10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

x	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 2012
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 No. 000-24537

DYAX CORP.

(Exact Name of Registrant as Specified in its Charter)

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

55 Network Drive, Burlington, MA 01803

(Address of Principal Executive Offices)

(617) 225-2500

(Registrant’s Telephone Number, including Area Code)

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

YES         x                            NO          o

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

YES         x                            NO          o

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

Large accelerated filer      o              Accelerated filer      x          Non-accelerated filer      o        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

Number of shares outstanding of Dyax Corp.’s Common Stock, par value $0.01, as of October 18, 2012:99,195,806

DYAX CORP.

TABLE OF CONTENTS

PART I		FINANCIAL INFORMATION
			Page
Item 1	-	Financial Statements
		Consolidated Balance Sheets (Unaudited) as of September 30, 2012 and December 31, 2011	3
		Consolidated Statements of Operations and Comprehensive Loss (Unaudited) for the three and nine months ended September 30, 2012 and 2011	4
		Consolidated Statements of Cash Flows (Unaudited) for the nine months ended September 30, 2012 and 2011	5
		Notes to Consolidated Financial Statements (Unaudited)	6
Item 2	-	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3	-	Quantitative and Qualitative Disclosures About Market Risk	38
Item 4	-	Controls and Procedures	38
PART II		OTHER INFORMATION	38
Item 1A	-	Risk Factors	38
Item 5		Other Information	58
Item 6	-	Exhibits	59
Signatures			60
Exhibit Index			61

2

PART I – FINANCIAL INFORMATION

Item 1 – FINANCIAL STATEMENTS

Dyax Corp. and Subsidiaries

Consolidated Balance Sheets (Unaudited)

	September 30, 2012			December 31, 2011
	(In thousands, except share data)
ASSETS
Current assets:
Cash and cash equivalents	$	21,346		$	31,468
Short-term investments		9,043			26,036
Accounts receivable, net of allowances for doubtful accounts of $45 and $115 at September 30, 2012 and December 31, 2011, respectively		7,490			6,092
Inventory		3,838			2,121
Current portion of restricted cash		—			1,266
Other current assets		2,314			4,968
Total current assets		44,031			71,951
Fixed assets, net		5,288			4,881
Restricted cash		1,100			1,100
Other assets		6,742			5,443
Total assets	$	57,161		$	83,375
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued expenses	$	10,949		$	15,318
Current portion of deferred revenue		5,943			6,637
Current portion of long-term obligations		399			101
Other current liabilities		—			1,709
Total current liabilities		17,291			23,765
Deferred revenue		6,906			9,265
Notes payable		77,191			75,372
Long-term obligations		1,045			—
Deferred rent and other long-term liabilities		3,087			2,372
Total liabilities		105,520			110,774
Commitments and contingencies
Stockholders' 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;     99,140,550 and 98,798,065 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		991			988
Additional paid-in capital		451,996			448,527
Accumulated deficit		(501,352	)		(476,921	)
Accumulated other comprehensive income		6			7
Total stockholders' deficit		(48,359	)		(27,399	)
Total liabilities and stockholders' deficit	$	57,161		$	83,375

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

3

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

	Three Months Ended  September 30,						Nine Months Ended  September 30,
	2012			2011			2012			2011
	(In thousands, except share and per share data)
Revenues:
Product sales, net	$	10,814		$	6,597		$	27,988		$	15,888
Development and license fee revenues		2,287			3,535			10,632			24,333
Total revenues, net		13,101			10,132			38,620			40,221
Costs and expenses:
Cost of product sales		493			260			1,447			781
Research and development expenses		6,158			8,659			22,664			26,238
Selling, general and administrative expenses		9,117			8,790			29,872			27,120
Restructuring costs		—			—			1,440			—
Total costs and expenses		15,768			17,709			55,423			54,139
Income (loss) from operations		(2,667	)		(7,577	)		(16,803	)		(13,918	)
Other income (expense):
Interest income		5			382			22			544
Interest and other expenses		(2,548	)		(2,528	)		(7,650	)		(7,690	)
Total other expense		(2,543	)		(2,146	)		(7,628	)		(7,146	)
Net loss		(5,210	)		(9,723	)		(24,431	)		(21,064	)
Other comprehensive income (loss):
Unrealized gain (loss) on investments		4			(27	)		(1	)		(18	)
Comprehensive loss	$	(5,206	)	$	(9,750	)	$	(24,432	)	$	(21,082	)
Basic and diluted net loss per share	$	(0.05	)	$	(0.10	)	$	(0.25	)	$	(0.21	)
Shares used in computing basic and diluted net loss per share		99,069,928			98,748,086			98,896,984			98,720,137

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

4

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

	Nine Months Ended September 30,
	2012			2011
	(In thousands)
Cash flows from operating activities:
Net loss	$	(24,431	)	$	(21,064	)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of purchased premium/discount		49			190
Depreciation and amortization of fixed assets and intangible assets		826			973
Non-cash interest expense		1,915			1,612
Compensation expenses associated with stock-based compensation plans		2,775			3,110
Provision for doubtful accounts		(35	)		10
Gain on sale of fixed assets		(110	)		—
Changes in operating assets and liabilities:
Accounts receivable		(1,363	)		(1,485	)
Other current assets		2,654			271
Inventory		(3,130	)		(5,075	)
Other long-term assets		151			(247	)
Accounts payable and accrued expenses		(3,589	)		(1,540	)
Deferred revenue		(3,053	)		(4,010	)
Long-term deferred rent		715			(30	)
Net cash used in operating activities		(26,626	)		(27,285	)
Cash flows from investing activities:
Purchase of investments		(6,057	)		(3,021	)
Proceeds from maturity of investments		23,000			28,502
Purchase of fixed assets		(3,834	)		(236	)
Restricted cash		1,266			(178	)
Proceeds from sale of fixed assets		200			—
Net cash provided by investing activities		14,575			25,067
Cash flows from financing activities:
Net proceeds from sale of common stock		—			323
Repayment of long-term obligations		(135	)		(1,584	)
Proceeds from long-term obligations		1,382			—
Proceeds from the issuance of common stock under employee stock purchase plan and exercise of stock options		682			159
Net cash provided by (used in) financing activities		1,929			(1,102	)
Net decrease in cash and cash equivalents		(10,122	)		(3,320	)
Cash and cash equivalents at beginning of the period		31,468			18,601
Cash and cash equivalents at end of the period	$	21,346		$	15,281
Supplemental disclosure of cash flow information:
Interest paid	$	7,431		$	6,923

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

5

DYAX CORP.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1. BUSINESS OVERVIEW

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

● Angioedema Franchise

The principal focus of the Company's efforts is to identify, develop and commercialize treatments for angioedemas that are identified as plasma kallikrein (bradykinin) mediated (PKM), including hereditary angioedema (HAE) and 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 to commercialize KALBITOR in certain markets and is evaluating opportunities in others.

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

● Identifying diagnostic strategies to assist in the differentiation between histamine-mediated and plasma kallikrein (bradykinin) mediated angioedema, including development of a laboratory test. 

● Continuing the development of DX-2930, a fully human monoclonal antibody inhibitor of plasma kallikrein, which could be a candidate to prophylactically treat PKM 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 various stages of clinical development, including three in Phase 3 trials.  The LFRP generated revenue of approximately $15 million in 2011 and $9 million for the nine months ended September 30, 2012.  To the extent that the Company’s licensees commercialize some of the Phase 3 product candidates, milestone and royalty revenues under the LFRP are expected to experience significant growth.

6

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information.  It is management’s opinion that the accompanying unaudited interim consolidated financial statements reflect all adjustments (which are normal and recurring) necessary for a fair statement of the results for the interim periods.  The financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  The accompanying December 31, 2011 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the dates of the financial statements and (iii) the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.  The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

 Basis of Consolidation  

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

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 September 30, 2012 and December 31, 2011, approximately 92% and 61% 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 September 30, 2012, two customers accounted for 45% and 33% of the accounts receivable balance.  These two customers also accounted for approximately 43% and 34% of the Company's accounts receivable balance as of December 31, 2011, all of which were collected in the first quarter of 2012.

7

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 September 30, 2012, the Company's investments consisted of U.S. Treasury notes and bills with an amortized cost and estimated fair value of $27.9 million, and had an unrealized gain of $6,000.  As of December 31, 2011, the Company's investments consisted of United States Treasury notes and bills with an estimated fair value and amortized cost of $34.9 million, and had an unrealized gain of $7,000, 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 Accounting Standards Codification (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’s long-lived assets, consisting primarily of fixed assets, are reviewed 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.

8

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 and other discounts, government rebates, patient assistance programs, product returns and other applicable allowances.

Product Sales Allowances.  The Company establishes reserves for trade distributor and prompt pay discounts, government rebates, patient assistance programs, 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, patient financial assistance programs, 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 United States distributors.  Since the Company expects that these 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.

9

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, trends for similar products sold by others and data provided by a distributor.

Development and License Fee Revenues

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.

10

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 (i.e. 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.

11

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.

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.

Patent Licenses.  The Company previously licensed its phage display patents on a non-exclusive basis to third parties for use in connection with the research and development of therapeutic, diagnostic, and other products.  The last of these patents will expire in November 2012.  Even after patent expiration, the Company generally remains eligible under these patent licenses to receive milestones and/or royalties for products discovered prior to patent expiration, although certain existing patent licenses will no longer have a royalty obligation.  The Company does not expect the expiration of these patents to have a material impact on its LFRP business.

Standard terms of the patent rights agreements include non-refundable signing fees, non-refundable license maintenance fees, development milestone payments and/or royalties on product sales. Signing fees and maintenance fees are generally recognized on a straight line basis over the term of the agreement or through the date of patent expiry, if shorter, except that in the case of perpetual patent licenses for which fees were recognized immediately if it was determined that the Company had no future obligations under the agreement and the payments were made 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, since the Company has no remaining performance obligations under the agreement.

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 in the United States were expensed when incurred as a research and development cost and accordingly, KALBITOR units sold during the three and nine months ended September 30, 2012 and 2011 do not include the full cost of drug manufacturing.

12

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 September 30, 2012 and December 31, 2011, 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 three and nine months ending September 30, 2012 the Company recorded other income of $10,000 and other expense of $3,000, respectively, for the translation of foreign currency.  For the three and nine months ending September 30, 2011 the Company recorded other expense of $32,000 and other income of $15,000, 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 and restricted stock units, as well as its 1998 Employee Stock Purchase Plan, as amended (the Purchase Plan).  The Company’s share-based compensation expense is recorded in accordance with ASC 718.

Income or Loss Per Share

The Company presents two earnings or loss per share (EPS) amounts, basic and diluted in accordance with ASC 260.  Basic earnings or loss per share is computed using the weighted average number of shares of common stock outstanding. Diluted net loss per share does not differ from basic net loss per share since potential common shares from the exercise of stock options, warrants or rights under the Purchase Plan are anti-dilutive for the periods ended September 30, 2012 and 2011 and, therefore, are excluded from the calculation of diluted net loss per share.

Stock options and warrants to purchase a total of 11,379,953 and 11,682,969 shares of common stock were outstanding at September 30, 2012 and 2011, respectively.

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Comprehensive Income (Loss)

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

Business Segments

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

Recent Accounting Pronouncements

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

In December 2011, the FASB issued an amendment to the accounting guidance for disclosure of offsetting assets and liabilities and related arrangements. The amendment expands the disclosure requirements in that entities will be required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The amendment is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013, and shall be applied retrospectively.  The Company does not expect the adoption of this accounting pronouncement to have a material impact on its financial statements.

3. SIGNIFICANT TRANSACTIONS

Sigma-Tau

In June 2010, the Company entered into a strategic collaboration agreement with Sigma-Tau Rare Diseases S.A. (as successor-in-interest to Defiante Farmaceutica S.A.) (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 and certain Asian territories (the second amendment).  Three subsequent amendments to this agreement eliminated rights that Dyax had previously granted to Sigma-Tau for the Asian territories, the Middle East, North Africa, Latin America and the Caribbean.

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. 

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Under the terms of a 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 a third amendment, upon elimination of Sigma-Tau’s rights to certain Asian territories, the $3.0 million payment obligation was eliminated, as were the future milestones and royalties related to these territories.

Under the terms of the fourth and fifth amendments, Sigma-Tau’s rights to the Middle East, Latin America and the Caribbean were eliminated.  The Company agreed to make payments to Sigma-Tau ranging from 5%-12.5% of the amounts received by the Company as a result of any future product sales for certain countries in these territories.

The Company is eligible to receive up to $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 all licensed territories.  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.

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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.

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 $69,000 and $156,000 related to the Sigma-Tau agreement, as amended, for the three and nine months ended September 30, 2012, respectively, and $280,000 and $12.2 million related to this agreement for the three and nine months ended September 30, 2011, respectively. 

As of September 30, 2012 and December 31, 2011, the Company has deferred $111,000 and $158,000, 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 September 30, 2012, relates to the joint steering committee obligation which is estimated to continue until 2014.

CMIC

In 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 in the CMIC territory through 2016.

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The Company recognized revenue of approximately $189,000 and $566,000 related to this agreement for the three and nine months ended September 30, 2012, respectively and approximately $148,000 and $444,000 for the three and nine months ended September 30, 2011, respectively.  As of September 30, 2012 and December 31, 2011, the Company has deferred approximately $2.7 million and $3.3 million, respectively, of revenue related to this arrangement, which is recorded in deferred revenue on the accompanying consolidated balance sheets.

4. FAIR VALUE MEASUREMENTS

The following tables present information about the Company's financial assets that have been measured at fair value as of September 30, 2012 and December 31, 2011 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices, for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

Description    (in thousands)	September 30, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	18,893	$	18,893	$	—	$	—
Marketable debt securities		9,043		—		9,043		—
Total	$	27,936	$	18,893	$	9,043	$	—

Description   (in thousands)	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	$	—

The following tables summarize the Company’s marketable securities at September 30, 2012 and December 31, 2011, in thousands:

	September 30, 2012
Description	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Fair Value
US Treasury Bills and Notes (due within 1 year)	$	9,037	$	6	$	—	$	9,043
US Treasury Bills and Notes (due after 1 year through 2 years)		—		—		—		—
Total	$	9,037	$	6	$	—	$	9,043

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	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

As of September 30, 2012 and December 31, 2011, the Company's cash equivalents which are invested in money market funds are valued based on Level 1 inputs.  As of September 30, 2012 and December 31, 2011, the Company’s short-term investments consisted of U.S. Treasury notes and bills valued based on Level 2 inputs. These assets have been initially valued at the transaction price and subsequently valued utilizing a third party pricing service. We validate the prices provided by our third party pricing service by understanding the models used and obtaining market values from other pricing sources. The Company has 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, 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.  Inventory on-hand that will be sold beyond the Company's normal operating cycle is classified as non-current and grouped with other assets on the Company's balance sheet. As of September 30, 2012, approximately $6.4 million of inventory is classified as non-current.  

Inventory consists of the following (in thousands):

	September 30, 2012		December 31, 2011
Raw Materials	$	1,116	$	1,429
Work in Progress		8,189		5,474
Finished Goods		887		119
Total	$	10,192	$	7,022

The Company has revised the classification for $4.9 million of inventory from current assets to non-current other assets for the year ended December 31, 2011, to correct the classification of inventory based on the projected sale of inventory beyond the Company's normal operating cycle. The Company concluded this error was not material to the prior period financial statements.

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6. FIXED ASSETS

Fixed assets consist of the following:

	September 30, 2012			December 31, 2011
	(In thousands)
Laboratory equipment	$	7,629		$	9,103
Furniture and office equipment		1,588			1,095
Software and computers		4,711			4,445
Leasehold improvements		4,502			6,845
Construction in process		—			3,960
Total		18,430			25,448
Less: accumulated depreciation and amortization		(13,142	)		(20,567	)
	$	5,288		$	4,881

Depreciation expense for the three and nine months ended September 30, 2012 was approximately $246,000 and $824,000, respectively, and $315,000 and $971,000 for the three and nine months ended September 30, 2011, respectively.

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

	September 30, 2012		December 31, 2011
Accounts payable	$	1,659	$	2,927
Accrued employee compensation and related taxes.		3,495		4,529
Accrued expenses		1,884		1,591
Accrued license fees		74		—
Accrued legal		470		214
Accrued leasehold improvements		—		2,472
Accrued restructuring		139		—
Accrued sales allowances		921		525
Other accrued liabilities		2,307		3,060
Total	$	10,949	$	15,318

8. NOTES PAYABLE

HealthCare Royalty Partners

In August 2012, the Company completed an agreement with an affiliate of HealthCare Royalty Partners, formerly Cowen Healthcare Partners (HC Royalty) entered into in December 2011, to refinance its existing loans with HC Royalty.  As of the refinancing, the aggregate principal amount of the new loan was $80.5 million, consisting of a $21.7 million Tranche A Loan and a $58.8 million Tranche B Loan (collectively, the “Loan”). The Loan bears interest at a rate of 12% per annum, payable quarterly.  The Loan will mature in August 2018, and can be repaid without penalty beginning in August 2015.

In connection with the Loan, the Company entered into a security agreement granting HC Royalty 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.

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Under the terms of the Loan agreement, the Company is required to repay the Loan based on the annual net LFRP receipts.  Until September 30, 2016, required payments are equal to the sum of 75% of the first $15.0 million in specified annual LFRP receipts and 25% of specified annual LFRP receipts over $15.0 million.  After September 30, 2016, and until the maturity date or the complete repayment of the Loan, HC Royalty will receive 90% of all included LFRP receipts.  If the HC Royalty portion of LFRP receipts for any quarter exceeds the interest for that quarter, then the principal balance will be reduced.  Any unpaid principal will be due upon the maturity of the Loan.  If the HC Royalty 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 dates of the Tranche A Loan and the Tranche B Loan, respectively, the Company must repay to HC Royalty all additional accumulated principal above the original loan amounts of $21.7 million and $58.8 million, respectively.

Tranche A Loan

In December 2011, the Company entered into an agreement with an affiliate of HC Royalty and received a loan of $20 million (Tranche A Loan) and a commitment to refinance the amounts outstanding under the Company’s March 2009 amended and restated loan agreement (the March 2009 loan agreement) at a reduced interest rate in August 2012.  The Tranche A Loan was unsecured and accrued interest at an annual rate of 13% through August 2012, at which time the Tranche A Loan and its accrued interest was combined with 102% of the unpaid principal and accrued interest outstanding under the March 2009 loan agreement upon the closing of the Tranche B Loan.

Upon execution of the Tranche A Loan, the terms of the Original Loans (defined below) were determined to be modified under ASC 470.  Accordingly, during the three and nine months ending September 30 2012, interest expense on the Loan is being recorded in the Company’s financial statements at an effective interest rate of 12.5%.

Upon modification of the debt arrangement, the note payable balance related to the Tranche A Loan was reduced by $193,000 to reflect payment of legal fees in conjunction with the loan; these fees are being accreted over the life of the Loan, through August 2018.

Tranche B Loan

In 2008 and 2009, the Company entered into loan agreements with an affiliate of HC Royalty that provided aggregate loan proceeds of $65.0 million (the Original Loans), which  had an outstanding  principal and accrued interest balance of $57.6 million at the time of their refinancing in August 2012 (Tranche B Loan).  The Original Loans bore interest at an annual rate of 17.4%, payable quarterly, and were secured by the Company’s LFRP.

In connection with the Original Loans, the Company issued affiliates of HC Royalty warrants to purchase shares of the Company’s common stock.  In August 2008, the Company issued warrants to purchase 250,000 shares of the Company’s common stock at an exercise price of $5.50 per share.  This 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 March 2009, the Company issued HC Royalty a second warrant to purchase 250,000 shares of the Company’s common stock at an exercise price of $2.87 per share.  This 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.

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The cash proceeds from the Original Loans 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 warrants issued, and by $580,000 for payment of HC Royalty’s legal fees in conjunction with the Tranche B Loan.  Prior to the December 2011 issuance of the Tranche A Loan, each of these amounts was being accreted over the life of the note through August 2016.  Subsequent to the modification of the debt arrangement in December 2011, the unamortized portion of these amounts is being accreted over the life of the Loan through August 2018.

The Loan principal balance at September 30, 2012 and December 31, 2011 was $80.5 million and $76.7 million, respectively.  For financial reporting purposes, the Loan is adjusted for discounts associated with the debt issuance, including warrants and fees.

Activity under the Loan is presented for financial reporting purposes, as follows (in thousands):

	September 30, 2012			December 31, 2011
Beginning balance	$	75,372		$	56,406
Accretion of discount		149			246
Loans activity:
Net proceeds from Tranche A Loan		—			20,000
Discount on Tranche A Loan		(43	)		(150	)
Interest Expense		7,437			9,932
Payments applied to principal		(96	)		(1,129	)
Payments applied to interest		(5,628	)		(8,224	)
Accrued interest payable		—			(1,709	)
Ending balance	$	77,191		$	75,372

The estimated fair value of the note payable was $80.5 million at September 30, 2012 which was calculated based on level 3 inputs due to the limited availability of comparable data points.  The note payable was valued using expected cash flows discounted at our estimate of the currently available market interest rate.

Equipment Loan

In June 2012, the Company entered into an equipment lease line of credit for up to $3 million with Silicon Valley Bank.  When drawn, the note bears interest at a 6% annual rate.  The Company drew down $1.4 million from this line, which will be financed over a 3-year term.  The outstanding balance of this loan was $1.4 million as of September 30, 2012.

9. FACILITY LEASE

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 Burlington 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.  The Company has provided the landlord a Letter of Credit of $1.1 million to secure its obligations under the lease.  Under the terms of the Burlington lease agreement, the landlord has provided the Company with a tenant improvement allowance of $2.6 million which was used towards the cost of leasehold improvements.  Through September 30, 2012, the Company capitalized approximately $4.5 million in leasehold improvements associated with the Burlington facility.  Costs reimbursed under the tenant improvement allowance have been recorded as deferred rent and are being amortized as a reduction to rent expense over the lease term.

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10. RESTRUCTURING CHARGES

In February 2012, the Company realigned its business structure and implemented a number of strategic and operational initiatives.  As part of these initiatives, the Company terminated certain early stage, preclinical research and development programs and a workforce reduction was implemented.  As a result of the restructuring, during the nine months ended September 30, 2012, the Company recorded one-time charges of approximately $1.4 million, which included severance and benefits related charges of approximately $1.2 million, outplacement costs of approximately $120,000, stock compensation expense of $56,000 for amendments to the exercise schedules to certain options and other exit costs of $90,000.  All restructuring costs are expected to be paid by December 31, 2012, including $139,000 which is accrued and unpaid as of September 30, 2012.  No additional charges are expected in future periods related to this restructuring.  

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

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, restricted stock units 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. Restricted stock unit are generally granted at the current fair market value on the date of grant, generally vest over a four year period in equal installments on each anniversary of the grant date.  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 the Annual Meeting of Stockholders held in May 2012 (the Annual Meeting), the Company’s shareholders approved a stock option exchange program for employees, executive officers and non-employee directors.  Under this option exchange program, outstanding options to purchase an aggregate of 4,192,310 shares of the Company’s common stock were exchanged for new options to purchase an aggregate of 2,473,596 shares of the Company’s common stock at an exercise price equal to $2.06 per share, which was the closing price of the Company’s common stock on the grant date of June 20, 2012.  All new options issued in the option exchange program are subject to a new, extended vesting schedule, the terms of which differ depending on the holder’s status as an executive, director or non-executive employee.  The new options have a term equal to the greater of (i) the term of the original options for which they were exchanged, or (ii) five years from date of grant.  The new options had a fair value approximately equal to the fair value of the surrendered options, based on a Black-Scholes option pricing model applied immediately prior to commencement of the exchange program.  Accordingly, approximately $25,000 and $28,000 of expense was recorded during the three and nine months ended September 30, 2012 related to the modification of the exchanged options.

Also at the Annual Meeting, the Company’s shareholders approved an amendment to the Equity Plan to increase the number of shares of common stock available for issuance under the plan by 5,000,000 shares less the net number of shares, if any, returned to the Equity Plan for issuance following the option exchange program.  Accordingly, 3,281,286 additional shares of common stock, constituting the approved 5,000,000 share increase net of the 1,718,714 shares that were returned to the Equity Plan as a result of the option exchange program, became available for issuance under the plan.

At September 30, 2012, a total of 6,137,673 shares were available for future grants under the Equity Plan.

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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 was approximately $15,000 and $32,000 for the three and nine months ended September 30, 2012, respectively, and $8,000 and $32,000, respectively, for the three and nine months ended September 30, 2011.  There were 48,748 and 87,188 shares purchased under the Plan during the nine months ended September 30, 2012 and 2011, respectively.  At September 30, 2012, a total of 408,165 shares were reserved and available for issuance under this Plan.

Stock-Based Compensation Expense

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

The following table reflects stock compensation expense recorded, net of amounts capitalized into inventory, during the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Compensation expense related to:
Equity Incentive Plan	$	733	$	883	$	2,744	$	3,078
Employee Stock Purchase Plan		15		8		32		32
	$	748	$	891	$	2,776	$	3,110
Stock-based compensation expense charged to:
Research and development	$	198	$	273	$	576	$	896
Selling, general and administrative	$	550	$	618	$	2,145	$	2,214
Restructuring charges	$	—	$	—	$	55	$	—

Stock-based compensation expense capitalized into inventory was $9,000 and $15,000 for the three and nine months ended September 30, 2012, respectively, and $18,000 and $25,000 for the three and nine months ended September 30, 2011, respectively.  Capitalized stock-based compensation is recognized into cost of product sales when the related product is sold.

Stock-based compensation expense for the three and nine months ending September 30, 2012 included $46,000 and $428,000, respectively, related to the modification of certain stock options.

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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 for which the Company determines that it does not meet the criteria under ASC 740.

The Company has recorded a deferred tax asset of approximately $1.8 million at December 31, 2011 reflecting the benefit of deductions from the exercise of stock options which has been fully reserved until it is more likely than not that the benefit will be realized.  The benefit from this deferred tax asset will be recorded as a credit to additional paid-in capital, if and when realized, through a reduction of cash taxes.

As required by ASC 740, the Company's management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, and has determined that it does not meet the criteria for recognizing its deferred tax assets under the criteria of ASC 740.  Therefore, a valuation allowance of approximately $199.2 million was established at December 31, 2011.

The Company accounts for uncertain tax positions using a "more-likely-than-not" threshold for recognizing and resolving uncertain tax positions. 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 September 30, 2012, the Company had no unrecognized tax benefits.

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.

As of December 31, 2011, the Company had federal tax net operating loss carryforwards (NOLs) of $315.6 million 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 as of December 31, 2011 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 $151.9 million as of December 31, 2011 available to reduce future taxable income in the Commonwealth of Massachusetts and other states, which will expire at various dates beginning in 2012 through 2031.  The Company also had state research and development and investment tax credit carryforwards of approximately $7.2 million as of December 31, 2011 available to reduce future tax liabilities, which expire at various dates beginning in 2012 through 2026.

Utilization of the NOLs 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 (Section 382), as well as similar state and foreign provisions.  Ownership changes may limit the amount of NOLs and tax credit 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 that increase the ownership of 5% shareholders or public groups in the stock of a corporation by more than 50 percent in the aggregate over a three-year period.  During 2012, the Company completed a study through December 31, 2011, to determine whether any ownership change has occurred since the Company's formation and has determined that transactions have resulted in two ownership changes, as defined by Section 382.  There could be additional ownership changes in the future that could further limit the amount of NOLs and tax credit carryforwards that the Company can utilize.

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As of December 31, 2011, the Company’s federal tax NOLs available to reduce future taxable income without limitation are $243.5 million, which expire at various times beginning in 2024 through 2031.  The Company’s federal research and experimentation and orphan drug credit carryforward as of December 31, 2011 available to reduce future tax liabilities without limitation are $51.7 million, which will expire at various dates beginning in 2024 through 2031.  In addition the Company has NOLs and federal tax credits that are restricted and expire at various times beginning in 2012 through 2024.  These restricted NOLs and federal tax credits of $72.1 million and $5.5 million, respectively, may be utilized in part, subject to an annual limitation.

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

Note Regarding Forward-Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements that have been made pursuant to the provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on current expectations, estimates and projections about our industry, management’s beliefs, and certain assumptions made by our management and may include, but are not limited to, statements about:

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

● our commercialization of KALBITOR, including 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 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;

● the impact of the expiration of certain of our phage display patents under the LFRP; 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 "guidance," "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.

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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 angioedemas that are identified as plasma kallikrein (bradykinin) mediated (PKM), including hereditary angioedema (HAE) and 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 to 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:

●       Identifying diagnostic strategies to assist in the differentiation between histamine-mediated and PKM angioedema, including development of a laboratory test.

●       Continuing our development of DX-2930, a fully human monoclonal antibody inhibitor of plasma kallikrein, which could be a candidate to prophylactically treat PKM 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 various stages of clinical development, including three in Phase 3 trials.  The LFRP generated revenue of approximately $15 million in 2011 and $9 million for the nine months ended September 30, 2012.  To the extent that our licensees commercialize some of the Phase 3 product candidates, revenues under the LFRP are expected to experience significant growth.

ANGIOEDEMA FRANCHISE

We are focused on identifying and developing treatments for patients who experience PKM 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 and idiopathic angioedema, all of which are PKM angioedemas.

We have three 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 the Middle East.

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●       Identification of PKM angioedemas.  As part of extending the angioedema franchise, we have launched a program to identify one or more diagnostic strategies that will assist in the differentiation of PKM angioedema from histamine-mediated angioedema, in order to direct appropriate treatment.  These tools are expected to be relevant to both normal C1esterase inhibitor (C1-INH) and C1-INH deficient patients and will enable the identification of PKM angioedema, including Type III HAE and angioedema of unknown origin, or idiopathic angioedema.  A laboratory based test is expected to begin clinical validation in 2013.

●       DX-2930 - Antibody for PKM 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 PKM angioedemas.  After completing a series of pharmacokinetic, tolerability and preclinical studies, we believe DX-2930 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.  Based upon HAE patient association registries, we 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.

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.

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KALBITOR Access®

To facilitate access to KALBITOR in the United States, we have established 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.  We are currently evaluating the expansion of our network to include a limited number of additional specialty pharmacies.

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 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.  This agreement has a term through December 2013 and will renew annually unless amended or terminated by the parties.

Single-Injection KALBITOR Formulation

We are currently in the process of developing a more convenient 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-injection formulation.  We expect to file a supplemental Biologics License Application (BLA) with the FDA in the first half of 2013.

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).  Effective June 2012, we entered into an agreement with Fujifilm for the manufacture and supply of KALBITOR, under which Fujifilm has committed to be available to manufacture bulk drug substance through 2020. 

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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-Stier at its facilities in Spokane, Washington under a commercial supply agreement. This process is known in the industry as the "fill and finish" process.  KALBITOR in its "filled and finished" form has additional refrigerated shelf-life of three years.

Our current inventory of filled drug product, together with drug substance inventory, when filled, is sufficient to supply all ongoing studies relating to ecallantide and to meet anticipated KALBITOR market demand into 2016.

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, which have regulatory capabilities, distribution systems and sales capabilities in their designated territories.

Sigma-Tau – We have a 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, Russia, Australia and New Zealand.  Under the terms of the agreement, as amended, Sigma-Tau made an aggregate of $7.0 million in upfront payments to us and also purchased 787,647 shares of our common stock for an aggregate purchase price of $3.0 million.  We are also eligible to receive up to $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.  Under the terms of the amendments to our agreement with Sigma-Tau that eliminated its rights to the Middle East, Latin America and the Caribbean, we agreed to make payments to Sigma-Tau ranging from 5%-12.5% of the amounts received by us as a result of any product sales in certain countries 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.

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 that 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 in 2014.

Taiba – In May 2012, we granted exclusive distribution rights to taiba ME (Taiba) under which they will obtain registration and reimbursement approval and commercialize ecallantide for HAE in certain countries in the Middle East.  Under the terms of the agreement, we will provide Taiba with drug supply at a price equal to 60% of net sales within the licensed territory.

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.

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

IDENTIFICATION OF PKM ANGIOEDEMAS

We have launched a program to identify one or more diagnostic strategies that will assist in the differentiation of PKM angioedema from histamine-mediated angioedema, in order to direct appropriate treatment.  These tools are expected to be relevant to both normal C1-INH and C1-INH deficient patients and will enable the identification of PKM angioedema, including Type III HAE and angioedema of unknown origin, or idiopathic angioedema.  A laboratory based test is expected to begin clinical validation in 2013.

PLASMA KALLIKREIN ANTIBODY – DX-2930

We are currently in preclinical development of DX-2930, a potent and specific fully human monoclonal antibody that is an inhibitor of plasma kallikrein and which would be a candidate to prophylactically treat PKM angioedema.  DX-2930 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 preliminary preclinical pharmacokinetic and tolerability studies and found DX-2930 to have relevant activity in animal models.  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 and $9 million for the nine months ended September 30, 2012.  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.

Currently, 18 product candidates generated by our licensees or collaborators under the LFRP portfolio are in clinical development.  In addition, one product has received market approval from the FDA.  Furthermore, our licensees and collaborators have 18 additional product candidates in various stages of preclinical development.  Our licensees and collaborators are responsible for all costs associated with development of these product candidates.  We will receive milestones and/or royalties from our licensees and collaborators for 11 of the 18 product candidates that are currently in clinical development, including three in Phase 3 and four in Phase 2 trials, to the extent these product candidates advance in development and are ultimately commercialized.  If commercialized, we expect to receive royalties from commercial sales as early as 2014.

The chart below provides a summary of the clinical stage product candidates under the LFRP for which we are eligible to receive milestones and/or royalties to the extent these candidates are developed and commercialized and is based on information publicly disclosed by licensees.  Certain of these product candidates are in multiple clinical trials for various indications.

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* Eli Lilly and Company announced in October 2012 that their REGARD clinical trial, a Phase 3 study of ramucirumab in patients with metastatic gastric cancer, met its primary endpoint of improved overall survival and also showed prolonged progression-free survival.  This trial was the first Phase 3 data read-out for ramucirumab, which is currently in five additional Phase 3 trials.

Under loan arrangements with affiliates of HC Royalty, we have obtained debt funding which has a principal balance of $80.5 million as of September 30, 2012, secured exclusively by the LFRP.

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.  These libraries are protected by a patent portfolio in which the last patent is scheduled to expire in 2024.  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 libraries 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 Pharmaceuticals, and Emergent BioSolutions (formerly known as Trubion).

● Patent Licenses. Under our patent license program, we previously granted other biopharmaceutical and pharmaceutical companies non-exclusive licenses to use certain of our phage display patents to discover and develop biologic compounds for use in specified fields.  The last of these patents will expire in November 2012.  We do not anticipate entering into future agreements for this patent portfolio after expiry.  In addition, certain existing patent licenses will no longer have a royalty obligation.  We do not expect the expiration of these patents to have a material impact on our LFRP business.

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We expect to continue to enter into library licenses and funded research agreements to maximize the strategic value of our LFRP.

Results of Operations

Three Months Ended September 30, 2012 and 2011

Revenues.  Total revenues for the three months ended September 30, 2012 (the 2012 Quarter) were $13.1 million, compared with $10.1 million for the three months ended September 30, 2011 (the 2011 Quarter).

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 allowances and accruals related to trade prompt pay discounts, government rebates, patient financial assistance programs, product returns and other applicable allowances.  For the 2012 Quarter, product sales of KALBITOR increased to $10.8 million, net of product discounts and allowances of $789,000 compared with product sales of $6.6 million, net of product discounts and allowances of $334,000 during the 2011 Quarter.  The 2012 increase in net sales was primarily due to additional KALBITOR units sold, as well as an increase in the selling price.

During the three months ended September 30, 2012 and 2011, provisions for product sales allowances reduced gross product sales as follows (in thousands):

	2012			2011
Total gross product sales	$	11,603		$	6,931
Prompt pay and other discounts	$	(382	)	$	(193	)
Government rebates and chargebacks		(279	)		(130	)
Returns		(128	)		(11	)
Product sales allowances	$	(789	)	$	(334	)
Total product sales, net	$	10,814		$	6,597
Total product sales allowances as a percent of  gross product sales		6.8	%		4.8	%

Development and License Fees.  We derive revenues from licensing, funded research and development fees, including milestone payments from our licensees and collaborators, in amounts that fluctuate from period to period due to the timing of the clinical activities of our collaborators and licensees.  This revenue was $2.3 million in the 2012 Quarter and $3.5 million in the 2011 Quarter.

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Cost of Product Sales.We incurred $493,000 of costs associated with product sales during the 2012 Quarter and $260,000 of costs associated with product sales during the 2011 Quarter.  These costs primarily include the cost of testing, filling, packaging and distributing the 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 these periods.  The supply of KALBITOR produced prior to FDA approval is expected to meet anticipated commercial needs through 2012.  When this supply has been fully depleted, we expect our cost of product sales will increase, reflecting the full manufacturing cost of KALBITOR.

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

	Three Months  Ended September 30,
	2012		2011
	(In thousands)
KALBITOR development costs	$	3,513	$	5,272
Other research and development expenses		2,405		2,556
LFRP pass-through fees		240		831
Research and development expenses	$	6,158	$	8,659

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.

The lower research and development expenses during the 2012 Quarter were related to the discontinuation during June 2012 of the clinical study of the use of ecallantide for the treatment of ACE inhibitor-induced angioedema.  All prior periods through June 2012 included costs related to conducting and ultimately discontinuing and closing out the study.  In addition, the 2012 Quarter reflects an expense decline due to lower personnel costs after the re-alignment around the angioedema and LFRP franchises in the first quarter of 2012.  Costs associated with obtaining regulatory approval for the treatment of HAE in territories outside the United States were $53,000 and $430,000 during the 2012 Quarter and 2011 Quarter, respectively.  These amounts were reimbursed by Sigma Tau and such payments are recorded as development and license fee revenue in our results of operations

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 for the 2012 and 2011 Quarters were $9.1 million and $8.8 million, respectively.  Costs increased during the 2012 Quarter primarily due to continued expansion of infrastructure and initiatives to support further commercialization of the KALBITOR product.

