8 million and earned  additional  milestones payments of $1.5 million in 2010 and $500,000 in 2011, based on product sales for each respective year.  A portion of the cash payments received were required to be applied to the Company's loan with Cowen Healthcare (see Note 8 – Note Payable), totaling a $2.2 million principal reduction and interest expense of $1.4 million.  A similar proportion of the $500,000 sales milestone payment due by March 31, 2012, will also be applied to the loan. The Company has determined that it has no substantive future obligations under the arrangement.  During the years ended December 31, 2010 and 2011,the Company recognized $11.3 million and $500,000 of revenue under this arrangement, respectively.

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 ecallantide for the reduction of blood loss during surgery. Under this agreement, Cubist assumed responsibility for all further development and costs associated with ecallantide in the licensed indications in the Cubist territory and the Company received $17.5 million in upfront license and milestone fees.

In 2010, Cubist announced its plan to stop investing in the clinical development of ecallantide and terminated the 2008 agreement.  Based upon Cubist's decision, $13.8 million of deferred revenue was recognized as revenue during the year ended December 31, 2010, as the development period had ended.  During the year ended December 31, 2009, the Company recognized revenue of $4.3 million related to this agreement.

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Accounting Policies

12 Months Ended

Dec. 31, 2011

Accounting Policies

2. Accounting Policies

Basis of Consolidation 

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

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 December 31, 2011 and 2010, approximately 61% and 98% , respectively, 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 United States 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 distributors.  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 December 31, 2011, two customers accounted for 43% and 34% of the accounts receivable balance.  Three customers accounted for approximately 35%, 28% and 24%, of the Company's accounts receivable balance as of December 31, 2010, all of which were collected in the first quarter of 2011.

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, money market 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 at period end.  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 December 31, 2011, the Company's investments consisted of U.S. Treasury notes and bills with an amortized cost and estimated fair value of $34.9 million, and an unrealized gain of $7,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheet.  As of December 31, 2010, the Company's investments consisted of United States Treasury notes and bills with an amortized cost of $58.7 million, an estimated fair value of $58.8 million, and had an unrealized gain of $44,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheet.

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 ASC 718.

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.

The Company records all proceeds received from the lessor for tenant improvements under the terms of its operating lease as deferred rent. These amounts are amortized on a straight-line basis over the term of the lease as an offset to rent expense.

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.

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, collectability of the resulting receivable is reasonably assured and the Company has no further performance obligations.

Product Sales and Allowances

Product Sales.  Product sales are generated from the sale of KALBITOR to the Company’s wholesale and specialty distributors, and are recorded upon delivery when title and risk of loss have passed to the customer.  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.  The Company establishes reserves for trade distributor and 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, 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 service contracts with its distributors. 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 patient support 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 and Other Discounts.  The Company offers a prompt payment discount to its distributors.  Since the Company expects that its distributors 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 and the Medicare Part D Coverage Gap Program, as well as with respect to certain other qualifying federal and state government programs.  The Company estimates the amount of these reductions based on KALBITOR patient data and actual sales data.  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.  Actual rebate amounts are 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. Actual chargeback amounts for Public Health Service are 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 distributors with a general right of product return. It permits returns if the product is damaged or defective when received by 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.

During the years  ended December 31, 2011 and 2010, provisions for product sales allowances reduced gross product sales as follows (in thousands):

	2011			2010
Total gross product sales	$	23,999		$	9,293
Prompt pay and other discounts	$	(831	)	$	(205	)
Government rebates and chargebacks		(249	)		(239	)
Returns		(35	)		(14	)
Product sales allowances	$	(1,115	)	$	(458	)
Total product sales, net	$	22,884		$	8,835
Total product sales allowances as a percent of  gross product sales		4.6	%		4.9	%

Development and License Fee Revenues

In January 2011, the Company adopted a new U.S. GAAP accounting standard which amends existing revenue recognition accounting guidance regarding agreements with multiple elements, such as many licensing and collaboration agreements.  The new standard provides accounting principles and application guidance on whether multiple deliverables exist, whether and how the deliverables should be separated, and the consideration allocated.  The new guidance amends the requirement to establish objective evidence of fair value of undelivered products and services and provides for separate revenue recognition based upon management’s best estimate of selling price for an undelivered item when there is no other means to determine the fair value of that undelivered item.  The adoption of this standard resulted in it being applied to all new or materially amended agreements in 2011 that include multiple deliverables.  In 2011, the Company applied the amended revenue guidance to several revenue arrangements entered into during the year, including one amendment which was determined to be a material modification to an existing agreement (see Note 3, Significant Transactions – Sigma-Tau).

Collaboration Agreements.  The Company enters into collaboration agreements with other companies 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, payments related to manufacturing services, milestone payments and royalties on any product sales derived from collaborations.  These multiple element arrangements are analyzed to determine how the deliverables, which often include license and performance obligations such as research, steering committee and manufacturing services, are separated into units of accounting.

Before January 1, 2011, the Company evaluated license arrangements with multiple elements in accordance with ASC, 605-25 Revenue Recognition – Multiple-Element Arrangements.  In October 2009, the FASB, issued ASU 2009-13 Revenue Arrangements with Multiple Deliverables, or ASU 2009-13, which amended the accounting standards for certain multiple element arrangements to:

· Provide updated guidance on whether multiple elements exist, how the elements in an arrangement should be separated and how the arrangement considerations should be allocated to the separate elements;

· Require an entity to allocate arrangement consideration to each element based on a selling price hierarchy, also called the relative selling price method, where the selling price for an element is based on vendor-specific objective evidence (VSOE), if available; vendor objective evidence (VOE), if available and VSOE is not available; or the best estimate of selling price (BESP), if neither VSOE or VOE is available;

· Eliminate the use of the residual method and require an entity to allocate arrangement consideration using the selling price hierarchy.

The Company evaluates all deliverables within an arrangement to determine whether or not they provide value to the licensee on a stand-alone basis.  Based on this evaluation, the deliverables are separated into units of accounting.  If VSOE or VOE is not available to determine the fair value of a deliverable, the Company determines the best estimate of selling price associated with the deliverable.  The arrangement consideration, including upfront license fees and funding for research and development, is allocated to the separate units based on relative fair value.

