LICENSE AGREEMENT

THIS LICENSE AGREEMENT (the “Agreement”), effective as of this 7 ^th day of November 2005 (the “Effective Date”), by and between Panion & BF Biotech, Inc., with offices at 16F No. 3, Yuanqu Street, Nangang District, Taipei, Taiwan, ROC (hereinafter "Licensor"), and Keryx Biopharmaceuticals, Inc, with offices at 750 Lexington, 20 ^th Floor, New York, NY 10022 (hereinafter "Licensee").

WHEREAS , Dr. Chen Hsing Hsu (the "Inventor"), an employee of the University of Michigan (the "Institution"), is the named inventor on U.S. Patent No. 5,753,706, issued May 19, 1998 and entitled "Methods for Treating Renal Failure" (the "Licensed Patent Property"),

WHEREAS , the Institution has transferred to the Inventor all of the Institution's right, title, and interest in and to the Licensed Patent Property (subject to certain non-commercial applications, specified below), by an Agreement for the Reassignment of Intellectual Property, with a last-signed date of August 16, 2000,

WHEREAS , the Inventor has granted the Licensor the exclusive license, throughout the world (except the People's Republic of China) to make, use, and sell products embodying the inventions described in the Licensed Patent Properties, as well as rights to the Patent Rights (as hereinafter defined) (as specified below) (the "Exclusive License"),

WHEREAS , Licensor has developed certain Licensor Know-How (as hereinafter defined),

WHEREAS , by operation of this exclusive license, Licensor is the sole and exclusive licensee of the entire right, title and interest in and to the Patent Rights (with the exception of the People's Republic of China) and Licensor Know-How,

WHEREAS, Licensee desires to obtain an exclusive license under such Patent Rights and Licensor Know-How to develop, have developed, make, have made, use, have used, offer to sell, sell, have sold, import and export the Compound and Product in the Territory (as hereinafter defined), and

WHEREAS , Licensor has the authority and is willing to grant such license to Licensee, and Licensee is willing to accept such license from Licensor, under the terms and conditions set forth in this Agreement.

NOW THEREFORE , in consideration of the mutual promises and covenants set forth herein and other good and valuable consideration, the receipt of which is hereby acknowledged, the parties hereto agree as follows:

1.1 " Affiliate " means any corporation or non-corporate business entity, which controls, is controlled by, or is under common control with a party to this Agreement. A corporation or non-corporate business entity shall be regarded as in control of another corporation if it owns or directly or indirectly controls at least fifty-one percent (51%) of the voting stock of the other corporation, or (i) in the absence of the ownership of at least fifty-one percent (51%) of the voting stock of a corporation, or (ii) in the case of a non-corporate business entity, if it possesses, directly or indirectly, the power to direct or cause the direction of the management and policies of the corporation or non-corporate business entity, as applicable.

1.2   “ Combination Product ” means a Product containing one or more therapeutically active ingredients in addition to the Compound.

1.3   " Compound " means ferric citrate (PBF1681).

1.4   " FDA " means the United States Food and Drug Administration.

1.5   “ Field ” means the field of nephrology.

1.6   “ First Commercial Sale ” means with respect to a Product, the first sale for end use or consumption of such Product in a country after all Registrations in such country have been obtained.

1.7   " IND " means an Investigational New Drug Application in the United States.

1.8   " Indication " means any therapeutic application for a Product (i) for the treatment of hyperphosphatemia in end-stage renal disease, and (ii) for all other indications covered by the Patent Rights.

1.9   “ Improvements ” means any and all improvements, materials, technical data and information whether patented or unpatented, including but not limited to any changes to the Compound, to the Product or in the Licensor Know-How or Licensee Know-How including, but not limited to any analogues, or derivatives of the Compound, and changes in the manufacturing process for the Compound or the Product which are conceived or reduced to practice during the term of this Agreement.

1.10 “ Licensee Development Data ” means and includes all data relating to the Compound or the Product and all chemistry, manufacturing and control data relating to the development and manufacture of the Compound or the Product, results of pre-clinical and clinical studies and all other documentation containing or embodying any pre-clinical, clinical, chemistry, manufacturing and control data relating to any application for Registrations for a Product, which is generated by Licensee, its agents, or any Sublicensees during the term of this Agreement.