Interest and Other Expense.  Interest expense, which is primarily derived from our loan arrangements with HC Royalty, was approximately $2.6 million in the 2012 Quarter compared to $2.5 million in the 2011 Quarters. Based on the modification of the HC Royalty loan in December 2011, under which we received additional proceeds of $20 million, we record interest expense in 2012 using the effective interest rate method for the different tranches of the loan.  This effective interest rate is approximately 12.5%.  In 2011, we recorded interest expense at the stated interest rate for each tranche, which in total was approximately 17.4%.

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Nine Months Ended September 30, 2012 and 2011

Revenues.  Total revenues for the nine months ended September 30, 2012 (the 2012 Period) were $38.6 million, compared with $40.2 million for the nine months ended September 30, 2011 (the 2011 Period).

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

Product Sales.  For the 2012 Period, product sales of KALBITOR increased to $28.0 million, net of product discounts and allowances of $2.2 million compared with product sales of $15.9 million, net of product discounts and allowances of $746,000 during the 2011 Period.  The 2012 increase in net sales was primarily due to additional KALBITOR units sold, as well as an increase in the selling price.

During the nine months ended September 30, 2012 and 2011, provisions for product sales allowances reduced gross product sales as follows (in thousands):

	2012			2011
Total gross product sales	$	30,143		$	16,634
Prompt pay and other discounts	$	(1,025	)	$	(447	)
Government rebates and chargebacks		(814	)		(274	)
Returns		(316	)		(25	)
Product sales allowances	$	(2,155	)	$	(746	)
Total product sales, net	$	27,988		$	15,888
Total product sales allowances as a percent of  gross product sales		7.1	%		4.5	%

Development and License Fees.  We derive revenues from licensing, funded research and development fees, including milestone payments from our licensees and collaborators, in amounts that fluctuate from period to period due to the timing of the clinical activities of our collaborators and licensees.  This revenue was $10.6 million in the 2012 Period and $24.3 million in the 2011 Period, which included $12.2 million recognized in connection with our amended agreement with Sigma-Tau.

Cost of Product Sales.We incurred $1.4 million of costs associated with product sales during the 2012 Period and $781,000 of costs associated with product sales during the 2011 Period.  These costs primarily include the cost of testing, filling, packaging and distributing the 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 these periods.  The supply of KALBITOR produced prior to FDA approval is expected to meet anticipated commercial needs through 2012.  When this supply has been fully 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:

	Nine Months  Ended September 30,
	2012		2011
	(In thousands)
KALBITOR development costs	$	14,084	$	15,692
Other research and development expenses		7,265		8,266
LFRP pass-through fees		1,315		2,280
Research and development expenses	$	22,664	$	26,238

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.

The lower research and development expenses during the 2012 Period were related to the discontinuation during June 2012 of the clinical study of the use of ecallantide for the treatment of ACE inhibitor-induced angioedema.  All prior periods through June 2012 included costs related to conducting and ultimately discontinuing and closing out the study.  In addition, the 2012 Period reflects an expense decline due to lower personnel costs after the re-alignment around the angioedema and LFRP franchises in the first quarter of 2012.  Costs associated with obtaining regulatory approval for the treatment of HAE in territories outside the United States were $109,000 and $1.8 million during the 2012 Period and 2011 Period, respectively.  These amounts were reimbursed by Sigma Tau and such payments are recorded as development and license fee revenue in our results of operations.

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 for the 2012 and 2011 Periods were $29.9 million and $27.1 million, respectively.  Costs increased during the 2012 Period primarily due to continued expansion of infrastructure and initiatives to support further commercialization of the KALBITOR product.

Restructuring.  In February 2012, we implemented a realignment of our business which included a workforce reduction.  As a result, we recorded restructuring charges of approximately $1.4 million.

Interest and Other Expense.  Interest expense, which is primarily derived from our loan arrangements with HC Royalty, was approximately $7.6 million in the 2012 Period compared to $7.7 million in the 2011 Period. Based on the modification of the HC Royalty loan in December 2011, under which we received additional proceeds of $20 million, we record interest expense in 2012 using the effective interest rate method for the different tranches of the loan.  This effective interest rate is approximately 12.5%.  In 2011, we recorded interest expense at the stated interest rate for each tranche, which in total was approximately 17.4%.

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Liquidity and Capital Resources

	September 30, 2012		December 31, 2011
	(in thousands)
Cash and cash equivalents	$	21,346	$	31,468
Short-term investments		9,043		26,036
Total cash, cash equivalents and investments	$	30,389	$	57,504

The following table summarizes our cash flow activity for the nine months ended September 30, 2012 and 2011 (in thousands):

	2012			2011
Net cash used in operating activities	$	(26,626	)	$	(27,285	)
Net cash provided by investing activities		14,575			25,067
Net cash provided by (used in) financing activities		1,929			(1,102	)
Net decrease in cash and cash equivalents	$	(10,122	)	$	(3,320	)

We require cash to fund our operating activities, make capital expenditures, acquisitions and investments, and service debt.  Through September 30, 2012, we have funded our operations through the sale of equity securities, which have provided aggregate net cash proceeds since inception of approximately $398 million, and from borrowed funds under our loan agreement with HC Royalty, 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

The principal use of cash in our operations during the 2012 Period was to fund our net loss, which was $24.4 million.  Of this net loss, certain costs were non-cash charges, such as non-cash interest expense of $1.9 million, depreciation and amortization costs of $875,000 and stock-based compensation expense of $2.8 million.  In addition to non-cash charges, we also had net cash out-flow due to changes in other operating assets and liabilities, including a decrease in accounts payable and accrued expenses of $3.6 million, an increase in inventory of $3.1 million, a decrease in other current assets of $2.7 million and a decrease in deferred revenue of $3.1 million associated with revenue recognized for library licenses that was previously deferred.

The principal use of cash in our operations was to fund our net loss, which was $21.1 million during the 2011 Period.  Of this net loss, certain costs were non-cash charges, such as non-cash interest expense of $1.6 million, depreciation and amortization costs of $1.2 million and stock-based compensation expense of $3.1 million.  In addition to non-cash charges, we also had net cash out flow due to changes in other operating assets and liabilities, including an increase in inventory of $5.1 million, an increase in accounts receivable of $1.5 million and a decrease in deferred revenue of $4.0 million. 

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Investing Activities

Our investing activities for the 2012 Period primarily consisted of investments which matured of $23.0 million, as well as a decrease of $1.3 million in restricted cash resulting from the release of the letter of credit that had been issued as a security deposit under the lease of our previous headquarters in Cambridge, Massachusetts.  These are offset by the purchase of $3.8 million of fixed assets primarily made up of leasehold improvements for the new Burlington facility, of which $2.6 million was covered by a tenant improvement allowance and $1.4 million was financed through an equipment loan arrangement.

Our investing activities for the 2011 Period primarily consisted of investment maturities of $28.5 million, partially offset by $3.0 million in investment purchases.  Additionally, we had an increase of $178,000 in restricted cash primarily due to a $1.1 million letter of credit entered into in connection with our new lease in Burlington, Massachusetts, partially offset by the contractual reduction of the letter of credit that served as our security deposit for the lease of our facility in Cambridge, Massachusetts.

Financing Activities

Our financing activities for the 2012 Quarter consisted of a drawdown of $1.4 million under an equipment loan arrangement, as well as the repayment of long-term debt totaling $135,000, including $96,000 to HC Royalty.

Our financing activities for the 2011 Period consisted of net proceeds of $323,000 from the sale of 151,515 shares of our common stock, as well as repayments of long-term debt totaling $1.6 million including $1.1 million to HC Royalty.

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.

OFF BALANCE SHEET ARRANGEMENTS

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

COMMITMENTS AND CONTINGENCIES

In our Annual Report on Form 10-K for the year ended December 31, 2011, Part II, Item 7, Management’s Discussion and Analysis of Financial Conditions and Results of Operations, under the heading "Contractual Obligations, " we described our commitments and contingencies. There were no material changes in our commitments and contingencies during the nine months ended September 30, 2012.

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CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES

In our Annual Report on Form 10-K for the year ended December 31, 2011, our critical accounting policies and estimates were identified as those relating to revenue recognition, allowance for doubtful accounts, share-based compensation and valuation of long-lived and intangible assets.  There have been no material changes to our critical accounting policies from the information provided in our 2011 Annual Report on Form 10-K.

Item 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our exposure to market risk consists primarily of our cash and cash equivalents and short-term investments. We place our investments in high-quality financial instruments, primarily U.S. Treasury notes and bills, which we believe are subject to limited credit risk. We currently do not hedge interest rate exposure. As of September 30, 2012, we had cash, cash equivalents and investments of approximately $30.4 million. Our investments will decline by an immaterial amount if market interest rates increase, and therefore, our exposure to interest rate changes is immaterial. Declines of interest rates over time will, however, reduce our interest income from our investments.

As of September 30, 2012, we had $83.2 million outstanding under short-term and long-term obligations, including our note payable. Interest rates on all of these obligations are fixed and therefore are not subject to interest rate fluctuations.

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

Item 4 - CONTROLS AND PROCEDURES

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

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

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during our fiscal quarter ended September 30, 2012 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

Item 1A. – RISK FACTORS

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.

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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 September 30, 2012 we had an accumulated deficit of approximately $501 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, increase licensing receipts under our LFRP or reduce costs.  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.

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 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.

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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.

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 multiple factors, including the following:

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

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● 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;

● our maintenance of commercial manufacturing capabilities through third-party manufacturers; and

● our ability to maintain sufficient inventories to supply KALBITOR for patient use.

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.

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.

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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.

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 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 where the product is approved for the 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 is conducting 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.

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● 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. 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 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 in the US for the treatment of acute abdominal, facial or laryngeal attacks of HAE in adults and adolescents, and has orphan drug designation from the FDA. The FDA has also approved patient labeling for Berinert to include self-administration after proper training by a healthcare professional.  Berinert is also approved in the EU, Japan and several rest-of-world markets for the treatment of acute attacks of HAE.  CSL Behring announced in May 2012 that they had commenced an international Phase I/II study of a volume-reduced subcutaneous formulation of C1-INH which will evaluate the pharmacokinetics, pharmacodynamics and safety of various doses of C1-INH.

● Pharming Group NV— Pharming markets a recombinant C1-esterase inhibitor, known as Ruconest™, which is administered intravenously.  Ruconset is approved in the EU for the treatment of acute HAE attacks in adult patients.  In the US, Pharming's recombinant C1-esterase inhibitor is known as Rhucin®. In July 2012, Pharming and US partner Santarus announced they had reached full recruitment in their Phase 3 trial for Ruconest. 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 small molecule 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.

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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 or our third party vendors are and will continue to be in compliance with all applicable laws and regulations. Failure to comply with the laws, including statutes and regulations, administered by the FDA or other agencies could result in:

● administrative and judicial sanctions, including warning letters;

● fines and other civil penalties;

● withdrawal of a previously granted approval;

● interruption of production;

● operating restrictions;

● product recall or seizure; injunctions; and

● criminal prosecution.

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

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

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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.

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.

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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 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.

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.

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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.

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.

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

We have identified only a few vendors with facilities that are capable of producing material for preclinical, clinical studies and for commercial purposes and we cannot assure you that they will be able to supply sufficient clinical materials during the clinical development or commercialization 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.

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We are dependent on a single contract manufacturer to produce ecallantide drug substance and another to fill, label and package ecallantide drug product into the final form, 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.  In addition, ecallantide drug substance is filled, labeled and packaged into the final form of KALBITOR drug product by Hollister-Stier under a commercial supply agreement.  Our business, therefore, faces risks of difficulties with, and interruptions in, performance by Fujifilm and Hollister-Stier, 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 or Hollister-Stier 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 or Hollister-Stier 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 currently have a long-term commercial supply agreement with Fujifilm, under which FujiFilm has committed to be available to manufacture ecallantide drug substance through 2020.  In addition, we believe that our existing supply of ecallantide drug substance will be sufficient to supply all ongoing studies relating to ecallantide and KALBITOR and to meet anticipated market demand into 2016.  These estimates are subject to changes in market conditions and other factors beyond our control.  If Fujifilm or Hollister-Stier is unable to dependably meet our demands for ecallantide drug substance or product, 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.

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 evaluating ecallantide in further indications and are developing DX-2930, another potential biopharmaceutical product.  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.

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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 collaborators 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.

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.

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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.

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.

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

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

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

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

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

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

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

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

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

We cannot 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;

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● 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.  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.), 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 Ireland Limited, other third party patent owners may contend that we need a license or other rights under their patents in order for us to commercialize a process or product.  In addition, we may choose to license patent rights from other third parties.  In order for us to commercialize a process or product, we may need to license the patent or other rights of other parties.  If a third party does not offer us a needed license or offers us a license only on terms that are unacceptable, we may be unable to commercialize one or more of our products.  If a third party does not offer a needed license to our collaborators and as a result our collaborators stop work under their agreement with us, we might lose future milestone payments and royalties, which would adversely affect us.  If we decide not to seek a license, or if licenses are not available on reasonable terms, we may become subject to infringement claims or other legal proceedings, which could result in substantial legal expenses.  If we are unsuccessful in these actions, adverse decisions may prevent us from commercializing the affected process or products and could require us to pay substantial monetary damages.

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

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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.

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.

54

Failure to meet our HealthCare Royalty Partners (HC Royalty) debt service obligations could adversely affect our financial condition and our loan agreement obligations could impair our operating flexibility.

Our loan from affiliate of HC Royalty has an aggregate principal balance of $80.5 million at September 30, 2012.  The loan bears interest at a rate of 12% per annum, payable quarterly, will mature in August 2018, and can be repaid without penalty beginning in August 2015.

In connection with this loan, we have entered into a security agreement granting HC Royalty a security interest in the intellectual property related to the LFRP, and the revenues generated by us through the license of the intellectual property related to the LFRP.  We are required to repay the loan based on a percentage of LFRP related revenues, including royalties, milestones, and license fees received by us under the LFRP.  If the LFRP revenues for any quarterly period are insufficient to cover the cash interest due for that period, the deficiency may be added to the outstanding loan principal or paid in cash by us.  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 HC Royalty’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 HC Royalty 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 HC Royalty, 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 is 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 HC Royalty, 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 HC Royalty.  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 HC Royalty agreement may limit our operating flexibility, make it difficult to pursue our business strategy and make us more vulnerable to economic downturns and adverse developments in our business.

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

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

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

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

55

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

● 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.

56

The market price of our common stock has been highly volatile.  Since our initial public offering in August 2000 through September 21, 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.

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.

57

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 5.    OTHER INFORMATION

None

58

Item 6 – EXHIBITS

EXHIBIT NO.	DESCRIPTION
3.1	Amended and Restated Certificate of Incorporation of the Company. Filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2008 and incorporated herein by reference.
3.2	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 on May 13, 2011 and incorporated herein by reference.
3.3	Amended and Restated By-laws of the Company. Filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2008 and incorporated herein by reference.
10.1†	Amended and Restated License Agreement by and between the Company and MedImmune Limited, formerly Cambridge Antibody Technology Limited (“MedImmune”) dated as of July 26, 2012.  Filed herewith.
31.1	Certification of Chief Executive Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
32	Certification pursuant to 18 U.S.C. Section 1350.  Filed herewith.
101*	The following materials from Dyax Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, (ii) Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, and (iv) Notes to Consolidated Financial Statements.
*	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.

59

DYAX CORP.

SIGNATURE

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

	DYAX CORP.
Date: October 29, 2012
	/s/George Migausky
	George Migausky Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer)

60

DYAX CORP.

EXHIBIT INDEX

EXHIBIT NO.	DESCRIPTION
3.1	Amended and Restated Certificate of Incorporation of the Company. Filed as Exhibit 3.1 to the Company's Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2008 and incorporated herein by reference.
3.2	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 on May 13, 2011 and incorporated herein by reference.
3.3	Amended and Restated By-laws of the Company. Filed as Exhibit 3.2 to the Company's Quarterly Report on Form 10-Q (File No. 000-24537) for the quarter ended September 30, 2008 and incorporated herein by reference.
10.1†	Amended and Restated License Agreement by and between the Company and MedImmune Limited, formerly Cambridge Antibody Technology Limited (“MedImmune”) dated as of July 26, 2012. Filed herewith.
31.1	Certification of Chief Executive Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
31.2	Certification of Chief Financial Officer Pursuant to §240.13a-14 or §240.15d-14 of the Securities Exchange Act of 1934, as amended. Filed herewith.
32	Certification pursuant to 18 U.S.C. Section 1350.  Filed herewith.
101*	The following materials from Dyax Corp.’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2012, formatted in XBRL (eXtensible Business Reporting Language); (i) Consolidated Balance Sheets as of June 30, 2012 and December 31, 2011, (ii) Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2012 and 2011, (iii) Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011, and (iv) Notes to Consolidated Financial Statements.
*	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.

61

EX-10.1

Exhibit 10.1

Private & Confidential                                           

CONFIDENTIAL TREATMENT

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.

DATED JULY 26, 2012

­­­­­­­­­­­­­­______________________________________________

MEDIMMUNE LIMITED (1)

and

DYAX CORP. (2)

­­­­­­­­­­­­­­______________________________________________

2012

AMENDED AND RESTATED LICENSE AGREEMENT

­­­­­­­­­­­­­­______________________________________________

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

THIS AGREEMENT is made as of July 26, 2012 (“Effective Date”)

BETWEEN:

(1) MEDIMMUNE LIMITED (Registered in England No. 2451177) whose registered office is at Milstein Building, Granta Park, Cambridge, CB21 6GH, UK ("MedImmune").

(2) DYAX CORP. a corporation organised and existing under the laws of the State of Delaware having its principal place of business at 55 Network Drive, Burlington, Massachusetts  01803 USA ("Dyax").

BACKGROUND:

(a) The Parties entered into the Original Agreements; an Amendment Agreement, a Second Amendment Agreement which agreements were consolidated in the 2006 Amended and Restated Agreement (as defined below) and then into the 2007 Amended and Restated Agreement (as defined below); all regarding the use of their respective rights in (b) and (c) below.

(b) MedImmune is the owner or exclusive licensee (pursuant to an agreement dated 7 January 1997 between MedImmune and the Medical Research Council ("MRC")) of the MedImmune Antibody Phage Display Patents (as defined below).

(c) Dyax has the right to grant licenses to certain technology described and claimed in US Patent No. 5,223,409 entitled "Directed Evolution of Novel Binding Proteins", US Patent No. 5,403,484 entitled "Viruses Expressing Chimeric Binding Proteins", US Patent No. 5,571,698 entitled "Directed Evolution of Novel Binding Proteins", and other Dyax Base Phage Display Patent Rights (as defined below).

(d) Dyax also has the right to grant licenses to use the Dyax Antibody Library (as defined below) and related technology described in the Dyax Library-Related Patent Rights.

In consideration of the mutual covenants and undertakings set out below, THE PARTIES AGREE as follows:

1.            Definitions

1.1 In this Agreement, the terms defined in this Clause shall have the meanings specified below:

"2006 Amended and Restated Agreement" means the agreement made between MedImmune and Dyax, dated 21 June 2006.

"2007 Amended and Restated Agreement" means the agreement made between MedImmune and Dyax, dated 30 July 2007.

"Abbott Agreement" means the Agreement dated 20 January 1994 between MedImmune and Knoll AG (now known as Abbott Laboratories Inc) and relating to D2E7.

"Acceptance Fee" means the payment to MedImmune by Dyax or a Dyax Sublicensee, as appropriate, under Clauses 8.1.1, 8.2.1, and 8.3.1 hereof.

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

Page 1

"Additional Diagnostic Licences" means the Dyax Product Licences detailed in Clause 3.7.

"Affiliate" means any company, partnership or other entity which directly or indirectly Controls, is Controlled by or is under common Control with any other entity.

"Affimed License" means that certain Patent Cross-License Agreement dated August 4, 2003 by and between Affimed Therapeutics AG ("Affimed") and Dyax, a redacted copy of which has been provided to MedImmune.

"Affimed Patent Rights" has the meaning set forth in Schedule 9-A.

"Agreement"means this agreement and any and all Schedules, appendices and other addenda to it as may be amended from time to time in accordance with the provisions of this agreement.

"Amendment Agreement" means the agreement made between MedImmune and Dyax, dated 3 January 2003, to amend the Original Agreements.

"Antibody"means a molecule or a gene encoding such a molecule comprising or containing one or more immunoglobulin variable domains or parts of such domains or any existing or future fragments, variants, modifications or derivatives thereof.

"Antibody Diagnostic License Agreement"means the License Agreement between Dyax and MedImmune dated 31 December 1997 relating to antibody diagnostic products.

"Antibody Library" means any Antibody library constructed using processes which are covered by a claim of an issued and unexpired patent included within the MedImmune Antibody Phage Display Patents which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

"Antibody Services" means the provision of research and/or development services for the identification, generation, derivation or development of one or more Antibody Libraries or Antibodies derived therefrom.

"Biosite License" means the license agreement effective March 28, 2002 between Biosite Incorporated ("Biosite") and Dyax, a redacted copy of which has been provided to MedImmune.

"Biosite Patent Rights"has the meaning set forth in Schedule 9-B.

"Bi-Specific Antibody" means an Antibody directed to two Nominated Targets as described in Clause 4.6.

"Business Day" means a day (other than a Saturday or Sunday) on which the banks are ordinarily open for business in the City of London and the Commonwealth of Massachusetts.

"Catalytic Antibodies"means solely those Antibodies which bind to and catalyze the chemical transformation of a substrate and in which an Antibody binding region is involved in said catalysis.

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

Page 2

"Commencement Date" means 3 January 2003.

"Commercial Party" shall mean any party, other than an Affiliate of MedImmune, which has been authorized by MedImmune to make, have made, use, sell or have sold Licensed Products and (i) to which MedImmune (or any of its Affiliates), sells, transfers, or otherwise makes available any Licensed Intermediate or (ii) for which MedImmune (or any of its Affiliates) performs services or provides proprietary information, with respect to any Licensed Intermediate.

"Competent Authority" means any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties including the European Commission, the Court of First Instance and the European Court of Justice.

"Controls" means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation.

"Development and Licence Agreement" means the agreement referred to in Clause 8.7 of this Agreement.

"Development Licence" means a licence as described in Clause 10.1.

"Development Licence Option" means the option for MedImmune to enter into a Development Licence with Dyax for any Dyax Therapeutic Antibody Product as described in Clause 10.1;

"Development Licence Option Notice" means the notice described in Clause 10.2;

"Diagnostic Antibody Product" means any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a MedImmune Licensable Antibody.  The term "Diagnostic Antibody Product" shall not include any Research Product.

"Diagnostic Collaboration Licences" means the Dyax Product Licences detailed in Clause 3.6.

"Disclosing Party" means a Party which discloses Confidential Information to the other Party.

"Domantis License" means that certain Cross License Agreement dated April 6, 2006 by and between Domantis Limited ("Domantis") and Dyax, a redacted copy of which has been provided to MedImmune.

"Domantis Patent Rights" has the meaning set forth in Schedule 9-C.

"Dyax Antibody Library" means Dyax's proprietary phagemid-based Fab libraries and phage-based Fab libraries of human antibody sequences as identified in Schedule 6.

"Dyax Antibody Library Improvements" means the improvements described in Clause 11.7(f).

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

Page 3

"Dyax Know-How" means the Confidential Information of Dyax which constitutes unpatented know how, technical and other information related to the subject matter of the Dyax Patent Rights and Dyax Antibody Libraries, as identified in Schedule 6 as updated from time to time in accordance with Clause 11.5.

"Dyax Licensable Antibody" means any Antibody (including a Bi–Specific or Poly- Specific Antibody) to a Target which Antibody has been selected by MedImmune from the Dyax Antibody Library.

"Dyax Materials"means the materials which comprise or relate to the Dyax Antibody Library as described in Schedule 6 together with any materials which comprise or relate to any improved version of the Dyax Antibody Library and made available to MedImmune by Dyax in accordance with Clause 11.4.

"Dyax Partner" means (a) any person or entity with whom Dyax has entered into a written agreement for the performance of Antibody Services or other services related to the commercialization of any Product, or (b) any other Third Party to which Dyax is selling or licensing in good faith in accordance with its normal business practice MedImmune Antibody Libraries or Antibodies derived therefrom; provided, that in no event shall the term "Dyax Partner" include any Third Party which is a bare licensee under the Dyax Patent Rights.

"Dyax Patent Rights" means all Valid Claims of the patents and patent applications listed in Schedule 5, as well as any and all, reissues, reexaminations, renewals and extensions thereof, and any and all continuations, continuations-in-part and divisionals of the applications for such patents in the United States and all counterparts thereto in countries outside the United States but shall not include (i) Valid Claims in US Patent No. 5,233,409 to the extent they cover single chain antibodies, nor (ii) Valid Claims of any continuation, continuation-in-part or divisional applications of the US Patents or any counterparts of the US Patents in countries outside of the United States, that cover particular protein or peptide sequences, or nucleic acids thereof, that bind to a specific biological or molecular target.  Dyax Patent Rights include the Dyax Base Phage Display Patent Rights (the patents and patent applications listed in Schedule 5A) and the Dyax Library-Related Patent Rights (the patents and patent applications listed in Schedule 5B).

"Dyax Product Licence" means each license granted to Dyax pursuant to Clause 5.1.

"Dyax Therapeutic Antibody Product" means any Therapeutic Antibody Product identified, generated or derived by Dyax for itself or its Affiliates but not a Therapeutic Antibody Product identified, generated or derived by Dyax for, or on behalf of, a Third Party.

"Dyax Sublicensee" means any (a) Dyax Partner to which Dyax grants a sublicense in accordance with the terms of this Agreement, and/or (b) any sublicensee of Dyax under a Dyax Product Licence.

"Dyax Target Option Notice" means the notice described in Clause 4.1.

"D2E7" means any Antibody directed against the Target TNF alpha.

"End User" shall mean a person or entity whose use of a product results in its destruction, loss of activity and/or loss of value.

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

Page 4

"Exploit" means to make, have made, use, sell or import.

"Extension Fee" means the fee described in Clause 4.2.

"FDA" means the United States Food and Drug Administration, the equivalent Competent Authority in any country of the Territory or any successor bodies thereto.

"Field of Use" means research and development of human or non-human therapeutics and human or non-human in vitro diagnostic or research reagent uses only and not any in vivo diagnostics, purifications or separations, or other industrial purposes.

"First Additional Licence Allocation" means the Dyax Product Licences referenced in Clause 3.5(a).

"First Commercial Sale" means the first commercial sale of (a) any Product, or Other Product by Dyax or a Dyax Sublicensee (or its sublicensee) or (b) any MedImmune Product by MedImmune or a MedImmune Sublicensee  (or its Sublicensee) in each case in any country after grant of a Marketing Authorisation.

"Force Majeure" means any event outside the reasonable control of either Party affecting its ability to perform any of its obligations (other than payment) under this Agreement, including Act of God, fire, flood, lightning, war, revolution, act of terrorism, riot or civil commotion, but excluding strikes, lock-outs or other industrial action, whether of the affected Party's own employees or others, failure of supplies of power, fuel, transport, equipment, raw materials or other goods or services.

"GAAP" means United States generally accepted accounting principles, consistently applied.

"Genentech License" means the license agreement effective September 19, 2002 between Dyax and Genentech, Inc. ("Genentech"), a redacted copy of which has been provided to MedImmune.

"Genentech Patent Rights"have the meaning set forth in Schedule 9-D.

"IDE"means an Investigational Device Exemption application, as defined in Title 21 of the United States Code of Federal Regulations, filed with the FDA or an equivalent foreign filing.

"IND"means an Investigational New Drug Application, as defined in Title 21 of the United States Code of Federal Regulations, that is required to be filed with the FDA before beginning Phase I Clinical Trials of any Therapeutic Antibody Product in human subjects, or an equivalent foreign filing.

"Initial Licence Allocation"means the [*****] Dyax Product Licences in Clause 3.2, the [*****] additional Dyax Product Licences in Clause 3.3, and the [*****] additional Dyax Product Licences in Clause 3.4.

"Licensed Intermediate" means any fusion protein (including without limitation any chimeric binding protein), genetic package (including without limitation any virus, spore or cell) or other intermediate compound, or any compound derived form any of the foregoing, that is (i) discovered, made or developed by MedImmune using a method covered in whole or in part by Dyax Base Phage Display Patent Rights or (ii) is otherwise covered by Dyax Base Phage Display Patent Rights.

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

Page 5

"Licensed Product" means any product intended for sale to an End User as a human or non-human therapeutic or in vitro diagnostic or research reagent (and in the case of a diagnostic or research reagent contains one or more antibodies as a binding moiety) that prior to or after December 31, 1997 (the effective date of the Original Agreements) is discovered, made or developed, whether by MedImmune, its Affiliates or any Commercial Party, using a Licensed Intermediate or a method covered in whole or in part by the Dyax Base Phage Display Patent Rights.

"Major Market" means any one of the following: (i) the United States of America, (ii) any country in Europe which is subject to the Marketing Authorisation procedure of the European Medicines Evaluation Agency, or (iii) Japan.

"Marketing Authorisation" means any approval (including all applicable pricing and governmental reimbursement approvals) required from the FDA or relevant Competent Authority to market and sell a Product in a particular country.

"MedImmune Antibody Phage Display Patents" means: (a) the patents and patent applications listed in Schedule 1 and any patents issuing from such patent applications, together with any divisions, registrations, confirmations, reissues, extensions, renewals, continuations, continuations-in-part, revalidations, additions, substitutions, renewals or supplementary protection certificates thereof throughout the world; and (b) any Patent Rights which claim or cover any invention or discovery which is developed by MedImmune or its Affiliates at any time during the term of this Agreement directly related to Antibody phage display or Antibody Services; provided, however, that MedImmune Antibody Phage Display Patents shall always exclude (i) MedImmune Diabodies Patent Rights, (ii) any Patent Rights owned or controlled by MedImmune which claim or cover Catalytic Antibodies, (iii) any Patent Rights owned or controlled by MedImmune which claim ribosome display technology, (iv) any Patent Rights which claim Single Domain Antibodies, (v) any Patent Rights acquired by MedImmune after 3 January 2003 from any Third Party for consideration or as a result of MedImmune's acquisition of or merger with such Third Party, and (vi) any use of the said Patent Rights in the field of Research Products.

"MedImmune Diabodies Patent Rights"means (a) the Patent Rights entitled "Diabodies – multivalent and multispecific binding proteins, their manufacture and use", PCT/GB93/02492 and (b) the Patent Rights entitled "Retargeting antibodies and diabodies", PCT/GB94/02019.

"MedImmune Gatekeeping Procedure" means the procedure set out in Schedule 2 which MedImmune shall carry out in respect of a Nominated Target prior to the grant of any Dyax Product Licence.

"MedImmune Know-How"means any Confidential Information of MedImmune which constitutes unpatented know-how, technical and other information related to the subject matter of the MedImmune Antibody Phage Display Patents as identified in Schedule 3 and as amended from time to time in accordance with Schedule 3;

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

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"MedImmune Licensable Antibody" means any Antibody (including a Bi–Specific Antibody or a Poly-Specific Antibody) to a Target (a) where such Antibody has been identified, generated, developed, produced or derived by Dyax or a Dyax Sublicensee or its sublicensees and (b) the identification, generation, development, production or derivation of such Antibody uses any of the processes claimed or covered by a claim of an issued and unexpired patent included within the MedImmune Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or uses the MedImmune Know-How and (c) which is potentially useful for the development of any Diagnostic Antibody Product and/or any Therapeutic Antibody Product.

"MedImmune Product" means (a) any preparation for the treatment or prevention of disease, infection, or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises a Dyax Licensable Antibody or (b) any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction, or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a Dyax Licensable Antibody.

"MedImmune Product Licences" means each licence granted to MedImmune pursuant to Clause 12.

"MedImmune Site" means the MedImmune premises described in Clause 11.3.

"MedImmune Status Report" means the report described in Clause 12.4.

"MedImmune Sublicensee" means any Third Party to which MedImmune grants a sublicense in accordance with the terms of this Agreement, under a MedImmune Product Licence.

"Net Sales" means, with respect to a Product sold by Dyax, its Affiliate or a Dyax Sublicensee (or its sublicensees) or an Other Product sold by Dyax , its Affiliate or its sublicensee or with respect to a MedImmune Product sold by MedImmune, its Affiliate or a MedImmune Sublicensee (or its sublicensee), the price invoiced by that party to the relevant purchaser (or in the case of a sale or other disposal otherwise than at arm's length, the price which would have been invoiced in a bona fide arm's length contract or sale) but deducting the costs of packing, transport and insurance, customs duties, any credits actually given for returned or defective Products, Other Products, MedImmune Products, normal trade discounts actually given, and sales taxes, VAT or other similar tax charged on and included in the invoice price to the purchaser.

"Nominated Target" has the meaning set forth in Clause 4.1(a).

"Original Agreements" means the Therapeutic Product License Agreement and the Antibody Diagnostic License Agreement.

"Other Product" has the meaning set forth in Clause 7.1.

"Other Purposes" has the meaning set forth in Clause 7.1.

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

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"Party" means MedImmune or Dyax.

"Patent Rights" means any patent applications and any patents issuing from such patent applications, author certificates, inventor certificates, utility certificates, improvement patents and models, and certificates of addition and all counterparts of them throughout the Territory, including any divisional applications and patents, filings, renewals, continuations, continuations-in-part, patents of addition, extensions, reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them.

"Pharmacia Agreement" means the agreement between MedImmune and Pharmacia P-L Biochemicals Inc. dated 11 September 1991.

"Pharmacia P-L Biochemicals Inc."means Pharmacia P-L Biochemicals Inc (now known as Amersham Biosciences).

"Phase I Clinical Trial" means a human clinical trial in any country that is intended to initially evaluate the safety of an investigational Product in volunteer subjects or patients that would satisfy the requirements of 21 CFR 312.21(a), or its foreign equivalent and may evaluate the Product's therapeutic or antigenic effects.

"Phase II Clinical Trial" means studies in humans of the safety, dose ranging and efficacy of a Product that would satisfy the requirements of 21 CFR 312.21(b).

"Phase III Clinical Trial" means a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a Product as a basis for a marketing application that would satisfy the requirements of 21 CFR 312.21(c).

"Product" means a Diagnostic Antibody Product or a Therapeutic Antibody Product.

"Quarter" means each period of three (3) months ending on March 31, June 30, September 30, or December 31 and "Quarterly" shall be construed accordingly.

"Research Products"means any product in relation to which Pharmacia P-L has an exclusive licence from MedImmune pursuant to the Pharmacia Agreement.

"Reservation Period" means the period described in Clause 4.2.

"Restatement Date"means the date of this Agreement first written above.

"Second Additional Licence Allocation" means the Dyax Product Licences referenced in Clause 3.5(b).

"Second Amendment Agreement" means the agreement to amend the Amendment Agreement made between MedImmune and Dyax dated 18 September 2003.

"Single Domain Antibodies" means an Antibody containing only a single domain (heavy or light).

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

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"Specified Diagnostic Agreements" means (i) the Collaboration and License Agreement [*****], and (ii) the Collaboration and License Agreement [*****],  and (iii) the Technology Transfer and License Agreement [*****], as such agreements may be amended from time to time.

"Supporting Information" means the information described in Clause 10.3.

"Target" shall mean:

(a) a polynucleotide sequence corresponding to a sequence identified in a publicly available curated database such as GenBank® by means of an accession number or similar sequence information that uniquely identifies that sequence; together with:

(i) all variants of the identified sequence in man and other species known and demonstrated to MedImmune or Dyax (as the case may be) at the time of submission to the MedImmune Gatekeeping Procedure or to Dyax (as the case may be) to have functional equivalence to (a); and

(ii) all post-transcriptional material encoded by (a) and (i) (including splice variants); and

(iii) all post-translational material encoded by such post-transcriptional material; and

(iv) all multimeric forms of (iii) irrespective of whether homomeric or heteromeric; and

(v) where any of (iii) or (iv) is known to form a heteromeric complex with one or more non-identical subunits, that heteromeric complex must be identified in its entirety at he time of submission to the MedImmune Gatekeeping Procedure or to Dyax (as the case may be) using such accession numbers of a publicly available curated database entry as correspond to each of the component subunits; or

(b) a non-proteinaceous antigen that is uniquely identifiable in a routine manner using publicly available curated databases and/or such other suitable written material as is available.

"Territory" means all countries of the world.

"Therapeutic Antibody Product" means any preparation for the treatment or prevention of disease, infection or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises, a MedImmune Licensable Antibody.  The term "Therapeutic Antibody Product" shall not include any Research Product.

"Therapeutic Product License Agreement"means the License Agreement between Dyax and MedImmune dated 31 December 1997 relating to therapeutic products.

"Third Party" means any entity or person other than Dyax, MedImmune or their respective Affiliates.

"Updates" means the updates described in Clause 11.5.

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

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"Valid Claim"means a claim of an issued and unexpired patent included within either (i) the MedImmune Antibody Phage Display Patents which have been licensed to MedImmune by the MRC; or (ii) the Dyax Patent Rights (as the case may be) which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

"XOMA Covenant" has the meaning set forth in Clause11.2(b).

"XOMA License" means that certain Amended and Restated License Agreement dated October 27, 2006 by and between XOMA Ireland Limited ("XOMA") and Dyax, a redacted copy of which has been provided to MedImmune.

"XOMA Know How"has the meaning set forth in the XOMA License.