VSOE is based on the price charged when an element is sold separately and represents the actual price charged for that deliverable.  When VSOE cannot be established, the Company attempts to establish the selling price of the elements of a license arrangement based on VOE.  VOE is determined based on third party evidence for similar deliverables when sold separately.  In circumstances when the Company charges a licensee for pass-through costs paid to external vendors for development services, these costs represent VOE.

When the Company is unable to establish the selling price of an element using VSOE or VOE, management determines BESP for that element.  The objective of BESP is to determine the price at which the Company would transact a sale if the element within the license agreement was sold on a stand-alone basis.  The Company's process for establishing BESP involves management’s judgment and considers multiple factors including discounted cash flows, estimated direct expenses and other costs and available data.

Based on the value allocated to each unit of accounting within an arrangement, upfront fees and other guaranteed payments are allocated to each unit based on relative value.  The appropriate revenue recognition method is applied to each unit and revenue is accordingly recognized as each unit is delivered.

For agreements entered into prior to 2011, revenue related to upfront license fees was spread over the full period of performance under the agreement, unless the license was determined to provide value to the licensee on a stand-alone basis and the fair value of the undelivered performance obligations, typically including research or steering committee services was determinable.

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

Whenever the Company determined that an arrangement should be accounted for as a single unit of accounting, it determined the period over which the performance obligations would be completed. Revenue is recognized using either an efforts-based or time-based (ie. straight-line) proportional performance method. The Company recognizes revenue using an efforts-based 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 is 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. For all milestones achieved prior to 2011, substantive milestones were included in the Company's revenue model when achievement of the milestone was achieved. Milestones that were tied to regulatory approval were not considered probable of being achieved until such approval was received. All milestones achieved after January 1, 2011 which are determined to be substantive milestones are recognized as revenue in the period in which they are met in accordance with Accounting Standards Update (ASU) No. 2010-17, Revenue Recognition – Milestone Method. Milestones tied to counter-party performance are not included in the Company's revenue model until the performance conditions are met. Milestones determined to be non-substantive are allocated to each unit of accounting within an arrangement when met.  The allocation of the milestone to each unit is based on relative value and revenue related to each unit is recognized accordingly.

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

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.  Milestones are recognized as revenue in the period in which the milestone is achieved and royalty revenue is recognized upon the sale of the related products as the Company has no remaining performance obligations under the agreement.

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 deliverables within these arrangements are determined to not provide the licensee with value on a stand-alone basis and therefore are accounted for as a single unit of accounting. 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, which are optional to the licensee, are substantive and therefore are excluded from the initial allocation of the arrangement consideration.  These payments are recognized as revenue when the license is issued upon exercise of the licensee’s option, 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, KALBITOR units sold during the years ended December 31, 2011 and 2010 do not reflect the full cost of drug manufacturing.

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 enacted statutory tax rates.  At December 31, 2011 and 2010, there were no unrecognized tax benefits.

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. All currency translation adjustments are recorded to other income (expense) in the consolidated statement of operations.  For the years ended December 31, 2011 and 2010 the Company recorded other expense of $3,000 and $32,000, respectively, for the translation of foreign currency.

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 1998 Employee Stock Purchase Plan, as amended (the Purchase Plan).  The Company’s awards are expensed over the service period which is generally the vesting period, based on fair value on the date of grant.  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 year ended December 31, 2011 and 2010, and therefore, are excluded from the calculation of diluted net loss per share.

Stock options and warrants to purchase a total of 11,554,126 shares, 9,693,266 shares and 8,798,956 shares of common stock were outstanding at December 31, 2011,  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 requires that all components of comprehensive income (loss) be reported in a financial statement that is displayed with the same prominence as other financial statements.

Accumulated other comprehensive income (loss) is calculated as follows:

	Unrealized Gain (Loss) on Investments			Foreign Currency Translation Adjustment			Accumulated Other Comprehensive Income
	(In thousands)
Balance at January 1, 2009	$	152		$	492		$	644
Change for 2009		(137	)		(492	)		(629	)
Balance at December 31, 2009		15			--			15
Change for 2010		29			--			29
Balance at December 31, 2010		44			--			44
Change for 2011		(37	)		--			(37	)
Balance at December 31, 2011	$	7		$	--		$	7

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 within predominantly one geographic area.

Recent Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the 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 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 May 2011, the FASB issued ASU No. 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (ASU 2011-04). This newly issued accounting standard clarifies the application of certain existing fair value measurement guidance and expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This ASU is effective on a prospective basis for annual and interim reporting periods beginning on or after December 15, 2011, which for Dyax will be January 1, 2012. The Company does not expect that adoption of this standard will have a material impact on its financial position or results of operations.

In June 2011, the FASB issued Accounting Standards Update (ASU) No. 2011-05, “Comprehensive Income (Topic 220)” (ASU 2011-05). This newly issued accounting standard (1) eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholders’ equity; (2) requires the consecutive presentation of the statement of net income and other comprehensive income; and (3) requires an entity to present reclassification adjustments from other comprehensive income to net income on the face of the financial statements. The amendments in this ASU do not change the items that must be reported in other comprehensive income or when an item of other comprehensive income must be reclassified to net income nor do the amendments affect how earnings per share is calculated or presented. This ASU is required to be applied retrospectively and is effective for fiscal years and interim periods within those years beginning after December 15, 2011, which for Dyax will be January 1, 2012. This accounting standard will not impact the Company’s financial position or results of operations.  Furthermore, other comprehensive income amounts are currently being presented in the Company’s results of operations.

