x  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

OR

o  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                      .

Delaware (State or other jurisdiction of incorporation or organization)	13-4087132 (I.R.S. Employer Identification No.)

		Page
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS		1
PART I	FINANCIAL INFORMATION
Item 1	Financial Statements
	Consolidated Balance Sheets as of September 30, 2004 (unaudited) and December 31, 2003 (audited)	2
	Interim Consolidated Statements of Operations for the three and nine months ended September 30, 2004 and 2003 (unaudited)	3
	Interim Consolidated Statements of Cash Flows for the nine months ended September 30, 2004 and 2003 (unaudited)	4
	Notes to Interim Consolidated Financial Statements as of September 30, 2004 (unaudited)	7
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	13
Item 3	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4	Controls and Procedures	31
PART II	OTHER INFORMATION
Item 6	Exhibits	31

·	our expectations for increases or decreases in expenses;

·	our expectations for the development, manufacturing, and approval of KRX-101, KRX-0401, KRX-0402, KRX-0403 or any other products we may acquire or in-license;

·	our expectations for incurring additional capital expenditures to expand our research and development capabilities;

·	our expectations for generating revenue or becoming profitable on a sustained basis;

·	our expectations or ability to enter into marketing and other partnership agreements;

·	our expectations or ability to enter into product acquisition and in-licensing transactions;

·	our estimates of the sufficiency of our existing cash and cash equivalents and investments to finance our operating and capital requirements;

·	our expected losses; and

·	our expectations for future capital requirements.

		September 30, 2004				December 31, 2003
			(Unaudited)			(Audited)
Assets
Current assets
Cash and cash equivalents		$	35,690		$	21,672
Short-term investment securities, held-to-maturity			15,679			9,631
Note and accrued interest receivable from related party			--			352
Accrued interest receivable			44			111
Other receivables and prepaid expenses			811			213
Total current assets			52,224			31,979
Property, plant and equipment, net			157			24
Other assets (primarily intangible assets), net			236			220
Total assets		$	52,617		$	32,223
Liabilities and stockholders’ equity
Current liabilities
Accounts payable and accrued expenses		$	2,353		$	894
Accrued compensation and related liabilities			28			103
Deferred revenue			212			--
Total current liabilities			2,593			997
Contingent equity rights			4,003			--
Other liabilities			109			--
Total liabilities			6,705			997
Stockholders’ equity
Common stock, $0.001 par value per share (60,000,000 and 40,000,000 shares authorized, 30,890,280 and 25,016,873 shares issued, 30,834,180 and 24,960,773 shares outstanding at September 30, 2004, and December 31, 2003, respectively)			31			25
Additional paid-in capital			131,357			86,042
Treasury stock, at cost, 56,100 shares at September 30, 2004, and December 31, 2003, respectively			(89	)		(89	)
Unearned compensation			(2,442	)		(142	)
Deficit accumulated during the development stage			(82,945	)		(54,610	)
Total stockholders’ equity			45,912			31,226
Total liabilities and stockholders’ equity		$	52,617		$	32,223

		Three months ended September 30,						Nine months ended September 30,						Amounts accumulated during the development
		2004			2003			2004			2003			stage
Revenue:
Service revenue		$	397		$	--		$	642		$	--		$	642
Management fees from related party			--			--			--			--			300
Total revenue			397			--			642			--			942
Operating expenses:
Cost of services			416			--			619			--			619
Research and development:
Non-cash compensation			70			--			295			(515	)		7,022
Non-cash acquired in-process research and development			--			--			18,800			--			18,800
Other research and development			2,594			810			6,313			4,735			36,220
Total research and development expenses			2,664			810			25,408			4,220			62,042
General and administrative:
Non-cash compensation			161			17			967			69			4,546
Other general and administrative			596			763			2,434			2,632			20,523
Total general and administrative expenses			757			780			3,401			2,701			25,069
Total operating expenses			3,837			1,590			29,428			6,921			87,730
Operating loss			(3,440)			(1,590)			(28,786)			(6,921)			(86,788)
Interest income, net			187			34			452			184			4,334
Net loss before income taxes			(3,253)			(1,556)			(28,334)			(6,737)			(82,454)
Income taxes			--			--			1			116			491
Net loss		$	(3,253)		$	(1,556)		$	(28,335)		$	(6,853)		$	(82,945)
Basic and diluted loss per common share		$	(0.11)		$	(0.07)		$	(0.95)		$	(0.33)		$	(5.34)
Weighted average shares used in computing basic and diluted net loss per common share			30,743,132			21,107,158			29,683,258			20,623,339			15,546,338