"XOMA Patent Rights" has the meaning set forth in Schedule 9-E.

"Year" means initially the period from the Commencement Date to the end of that calendar year, and subsequently a calendar year.

1.2 The headings to clauses are inserted for convenience only and shall not affect the interpretation or construction of this Agreement.

1.3 Words imparting the singular shall include the plural and vice versa. References to persons include an individual, company, corporation, firm or partnership.

1.4 The words and phrases "other", "including" and "in particular" shall not limit the generality of any preceding words or be construed as being limited to the same class as any preceding words where a wider construction is possible.

1.5 References to any statute or statutory provisions of the United Kingdom shall include (i) any subordinate legislation made under it, (ii) any provision which it has superseded or re-enacted (whether with or without modification), and (iii) any provision which subsequently supersedes it or re-enacts it (whether with or without modification. References to any statute or regulation of the United States of America means that statute or regulation as it may be amended, supplemented or otherwise modified from time to time, and any successor statute or regulation. 

2.            Amended and Restated Licence Agreement and MedImmune Patent Licence from Dyax

2.1 This Agreement consolidates and replaces the Original Agreements, the Amendment Agreement the Second Amendment Agreement, the 2006 Amended and Restated Agreement and the 2007 Amended and Restated Agreement.

2.2 Subject to the terms and conditions set out in this Agreement, Dyax grants MedImmune and its Affiliates a world-wide, non-exclusive, royalty free licence (sub-licensable in accordance with the provisions of Clause 2.4) under the Dyax Base Phage Display Patent Rights (i) to research develop, make, have made, use, import, sell and have sold Licensed Products in the Field of Use, and (ii) to research, develop, make, and use Licensed Intermediates in the Field of Use (a) for sale or transfer to any Commercial Party, or (b) for transfer to any third party who is not permitted by MedImmune or its Affiliates to commercialize such Licensed Intermediates of any Licensed Product.

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

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2.3 MedImmune acknowledges that the value of the Dyax Base Phage Display Patent Rights is measured in part by the value of products resulting from any Licensed Intermediate.  MedImmune agrees, therefore, that it will not sell, transfer, or otherwise make available a Licensed Intermediate to any Commercial Party and will not provide services or proprietary information with respect to any Licensed Intermediate solely within the Field of Use to any Commercial Party, unless such Commercial Party executes an agreement with MedImmune in which such Commercial Party agrees to use any Licensed Intermediate solely in the Field of Use.

2.4 Subject to Clause 12.3, MedImmune shall have no right to grant sublicences under the licence to Dyax Base Phage Display Patent Rights granted to MedImmune in this Clause 2, except MedImmune may grant a sublicence under the Dyax Base Phage Display Patent Rights to any Third Party to which MedImmune is licensing, selling or otherwise transferring Antibodies or Antibody Libraries solely for use by such Third Party with the Antibodies (including Antibodies which are supplied to MedImmune by the Third Party and in relation to which MedImmune provides services to optimize that Antibody before handing the Antibody back to the Third Party in its optimized form) or Antibody Libraries licensed, sold or otherwise transferred from MedImmune and solely for the purpose of developing therapeutic Antibody products or diagnostic Antibody products; provided that as a condition to any such sublicense, MedImmune shall require any such sublicensee to be bound by the terms of this Clause 2 and Clause 16.  For the avoidance of doubt, in no event shall MedImmune have the right to sublicense the Dyax Base Phage Display Patent Rights to any Third Party which is a bare licensee under the MedImmune Antibody Phage Display Patents.  Any Third Party which is granted a sublicense under the Dyax Base Phage Display Patent Rights by MedImmune shall have no right to grant further sublicenses.

2.5 MedImmune or its sublicensees shall indemnify Dyax and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the "Dyax Indemnitees") against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the Dyax Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Licensed Product or Licensed Intermediate by MedImmune or its sublicensee.

2.6 In partial consideration for the grant of rights set out above MedImmune agrees not to enforce against Dyax or its Affiliates the MedImmune Antibody Phage Display Patents during the term of this Agreement that Dyax or its Affiliates may infringe in practicing the inventions claimed in the Dyax Patent Rights.

3.            Dyax Option for Dyax Product Licences from MedImmune

3.1 Numbers of Options.  In accordance with this Clause 3, MedImmune grants to Dyax the following options to obtain Dyax Product Licences which may be exercised by Dyax for itself and for Dyax Sublicensees:

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

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(a) an Initial Licence Allocation of [*****] Dyax Product Licences for Therapeutic Antibody Products and/or Diagnostic Antibody Products shall be available from the Commencement Date as set out in Clauses 3.2, 3.3 and 3.4;

(b) a First Additional Licence Allocation of [*****] Dyax Product Licences for Therapeutic Antibody Products and Diagnostic Antibody Products shall be available from the Commencement Date as set out in Clause 3.5(a).

(c) [*****] Diagnostic Collaboration Licences for Diagnostic Antibody Products shall be available from the Commencement Date as set out in Clause 3.6;

(d) [*****] Additional Diagnostic Licences for Diagnostic Antibody Products shall be available from the Commencement Date as set out in Clause 3.7; and

(e) a Second Additional Licence Allocation of an unlimited number of Dyax Product Licences for Therapeutic Antibody Products and/or Diagnostic Antibody Products shall be available from the Effective Date of this Agreement as set out in Clause 3.5(b).

3.2 Subject to Clauses 3.3 and 3.4, MedImmune hereby grants to Dyax the option for Dyax to obtain [*****] Dyax Product Licences for both Therapeutic Antibody Products and Diagnostic Antibody Products, which may be exercised by Dyax only on a cumulative basis in accordance with the following schedule:

(a) [*****] Dyax Product Licences on or before 31 December 2003;

(b) [*****] additional Dyax Product Licences on or before 31 December 2004;

(c) [*****] additional Dyax Product Licences on or before 31 December 2005;

(d) [*****] additional Dyax Product Licences on or before 31 December 2006.

If the option for any particular Dyax Product Licence set out in clauses (a) through (d) above has not been exercised by Dyax by the relevant date, then such unexercised options will be carried over into the next allocation period, and so on; provided that if any option for a Dyax Product Licence in this Clause 3.2 has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

3.3 If any option for a Dyax Product Licence under Clause 3.2 is exercised and a Dyax Product Licence is granted to Dyax, then for each Product under any such Dyax Product Licence which enters a Phase III Clinical Trial, MedImmune hereby grants to Dyax an additional option for one Dyax Product Licence, up to a maximum of [*****] additional Dyax Product Licences under this Clause 3.3; provided that if any option for a Dyax Product Licence granted in this Clause 3.3 has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

3.4 If any option for a Dyax Product Licence under Clause 3.2 is exercised and a Dyax Product Licence is granted to Dyax, then for each Product under any such Dyax Product Licence which fails in development or for which Dyax decides to terminate its program of development, MedImmune hereby grants to Dyax an additional option for one Dyax Product Licence, up to a maximum of [*****] additional Dyax Product Licences under this Clause 3.4; provided that if any option for a Dyax Product Licence granted in this Clause 3.4 has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

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

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3.5 In addition to the options for Dyax Product Licences granted by MedImmune to Dyax in Clauses 3.2 to  3.4, MedImmune hereby grants to Dyax:

(a) the option for a total of an additional [*****] Dyax Product Licences for both Diagnostic Antibody Products and Therapeutic Antibody Products to be granted to Dyax (the "First Additional Licence Allocation"); and

(b) the option for an unlimited number of Dyax Product Licences for both Diagnostic Antibody Products and Therapeutic Antibody Products to be granted to Dyax in connection with Diagnostic Antibody Products and/or Therapeutic Antibody Products identified by or on behalf of a Dyax Partner pursuant to an agreement entered into after the Effective Date of this Agreement (the "Second Additional Licence Allocation");

provided that if any option for a Dyax Product Licence in this Clause 3.5 has not been exercised and granted to Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

3.6 In addition to the options for Dyax Product Licences granted by MedImmune to Dyax in Clauses 3.2 through 3.5, MedImmune hereby grants to Dyax the option for a total of an additional [*****] Dyax Product Licences for Diagnostic Antibody Products developed by Dyax under the Specified Diagnostic Agreements (the "Diagnostic Collaboration Licences"); provided that if any option for a Diagnostic Collaboration Licence in this Clause 3.6 has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licence will lapse irrevocably.

3.7 In addition to the options for Dyax Product Licences granted by MedImmune to Dyax in Clauses 3.2 through 3.6, MedImmune hereby grants to Dyax the option for a total of an additional [*****] Dyax Product Licences for Diagnostic Antibody Products (the "Additional Diagnostic Licences"); provided that if any option for an Additional Diagnostic Licences has not been exercised by Dyax on or before 31 December 2017, then the option for such Dyax Product Licences will lapse irrevocably.

3.8 MedImmune agrees that, commencing with effect from 3 January 2003, it will not enter into any  agreement or arrangement with any Third Party whereby a field of use under the MedImmune Antibody Phage Display Patents is exclusively licensed to, reserved for, or otherwise committed to such Third Party.  If MedImmune does enter into such an agreement or arrangement it will ensure that such agreement or arrangement does not restrict the activities or rights of Dyax (or any potential Dyax Sublicensee or its sublicensee) contemplated by this Agreement.  For the purposes of this Clause, a "field of use" means one or more particular clinical diseases or medical conditions and not one or more uniquely identified Targets.

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

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3.9 Except as set forth in Clause 18, the options granted in this Agreement shall not be assigned or otherwise transferred to any Third Party.

3.10 Prior to [*****], and provided that Dyax obtains a Dyax Product Licence for such Product [*****], MedImmune grants to Dyax, its Affiliates, and Dyax Sublicensees (and their sublicensees) a non-exclusive, royalty free licence in the Territory during the term of this Agreement to use the MedImmune Antibody Phage Display Patents and the MedImmune Know-How for the purposes of carrying out research and development activities in relation to identifying MedImmune Licensable Antibodies or potential Products.

4.            Target Option Notice and Gatekeeping Procedure

4.1 If Dyax wishes to develop and commercialise Diagnostic Antibody Products and/or Therapeutic Antibody Products to a particular Target and provided that Dyax Product Licences are available to Dyax under Clause 3, Dyax may, at any time, in a written notice to MedImmune (each a "Dyax Target Option Notice") request that MedImmune grant Dyax a Dyax Product Licence in relation to such identified Target.  In such Target Option Notice, Dyax will:

(a) identify the relevant Target against which such MedImmune Licensable Antibodies are directed ("Nominated Target"); and

(b) state whether Dyax or the Dyax Sublicensee wishes to develop such MedImmune Licensable Antibodies as Diagnostic Antibody Products and/or Therapeutic Antibody Products.

4.2 If MedImmune notifies Dyax that the Nominated Target has passed the MedImmune Gatekeeping Procedure in accordance with Clause 4.4.1 below, then, unless otherwise notified by Dyax, MedImmune will reserve such Nominated Target for Dyax and Dyax Sublicensee for a period of [*****] from the date of such MedImmune notice ("Reservation Period").    Up to and including [*****] Nominated Targets may be reserved in accordance with the following procedure at any time without charge.  For each additional reservation above and beyond [*****] Nominated Targets, Dyax will pay MedImmune a reservation fee of [*****] for the next [*****] Nominated Targets provided that no more [*****] Nominated Targets may be reserved at any one time.  [*****].  Dyax may, at any time prior to the expiry of the Reservation Period, request in writing that MedImmune extend the Reservation Period by a period of [*****].  Such request for an extension shall be accompanied by payment of a fee of [*****] (the "Extension Fee").  Upon receipt by MedImmune of the Extension Fee the Reservation Period for the Nominated Target in question will be so extended.  [*****].  For the purposes of this Clause 4.2 "reserved for" means that a Dyax Product Licence will continue to be available to Dyax and Dyax Sublicensees during that [*****] period (or [*****] month period if the Reservation Period is extended).  Dyax may not (a) have more than [*****] Nominated Targets reserved at any one time and (b) exercise the right to reserve Nominated Targets pursuant to this Clause in relation to more Targets than there are Dyax Product Licences remaining available at the relevant time pursuant to Clause 3.  In the event that, at any time during which a Nominated Target is reserved for Dyax in accordance with this Clause 4.2, a Third Party request from MedImmune an exclusive license in respect of the relevant Nominated Target, MedImmune will promptly notify Dyax in writing.  Dyax will then have a period of [*****] days from the date of MedImmune's notice to decide whether or not it wishes to take a Dyax Product Licence for that Nominated Target.  If Dyax notifies MedImmune within that period that it does not wish to take such a Dyax Product Licence or fails to notify MedImmune at all then such Nominated Target shall no longer be reserved for Dyax and MedImmune may grant an exclusive license in respect of such Nominated Target to the Third Party.

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

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4.3 Upon receipt of a Dyax Target Option Notice from Dyax under Clause 4.1, MedImmune shall have [*****] days to make a determination whether the Nominated Target passes MedImmune's Gatekeeping Procedure.  MedImmune shall:

(a) [*****]; and

(b) [*****].

4.4 Before the expiry of the [*****] days referred to in Clause 4.3, MedImmune shall either;

4.4.1 notify Dyax in writing that the Nominated Target has passed the MedImmune Gatekeeping Procedure, in which case (subject to the payment of the applicable Acceptance Fee for Dyax Product Licenses taken from the Initial Licence Allocation or the First Additional Licence Allocation), grant to Dyax a Dyax Product Licence to Exploit Products against such Nominated Target in the Territory; or

4.4.2 notify Dyax in writing that the Nominated Target has not passed the MedImmune Gatekeeping Procedure, in which case Dyax shall have no right to obtain a Dyax Product Licence to Exploit Products against such Nominated Target in the Territory.

4.5 MedImmune agrees that:

(a) MedImmune will treat Dyax in the same way as MedImmune treats its other customers, collaborators and licensees when applying the procedure described in this Clause 4; and

(b) MedImmune will only disclose information received by it from Dyax in relation to a Nominated Target to those MedImmune employees who need to know such information for the purposes of this Clause 4.  Any such information will be deemed to be Confidential Information of Dyax

4.6 In the case where a MedImmune Licensable Antibody is directed to two Targets (a "Bi-Specific Antibody"), or more than two Targets (a "Poly-Specific Antibody") the Target Option Notice shall identify each relevant Target against which such Bi-Specific Antibody or Poly-Specific Antibody is directed, and each such Target shall be considered a Nominated Target.  If MedImmune notifies Dyax that each Nominated Target to which such Bi-Specific Antibody or Poly-Specific Antibody is directed has passed the MedImmune Gatekeeping Procedure, Dyax shall have the right to obtain a Dyax Product Licence with respect to each such Nominated Target; provided however, that such Dyax Product Licence shall be limited so as to allow Dyax to Exploit only Products to such Nominated Targets that comprise or contain the Bi-Specific Antibody or Poly-Specific Antibody, which shall be clearly identified in the Dyax Product Licence.  For the avoidance of doubt, the parties acknowledge that:

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

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(a) Dyax may obtain a Dyax Product Licence for Therapeutic Antibody Products and Diagnostic Antibody Products containing or comprising such Bi-Specific Antibodies against two Nominated Targets or Poly-Specific Antibodies against more than two Nominated Targets by exercising only one (1) option from among the Initial Licence Allocation under Clauses 3.2 to 3.4 and the First and Second Additional Licence Allocations under Clause 3.5;

(b) in the event that Dyax requests that MedImmune reserve such Nominated Targets for the Reservation Period all such Nominated Targets will count towards the maximum of [*****] Nominated Targets which may be reserved by Dyax at one time pursuant to Clause 4.2; and

(c) in the event that Dyax request that the Reservation Period for any such Nominated Targets be extended for [*****] then Dyax will pay an Extension Fee for each such Nominated Target.

5.            Grant of Dyax Product Licence by MedImmune

5.1 To Dyax.  In the event MedImmune notifies Dyax under Clause 4.4.1 above that a Nominated Target has passed the MedImmune Gatekeeping Procedure, then (upon receipt of the applicable Acceptance Fee for Dyax Product Licenses taken from the Initial Licence Allocation or the First Additional Licence Allocation), MedImmune agrees to grant and hereby grants to Dyax and its Affiliates a non-exclusive, royalty-bearing license, with the right to sublicense, under the MedImmune Antibody Phage Display Patents and MedImmune Know-How to Exploit Products against such Nominated Target in the Territory ("Dyax Product Licence").  Any Dyax Product Licence granted to Dyax shall be consistent with the terms of this Clause 5 and Clauses 6, 8, 9, 17 and 19 of this Agreement and shall be negotiated by the Parties in good faith; provided, however, that the Parties agree that the terms and conditions and the form of any Dyax Product Licence executed after the Effective Date of this Agreement (i) from the Initial Licence Allocation or the First Additional Licence Allocation shall be substantially similar to the form attached hereto as Schedule 7-A, and (ii) from the Second Additional Licence Allocation shall be substantially similar to the form attached hereto as Schedule 7-B.

5.2 The Parties agree that Dyax may obtain a Dyax Product Licence for Therapeutic Antibody Products and Diagnostic Antibody Products against the same Nominated Target by exercising only one (1) option from among the Initial Licence Allocation under Clauses 3.2 to 3.4 and the First and Second Additional Licence Allocations under Clause 3.5.

5.3 Nothing herein shall prevent MedImmune from meeting any obligations it has to Third Parties under any agreements in respect of any Nominated Target for which Dyax submits a Target Option Notice under Clause 4.1 where such Nominated Target is determined by MedImmune under Clause 4 not to pass the MedImmune Gatekeeping Procedure, provided that such obligation does not involve any use or disclosure of any Confidential Information belonging to Dyax.

5.4 Dyax must request, and be granted, a Dyax Product Licence;

5.4.1 in relation to a Therapeutic Antibody Product prior to [*****]; or

5.4.2 in relation to a Diagnostic Antibody Product prior to [*****].

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

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For the avoidance of doubt, the parties acknowledge and agree that a Dyax Partner or Dyax Sublicensee may obtain rights under the MedImmune Antibody Phage Display Patents and MedImmune Know-How to Exploit Products against a Target in the Territory without obtaining rights under a Product License if such Dyax Partner or Dyax Sublicensee obtains such rights under a written agreement directly with MedImmune.

5.5 Any Dyax Product Licence which may be granted by MedImmune to Dyax from the Initial Licence Allocation or the First Additional Licence Allocation shall not be effective until the receipt by MedImmune of the relevant Acceptance Fee, which shall not be refundable or creditable against any other sums which may be payable by Dyax or a Dyax Sublicensee to MedImmune pursuant to this Agreement.

5.6 Dyax will, if requested by MedImmune, inform MedImmune of the identity of all Dyax Sublicensees (and their sublicensees) in relation to each Dyax Product Licence.  Upon execution of a Dyax Product Licence from the Second Additional Licence Allocation, Dyax shall provide to MedImmune details of the consideration that is, or could be, payable by such Dyax Sublicensee to Dyax pursuant to the sublicence granted to such Dyax Sublicensee.

5.7 Dyax (and where relevant each Dyax Sublicensee) will ensure that any sublicensee (to which it sublicences its rights in accordance with the terms of this Agreement) executes a written agreement (a) which requires the sublicensee to abide by the terms of one or more specified Dyax Product Licences or (b) which is consistent with the terms of Clauses 3.10 or 7, and Clauses 4, 5.5, and 5.8 of this Agreement and for the purposes of sublicences relating to Other Products only Clauses 8.4, 8.6, 8.8, 8.9, 8.10 and 9.2 through to 9.7.

5.8 Dyax shall be entitled to sublicense its rights under a Dyax Product Licence to one or more Dyax Sublicensees.  Furthermore, each Dyax Sublicensee may also sublicense to any Third Party and so on provided each such sublicence is granted in accordance with Clause 5.7 above.  [*****].

6.            Terms of the Dyax Product Licences

Each Dyax Product Licence granted to Dyax by MedImmune shall include the following terms:

6.1 The Dyax Product Licence shall grant rights under the MedImmune Antibody Phage Display Patents and MedImmune Know-How and, for the avoidance of doubt, no rights shall be granted by MedImmune in any Dyax Product Licence to any MedImmune Diabodies Patent Rights, and any Patent Rights owned or controlled by MedImmune which claim Catalytic Antibodies, ribosome display technology, any Patent Rights which claim Single Domain Antibodies and no rights shall be granted by MedImmune in any Dyax Product Licence under the Antibody Phage Display Patents to Exploit Research Products;

6.2 The Dyax Product Licence shall come into effect upon the date that the Acceptance Fee is paid, except for any Dyax Product Licence taken from the Second Additional License Allocation which shall come into effect upon execution by both Parties.  All Dyax Product Licence shall be subject to the applicable terms of Clause 8;

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

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6.3 Unless terminated under Clause 6.10, Clause 6.11 or Clause 6.12, the Dyax Product Licence shall continue, on a country-by-country and Product-by-Product basis until the last Valid Claim of the MedImmune Antibody Phage Display Patents expires, or [*****] years after First Commercial Sale of such Product in the country of sale, whichever occurs later;

6.4 Dyax and each Dyax Sublicensee (or its sublicensee) shall indemnify MedImmune and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the "MedImmune Indemnitees") against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by Dyax or such Dyax Sublicensee (or its sublicensee);

6.5 MedImmune shall not be liable to any Dyax and Dyax Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by Dyax and any Dyax Sublicensees (or its sublicensee) in connection with the manufacture, use or sale of any Products by Dyax and Dyax Sublicensees (or its sublicensee);

6.6 MedImmune provides no warranty or representation from MedImmune that the MedImmune Antibody Phage Display Patents are, or will be, valid or that the exercise of the rights granted under the Dyax Product Licence will not result in the infringement of patents of Third Parties;

6.7 Dyax shall notify MedImmune promptly of any proceedings or applications for revocation of any of the MedImmune Antibody Phage Display Patents emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of any patents of that Third Party by reason of Dyax's use or operation of the MedImmune Antibody Phage Display Patents or manufacture, use or sale of the Products.  Dyax shall notify MedImmune promptly of any infringement of the MedImmune Antibody Phage Display Patents by a Third Party which may come to its attention during the term of the Dyax Product Licence, except Dyax shall have no obligation to so notify MedImmune with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as Dyax is aware, not being carried out with a view to commercialising a product or otherwise for profit;

6.8 MedImmune shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from Dyax, to file, prosecute and maintain the MedImmune Antibody Phage Display Patents and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, Dyax and Dyax Sublicensees will have the right to conduct any proceedings relating to its Product including any proceedings relating to product liability;

6.9 Dyax and any Dyax Sublicensee may assign the benefit and/or burden of any Dyax Product Licence to any Affiliate or Third Party, provided that such Affiliate or Third Party undertakes to MedImmune to be bound by the terms of the Dyax Product Licence;

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

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6.10 MedImmune shall have the right to terminate any Dyax Product Licence in the event that:

6.10.1 Dyax or a Dyax Sublicensee (or its sublicensee) has not filed an IND for a Therapeutic Antibody Product, or a 510(k) or IDE for a Diagnostic Antibody Product within [*****] after the grant of that Dyax Product Licence; provided however, that Dyax shall have the right to extend such period in annual increments by up to [*****], upon the following terms:

[*****]	$[*****]
[*****]	$[*****]

In order for Dyax to be granted an extension under this Clause 6.10.1, the foregoing amounts must be received by MedImmune prior to the date of expiration.  All amounts received by MedImmune under this Clause 6.10.1 will be credited against any amounts that would otherwise be due to MedImmune under the terms of the Dyax Product License; or

6.10.2 Dyax or a Dyax Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the MedImmune Antibody Phage Display Patents, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the MedImmune Antibody Phage Display Patents or any of the claims thereof.

6.11 In the event that either Party commits a material breach of any of its obligations with respect to a Dyax Product Licence, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate the Dyax Product Licence upon written notice to the breaching Party.

6.12 Either Party may terminate a Dyax Product Licence in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

(a) the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

(b) the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

(c) the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

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

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(d) a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security; or

(e) the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 6.12(a) - (d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

7.            Grant of Other Licences

7.1 Other Products. MedImmune hereby grants with effect from 3 January 2003 to Dyax a non-exclusive licence in the Territory, with the right to sublicence, under the MedImmune Antibody Phage Display Patents and the MedImmune Know-How for any purpose not already covered by the provisions of this Agreement ("Other Purposes") including to Exploit any product, other than a Therapeutic Antibody Product, Diagnostic Antibody Product or Research Product, whose development, manufacture, use or sale would, absent the license hereunder, infringe Valid Claims of the MedImmune Antibody Phage Display Patents or utilize the MedImmune Know-How ("Other Product").  The license granted under this Clause 7.1 shall be subject to the terms and conditions applicable under Clauses 5.6, 5.7, 5.8, 6.1, 6.3 through 6.11, 7.3, 7.4, 7.5, 8.5 through 8.7, 9.2 through 9.7, 15.4(c)-(g) and 19.

7.2 The licence granted in Clause 7.1 does not include any grant by MedImmune of rights to MedImmune Diabodies Patent Rights, or Patent Rights owned or controlled by MedImmune which claim Catalytic Antibodies, or ribosome display technology or Patent Rights which claim Single Domain Antibodies or any use of the said Patent Rights in the field of Research Products.  Dyax's rights under the licence granted in Clause 7.1 are expressly subject to any rights which MedImmune has granted to any Third Party prior to 3 January 2003 or may grant to any Third Party after 3 January 2003 provided that any rights granted by MedImmune to any Third Party after 3 January 2003 shall not restrict the freedom of Dyax or Dyax Sublicensees (or their sublicensees) to operate under any agreement entered into by them prior to the date MedImmune grants such Third Party rights.

7.3 In the event that either Party commits a material breach of any of its obligations with respect to the licence granted in Clause 7.1, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate the licence upon written notice to the breaching Party.

7.4 Either Party may terminate a licence set out in Clause 7.1 above in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

(a) the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

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

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(b) the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

(c) the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

(d) a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

(e) the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 7.4(a) – (d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor;

8.            Consideration Payable by Dyax

8.1 Initial Licence Allocation for Therapeutic Antibody Products.

8.1.1 With respect to each Dyax Product Licence from the Initial Licence Allocation for Therapeutic Antibody Products for a Nominated Target, Dyax shall pay to MedImmune the following payments upon achievement of the specified milestones by Dyax or a Dyax Sublicensee (or its sublicensee) for the first Therapeutic Antibody Product directed against such Nominated Target to achieve the relevant milestone:

Acceptance Fee [*****]	US $[*****]
Initiation of first Phase I Clinical Trial	US $[*****]
Initiation of first Phase III Clinical Trial	US $[*****]
First filing for Marketing Authorisation in one Major Market country	US $[*****]
Marketing Authorisation granted in the United States	US $[*****]

8.1.2 With respect to Dyax Product Licences for a Therapeutic Antibody Product from the Initial Licence Allocation, Dyax shall pay MedImmune royalties in an amount equal to [*****] of Net Sales of the Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee.

8.2 Dyax Product Licenses from First Additional Licence Allocation and Second Additional Licence Allocation.

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

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8.2.1           Dyax Product Licenses from First Additional Licence Allocation.

(a) With respect to each Dyax Product Licence from the First Additional Licence Allocation set forth in Clause 3.5(a) for Therapeutic Antibody Products for a Nominated Target, Dyax shall pay to MedImmune:

(i) the following payments upon achievement of the specified milestones by Dyax or a Dyax Sublicensee (or its sublicensee) for the first Therapeutic Antibody Product directed against such Nominated Target to achieve the relevant milestone:

Acceptance Fee [*****]	US $[*****]
Initiation of first Phase I Clinical Trial	US $[*****]
Initiation of first Phase III Clinical Trial	US $[*****]
First filing for Marketing Authorisation in one Major Market country	US $[*****]
First Marketing Authorisation granted in one Major Market country	US $[*****]

and

(ii) royalties in an amount equal to [*****] of Net Sales of the Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee.  Such royalty rate shall apply to the four Dyax Product Licences which MedImmune and Dyax have already executed before the effective date of the Original Agreement and which were taken from the [*****].

(b) With respect to each Dyax Product Licence from the Additional Licence Allocation set forth in Clause 3.5(a) for Diagnostic Antibody Products, Dyax will pay MedImmune the amounts set forth in Clause 8.3.

8.2.2 Dyax Product Licenses from Second Additional Licence Allocation.

(a) With respect to each Dyax Product Licence from the Second Additional Licence Allocation set forth in Clause 3.5(b) for Therapeutic Antibody Products or Diagnostic Antibody Products for a Nominated Target, Dyax shall pay to MedImmune:

(i) royalties in an amount equal to [*****] of Net Sales of any Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee; and

(ii) [*****] of all other net proceeds paid or payable to Dyax arising pursuant to such Dyax Product Licence.

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

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8.3 Dyax Product Licences for Diagnostic Products.

8.3.1 Subject to Clause 8.2.2, with respect to each Dyax Product Licence for Diagnostic Antibody Products, Dyax shall pay to MedImmune the following payments upon achievement by Dyax or a Dyax Sublicensee (or its sublicensee) of the milestones set out below.  For the avoidance of doubt the milestone payments shall be payable in respect of the first Diagnostic Antibody Product directed against each Nominated Target to achieve the relevant milestone:

Acceptance Fee [*****]	US $[*****]
First filing for Marketing Authorisation in one Major Market country	US $[*****]
Marketing Authorisation granted in each Major Market Country	US $[*****]

8.3.2 Notwithstanding the foregoing, the parties acknowledge and agree that no milestone payments will be payable by Dyax Sublicensee to MedImmune in respect of Diagnostic Antibody Products developed under the Specified Diagnostic Agreements.

8.3.3 With respect to each Dyax Product Licence for a Diagnostic Antibody Product, Dyax shall pay MedImmune royalties on a country-by-country basis in an amount equal to [*****] of Net Sales of Diagnostic Antibody Products sold by or on behalf of Dyax or any Dyax Sublicensee.

8.4 Other Products.  With respect to each Other Product developed by Dyax or one of its sublicensees under Clause 7, Dyax or its sublicensee, as the case may be, shall pay MedImmune royalties on a country-by-country basis in an amount equal to [*****] of Net Sales of each Other Product sold by or on behalf of Dyax or the Dyax Sublicensee in the Territory.

8.5 In addition to the royalty payments in Clause 8.4, and subject to Clause 8.7.3, Dyax will pay to MedImmune [*****] of all other sums received by Dyax in relation to Other Products or any Other Purposes under sublicense agreements executed after the Commencement Date.  For the avoidance of doubt, the sums payable by Dyax shall include [*****] of any sums that Dyax receives from a sublicensee from any further sublicensing but MedImmune shall not receive [*****] of the sum actually received by such a sublicensee from such further sublicensing.  Dyax shall be entitled to retain all amounts that it receives from sublicensees in payment for the provision of support services relating to the supply of MedImmune Antibody Libraries or Antibodies derived therefrom as reasonably calculated based on the use of Full Time Equivalents, machine hours, other comparable cost based measures or any combination of the foregoing.

8.6 For the further avoidance of doubt, Dyax or its sublicensee will retain all non-royalty payments made to Dyax by sublicensees of Other Products under agreements executed prior to 3 January 2003.

8.7 The Parties hereby agree that, notwithstanding any provision of this Agreement (including without limitation Clauses 8.4, 8.5 and 8.6 of this Agreement), with respect to any [*****] used for [*****] that is developed under that certain Development and License Agreement between Dyax and a Third Party dated [*****] (the "Development and License Agreement"), Dyax's sole obligation to MedImmune is to pay to MedImmune [*****] of all royalties, milestones and other sums (including any consideration in kind) received by Dyax in relation to [*****], except that Dyax shall not pay to MedImmune any percentage of Full Time Equivalent based funded research payments received by Dyax under the Development and License Agreement.

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

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8.8 Dyax Antibody Libraries and Funded Discovery Activities.

8.8.1 In respect of any agreements concluded between Dyax and any Dyax Partner before 3 January 2003 under which MedImmune Antibody Libraries or Antibodies derived therefrom are made available to such Dyax Partner, the Parties agree that: (a) Dyax will retain all amounts (including without limitation all Antibody Library transfer fees) that it receives in payment from such Dyax Partner prior to the grant of a Dyax Product Licence; (b) Dyax will retain all amounts that it receives in payment from such Dyax Partner after the grant of a Dyax Product Licence hereunder, exclusive of any amounts payable on account of such Dyax Partner's obligation to pay any milestone payments or royalties to MedImmune for any Therapeutic Antibody Product or Diagnostic Antibody Product under the terms of such Dyax Product Licence.

8.8.2 In respect of any agreements concluded between Dyax and any Dyax Partner after 3 January 2003 of this Agreement under which MedImmune Antibody Libraries or Antibodies derived therefrom are made available to such Dyax Partner, the Parties agree that: (a) Dyax shall be entitled to retain all amounts that it receives from such Dyax Partner in payment for the provision of support services relating to the supply of the MedImmune Antibody Libraries or Antibodies derived therefrom as reasonably calculated based on the use of Full Time Equivalents, machine hours, other comparable cost-based measures or any combination of the foregoing; and (b) all other amounts (including without limitation all Antibody Library transfer fees) that Dyax receives in payment from such Dyax Partner with respect to development of a Product during the period before the grant of a Dyax Product Licence hereunder will be divided in the proportion [*****] to Dyax and [*****] to MedImmune.  After the grant of a Dyax Product Licence for a Product MedImmune shall only be entitled to payments under the Dyax Product Licence for such Product and no further amounts shall be payable under this Clause 8.8.2.

8.8.3 The provisions of this Clause 8.8 shall not apply to Other Products, which shall be handled solely in accordance with Clauses 8.4, 8.5 and 8.6 above.

8.9 All royalties due to MedImmune under Clauses 8.1.2, 8.2.2, 8.3.2, 8.4 or sums due to MedImmune in respect of any Other Product or any Other Purpose under Clause 8.5 or any other sums due to MedImmune under Clause 8.8.2 shall be payable on a country-by-country basis until the last Valid Claim of a MedImmune Antibody Phage Display Patent expires or ten (10) years from the date of First Commercial Sale of such Product or Other Product or Other Purpose, whichever occurs later.

8.10 Dyax agrees that it will not, without the prior written consent of MedImmune, receive shares or any other non-cash consideration in return for granting any sublicence to a Dyax Sublicensee.  Dyax will ensure that each Dyax Sublicensee will also not receive any shares or any other non-cash consideration when granting a sublicence pursuant to the terms of its sublicence agreement.

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

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8.11 Dyax shall be free to make MedImmune Antibody Libraries and Antibodies derived from MedImmune Antibody Libraries available to any Dyax Sublicensee and the latter will be free to use the foregoing without any further licence from MedImmune under the MedImmune Antibody Phage Display Patents; provided that (i) any amounts paid to Dyax from any such Dyax Sublicensee will be dealt with in accordance with Clause 8.5 or 8.8, and (ii) such Dyax Sublicensees will only be able to Exploit any Product derived from such MedImmune Antibody Libraries or such Antibodies if a Dyax Product Licence has been sublicensed to them by Dyax.

8.12 The Parties agree that any payments already made by Dyax to MedImmune under the terms of the Amendment Agreement are not affected by the terms of this Agreement.

9.            Provisions relating to Payment of Consideration by Dyax

9.1 (a) Subject to 9.1(b), all milestone payments shall be paid by Dyax within [*****] days of the applicable milestone being achieved and no milestone payments shall be refundable or creditable against any other sum payable by Dyax hereunder for any reason.

(b) All amounts payable by Dyax under a Dyax Product License taken from the Second License Allocation shall:

(i) in the event the payment is a milestone payment, be paid by Dyax within [*****] days of the applicable milestone being achieved;

(ii) in the event the payment is not a milestone payment or royalty, be paid by Dyax within [*****] days of the requisite sum (in respect of which the payment to MedImmune arises) becoming payable to Dyax.

9.2 Dyax shall make the payments due to MedImmune under Clause 8 above in United States dollars (if Dyax in turn receives payment in dollars) or in pounds sterling (if Dyax in turn receives payment in pound sterling), or Euros (if Dyax in turn receives payment in Euros).  Where Dyax receives payment in a currency other than United States dollars, pounds sterling or Euros, Dyax will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  Dyax will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which Dyax pays MedImmune.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [*****] of the end of each Quarter after the First Commercial Sale of each Product, or Other Product in any country, Dyax shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each Product, or Other Product by Dyax or its Affiliates and all monies due to MedImmune based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by Dyax or its Affiliates in such country and shall be submitted to MedImmune within such [*****] day period together with remittance of the monies due.  With respect to Net Sales of a Product or Other Product by a Dyax Sublicensee (or its sublicensee) Dyax shall prepare a statement which will include the same information and remit that statement and any monies due within the same period except with regard to any Dyax Sublicensee with which Dyax has a licence agreement relating to the technology of Antibody phage display as of or prior to the Commencement Date where the remittance will be made at Quarterly intervals within [*****] days of the date royalties are due to Dyax from such existing Dyax Sublicensees.  With respect to any other sums received by Dyax in accordance with Clauses 8.5 and 8.7.2 Dyax  shall within [*****] days of the end of the first Quarter in which Dyax receives such sums prepare and submit to MedImmune a statement, which shall include details of all such sums received by Dyax on a country by country basis in the previous Quarter,  together with remittance of any monies due.

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

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9.3 All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  [*****].

9.4 Dyax shall keep and shall procure that its Affiliates and Dyax Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to MedImmune pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon MedImmune's written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point MedImmune shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any Dyax Sublicensee with rights to the Product in question) acceptable to Dyax or the Dyax Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

9.4.1 shall be given access to and shall be permitted to examine and copy such books and records of Dyax and its Affiliates and Dyax Sublicensees upon twenty (20) Business Days notice having been given by MedImmune and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by Dyax and its Affiliates and Dyax Sublicensees during any Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

9.4.2 prior to any such examination taking place, such firm of accountants shall undertake to Dyax that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including MedImmune, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

9.4.3 any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

9.4.4 Dyax and its Affiliates and Dyax Sublicensees shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

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

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9.4.5 the cost of the accountant shall be the responsibility of Dyax if the certification shows it to have underpaid monies to MedImmune by more than [*****] and the responsibility of MedImmune otherwise.