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Current assets:
Cash and cash equivalents	$ 31,468	$ 18,601
Short-term investments	26,036	58,783
Accounts receivable, net of allowances for doubtful accounts of $115 and $45 at December 31, 2011 and 2010, respectively	6,092	5,315
Inventory	7,022	1,696
Current portion of restricted cash	1,266	922
Other current assets	4,968	3,248
Total current assets	76,852	88,565
Fixed assets, net	4,881	2,178
Restricted cash	1,100	1,266
Other assets	542	422
Total assets	83,375	92,431
Current liabilities:
Accounts payable and accrued expenses	15,318	10,672
Current portion of deferred revenue	6,637	8,738
Current portion of long-term obligations	101	586
Other current liabilities	1,709	700
Total current liabilities	23,765	20,696
Deferred revenue	9,265	12,598
Note payable	75,372	56,406
Long-term obligations		68
Deferred rent and other long-term liabilities	2,372	30
Total liabilities	110,774	89,798
Commitments and Contingencies (Notes 8, 11, 14)
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; 200,000,000 shares authorized; 98,798,065 and 98,508,487 shares issued and outstanding at December 31, 2011 and 2010, respectively	988	985
Additional paid-in capital	448,527	443,926
Accumulated deficit	(476,921)	(442,322)
Accumulated other comprehensive income	7	44
Total stockholders' equity (deficit)	(27,399)	2,633
Total liabilities and stockholders' equity (deficit)	$ 83,375	$ 92,431

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Cash flows from operating activities:
Net loss	$ (34,599)	$ (24,503)	$ (62,419)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of investment premium/discount	229	76	142
Depreciation and amortization of fixed assets and intangible assets	1,417	1,484	2,649
Non-cash interest expense	1,955	945	1,634
Impairment of fixed assets			955
Gain on disposal of fixed assets		43	(42)
Compensation expenses associated with stock-based compensation plans	4,030	4,098	5,282
Provision for doubtful accounts	35	15	(42)
Non-cash other income			(1,491)
Changes in operating assets and liabilities
Accounts receivable	(810)	(2,608)	2,011
Prepaid research and development and other assets	(1,720)	(1,143)	(141)
Inventory	(5,201)	(992)	(70)
Other long-term assets	(122)	179	(595)
Accounts payable and accrued expenses	1,426	(2,478)	(280)
Deferred revenue	(5,434)	(8,794)	(1,255)
Long-term deferred rent	1,417	(258)	(565)
Landlord incentive	925
Other long-term liabilities		(195)
Net cash used in operating activities	(36,452)	(34,131)	(54,227)
Cash flows from investing activities:
Purchase of investments	(3,021)	(82,824)	(31,501)
Proceeds from maturity of investments	35,502	47,003	39,005
Purchase of fixed assets	(1,694)	(326)	(589)
Proceeds from sale of fixed assets		38	74
Restricted cash	(178)	700
Net cash (used in) provided by investing activities	30,609	(35,409)	6,989
Cash flows from financing activities:
Net proceeds from common stock offerings	323	61,133	38,202
Proceeds from note payable	19,850		14,820
Repayment of long-term obligations	(1,682)	(2,824)	(4,607)
Proceeds from the issuance of common stock under employee stock purchase plan and exercise of stock options	219	446	527
Net cash provided by financing activities	18,710	58,755	48,942
Effect of foreign currency translation on cash balances			14
Net (decrease) increase in cash and cash equivalents	12,867	(10,785)	1,718
Cash and cash equivalents at beginning of the period	18,601	29,386	27,668
Cash and cash equivalents at end of the period	31,468	18,601	29,386
Supplemental disclosure of cash flow information:
Interest paid	9,108	12,211	8,558
Supplemental disclosure of non cash investing and financing activities:
Warrant issued in connection with note payable			$ 477

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Unaudited Quarterly Operating Results

12 Months Ended

Dec. 31, 2011

Unaudited Quarterly Operating Results

16. Unaudited Quarterly Operating Results

The following is a summary of unaudited quarterly results of operations for the years ended December 31, 2011 and 2010:

Year ended December 31, 2011	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except share and per share)
Revenue	$	8,214		$	21,875		$	10,132		$	8,516
(Loss) Income from operations	$	(8,769	)	$	2,428		$	(7,577	)	$	(10,984	)
Net loss	$	(11,265	)	$	(76	)	$	(9,723	)	$	(13,535	)
Shares used in computing basic and diluted net loss per share		98,689,795			98,721,889			98,748,086			98,764,384
Basic and diluted net loss per share:	$	(0.11	)	$	(0.00	)	$	(0.10	)	$	(0.14	)

Year ended December 31, 2010	First Quarter		Second Quarter			Third Quarter			Fourth Quarter
	(in thousands, except share and per share)
Revenue	$	20,048	$	15,142		$	6,951		$	9,258
Income (loss) from operations	$	3,664	$	(1,356	)	$	(8,776	)	$	(7,743	)
Net (loss) income	$	954	$	(5,261	)	$	(11,254	)	$	(8,942	)
Shares used in computing basic net (loss) income per share		78,315,589		97,568,409			98,401,835			98,507,264
Shares used in computing diluted net (loss) income per share		79,690,854		97,568,409			98,401,835			98,507,264
Basic and diluted net (loss) income per share:	$	0.01	$	(0.05	)	$	(0.11	)	$	(0.09	)

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Nature of Business

12 Months Ended

Dec. 31, 2011

Nature of Business

1. Nature of Business

Dyax Corp. (Dyax or the Company) is a biopharmaceutical company with two business elements:

· Angioedema Franchise

The principal focus of the Company's efforts is to identify, develop and commercialize treatments for conditions identified as plasma kallikrein (bradykinin) mediated angioedema, including hereditary angioedema (HAE), ACE inhibitor-induced angioedema (ACEI-AE) and angioedema of unknown origin, or idiopathic angioedema.

The Company developed KALBITOR (ecallantide) on its own  and since February 2010 the Company has been selling it in the United States for the treatment of acute attacks of HAE.  Outside of the United States, the Company has established partnerships to obtain regulatory approval for and commercialize KALBITOR in certain markets and are evaluating opportunities in others.

The Company is expanding its franchise for the treatment of angioedemas in the following ways:

· Advancing the clinical development of ecallantide for use in the treatment of ACEI-AE.

· Developing a laboratory test that could assist in the differentiation between histamine-mediated and plasma kallikrein (bradykinin) mediated angioedema.

· Continuing the development of a fully human monoclonal antibody inhibitor of plasma kallikrein (pKal) which would be a candidate to prophylactically treat plasma kallikrein (bradykinin) mediated angioedemas.

· Phage Display Licensing and Funded Research Program

The Company leverages its proprietary phage display technology through its Licensing and Funded Research Program, referred to as the LFRP.  This program has provided the Company a portfolio of product candidates being developed by its licensees, which currently includes 18 product candidates in clinical development, including four products in Phase 3 trials.  The LFRP generated revenue of approximately $15 million in 2011, and to the extent that the Company’s licensees commercialize some of the Phase 3 product candidates according to published timelines, milestone and royalty revenues under the LFRP are expected to experience significant growth over the next several years.