		Nine months ended                     September 30,						Amounts accumulated during the development
			2004			2003			stage
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(28,335	)	$	(6,853	)	$	(82,945	)
Adjustments to reconcile cash flows used in operating activities:
Acquired in-process research and development			18,800			--			18,800
Stock compensation expense (negative expense)			1,262			(446	)		11,568
Issuance of common stock to technology licensor			--			--			359
Interest on convertible notes settled through issuance of preferred shares			--			--			253
Depreciation and amortization			116			905			2,382
Loss on disposal of property, plant and equipment			--			37			170
Impairment charges			--			2,482			2,482
Exchange rate differences			(3	)		9			94
Changes in assets and liabilities, net of effects of acquisitions:
Decrease (increase) in other receivables and prepaid expenses			(233	)		(15	)		(441	)
Decrease (increase) in accrued interest receivable			67			127			(44	)
Changes in deferred tax provisions and valuation allowance			--			102			--
Increase (decrease) in accounts payable and accrued expenses			147			(130	)		1,039
Increase (decrease) in income taxes payable			--			(47	)		--
Increase (decrease) in accrued compensation and related liabilities			(647	)		(988	)		(544	)
Increase (decrease) in liability in respect of employee severance obligations			--			(188	)		--
Increase (decrease) in other liabilities			(46	)		--			(46	)
Increase (decrease) in deferred revenue			(244	)		--			(244	)
Net cash used in operating activities			(9,116	)		(5,005	)		(47,117	)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property, plant and equipment			(18	)		(3	)		(4,421	)
Proceeds from disposals of property, plant and equipment			--			369			424
Decrease (increase) in note and accrued interest receivable from related party			(4	)		--			(356	)
Investment in other assets			(4	)		(65	)		(1,192	)
Proceeds from (additions to) deposits in respect of employee severance obligations			--			300			--
Proceeds from maturity of (investment in) short-term securities			(6,048	)		2,915			(15,679	)
Net cash provided by (used in) investing activities			(6,074	)		3,516			(21,224	)

	4

		Nine months ended September 30,						Amounts accumulated during the development
			2004			2003			stage
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans		$	--		$	--		$	500
Proceeds from long-term loans			--			--			3,251
Payment of assumed notes payable and accrued interest in connection with the ACCESS Oncology acquisition			(6,322	)		--			(6,322)
Issuance of convertible note, net			--			--			2,150
Issuance of preferred shares, net			--			--			8,453
Receipts on account of shares previously issued			--			--			7
Proceeds from initial public offering, net			--			--			46,298
Proceeds from private placements, net			31,707			--			45,840
Proceeds from exercise of options and warrants			3,726			164			3,943
Purchase of treasury stock			--			(12)			(89)
Net cash provided by financing activities			29,111			152			104,031
Cash and cash equivalents acquired in acquisition			94			--			94
Effect of exchange rate on cash			3			(9)			(94)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS			14,018			(1,346)			35,690
Cash and cash equivalents at beginning of year			21,672			13,350			--
CASH AND CASH EQUIVALENTS AT END OF PERIOD		$	35,690		$	12,004		$	35,690