9.5 All payments due to MedImmune under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  [*****].

9.6 All payments made to MedImmune under this Agreement shall be made to the bank account of MedImmune as notified by MedImmune to Dyax from time to time.

9.7 If Dyax fails to make any payment to MedImmune hereunder on the due date for payment, without prejudice to any other right or remedy available to MedImmune it shall be entitled to charge Dyax interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [*****] calculated on a daily basis until payment in full is made without prejudice to MedImmune's right to receive payment on the due date.

10.          MedImmune Development License for Dyax Therapeutic Antibody Products

10.1 Right of First Offer; Development License Option.

10.1.1. In the event that Dyax undertakes development of any Dyax Therapeutic Antibody Product on its own and then subsequently decides to fully licence-out the further development and commercialisation of such Dyax Therapeutic Antibody Product to a Third Party prior to the filing of the first IND for such Dyax Therapeutic Antibody Product ("Development Licence"), then before granting such license to such Third Party, Dyax shall first offer MedImmune in writing the option to obtain a license to continue the development and commercialisation of such Dyax Therapeutic Antibody Product in the Territory (a "Development Licence Option").  As used in this Clause 10.1.1, the term "licence-out" shall apply only to Third Party license agreements in which Dyax will not retain any operational control or funding obligations with respect to the ongoing development and commercialisation of such Dyax Therapeutic Antibody Product.

10.1.2. For the avoidance of doubt, if Dyax decides to licence the further development and commercialisation of any Dyax Therapeutic Antibody Product to a Third Party after the filing of the first IND for such Dyax Therapeutic Antibody Product, it shall give MedImmune the option to participate in the bidding process for such a licence but Dyax shall have no obligation to offer MedImmune a Development Licence with respect thereto.

10.2 MedImmune acknowledges and agrees that, from time to time, the license out by Dyax of a Dyax Therapeutic Antibody Product may be strategically combined with one or more other Dyax Therapeutic Antibody Products or with products and services offered by Dyax, and that in such cases, MedImmune's Development Licence Optionmay only be exercised by agreeing to all of the terms relevant to such strategic combination.  If (i) any Development Licence Option offered to MedImmune contains such a combination; and (ii) MedImmune and Dyax do not enter into a Development Licence pursuant to such Development Licence Option in accordance with the provisions of Clause 10.5 below; and (iii) Dyax subsequently decide to alter the combination (for example add or take away a product or service) which is to be the subject of the Development Licence, such altered combination must be offered to MedImmune in accordance with Clause 10.1.1 above and Clauses 10.2 to 10.6 below shall apply.

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

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10.3 The written notification by Dyax to MedImmune of a Development Licence Option (a "Development Licence Option Notice") shall set out the general terms upon which Dyax is willing to grant a Development Licence, and it shall be accompanied by all reasonable and relevant scientific, regulatory and technical information relating to the Dyax Therapeutic Antibody Product that is the subject of the Development Licence Option Notice (the "Supporting Information") so that MedImmune can reasonably determine in its sole discretion whether to enter into a Development Licence.

10.4 MedImmune shall notify Dyax within [*****] days of receipt of the Development Licence Option Notice and all Supporting Information (or such other longer period as the Parties agree) whether or not it wishes to enter into a Development Licence.  If MedImmune notifies Dyax that it does not wish to enter into a Development Licence, or MedImmune does not respond to Dyax within the foregoing period, then Dyax shall be free to develop and commercialise the Dyax Therapeutic Antibody Product that was the subject of the Development Licence Option Notice with any Third Party; provided that Dyax shall not enter into such a Development Licence on terms which, taken as a whole, are more favourable to the Third Party then those set out in the Development Licence Option Notice without first offering such more favourable terms to MedImmune.

10.5 If MedImmune wishes to enter into a Development Licence, the Parties shall forthwith negotiate the terms of such Development Licence in good faith.  If the Parties acting reasonably and in good faith are unable to agree the heads of terms of the Development Licence within [*****]  months of commencing negotiations, then  Dyax shall be free to enter into a Development Licence with any Third Party for the Dyax Therapeutic Antibody that was the subject of the Development Licence Option Notice; provided that Dyax shall not enter into such a Development Licence on terms which, taken as a whole, are more favourable to the Third Party then those set out in the Development Licence Option Notice without first offering such more favourable terms to MedImmune.

10.6 The provisions of this Clause 10 shall apply to all Dyax Therapeutic Antibody Products.

10.7 For the avoidance of doubt Dyax shall be free to enter into co-development agreements with any Third Party with respect to any Therapeutic Antibody Product without first offering any rights to such product to MedImmune.  If however any proposed co-development agreement changes in nature during negotiations between Dyax and the relevant Third Party to being one of a licence-out the provisions of 10.1 to 10.5 above will apply.  In addition, if having entered into a co-development agreement with a Third Party with respect to any Therapeutic Antibody Product, such agreement is terminated and Dyax decides to out license the further development and commercialisation of such product, the provisions of Clauses 10.1 to 10.5 above will apply.

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

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11.          Dyax Library Licence

11.1 Dyax grants to MedImmune and its Affiliates a non-exclusive, non-sublicensable licence to use the Dyax Antibody Library, Dyax Materials, Dyax Know-How and the inventions claimed in the Dyax Patent Rights for the purposes of carrying out research and development activities in relation to identifying Dyax Licensable Antibodies or potential MedImmune Products from the Dyax Antibody Library.  Such licence shall commence on the date the Dyax Materials are received by MedImmune pursuant to Clause 11.3 below and continue until [*****].

[*****].

11.2 Dyax also grants to MedImmune and its Affiliates the following rights to Third Party intellectual property:

(a) Affimed Sublicense.   Upon the terms and conditions set forth in Schedule 10-A, MedImmune shall have a sublicense under the Affimed Patent Rights (the "Affimed Sublicense") for use with the Dyax Antibody Library as permitted by the license granted in Clause 11.1.

(b) Biosite Sublicense.   Upon the terms and conditions set forth in Schedule 10-B, MedImmune shall have a sublicense under the Biosite Patent Rights (the "Biosite Sublicense") for use with the Dyax Antibody Library as permitted by the license granted in Clause 11.1.

(c) Domantis Sublicense.   Upon the terms and conditions set forth in Schedule 10-C, MedImmune shall have a sublicense under the Domantis Patent Rights and the Domantis Know How (the "Domantis Sublicense") for use with the Dyax Antibody Library as permitted by the license granted in Clause 11.1.

(d) Genentech Sublicense.   Upon the terms and conditions set forth in Schedule 10-D, MedImmune shall have a sublicense under the Genentech Patent Rights (the "Genentech Sublicense") for use with the Dyax Antibody Library as permitted by the license granted in Clause 11.1.

(e) XOMA Covenant.  Upon the terms and conditions set forth in Schedule 10-E,  MedImmune shall have the benefit of the covenant not to sue conferred pursuant to the XOMA License with regard to infringement of the XOMA Patent Rights or misappropriation of the XOMA Know-How (the "XOMA Covenant") solely to the extent reasonably necessary to permit the use by MedImmune of the Dyax Antibody Library as permitted by the license granted in Clause 11.1; but the benefit of the covenant shall expressly exclude the use and practice of the XOMA Patent Rights or XOMA Know-How for commercial or industrial manufacture or any activities solely directed to the creation of such manufacturing capabilities.

11.3 As soon as possible following the date of this Agreement Dyax will transfer to MedImmune at its own expense the Dyax Materials and will disclose the Dyax Know-How to MedImmune.  Prior to the shipment of the Dyax Materials Dyax and MedImmune shall agree on appropriate specifications for the shipment and delivery of the Dyax Materials.  Dyax shall be responsible for obtaining all import and export licences and approvals required in order to transfer the Dyax Materials and Dyax Know-How to MedImmune at its site on Granta Park, Cambridge, England (the "MedImmune Site").

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

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11.4 Within thirty (30) days after the execution of this Agreement, Dyax shall transfer the Dyax Antibody Libraries (sufficient for [*****] selections), Dyax Materials and Dyax Know-How to MedImmune for use by MedImmune and its Affiliates in accordance with the terms and conditions of this Agreement.   Following the [*****], Dyax shall make additional transfers of the Dyax Antibody Libraries at least sufficient for [*****] selections at no additional cost or expense to MedImmune.

11.5 In the event of any loss of the Dyax Antibody Library by MedImmune, Dyax will provide MedImmune with a new copy of the Dyax Materials as soon as possible following such loss, provided that (i) MedImmune shall not be entitled to request such a new copy more than once in any one hundred and eighty (180) day period, and (ii) MedImmune shall reimburse Dyax for any reasonable costs incurred in connection with the production and delivery of such Dyax Materials.    On [*****], Dyax shall provide MedImmune with all material updates and improvements made or controlled by Dyax to the Dyax Antibody Libraries, Dyax Materials and all related Dyax Know-How ("Updates") at no additional cost to MedImmune and such Updates shall thereafter be deemed to be included in the license granted to MedImmune under Clause 11.1.

11.6 At MedImmune's request, Dyax shall provide on-site training to MedImmune in the use of the Dyax Antibody Libraries and Dyax Materials at mutually acceptable times and locations.  Such training shall be provided by [*****].  Such training shall be provided at no cost to MedImmune other than Dyax's reasonable, out-of-pocket, invoiced and documented travel, lodging and other similar expenses.  After such [*****] of training, Dyax will provide additional training to MedImmune at mutually acceptable times and locations at a cost of [*****] per employee per day, plus reimbursement for Dyax's reasonable, out-of-pocket, invoiced and documented travel, lodging and other similar expenses

11.7 MedImmune acknowledges that its rights with respect to the Dyax Patent Rights, Dyax Antibody Libraries, Dyax Materials or Dyax Know-How are limited to those expressly granted in this Clause 11 and Clause 2.  Each Party agrees that, except as expressly set forth in this Agreement, no other rights or licenses, express or implied, are granted to any patents, Patent Rights,  inventions, trademarks, trade secrets or other intellectual property, or to any materials, information, data or know-how, of the other Party.  Without in any way limiting the scope of the foregoing, MedImmune also acknowledges and agrees that:

(a) no rights are granted to MedImmune by Dyax to use the Dyax Antibody Libraries, Dyax Materials or Dyax Know-How except for the purposes of carrying out research and development activities in relation to identifying Dyax Licensable Antibodies or potential MedImmune Products;

(b) the use of the Dyax Antibody Libraries, Dyax Materials, or Dyax Know-How are solely for internal research and development purposes.  MedImmune shall not transfer the Dyax Antibody Libraries, Dyax Materials, or Dyax Know-How to any Third Party and shall not perform services or enter co-development lead discovery agreements with or on behalf of a Third Party under which any of the Dyax Antibody Libraries, Dyax Materials or Dyax Know-How are utilized;

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

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(c) Dyax has previously licensed and will continue to license use of the Dyax Antibody Libraries to Third Parties and as such it may be possible that Third Parties may generate the same Antibodies as MedImmune and therefore have access and rights to the same, and nothing contained in this Agreement shall be deemed to prohibit or restrict Dyax from continuing to supply Dyax Antibody Libraries to Third Parties, or serve as the basis for any claim of liability against Dyax as a result of such activities;

(d) Dyax has used and will continue to use the Dyax Antibody Libraries and Dyax Patent Rights in connection with Dyax's own internal research and development activities to discover Antibodies and as such it may be possible for Dyax to generate Antibodies or products that are the same or similar to Licensed Antibodies or Products developed by MedImmune;

(e) the Dyax Materials that are provided by Dyax to MedImmune are to be used for research and development purposes only in accordance with Section 11.1; and

(f) Dyax is and shall remain the owner of the Dyax Antibody Libraries, including without limitation any improvements to the Dyax Antibody Library that are developed by MedImmune or its Affiliates as a result of exercising the rights granted pursuant to this Agreement ("Dyax Antibody Library Improvements").  MedImmune shall execute and deliver to Dyax, without charge, irrevocable assignments of its right, title and interest in and to any and all Dyax Antibody Library Improvements and any intellectual property rights thereto to Dyax and shall take all other actions as may reasonably be requested by Dyax to vest in Dyax all right, title and interest in such Dyax Antibody Library Improvements and intellectual property rights.  Dyax shall have the sole right to prepare, file, prosecute, maintain and enforce patent applications and patents arising therefrom claiming inventions made by Dyax or its employees or otherwise relating to the Dyax Antibody Libraries and Dyax Antibody Library Improvements.  MedImmune shall have a licence to use any Dyax Antibody Library Improvements on the same terms as set out in Clause 11.1 above and in Clause 12.2 below except that, in the case of the licence granted pursuant to Clause 12.2, such licence shall be [*****].

11.8 MedImmune shall indemnify the Dyax Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the Dyax Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any use by MedImmune of the Dyax Antibody Library or Dyax Materials.

12.          MedImmune Option for MedImmune Product Licences from Dyax

12.1 Number of Options: In accordance with this Clause 12 Dyax grants to MedImmune and its Affiliates an option to obtain [*****] MedImmune Product Licences for MedImmune Products.

12.2 If MedImmune or its Affiliate wishes to develop and commercialise a MedImmune Product to a particular Target, MedImmune may at any time [*****], by written notice to Dyax ("MedImmune Target Option Notice") require that Dyax grant MedImmune or its Affiliate a MedImmune Product Licence in relation to such Target.  Provided that MedImmune has at least one option remaining from its allocation set out in Clause 12.1 above, Dyax will be deemed to have granted to MedImmune or its Affiliate a non-exclusive, royalty bearing license, with the right to sublicense under the Dyax Patent Rights and Dyax Know-How to research, develop and Exploit MedImmune Products against such Target in the Territory ("MedImmune Product Licence").

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

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12.3 MedImmune or its Affiliate shall be entitled to sublicense its rights under any MedImmune Product Licence to one or more MedImmune Sublicensees.  Furthermore each MedImmune Sublicensee may also sublicense to any Third Party and so on provided that in each case any sublicensee executes a written agreement (a) which requires sublicensee to abide by the terms of the MedImmune Product Licence and which (b) is consistent with the terms of Clause 11 of this Agreement, this Clause 12 and Clause 13 below.  MedImmune (and where relevant each MedImmune Sublicensee) will be liable for any breach of this Agreement by a sublicense.

12.4 Commencing with the first calendar year following the year in which MedImmune or its Affiliate has obtained rights under its first MedImmune Product Licence, MedImmune will provide to Dyax a brief summary of the status of all outstanding MedImmune Products with respect to which MedImmune has obtained rights under a MedImmune Product Licence ("MedImmune Status Report").  MedImmune will prepare and provide to Dyax the MedImmune Status Report on an annual basis by [*****] of each year, which will summarize the status of each MedImmune Product in the preceding calendar year.

12.5 Unless terminated under Clause 12.12, Clause 12.13 or Clause 12.14, each MedImmune Product Licence shall continue, on a country-by-country and MedImmune Product-by-MedImmune Product basis until [*****] after First Commercial Sale of such MedImmune Product, after which period the licence will become fully paid up.

12.6 MedImmune and each MedImmune Sublicensee (or its sublicensee) shall indemnify the Dyax Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the Dyax Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any MedImmune Product by MedImmune or such MedImmune Sublicensee (or its sublicensee).

12.7 Dyax shall not be liable to MedImmune or any MedImmune Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by MedImmune and any MedImmune Sublicensee (or its sublicensee) in connection with the manufacture, use or sale of any MedImmune Products by MedImmune or such MedImmune Sublicensee (or its sublicensee).

12.8 No warranty or representation is given by Dyax that the Dyax Patent Rights are, or will be, valid or that the exercise by MedImmune of the rights granted to MedImmune by Dyax under this Agreement will result in any Dyax Licensable Antibodies or MedImmune Products or as a warranty or representation by Dyax that the exploitation of the Dyax Patent Rights, Dyax Antibody Libraries, Dyax Materials or Dyax Know-How any Licensable Antibodies or MedImmune Product will be free from infringement of patents of third parties.  FURTHERMORE, DYAX DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND WITH REGARD TO THE DYAX PATENT RIGHTS, DYAX ANTIBODY LIBRARIES, DYAX MATERIALS AND DYAX KNOW-HOW, WHETHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, ANY WARRANTIES ARISING FROM COURSE OF DEALING OR USAGE OF TRADE OR THE WARRANTY OF NONINFRINGEMENT.

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

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12.9 MedImmune shall notify Dyax promptly of any proceedings or applications for revocation of any of the Dyax Patent Rights emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of any patents of that Third Party by reason of MedImmune's use or operation of the Dyax Patent Rights or manufacture, use or sale of the MedImmune Products.  MedImmune shall notify Dyax  promptly of any infringement of the Dyax Patent Rights by a Third Party which may come to its attention during the term of the MedImmune Product Licence, except MedImmune shall have no obligation to so notify Dyax with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as MedImmune is aware, not being carried out with a view to commercialising a product or otherwise for profit.

12.10 Dyax shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from MedImmune, to file, prosecute and maintain the Dyax Patent Rights and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, MedImmune and MedImmune Sublicensee (or its sublicensee) will have the right to conduct any proceedings relating to a MedImmune Product including any proceedings relating to product liability.

12.11 MedImmune and any MedImmune Sublicensee (or its sublicensee) may assign the benefit and/or burden of any MedImmune Product Licence to any Affiliate or Third Party, provided that such Affiliate or Third Party undertakes to Dyax to be bound by the terms of the MedImmune Product Licence.

12.12 Dyax shall have the right to terminate any MedImmune Product Licence in the event MedImmune or a MedImmune Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the Dyax Patent Rights, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the Dyax Patent Rights or any of the claims thereof.

12.13 In the event that either Party commits a material breach of any of its obligations with respect to a MedImmune Product Licence, and such Party fails to remedy that breach within [*****] days after receiving written notice thereof from the other Party, that other Party may immediately terminate the MedImmune Product Licence upon written notice to the breaching Party.

12.14 Either Party may terminate a MedImmune Product Licence in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

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

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(a) the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within [*****] days of its being levied;

(b) the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

(c) the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

(d) a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security; or

(e) the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 12.14(a) - (d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

13.          Sums Payable by MedImmune

13.1 MedImmune will have no obligation whatsoever to make any payments to Dyax for the rights granted to MedImmune under Clause 2 above including by way of royalty, milestone, payment of maintenance fee.

13.2 Without prejudice to Clause 13.1 above, Dyax agrees that MedImmune will have no obligations whatsoever to make any payments (whether by way of royalty, milestone or otherwise) to Dyax for any reason in relation to the sums MedImmune may have received or will receive in respect of the D2E7 product developed by MedImmune under the Abbott Agreement or any agreement which replaces or amends the Abbott Agreement in the future.  Dyax, on behalf of itself and its assigns and successors (each a "Dyax Entity"), hereby releases and forever discharges MedImmune, its Affiliates, assignees, successors and licensees and predecessors and any directors and officers of the foregoing (each a "MedImmune Entity") from any and all actions, courses of action, claims, demands, damages and expenses and any other thing in law, equity or otherwise whether now known or unknown or which have ever existed, now exist or which may exist in the future which any Dyax Entity may have against any MedImmune Entity arising out of or relating to any agreements, events or conduct relating to the D2E7 product developed by MedImmune under the Abbott Agreement.

13.3 MedImmune will pay to Dyax a royalty of [*****] on Net Sales of MedImmune Products by MedImmune, its Affiliates or a MedImmune Sublicensee (or its sublicensees).  All royalties due to Dyax under this Clause 13.3 shall be payable on a country by country basis for [*****] years from the date of First Commercial Sale of such MedImmune Product.

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

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13.4 MedImmune shall make the payments due to Dyax under this Clause 13 in United States dollars (if MedImmune in turn receives payment in dollars) or in pounds sterling (if MedImmune in turn receives payment in pound sterling), or Euros (if MedImmune in turn receives payment in Euros).  Where MedImmune receives payment in a currency other than United States dollars, pounds sterling or Euros, MedImmune will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  MedImmune will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which MedImmune pays Dyax.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [*****] days of the end of each Quarter after the First Commercial Sale of each MedImmune Product, in any country, MedImmune shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each MedImmune Product, by MedImmune or its Affiliates and all monies due to Dyax based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by MedImmune or its Affiliates in such country and shall be submitted to Dyax within such [*****] day period together with remittance of the monies due.  With respect to Net Sales of a Product, by a MedImmune Sublicensee (or its sublicensee) MedImmune shall prepare a statement which will include the same information and remit that statement and any monies due within the same period.

13.5 All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  Any tax (other than VAT) which MedImmune is required to pay or withhold with respect of the payments to be made to Dyax hereunder shall be deducted from the amount otherwise due provided that, in regard to any such deduction, MedImmune shall give Dyax such assistance, which shall include the provision of such documentation as may be required by any revenue authority and other revenue services, as may reasonably be necessary to enable Dyax to claim exemption therefrom or obtain a repayment thereof or a reduction thereof and shall upon request provide such additional documentation from time to time as is needed to confirm the payment of tax.  If by law, regulation or fiscal policy of a particular country, a remittance of royalties in the currency stipulated in Clause 13.5 above, as the case may be, is restricted or forbidden, notice thereof will be promptly given to Dyax, and payment of the royalty shall be made by the deposit thereof in local currency to the credit of Dyax in a recognized banking institution designated by Dyax or its Affiliates.  When in any country a law or regulation that prohibits both the transmittal and deposit of such payments ceases to be in effect, all royalties that MedImmune would have been under obligation to transmit or deposit but for the prohibition, shall forthwith be deposited or transmitted promptly to the extent allowable.

13.6 MedImmune shall keep and shall procure that its Affiliates and MedImmune Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to Dyax pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon Dyax's written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point Dyax shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any MedImmune Sublicensee with rights to the MedImmune Product in question) acceptable to MedImmune or the MedImmune Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

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

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13.6.1 shall be given access to and shall be permitted to examine and copy such books and records of MedImmune and its Affiliates and MedImmune Sublicensees upon twenty (20) Business Days notice having been given by Dyax and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by MedImmune and its Affiliates and MedImmune Sublicensees during any Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

13.6.2 prior to any such examination taking place, such firm of accountants shall undertake to MedImmune that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including Dyax, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

13.6.3 any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

13.6.4 MedImmune and its Affiliates and MedImmune Sublicensee shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

13.6.5 the cost of the accountant shall be the responsibility of MedImmune if the certification shows it to have underpaid monies to Dyax by more than [*****] and the responsibility of Dyax otherwise.

13.7 All payments due to Dyax under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  If Dyax is required to charge VAT on any such payment, Dyax will notify MedImmune.  MedImmune will then use all commercially reasonable endeavours to obtain a VAT registration as soon as reasonably possible in order to allow it to reclaim any VAT so chargeable.  If MedImmune does obtain a VAT registration then VAT will be added to any relevant payment at the applicable rate.  If having used all commercially reasonable endeavours MedImmune is not able to reclaim the VAT (in whole or in part) the parties agree that the amount of any VAT payable will be shared between them equally.

13.8 All payments made to Dyax under this Agreement shall be made to the bank account of Dyax as notified by Dyax to MedImmune from time to time.

13.9 If MedImmune fails to make any payment to Dyax hereunder on the due date for payment, without prejudice to any other right or remedy available to Dyax it shall be entitled to charge  MedImmune interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [*****] calculated on a daily basis until payment in full is made without prejudice to Dyax's right to receive payment on the due date.

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

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14.          Representations and Warranties

14.1 Each Party represents, warrants, undertakes and agrees for the benefit of the other Party that:

14.1.1 it has full power to enter into and perform this Agreement;

14.1.2 so far as it is aware the execution and delivery of this Agreement and the performance of and compliance with its terms and provisions will not:

(a) conflict with or result in a breach of, or constitute a default under, any agreement or instrument to which it is a party or by which it is bound or with its memorandum and articles of association;

(b) conflict with or result in a breach of any law, regulation or order of any court;

14.2 MedImmune represents, warrants and undertakes for the benefit of Dyax as at 3 January 2003:

14.2.1 MedImmune has provided to Dyax a complete and accurate description of MedImmune's Gatekeeping Procedure;

14.2.2 MedImmune will keep the agreement between it and the Medical Research Council dated 7 January 1997 in force;

14.2.3 the patents and applications listed in Schedule 1 are all the Patent Rights relating to the technology of Antibody phage display owned or controlled by MedImmune (including Patent Rights sublicensed by MedImmune from the Medical Research Council), except as specifically excluded in this Agreement.  If MedImmune has inadvertently excluded any such Patent Right from Schedule 1, such omission shall not be considered a breach of this representation and warranty but rather any missing Patent Right shall be deemed to be so included in Schedule 1;

14.3 Dyax represents, warrants and undertakes for the benefit of MedImmune that:

14.3.1 as at 31 December 1997 it possessed the exclusive right, title and interest in and to the Dyax Patent Rights and that it had the full legal right and power to enter into the obligations and grant the rights and licences set forth in this Agreement;

14.3.2 as at the date of this Agreement the patents and applications listed in Schedule 5 are all the Patent Rights relating to the technology of creating and using the Dyax Antibody Library owned or controlled by Dyax, except as specifically excluded in this Agreement.  If Dyax has inadvertently excluded any such Patent Right from Schedule 5, such omission shall not be considered a breach of this representation and warranty but rather any missing Patent Right shall be deemed to be so included in Schedule 5; and

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

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14.3.3 as at the date of this Agreement neither Dyax nor any Dyax Affiliate has received any written notice or other communication from a Third Party alleging that the practice of the Dyax Patent Rights infringes the rights of such Third Party.

14.4 Nothing in this Agreement shall be construed as:

14.4.1 a warranty or representation by Dyax or MedImmune as to the validity or scope of any patent included within any Patent Rights licensed pursuant to this Agreement.

14.4.2 a warranty or representation that the exploitation of any Patent Rights or the manufacture, use or sale of a Licensed Intermediate or a Licensed Products or a Product, or Other Product  is or will be free from infringement of patents of Third Parties;

14.4.3 an obligation of either Party to bring or prosecute actions or suits against Third Parties for infringement;

14.4.4 an obligation of MedImmune or Dyax to maintain any patent or to continue to prosecute any patent application included within the Patent Rights licensed pursuant to this Agreement in any country;

14.4.5 creating any agency, partnership, joint venture or similar relationship between MedImmune and Dyax ; or

14.4.6 conferring by implication, estoppel or otherwise any license, immunity or right under any patent of Dyax or MedImmune other than those specified in the Dyax Patent Rights or the MedImmune Antibody Phage Display Patent Rights.

15.          Duration and Termination

15.1 The options granted by MedImmune in Clause 3 will continue until (a) 31 December 2017; or (b) the termination of this Agreement in accordance with Clause 15.3 below.

15.2 The term of this Agreement shall commence upon the Restatement Date save for those provisions which are expressed to have an effect from the Commencement Date (in which case the relevant term will be deemed to have commenced as of the Commencement Date and be subject to the remaining terms of this Agreement) and shall terminate upon (a) the last-to-expire of claims of an issued and unexpired patent within the MedImmune Antibody Phage Display Patents or the Dyax Patent Rights (as the case may be) (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or (b) the date upon which no payments are due to MedImmune under Clause 8 of this Agreement and no payments are due to Dyax under Clause 13 of this Agreement, whichever event occurs last.

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

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15.3 Either Party may terminate this Agreement in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

(a) the other Party commits a material breach of any of its obligations under this Agreement which is incapable of remedy;

(b) the other Party fails to remedy, where it is capable of remedy, or persists in any breach of any of its obligations under this Agreement after having been required in writing to remedy or desist from such breach within a period of [*****] days;

(c) the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within [*****] days of its being levied;

(d) the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

(e) the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

(f) a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

(g) the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 15.3(c) - (f) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor;

15.4 Upon termination of this Agreement for any reason whatsoever:

(a) the relationship of the Parties hereunder shall cease save as (and to the extent) expressly provided for in this Clause 15.4;

(b) any unexercised options for Dyax Product Licences granted to Dyax under this Agreement shall terminate;

(c) any unexercised options for MedImmune Product Licences granted to MedImmune under this Agreement shall terminate;

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

Page 39

(d) any Dyax Product Licence granted to Dyax before the date of termination shall continue and the Parties will continue to be bound by the terms of this Agreement in relation to any such Dyax Product Licences;

(e) any MedImmune Product Licence granted to MedImmune before the date of termination shall continue and the Parties will continue to be bound by the terms of this Agreement in relation to any such MedImmune Product Licences;

(f) the licence granted to Dyax for Other Purposes shall continue with respect to any Other Products commercialised prior to the date of termination of this Agreement and the Parties will continue to be bound by the terms of this Agreement in relation to any such Other Product;

(g) any sublicences granted by Dyax in accordance with the terms of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicence and that each sublicensee agrees to enter into a direct agreement with MedImmune upon the terms of this Agreement;

(h) the Parties acknowledge and agree that Dyax Sublicensees, as well as sublicensees of the foregoing to the extent permitted under this Agreement, each derive independent and significant value from the agreements set forth herein and may rely thereon and to that extent only shall each have the right to enforce the provisions of Clause 15.4 (g) of this Agreement and be a third party beneficiary for that purpose only;

(i) Dyax shall immediately return or procure to be returned to MedImmune at such place as it directs and at the expense of Dyax (or if MedImmune so requires by notice to Dyax in writing, destroy) all MedImmune Know-How together with all copies of such MedImmune Know-How in its possession or under its control;

(j) MedImmune shall immediately return or procure to be returned to Dyax at such place as it directs and at the expense of MedImmune (or if Dyax so requires by notice to MedImmune in writing, destroy) all Dyax Antibody Libraries, Dyax Materials and Dyax Know-How together with all copies, where applicable, in its possession or under its control;

(k) the rights of any Commercial Party shall not be affected by the termination or expiration of this Agreement provided that the Commercial Party continues to perform the obligations of MedImmune pursuant to Clause 2.  MedImmune's rights and obligations, with respect to Licensed Products developed using the Dyax Base Phage Display Patent Rights, or developed as a result of Licensed Intermediates, during the term of this Agreement will survive termination or expiration of this Agreement;

(l) any sublicences granted by MedImmune with respect to the rights granted to MedImmune under Clause 2 of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicence and that each sublicensee agrees to enter into a direct agreement with Dyax upon the terms of this Agreement;

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

Page 40

(m) the Parties acknowledge and agree that MedImmune sublicensees each derive independent and significant value from the agreements set forth herein and may rely thereon and to that extent only shall each have the right to enforce the provisions of Clause 15.4 (l) of this Agreement and be a third party beneficiary for that purpose only;

16.          Confidentiality and Publicity

16.1 With respect to any confidential information received from the other Party ("Confidential Information"), each Party undertakes and agrees to:

16.1.1 only use the Confidential Information for the purposes envisaged under this Agreement and not to use the same for any other purpose whatsoever;

16.1.2 ensure that only those of its officers and employees who are directly concerned with the carrying of this Agreement have access to the Confidential Information on a strictly "need to know" basis and are informed of the secret and confidential nature of it;

16.1.3 keep the Confidential Information secret, confidential, safe and secure and shall not directly or indirectly disclose or permit to be disclosed the same to any Third Party, including any consultants or other advisors, without the prior written consent of the disclosing party except to the extent disclosure is necessary in connection with its use as envisaged under this Agreement;

16.1.4 ensure that the Confidential Information will not be covered by any lien or other encumbrance in any way; and

16.1.5 not copy, reproduce or otherwise replicate for any purpose or in any manner whatsoever any documents containing the Confidential Information except to the extent necessary in connection with its use as envisaged under this Agreement.

16.2 The obligations referred to in Clause 16.1 above shall not extend to any Confidential Information which:

16.2.1 is or becomes generally available to the public otherwise than be reason of breach by a recipient Party of the provision of Clause 16.1;

16.2.2 is known to the recipient Party and is at its free disposal (having been generated independently by the recipient Party or a Third Party in circumstances where it has not been derived directly or indirectly from the disclosing Party's Confidential Information prior to its receipt from the disclosing Party), provided that evidence of such knowledge is furnished by the recipient Party to the disclosing Party within twenty eight (28) days of recipient of that Confidential Information;

16.2.3 is subsequently disclosed to the recipient Party without obligations of confidence by a Third Party owing no such obligations to the disclosing Party in respect of that Confidential Information;

16.2.4 is required by law to be disclosed (including as part of any regulatory submission or approval process) and then only when prompt written notice of this requirement has been given to the disclosing Party so that it may, if so advised, seek appropriate relief to prevent such disclosure, provided always that in such circumstances such disclosure shall be only to the extent so required and shall be subject to prior consultation with the disclosing Party with a view to agreeing on the timing and content of such disclosure.

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

Page 41

16.3 No public announcement or other disclosures to Third Parties concerning the terms of this Agreement shall be made, whether directly or indirectly, by any Party to this Agreement (except confidential disclosures to professional advisors) without first obtaining the approval of the other Party and agreement upon the nature and text of such announcement or disclosure provided that:

16.3.1 a Party may disclose those terms which it is required by regulation or law to disclose, provided that it takes advantage of all provisions to keep confidential as many terms of this Agreement as possible; and

16.3.2 the Party desiring to make any such public announcement or other disclosure shall inform the other Party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof, in order to allow such Party to comment upon such announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof, in order to allow such Party to comment upon such announcement or disclosure.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the US Securities Exchange Commission, the UK Stock Exchange and any other comparable body including requests for confidential information or proprietary information of either party included in any such disclosure.  The Parties agree that each shall be entitled from time to time to include the name of other within a list of licensees under the respective Patent Rights in a public announcement.

17.          Governing Law and Jurisdiction

17.1 This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Massachusetts.

17.2 Any dispute, controversy or claim arising under, out of or relating to this agreement and any subsequent amendments of this contract, including, without limitation, its formation, validity, binding effect, interpretation, performance, breach or termination, as well as non-contractual claims, shall be referred to and finally determined by arbitration in accordance with the World Intellectual Property Organization Arbitration Rules. The arbitral tribunal shall consist of three arbitrators. The place of arbitration shall be Boston, Massachusetts if the arbitration is initiated by MedImmune, and it shall be London, England if the arbitration is initiated by Dyax.  The language to be used in the arbitral proceedings shall be English.  The dispute, controversy or claim shall be decided in accordance with the law of the Commonwealth of Massachusetts, U.S.A.

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

Page 42

18.          Assignment

18.1 Subject to Clause 6.9, this Agreement may not be assigned by either Party without the prior written consent of the other Party, except that either Party may assign the Agreement to any of its Affiliates or either Party may assign this Agreement to a successor in connection with the merger, consolidation or sale of all or substantially all of its assets or the portion of its business pertaining to the subject matter of this Agreement with prompt notice to the other Party of such assignment.  This Agreement shall inure for the benefit of and be binding on the Parties and their respective lawful successors and assignees.

19.          Miscellaneous

19.1 Acknowledgement Regarding Royalties.  Dyax and MedImmune each acknowledge and agree that the amount of royalties due from one Party to the other under this Agreement and the duration of such royalty payments have been chosen for the convenience of the Parties as payment for use of the other Party's proprietary technology to identify, generate, develop, produce or optimize Antibodies Products and MedImmune Products including in the case of patented technology, for use thereof during the life of such patents.

19.2 Notices - All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers:

If to Dyax:	If to MedImmune:
Dyax Corp.	MedImmune Limited
55 Network Drive	Milstein Building, Granta Park
Burlington, MA 01803	Cambridge, CB21 6GH
USA	UK
Attention:  General Counsel	Attention:  Company Secretary
Facsimile: [*****]	Facsimile:  [*****]

19.3 Compliance with Law - Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance or treaty, the latter shall prevail, but in such event the affected provisions of the Agreement shall be conformed and limited only to the extent necessary to bring it within the applicable legal requirements.

19.4 Amendment and Waiver - This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties.  Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

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

Page 43

19.5 Severability - In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof, and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

19.6 Entire Agreement - This Agreement, together with (i) [*****] and (iii) that [*****], constitutes the entire agreement between the parties with respect to the subject matter hereof and supersedes all prior agreements or understandings between the parties relating to the subject matter hereof.   [*****].

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

Page 44

IN WITNESS OF THE ABOVE the Parties have signed this Agreement on the date written at the head of this Agreement.