The Company expects that existing cash, cash equivalents, and short-term investments together with anticipated cash flow from existing development, collaborations and license agreements and product sales of KALBITOR will be sufficient to support the Company's current operations beyond 2012. If, over the longer term, the Company's cash requirements exceed its current expectations or if the Company generates less revenue than it expects, the Company will need additional funds.  The Company may seek additional funding through collaborative arrangements, and public or private financings.  However, the Company may not be able to obtain financing on acceptable terms or at all, and the Company may not be able to enter into additional collaborative arrangements.  Arrangements with collaborators or others may require the Company to relinquish rights to certain of its technologies, product candidates or products.  The terms of any financing may adversely affect the holdings or the rights of the Company's stockholders.  If the Company needs additional funds and it is unable to obtain funding on a timely basis, the Company may be required to significantly curtail its research, development or commercialization programs in an effort to provide sufficient funds to continue its operations, which could adversely affect its business prospects.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2011	Dec. 31, 2010
Accounts receivable, allowances for doubtful accounts	$ 115	$ 45
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	1,000,000	1,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	98,798,065	98,508,487
Common stock, shares outstanding	98,798,065	98,508,487

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Employee Savings and Retirement Plans

12 Months Ended

Dec. 31, 2011

Employee Savings and Retirement Plans

11. Employee Savings and Retirement Plans

The Company has an employee savings and retirement plan (the "Retirement Plan"), qualified under Section 401(k) of the Internal Revenue Code, covering substantially all of the Company's employees.  Employees may elect to contribute a portion of their pretax compensation to the Retirement Plan up to the annual maximum allowed under the Retirement Plan.  Employees are 100% vested in company matching contributions which have been 50% of employee contributions up to 6% of eligible pay.  For the years ended December 31, 2011, 2010 and 2009, the Company's matching contributions amounted to $431,000, $410,000 and $401,000, respectively.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2011	Feb. 23, 2012	Jun. 30, 2011
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2011
Document Fiscal Year Focus	2011
Document Fiscal Period Focus	FY
Trading Symbol	DYAX
Entity Registrant Name	DYAX CORP
Entity Central Index Key	0000907562
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		98,798,065
Entity Public Float			$ 161,554,675

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Income Taxes

12 Months Ended

Dec. 31, 2011

Income Taxes

12. 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 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 provision for income taxes for continuing operations was calculated at rates different from the United States federal statutory income tax rate for the following reasons:

	2011			2010			2009
Statutory federal income taxes		34.00	%		34.00	%		34.00	%
State income taxes, net of federal benefit		(1.96	%)		1.74	%		(2.63	)%
Federal research and development tax credits		5.86	%		4.64	%		6.94	%
Other		(1.20	%)		(2.86	)%		(1.28	%)
Federal true up and expiring NOLs and research credits		(3.68	%)		(8.01	)%		24.10	%
Valuation allowance		(33.02	%)		(29.51	)%		(61.13	)%
Effective income tax rate		—	%		—	%		—	%

The principal components of the Company's deferred tax assets and liabilities at December 31, 2011, 2010 and 2009, respectively are as follows:

	2011			2010			2009
	(In thousands)
Net Deferred Tax Asset:
Allowance for doubtful accounts	$	44		$	18		$	10
Depreciation and amortization		2,023			1,848			1,634
Accrued expenses		173			151			49
Other		861			(205	)		100
Stock based compensation		3,615			2,561			2,294
Deferred revenue		5,898			8,249			11,438
Research credit carryforwards		61,999			58,772			58,335
Net operating loss carryforwards		124,558			116,351			106,653
Total gross deferred tax asset		199,171			187,745			180,513
Valuation allowance		(199,171	)		(187,745	)		(180,513	)
Net deferred tax asset	$	—		$	—		$	—

As of December 31, 2011 and 2010, the Company had federal tax net operating loss carryforwards (NOLs) of $339.9 million and $313.3 million, respectively, available to reduce future taxable income, which expire at various times beginning in 2012 through 2031.  The Company also had federal research and experimentation and orphan drug credit carryforwards of approximately $57.2 million and $54.5 million as of December 31 2011 and 2010, respectively, available to reduce future tax liabilities which will expire at various dates beginning in 2012 through 2031.  The Company had state tax net operating loss carryforwards of approximately $170.7 million and $186.0 million as of December 31, 2011 and 2010, respectively, available to reduce future state taxable income, which will expire at various dates beginning in 2012 through 2026.  The Company also had state research and development and investment tax credit carryforwards of approximately $7.2 million and $6.5 million as of December 31, 2011 and 2010, respectively, available to reduce future tax liabilities which expire at various dates beginning in 2012 through 2026.

The Company has recorded a deferred tax asset of approximately $1.8 million and $1.8 million, respectively, at December 31, 2011 and 2010, 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 $1.8 million 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 $199.2 million and $187.7 million has been established at December 31, 2011 and 2010, respectively.

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  December 31, 2011 , the Company had no unrecognized tax benefits or liabilities and had no accrued interest or penalties related to uncertain tax positions.

Utilization of the NOL and tax credit carryforwards may be subject to a substantial annual limitation due to ownership change limitations that have occurred previously or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986, as well as similar state and foreign provisions.  Ownership changes may limit the amount of NOL and tax credits carryforwards that can be utilized annually to offset future taxable income and tax, respectively.  In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of certain shareholders or public groups in the stock of a corporation by more than 50 percentage points over a three-year period.  Since the Company's formation, the Company has raised capital through the issuance of capital stock on several occasions which, combined with the purchasing shareholders' subsequent disposition of those shares, may have resulted in one or more changes of control, as defined by Section 382, or could result in a change of control in the future upon subsequent disposition.  The Company has not currently completed a study to assess whether any change of control has occurred, or whether there have been multiple changes of control since the Company's formation, due to the significant complexity and cost associated with the study and that there could be additional changes in control in the future.  If the Company has experienced a change of control at any time since its formation, utilization of its NOL or tax credits carryforwards would be subject to an annual limitation under Section 382.