1.11   “ Licensee Know-How ” means all information and materials, including but not limited to, discoveries, processes, instructions, formulas, data, inventions, know-how and trade secrets, patentable or otherwise, which arise out of the development, manufacture and commercialization by Licensee of the Compound or the Product, including, without limitation, all biological, chemical, pharmacological, toxicological, pharmaceutical, physical, analytical, clinical, safety, manufacturing and quality control data and information related thereto, and all applications, registrations, licenses authorizations, documents, approvals and correspondence relating to the Compound or the Product, including without limitation, correspondence submitted to Regulatory Authorities, and all information and data contained in Registrations. Licensee Know-How shall also include Licensee’s interest in Improvements .

1.12 “ Licensor Development Data ” means and includes all data to which Licensor has rights relating to the Compound or the Product and all chemistry, manufacturing and control data relating to the development and manufacture of the Compound or the Product, results of pre-clinical and clinical studies and all other documentation containing or embodying any pre-clinical, clinical, chemistry, manufacturing and control data relating to any application for Registrations for the Product, whether such Licensor Development Data is in existence as of the Effective Date or generated by Licensor during the term of this Agreement.

1.13   " Licensor Know-How ” means all information and materials to which Licensor has rights, including but not limited to, discoveries, processes, formulas, instructions, data, inventions, know-how and trade secrets, patentable or otherwise, in each case, which as of the Effective Date and during the term of this Agreement are necessary or useful to Licensee in connection with the development, registration, manufacture, marketing, use or sale of a Product. Licensor Know-How shall also include without limitation, all biological, chemical, pharmacological, toxicological, pharmaceutical, physical, analytical, clinical, safety, manufacturing and quality control data and information related thereto, and all applications, registrations, licenses, authorizations, documents, approvals and correspondence relating to a Licensed Compound or a Product.   Licensor Know-How shall also include Licensor’s interest in Improvements.

1. 14   " NDA " means a New Drug Application in the United States.

1.15   " Net Sales " with respect to any Product other than a Combination Product means the gross sales (i.e. gross invoice prices) of such Product billed by Licensee and its Sublicenses to Third Party customers on all sales of a Product, and exclusive of inter-company transfer or sales, less the reasonable and customary deductions from such gross sales, including:

(i) actual credited allowances to such Third Party customers for spoiled, damaged, outdated and returned Product and for retroactive price reductions,

(ii) the amounts of trade, cash discounts and rebates, to the extent such discounts and rebates were not deducted by Licensee or its Sublicensees at the time of invoice in order to arrive at the gross invoice prices,

(iii) all transportation, handling charges and freight insurance, sales taxes, excise taxes, use taxes or import/export duties paid, and

(iv) all other reasonable and customary allowances and adjustments actually credited to customers whether during the specific royalty period or not.

The sale of a Product between Licensee and any of its Sublicensees solely for the research or clinical testing of such Product shall be excluded from the computation of Net Sales of such Product, provided that Licensee's sale of the Product was at cost, and such Product was used for research or clinical testing.  

1.16 " Net Sales " with respect to any Combination Product means the gross sales of such Product billed by Licensee and its Sublicensees to Third Party customers, on all sales of a Combination Product, and exclusive of inter-company transfer or sales, less all the allowances, adjustment, reductions, discounts, taxes, duties and other charges referred to in Section 1.15, multiplied by a fraction to be determined by Licensor and Licensee at such time when the Combination Product becomes available.   

The sale of a Combination Product between Licensee and any of its Sublicensees solely for the research or clinical testing of such Product shall be excluded from the computation of Net Sales for such Combination Product, provided that Licensee's sale of the Combination Product was at cost, and such Combination Product was used for research or clinical testing.  