SIGNED by	)
	)
	)
	)   /s/ AndrewWilliams
for and on behalf of	)	Authorised Signatory
MEDIMMUNE LIMITED	)
SIGNED by	)
	)
	)
	)   /s/ Kia Motesharei
for and on behalf of	)	Authorised Signatory
DYAX CORP.	)
	)

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

Page 45

Schedule 1

Antibody Phage Display Patents

Family 1 (includes PCT/GB89/01344)
Patent or Publication No.	Title
AU 634186 B2	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors
CA 2002868 C	Single domain ligands, receptors comprising said ligands, methods for their production, and use of said ligands and receptors
DK 175392 B1	Enkelt-domaene-ligander, receptorer omfattende disse lignader, fremgangsmaader til fremstilling af dem og anvendelse af disse ligander og receptorer (Danish)
EP 368684 B2	Cloning immunoglobulin variable domain sequences
GB 8826444 A0	Cloning immunoglobulin variable domains for expression by polymerase
GB 8906034 A0	Recombinant DNA method
GB 8911047 A0	Antibody binding
GB 8912652 A0	Antibody binding
GB 8913900 A0	Antibody binding
GB 8918543 A0	Antibody binding
GB 899217 A0	Antibody binding
JP 2919890 B2
JP 3502801 T2
KR 184860 B1	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors
US 6248516	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors
US 6545142	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors
US 20030114659	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors
US 20030130496	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors
US 20040110941	Single domain ligands, receptors comprising said ligands, methods for their production and use of said ligands and receptors
WO 9005144	Single domain ligands, receptors comprising said ligands, methods for their production, and use of said ligands and receptors

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

Page 46

Family 2 (includes  PCT/US90/02890, PCT/US90/02835, PCT/US90/02836)
Patent or Publication No.	Title
AU 643948 B2	A new method for tapping the immunological repertoire
AU 651065 B2	Method for isolating receptors having a preselected specificity
AU 652539 B2	Co-expression of heteromeric receptors
CA 2016841 C	A method for producing polymers having a preselected activity
EP 425661 B1	A new method for tapping the immunological repertoire
EP 472638 B1	Method for isolating receptors having a preselected specificity
EP 478627 A1 (wd)	Co-expression of heteromeric receptors
EP 1026239 A2/A3	A new method for tapping the immunological repertoire
GR 1002149 B	Method for producing polymers having a preselected activity
GR 1002158 B	Method for tapping the immunological repertoire
JP 3321159 B2
JP 4500607 T2
JP 4506600 T2
JP 5501348 T2
PT 94065 B	Processo de producao de um acido nucleico conservado e de um receptor codificado pelo referido acido
PT 94066 B	Processo para a producao de vectores de and de cadeia dupla e de um sistema de clonacao compreendendo os referidos vectores
US 6291158	Method for tapping the immunological repertoire
US 6291159	Method for producing polymers having a preselected activity
US 6291160	Method for producing polymers having a preselected activity
US 6291161	Method for tapping the immunological repertoire
US 6680192	Method for producing polymers having a preselected activity
US 6969586	Method for tapping the immunological repertoire
US 7189841	Method for tapping the immunological repertoire
US 20060019260	Method for tapping the immunological repertoire
WO 9014424	Method for isolating receptors having a preselected specificity
WO 9014430	A new method for tapping the immunological repertoire
WO 9014443	Co-expression of heteromeric receptors

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

Page 47

Family 3 (includes PCT/GB92/00883, PCT/GB91/01134, PCT/GB92/01755, PCT/GB92/02240, PCT/GB93/00605)
Patent or Publication No.	Title
AU 664155 B2	Methods for producing members of specific binding pairs
AU 665025 B2	Production of chimeric antibodies - a combinatorial approach
AU 665190 B2	Methods for producing members of specific binding pairs
AU 665221 B2	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
AU 673515 B2	Methods for producing members of specific binding pairs
AU 703319 B2	Specific binding members for human carcinoembryonic antigen, materials and methods
CA 2086936 C	Method for producing members of specific binding pairs
CA 2109602 C	Methods for producing members of specific binding pairs
CA 2119930 C	Production of chimeric antibodies - a combinatorial approach
EP 585287 B1	Methods for producing members of specific binding pairs
EP 589877 B2	Methods for producing members of specific binding pairs
EP 605522 B1	Production of chimeric antibodies - a combinatorial approach
EP 616640 B1	Production of anti-self antibodies from antibody seqment repertoires and displayed on phage
EP 656941 B1	Methods for producing members of specific binding pairs
EP 774511 B1	Phagemid-based method of producing filamentous bacteriophage particles displaying antibody molecules and the corresponding bacteriophage paricles
EP 844306 B1	Methods of producing members of specific binding pairs
EP 865492 B1	Specific binding members for human carcinoembryonic antigen, materials and methods
EP 1433846 B1	Phagemid-based method of producing filamentous bacteriophage particles displaying antibody molecules and the corresponding bacteriophage paricles

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

Page 48

EP 1024191 A2/A3	Production of chimeric antibodies from antibody segment repertoires and displayed on phage
EP 1754787 A2	Methods for producing members of specific binding pairs
GB 9015198 A0	Binding substance
GB 9022845 A0	Antibodies
GB 9024503 A0	Binding substances
GB 9104744 A0	Binding substances
GB 9110549 A0	Binding substances
GB 9120252 A0	Improvement binding substances
GB 9120377 A0	Improved binding substances
GB 9125579 A0	Binding molecules 1
GB 9125582 A0	Binding molecules 2
GB 9206318 A0	Binding substances
GB 9206372 A0	Binding substances
GB 9525004 A0	Specific binding members, materials and methods
GB 9610824 A0	Specific binding members, materials and methods
GB 9621295 A0	Specific binding members, materials and methods
JP 3176917 B2
JP 3507073 B2
JP 3540315 B2
JP 5508076 T2
JP 6508511 T2
JP 6510671 T2
JP 7502167 T2
JP 7505055 T2
JP 2000504204 T2
KR 222326 B1	Method for producing members of specific binding pairs
US 5565332	Production of chimeric antibodies - a combinatorial approach
US 5733743	Methods for producing members of specific binding pairs

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

Page 49

US 5858657	Methods for producing members of specific binding pairs
US 5871907	Methods for producing members of specific binding pairs
US 5872215	Specific binding members, materials and methods
US 5885793	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
US 5962255	Methods for producing recombinant vectors
US 5969108	Methods for producing members of specific binding pairs
US 6140471	Methods for producing members of specific binding pairs
US 6172197	Methods for producing members of specific binding pairs
US 6225447	Methods for producing members of specific binding pairs
US 6291650	Methods for producing members of specific binding pairs
US 6492160	Methods for producing members of specific binding pairs
US 6521404	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
US 6544731	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
US 6555313	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
US 6582915	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
US 6593081	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
US 6806079	Methods for producing members of specific binding pairs
US 6916605	Methods for producing members of specific binding pairs
US 7063943	Methods for producing members of specific binding pairs
US 20030190674	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
US 20040157214	Methods for producing members of specific binding pairs
US 20040157215	Methods for producing members of specific binding pairs
WO 9201047	Methods for producing members of specific binding pairs
WO 9220791	Methods for producing members of specific binding pairs
WO 9306213	Production of chimeric antibodies - a combinatorial approach
WO 9311236	Production of anti-self antibodies from antibody segment repertoires and displayed on phage
WO 9319172	Methods for producing members of specific binding pairs
WO 9720932	Specific binding members for human carcinoembryonic antigen, materials and methods

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

Page 50

Family 4 (includes PCT/GB92/01483)
Patent or Publication No.	Title
AU 665365 B2	Treatment of cell populations
EP 597960 B1	Treatment of cell populations
GB 9117352 A0	Recombinant DNA method
GB 9212419 A0	Recombinant DNA method
JP 6509473 T2
US 5830663	In situ recombinant PCR within single cells
WO 9303151	Treatment of cell populations
Family 5 (includes PCT/GB94/01422)
Patent or Publication No.	Title
AU 691817 B2	SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof
EP 706569 B1	SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof
GB 9313509 A0	Chemisynthetic libraries
JP 9500016 T2
US 6017732	Bacteriophage library displaying immunoglobulin repertoires with a chemical moiety covalently bound within the binding site: production and selection thereof
WO 9501438	SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof

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

Page 51

Family 6 (includes PCT/GB94/02662)
Patent or Publication No.	Title
AU 674568 B2	Improved method for the refolding of proteins
AU 680685 B2	Retargeting antibodies
AU 690171 B2	Recombinant binding proteins and peptides
AU 690528 B2	Multivalent and multispecific binding proteins, their manufacture and use
CA 2155335 C	Improved method for the refolding of proteins
EP 672142 B1	Multivalent and multispecific binding proteins, their manufacture and use
EP 686162 B1	Improved method for the refolding of proteins
EP 720624 B1	Retargeting antibodies
EP 731842 A1	Recombinant binding proteins and peptides
FI 113272 B1	Parannettu proteiinien laskostamismenetelma forbattrat forfarande for veckning av proteiner (Swedish)
GB 9225453 A0	Binding proteins
GB 9300816 A0	Improvements in or relating to binding proteins
GB 9319969 A0	Binding proteins IV
GB 9412147 A0	Recombinant binding proteins and peptides
GB 9412166 A0	Retargeting antibodies
JP 3695467 B2
JP 3720353 B2
JP 8504100 T2
JP 8506243 T2
JP 9503759 T2
JP 9506508 T2
NO 316274 B1	Fremgangsmate til refolding av proteiner (Norwegian)
US 5739281	Interative method of at least three cycles for the refolding of proteins
US 5837242	Multivalent and multispecific binding proteins, their manufacture and use
US 5917018	Interative method of at least five cycles for the refolding of proteins
US 6010884	Recombinant binding proteins and peptides
US 6492123	Multivalent and multispecific binding proteins, their manufacture and use
US 6589527	Retargeting antibodies
WO 9413804	Multivalent and multispecific binding proteins, their manufacture and use
WO 9418227	Improved method for the refolding of proteins
WO 9508577	Retargeting antibodies
WO 9515388	Recombinant binding proteins and peptides

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

Page 52

Family 7 (includes PCT/GB97/01835)
Patent or Publication No.	Title
AU 715796 B2	Labelling and selection of molecules
EP 906571 B1	Labelling and selection of molecules
EP 1353180 B1	Labelling and selection of molecules
GB 9614292 A0	Labelling and selection of specific binding molecules
GB 9624880 A0	Labelling and selection of specific binding molecules
GB 9712818 A0	Labelling and selection of specific binding molecules
GB 9714397 A0	Labelling and selection of molecules
GB 9900205 A0	Labelling and selection of molecules
GB 2330909 B2	Labelling and selection of molecules
GB 2315125 B2	Labelling and selection of molecules
JP 2000517046 T2
US 5994519	Labelling and selection of molecules
US 6180336	Labelling and selection of molecules
US 6342588	Labelling and selection of molecules
US 6489123	Labelling and selection of molecules
US 20020004215	Labelling and selection of molecules
WO 9801757	Labelling and selection of molecules

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

Page 53

Schedule 2

MedImmune Gatekeeping Procedure

For each Nominated Target (which must be accompanied by a GenBank® accession number or similar information which uniquely identifies that Nominated Target) submitted by Dyax under Clause 4.1, MedImmune will, on a Nominated -Target-by-Nominated -Target basis, not grant a Dyax Product Licence to Dyax, if MedImmune is, at the date of submission of the Target Option Notice by Dyax, contractually obligated on an exclusive basis in respect of that Nominated Target with a Third Party pursuant to an agreement with that Third Party which was entered into prior to 3 January 2003.

NOTES

1. For the avoidance of doubt, MedImmune will not subject any Nominated Target to the MedImmune Gatekeeping Procedure unless and until Dyax supplies MedImmune with a GenBank® accession number or similar information which uniquely identifies that Nominated Target.

2. If Dyax supplies MedImmune with an incorrect GenBank® accession number for a Nominated Target or otherwise incorrectly identifies a Nominated Target which is then subjected to the MedImmune Gatekeeping Procedure, the result of the MedImmune Gatekeeping Procedure in respect of such Nominated Target shall prevail even if it is subsequently discovered that such incorrect GenBank® accession number or identifying information had been provided by Dyax.

3. Within one (1) month after notice is given to Dyax of a refusal by MedImmune to grant a Dyax Product Licence in respect of any Nominated Target, Dyax may notify MedImmune that it wishes to appoint an Expert to make such enquiries of MedImmune as may be reasonably necessary for the Expert to be able to confirm to Dyax that the MedImmune Gatekeeping Procedure had been correctly applied by MedImmune in respect of such Nominated Target.  MedImmune shall provide such information to the Expert as the Expert may reasonably determine is required in order to make such confirmation.  For the avoidance of doubt the Expert shall not be entitled (unless MedImmune consents) to enter MedImmune premises in order to carry out its enquiries, shall only provide the confirmation to Dyax on a "Yes/No" basis and shall not give or be obliged to give to Dyax any other information obtained from MedImmune in respect of the MedImmune Gatekeeping Procedure or the relevant Nominated Target.  The Expert shall, prior to making any enquiries of MedImmune, enter into a confidential disclosure agreement with MedImmune.  Notwithstanding the foregoing, MedImmune shall not be obliged to respond to the enquiries of the Expert if to do so would, or would reasonably be expected to, cause a breach in terms of any agreement MedImmune may have with any other Third Parties; provided, however, that such disclosure subject to the confidential disclosure agreement shall be treated by MedImmune in the same manner as disclosure in its normal business operations. The Expert shall complete its investigations and provide the confirmation to Dyax (with a copy to MedImmune) within thirty (30) days after appointment by Dyax, and payment of the Expert's fee shall be conditioned on such delivery being timely made.  If such written confirmation is not made within such thirty (30) days period, then a replacement Expert shall be appointed within 10 days thereafter, subject to same terms and conditions stated above.  If an Expert provides notice that he or she cannot complete the analysis because MedImmune has failed without good reason to provide any information requested as provided above, then MedImmune shall have no more than 30 days to provide the information and the Expert shall then have no more than 15 days after the information is provided to the Expert to evaluate the information and make a determination.  Failure of the second Expert to provide such written confirmation to Dyax on a "Yes/No" basis within thirty (30) days after appointment shall be irrevocably deemed to be confirmation that MedImmune correctly applied the MedImmune Gatekeeping Procedure to the Nominated Target in question, provided, however that until (i) MedImmune provides all information that it is required to provide in accordance with this Schedule 2 and (ii) the expiration of any extension required for the Expert to evaluate such information, there shall not be deemed to be any such confirmation that MedImmune correctly applied the MedImmune Gatekeeping Procedure to the Nominated Target in question.

Schedule 2 - Page 1

If the Expert appointed by Dyax hereunder decides that MedImmune correctly applied, or is deemed to have correctly applied, the MedImmune Gatekeeping Procedure, Dyax shall be responsible for the Expert's fees and MedImmune shall thereafter have no obligations to Dyax in respect of such Nominated Target.  If the Expert decides that MedImmune did not correctly apply the MedImmune Gatekeeping Procedure Dyax shall be granted a Dyax Product Licence in relation to the Nominated Target in question (provided that MedImmune is not restricted by obligations to any Third Party in relation to the Nominated Target in question in which case the Dyax Product Licence will be subject to those restrictions) and MedImmune shall be responsible for the Expert's fees.  "Expert" shall mean a patent agent who is independent of MedImmune and all of the other parties with an interest in the outcome of a determination regarding a Nominated Target, who has suitable knowledge and experience in the reasonable opinion of Dyax to perform the above activities, subject to MedImmune's consent, which consent shall not be unreasonably withheld or delayed.

Schedule 2 - Page 2

Schedule 3

MedImmune Know-How

[*****]

Schedule 3 - Page 1

Schedule 4

[RESERVED]

Schedule 5

Dyax Patent Rights

A.  Dyax Base Phage Display Patent Rights

COUNTRY	SERIAL NO.	TITLE	PUB. NO.	PATENT NO.
AT	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE	0573611	E262036
CA	610176	GENERATION AND SELECTION OF NOVEL DNA-BINDING PROTEINS AND POLYPEPTIDES		1340288
CA	2105300	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS
CH	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE		0573611
DE	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE	DE 69233325T2	69233325.8-08
DK	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE	0573611	0573611
EP	89910702.3	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	EP0436597	0436597
EP	02015673.3	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	EP1279731
EP	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE	EP0573611	0573611
EP	04006079.0	IMPROVED EPITOPE DISPLAYING PHAGE	1452599
EP	05000796.2	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	EP1541682
ES	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE	0573611	0573611
FR	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE		0573611
GR	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE		3049248
IE	2834/89	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS
IL	91501	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS		91501
IL	120941	CHIMERIC BINDING PROTEIN	120941	120941
IL	120940	FUSION PROTEINS DISPLAYED DISPLAYABLE ON THE SURFACE OF FILAMENTOUS PHAGE AND A RECOMBINANT FILAMENTOUS PHAGE BEARING SAME		120940
IL	120939	METHOD FOR OBTAINING NUCLEIC ACID ENCODING A PROTEINACOUS BINDING DOMAIN		120939

Schedule 5 - Page 1

IT	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE		0573611
JP	510087/1989	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS		3771253
JP	507558/1992	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS
JP	508216/1992	IMPROVED EPITOPE DISPLAYING PHAGE		3447731
JP	130929/2003	IMPROVED EPITOPE DISPLAYING PHAGE	2004-221
NL	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE	0573611	0573611
SE	92908799.7	IMPROVED EPITOPE DISPLAYING PHAGE		0573611
US	07/664,989	DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS		5,223,409
US	08/009,319	VIRUSES EXPRESSING CHIMERIC BINDING PROTEINS		5,403,484
US	08/057,667	DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS		5,571,698
US	08/415,922	DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS		5,837,500
US	09/781,988	DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS	US-2002-0150881 A1	6,979,538
US	09/893,878	DIRECTED EVOLUTION OF NOVEL BINDING PROTEINS	US-2003-0113717 A1	7,208,293
US	10/126,544	METHOD OF RECOVERING A NUCLEIC ACID ENCODING A PROTEINACEOUS BINDING DOMAIN WHICH BINDS A TARGET MATERIAL	US-2004-0023205a1	7,118,879
US	10/207,797	DIRECTED EVOLUTION OF DISULFIDE BONDED MICROPROTEINS	US-2006-0084113-A1
WO	PCT/US92/01456	PROCESS FOR THE DEVELOPMENT OF BINDING MINI-PROTEINS	WO9215677
WO	PCT/US92/01539	IMPROVED DISPLAY PHAGE	WO92/15679
WO	PCT/US89/03731	GENERATION AND SELECTION OF RECOMBINANT VARIED BINDING PROTEINS	WO9002809

Schedule 5 - Page 2

B.    Dyax Library-Related Patent Rights

COUNTRY	SERIAL NO.	TITLE	PUB. NO.	PATENT NO.
AU	2002249854	FOCUSED LIBRARIES OF GENETIC PACKAGES	WO02/061071 A2
CA	2432377	FOCUSED LIBRARIES OF GENETIC PACKAGES
EP	01998098.6	FOCUSED LIBRARIES OF GENETIC PACKAGES	EP1360288
JP	2002-561628	FOCUSED LIBRARIES OF GENETIC PACKAGES
US	11/416,460	FOCUSED LIBRARIES OF GENETIC PACKAGES	US-2006-0257937-A1
WO	PCT/US01/50297	FOCUSED LIBRARIES OF GENETIC PACKAGES
AU	2001253589	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE (CJ Library)
AU	2002307422	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES
CA	2406236	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE
CA	2458462	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES
EP	01927108.9	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE	EP1276855
EP	02762148.1	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	EP1578903
JP	2001-577464	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE
JP	PCT/US02/12405	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES
US	10/045,674	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	US 2003-0232333 A1

Schedule 5 - Page 3

US	11/365,556	NOVEL METHODS OF CONSTRUCTING LIBRARES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND NOVEL LIBRARIES	US-2006-0166252-A1
WO	PCT/US01/12454	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES OF HUMAN FAB ANTIBODY FRAGMENTS DISPLAYED ON FILAMENTOUS PHAGE	2003-530853
WO	PCT/US02/12405	NOVEL METHODS OF CONSTRUCTIONG LIBRARIES COMPRISING DISPLAYED AND/OR EXPRESSED MEMBERS OF A DIVERSE FAMILY OF PEPTIDES, POLYPEPTIDES OR PROTEINS AND THE NOVEL LIBRARIES	WO02083872
US	10/383,902	LIGAND SCREENING AND DISCOVERY	US 2003-0224408 A1
AU	51422/00	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE		780145
CA	2372582	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE
EP	99201558.6	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	EP1054018
JP	2000-618429	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE
US	09/988,899	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	US 2002-0102613 A1
WO	PCT/US00/13682	NOVEL FAB FRAGMENT LIBRARIES AND METHODS FOR THEIR USE	WO00/70023

Schedule 5 - Page 4

Schedule 6

Dyax Antibody Libraries,  Dyax Materials and Dyax Know-How

[*****]

Schedule 6 - Page 1

Schedule 7-A

Private & Confidential

DATED AS OF ________________, 20__

____________________________________

MEDIMMUNE LIMITED   (1)

and

DYAX CORP.   (2)

____________________________________

DYAX PRODUCT LICENCE FOR [    ]

_____________________________________

Schedule 7-A

Page 1

THIS AGREEMENT is made as of ____________________, 20___

BETWEEN:

(1) MEDIMMUNE LIMITED (Registered in England No. 2451177) whose registered office is at Milstein Building, Granta Park, Cambridge, CB21 6GH, UK ("MedImmune").

(2) DYAX CORP. a corporation organised and existing under the laws of the State of Delaware having its principal place of business at 55 Network Drive, Burlington, Massachusetts  01803 USA ("Dyax").

BACKGROUND:

(a) By the terms of the Amended Agreement (as defined below), MedImmune granted Dyax certain options to be granted Dyax Product Licences under the Antibody Phage Display Patents and MedImmune Know How (all as defined below).

(b) Dyax has nominated the Target, and this Target has passed the MedImmune Gatekeeping Procedure (each as defined below).

(c) By this Agreement MedImmune wishes to grant to Dyax a Dyax Product Licence in respect of Diagnostic Antibody Products and Therapeutic Antibody Products against the Target.

In consideration of the mutual covenants and undertakings set out below, THE PARTIES AGREE as follows:

1.            Definitions

1.1 In this Agreement, the terms defined in this Clause shall have the meanings specified below:

"Acceptance Fee" means [*****].

"Affiliate" means any company, partnership or other entity which directly or indirectly Controls, is Controlled by or is under common Control with any other entity.

"Agreement"means this Dyax Product Licence and any and all Schedules, appendices and other addenda to it as may be amended from time to time in accordance with the provisions of this agreement.

"Amended Agreement"means the Amended and Restated Agreement executed by Dyax and MedImmune on July ___, 2012.

"Antibody"means a molecule or a gene encoding such a molecule comprising or containing one or more immunoglobulin variable domains or parts of such domains or any existing or future fragments, variants, modifications or derivatives thereof.

Schedule 7-A

Page 2

"Antibody Library" means any antibody library constructed using processes which are covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

"Antibody Phage Display Patents" means:  (a) the patents and patent applications listed in Schedule 1 and any patents issuing from such patent applications, together with any divisions, registrations, confirmations, reissues, extensions, renewals, continuations, continuations-in-part, revalidations, additions, substitutions, renewals or supplementary protection certificates thereof throughout the world; and (b) any Patent Rights which claim or cover any invention or discovery which is developed by MedImmune or its Affiliates at any time during the term of this Agreement directly related to Antibody phage display or Antibody Services; provided, however, that Antibody Phage Display Patents shall always exclude (i) MedImmune Diabodies Patent Rights, (ii) any Patent Rights owned or controlled by MedImmune which claim or cover Catalytic Antibodies, (iii) any Patent Rights owned or controlled by MedImmune which claim ribosome display technology, (iv) any Patent Rights which claim Single Domain Antibodies, and (v) any Patent Rights acquired by MedImmune after the Commencement Date from any Third Party for consideration or as a result of MedImmune's acquisition of or merger with such Third Party.

"Antibody Services" means the provision of research and/or development services for the identification, generation, derivation or development of one or more MedImmune Antibody Libraries or Antibodies derived therefrom.

"Business Day" means a day (other than a Saturday or Sunday) on which the banks are ordinarily open for business in the City of London and the Commonwealth of Massachusetts.

"Catalytic Antibodies"means solely those Antibodies which bind to and catalyze the chemical transformation of a substrate and in which an Antibody binding region is involved in said catalysis.

"Commencement Date" means the date of this Agreement first written above.

"Competent Authority" means any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties including the European Commission, the Court of First Instance and the European Court of Justice.

"Controls" means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation.

"Diagnostic Antibody Product" means any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a MedImmune Licensable Antibody.  The term "Diagnostic Antibody Product" shall not include any Research Product,

Schedule 7-A

Page 3

"Dyax Product Licence" means the licence granted to Dyax pursuant to Clause 2 of this Agreement.

"Dyax Therapeutic Antibody Product" means any Therapeutic Antibody Product identified, generated or derived by Dyax for itself or its Affiliates but not a Therapeutic Antibody Product identified, generated or derived by Dyax for, or on behalf of, a Third Party.

"Dyax Sublicensee" means any Third Party who is granted a sublicense under Clause 3.4 of this Agreement to Exploit Products against the Target in the Territory.

"Exploit" means to make, have made, use, sell or import.

"FDA" means the United States Food and Drug Administration, the equivalent Competent Authority in any country of the Territory or any successor bodies thereto.

"First Additional Licence Allocation" means the options for licences granted pursuant to Clause 3.5(a) of the Amended Agreement.

"First Commercial Sale" means the first commercial sale of any Product by Dyax or a Dyax Sublicensee (or its sublicensee) in any country after grant of a Marketing Authorisation.

"GAAP" means United States generally accepted accounting principles, consistently applied.

"IDE"means an Investigational Device Exemption application, as defined in Title 21 of the United States Code of Federal Regulations, filed with the FDA or an equivalent foreign filing.

"IND"means an Investigational New Drug Application, as defined in Title 21 of the United States Code of Federal Regulations, that is required to be filed with the FDA before beginning Phase I Clinical Trials of any Therapeutic Antibody Product in human subjects, or an equivalent foreign filing.

"Initial Licence Allocation" means the [*****] Dyax Product Licences in Clause 3.2, the up to [*****] additional Dyax Product Licences in Clause 3.3, and the up to [*****] additional Dyax Product Licences in Clause 3.4.

"Major Market" means any one of the following:  (i) the United States of America, (ii) any country in Europe which is subject to the Marketing Authorisation procedure of the European Medicines Evaluation Agency, or (iii) Japan.

"Marketing Authorisation" means any approval (including all applicable pricing and governmental reimbursement approvals) required from the FDA or relevant Competent Authority to market and sell a Product in a particular country.

"MedImmune Diabodies Patent Rights"means (a) the Patent Rights entitled "Diabodies – multivalent and multispecific binding proteins, their manufacture and use", PCT/GB93/02492 and (b) the Patent Rights entitled "Retargeting antibodies and diabodies", PCT/GB94/02019.

Schedule 7-A

Page 4

"MedImmune Gatekeeping Procedure" means the procedure set out in Schedule 2 of the Amended Agreement which MedImmune has carried out in respect of the Target prior to the grant of this Dyax Product Licence.

"MedImmune Know-How"means any Confidential Information of MedImmune which constitutes unpatented know-how, technical and other information related to the subject matter of the Antibody Phage Display Patents as identified in Schedule 2 and as amended from time to time in accordance with Schedule 2.

"MedImmune Licensable Antibody" means any Antibody (including any Bi-Specific or Poly-Specific Antibody) to the Target (a) where such Antibody has been identified, generated, developed, produced or derived by Dyax or a Dyax Sublicensee or its sublicensees and (b) the identification, generation, development, production or derivation of such Antibody uses any of the processes claimed or covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or uses the MedImmune Know-How and (c) which is potentially useful for the development of any Diagnostic Antibody Product and/or any Therapeutic Antibody Product.

"Net Sales" means, with respect to a Product sold by Dyax or a Dyax Sublicensee (or its sublicensees), the price invoiced by that party to the relevant purchaser (or in the case of a sale or other disposal otherwise than at arm's length, the price which would have been invoiced in a bona fide arm's length contract or sale) but deducting the costs of packing, transport and insurance, customs duties, any credits actually given for returned or defective Products, normal trade discounts actually given, and sales taxes, VAT or other similar tax charged on and included in the invoice price to the purchaser.

"Party" means MedImmune or Dyax.

"Patent Rights" means any patent applications and any patents issuing from such patent applications, author certificates, inventor certificates, utility certificates, improvement patents and models, and certificates of addition and all counterparts of them throughout the Territory, including any divisional applications and patents, filings, renewals, continuations, continuations-in-part, patents of addition, extensions, reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them.

"Pharmacia Agreement" means the agreement between MedImmune and Pharmacia P-L Biochemicals Inc.  dated 11 September 1991.

"Pharmacia P-L Biochemicals Inc."means Pharmacia P-L Biochemicals Inc (now known as Amersham Biosciences).

Schedule 7-A

Page 5

"Phase I Clinical Trial" means a human clinical trial in any country that is intended to initially evaluate the safety of an investigational Product in volunteer subjects or patients that would satisfy the requirements of 21 CFR 312.21(a), or its foreign equivalent and may evaluate the Product's therapeutic or antigenic effects.

"Phase III Clinical Trial" means a pivotal human clinical trial in any country the results of which could be used to establish safety and efficacy of a Product as a basis for a marketing application that would satisfy the requirements of 21 CFR 312.21(c).

"Product" means a Diagnostic Antibody Product or a Therapeutic Antibody Product.

"Quarter" means each period of three (3) months ending on March 31, June 30, September 30, or December 31 and "Quarterly" shall be construed accordingly.

"Research Products"means any product in relation to which Pharmacia P-L has an exclusive licence from MedImmune pursuant to the Pharmacia Agreement.

"Single Domain Antibodies" means an Antibody containing only a single domain (heavy or light).

"Status Report"has the meaning set forth in Clause 4.1.

"Target" means [        ], as set out in Schedule 3.

"Territory" means all countries of the world.

"Therapeutic Antibody Product" means any preparation for the treatment or prevention of disease, infection or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises, a MedImmune Licensable Antibody.  The term "Therapeutic Antibody Product" shall not include any Research Product, "Third Party" means any entity or person other than Dyax, MedImmune or their respective Affiliates.

"Valid Claim"means a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which have been licensed to MedImmune by the MRC which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

"Year" means initially the period from the Commencement Date to the end of that calendar year, and subsequently a calendar year.

1.2 The headings to clauses are inserted for convenience only and shall not affect the interpretation or construction of this Agreement.

1.3 Words imparting the singular shall include the plural and vice versa.  References to persons include an individual, company, corporation, firm or partnership.

Schedule 7-A

Page 6

1.4 The words and phrases "other", "including" and "in particular" shall not limit the generality of any preceding words or be construed as being limited to the same class as any preceding words where a wider construction is possible.

1.5 References to any statute or statutory provisions of the United Kingdom shall include (i) any subordinate legislation made under it, (ii) any provision which it has superseded or re-enacted (whether with or without modification), and (iii) any provision which subsequently supersedes it or re-enacts it (whether with or without modification.  References to any statute or regulation of the United States of America means that statute or regulation as it may be amended, supplemented or otherwise modified from time to time, and any successor statute or regulation.

2.            Grant of Dyax Product Licence

2.1 Subject to Clause 2.4 below, MedImmune hereby grants to Dyax and its Affiliates a non-exclusive, royalty-bearing licence (on the terms of this Agreement) with the right to sublicense (on the terms of Clause 3) under the Antibody Phage Display Patents and MedImmune Know-How to Exploit Products against the Target in the Territory.

2.2 The Dyax Product Licence granted under this Agreement is pursuant to Dyax's exercise of one (1) option from the [*****] under the Amended Agreement.

2.3 For the avoidance of doubt, no rights are granted by MedImmune under this Agreement to any MedImmune Diabodies Patent Rights, and any Patent Rights owned or controlled by MedImmune which claim Catalytic Antibodies, ribosome display technology, any Patent Rights which claim Single Domain Antibodies and no rights are granted by MedImmune in this Agreement under the Antibody Phage Display Patents to Exploit Research Products.

2.4 This Dyax Product Licence shall come into effect upon the date that the Acceptance Fee is received by MedImmune.  The Acceptance Fee of three hundred and twenty-five thousand dollars (US $325,000) will be due upon execution of this Product Licence.  The Acceptance Fee shall not be refundable or creditable against any other sums which may be payable by Dyax or a Dyax Sublicensee to MedImmune pursuant to this Agreement.

3.            Sub-Licensing

3.1 Dyax will, if requested by MedImmune, inform MedImmune of the identity of all Dyax Sublicensees (and their sublicensees) in relation to this Agreement.

3.2 Dyax will ensure that any Third Party which receives a sublicence of its rights in accordance with the terms of this Agreement executes a written agreement which requires the Third Party to abide by the terms of this Agreement.

3.3 Dyax will be liable for any breach of the sublicences granted in accordance with Clause 3.2.

Schedule 7-A

Page 7

3.4 For the avoidance of doubt, the rights granted to Dyax to Exploit Products against the Target in the Territory may be sublicensed to one or more Third Parties (and further sublicensed by any such Third Party), provided that any such sublicense would remain subject to the terms and conditions of this Agreement.

4.            Status Report

4.1 Dyax will provide to MedImmune a brief summary of the status of each Product against the Target that Dyax or Dyax Sublicensees desire to Exploit under this Agreement ("Status Report").  During the Term, Dyax will submit such Status Report to MedImmune for a particular Product prior to the time Dyax or Dyax Sublicensees begin the first human clinical trial with respect to such Product. [*****].

5.            Gatekeeping

The Parties acknowledge that, as of the Commencement Date, the Target has passed MedImmune's Gatekeeping Procedure under the Amended Agreement.

6.            Consideration

6.1 Therapeutic Antibody Products

6.1.1 With respect to Therapeutic Antibody Products, Dyax shall pay to MedImmune the following payments upon achievement of the specified milestones by Dyax or a Dyax Sublicensee (or its sublicensee) for the first Therapeutic Antibody Product to achieve the relevant milestone:

Initiation of first Phase I Clinical Trial	US $[*****]
Initiation of first Phase III Clinical Trial	US $[*****]
First filing for Marketing Authorisation in one Major Market country	US $[*****]
Marketing Authorisation granted in the United States	US $[*****]

6.1.2 With respect to Therapeutic Antibody Products, Dyax shall pay MedImmune royalties in an amount equal to [*****] percent [*****] of Net Sales of the Therapeutic Antibody Product sold by or on behalf of Dyax or the Dyax Sublicensee.

6.2 Diagnostic Products

6.2.1 With respect to Diagnostic Antibody Products, Dyax shall pay to MedImmune the following payments upon achievement by Dyax or a Dyax Sublicensee (or its sublicensee) of the milestones set out below.  For the avoidance of doubt the milestone payments shall be payable in respect of the first Diagnostic Antibody Product to achieve the relevant milestone:

First filing for Marketing Authorisation in one Major Market country	US $[*****]
Marketing Authorisation granted in each Major Market Country	US $[*****]

Schedule 7-A

Page 8

6.2.2 With respect to Diagnostic Antibody Products, Dyax shall pay MedImmune royalties on a country-by-country basis in an amount equal to [*****] of Net Sales of Diagnostic Antibody Products sold by or on behalf of Dyax or any Dyax Sublicensee.

6.3 All royalties due to MedImmune pursuant to Clauses 6.1.2 and 6.2.2 shall be payable on a country-by-country basis until the last Valid Claim expires or ten (10) years from the date of First Commercial Sale of such Product, whichever occurs later.

7.            Provisions Relating to Payment of Consideration

7.1 All milestone payments shall be paid by Dyax within [*****] days of the applicable milestone being achieved and no milestone payments shall be refundable or creditable against any other sum payable by Dyax hereunder for any reason.

7.2 Dyax shall make the payments due to MedImmune under Clause 6 above in United States dollars (if Dyax in turn receives payment in dollars) or in pounds sterling (if Dyax in turn receives payment in pound sterling), or Euros (if Dyax in turn receives payment in Euros).  Where Dyax receives payment in a currency other than United States dollars, pounds sterling or Euros, Dyax will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  Dyax will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which Dyax pays MedImmune.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [*****] days of the end of each Quarter after the First Commercial Sale of each Product in any country, Dyax shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each Product by Dyax or its Affiliates and all monies due to MedImmune based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by Dyax or its Affiliates in such country and shall be submitted to MedImmune within such [*****] day period together with remittance of the monies due.  With respect to Net Sales of a Product by a Dyax Sublicensee (or its sublicensee) Dyax shall prepare a statement which will include the same information and remit that statement and any monies due within the same period except with regard to any Dyax Sublicensee with which Dyax has a licence agreement relating to the technology of Antibody phage display as of the Commencement Date where the remittance will be made at Quarterly intervals within [*****] days of the date royalties are due to Dyax from such existing Dyax Sublicensees.

7.3 All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  [*****].

7.4 Dyax shall keep and shall procure that its Affiliates and Dyax Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to MedImmune pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon MedImmune's written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point MedImmune shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any Dyax Sublicensee with rights to the Product in question) acceptable to Dyax or the Dyax Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

Schedule 7-A

Page 9

7.4.1 shall be given access to and shall be permitted to examine and copy such books and records of Dyax and its Affiliates and Dyax Sublicensees upon twenty (20) Business Days notice having been given by MedImmune and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by Dyax and its Affiliates and Dyax Sublicensees during any Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

7.4.2 prior to any such examination taking place, such firm of accountants shall undertake to Dyax and its Affiliates and Dyax' Sublicenseesthat they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including MedImmune, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

7.4.3 any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

7.4.4 Dyax and its Affiliates and Dyax Sublicensees shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

7.4.5 the cost of the accountant shall be the responsibility of Dyax if the certification shows it to have underpaid monies to MedImmune by more than [*****] and the responsibility of MedImmune otherwise.

7.5 All payments due to MedImmune under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  [*****].

7.6 All payments made to MedImmune under this Agreement shall be made to the bank account of MedImmune as notified by MedImmune to Dyax from time to time.

7.7 If Dyax fails to make any payment to MedImmune hereunder on the due date for payment, without prejudice to any other right or remedy available to MedImmune it shall be entitled to charge  Dyax interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [*****] calculated on a daily basis until payment in full is made without prejudice to MedImmune's right to receive payment on the due date.