In addition to uncertainties surrounding the use of NOL carryforwards in a change of control, the Company has identified orphan drug and research and development credits as material components of its deferred tax asset.  The uncertainties in these components arise from judgments in the allocation of costs utilized to calculate these credits.  The Company has not conducted studies to analyze these credits to substantiate the amounts due to the significant complexity and cost associated with such study.  Any limitation may result in expiration of a portion of the NOL or tax credits carryforwards before utilization.  Further, until a study is completed and any limitation known, no amounts are being presented as an uncertain tax position.

A full valuation allowance has been provided against the Company's NOL carryforwards and research and development credits and, if an adjustment is required, this adjustment would be offset by an adjustment to the valuation allowance.  Thus there would be no impact to the consolidated balance sheet or statement of operations if an adjustment were required.

The tax years 1997 through 2011 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.

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Consolidated Statements of Operations and Comprehensive Loss (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2011	Dec. 31, 2010	Dec. 31, 2009
Revenues:
Product sales, net	$ 22,884	$ 8,835
Development and license fee revenues	25,853	42,564	21,643
Total revenues	48,737	51,399	21,643
Costs and expenses:
Cost of product sales	1,223	505
Research and development expenses	34,676	31,522	46,587
Selling, general and administrative expenses	37,740	33,583	25,843
Restructuring costs			2,331
Impairment of fixed assets			955
Total costs and expenses	73,639	65,610	75,716
Loss from operations	(24,902)	(14,211)	(54,073)
Other income (expense):
Interest and other income	554	1,645	1,736
Interest expense	(10,251)	(11,937)	(10,082)
Total other expense, net	(9,697)	(10,292)	(8,346)
Net loss	(34,599)	(24,503)	(62,419)
Other comprehensive (loss) income:
Foreign currency translation adjustments			(492)
Unrealized gain (loss) on investments	(37)	29	(137)
Comprehensive loss	$ (34,636)	$ (24,474)	$ (63,048)
Basic and diluted net loss per share:
Net loss	$ (0.35)	$ (0.26)	$ (0.90)
Shares used in computing basic and diluted net loss per share	98,731,289	93,267,850	69,151,841

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Fixed Assets

12 Months Ended

Dec. 31, 2011

Fixed Assets

6. Fixed Assets

Fixed assets consist of the following:

	December 31,
	2011			2010
	(In thousands)
Laboratory equipment	$	9,103		$	8,992
Furniture and office equipment		1,095			1,096
Software and computers		4,445			4,311
Leasehold improvements		6,845			6,844
Construction in process		3,960			--
Total		25,448			21,243
Less: accumulated depreciation and amortization		(20,567	)		(19,065	)
	$	4,881		$	2,178

As of December 31, 2011 there were no assets under capital lease.  As of December 31, 2010 there were $1.2 million of assets under capital leases, which included laboratory and office equipment, with related accumulated amortization of $767,000.

Depreciation expense for the years ended December 31, 2011, 2010, and 2009 was approximately $1.4 million, $1.5 million and $2.2 million, respectively.

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Inventory

12 Months Ended

Dec. 31, 2011

Inventory

5.  Inventory

In December 2009, the Company received marketing approval of KALBITOR from the FDA. Costs associated with the manufacture of KALBITOR prior to regulatory approval were expensed when incurred, and therefore were not capitalized as inventory.  As a result, the Company’s finished goods inventory does not include all costs of manufacturing drug substance currently being sold.  Subsequent to FDA approval, all costs associated with the manufacture of KALBITOR have been recorded as inventory.  As of December 31, 2011, drug supply on hand is anticipated to meet KALBITOR demand in excess of one year.  Inventory consists of the following (in thousands):

	December 31, 2011		December 31, 2010
Raw Materials	$	1,429	$	766
Work in Progress		5,474		723
Finished Goods		119		207
Total	$	7,022	$	1,696

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Business Segments

12 Months Ended

Dec. 31, 2011

Business Segments

13. Business Segments

The Company discloses business segments under ASC 280, Segment Reporting.   The statement established standards for reporting information about operating segments in annual financial statements of public enterprises and in interim financial reports issued to shareholders.  It also established standards for related disclosures about products and services, geographic areas and major customers.  The Company operates as one business segment in one geographic area.

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Restructuring and Impairment Charges

12 Months Ended

Dec. 31, 2011

Restructuring and Impairment Charges

9. Restructuring and Impairment Charges

In 2009, the Company implemented a workforce reduction in order to focus necessary resources on the commercialization of its lead product candidate, ecallantide.  As a result of the restructuring, during 2009, the Company recorded charges of approximately $1.9 million, which includes severance related charges of approximately $1.6 million, outplacement costs of approximately $107,000, stock compensation expense of $237,000 for amendments to the exercise and vesting schedules to certain options and other exit costs of $26,000.  All amounts were paid as of the year ended December 31, 2009.

As a result of the decrease in necessary facility space following the workforce reduction, the Company amended its facility lease in 2009 to reduce the leased space, and a charge of approximately $1.4 million was recorded, of which approximately $955,000 was a result of the write-down of leasehold improvements.  This charge is net of $355,000 of amortization of deferred rent.  During 2009, $750,000 related to this restructuring charge was paid.  There was no residual balance to be paid as of December 31, 2009.

In 1999, the Company received an €825,000 grant from the Walloon region of Belgium, which included specific criteria regarding employment and investment levels that needed to be met.  Pursuant to the closure of the Liege, Belgium facility in 2008, the Company refunded approximately $162,000 of the grant.  In 2009, all investment criteria were met.  As a result, the residual balance of approximately $1.0 million was released from short-term liabilities on the consolidated balance sheet and recognized as Other Income in the Statement of Operations.