1.17 " Patent Rights " means the Licensed Patent Property, and the patents and patent applications set forth in Exhibit 1 (which shall be updated from time to time by Licensor), patents and patent applications in which Licensor holds rights and which are directed to Licensor’s interest in Improvements, and any and all patents in which Licensor holds rights and that may issue from all such patent applications, including any and all divisions, continuations, continuations-in-part, extensions, substitutions, renewals, registrations, supplementary protection certificates, revalidations, reissues or additions of or to any of the aforesaid patents and patent applications, and any additional patents or patent applications to which Licensor acquires rights during the term of this Agreement which pertain in any way to the use or manufacture of the Compound or the Product.

1.18   “Payment Default” means Licensee’s failure to pay Licensor the license fee and milestone payments under Article 4, and the royalties under Article 5 for more than 90 days past the date on which these amounts are due.

1.19   " Product " means the Compound or any pharmaceutical product containing the Compound as an active ingredient, either alone or in combination with other active ingredients.

1.20   “ Proprietary Information ” means all information, including without limitation all Licensee Know-How, Licensor Know-How, and all other scientific, clinical, regulatory, marketing, financial and commercial information or data, whether communicated in writing, orally or electronically which is provided by one party to the other party in connection with this Agreement.  

1.21   " Registration " in relation to any Product means such approvals by a Regulatory Authority in a country or community or association of countries as may be legally required before such Product may be commercialized in such country or community or association of countries.

1.22   “ Regulatory Authority ” means the applicable government regulatory authority in each country in the Territory involved in granting regulatory approval for the Product. Such term includes, without limitation, the FDA and any successor agency thereto and Committee on Proprietary Medicinal Products of the European Community and any successor agency thereto

1.23   “ Sublicensee ” means a Third Party to which Licensee has granted sublicense rights under the license granted Licensee hereunder, which rights include at least the right to sell the Product. Third Parties that are permitted to manufacture the Compound or the Product for supply only to Licensee or only to Sublicensees are not “Sublicensees” and such transaction shall be deemed a transfer and not a sale of the Product.

1.24   " Territory " means the entire world, provided that (a) excluded from the Territory are China, Korea, and all other countries in the Asian Pacific Region, except that (b) included within the Territory is Japan.

1.25   " Third Party " means any party other than Licensor or Licensee or their respective Affiliates, or Sublicensees of Licensee or its Sublicensees.

1.26   " Valid Claim " means a claim of an issued and unexpired patent included within the Patent Rights which has not been held unenforceable or invalid in the applicable jurisdiction by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, and which has not been admitted to be invalid or unenforceable through dedication, disclaimer or otherwise.

2.1   Each party represents and warrants to the other party that it has the full right and authority to enter into this Agreement, and that, to the best of its knowledge, there are no prior agreements, commitments or other obstacles which could prevent it from carrying out all of its obligations hereunder.

2.2   Licensor represents to Licensee that:

(a)   it is the exclusive licensee of the entire right, title and interest in and to the Patent Rights, and to the best of its knowledge, there are no charges, encumbrances, licenses, options, restrictions, liens, rights of others, disputes, proceedings or claims relating to, affecting, or limiting its rights or the rights of Licensee under this Agreement, with the exception of non-commercial uses of the Licensed Patent Properties reserved to the Institution;

(b)   there is no claim, pending or threatened, of infringement, interference or invalidity regarding any part or all of the Patent Rights and their use as contemplated in this Agreement, and it has no present knowledge from which it can be inferred that the Patent Rights are invalid or that their exercise would infringe the patent rights of any Third Party;

(c)   it has the right to enter into this Agreement and to grant the licenses granted herein, and there is nothing in any Third Party agreement Licensor has entered into as of the Effective Date, which in any way, will limit the ability of Licensor to perform any and all of the obligations undertaken by Licensor hereunder,

(d)   it will not enter into any agreement after the Effective Date which will limit its ability to perform any and all of the obligations undertaken by Licensor hereunder

(e)   it has delivered to Licensee all Licensor Development Data and Licensor Know-how; and

(f)   to the best of its knowledge, neither this Agreement, nor any document or piece of Licensor Development Data, Licensor Know-How or Patent Rights contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein or therein misleading.