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8.            Confidentiality

8.1 With respect to any confidential information received from the other Party ("Confidential Information"), each Party undertakes and agrees to:

(a) only use the Confidential Information for the purposes envisaged under this Agreement and not to use the same for any other purpose whatsoever;

(b) ensure that only those of its officers and employees who are directly concerned with the carrying of this Agreement have access to the Confidential Information on a strictly "need to know" basis and are informed of the secret and confidential nature of it;

(c) keep the Confidential Information secret, confidential, safe and secure and shall not directly or indirectly disclose or permit to be disclosed the same to any Third Party, including any consultants or other advisors, without the prior written consent of the disclosing Party except to the extent disclosure is necessary in connection with its use as envisaged under this Agreement;

(d) ensure that the Confidential Information will not be covered by any lien or other encumbrance in any way, and

(e) not copy, reproduce or otherwise replicate for any purpose or in any manner whatsoever any documents containing the Confidential Information except to the extent necessary in connection with its use as envisaged under this Agreement.

For the avoidance of doubt, the Parties agree that the identity of the Target, any information related to the Target provided to MedImmune by Dyax, and the Status Report is the Confidential Information of Dyax.

8.2 The obligations referred to in Clause 8.1 above shall not extend to any Confidential Information which:

(a) is or becomes generally available to the public otherwise than be reason of breach by a recipient Party of the provision of Clause 8.1;

(b) is known to the recipient Party and is at its free disposal (having been generated independently by the recipient Party or a Third Party in circumstances where it has not been derived directly or indirectly from the disclosing Party's Confidential Information prior to its receipt from the disclosing Party), provided that evidence of such knowledge is furnished by the recipient Party to the disclosing Party within twenty-eight (28) days of recipient of that Confidential Information;

(c) is subsequently disclosed to the recipient Party without obligations of confidence by a Third Party owing no such obligations to the disclosing Party in respect of that Confidential Information;

(d) is required by law to be disclosed (including as part of any regulatory submission or approval process) and then only when prompt written notice of this requirement has been given to the disclosing Party so that it may, if so advised, seek appropriate relief to prevent such disclosure, provided always that in such circumstances such disclosure shall be only to the extent so required and shall be subject to prior consultation with the disclosing Party with a view to agreeing on the timing and content of such disclosure.

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8.3 No public announcement or other disclosures to Third Parties concerning the terms of this Agreement shall be made, whether directly or indirectly, by either Party (except confidential disclosures to professional advisors) without first obtaining the approval of the other Party and agreement upon the nature and text of such announcement or disclosure with the exceptions that:

(a) a Party may disclose those terms which it is required by regulation or law to disclose, provided that it takes advantage of all provisions to keep confidential as many terms of this Agreement as possible; and

(b) the Party desiring to make any such public announcement or other disclosure shall inform the other Party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof in order to allow such Party to comment upon such announcement or disclosure.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the U.S. Securities Exchange Commission, the UK Stock Exchange and any other comparable body including requests for confidential information or proprietary information of either Party included in any such disclosure.

9.            Indemnification

9.1 Dyax hereby indemnifies MedImmune and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the "MedImmune Indemnitees") against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by Dyax or any Dyax Sublicensee (or their sublicensee). In addition, each Dyax Sublicensee (or their sublicensee) shall indemnify the MedImmune Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by such Dyax Sublicensee (or their sublicensee).

9.2 MedImmune shall not be liable to Dyax and Dyax Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by Dyax and Dyax Sublicensees (or its sublicensee) in connection with the manufacture, use or sale of any Products by Dyax and Dyax Sublicensees (or its sublicensee).

9.3 MedImmune gives no warranty or representation that the Antibody Phage Display Patents are, or will be, valid or that the exercise of the rights granted under this Agreement will not result in the infringement of patents of Third Parties.

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10.          Infringement and Patent Prosecution

10.1 Dyax shall notify MedImmune promptly of any proceedings or applications for revocation of any of the Antibody Phage Display Patents emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of any patents of that Third Party by reason of Dyax's use or operation of the Antibody Phage Display Patents or manufacture, use or sale of the Products.  Dyax shall notify MedImmune promptly of any infringement of the Antibody Phage Display Patents by a Third Party which may come to its attention during the term of the Dyax Product Licence, except Dyax shall have no obligation to so notify MedImmune with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as Dyax is aware, not being carried out with a view to commercialising a product or otherwise for profit.

10.2 MedImmune shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from Dyax, to file, prosecute and maintain the Antibody Phage Display Patents and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, Dyax and Dyax Sublicensees will have the right to conduct any proceedings relating to its Product including any proceedings relating to product liability.

11.          Termination

11.1 Unless terminated under this Clause 11, this Agreement shall commence on the Commencement Date and shall terminate, on a country-by-country and Product-by-Product basis upon the last to expire of claims of an issued and unexpired patent within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or (b) the date upon which no payments are due to MedImmune under Clause 6 of this Agreement, whichever occurs later.

11.2 MedImmune shall have the right to terminate this Agreement in the event that:

11.2.1 Dyax or a Dyax Sublicensee (or its sublicensee) has not filed an IND for a Therapeutic Antibody Product, or a 510(k) or IDE for a Diagnostic Antibody Product within [*****] after the Commencement Date; provided however, that Dyax shall have the right to extend such period in annual increments by up to [*****], upon the following terms:

First Annual Extension	$[*****]
Second Annual Extension	$[*****]

In order for Dyax to be granted an extension under this Clause 11.2.1, the foregoing amounts must be received by MedImmune prior to the date of expiration.  All amounts received by MedImmune under this Clause 11.2.1 will be credited against any milestones and royalties that would otherwise be due to MedImmune under the terms of the Product License; or

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11.2.2 Dyax or a Dyax Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the Antibody Phage Display Patents, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the Antibody Phage Display Patents or any of the claims thereof.

11.3 In the event that either Party commits a material breach of any of its material obligations with respect to this Agreement, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate this Agreement upon written notice to the breaching Party.

11.4 Either Party may terminate this Agreement in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

(a) the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

(b) the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

(c) the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

(d) a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

(e) the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 11.4(a)-(d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

12.          Consequences of Termination

12.1 Upon termination of this Agreement for any reason whatsoever:

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(a) the relationship of the Parties hereunder shall cease save as (and to the extent) expressly provided for in this Clause 12;

(b) any sublicenses granted by Dyax in accordance with the terms of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicense and that each sublicensee agrees to enter into a direct agreement with MedImmune upon the terms of this Agreement;

(c) Dyax shall immediately return or procure to be returned to MedImmune at such place as it directs and at the expense of Dyax (or if MedImmune so requires by notice to Dyax in writing, destroy) all MedImmune Know-How together with all copies of such MedImmune Know-How in its possession or under its control;

(d) The following provisions shall survive expiration or termination of this Agreement: Clauses 7 (in relation to any accrued payment obligations of Dyax prior to termination or expiry), 8, 9, 12, 13 and 15; and

(e) Expiry or termination of this Agreement shall not affect the rights and obligations of the Parties accrued prior to such expiry or termination including any accrued obligation for Dyax to make any payments under Clause 6.

13.          Dispute Resolution

13.1 Any dispute arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition thereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement, shall be referred to the Chief Executive Officers of each of the Parties.  The Chief Executive Officers shall meet to resolve such deadlock within thirty (30) days of the date that the dispute is referred to them, at a time and place mutually acceptable to them.  Any dispute that has not been resolved following good faith negotiations of the Chief Executive Officers for a period of thirty (30) days shall be referred to and finally settled by binding arbitration in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association.  There shall be three (3) arbitrators, each Party to designate one arbitrator and the two Party-designated arbitrators to select the third arbitrator.  The Party initiating recourse to arbitration shall include in its notice of arbitration its appointment of an arbitrator.  The appointing authority, in the event a Party does not or the Parties do not appoint arbitrator(s), shall be the American Arbitration Association in [*****].  The place of arbitration shall be [*****]. The language to be used in the arbitration shall be English.  Any determination by the arbitration panel shall be final and conclusively binding.  Judgement on any arbitration award may be entered in any court having jurisdiction thereof.  Each Party shall bear its own costs and expenses incurred in the arbitration; provided that the arbitration panel may assess the costs and expenses of the prevailing Party, including reasonable attorneys fees, against the non-prevailing Party.

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14.           Notices

14.1 All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers:

If to Dyax:	If to MedImmune:
Dyax Corp.	MedImmune Limited
55 Network Drive	Milstein Building, Granta Park
Burlington, MA 01803	Cambridge, CB21 6GH
USA	UK
Attention:  General Counsel	Attention:  Company Secretary
Facsimile: [*****]	Facsimile: [*****]

Either party may change its designated address and facsimile number by notice to the other party in the manner provided in this Clause.

15.          Governing Law

15.1 This Agreement shall be governed by and construed in accordance with the laws of the [*****].

15.2 Save as provided in this Clause, the United Kingdom Legislation entitled the Contracts (Rights of Third Parties) Act 1999 will not apply to this Agreement.  No person, other than a MedImmune Indemnitee (as defined in Clause 9.1), who is not a Party to this Agreement (including any employee, officer, agent, representative or subcontractor of either Party) will have the right (whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise) to enforce any term of this Agreement which expressly or by implication confers a benefit on that person without the express prior agreement in writing of the Parties which agreement must refer to this Clause, except that any Dyax Sublicensee shall have the right to enforce the provisions of Clause 12.1(b) of this Agreement and shall be a third party beneficiary for that purpose only.

16.          Specific Performance

16.1 The parties agree that irreparable damage will occur in the event that the provisions of Clause 8 are not specifically enforced.  In the event of a breach or threatened breach of any such provisions, each Party agrees that the other Party shall, in addition to all other remedies, be entitled to temporary or permanent injunction, without showing any actual damage or that monetary damages would not provide an adequate remedy and without the necessity of posting any bond, and/or a decree for specific performance, in accordance with the provisions hereof.

17.          Assignment

17.1 This Agreement may not be assigned by either party without the prior written consent of the other party, except that either Party may assign the benefit and/or burden of this Agreement to any Affiliate of it or any Third Party, provided that such Affiliate or Third Party undertakes to the other Party to be bound by the terms of this Agreement. This Agreement shall inure to the benefit of and be binding upon the parties and their respective lawful successors and assigns.

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18.          Compliance With Law

18.1 Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance, or treaty, the latter shall prevail, but in, such event the affected provisions of the Agreement shall be conformed and limited only to the extent necessary to bring it within the applicable legal requirements.

19.          Amendment and Waiver

19.1 This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties.  Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

20.          Severabi1ity

20.1 In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

21.          Entire Agreement

21.1 This Agreement and the Amendment Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements or understandings between the parties relating to the subject matter hereof.

IN WITNESS OF THE ABOVE the Parties have signed this Agreement on the date written at the head of this Agreement.

SIGNED by	)
	)
	)
	____________________________________________
for and on behalf of	)	Authorised Signatory
MEDIMMUNE LIMITED	)

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SIGNED by	)
	)
	)
	____________________________________________
for and on behalf of	)	Authorised Signatory
DYAX CORP.	)
	)

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Schedule 1 (to Dyax Product Licence, Schedule 7A)

Antibody Phage Display Patents

1. “Single Domain Ligands, Receptors Comprising said Ligands, Methods for their Production and Use of Said Ligands and Receptors” PCT/GB89/01344, filed November 13, 1989.

2.  “Co-expression of Heteromeric Receptors” PCT/US90/02890, filed May 16, 1990.

3. “Method for Isolating Receptors Having a Preselected Specificity” PCT/US90/02835, filed May 16, 1990.

4. “A new method for tapping the immunological repertoire” PCT/US90/02836, filed May 16, 1990.

5. “Methods for producing members of specific binding pairs” PCT/GB91/01134, filed July 10, 1991.

6. “Methods for producing members of specific binding pairs” PCT/GB92/00883, filed May 15, 1992.

7.  “Treatment of Cell Populations” PCT/GB92/01483, filed August 10, 1992.

8. “Production of chimeric antibodies – a combinational approach” PCT/GB92/01755, filed September 23, 1992.

9. “Production of anti-self antibodies from antibody segment repertoires and displayed on phage” PCT/GB92/02240, filed December 2, 1992.

10. “Methods for producing members of specific binding pairs” PCT/GB93/00605, filed March 24, 1993.

11. “SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof” PCT/GB94/01422, filed June 30, 1994.

12. “Recombinant Binding Proteins and peptides” PCT/GB94/02662, filed December 5, 1994.

13. “Labelling and selection of Specified Binding Molecules” PCT/GB97/01835, filed July 8, 1997.

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Schedule 2 (to Dyax Product Licence, Schedule 7A)

MedImmune Know-How

MedImmune Training Manual “Antibody Phage Display” 2002.

MedImmune mammalian expression IgG vectors:

pEU1.2 (human gamma-1 heavy chain)

pEU3.2 (human kappa light chain)

pEU4.2 (human lambda light chain)

pEU8.2 (human gamma-4 heavy chain)

MedImmune may supplement the above with any revisions which it may make to the Training Manual or with any new vectors at its discretion from time to time (in each case accompanied by notice to Dyax under the Agreement) or with such additional know-how as the Parties may agree.

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Schedule 3 (to Dyax Product Licence, Schedule 7A)

Identification of Target:

The Target is identified as follows:	[ ]
GenBank accession number:	[ ]

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Schedule 7-B

Private & Confidential

DATED AS OF ________________, 20__

____________________________________

MEDIMMUNE LIMITED   (1)

and

DYAX CORP.   (2)

____________________________________

DYAX PRODUCT LICENCE FOR [    ]

_____________________________________

THIS AGREEMENT is made as of XX 20___

BETWEEN:

(1) MEDIMMUNE LIMITED (Registered in England No. 2451177) whose registered office is at Milstein Building, Granta Park, Cambridge, CB21 6GH, UK ("MedImmune").

(2) DYAX CORP. a corporation organised and existing under the laws of the State of Delaware having its principal place of business 55 Network Drive, Burlington, Massachusetts  01803  USA ("Dyax").

BACKGROUND:

(a) By the terms of the Amended Agreement (as defined below), MedImmune granted Dyax certain options to be granted Dyax Product Licences under the Antibody Phage Display Patents and MedImmune Know How (all as defined below).

(b) Dyax has nominated the Target and this Target has passed the MedImmune Gatekeeping Procedure (each as defined below).

(c) By this Agreement MedImmune wishes to grant to Dyax a Dyax Product Licence in respect of Diagnostic Antibody Products and Therapeutic Antibody Products against the Target.

In consideration of the mutual covenants and undertakings set out below, THE PARTIES AGREE as follows:

1.            Definitions

1.1 In this Agreement, the terms defined in this Clause shall have the meanings specified below:

"Affiliate" means any company, partnership or other entity which directly or indirectly Controls, is Controlled by or is under common Control with any other entity.

"Agreement"means this Dyax Product Licence and any and all Schedules, appendices and other addenda to it as may be amended from time to time in accordance with the provisions of this agreement.

"Amended Agreement"means the Amended and Restated Agreement executed by Dyax and MedImmune on July ___, 2012.

"Antibody"means a molecule or a gene encoding such a molecule comprising or containing one or more immunoglobulin variable domains or parts of such domains or any existing or future fragments, variants, modifications or derivatives thereof.

"Antibody Library" means any antibody library constructed using processes which are covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

2

"Antibody Phage Display Patents" means:  (a) the patents and patent applications listed in Schedule 1 and any patents issuing from such patent applications, together with any divisions, registrations, confirmations, reissues, extensions, renewals, continuations, continuations-in-part, revalidations, additions, substitutions, renewals or supplementary protection certificates thereof throughout the world; and (b) any Patent Rights which claim or cover any invention or discovery which is developed by MedImmune or its Affiliates at any time during the term of this Agreement directly related to Antibody phage display or Antibody Services; provided, however, that Antibody Phage Display Patents shall always exclude (i) MedImmune Diabodies Patent Rights, (ii) any Patent Rights owned or controlled by MedImmune which claim or cover Catalytic Antibodies, (iii) any Patent Rights owned or controlled by MedImmune which claim ribosome display technology, (iv) any Patent Rights which claim Single Domain Antibodies, and (v) any Patent Rights acquired by MedImmune after the Commencement Date from any Third Party for consideration or as a result of MedImmune's acquisition of or merger with such Third Party.

"Antibody Services" means the provision of research and/or development services for the identification, generation, derivation or development of one or more MedImmune Antibody Libraries or Antibodies derived therefrom.

"Business Day" means a day (other than a Saturday or Sunday) on which the banks are ordinarily open for business in the City of London and the Commonwealth of Massachusetts.

"Catalytic Antibodies"means solely those Antibodies which bind to and catalyze the chemical transformation of a substrate and in which an Antibody binding region is involved in said catalysis.

"Commencement Date" means the date of this Agreement first written above.

"Competent Authority" means any national or local agency, authority, department, inspectorate, minister, ministry official, parliament or public or statutory person (whether autonomous or not) of any government of any country having jurisdiction over either any of the activities contemplated by this Agreement or the Parties including the European Commission, the Court of First Instance and the European Court of Justice.

"Controls" means the ownership, directly or indirectly, of more than fifty percent (50%) of the outstanding equity securities of a corporation which are entitled to vote in the election of directors or a more than fifty percent (50%) interest in the net assets or profits of an entity which is not a corporation.

"Diagnostic Antibody Product" means any preparation in the form of a device, compound, kit or service with utility in the diagnosis, prognosis, prediction or disease management of a disorder for any indication which contains, comprises or the process of development or manufacture of which utilises a MedImmune Licensable Antibody.  The term "Diagnostic Antibody Product" shall not include any Research Product,

"Dyax Product Licence" means the licence granted to Dyax pursuant to Clause 2 of this Agreement.

3

"Dyax Therapeutic Antibody Product" means any Therapeutic Antibody Product identified, generated or derived by Dyax for itself or its Affiliates but not a Therapeutic Antibody Product identified, generated or derived by Dyax for, or on behalf of, a Third Party.

"Dyax Sublicensee" means any Third Party who is granted a sublicense under Clause 3.4 of this Agreement to Exploit Products against the Target in the Territory.

"Exploit" means to make, have made, use, sell or import.

"FDA" means the United States Food and Drug Administration, the equivalent Competent Authority in any country of the Territory or any successor bodies thereto.

"First Commercial Sale" means the first commercial sale of any Product by Dyax or a Dyax Sublicensee (or its sublicensee) in any country after grant of a Marketing Authorisation.

"GAAP" means United States generally accepted accounting principles, consistently applied.

"IDE"means an Investigational Device Exemption application, as defined in Title 21 of the United States Code of Federal Regulations, filed with the FDA or an equivalent foreign filing.

"IND"means an Investigational New Drug Application, as defined in Title 21 of the United States Code of Federal Regulations, that is required to be filed with the FDA before beginning Phase I Clinical Trials of any Therapeutic Antibody Product in human subjects, or an equivalent foreign filing.

"Second Additional Licence Allocation" means the options for licences granted pursuant to Clause 3.5(b) of the Amended Agreement.

"Marketing Authorisation" means any approval (including all applicable pricing and governmental reimbursement approvals) required from the FDA or relevant Competent Authority to market and sell a Product in a particular country.

"MedImmune Diabodies Patent Rights"means (a) the Patent Rights entitled "Diabodies – multivalent and multispecific binding proteins, their manufacture and use", PCT/GB93/02492 and (b) the Patent Rights entitled "Retargeting antibodies and diabodies", PCT/GB94/02019.

"MedImmune Gatekeeping Procedure" means the procedure set out in Schedule 2 of the Amended Agreement which MedImmune has carried out in respect of the Target prior to the grant of this Dyax Product Licence.

"MedImmune Know-How"means any Confidential Information of MedImmune which constitutes unpatented know-how, technical and other information related to the subject matter of the Antibody Phage Display Patents as identified in Schedule 2 and as amended from time to time in accordance with Schedule 2.

4

"MedImmune Licensable Antibody" means any Antibody (including any Bi-Specific or Poly-Specific Antibody) to the Target (a) where such Antibody has been identified, generated, developed, produced or derived by Dyax or a Dyax Sublicensee or its sublicensees and (b) the identification, generation, development, production or derivation of such Antibody uses any of the processes claimed or covered by a claim of an issued and unexpired patent included within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or uses the MedImmune Know-How and (c) which is potentially useful for the development of any Diagnostic Antibody Product and/or any Therapeutic Antibody Product.

"Net Sales" means, with respect to a Product sold by Dyax or a Dyax Sublicensee (or its sublicensees), the price invoiced by that party to the relevant purchaser (or in the case of a sale or other disposal otherwise than at arm's length, the price which would have been invoiced in a bona fide arm's length contract or sale) but deducting the costs of packing, transport and insurance, customs duties, any credits actually given for returned or defective Products, normal trade discounts actually given, and sales taxes, VAT or other similar tax charged on and included in the invoice price to the purchaser.

"Party" means MedImmune or Dyax.

"Patent Rights" means any patent applications and any patents issuing from such patent applications, author certificates, inventor certificates, utility certificates, improvement patents and models, and certificates of addition and all counterparts of them throughout the Territory, including any divisional applications and patents, filings, renewals, continuations, continuations-in-part, patents of addition, extensions, reissues, substitutions, confirmations, registrations, revalidation and additions of or to any of them, as well as any supplementary protection certificates and equivalent protection rights in respect of any of them.

"Pharmacia Agreement" means the agreement between MedImmune and Pharmacia P-L Biochemicals Inc.  dated 11 September 1991.

"Pharmacia P-L Biochemicals Inc."means Pharmacia P-L Biochemicals Inc (now known as Amersham Biosciences).

"Product" means a Diagnostic Antibody Product or a Therapeutic Antibody Product.

"Quarter" means each period of three (3) months ending on March 31, June 30, September 30, or December 31 and "Quarterly" shall be construed accordingly.

"Research Products"means any product in relation to which Pharmacia P-L has an exclusive licence from MedImmune pursuant to the Pharmacia Agreement.

"Single Domain Antibodies" means an Antibody containing only a single domain (heavy or light).

"Status Report"has the meaning set forth in Clause 4.1.

5

"Target" means [   ], as set out in Schedule 3.

"Territory" means all countries of the world.

"Therapeutic Antibody Product" means any preparation for the treatment or prevention of disease, infection or other condition in humans for any indication which contains, comprises, or the process of development or manufacture of which utilises, a MedImmune Licensable Antibody.  The term "Therapeutic Antibody Product" shall not include any Research Product.

"Third Party" means any entity or person other than Dyax, MedImmune or their respective Affiliates.

"Valid Claim"means a claim of an issued and unexpired patent included within the Antibody Phage Display Patents which have been licensed to MedImmune by the MRC which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise.

"Year" means initially the period from the Commencement Date to the end of that calendar year, and subsequently a calendar year.

1.2 The headings to clauses are inserted for convenience only and shall not affect the interpretation or construction of this Agreement.

1.3 Words imparting the singular shall include the plural and vice versa.  References to persons include an individual, company, corporation, firm or partnership.

1.4 The words and phrases "other", "including" and "in particular" shall not limit the generality of any preceding words or be construed as being limited to the same class as any preceding words where a wider construction is possible.

1.5 References to any statute or statutory provisions of the United Kingdom shall include (i) any subordinate legislation made under it, (ii) any provision which it has superseded or re-enacted (whether with or without modification), and (iii) any provision which subsequently supersedes it or re-enacts it (whether with or without modification.  References to any statute or regulation of the United States of America means that statute or regulation as it may be amended, supplemented or otherwise modified from time to time, and any successor statute or regulation.

2.            Grant of Dyax Product Licence

2.1 Subject to Clause 2.4 below, MedImmune hereby grants to Dyax and its Affiliates a non-exclusive, royalty-bearing licence (on the terms of this Agreement) with the right to sublicense (on the terms of Clause 3) under the Antibody Phage Display Patents and MedImmune Know-How to Exploit Products against the Target in the Territory.

2.2 The Dyax Product Licence granted under this Agreement is pursuant to Dyax's exercise of one (1) option from the Second Additional Licence Allocation under the Amended Agreement.

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2.3 For the avoidance of doubt, no rights are granted by MedImmune under this Agreement to any MedImmune Diabodies Patent Rights, and any Patent Rights owned or controlled by MedImmune which claim Catalytic Antibodies, ribosome display technology, any Patent Rights which claim Single Domain Antibodies and no rights are granted by MedImmune in this Agreement under the Antibody Phage Display Patents to Exploit Research Products.

3.            Sub-Licensing

3.1 Dyax will, if requested by MedImmune, inform MedImmune of the identity of all Dyax Sublicensees (and their sublicensees) in relation to this Agreement.

3.2 Dyax will ensure that any Third Party which receives a sublicence of its rights in accordance with the terms of this Agreement executes a written agreement which requires the Third Party to abide by the terms of this Agreement.

3.3 Dyax will be liable for any breach of the sublicences granted in accordance with Clause 3.2.

3.4 For the avoidance of doubt, the rights granted to Dyax to Exploit Products against the Target in the Territory may be sublicensed to one or more Third Parties (and further sublicensed by any such Third Party), provided that any such sublicense would remain subject to the terms and conditions of this Agreement.

4.            Status Report

4.1 Dyax will provide to MedImmune a brief summary of the status of each Product against the Target that Dyax or Dyax Sublicensees desire to Exploit under this Agreement ("Status Report").  During the Term, Dyax will submit such Status Report to MedImmune for a particular Product prior to the time Dyax or Dyax Sublicensees begin the first human clinical trial with respect to such Product. Dyax will prepare and provide to MedImmune an annual update to such Status Report by March 31st of each year which will summarize the status of the particular Product in the preceding calendar year.

5.            Gatekeeping

The Parties acknowledge that, as of the Commencement Date, the Target has passed MedImmune's Gatekeeping Procedure under the Amended Agreement.

6.            Consideration

6.1 With respect to each Therapeutic Antibody Products or Diagnostic Antibody Products, Dyax shall pay to MedImmune:

6.1.1. royalties in an amount equal to [*****] of Net Sales of any Therapeutic Antibody Product sold by or on behalf of Dyax or a Dyax Sublicensee; and

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6.1.2 [*****] of all other net paid or payable to Dyax arising pursuant to this Agreement.

6.2 All amounts due to MedImmune pursuant to this Clause 6 shall be payable on a country-by-country basis until the last Valid Claim expires or ten (10) years from the date of First Commercial Sale of such Product, whichever occurs later.

7.            Provisions Relating to Payment of Consideration

7.1 All milestone payments shall be paid by Dyax within [*****] days of the applicable milestone being achieved and no milestone payments shall be refundable or creditable against any other sum payable by Dyax hereunder for any reason.

7.2 All other payments that are not milestone payments or royalties, shall be paid by Dyax within [*****] of the requisite sum (in respect of which the payment to MedImmune arises) becoming payable to Dyax.

7.3 Dyax shall make the payments due to MedImmune under Clause 6 above in United States dollars (if Dyax in turn receives payment in dollars) or in pounds sterling (if Dyax in turn receives payment in pound sterling), or Euros (if Dyax in turn receives payment in Euros).  Where Dyax receives payment in a currency other than United States dollars, pounds sterling or Euros, Dyax will convert the relevant sum into pounds sterling (or Euros if Euros have replaced pounds sterling at the time of payment).  Dyax will use the conversion rate reported in the Financial Times two (2) Business Days before the day on which Dyax pays MedImmune.  Such payment will be made without deduction of exchange, collection or other charges.  All payments will be made at Quarterly intervals.  Within [*****] days of the end of each Quarter after the First Commercial Sale of each Product in any country, Dyax shall prepare a statement which shall show on a country-by-country basis for the previous Quarter Net Sales of each Product by Dyax or its Affiliates and all monies due to MedImmune based on such Net Sales.  That statement shall include details of Net Sales broken down to show the country of the sales and the total Net Sales by Dyax or its Affiliates in such country and shall be submitted to MedImmune within such [*****] day period together with remittance of the monies due.  With respect to Net Sales of a Product by a Dyax Sublicensee (or its sublicensee) Dyax shall prepare a statement which will include the same information and remit that statement and any monies due within the same period except with regard to any Dyax Sublicensee with which Dyax has a licence agreement relating to the technology of Antibody phage display as of the Commencement Date where the remittance will be made at Quarterly intervals within [*****] days of the date royalties are due to Dyax from such existing Dyax Sublicensees.

7.4 All payments shall be made free and clear of and without deduction or deferment in respect of any disputes or claims whatsoever and/or as far as is legally possible in respect of any taxes imposed by or under the authority of any government or public authority.  [*****].

7.5 Dyax shall keep and shall procure that its Affiliates and Dyax Sublicensees keep true and accurate records and books of account containing all data necessary for the calculation of the amounts payable by it to MedImmune pursuant to this Agreement.  Those records and books of account shall be kept for seven (7) years following the end of the Year to which they relate.  Upon MedImmune's written request, a firm of accountants appointed by agreement between the Parties or, failing such agreement within ten (10) Business Days of the initiation of discussions between them on this point MedImmune shall have the right to cause an international firm of independent certified public accountants that has not performed auditing or other services for either Party or their Affiliates (or, if applicable, any Dyax Sublicensee with rights to the Product in question) acceptable to Dyax or the Dyax Sublicensee such acceptance not to be unreasonably withheld to inspect such records and books of account.  In particular such firm:

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7.5.1 shall be given access to and shall be permitted to examine and copy such books and records of Dyax and its Affiliates and Dyax Sublicensees upon twenty (20) Business Days notice having been given by MedImmune and at all reasonable times on Business Days for the purpose of certifying that the Net Sales or other relevant sums calculated by Dyax and its Affiliates and Dyax Sublicensees during any Year were reasonably calculated, true and accurate or, if this is not their opinion, certify the Net Sales figure or other relevant sums for such period which in their judgment is true and correct;

7.5.2 prior to any such examination taking place, such firm of accountants shall undertake to Dyax and its Affiliates and Dyax Sublicensees that they shall keep all information and data contained in such books and records, strictly confidential and shall not disclose such information or copies of such books and records to any third person including MedImmune, but shall only use the same for the purpose of calculations which they need to perform in order to issue the certificate to which this Clause envisages;

7.5.3 any such access examination and certification shall occur no more than once per Year and will not go back over records more than two (2) years old;

7.5.4 Dyax and its Affiliates and Dyax Sublicensees shall make available personnel to answer queries on all books and records required for the purpose of that certification; and

7.5.5 the cost of the accountant shall be the responsibility of Dyax if the certification shows it to have underpaid monies to MedImmune by more than [*****] and the responsibility of MedImmune otherwise.

7.6 All payments due to MedImmune under the terms of this Agreement are expressed to be exclusive of value added tax (VAT) howsoever arising.  [*****].

7.7 All payments made to MedImmune under this Agreement shall be made to the bank account of MedImmune as notified by MedImmune to Dyax from time to time.

7.8 If Dyax fails to make any payment to MedImmune hereunder on the due date for payment, without prejudice to any other right or remedy available to MedImmune, it shall be entitled to charge Dyax interest (both before and after judgment) of the amount unpaid at the annual rate of LIBOR (London Interbank Offering Rate) plus [*****] calculated on a daily basis until payment in full is made without prejudice to MedImmune's right to receive payment on the due date.

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8.            Confidentiality

8.1 With respect to any confidential information received from the other Party ("Confidential Information"), each Party undertakes and agrees to:

(a) only use the Confidential Information for the purposes envisaged under this Agreement and not to use the same for any other purpose whatsoever;

(b) ensure that only those of its officers and employees who are directly concerned with the carrying of this Agreement have access to the Confidential Information on a strictly "need to know" basis and are informed of the secret and confidential nature of it;

(c) keep the Confidential Information secret, confidential, safe and secure and shall not directly or indirectly disclose or permit to be disclosed the same to any Third Party, including any consultants or other advisors, without the prior written consent of the disclosing Party except to the extent disclosure is necessary in connection with its use as envisaged under this Agreement;

(d) ensure that the Confidential Information will not be covered by any lien or other encumbrance in any way, and

(e) not copy, reproduce or otherwise replicate for any purpose or in any manner whatsoever any documents containing the Confidential Information except to the extent necessary in connection with its use as envisaged under this Agreement.

For the avoidance of doubt, the Parties agree that the identity of the Target, any information related to the Target provided to MedImmune by Dyax, and the Status Report is the Confidential Information of Dyax.

8.2 The obligations referred to in Clause 8.1 above shall not extend to any Confidential Information which:

(a) is or becomes generally available to the public otherwise than be reason of breach by a recipient Party of the provision of Clause 8.1;

(b) is known to the recipient Party and is at its free disposal (having been generated independently by the recipient Party or a Third Party in circumstances where it has not been derived directly or indirectly from the disclosing Party's Confidential Information prior to its receipt from the disclosing Party), provided that evidence of such knowledge is furnished by the recipient Party to the disclosing Party within twenty-eight (28) days of recipient of that Confidential Information;

(c) is subsequently disclosed to the recipient Party without obligations of confidence by a Third Party owing no such obligations to the disclosing Party in respect of that Confidential Information;

(d) is required by law to be disclosed (including as part of any regulatory submission or approval process) and then only when prompt written notice of this requirement has been given to the disclosing Party so that it may, if so advised, seek appropriate relief to prevent such disclosure, provided always that in such circumstances such disclosure shall be only to the extent so required and shall be subject to prior consultation with the disclosing Party with a view to agreeing on the timing and content of such disclosure.

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8.3 No public announcement or other disclosures to Third Parties concerning the terms of this Agreement shall be made, whether directly or indirectly, by either Party (except confidential disclosures to professional advisors) without first obtaining the approval of the other Party and agreement upon the nature and text of such announcement or disclosure with the exceptions that:

(a) a Party may disclose those terms which it is required by regulation or law to disclose, provided that it takes advantage of all provisions to keep confidential as many terms of this Agreement as possible; and

(b) the Party desiring to make any such public announcement or other disclosure shall inform the other Party of the proposed announcement or disclosure in reasonably sufficient time prior to public release, and shall provide the other Party with a written copy thereof in order to allow such Party to comment upon such announcement or disclosure.  Each Party agrees that it shall cooperate fully with the other with respect to all disclosures regarding this Agreement to the U.S. Securities Exchange Commission, the UK Stock Exchange and any other comparable body including requests for confidential information or proprietary information of either Party included in any such disclosure.

9.            Indemnification

9.1 Dyax hereby indemnifies MedImmune and its Affiliates and their directors, officers, employees and agents and their respective successors, heirs and assigns (the "MedImmune Indemnitees") against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by Dyax or any Dyax Sublicensee (or their sublicensee). In addition, each Dyax Sublicensee (or their sublicensee) shall indemnify the MedImmune Indemnitees against any liability, damage, loss or expense (including attorneys fees and expenses of litigation) incurred by or imposed upon the MedImmune Indemnitees or any one of them in connection with any claims, suits, actions, demands or judgments by or in favour of any Third Party concerning any manufacture, use or sale of any Product by such Dyax Sublicensee (or their sublicensee).

9.2 MedImmune shall not be liable to Dyax and Dyax Sublicensee (or its sublicensee) in respect of any liability, loss, damage or expense (including attorneys fees and expenses of litigation) incurred or suffered by Dyax and Dyax Sublicensees (or its sublicensee) in connection with the manufacture, use or sale of any Products by Dyax and Dyax Sublicensees (or its sublicensee).

9.3 MedImmune gives no warranty or representation that the Antibody Phage Display Patents are, or will be, valid or that the exercise of the rights granted under this Agreement will not result in the infringement of patents of Third Parties.

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10.          Infringement and Patent Prosecution

10.1 Dyax shall notify MedImmune promptly of any proceedings or applications for revocation of any of the Antibody Phage Display Patents emanating from a Third Party that comes to its notice or if a Third Party takes or threatens to take any proceedings for infringement of any patents of that Third Party by reason of Dyax's use or operation of the Antibody Phage Display Patents or manufacture, use or sale of the Products.  Dyax shall notify MedImmune promptly of any infringement of the Antibody Phage Display Patents by a Third Party which may come to its attention during the term of the Dyax Product Licence, except Dyax shall have no obligation to so notify MedImmune with respect to any infringement by an academic or not-for-profit entity which occurs by reason of such entity carrying out research activities provided such activities are, as far as Dyax is aware, not being carried out with a view to commercialising a product or otherwise for profit.

10.2 MedImmune shall have the sole right and responsibility, at its sole discretion and cost and with reasonable assistance from Dyax, to file, prosecute and maintain the Antibody Phage Display Patents and for the conduct of any lawsuits, claims or proceedings challenging the validity or enforceability thereof including, without limitation, any interference or opposition proceeding relating thereto in all countries.  For the avoidance of doubt, Dyax and Dyax Sublicensees will have the right to conduct any proceedings relating to its Product including any proceedings relating to product liability.

11.          Termination

11.1 Unless terminated under this Clause 11, this Agreement shall commence on the Commencement Date and shall terminate, on a country-by-country and Product-by-Product basis upon the last to expire of claims of an issued and unexpired patent within the Antibody Phage Display Patents (which has not been held permanently revoked, unenforceable or invalid by a decision of a court or other governmental agency of competent jurisdiction unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise) or (b) the date upon which no payments are due to MedImmune under Clause 6 of this Agreement, whichever occurs later.

11.2 MedImmune shall have the right to terminate this Agreement in the event that:

11.2.1 Dyax or a Dyax Sublicensee (or its sublicensee) has not filed an IND for a Therapeutic Antibody Product, or a 510(k) or IDE for a Diagnostic Antibody Product within [*****] after the Commencement Date; provided however, that Dyax shall have the right to extend such period in annual increments by up to [*****], upon the following terms:

First Annual Extension	$[*****]
Second Annual Extension	$[*****]

In order for Dyax to be granted an extension under this Clause 11.2.1, the foregoing amounts must be received by MedImmune prior to the date of expiration.  All amounts received by MedImmune under this Clause 11.2.1 will be credited against any milestones and royalties that would otherwise be due to MedImmune under the terms of the Product License; or

11.2.2 Dyax or a Dyax Sublicensee (or its sublicensee) directly or indirectly opposes or assists any Third Party to oppose the grant of letters patent or any patent application within the Antibody Phage Display Patents, or disputes or directly or indirectly assists any Third Party to dispute the validity of any patent within the Antibody Phage Display Patents or any of the claims thereof.