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Accounts Payable and Accrued Expenses

12 Months Ended

Dec. 31, 2011

Accounts Payable and Accrued Expenses

7. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consist of the following:

	December 31,
	2011		2010
	(In thousands)
Accounts payable	$	2,927		$	1,398
Accrued employee compensation and related taxes		4,529			4,847
Accrued external research and development and contract manufacturing		1,591			1,180
Accrued license fees		--			60
Accrued legal		214			500
Accrued leasehold improvements		2,472			--
Other accrued liabilities		3,585			2,687
	$	15,318		$	10,672

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Long-term Obligations

12 Months Ended

Dec. 31, 2011

Long-term Obligations

8. Long-term Obligations

Long-term obligations and note payable consists of the following:

	December 31,
	2011			2010
	(In thousands)
Note payable	$	75,372		$	56,406
Obligations under capital lease arrangements		--			207
Obligation under leasehold improvement arrangements		101			447
Total	$	75,473			57,060
Less: current portion		(101	)		(586	)
Long-term obligations	$	75,372		$	56,474

Minimum future payments under the Company's long-term obligations and note payable as of December 31, 2011 are as follows:

	(In thousands)
2012	$	8,421
2013		8,286
2014		11,701
2015		16,736
2016		36,550
Thereafter		46,150
Total future minimum payments		127,844
Less: amount representing interest		(51,093)
Present value of future minimum payments		76,751
Less: current portion		(101)
Less: unamortized portion of discount		(1,278)
Long-term obligations and note payable	$	75,372

Note Payable:

Original Financing

In 2008, the Company entered into an agreement with an affiliate of Cowen Healthcare Royalty Partners, LP (Cowen Healthcare) for a $50.0 million loan secured by the Company's LFRP (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 Tranche A and Tranche B loans (collectively, the Original 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 Original Loan may be prepaid without penalty, in whole or in part, beginning in August 2012.  In connection with the Original 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 Original Loan agreement, the Company is required to repay the Original 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 Original 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 Original 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 tranche of the Original 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.

In addition, under the terms of the 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 Original Loan plus any applicable prepayment premium and an additional 5.0% of such proceeds will be paid to Cowen Healthcare as a cash premium.  In 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.  Under the terms of the sale, the Company has received $11.8 million, including  milestone fees based on product sales (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 an exercise price of $5.50 per share.  The warrant expires in August 2016 and became exercisable in August 2009.  The Company estimated the relative fair value of the warrant to be $853,000 on the date of issuance, 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 an exercise price of $2.87 per share.  The warrant expires in August 2016 and became exercisable in March 2010.  The Company estimated the relative fair value of the warrant to be $477,000 on the date of issuance, 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 as of the date of issuance are recorded in additional paid-in capital on the Company's consolidated balance sheets.

The cash proceeds from the Original 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.

2011 Additional Financing

In December 2011, the Company entered into an agreement with a second affiliate of Cowen Healthcare and received an additional loan of$20 million and a commitment to refinance the Original Loan at a reduced interest rate in August 2012.

The additional loan is unsecured and bears interest at an annual rate of 13% through August 2012, at which time the agreement provides that the additional loan will be combined with a second loan, subject to customary closing conditions.  The second loan will be used to refinance 102% of the outstanding principal of the Original Loan.  Together, the collective loan will be secured exclusively by the Company’s LFRP and will bear interest at a rate of 12%.  It will mature in August 2018, and can be repaid without penalty beginning in August 2015.  Should the second loan not be funded in August 2012, the additional $20 million loan will continue to bear interest at a rate of 13% and will mature on June 30, 2013.

The note payable balance related to the additional financing was reduced by $150,000 for payment of Cowen Healthcare’s legal fees in conjunction with the loan.  This amount is being accreted over the life of the note, through June 2013.

The Loan principal balance due to Cowen Healthcare at December 31, 2011 and 2010 was $76.7 million and $57.8 million, respectively.

Activity under the Original Loan and the 2011 Additional Financing, as adjusted for discounts associated with the debt issuance including warrants and fees, is presented for financial reporting purposes as follows (in thousands):

	2011			2010
Balance, January 1	$	56,406		$	58,096
Accretion of discount		246			246
Loan activity:
Net proceeds from additional loan		19,850			-
Interest expense		9,932			11,420
Payments applied to principal		(1,129	)		(1,935	)
Payments applied to interest		(8,224	)		(10,721	)
Accrued interest payable		(1,709	)		(700	)
Balance, December 31	$	75,372		$	56,406

The estimated fair value of the note payable was $82.9 million at December 31, 2011 which was calculated based on level 3 inputs due to the limited availability of comparable data points.

In August 2011, Cowen Healthcare assigned their rights and interests under the Original Loan to an affiliate, Vanderbilt Royalty Sub L.P.  Cowen Healthcare continues to act as the agent under the loan agreement and will continue to manage all obligations with respect to the Loan.

Obligations under capital lease arrangements:

The Company has signed capital lease and debt agreements for the purchase of qualified fixed assets and leasehold improvements.  Interest pursuant to these agreements ranges between 0% and 11.18%.  Principal and interest were payable ratably over 24 months to 60 months.  Capital lease obligations are collateralized by the assets under lease.  During the years ended December 31, 2011, 2010 and 2009, no equipment was sold and leased back from lenders.

As of December 31, 2011 there was no amount outstanding related to capital leases.  As of December 31 2010, there was $207,000 (included in obligations under capital lease arrangements) outstanding related to capital leases, which is included in long-term obligations, including current portion of long-term obligations, on the Company's consolidated balance sheets.

Obligation under leasehold improvement arrangements:

In 2001, the Company entered into an agreement to lease laboratory and office space in Cambridge, Massachusetts.  Under the terms of the agreement, the landlord loaned the Company approximately $2.4 million to be used towards the cost of leasehold improvements.  The loan bears interest at a rate of 12.00% and is payable in 98 equal monthly installments through February 2012.  As of December 31, 2011, and 2010, there was $101,000 and $447,000 outstanding under the loan, which is included in long-term obligations, including current portion of long-term obligations, on the Company's consolidated balance sheets.

Operating Leases

In July 2011, the Company entered into a lease agreement for new premises located in Burlington, Massachusetts and in January 2012, the Company relocated its operations to the new facility.  The new premises, consisting of approximately 45,000 rentable square feet of office and laboratory facilities, serves as the Company’s principal offices and corporate headquarters.   The term of the new lease is ten years, and the Company has rights to extend the term for an additional five years at fair market value subject to specified terms and conditions. The aggregate minimum lease commitment over the ten year term of the new lease is approximately $15.0 million.  During 2011, the Company provided the landlord a Letter of Credit of $1.1 million to secure its obligations under the lease.  Under terms of the new lease agreement, the landlord has provided the Company with a tenant improvement allowance of up to $2.6 million to be used towards the cost of leasehold improvements. During 2011, the Company capitalized approximately $3.7 million in leasehold improvements associated with the Burlington facility.  As of December 31, 2011, $2.5 million of these costs were accrued as current liabilities of which $1.5 million will be covered by the tenant improvement allowance and approximately $1.1 million will be funded by the Company.  As of December 31, 2011, the Company had been reimbursed approximately $925,000 associated with the tenant improvement allowance and had billed receivables of $231,000 and unbilled receivables of $1.5 million.  Build out costs being reimbursed under the tenant improvement allowance have been recorded as deferred rent and will be amortized as a reduction to rent expense over the lease term.