	5

		Nine months ended September 30,						Amounts accumulated during the development
			2004			2003			stage
NON - CASH TRANSACTIONS
Issuance of common stock in connection with acquisition		$	6,325		$	--		$	6,325
Issuance of contingent equity rights in connection with acquisition			4,003			--			4,003
Assumption of liabilities in connection with acquisition			8,724			--			8,724
Conversion of short-term loans into contributed capital			--			--			500
Conversion of long-term loans into contributed capital			--			--			2,681
Conversion of long-term loans into convertible notes of Partec			--			--			570
Conversion of convertible notes of Partec and accrued interest into stock in Keryx			--			--			2,973
Issuance of warrants to related party as finder’s fee in private placement			--			--			114
Declaration of stock dividend			--			--			3
SUPPLEMENTARY DISCLOSURES OF CASH FLOW INFORMATION
Cash paid for interest		$	1,026		$	--*		$	1,166
Cash paid for income taxes		$	1		$	60		$	432

		Three months ended September 30,						Nine months ended September 30,						Amounts accumulated during the development
			2004			2003			2004			2003			stage
Net loss, as reported		$	(3,253)		$	(1,556)		$	(28,335)		$	(6,853)		$	(82,945)
Add: Stock-based compensation expense to employees and directors determined under the intrinsic value-based method, as included in reported net loss			111			1			556			80			9,596
Deduct: Stock-based compensation expense to employees and directors determined under fair value based method			(267)			(207)			(3,223)			(1,057)			(15,872)
Pro forma net loss		$	(3,409)		$	(1,762)		$	(31,002)		$	(7,830)		$	(89,221)
Basic and diluted loss per common share:
As reported		$	(0.11)		$	(0.07)		$	(0.95)		$	(0.33)		$	(5.34)
Pro forma		$	(0.11)		$	(0.08)		$	(1.04)		$	(0.38)		$	(5.74)

·	the issuance of up to 3,372,422 shares of the Company’s common stock as merger consideration, subject to the achievement of certain milestones, in connection with the recently completed acquisition of ACCESS Oncology, Inc. (see Note 4 below);

·	the Company’s 2004 long-term incentive plan, which provides for a maximum of four million shares of common stock reserved and available for issuance pursuant to awards granted under the plan;

·	the delisting of the Company’s common stock from the Alternative Investment Market of the London Stock Exchange, which became effective on August 10, 2004; and

·	an amendment to the Company’s amended and restated certificate of incorporation increasing by 20 million the number of shares of authorized common stock to 60 million shares.

·	500,000 shares of the Company’s common stock upon enrollment of the first patient in a Keryx-sponsored Phase III (or other pivotal) clinical trial for any of the acquired ACCESS Oncology drug candidates;

·	750,000 shares of the Company’s common stock upon the first new drug application acceptance by the Food and Drug Administration, or FDA, for any of the acquired ACCESS Oncology drug candidates;

·	1,750,000 shares of the Company’s common stock upon the first FDA approval of any of the acquired ACCESS Oncology drug candidates; and

·	372,422 shares of the Company’s common stock following the first 12-month period that sales of all of the acquired ACCESS Oncology drug candidates combined exceeds $100 million.

Assumed liabilities					$	8,724,000
Number of shares of Keryx common stock issued			623,145
Multiplied by Keryx’s volume-adjusted weighted average closing price per share measured over the last seven trading days immediately preceding the closing		$	10.15			6,325,000
Contingent equity rights						4,003,000
Other transaction costs						450,000
Total estimated purchase price					$	19,502,000

Allocation of purchase price:
Net assets acquired		$	725,000
Adjusted for write-off of existing intangible assets			23,000
Net tangible assets acquired			702,000
Acquired in-process research and development charge			18,800,000
Estimated purchase price		$	19,502,000

·	revenue that is likely to result from specific in-process research and development projects, including estimated patient populations, estimated selling prices, estimated market penetration and estimated market share and year-over-year growth rates over the product life cycles;

·	cost of sales related to the potential products using industry data or other sources of market data;

·	sales and marketing expense using industry data or other sources of market data;

·	general and administrative expenses; and

·	research and development expenses.