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11.3 In the event that either Party commits a material breach of any of its material obligations with respect to this Agreement, and such Party fails to remedy that breach within ninety (90) days after receiving written notice thereof from the other Party, that other Party may immediately terminate this Agreement upon written notice to the breaching Party.

11.4 Either Party may terminate this Agreement in its entirety by giving notice in writing to the other Party if any one or more of the following events happens:

(a) the other Party has any distress or execution levied on the major portion of its assets (as determined by its balance sheet in accordance with GAAP) which is not paid out within thirty (30) days of its being levied;

(b) the other Party calls a meeting for the purpose of passing a resolution to wind it up, or such a resolution is passed, or the other Party presents, or has presented, a petition for a winding up order, or presents, or has presented, a petition to appoint an administrator, or has an administrative receiver, or receiver, liquidator or other insolvency practitioner appointed over all or any substantial part of its business, undertaking, property or assets;

(c) the other Party stops or suspends making payments (whether of principal or interest) with respect to substantially all of its debts or announces an intention to do so or the other Party suspends or ceases to carry on its business;

(d) a secured lender to the other Party holding a security interest over the major portion of the tangible assets (as determined by its balance sheet in accordance with GAAP) of such other Party takes any steps to obtain possession of the property on which it has security or otherwise to enforce its security;

(e) the other Party suffers or undergoes any procedure analogous to any of those specified in Clause 11.4(a)-(d) above or any other procedure available in the country in which the other Party is constituted, established or domiciled against or to an insolvent debtor or available to the creditors of such a debtor.

12.          Consequences of Termination

12.1 Upon termination of this Agreement for any reason whatsoever:

(a) the relationship of the Parties hereunder shall cease save as (and to the extent) expressly provided for in this Clause 12;

(b) any sublicenses granted by Dyax in accordance with the terms of this Agreement will continue in force provided that such sublicensees are not in breach of the relevant sublicense and that each sublicensee agrees to enter into a direct agreement with MedImmune upon the terms of this Agreement;

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(c) Dyax shall immediately return or procure to be returned to MedImmune at such place as it directs and at the expense of Dyax (or if MedImmune so requires by notice to Dyax in writing, destroy) all MedImmune Know-How together with all copies of such MedImmune Know-How in its possession or under its control;

(d) The following provisions shall survive expiration or termination of this Agreement: Clauses 7 (in relation to any accrued payment obligations of Dyax prior to termination or expiry), 8, 9, 12, 13 and 15; and

(e) Expiry or termination of this Agreement shall not affect the rights and obligations of the Parties accrued prior to such expiry or termination including any accrued obligation for Dyax to make any payments under Clause 6.

13.          Dispute Resolution

13.1 Any dispute arising between the Parties relating to, arising out of or in any way connected with this Agreement or any term or condition thereof, or the performance by either Party of its obligations hereunder, whether before or after termination of this Agreement, shall be referred to the Chief Executive Officers of each of the Parties.  The Chief Executive Officers shall meet to resolve such deadlock within thirty (30) days of the date that the dispute is referred to them, at a time and place mutually acceptable to them.  Any dispute that has not been resolved following good faith negotiations of the Chief Executive Officers for a period of thirty (30) days shall be referred to and finally settled by binding arbitration in accordance with the then current Commercial Arbitration Rules of the American Arbitration Association.  There shall be three (3) arbitrators, each Party to designate one arbitrator and the two Party-designated arbitrators to select the third arbitrator.  The Party initiating recourse to arbitration shall include in its notice of arbitration its appointment of an arbitrator.  The appointing authority, in the event a Party does not or the Parties do not appoint arbitrator(s), shall be the American Arbitration Association in [*****].  The place of arbitration shall be [*****]. The language to be used in the arbitration shall be English.  Any determination by the arbitration panel shall be final and conclusively binding.  Judgement on any arbitration award may be entered in any court having jurisdiction thereof.  Each Party shall bear its own costs and expenses incurred in the arbitration; provided that the arbitration panel may assess the costs and expenses of the prevailing Party, including reasonable attorneys fees, against the non-prevailing Party.

14.          Notices

14.1 All notices, requests, demands and other communications required or permitted to be given pursuant to this Agreement shall be in writing and shall be deemed to have been duly given upon the date of receipt if delivered by hand, recognized international overnight courier, confirmed facsimile transmission, or registered or certified mail, return receipt requested, postage prepaid to the following addresses or facsimile numbers:

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If to Dyax:	If to MedImmune:
Dyax Corp.	MedImmune Limited
55 Network Drive	Milstein Building, Granta Park
Burlington, MA 01803	Cambridge, CB21 6GH
USA	UK
Attention:  General Counsel	Attention:  Company Secretary
Facsimile: [*****]	Facsimile:  [*****]

Either party may change its designated address and facsimile number by notice to the other party in the manner provided in this Clause.

15.          Governing Law

15.1 This Agreement shall be governed by and construed in accordance with the laws of the [*****].

15.2 Save as provided in this Clause, the United Kingdom Legislation entitled the Contracts (Rights of Third Parties) Act 1999 will not apply to this Agreement.  No person, other than a MedImmune Indemnitee (as defined in Clause 9.1), who is not a Party to this Agreement (including any employee, officer, agent, representative or subcontractor of either Party) will have the right (whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise) to enforce any term of this Agreement which expressly or by implication confers a benefit on that person without the express prior agreement in writing of the Parties which agreement must refer to this Clause, except that any Dyax Sublicensee shall have the right to enforce the provisions of Clause 12.1(b) of this Agreement and shall be a third party beneficiary for that purpose only.

16.          Specific Performance

16.1 The parties agree that irreparable damage will occur in the event that the provisions of Clause 8 are not specifically enforced.  In the event of a breach or threatened breach of any such provisions, each Party agrees that the other Party shall, in addition to all other remedies, be entitled to temporary or permanent injunction, without showing any actual damage or that monetary damages would not provide an adequate remedy and without the necessity of posting any bond, and/or a decree for specific performance, in accordance with the provisions hereof.

17.          Assignment

17.1 This Agreement may not be assigned by either party without the prior written consent of the other party, except that either Party may assign the benefit and/or burden of this Agreement to any Affiliate of it or any Third Party, provided that such Affiliate or Third Party undertakes to the other Party to be bound by the terms of this Agreement. This Agreement shall inure to the benefit of and be binding upon the parties and their respective lawful successors and assigns.

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18.          Compliance With Law

18.1 Nothing in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any statute, law, ordinance, or treaty, the latter shall prevail, but in, such event the affected provisions of the Agreement shall be conformed and limited only to the extent necessary to bring it within the applicable legal requirements.

19.          Amendment and Waiver

19.1 This Agreement may be amended, supplemented, or otherwise modified only by means of a written instrument signed by both parties.  Any waiver of any rights or failure to act in a specific instance shall relate only to such instance and shall not be construed as an agreement to waive any rights or fail to act in any other instance, whether or not similar.

20.          Severabi1ity

20.1 In the event that any provision of this Agreement shall, for any reason, be held to be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect any other provision hereof and the parties shall negotiate in good faith to modify the Agreement to preserve (to the extent possible) their original intent.

21.          Entire Agreement

21.1 This Agreement and the Amendment Agreement constitute the entire agreement between the parties with respect to the subject matter hereof and supersede all prior agreements or understandings between the parties relating to the subject matter hereof.

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IN WITNESS OF THE ABOVE the Parties have signed this Agreement on the date written at the head of this Agreement.

SIGNED by	)
	)
	)
	____________________________________________
for and on behalf of	)	Authorised Signatory
MEDIMMUNE LIMITED	)
SIGNED by	)
	)
	)
	____________________________________________
for and on behalf of	)	Authorised Signatory
DYAX CORP.	)
	)

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Schedule 1 (to Dyax Product Licence, Schedule 7B)

Antibody Phage Display Patents

1. “Single Domain Ligands, Receptors Comprising said Ligands, Methods for their Production and Use of Said Ligands and Receptors” PCT/GB89/01344, filed November 13, 1989.

2.  “Co-expression of Heteromeric Receptors” PCT/US90/02890, filed May 16, 1990.

3. “Method for Isolating Receptors Having a Preselected Specificity” PCT/US90/02835, filed May 16, 1990.

4. “A new method for tapping the immunological repertoire” PCT/US90/02836, filed May 16, 1990.

5. “Methods for producing members of specific binding pairs” PCT/GB91/01134, filed July 10, 1991.

6. “Methods for producing members of specific binding pairs” PCT/GB92/00883, filed May 15, 1992.

7.  “Treatment of Cell Populations” PCT/GB92/01483, filed August 10, 1992.

8. “Production of chimeric antibodies – a combinational approach” PCT/GB92/01755, filed September 23, 1992.

9. “Production of anti-self antibodies from antibody segment repertoires and displayed on phage” PCT/GB92/02240, filed December 2, 1992.

10. “Methods for producing members of specific binding pairs” PCT/GB93/00605, filed March 24, 1993.

11. “SBP members with a chemical moiety covalently bound within the binding site; production and selection thereof” PCT/GB94/01422, filed June 30, 1994.

12. “Recombinant Binding Proteins and peptides” PCT/GB94/02662, filed December 5, 1994.

13. “Labelling and selection of Specified Binding Molecules” PCT/GB97/01835, filed July 8, 1997.

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Schedule 2 (to Dyax Product Licence, Schedule 7B)

MedImmune Know-How

MedImmune Training Manual “Antibody Phage Display” 2002.

MedImmune mammalian expression IgG vectors:

pEU1.2 (human gamma-1 heavy chain)

pEU3.2 (human kappa light chain)

pEU4.2 (human lambda light chain)

pEU8.2 (human gamma-4 heavy chain)

MedImmune may supplement the above with any revisions which it may make to the Training Manual or with any new vectors at its discretion from time to time (in each case accompanied by notice to Dyax under the Agreement) or with such additional know-how as the Parties may agree.

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Schedule 3 (to Dyax Product Licence, Schedule 7B)

Identification of Target:

The Target is identified as follows:	[ ]
GenBank accession number:	[ ]

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Schedule 8

[RESERVED]

21

Schedule 9-A

[*****]

Schedule 9-A - Page 1

Schedule 9-B

[*****]

Schedule 9-B - Page 1

Schedule 9-C

[*****]

Schedule 9-C - Page 1

Schedule 9-D

[*****]

Schedule 9-D - Page 1

Schedule 9-E

[*****]

Schedule 9-E - Page 1

Schedule 10-A

AFFIMED SUBLICENSE TERMS AND CONDITIONS

MedImmune hereby acknowledges and agrees that the Affimed Sublicense granted to MedImmune under Section 11.2(a) is subject to the following terms and conditions:

(a)           Nothing in this Agreement shall be deemed to grant MedImmune rights under the Affimed Patent Rights broader than the field and scope of the license granted to Dyax under the Affimed License; and nothing in this Agreement shall be deemed to grant MedImmune the right to (i) make, sell, offer for sale or import any composition of matter other than Products which would, but for the licenses granted herein, infringe a Valid Claim of the Affimed Patent Rights, or (ii) use any phage or phagemid library other than the Dyax Antibody Library;

(b)           The Affimed Sublicense shall be subject to the applicable terms and conditions of the Affimed License;

(c)           MedImmune agrees that, promptly after execution of this Agreement, Dyax shall deliver to Affimed only those relevant portions of this Agreement evidencing the sublicense granted hereunder is in compliance with the terms and conditions set forth in the Affimed License;

(d)           In the event that the Affimed License is terminated prior to its expiration for any reason, the Affimed Sublicense shall terminate; and

(e)           If MedImmune fails to comply with any terms and conditions set forth herein, the Affimed Sublicense shall automatically terminate.

Schedule 10-A - Page 1

Schedule 10-B

BIOSITE SUBLICENSE TERMS AND CONDITIONS

MedImmune hereby acknowledges and agrees that the Biosite Sublicense granted to MedImmune under Section 11.2(b) is subject to the following terms and conditions:

(a)           MedImmune shall comply with the restrictions imposed by Biosite on any potential sublicensee under Section 2.2 of the Biosite License;

(b)           Nothing in this Biosite Sublicense shall be deemed to grant MedImmune rights under the Biosite Patent Rights and Biosite Know-How Rights broader than the rights granted to the Dyax Antibody Library and the Dyax Patent Rights under this Agreement and such rights to the Biosite Patent Rights and Biosite Know-How are limited to use with the Dyax Antibody Library and Antibody Compounds as permitted by Clause 11.1 of the Agreement;

(c)           MedImmune and its Affiliates shall not enforce (or attempt or purport to enforce) against Biosite or its Affiliates any patent that claims (or purports to claim) any process of, any composition for or any use of (i) Biosite Know-How Rights, provided that such Biosite Know-How Rights have been disclosed to MedImmune by Dyax, (ii) creating, constructing or producing immune libraries from immunized rodents for the purpose of phage display therefrom of antibodies or binding fragments thereof, or (iii) phage display of antibodies or binding fragments thereof, or (iv) selecting or producing antibodies or binding fragments thereof derived from such libraries.  The Biosite Sublicense shall automatically terminate upon any breach of this covenant, which shall survive any termination of the Biosite Sublicense;

(d)           A signed copy of this Biosite Sublicense (with any provisions of the Agreement  reasonablydeemed necessary by Dyax and Biosite) shall be provided to Biosite in order to confirm that Dyax has complied with Biosite’s restrictions on granting sublicenses contained in the Biosite License;

(e)           In the event that the Biosite License be terminated early, the Biosite Sublicense shall also terminate; and

(f)           The Biosite Sublicense shall not become effective until all of the conditions of this Schedule 10-B have been met.
 

The parties expressly acknowledge that the term of the Biosite Sublicense shall be coextensive with the term of the Agreement; provided, however, that the Biosite Sublicense is subject to early termination, upon written notice by Dyax to MedImmune, if the Biosite License terminates early for any reason.

Schedule 10-B - Page 1

Schedule 10-C

DOMANTIS SUBLICENSE TERMS AND CONDITIONS

MedImmune hereby acknowledges and agrees that the Domantis Sublicense granted to MedImmune under Section 11.2(c) is subject to the following terms and conditions:

(a)             Nothing in this Agreement shall be deemed to grant MedImmune rights under the Domantis Patent Rights broader than the field and scope of the license granted to Dyax under the Domantis License; and nothing in this Agreement shall be deemed to grant MedImmune the right to (i) make, sell, offer for sale or import any composition of matter other than Products which would, but for the licenses granted herein, infringe a Valid Claim of the Domantis Patent Rights, or (ii) use any phage or phagemid library other than the Dyax Antibody Library; and

(b)           MedImmune agrees that, promptly after execution of this Agreement, Dyax shall have the right to notify Domantis of this Agreement in compliance with the terms and conditions set forth in the Domantis License.

Schedule 10-C - Page 1

Schedule 10-D

GENENTECH SUBLICENSE TERMS AND CONDITIONS

MedImmune hereby acknowledges and agrees that the Genentech Sublicense granted to MedImmune under Section 11.2(d) is subject to the following terms and conditions:

(a)           MedImmune shall comply with the restrictions imposed by Genentech on any potential Genentech Sublicensee under Section 2.3 of the Genentech License;

(b)           Nothing in the Genentech Sublicense shall be deemed to grant MedImmune rights under the Genentech Patent Rights broader than the rights granted to the Dyax Antibody Library and the Dyax Patent Rights under the Agreement and such rights to the Genentech Patent Rights are limited to use with the Dyax Antibody Library and Antibody Compounds as permitted under Clause 11.1 of the Agreement;

(c)           A signed copy of this Genentech Sublicense (with any provisions of the Agreement reasonably deemed necessary by Dyax and Genentech) shall be provided to Genentech in order to confirm that Dyax has complied with Genentech’s restrictions on granting sublicenses contained in the Genentech License;

(d)           In the event that the Genentech License is terminated early, the Genentech Sublicense shall also terminate; and

(e)           The Genentech Sublicense shall not become effective until all of the conditions of this Schedule 10-D have been met.
 

The parties expressly acknowledge that the term of the Genentech Sublicense shall be coextensive with the term of the Agreement; provided, however, that the Genentech Sublicense is subject to early termination, upon written notice by Dyax to MedImmune, if the Genentech License terminates early for any reason.

Schedule 10-D - Page 1

Schedule 10-E

XOMA COVENANT TERMS AND CONDITIONS

As required by the XOMA Agreement, MedImmune acknowledge and agree that the XOMA Covenant is subject to the following provisions:

(a) shall not extend to the use of the XOMA Expression Technology to make any amount of a Licensed Immunoglobulin or Product other than Research Quantities; provided, however, that this limitation shall not preclude the manufacture, in commercial quantities, of a Licensed Immunoglobulin discovered using the XOMA Expression Technology in accordance with this Agreement when produced in a production system other than a prokaryot;

(b) MedImmune agrees that the "first sale" doctrine does not apply to any Disposition of Transferred Materials;

(c) MedImmune shall Dispose of Transferred Materials only to a Third Party who otherwise meets the definition of a Dyax Collaborator under the XOMA Agreement and who executes a written agreement in which its undertakes all of the obligations set forth herein, provided, however, that this Section (c) shall not apply to the Disposition of any Licensed Immunoglobulin hereunder ;

(d) If MedImmune or any person or entity controlled by MedImmune contests the validity or enforceability of any of the XOMA Patent Rights hereunder, XOMA shall have the right to terminate (or cause Dyax to terminate) all of the rights hereby granted to MedImmune under the XOMA Patent Rights;

(e) MedImmune acknowledges and agrees that nothing in this Agreement or this Schedule 10-E shall be construed as a release or waiver of past, present or future infringement of the XOMA Patent Rights by MedImmune acting outside the scope of this Agreement nor as a release from Dyax from any claim of infringement of the XOMA Patent Rights nor as any right to release any Third Party from any claim of infringement under the XOMA Patent Rights;

(f) MedImmune acknowledges and agrees that the XOMA Covenant shall not extend to infringement of the XOMA Patent Rights arising out of making or the means or methods used to make any amount of a Licensed Antibody or Product other than those quantities of Antibody reasonably required for Research and Development purposes; provided, however, that Dyax or MedImmune shall be permitted to make or have made any Licensed Antibody by any means of its selection other than those which otherwise infringe a Valid Claim of the XOMA Patent Rights;

(g) MedImmune acknowledges and agrees that the XOMA Covenant shall become void and without effect as to MedImmune if MedImmune fails to materially discharge or comply with any terms of this Agreement with respect to the XOMA Patent Rights;

(h) MedImmune acknowledges and agrees that the XOMA Covenant is personal to Dyax and MedImmune and cannot be assigned or transferred;

(i) MedImmune agrees that Dyax shall have the right to deliver to XOMA a written report which shall specify the name, address and contact person for MedImmune; and

(j) In the event of the termination of the XOMA Agreement by Dyax, the licenses and rights granted to Dyax and MedImmune under the XOMA Agreement shall survive.  In the event of the termination of the XOMA Agreement by XOMA, the licenses and rights granted to Dyax and MedImmune under the XOMA Agreement shall terminate; and

(k) XOMA shall be an intended third party beneficiary with respect to the foregoing provisions..

MedImmune and Dyax agree that capitalized terms used in this Schedule 10-E that are not defined in the Agreement shall have the meanings given to them under the XOMA Agreement.

2

EX-31.1

Exhibit 31.1

Certification Pursuant to Section 240.13a-14 or 240.15d-14

of the Securities Exchange Act of 1934, as amended

I, Gustav A. Christensen, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Dyax Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  October 29, 2012
	/s/Gustav A. Christensen
	Gustav A. Christensen
	President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certification Pursuant to Section 240.13a-14 or 240.15d-14

of the Securities Exchange Act of 1934, as amended

I, Gustav A. Christensen, certify that:
1.	I have reviewed this quarterly report on Form 10-Q of Dyax Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  October 29, 2012
	/s/Gustav A. Christensen
	Gustav A. Christensen
	President and Chief Executive Officer

EX-32

Exhibit 32

Certification of Periodic Financial Report

Pursuant to 18 U.S.C. Section 1350

Each of the undersigned officers of Dyax Corp. (the "Company") certifies, under the standards set forth in and solely for the purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2012 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in that Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: October 29, 2012	/s/Gustav. A Christensen
	Gustav A. Christensen
	President and Chief Executive Officer
Dated: October 29, 2012	/s/George Migausky
	George Migausky
	Executive Vice President and Chief Financial Officer

XML

Stockholder's Equity (Deficit) and Stock-Based Compensation - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended		9 Months Ended
	May 31, 2012	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Compensation expenses		$ 748,000	$ 891,000	$ 2,776,000	$ 3,110,000
Stock-based compensation expense related to modification of certain stock options				2,775,000	3,110,000
Stock Compensation Plan
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Stock based compensation expense capitalized into inventory		9,000	18,000	15,000	25,000
Stock-based compensation expense related to modification of certain stock options		46,000		428,000
Employee Stock Purchase Plans
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Number of shares purchased in period				48,748	87,188
Percentage of price per share				85.00%
Employee stock purchase plan offering period				6 months
Contribution of employee in percentage				10.00%
Contribution of employee in shares		875		875
Compensation expenses		15,000	8,000	32,000	32,000
Number of shares reserved and available for issuance		408,165		408,165
1995 Equity Incentive Plan (the Equity Plan)
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Number of shares purchased in period	4,192,310
Newly issued options in period	2,473,596
Option exercise price at grant date	$ 2.06
Option grant date	Jun. 20, 2012
Expense related to modification of exchanged options		25,000		28,000
Number of shares of common stock available for issuance	5,000,000	6,137,673		6,137,673
Additional number of shares of common stock available for issuance	3,281,286
number of shares of common stock available for issuance, increase	1,718,714
Compensation expenses		$ 733,000	$ 883,000	$ 2,744,000	$ 3,078,000
1995 Equity Incentive Plan (the Equity Plan) | Stock Options
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Vesting period				48 months
Contractual life of option				10 years
1995 Equity Incentive Plan (the Equity Plan) | Restricted Stock
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Vesting period				4 years

XML

Fixed Assets - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Fixed Assets [Line Items]
Depreciation expense	$ 246,000	$ 315,000	$ 824,000	$ 971,000

XML

Business Overview - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	9 Months Ended	12 Months Ended
	Sep. 30, 2012 Product	Dec. 31, 2011
Product Information [Line Items]
Number of business elements	2
LFRP
Product Information [Line Items]
Number of products to be developed	18
Milestone and royalty revenues	$ 9	$ 15
LFRP | Phase 3 Trials
Product Information [Line Items]
Number of products to be developed	3

XML

Facility Lease - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	1 Months Ended
	Jul. 31, 2011
Leases Disclosure [Line Items]
Rentable square feet of office and laboratory facilities	45,000
Lease term	10 years
Aggregate minimum lease commitment over payment lease term	$ 15.0
Capitalized leasehold improvements	4.5
Maximum
Leases Disclosure [Line Items]
Tenant improvement allowance	2.6
Letter of Credit
Leases Disclosure [Line Items]
Security given to landlord to secure lease obligation	$ 1.1
Extended Term
Leases Disclosure [Line Items]
Lease term	5 years

XML

Fair Value Measurements

9 Months Ended

Sep. 30, 2012

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 September 30, 2012 and December 31, 2011 and indicate the fair value hierarchy of the valuation inputs utilized to determine such fair value. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize observable inputs other than Level 1 prices, such as quoted prices, for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

Description    (in thousands)	September 30, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	18,893	$	18,893	$	—	$	—
Marketable debt securities		9,043		—		9,043		—
Total	$	27,936	$	18,893	$	9,043	$	—

Description   (in thousands)	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	$	—

The following tables summarize the Company’s marketable securities at September 30, 2012 and December 31, 2011, in thousands:

	September 30, 2012
Description	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Fair Value
US Treasury Bills and Notes (due within 1 year)	$	9,037	$	6	$	—	$	9,043
US Treasury Bills and Notes (due after 1 year through 2 years)		—		—		—		—
Total	$	9,037	$	6	$	—	$	9,043

	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

As of September 30, 2012 and December 31, 2011, the Company's cash equivalents which are invested in money market funds are valued based on Level 1 inputs.  As of September 30, 2012 and December 31, 2011, the Company’s short-term investments consisted of U.S. Treasury notes and bills valued based on Level 2 inputs. These assets have been initially valued at the transaction price and subsequently valued utilizing a third party pricing service. We validate the prices provided by our third party pricing service by understanding the models used and obtaining market values from other pricing sources. The Company has 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, other current assets, accounts payable and accrued expenses and other current liabilities approximate fair value due to their short-term maturities.

XML

Marketable Securities (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Marketable Securities [Line Items]
Amortized Cost	$ 9,037	$ 26,029
Gross Unrealized Gains	6	7
Gross Unrealized Losses
Fair Value	9,043	26,036
US Treasury Bill Securities | Due In One Year Or Less
Marketable Securities [Line Items]
Amortized Cost	9,037	23,013
Gross Unrealized Gains	6	7
Gross Unrealized Losses
Fair Value	9,043	23,020
US Treasury Bill Securities | Due After One Year Through Two Years
Marketable Securities [Line Items]
Amortized Cost		3,016
Gross Unrealized Losses
Fair Value		$ 3,016

XML

Financial Assets Measured at Fair Value (Detail) (Fair Value, Measurements, Recurring, USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Financial Assets Measured at Fair Value [Line Items]
Assets fair value disclosure Recurring	$ 27,936	$ 34,861
Cash Equivalents
Financial Assets Measured at Fair Value [Line Items]
Assets fair value disclosure Recurring	18,893	8,825
Marketable Securities
Financial Assets Measured at Fair Value [Line Items]
Assets fair value disclosure Recurring	9,043	26,036
Quoted Prices in Active Markets (Level 1)
Financial Assets Measured at Fair Value [Line Items]
Assets fair value disclosure Recurring	18,893	8,825
Quoted Prices in Active Markets (Level 1) | Cash Equivalents
Financial Assets Measured at Fair Value [Line Items]
Assets fair value disclosure Recurring	18,893	8,825
Significant Other Observable Inputs (Level 2)
Financial Assets Measured at Fair Value [Line Items]
Assets fair value disclosure Recurring	9,043	26,036
Significant Other Observable Inputs (Level 2) | Marketable Securities
Financial Assets Measured at Fair Value [Line Items]
Assets fair value disclosure Recurring	$ 9,043	$ 26,036

XML

Inventory - Additional Information (Detail) (Other Noncurrent Assets, USD $) In Millions, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Other Noncurrent Assets
Schedule of Inventory [Line Items]
Inventory classified as non-current	$ 6.4	$ 4.9

XML

Inventory Components (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Schedule of Inventory [Line Items]
Raw Materials	$ 1,116	$ 1,429
Work in Progress	8,189	5,474
Finished Goods	887	119
Total	$ 10,192	$ 7,022

XML

Significant Transactions

9 Months Ended

Sep. 30, 2012

Significant Transactions

3. SIGNIFICANT TRANSACTIONS

Sigma-Tau

In June 2010, the Company entered into a strategic collaboration agreement with Sigma-Tau Rare Diseases S.A. (as successor-in-interest to Defiante Farmaceutica S.A.) (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 and certain Asian territories (the second amendment).  Three subsequent amendments to this agreement eliminated rights that Dyax had previously granted to Sigma-Tau for the Asian territories, the Middle East, North Africa, Latin America and the Caribbean.

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 a 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 a third amendment, upon elimination of Sigma-Tau’s rights to certain Asian territories, the $3.0 million payment obligation was eliminated, as were the future milestones and royalties related to these territories.

Under the terms of the fourth and fifth amendments, Sigma-Tau’s rights to the Middle East, Latin America and the Caribbean were eliminated.  The Company agreed to make payments to Sigma-Tau ranging from 5%-12.5% of the amounts received by the Company as a result of any future product sales for certain countries in these territories.

The Company is eligible to receive up to $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 all licensed territories.  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.

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 $69,000 and $156,000 related to the Sigma-Tau agreement, as amended, for the three and nine months ended September 30, 2012, respectively, and $280,000 and $12.2 million related to this agreement for the three and nine months ended September 30, 2011, respectively. 

As of September 30, 2012 and December 31, 2011, the Company has deferred $111,000 and $158,000, 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 September 30, 2012, relates to the joint steering committee obligation which is estimated to continue until 2014.

CMIC

In 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 in the CMIC territory through 2016.

The Company recognized revenue of approximately $189,000 and $566,000 related to this agreement for the three and nine months ended September 30, 2012, respectively and approximately $148,000 and $444,000 for the three and nine months ended September 30, 2011, respectively.  As of September 30, 2012 and December 31, 2011, the Company has deferred approximately $2.7 million and $3.3 million, respectively, of revenue related to this arrangement, which is recorded in deferred revenue on the accompanying consolidated balance sheets.

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Fixed Assets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fixed Assets [Line Items]
Property, plant and equipment, gross	$ 18,430	$ 25,448
Less: accumulated depreciation and amortization	(13,142)	(20,567)
Property, plant and equipment, Net	5,288	4,881
Laboratory Equipment
Fixed Assets [Line Items]
Property, plant and equipment, gross	7,629	9,103
Furniture and Office Equipment
Fixed Assets [Line Items]
Property, plant and equipment, gross	1,588	1,095
Software and Computers
Fixed Assets [Line Items]
Property, plant and equipment, gross	4,711	4,445
Leasehold Improvements
Fixed Assets [Line Items]
Property, plant and equipment, gross	4,502	6,845
Construction in Progress
Fixed Assets [Line Items]
Property, plant and equipment, gross		$ 3,960

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Stock Compensation Expense, Net of Amounts Capitalized into Inventory (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Compensation expense	$ 748,000	$ 891,000	$ 2,776,000	$ 3,110,000
Research and Development Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocation of stock-based compensation expense	198,000	273,000	576,000	896,000
Selling, General and Administrative Expenses
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocation of stock-based compensation expense	550,000	618,000	2,145,000	2,214,000
Restructuring Charges
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Allocation of stock-based compensation expense			55,000
1995 Equity Incentive Plan (the Equity Plan)
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Compensation expense	733,000	883,000	2,744,000	3,078,000
Allocation of stock-based compensation expense	25,000		28,000
Employee Stock Purchase Plans
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items]
Compensation expense	$ 15,000	$ 8,000	$ 32,000	$ 32,000

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Consolidated Balance Sheets (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current assets:
Cash and cash equivalents	$ 21,346	$ 31,468
Short-term investments	9,043	26,036
Accounts receivable, net of allowances for doubtful accounts of $45 and $115 at September 30, 2012 and December 31, 2011, respectively	7,490	6,092
Inventory	3,838	2,121
Current portion of restricted cash		1,266
Other current assets	2,314	4,968
Total current assets	44,031	71,951
Fixed assets, net	5,288	4,881
Restricted cash	1,100	1,100
Other assets	6,742	5,443
Total assets	57,161	83,375
Current liabilities:
Accounts payable and accrued expenses	10,949	15,318
Current portion of deferred revenue	5,943	6,637
Current portion of long-term obligations	399	101
Other current liabilities		1,709
Total current liabilities	17,291	23,765
Deferred revenue	6,906	9,265
Notes payable	77,191	75,372
Long-term obligations	1,045
Deferred rent and other long-term liabilities	3,087	2,372
Total liabilities	105,520	110,774
Commitments and contingencies
Stockholders' 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; 99,140,550 and 98,798,065 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	991	988
Additional paid-in capital	451,996	448,527
Accumulated deficit	(501,352)	(476,921)
Accumulated other comprehensive income	6	7
Total stockholders' deficit	(48,359)	(27,399)
Total liabilities and stockholders' deficit	$ 57,161	$ 83,375

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Business Overview

9 Months Ended

Sep. 30, 2012

Business Overview

1. BUSINESS OVERVIEW

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 angioedemas that are identified as plasma kallikrein (bradykinin) mediated (PKM), including hereditary angioedema (HAE) and 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 to commercialize KALBITOR in certain markets and is evaluating opportunities in others.

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

● Identifying diagnostic strategies to assist in the differentiation between histamine-mediated and plasma kallikrein (bradykinin) mediated angioedema, including development of a laboratory test. 

● Continuing the development of DX-2930, a fully human monoclonal antibody inhibitor of plasma kallikrein, which could be a candidate to prophylactically treat PKM 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 various stages of clinical development, including three in Phase 3 trials.  The LFRP generated revenue of approximately $15 million in 2011 and $9 million for the nine months ended September 30, 2012.  To the extent that the Company’s licensees commercialize some of the Phase 3 product candidates, milestone and royalty revenues under the LFRP are expected to experience significant growth.

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Note Payable - Additional Information (Detail) (USD $)	9 Months Ended	12 Months Ended		9 Months Ended			9 Months Ended						9 Months Ended	12 Months Ended		24 Months Ended				9 Months Ended					1 Months Ended
	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011	Sep. 30, 2012 Warrant Tranche A loan and Tranche B Loans (Original Loan)	Sep. 30, 2012 Healthcare Royalty Partners	Dec. 31, 2011 Healthcare Royalty Partners	Sep. 30, 2012 Healthcare Royalty Partners Legal Fee	Sep. 30, 2012 Healthcare Royalty Partners Tranche B Loan Loan One	Sep. 30, 2012 Healthcare Royalty Partners Tranche B Loan Loan Two	Sep. 30, 2012 Healthcare Royalty Partners Tranche A loan and Tranche B Loans (Original Loan)	Sep. 30, 2012 Healthcare Royalty Partners Tranche A loan and Tranche B Loans (Original Loan) Phase 3 Trials	Sep. 30, 2012 Healthcare Royalty Partners Tranche A loan and Tranche B Loans (Original Loan) Group Two	Sep. 30, 2012 Healthcare Royalty Partners 2011 Additional Financing and Original Loan Modification Tranche A Loan Legal Fee	Dec. 31, 2011 Healthcare Royalty Partners 2011 Additional Financing and Original Loan Modification Second Affiliated Tranche A Loan	Sep. 30, 2012 Healthcare Royalty Partners 2011 Additional Financing and Original Loan Modification Second Affiliated Tranche A Loan	Dec. 31, 2009 Healthcare Royalty Partners 2011 Additional Financing and Original Loan Modification Second Affiliated Tranche B Loan	Sep. 30, 2012 Healthcare Royalty Partners 2011 Additional Financing and Original Loan Modification Second Affiliated Tranche B Loan	Jul. 31, 2012 Healthcare Royalty Partners 2011 Additional Financing and Original Loan Modification Second Affiliated Tranche B Loan	Dec. 31, 2011 Healthcare Royalty Partners 2011 Additional Financing and Original Loan Modification Second Affiliated Tranche B Loan	Sep. 30, 2012 Healthcare Royalty Partners Minimum Tranche A loan and Tranche B Loans (Original Loan) Group Two	Aug. 31, 2012 Healthcare Royalty Partners LFRP	Aug. 31, 2012 Healthcare Royalty Partners LFRP Tranche A Loan	Aug. 31, 2012 Healthcare Royalty Partners LFRP Tranche B Loan	Aug. 31, 2012 Healthcare Royalty Partners LFRP Tranche A loan and Tranche B Loans (Original Loan)	Jun. 30, 2012 Silicon Valley Equipment lease	Sep. 30, 2012 Silicon Valley Equipment lease	Jun. 30, 2012 Silicon Valley Equipment lease Negotiable Order of Withdrawal Accounts
Debt Disclosure [Line Items]
Secured Loan																					$ 80,500,000	$ 21,700,000	$ 58,800,000
Debt maturity date																								2018-08
Interest rate														13.00%			17.40%		102.00%					12.00%
Debt instrument maturity date										Sep. 30, 2016
Percentage of required payment for partial repayment of debt										90.00%	75.00%	25.00%
Annual net LFRP receipts amount used as a basis for repayment of loan											15,000,000									15,000,000
Proceed from unsecured loan														20,000,000		65,000,000
Effective interest rate															12.50%
Decrease in note payable	149,000	246,000		1,300,000			580,000						193,000
Principal amount of Loan																		57,600,000
Issuance of warrants to purchase common stock	11,379,953		11,682,969					250,000	250,000
Warrant exercise price per share								5.50	2.87
Warrant right expiration date								2016-08	2016-08
Estimated fair value of warrant at issuance date								853,000	477,000
Volatility factor								83.64%	85.98%
Risk-free interest rate								4.07%	2.77%
Expected term								8 years	7 years 4 months
Expected dividend yield								$ 0	$ 0
Loan principal balance					80,500,000	76,700,000
Fair value of note payable	80,500,000
Line of credit, maximum borrowing capacity																									3,000,000
Interest on lease																									6.00%
Line of credit																											1,400,000
Line of credit term																									3 years
Line of credit, outstanding balance																										$ 1,400,000

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Accounts Payable and Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2012

Accounts Payable and Accrued Expenses

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

	September 30, 2012		December 31, 2011
Accounts payable	$	1,659	$	2,927
Accrued employee compensation and related taxes.		3,495		4,529
Accrued expenses		1,884		1,591
Accrued license fees		74		—
Accrued legal		470		214
Accrued leasehold improvements		—		2,472
Accrued restructuring		139		—
Accrued sales allowances		921		525
Other accrued liabilities		2,307		3,060
Total	$	10,949	$	15,318

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Activity of Original Loan and 2011 Additional Financing (Detail) (USD $)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Beginning balance	$ 75,372,000	$ 56,406,000
Accretion of discount	149,000	246,000
Loans activity:
Interest Expense	7,437,000	9,932,000
Payments applied to principal	(96,000)	(1,129,000)
Payments applied to interest	(5,628,000)	(8,224,000)
Accrued interest payable		(1,709,000)
Ending balance	77,191,000	75,372,000
Tranche A Loan
Loans activity:
Net proceeds from Tranche A Loan		20,000,000
Discount on Tranche A Loan	$ (43,000)	$ (150,000)

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Stockholder's Equity (Deficit) and Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2012

Stock Compensation Expense

The following table reflects stock compensation expense recorded, net of amounts capitalized into inventory, during the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Compensation expense related to:
Equity Incentive Plan	$	733	$	883	$	2,744	$	3,078
Employee Stock Purchase Plan		15		8		32		32
	$	748	$	891	$	2,776	$	3,110
Stock-based compensation expense charged to:
Research and development	$	198	$	273	$	576	$	896
Selling, general and administrative	$	550	$	618	$	2,145	$	2,214
Restructuring charges	$	—	$	—	$	55	$	—

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information.  It is management’s opinion that the accompanying unaudited interim consolidated financial statements reflect all adjustments (which are normal and recurring) necessary for a fair statement of the results for the interim periods.  The financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  The accompanying December 31, 2011 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the dates of the financial statements and (iii) the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.  The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

 Basis of Consolidation  

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

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 September 30, 2012 and December 31, 2011, approximately 92% and 61% 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 September 30, 2012, two customers accounted for 45% and 33% of the accounts receivable balance.  These two customers also accounted for approximately 43% and 34% of the Company's accounts receivable balance as of December 31, 2011, all of which were collected in the first quarter of 2012.