In January, 2012, the Company’s lease agreement associated with its former facility terminated and the $1.3 million Letter of Credit which secured the Company's obligations under the lease, is expected to be fully released in the first quarter of 2012.

Gross minimum future lease payments under the Company's non-cancelable operating leases as of December 31, 2011 are as follows:

	(In thousands)
2012	$	636
2013		1,502
2014		1,605
2015		1,615
2016		1,581
Thereafter		8,611
Total	$	15,550

Rent expense for the years ended December 31, 2011, 2010, and 2009 was approximately $3.4 million, $3.6 million and $5.1 million, respectively.  Rent expense for the years ended December 31, 2011, 2010 and 2009 is reflected as net of sublease payments of $194,000, $1.5 million and $1.5 million, respectively.

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Stockholders' Deficit

12 Months Ended

Dec. 31, 2011

Stockholders' Deficit

10. Stockholders' Deficit

Preferred Stock: As of December 31, 2011 and 2010, there were a total of 1,000,000 shares of $0.01 par value preferred stock authorized with 950,000 shares undesignated and 50,000 shares designated as Series A Junior Participating Preferred Stock.

Common Stock:  In January 2011, the Company issued 151,515 shares of its common stock for an aggregate purchase price of $500,000 in connection with an amendment to a strategic partnership (see Note 3, Significant Transactions - Sigma Tau).

In May 2011, the Company’s stockholders approved an amendment to Dyax’s Restated Certificate of Incorporation to increase the number of authorized shares of common stock to 200,000,000 shares.

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.  In December 2010, the Company amended this transaction, resulting in the issuance of an additional 151,515 shares of common stock in January 2011 for an aggregate purchase price of $500,000 (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.

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 is 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.

The following table reflects stock compensation expense recorded, net of amounts capitalized into inventory, during the years  ended December 31, 2011 and 2010 (in thousands):

	Year Ended December 31,
Compensation expense related to:	2011		2010		2009
Equity incentive plan	$	3,984	$	4,073	$	5,136
Employee stock purchase plan		46		57		146
	$	4,030	$	4,130	$	5,282
Stock-based compensation expense charged to:
Research and development expenses	$	1,193	$	1,466	$	1,768
General and administrative expenses	$	2,837	$	2,664	$	3,277
Restructuring charges	$	--	$	--	$	237

Stock-based compensation of $31,000 was capitalized into inventory for the each of the years ended December 31, 2011 and 2010, respectively.  Capitalized stock-based compensation is recognized into cost of product sales when the related product is sold.  During 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.

Valuation Assumptions for Stock Options

For the years ended December 31, 2011, 2010 and 2009 2,624,160, 2,042,180 and 2,305,655 stock options were granted, respectively.  The fair value of each option was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Year Ended December 31,
	2011			2010			2009
Expected Option Term (in years)		5.5 – 6			5.5			5.5 – 6
Risk-free interest rate		1.28% - 2.39	%		1.76 % - 2.68	%		2.20% - 2.99	%
Expected dividend yield		0			0			0
Volatility factor		74% - 75	%		74% - 76	%		77% - 79	%

Valuation Assumptions for Employee Stock Purchase Plans

The fair value of shares issued under the employee stock purchase plan was estimated on the commencement date of each offering period using the Black-Scholes option-pricing model with the following assumptions:

	Year Ended December 31,
	2011			2010			2009
Expected Option Term (in years)		0.5			0.5			0.5
Risk-free interest rate		0.07% - 0.11	%		0.15% - 0.22	%		0.03% - 0.33	%
Expected dividend yield		0			0			0
Volatility factor		37% - 72	%		40% - 50	%		74% - 150	%

Expected volatilities are based on historical volatilities of our common stock; the expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and our historical exercise and cancellation patterns; and the risk-free rate is based on the United States  Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option.

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 December 31, 2011, a total of 3,518,383 shares were available for future grants under the Equity Plan.

Stock Option Activity

The following table summarizes stock option activity for the year ended December 31, 2011:

	Number of Options			Weighted-Avg. Exercise Price		Weighted-Avg. Remaining Contractual Life		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2010		9,193,266		$	4.10		6.79	$	133
Granted at fair market value		2,699,160		$	1.89
Exercised		(896	)	$	1.87
Forfeited		(253,548	)	$	2.61
Expired		(583,856	)	$	7.89
Outstanding as of December 31, 2011		11,054,126		$	3.41		6.69	$	22
Exercisable as of December 31, 2011		7,488,094		$	3.88		5.79	$	2
Vested and unvested expected to vest as of December 31, 2011		10,779,008		$	3.44		6.62	$	20

The aggregate intrinsic value in the table above represents the total intrinsic value of the options outstanding, options exercisable and options vested and unvested which are expected to vest, based on the Company's common stock closing price of $1.36 as of December 31, 2011, which would have been received by the option holders had all option holders exercised their options and sold the underlying common stock as of that date.  The total number of in-the-money options exercisable as of December 31, 2011 was 15,281.

The weighted average grant date fair values of options, as determined under ASC 718, granted during the years ended December 31, 2011, 2010 and 2009 were $1.17, $2.07 and $1.81 per share, respectively.  The total intrinsic value of options exercised during years ended December 31, 2011, 2010 and 2009 was approximately $0, $120,000, and $196,000, respectively.  The total cash received from employees as a result of employee stock option exercises during the years ended December 31, 2011, 2010 and 2009 was approximately $2,000, $260,000, and $304,000, respectively.

As of December 31, 2011 future compensation cost related to non-vested stock options is approximately $5.9 million and will be recognized over an estimated weighted average period of approximately 2.42 years.