2.3   Licensee represents to Licensor that:

(a)   it has the right to enter into this Agreement and to the best of its knowledge, there is nothing in any Third Party agreement Licensee has entered into as of the Effective Date, which in any way, will limit the ability of Licensee to perform any and all of the obligations undertaken by Licensee hereunder, and

(b)   it will not enter into any agreement after the Effective Date which will limit its ability to perform any and all of the obligations undertaken by Licensee hereunder.

3.1   Grant . Subject to the terms and conditions of this Agreement, Licensor hereby grants to Licensee an exclusive license, in the Territory, with the right to sublicense, to develop, have developed, make, have made, use, have used, offer to sell, sell, have sold, and import and export the Product in the Territory under the Licensor Know-How, and the Patent Rights for all Indications in the Field.

3.2   Sublicensing.  Sublicensees of Licensee shall be entitled to sublicense to third parties the right to manufacture the Product, provided such third party manufacturers are permitted to sell only to Licensee or its immediate Sublicensees. Sublicensees of Licensee may not grant sublicenses under this Agreement without the written consent of Licensor, which consent shall not be unreasonably withheld or delayed. Should Licensee or any Sublicensee of Licensee grant any sublicenses, the terms and conditions of such sublicenses and the identity of sublicensees shall be at the sole discretion of Licensee and no consent shall be required from Licensor in connection with the terms and conditions of such sublicenses or the identity of sublicensees, provided however, that such sublicenses shall be co-terminated with this Agreement.

3.3   Consent of Inventor . The Inventor has provided his written consent to the terms and conditions of the License Grant and the terms and conditions of this Agreement. The Written Consent of the Inventor is set forth in Exhibit 2 hereto.

4.1   License Fee . Licensee will pay to Licensor a non-refundable, non-creditable license fee of ***** in cash on or about the Effective Date.

4.2   Milestone Payments . Licensee will pay to Licensor the milestone payments as follows:

(a) Within one hundred twenty (120) days following completion of Phase II clinical trial: *****;

(b) Within one hundred twenty (120) days following submission to the FDA of the first New Drug Application for a Product: *****;

(c) Within one hundred and twenty (120) days following a first FDA marketing approval for a Product: *****;

(d) Within one hundred and twenty (120) days following a first marketing approval for a Product in any country in Europe: *****; and

(e) Within one hundred and twenty (120) days following a first marketing approval for a Product in Japan: *****.

4.3   Limitations . It is understood and agreed that Licensee shall pay the milestone payments set forth in Section 4.2 only with respect to the first Indication for which a Product achieves a particular milestone event, and regardless of the number of Products which achieve a particular milestone event.

4.4 Payment in Equity . At Licensee’s option, up to ***** or such greater amount as may be mutually agreed by Licensor and Licensee of any milestone payment due pursuant to Sections 4.2(b) and (c) can be made in shares of unrestricted, unlegended and freely tradable common stock of Licensee, based on a per share price equal to the average closing price as listed in the Wall Street Journal over the last thirty (30) business days immediately preceding the date of a particular milestone payment is due; provided that (i) the Licensee’s common stock is traded on the NASDAQ National Market or other national stock exchange in the U.S. at the time the payment is made; (ii) the average trading price of such shares of common stock on the NASDAQ National Market or other national stock exchange in the U.S. in the three (3) months period immediately preceding the last day of a particular milestone payment pursuant to Sections 4.2(b) or (c) is due exceeds *****, and (iii) the ***** immediately preceding the payment due date exceeds *****. It is understood and agreed that the Licensee has the right to refuse any or all payment in the form of stock by the Licensor pursuant to this Section 4.4 if the Licensor has reasons to believe that the stock delivered is not unrestricted, unlegended or freely tradable.

5.1   Royalties. In consideration of the license rights granted to Licensee hereunder, Licensee shall pay or cause any Sublicensee  to pay to Licensor a royalty on their respective Net Sales, as follows:

for each Product where the manufacture, use or sale of such Product would but for the license granted hereunder, infringe a Valid Claim a royalty of ***** on Net Sales.

 5.2   Limitation . If the laws of any country where royalties are payable under Section 5.1 limit the amount of royalty or the duration of such royalty payments to less than the amount specified herein, then the royalty payment to Licensor shall be limited to that permitted by law.