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 September 30, 2012, the Company's investments consisted of U.S. Treasury notes and bills with an amortized cost and estimated fair value of $27.9 million, and had an unrealized gain of $6,000.  As of December 31, 2011, the Company's investments consisted of United States Treasury notes and bills with an estimated fair value and amortized cost of $34.9 million, and had an unrealized gain of $7,000, 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 Accounting Standards Codification (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’s long-lived assets, consisting primarily of fixed assets, are reviewed 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 and other discounts, government rebates, patient assistance programs, product returns and other applicable allowances.

Product Sales Allowances.  The Company establishes reserves for trade distributor and prompt pay discounts, government rebates, patient assistance programs, 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, patient financial assistance programs, 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 United States distributors.  Since the Company expects that these 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, trends for similar products sold by others and data provided by a distributor.

Development and License Fee Revenues

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 (i.e. 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.

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.

Patent Licenses.  The Company previously licensed its phage display patents on a non-exclusive basis to third parties for use in connection with the research and development of therapeutic, diagnostic, and other products.  The last of these patents will expire in November 2012.  Even after patent expiration, the Company generally remains eligible under these patent licenses to receive milestones and/or royalties for products discovered prior to patent expiration, although certain existing patent licenses will no longer have a royalty obligation.  The Company does not expect the expiration of these patents to have a material impact on its LFRP business.

Standard terms of the patent rights agreements include non-refundable signing fees, non-refundable license maintenance fees, development milestone payments and/or royalties on product sales. Signing fees and maintenance fees are generally recognized on a straight line basis over the term of the agreement or through the date of patent expiry, if shorter, except that in the case of perpetual patent licenses for which fees were recognized immediately if it was determined that the Company had no future obligations under the agreement and the payments were made 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, since the Company has no remaining performance obligations under the agreement.

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 in the United States were expensed when incurred as a research and development cost and accordingly, KALBITOR units sold during the three and nine months ended September 30, 2012 and 2011 do not include 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 September 30, 2012 and December 31, 2011, 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 three and nine months ending September 30, 2012 the Company recorded other income of $10,000 and other expense of $3,000, respectively, for the translation of foreign currency.  For the three and nine months ending September 30, 2011 the Company recorded other expense of $32,000 and other income of $15,000, 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 and restricted stock units, as well as its 1998 Employee Stock Purchase Plan, as amended (the Purchase Plan).  The Company’s share-based compensation expense is recorded in accordance with ASC 718.

Income or Loss Per Share

The Company presents two earnings or loss per share (EPS) amounts, basic and diluted in accordance with ASC 260.  Basic earnings or loss per share is computed using the weighted average number of shares of common stock outstanding. Diluted net loss per share does not differ from basic net loss per share since potential common shares from the exercise of stock options, warrants or rights under the Purchase Plan are anti-dilutive for the periods ended September 30, 2012 and 2011 and, therefore, are excluded from the calculation of diluted net loss per share.

Stock options and warrants to purchase a total of 11,379,953 and 11,682,969 shares of common stock were outstanding at September 30, 2012 and 2011, respectively.

Comprehensive Income (Loss)

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

Business Segments

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

Recent Accounting Pronouncements

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

In December 2011, the FASB issued an amendment to the accounting guidance for disclosure of offsetting assets and liabilities and related arrangements. The amendment expands the disclosure requirements in that entities will be required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The amendment is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013, and shall be applied retrospectively.  The Company does not expect the adoption of this accounting pronouncement to have a material impact on its financial statements.

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Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts receivable, allowances for doubtful accounts	$ 45	$ 115
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	99,140,550	98,798,065
Common stock, shares outstanding	99,140,550	98,798,065

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Income Taxes

9 Months Ended

Sep. 30, 2012

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 for which the Company determines that it does not meet the criteria under ASC 740.

The Company has recorded a deferred tax asset of approximately $1.8 million at December 31, 2011 reflecting the benefit of deductions from the exercise of stock options which has been fully reserved until it is more likely than not that the benefit will be realized.  The benefit from this deferred tax asset will be recorded as a credit to additional paid-in capital, if and when realized, through a reduction of cash taxes.

As required by ASC 740, the Company's management has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets, and has determined that it does not meet the criteria for recognizing its deferred tax assets under the criteria of ASC 740.  Therefore, a valuation allowance of approximately $199.2 million was established at December 31, 2011.

The Company accounts for uncertain tax positions using a "more-likely-than-not" threshold for recognizing and resolving uncertain tax positions. 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 September 30, 2012, the Company had no unrecognized tax benefits.

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.

As of December 31, 2011, the Company had federal tax net operating loss carryforwards (NOLs) of $315.6 million 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 as of December 31, 2011 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 $151.9 million as of December 31, 2011 available to reduce future taxable income in the Commonwealth of Massachusetts and other states, which will expire at various dates beginning in 2012 through 2031.  The Company also had state research and development and investment tax credit carryforwards of approximately $7.2 million as of December 31, 2011 available to reduce future tax liabilities, which expire at various dates beginning in 2012 through 2026.

Utilization of the NOLs 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 (Section 382), as well as similar state and foreign provisions.  Ownership changes may limit the amount of NOLs and tax credit 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 that increase the ownership of 5% shareholders or public groups in the stock of a corporation by more than 50 percent in the aggregate over a three-year period.  During 2012, the Company completed a study through December 31, 2011, to determine whether any ownership change has occurred since the Company's formation and has determined that transactions have resulted in two ownership changes, as defined by Section 382.  There could be additional ownership changes in the future that could further limit the amount of NOLs and tax credit carryforwards that the Company can utilize.

As of December 31, 2011, the Company’s federal tax NOLs available to reduce future taxable income without limitation are $243.5 million, which expire at various times beginning in 2024 through 2031.  The Company’s federal research and experimentation and orphan drug credit carryforward as of December 31, 2011 available to reduce future tax liabilities without limitation are $51.7 million, which will expire at various dates beginning in 2024 through 2031.  In addition the Company has NOLs and federal tax credits that are restricted and expire at various times beginning in 2012 through 2024.  These restricted NOLs and federal tax credits of $72.1 million and $5.5 million, respectively, may be utilized in part, subject to an annual limitation.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 18, 2012
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	DYAX
Entity Registrant Name	DYAX CORP
Entity Central Index Key	0000907562
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		99,195,806

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Basis of Presentation

Basis of Presentation

The accompanying unaudited interim consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information.  It is management’s opinion that the accompanying unaudited interim consolidated financial statements reflect all adjustments (which are normal and recurring) necessary for a fair statement of the results for the interim periods.  The financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2011.  The accompanying December 31, 2011 consolidated balance sheet was derived from audited financial statements, but does not include all disclosures required by GAAP.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect (i) the reported amounts of assets and liabilities, (ii) disclosure of contingent assets and liabilities at the dates of the financial statements and (iii) the reported amounts of revenue and expenses during the reporting periods.  Actual results could differ from those estimates.  The results of operations for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012.

Basis of Consolidation

Basis of Consolidation  

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

Use of Estimates

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

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 September 30, 2012 and December 31, 2011, approximately 92% and 61% 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 September 30, 2012, two customers accounted for 45% and 33% of the accounts receivable balance.  These two customers also accounted for approximately 43% and 34% of the Company's accounts receivable balance as of December 31, 2011, all of which were collected in the first quarter of 2012.

Cash and Cash Equivalents

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

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 September 30, 2012, the Company's investments consisted of U.S. Treasury notes and bills with an amortized cost and estimated fair value of $27.9 million, and had an unrealized gain of $6,000.  As of December 31, 2011, the Company's investments consisted of United States Treasury notes and bills with an estimated fair value and amortized cost of $34.9 million, and had an unrealized gain of $7,000, which is recorded in other comprehensive income on the accompanying consolidated balance sheet.

Inventories

Inventories

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

Fixed Assets

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

Impairment of Long-Lived Assets

The Company’s long-lived assets, consisting primarily of fixed assets, are reviewed 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

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 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 and other discounts, government rebates, patient assistance programs, product returns and other applicable allowances.

Product Sales Allowances.  The Company establishes reserves for trade distributor and prompt pay discounts, government rebates, patient assistance programs, 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, patient financial assistance programs, 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 United States distributors.  Since the Company expects that these 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, trends for similar products sold by others and data provided by a distributor.

Development and License Fee Revenues

Development and License Fee Revenues

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 (i.e. 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.

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.

Patent Licenses.  The Company previously licensed its phage display patents on a non-exclusive basis to third parties for use in connection with the research and development of therapeutic, diagnostic, and other products.  The last of these patents will expire in November 2012.  Even after patent expiration, the Company generally remains eligible under these patent licenses to receive milestones and/or royalties for products discovered prior to patent expiration, although certain existing patent licenses will no longer have a royalty obligation.  The Company does not expect the expiration of these patents to have a material impact on its LFRP business.

Standard terms of the patent rights agreements include non-refundable signing fees, non-refundable license maintenance fees, development milestone payments and/or royalties on product sales. Signing fees and maintenance fees are generally recognized on a straight line basis over the term of the agreement or through the date of patent expiry, if shorter, except that in the case of perpetual patent licenses for which fees were recognized immediately if it was determined that the Company had no future obligations under the agreement and the payments were made 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, since the Company has no remaining performance obligations under the agreement.

Cost of Product Sales

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 in the United States were expensed when incurred as a research and development cost and accordingly, KALBITOR units sold during the three and nine months ended September 30, 2012 and 2011 do not include the full cost of drug manufacturing.

Research and Development

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

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 September 30, 2012 and December 31, 2011, 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

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 three and nine months ending September 30, 2012 the Company recorded other income of $10,000 and other expense of $3,000, respectively, for the translation of foreign currency.  For the three and nine months ending September 30, 2011 the Company recorded other expense of $32,000 and other income of $15,000, respectively, for the translation of foreign currency.

Share-Based Compensation

Share-Based Compensation

The Company’s share-based compensation program consists of share-based awards granted to employees in the form of stock options and restricted stock units, as well as its 1998 Employee Stock Purchase Plan, as amended (the Purchase Plan).  The Company’s share-based compensation expense is recorded in accordance with ASC 718.

Income or Loss Per Share

Income or Loss Per Share

The Company presents two earnings or loss per share (EPS) amounts, basic and diluted in accordance with ASC 260.  Basic earnings or loss per share is computed using the weighted average number of shares of common stock outstanding. Diluted net loss per share does not differ from basic net loss per share since potential common shares from the exercise of stock options, warrants or rights under the Purchase Plan are anti-dilutive for the periods ended September 30, 2012 and 2011 and, therefore, are excluded from the calculation of diluted net loss per share.

Stock options and warrants to purchase a total of 11,379,953 and 11,682,969 shares of common stock were outstanding at September 30, 2012 and 2011, respectively

Comprehensive Income (Loss)

Comprehensive Income (Loss)

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

Business Segments

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

Recent Accounting Pronouncements

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

In December 2011, the FASB issued an amendment to the accounting guidance for disclosure of offsetting assets and liabilities and related arrangements. The amendment expands the disclosure requirements in that entities will be required to disclose both gross information and net information about both instruments and transactions eligible for offset in the statement of financial position and instruments and transactions subject to an agreement similar to a master netting arrangement. The amendment is effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2013, and shall be applied retrospectively.  The Company does not expect the adoption of this accounting pronouncement to have a material impact on its financial statements.

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Consolidated Statements of Operations and Comprehensive Loss (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenues:
Product sales, net	$ 10,814	$ 6,597	$ 27,988	$ 15,888
Development and license fee revenues	2,287	3,535	10,632	24,333
Total revenues, net	13,101	10,132	38,620	40,221
Costs and expenses:
Cost of product sales	493	260	1,447	781
Research and development expenses	6,158	8,659	22,664	26,238
Selling, general and administrative expenses	9,117	8,790	29,872	27,120
Restructuring costs			1,440
Total costs and expenses	15,768	17,709	55,423	54,139
Income (loss) from operations	(2,667)	(7,577)	(16,803)	(13,918)
Other income (expense):
Interest income	5	382	22	544
Interest and other expenses	(2,548)	(2,528)	(7,650)	(7,690)
Total other expense	(2,543)	(2,146)	(7,628)	(7,146)
Net loss	(5,210)	(9,723)	(24,431)	(21,064)
Other comprehensive income (loss):
Unrealized gain (loss) on investments	4	(27)	(1)	(18)
Comprehensive loss	$ (5,206)	$ (9,750)	$ (24,432)	$ (21,082)
Basic and diluted net loss per share	$ (0.05)	$ (0.10)	$ (0.25)	$ (0.21)
Shares used in computing basic and diluted net loss per share	99,069,928	98,748,086	98,896,984	98,720,137

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Accounts Payable and Accrued Expenses

9 Months Ended

Sep. 30, 2012

Accounts Payable and Accrued Expenses

7. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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

	September 30, 2012		December 31, 2011
Accounts payable	$	1,659	$	2,927
Accrued employee compensation and related taxes.		3,495		4,529
Accrued expenses		1,884		1,591
Accrued license fees		74		—
Accrued legal		470		214
Accrued leasehold improvements		—		2,472
Accrued restructuring		139		—
Accrued sales allowances		921		525
Other accrued liabilities		2,307		3,060
Total	$	10,949	$	15,318

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Fixed Assets

9 Months Ended

Sep. 30, 2012

Fixed Assets

6. FIXED ASSETS

Fixed assets consist of the following:

	September 30, 2012			December 31, 2011
	(In thousands)
Laboratory equipment	$	7,629		$	9,103
Furniture and office equipment		1,588			1,095
Software and computers		4,711			4,445
Leasehold improvements		4,502			6,845
Construction in process		—			3,960
Total		18,430			25,448
Less: accumulated depreciation and amortization		(13,142	)		(20,567	)
	$	5,288		$	4,881

Depreciation expense for the three and nine months ended September 30, 2012 was approximately $246,000 and $824,000, respectively, and $315,000 and $971,000 for the three and nine months ended September 30, 2011, respectively.

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Notes Payable (Tables)

9 Months Ended

Sep. 30, 2012

Activity Under Loan Presented For Financial Reporting

Activity under the Loan is presented for financial reporting purposes, as follows (in thousands):

	September 30, 2012			December 31, 2011
Beginning balance	$	75,372		$	56,406
Accretion of discount		149			246
Loans activity:
Net proceeds from Tranche A Loan		—			20,000
Discount on Tranche A Loan		(43	)		(150	)
Interest Expense		7,437			9,932
Payments applied to principal		(96	)		(1,129	)
Payments applied to interest		(5,628	)		(8,224	)
Accrued interest payable		—			(1,709	)
Ending balance	$	77,191		$	75,372

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Financial Assets Measured at Fair Value

Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability.

Description    (in thousands)	September 30, 2012		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Cash equivalents	$	18,893	$	18,893	$	—	$	—
Marketable debt securities		9,043		—		9,043		—
Total	$	27,936	$	18,893	$	9,043	$	—

Description   (in thousands)	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	$	—

Marketable Securities

The following tables summarize the Company’s marketable securities at September 30, 2012 and December 31, 2011, in thousands:

	September 30, 2012
Description	Amortized Cost		Gross Unrealized  Gains		Gross Unrealized Losses		Fair Value
US Treasury Bills and Notes (due within 1 year)	$	9,037	$	6	$	—	$	9,043
US Treasury Bills and Notes (due after 1 year through 2 years)		—		—		—		—
Total	$	9,037	$	6	$	—	$	9,043

	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

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Restructuring Charges

9 Months Ended

Sep. 30, 2012

Restructuring Charges

10. RESTRUCTURING CHARGES

In February 2012, the Company realigned its business structure and implemented a number of strategic and operational initiatives.  As part of these initiatives, the Company terminated certain early stage, preclinical research and development programs and a workforce reduction was implemented.  As a result of the restructuring, during the nine months ended September 30, 2012, the Company recorded one-time charges of approximately $1.4 million, which included severance and benefits related charges of approximately $1.2 million, outplacement costs of approximately $120,000, stock compensation expense of $56,000 for amendments to the exercise schedules to certain options and other exit costs of $90,000.  All restructuring costs are expected to be paid by December 31, 2012, including $139,000 which is accrued and unpaid as of September 30, 2012.  No additional charges are expected in future periods related to this restructuring.

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Notes Payable

9 Months Ended

Sep. 30, 2012

Notes Payable

8. NOTES PAYABLE

HealthCare Royalty Partners

In August 2012, the Company completed an agreement with an affiliate of HealthCare Royalty Partners, formerly Cowen Healthcare Partners (HC Royalty) entered into in December 2011, to refinance its existing loans with HC Royalty.  As of the refinancing, the aggregate principal amount of the new loan was $80.5 million, consisting of a $21.7 million Tranche A Loan and a $58.8 million Tranche B Loan (collectively, the “Loan”). The Loan bears interest at a rate of 12% per annum, payable quarterly.  The Loan will mature in August 2018, and can be repaid without penalty beginning in August 2015.

In connection with the Loan, the Company entered into a security agreement granting HC Royalty a security interest in the intellectual property related to the LFRP, and the revenues generated by the Company through the license of the intellectual property related to the LFRP. The security agreement does not apply to the Company's internal drug development or to any of the Company's co-development programs.

Under the terms of the Loan agreement, the Company is required to repay the Loan based on the annual net LFRP receipts.  Until September 30, 2016, required payments are equal to the sum of 75% of the first $15.0 million in specified annual LFRP receipts and 25% of specified annual LFRP receipts over $15.0 million.  After September 30, 2016, and until the maturity date or the complete repayment of the Loan, HC Royalty will receive 90% of all included LFRP receipts.  If the HC Royalty portion of LFRP receipts for any quarter exceeds the interest for that quarter, then the principal balance will be reduced.  Any unpaid principal will be due upon the maturity of the Loan.  If the HC Royalty 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 dates of the Tranche A Loan and the Tranche B Loan, respectively, the Company must repay to HC Royalty all additional accumulated principal above the original loan amounts of $21.7 million and $58.8 million, respectively.

Tranche A Loan

In December 2011, the Company entered into an agreement with an affiliate of HC Royalty and received a loan of $20 million (Tranche A Loan) and a commitment to refinance the amounts outstanding under the Company’s March 2009 amended and restated loan agreement (the March 2009 loan agreement) at a reduced interest rate in August 2012.  The Tranche A Loan was unsecured and accrued interest at an annual rate of 13% through August 2012, at which time the Tranche A Loan and its accrued interest was combined with 102% of the unpaid principal and accrued interest outstanding under the March 2009 loan agreement upon the closing of the Tranche B Loan.

Upon execution of the Tranche A Loan, the terms of the Original Loans (defined below) were determined to be modified under ASC 470.  Accordingly, during the three and nine months ending September 30 2012, interest expense on the Loan is being recorded in the Company’s financial statements at an effective interest rate of 12.5%.

Upon modification of the debt arrangement, the note payable balance related to the Tranche A Loan was reduced by $193,000 to reflect payment of legal fees in conjunction with the loan; these fees are being accreted over the life of the Loan, through August 2018.

Tranche B Loan

In 2008 and 2009, the Company entered into loan agreements with an affiliate of HC Royalty that provided aggregate loan proceeds of $65.0 million (the Original Loans), which  had an outstanding  principal and accrued interest balance of $57.6 million at the time of their refinancing in August 2012 (Tranche B Loan).  The Original Loans bore interest at an annual rate of 17.4%, payable quarterly, and were secured by the Company’s LFRP.

In connection with the Original Loans, the Company issued affiliates of HC Royalty warrants to purchase shares of the Company’s common stock.  In August 2008, the Company issued warrants to purchase 250,000 shares of the Company’s common stock at an exercise price of $5.50 per share.  This 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 March 2009, the Company issued HC Royalty a second warrant to purchase 250,000 shares of the Company’s common stock at an exercise price of $2.87 per share.  This 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 Loans 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 warrants issued, and by $580,000 for payment of HC Royalty’s legal fees in conjunction with the Tranche B Loan.  Prior to the December 2011 issuance of the Tranche A Loan, each of these amounts was being accreted over the life of the note through August 2016.  Subsequent to the modification of the debt arrangement in December 2011, the unamortized portion of these amounts is being accreted over the life of the Loan through August 2018.

The Loan principal balance at September 30, 2012 and December 31, 2011 was $80.5 million and $76.7 million, respectively.  For financial reporting purposes, the Loan is adjusted for discounts associated with the debt issuance, including warrants and fees.

Activity under the Loan is presented for financial reporting purposes, as follows (in thousands):

	September 30, 2012			December 31, 2011
Beginning balance	$	75,372		$	56,406
Accretion of discount		149			246
Loans activity:
Net proceeds from Tranche A Loan		—			20,000
Discount on Tranche A Loan		(43	)		(150	)
Interest Expense		7,437			9,932
Payments applied to principal		(96	)		(1,129	)
Payments applied to interest		(5,628	)		(8,224	)
Accrued interest payable		—			(1,709	)
Ending balance	$	77,191		$	75,372

The estimated fair value of the note payable was $80.5 million at September 30, 2012 which was calculated based on level 3 inputs due to the limited availability of comparable data points.  The note payable was valued using expected cash flows discounted at our estimate of the currently available market interest rate.

Equipment Loan

In June 2012, the Company entered into an equipment lease line of credit for up to $3 million with Silicon Valley Bank.  When drawn, the note bears interest at a 6% annual rate.  The Company drew down $1.4 million from this line, which will be financed over a 3-year term.  The outstanding balance of this loan was $1.4 million as of September 30, 2012.

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Facility Lease

9 Months Ended

Sep. 30, 2012

Facility Lease

9. FACILITY LEASE

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 Burlington 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.  The Company has provided the landlord a Letter of Credit of $1.1 million to secure its obligations under the lease.  Under the terms of the Burlington lease agreement, the landlord has provided the Company with a tenant improvement allowance of $2.6 million which was used towards the cost of leasehold improvements.  Through September 30, 2012, the Company capitalized approximately $4.5 million in leasehold improvements associated with the Burlington facility.  Costs reimbursed under the tenant improvement allowance have been recorded as deferred rent and are being amortized as a reduction to rent expense over the lease term.

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Stockholder's Equity (Deficit) and Stock-Based Compensation

9 Months Ended

Sep. 30, 2012

Stockholder's Equity (Deficit) and Stock-Based Compensation

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

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, restricted stock units 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. Restricted stock unit are generally granted at the current fair market value on the date of grant, generally vest over a four year period in equal installments on each anniversary of the grant date.  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 the Annual Meeting of Stockholders held in May 2012 (the Annual Meeting), the Company’s shareholders approved a stock option exchange program for employees, executive officers and non-employee directors.  Under this option exchange program, outstanding options to purchase an aggregate of 4,192,310 shares of the Company’s common stock were exchanged for new options to purchase an aggregate of 2,473,596 shares of the Company’s common stock at an exercise price equal to $2.06 per share, which was the closing price of the Company’s common stock on the grant date of June 20, 2012.  All new options issued in the option exchange program are subject to a new, extended vesting schedule, the terms of which differ depending on the holder’s status as an executive, director or non-executive employee.  The new options have a term equal to the greater of (i) the term of the original options for which they were exchanged, or (ii) five years from date of grant.  The new options had a fair value approximately equal to the fair value of the surrendered options, based on a Black-Scholes option pricing model applied immediately prior to commencement of the exchange program.  Accordingly, approximately $25,000 and $28,000 of expense was recorded during the three and nine months ended September 30, 2012 related to the modification of the exchanged options.

Also at the Annual Meeting, the Company’s shareholders approved an amendment to the Equity Plan to increase the number of shares of common stock available for issuance under the plan by 5,000,000 shares less the net number of shares, if any, returned to the Equity Plan for issuance following the option exchange program.  Accordingly, 3,281,286 additional shares of common stock, constituting the approved 5,000,000 share increase net of the 1,718,714 shares that were returned to the Equity Plan as a result of the option exchange program, became available for issuance under the plan.

At September 30, 2012, a total of 6,137,673 shares were available for future grants under the Equity Plan.

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 was approximately $15,000 and $32,000 for the three and nine months ended September 30, 2012, respectively, and $8,000 and $32,000, respectively, for the three and nine months ended September 30, 2011.  There were 48,748 and 87,188 shares purchased under the Plan during the nine months ended September 30, 2012 and 2011, respectively.  At September 30, 2012, a total of 408,165 shares were reserved and available for issuance under this Plan.

Stock-Based Compensation Expense

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

The following table reflects stock compensation expense recorded, net of amounts capitalized into inventory, during the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2012		2011		2012		2011
Compensation expense related to:
Equity Incentive Plan	$	733	$	883	$	2,744	$	3,078
Employee Stock Purchase Plan		15		8		32		32
	$	748	$	891	$	2,776	$	3,110
Stock-based compensation expense charged to:
Research and development	$	198	$	273	$	576	$	896
Selling, general and administrative	$	550	$	618	$	2,145	$	2,214
Restructuring charges	$	—	$	—	$	55	$	—

Stock-based compensation expense capitalized into inventory was $9,000 and $15,000 for the three and nine months ended September 30, 2012, respectively, and $18,000 and $25,000 for the three and nine months ended September 30, 2011, respectively.  Capitalized stock-based compensation is recognized into cost of product sales when the related product is sold.

Stock-based compensation expense for the three and nine months ending September 30, 2012 included $46,000 and $428,000, respectively, related to the modification of certain stock options.

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Accounts Payable and Accrued Expenses (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts Payable and Accrued Liabilities [Line Items]
Accounts payable	$ 1,659	$ 2,927
Accrued employee compensation and related taxes.	3,495	4,529
Accrued expenses	1,884	1,591
Accrued license fees	74
Accrued legal	470	214
Accrued restructuring	139
Total	10,949	15,318
Leasehold Improvements
Accounts Payable and Accrued Liabilities [Line Items]
Accrued liabilities		2,472
Accrued sales allowances
Accounts Payable and Accrued Liabilities [Line Items]
Accrued liabilities	921	525
Other
Accounts Payable and Accrued Liabilities [Line Items]
Accrued liabilities	$ 2,307	$ 3,060

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Fixed Assets (Tables)

9 Months Ended

Sep. 30, 2012

Fixed Assets

Fixed assets consist of the following:

	September 30, 2012			December 31, 2011
	(In thousands)
Laboratory equipment	$	7,629		$	9,103
Furniture and office equipment		1,588			1,095
Software and computers		4,711			4,445
Leasehold improvements		4,502			6,845
Construction in process		—			3,960
Total		18,430			25,448
Less: accumulated depreciation and amortization		(13,142	)		(20,567	)
	$	5,288		$	4,881

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Summary Of Significant Accounting Policies - Additional Information (Detail) (USD $)	9 Months Ended	12 Months Ended				3 Months Ended		9 Months Ended						9 Months Ended
	Sep. 30, 2012 Segment Customer Location Entity	Dec. 31, 2011 Customer	Sep. 30, 2011	Sep. 30, 2012 US Treasury and Government	Dec. 31, 2011 US Treasury and Government	Sep. 30, 2012 Foreign Exchange	Sep. 30, 2011 Foreign Exchange	Sep. 30, 2012 Foreign Exchange	Sep. 30, 2011 Foreign Exchange	Sep. 30, 2012 Customer A	Dec. 31, 2011 Customer A	Sep. 30, 2012 Customer B	Dec. 31, 2011 Customer B	Sep. 30, 2012 Maximum	Sep. 30, 2012 Maximum Cash and Cash Equivalents	Sep. 30, 2012 Maximum Short-term Investments	Sep. 30, 2012 Minimum	Sep. 30, 2012 Minimum Short-term Investments
Significant Accounting Policies [Line Items]
Percentage of cash, cash equivalent and short-term investments invested in money market fund	92.00%	61.00%
Number of financial institution in which financial instruments invested	1
Number of major customers	2	2
Percentage of single significant customer balance to total Accounts Receivables										45.00%	33.00%	43.00%	34.00%
Short term investment maturity period															90 days	1 year		90 days
Available-for-sale investment amortized cost	$ 9,037,000	$ 26,029,000		$ 27,900,000	$ 34,900,000
Available-for-sale estimated fair value	9,043,000	26,036,000		27,900,000	34,900,000
Unrealized gain on available-for-sale investments	6,000	7,000		6,000	7,000
Estimated useful life of property plant and equipment														7 years			3 years
Percentage of prompt payment discount accrued at the time of sale	100.00%
Standard product warranty description	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.
Unrecognized tax benefits	0	0
Other income						10,000			15,000
Other expense							$ 32,000	$ 3,000
Stock options and warrants Purchase	11,379,953		11,682,969
Number of business segment	1
Number of geographic area within which the company operates predominantly	1

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Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended		12 Months Ended		9 Months Ended
	Dec. 31, 2011	Sep. 30, 2012	Dec. 31, 2011 Research and Development Credit Carryforwards	Dec. 31, 2011 Federal Tax	Sep. 30, 2012 Minimum	Sep. 30, 2012 Maximum
Income Taxes [Line Items]
Deferred tax asset	$ 1,800,000
Deferred tax asset valuation allowance	199,200,000
Unrecognized tax benefit	0	0
Tax years open to examination by major taxing jurisdictions					1997	2011
Federal tax net operating loss carryforward	315,600,000
Federal research and experimentation	57,200,000		7,200,000
State tax net operating loss carryforward	151,900,000
Federal tax NOLs				243,500,000
Federal research and experimentation and orphan drug credit carryforward				51,700,000
Restricted NOLs				72,100,000
Federal tax credits				$ 5,500,000

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Consolidated Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities:
Net loss	$ (24,431)	$ (21,064)
Adjustments to reconcile net loss to net cash used in operating activities:
Amortization of purchased premium/discount	49	190
Depreciation and amortization of fixed assets and intangible assets	826	973
Non-cash interest expense	1,915	1,612
Compensation expenses associated with stock-based compensation plans	2,775	3,110
Provision for doubtful accounts	(35)	10
Gain on sale of fixed assets	(110)
Changes in operating assets and liabilities:
Accounts receivable	(1,363)	(1,485)
Other current assets	2,654	271
Inventory	(3,130)	(5,075)
Other long-term assets	151	(247)
Accounts payable and accrued expenses	(3,589)	(1,540)
Deferred revenue	(3,053)	(4,010)
Long-term deferred rent	715	(30)
Net cash used in operating activities	(26,626)	(27,285)
Cash flows from investing activities:
Purchase of investments	(6,057)	(3,021)
Proceeds from maturity of investments	23,000	28,502
Purchase of fixed assets	(3,834)	(236)
Restricted cash	1,266	(178)
Proceeds from sale of fixed assets	200
Net cash provided by investing activities	14,575	25,067
Cash flows from financing activities:
Net proceeds from sale of common stock		323
Repayment of long-term obligations	(135)	(1,584)
Proceeds from long-term obligations	1,382
Proceeds from the issuance of common stock under employee stock purchase plan and exercise of stock options	682	159
Net cash provided by (used in) financing activities	1,929	(1,102)
Net decrease in cash and cash equivalents	(10,122)	(3,320)
Cash and cash equivalents at beginning of the period	31,468	18,601
Cash and cash equivalents at end of the period	21,346	15,281
Supplemental disclosure of cash flow information:
Interest paid	$ 7,431	$ 6,923

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Inventory

9 Months Ended

Sep. 30, 2012

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.  Inventory on-hand that will be sold beyond the Company's normal operating cycle is classified as non-current and grouped with other assets on the Company's balance sheet. As of September 30, 2012, approximately $6.4 million of inventory is classified as non-current.  

Inventory consists of the following (in thousands):

	September 30, 2012		December 31, 2011
Raw Materials	$	1,116	$	1,429
Work in Progress		8,189		5,474
Finished Goods		887		119
Total	$	10,192	$	7,022

The Company has revised the classification for $4.9 million of inventory from current assets to non-current other assets for the year ended December 31, 2011, to correct the classification of inventory based on the projected sale of inventory beyond the Company's normal operating cycle. The Company concluded this error was not material to the prior period financial statements.

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Significant Transactions - Additional Information (Detail) (USD $)	1 Months Ended	3 Months Ended		9 Months Ended				3 Months Ended		9 Months Ended			1 Months Ended				12 Months Ended			9 Months Ended			3 Months Ended		9 Months Ended			9 Months Ended
	Jun. 30, 2012	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Steering Committee Services	Sep. 30, 2012 Second Amendment	Sep. 30, 2012 Sigma Tau	Sep. 30, 2011 Sigma Tau	Sep. 30, 2012 Sigma Tau	Sep. 30, 2011 Sigma Tau	Dec. 31, 2011 Sigma Tau	Jun. 30, 2010 Sigma Tau Original Agreement	Jun. 30, 2010 Sigma Tau Original Agreement Up-front Payment Arrangement	Sep. 30, 2012 Sigma Tau First Amendment	Sep. 30, 2012 Sigma Tau First Amendment Up-front Payment Arrangement	Dec. 31, 2011 Sigma Tau Second Amendment Up-front Payment Arrangement	Dec. 31, 2011 Sigma Tau Second Amendment Additional Up-front Payment Arrangement	Dec. 31, 2011 Sigma Tau Third Amendment	Sep. 30, 2012 Sigma Tau Fourth Amendment	Sep. 30, 2012 Sigma Tau Fourth Amendment Maximum	Sep. 30, 2012 Sigma Tau Fourth Amendment Minimum	Sep. 30, 2012 CMIC Co., Ltd, (CMIC)	Sep. 30, 2011 CMIC Co., Ltd, (CMIC)	Sep. 30, 2012 CMIC Co., Ltd, (CMIC)	Sep. 30, 2011 CMIC Co., Ltd, (CMIC)	Dec. 31, 2011 CMIC Co., Ltd, (CMIC)	Sep. 30, 2012 CMIC Co., Ltd, (CMIC) Maximum	Sep. 30, 2012 CMIC Co., Ltd, (CMIC) Minimum	Sep. 30, 2012 CMIC Co., Ltd, (CMIC) Up-front Payment Arrangement
Significant Transactions [Line Items]
Description of collaborative agreement	In June 2010, the Company entered into a strategic collaboration agreement with Sigma-Tau Rare Diseases S.A. (as successor-in-interest to Defiante Farmaceutica S.A.) (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 and certain Asian territories (the second amendment). Three subsequent amendments to this agreement eliminated rights that Dyax had previously granted to Sigma-Tau for the Asian territories, the Middle East, North Africa, Latin America and the Caribbean
Collaboration arrangement payment														$ 2,500,000		$ 500,000	$ 4,000,000	$ 3,000,000												$ 4,000,000
Common stock purchase													636,132		151,515
Common stock share price per share													$ 3.93		$ 3.30
Premium on common stock purchase													50.00%		50.00%
Aggregate purchase Price													2,500,000		500,000
Eliminated payment obligation of certain Asian territories																			3,000,000
Description of right and obligation of collaborative agreement																				Under the terms of the fourth and fifth amendments, Sigma-Tau's rights to the Middle East, Latin America and the Caribbean were eliminated. The Company agreed to make payments to Sigma-Tau ranging from 5%-12.5% of the amounts received by the Company as a result of any future product sales for certain countries in these territories.
Percentage of contribution payment from product sale																					12.50%	5.00%
Proceed from development and sales milestones				100,000,000																								102,000,000
Percentage of revenue to receive from development and sales milestones				41.00%																								24.00%	20.00%
Revenue		13,101,000	10,132,000	38,620,000	40,221,000	190,000	4,800,000	69,000.0	280,000.0	156,000.0	12,200,000												189,000	148,000	566,000	444,000
Deferred revenue							$ 2,400,000	$ 111,000		$ 111,000		$ 158,000											$ 2,700,000		$ 2,700,000		$ 3,300,000

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Restructuring Charges - Additional Information (Detail) (USD $)	9 Months Ended
	Sep. 30, 2012
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 1,440,000
Expected date of completion of restructuring costs	Dec. 31, 2012
One-Time Charges
Restructuring Cost and Reserve [Line Items]
Restructuring charges	1,400,000
Severance and Benefits
Restructuring Cost and Reserve [Line Items]
Restructuring charges	1,200,000
Outplacement Costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	120,000
Stock Compensation Expense
Restructuring Cost and Reserve [Line Items]
Restructuring charges	56,000
Other Exit Costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	90,000
Accrued Restructuring Costs
Restructuring Cost and Reserve [Line Items]
Restructuring charges	$ 139,000

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Inventory (Tables)

9 Months Ended

Sep. 30, 2012

Inventory

Inventory consists of the following (in thousands):

	September 30, 2012		December 31, 2011
Raw Materials	$	1,116	$	1,429
Work in Progress		8,189		5,474
Finished Goods		887		119
Total	$	10,192	$	7,022