The following table summarizes unvested stock option activity for the year ended December 31, 2011:

	Non-vested Number of Options
Unvested balance at December 31, 2010		3,104,221
Granted at fair market value		2,699,160
Vested		(1,983,801	)
Forfeited		(253,548	)
Unvested balance at December 31, 2011		3,566,032

The total fair value of options vested during the years ended December 31, 2011, 2010 and 2009 were $3.7 million, $4.1 million and $3.9 million, respectively.

Employee Stock Purchase Plan

The Company's Purchase Plan 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 June 1 and December 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 years ended December 31, 2011 and 2010  was approximately $46,000 and $57,000, respectively. There were 137,167 and 99,934 shares purchased under the Plan during the years ended December 31, 2011 and 2010, respectively. At December 31, 2011, a total of 456,913 shares were reserved and available for issuance under this Plan.

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Litigation

12 Months Ended

Dec. 31, 2011

Litigation

15.   Litigation

As of December 31, 2011, the Company was not engaged in any active legal proceedings.  The Company makes provisions for claims specifically identified for which it believes the likelihood of an unfavorable outcome is probable and reasonably estimable.  The Company records at least the minimum estimated liability related to claims where there is a range of loss and the loss is considered probable and no estimate within the range is better than any other.  As additional information becomes available, the Company assesses the potential liability related to its pending claims and revises its estimates.  Future revisions in the estimates of the potential liability could materially impact the results of operations and financial position.  The Company maintains insurance coverage that limits the exposure for any single claim as well as total amounts incurred per policy year, and it believes that its insurance coverage is adequate.  The Company makes every effort to use the best information available in determining the level of liability reserves.

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Consolidated Statements of Changes in Stockholders' Equity (Deficit) (USD $) In Thousands, except Share data	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income
Beginning Balance at Jan. 01, 2009	$ (20,044)	$ 630	$ 334,082	$ (355,400)	$ 644
Beginning Balance (in shares) at Jan. 01, 2009		63,040,420
Exercise of stock options (in shares)		153,125
Exercise of stock options	304	2	302
Issuance of common stock for employee stock purchase plan (in shares)		99,937
Issuance of common stock for employee stock purchase plan	223	1	222
Sale of common stock (in shares)		14,780,570
Sale of common stock	38,202	148	38,054
Compensation expense associated with stock options	5,284		5,284
Issuance of warrants	477		477
Unrealized gain on investments	(137)				(137)
Foreign currency translation	(492)				(492)
Net loss	(62,419)			(62,419)
Ending Balance at Dec. 31, 2009	(38,602)	781	378,421	(417,819)	15
Ending Balance (in shares) at Dec. 31, 2009		78,074,052
Exercise of stock options (in shares)		148,369
Exercise of stock options	259	1	258
Issuance of common stock for employee stock purchase plan (in shares)		99,934
Issuance of common stock for employee stock purchase plan	187	1	186
Sale of common stock (in shares)		20,186,132
Sale of common stock	61,133	202	60,931
Compensation expense associated with stock options	4,130		4,130
Unrealized gain on investments	29				29
Net loss	(24,503)			(24,503)
Ending Balance at Dec. 31, 2010	2,633	985	443,926	(442,322)	44
Ending Balance (in shares) at Dec. 31, 2010		98,508,487
Exercise of stock options (in shares)		896
Exercise of stock options	2		2
Issuance of common stock for employee stock purchase plan (in shares)		137,167
Issuance of common stock for employee stock purchase plan	217	1	216
Sale of common stock (in shares)		151,515
Sale of common stock	323	2	321
Compensation expense associated with stock options	4,062		4,062
Unrealized gain on investments	(37)				(37)
Net loss	(34,599)			(34,599)
Ending Balance at Dec. 31, 2011	$ (27,399)	$ 988	$ 448,527	$ (476,921)	$ 7
Ending Balance (in shares) at Dec. 31, 2011		98,798,065

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Fair Value Measurements

12 Months Ended

Dec. 31, 2011

Fair Value Measurements

4.  Fair Value Measurements

The following tables present information about the Company's financial assets that have been measured at fair value as of December 31, 2011 and 2010, in thousands, 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	December 31, 2011		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	8,825	$	8,825	$	—	$	—
Marketable debt securities		26,036		—		26,036		—
Total	$	34,861	$	8,825	$	26,036	$	—

Description	December 31, 2010		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	16,932	$	16,932	$	—	$	—
Marketable debt securities		58,783		—		58,783		—
Total	$	75,715	$	16,932	$	58,783	$	—

The following tables summarize the Company’s marketable securities at December 31, 2011 and 2010, in thousands:

	December 31, 2011
Description	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
US Treasury Bills and Notes (due within 1 year)	$	23,013	$	7	$	—	$	23,020
US Treasury Bills and Notes (due after 1 year through 2 years)		3,016		—		—		3,016
Total	$	26,029	$	7	$	—	$	26,036

	December 31, 2010
Description	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
US Treasury Bills and Notes (due within 1 year)	$	35,597	$	45	$	—		$	35,642
US Treasury Bills and Notes (due after 1 year through 2 years)		23,142		—		(1	)		23,141
Total	$	58,739	$	45	$	(1	)	$	58,783

As of December 31, 2011 and 2010, the Company's cash equivalents which are invested in money market funds are valued based on Level 1 inputs.  As of December 31, 2011 and 2010, the Company’s short-term investments consisted of United States Treasury notes and bills which are valued based on Level 2 inputs.  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 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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Subsequent Event

12 Months Ended

Dec. 31, 2011

Subsequent Event

14. Subsequent Event

In February 2012, Dyax implemented a number of strategic and operational initiatives designed to provide a framework for the future growth of their business and realign their overall structure to become a more efficient and cost effective organization. As part of this initiative:

· The Company terminated certain early stage, preclinical research and development programs which they plan to out-license.

· The Company completed an 18% reduction in workforce spanning its research, development and administrative functions.

As a result of these initiatives, Dyax expects to realize annual operating expense savings, which will be offset by costs associated with initiatives to grow their angioedema and LFRP franchises.  Costs associated with the workforce reduction are primarily related to employee severance and benefits of approximately $1.1 million which are expected to be incurred and paid during the quarter ended March 31, 2012.   In addition, the Company is expected to incur charges related to the modification of certain stock options.  This restructuring has no impact on the Company’s financial position or results of operations as of December 31, 2011.