*****Confidential material redacted and filed separately with the Commission.

5.3   Accrual of Royalties. No royalty shall be payable on a Product made, sold, or used for testing or development purposes or distributed as samples, provided such samples are sold by Licensee (or its Sublicensee) at cost. No royalties shall be payable on sale among Licensee and its Sublicensees, but royalties shall be payable on subsequent sales by Licensee or its Sublicensees to a Third Party. No multiple royalty shall be payable because the manufacture, use, or sale of a Product is covered by more than one Valid Claim.

5.4   Royalty Withheld due to Invalid Claims. In the event that all applicable claims of a patent included within the Patent Rights under which Licensee is paying a royalty according to Section 5.1 shall be held invalid or unenforceable by a court of competent jurisdiction in a given country of the Territory, Licensee may withhold payments of royalties which would otherwise have been due on Net Sales in that country by reason of Section 5.1 until such judgment shall be finally reviewed by an unappealed or unappealable decree of a higher court of competent jurisdiction in such country. The Licensee shall promptly repay Licensor any withheld royalty payments upon a final adjudication that the applicable claims of a patent included within the Patent Rights under which Licensee is paying a royalty under Section 5.1 are valid and enforceable.

5.5   Compulsory Licenses . If Licensee is caused to grant a compulsory license to any Third Party with respect to a Product in any country in the Territory, then the royalty rate to be paid by Licensee on Net Sales due on such Product in that country under Section 5.1 shall be reduced to the rate paid by such Third Party compulsory licensee on such Product.

6.1   Royalty Reports and Records. Beginning with the First Commercial Sale by Licensee or any Sublicensee as the case may be of a Product in any country of the Territory, and continuing thereafter during the term of this Agreement, Licensee shall furnish, and shall cause any Sublicensee to furnish, to Licensor a written report covering each calendar quarter (the "Reporting Period") showing (a) the Net Sales of each Product in each country of the Territory where royalties are payable under Section 5.1 during the Reporting Period; (b) the royalties, payable in United States Dollars, which shall have accrued hereunder in respect of such sales with a summary computation of such royalties; (c) withholding taxes, if any required by law to be deducted in respect of such sales; and (d) the exchange rates used in determining the amount of United States Dollars payable in respect of sales outside the United States. With respect to sales of a Product invoiced in a currency other than United States Dollars, the Net Sales and royalty payable shall be expressed in the domestic currency of the party making the sale together with the United States Dollars equivalent of the royalty payable, calculated using the simple average of the exchange rate published in the Wall Street Journal on the last day of each month of the Reporting Period. If any Sublicensee makes any sale invoiced in a currency other than its domestic currency, the Net Sales shall be converted to its domestic currency in accordance with its normal accounting principles. Licensee's Sublicensees shall have the option of making any royalty payment directly to Licensor. However, notwithstanding anything to the contrary, the Licensee shall continue to be liable for all royalties due under Section 5.1 until they are paid. Licensee or its Sublicensee shall furnish to Licensor appropriate evidence of payment of, and itemize any tax, credits or specific amount deducted from any royalty payment.

6.2   Royalty Reports and Payments. Royalty reports and payments shall be due sixty (60) days after the close of each Reporting Period. Payment of royalties in whole or in part may be made in advance of such due date. In case no royalty is due for any given Reporting Period, Licensee shall so report to Licensor. Licensee and its Sublicensees shall keep accurate records in sufficient detail to enable the royalty payable hereunder to be determined and confirmed. Licensee shall be responsible for all royalties, late payments, and interest that are due but have not been paid by Licensee's Sublicensees.

6.3   Right to Audit. Upon written request of Licensor, but not more than once in each calendar year nor more than once in respect to any given calendar year, Licensee shall permit an independent public accountant, selected by Licensor and acceptable to Licensee, which acceptance shall not be unreasonable withheld, to have access during normal business hours to those records of Licensee as may be reasonably necessary to verify the accuracy of the royalty reports hereunder in respect of any calendar year ending not more than thirty-six (36) months prior to the date of such request. Licensee shall include in each Sublicense granted by it pursuant to this Agreement a provision requiring the Sublicensee to keep and maintain records of sales made pursuant to such sublicense and to grant the same right of access to such records to Licensor's independent accountant. Upon the expiration of thirty-six (36) months following the end of any calendar year, the calculation of royalties payable with respect to such calendar year shall be binding and conclusive upon the parties, and Licensee and its Sublicensees shall be released from any liability or accountability with respect to royalties (and Licensor for an overpayment of royalties) for such calendar year, unless (a) an audit requested by Licensor prior to expiration of such thirty-six (36) months period has not yet been completed, or (b) Licensor has notified Licensee prior to the expiration of such thirty-six (36) months period that such audit has revealed a discrepancy regarding such calculation. The report prepared by such independent public accountant, a copy of which promptly shall be provided to Licensee, shall disclose only the amount of any underpayment or overpayment of royalties, if any, without disclosure of or reference to supporting documentation. If such independent accountant's report shows any underpayment of royalties, Licensee shall remit or shall cause its Sublicensees to remit to Licensor the amount of such underpayment within thirty (30) days after Licensee's receipt of such report, and if such underpayment exceeds five percent (5%) of the royalty due, Licensee shall reimburse Licensor for its reasonable out-of-pocket expenses for the audit, upon submission of supporting documentation. Any overpayment of royalties shall be creditable against future royalties payable in subsequent royalty periods, allocated evenly over the next-following two (2) royalty periods. In the event this Agreement is terminated or expires before such overpayment is fully credited, Licensor shall pay Licensee the portion of such overpayment not credited within one hundred twenty (120) days after the date of such termination or expiration.

6.4   Confidentiality of Records . Licensor agrees that all information subject to review under Section 6.3 or under any sublicense agreement shall be deemed the Proprietary Information of Licensee.

6.5   Late Payment Interest . Royalties and other payments required to be paid by Licensee pursuant to this Agreement shall, if overdue, bear interest at the rate equal to two percent (2%) over the prime rate as quoted by Citibank NA and not to exceed ten percent (10%) per annum . until paid. The payment of such interest shall not preclude Licensor from exercising any other rights it may have because any payment is overdue.

7.1 Clinical Development Program. Licensee shall pay, within thirty (30) days from the receipt of valid invoices from Licensor, ***** of all costs for Licensor's current Phase II clinical trial up to a maximum of *****, and shall at its expense, use commercially reasonable best efforts (a) to conduct a clinical development program directed to obtaining FDA approval of at least one Product for at least one Indication to be selected by Licensee (the "Development Program"), and (b) if, in the opinion of Licensee, the results of the Development Program so justify, to diligently seek FDA approval for such Product for such Indication. For purposes of this Section, "commercially reasonable best efforts" shall mean efforts consistent with those used by Licensee in its own priority development projects with its own products deemed to have high commercial potential.

7.2   Fulfillment . Licensee's reasonable efforts set forth in Section 7.1 with respect to the US shall be deemed to have been fulfilled if Licensee

(a) *****

(b) *****.

For purposes of this Section 7.2, *****. All clinical studies are to be conducted under an IND in the United States, or if conducted by Licensee outside the United States, are to be acceptable to the FDA for Registration of a Product in the United States. While fulfilling or in Licensee’s discretion, upon fulfillment of the above obligations, Licensee shall use commercially reasonable best efforts to commercialize the Product outside the US, within the Territory.

*****Confidential material redacted and filed separately with the Commission.

    7.3   Suspension of Development Program . Licensee’s obligation to conduct the Development Program is expressly conditioned on the continuing absence of any event or condition (such as, but not limited to, a regulatory action affecting the Product or the existence of an issue relating to the safety or efficacy of the Product, the introduction of a therapy which has superior safety and/or efficacy, or the existence of any circumstances, economic or otherwise, which make the development or marketing of the Product, in Licensee’s judgment, commercially unrewarding) that would suggest to Licensee, in exercising prudent and justifiable business judgment, that development or marketing of the Product should be suspended or stopped altogether, and Licensee’s obligation to develop or market the Product may be suspended for up to six (6) months, after which time the Development Program shall be resumed or this Agreem