		Three months ended September 30,						Nine months ended September 30,
			2004			2003			2004			2003
Revenue		$	397,000		$	46,000		$	744,000		$	143,000
Net loss		$	(3,253,000	)	$	(2,465,000	)	$	(9,478,000	)	$	(9,384,000	)
Basic and diluted loss per common share		$	(0.11	)	$	(0.11	)	$	(0.32	)	$	(0.44	)

·	the timing of expenses associated with product development of the proprietary drug candidates within our portfolio and those that may be in-licensed, partnered or acquired;

·	the timing of the in-licensing, partnering and acquisition of new product opportunities;

·	the progress of the development efforts of parties with whom we have entered, or may enter, into research and development agreements;

·	our ability to achieve our milestones under licensing arrangements;

·	the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and

·	the amount of any funds expended to repurchase our common stock.

·	revenue that is likely to result from specific in-process research and development projects, including estimated patient populations, estimated selling prices, estimated market penetration and estimated market share and year-over-year growth rates over the product life cycles;

·	cost of sales related to the potential products using industry data or other sources of market data;

·	sales and marketing expense using industry data or other market data;

·	general and administrative expenses; and

·	research and development expenses.

·	assist us in developing, testing and obtaining regulatory approval for and commercializing some of our compounds and technologies; and

·	market and distribute our drug candidates.

·	perceptions by members of the health care community, including physicians, of the safety and efficacy of our product candidates;

·	the rates of adoption of our products by medical practitioners and the target populations for our products;

·	the potential advantages that our product candidates offer over existing treatment methods;

·	the cost-effectiveness of our product candidates relative to competing products;

·	the availability of government or third-party payor reimbursement for our product candidates;

·	the side effects or unfavorable publicity concerning our products or similar products; and

·	the effectiveness of our sales, marketing and distribution efforts.

·	difficulty and expense of assimilating the operations, technology and personnel of the acquired business;

·	inability to retain the management, key personnel and other employees of the acquired business;

·	inability to maintain the acquired company’s relationship with key third parties, such as alliance partners;

·	exposure to legal claims for activities of the acquired business prior to acquisition;

·	diversion of management attention; and

·	potential impairment of substantial goodwill and write-off of in-process research and development costs, adversely affecting our reported results of operations.

·	decreased demand for a product;

·	injury to our reputation;

·	inability to continue to develop a drug candidate;

·	withdrawal of clinical trial volunteers; and

·	loss of revenues.

·	the progress of our development activities;

·	the progress of our research activities;

·	the number and scope of our development programs;

·	our ability to establish and maintain current and new licensing or acquisition arrangements;

·	our ability to achieve our milestones under our licensing arrangements;

·	the costs involved in enforcing patent claims and other intellectual property rights; and

·	the costs and timing of regulatory approvals.

·	developments concerning our drug candidates;

·	announcements of technological innovations by us or our competitors;

·	introductions or announcements of new products by us or our competitors;

·	announcements by us of significant acquisitions, strategic partnerships, joint ventures or capital commitments;

·	changes in financial estimates by securities analysts;

·	actual or anticipated variations in quarterly operating results;

·	expiration or termination of licenses, research contracts or other collaboration agreements;

·	conditions or trends in the regulatory climate and the biotechnology and pharmaceutical industries;

·	changes in the market valuations of similar companies; and

·	additions or departures of key personnel.

	3.1	Amended and Restated Certificate of Incorporation of Keryx Biopharmaceuticals, Inc., filed as Exhibit 3.1 to the Registrant's Annual Report on Form 10-Q for the quarter ended June 30, 2004, filed on August 12, 2004, and incorporated herein by reference.
	3.2	Amended and Restated Bylaws of Keryx Biopharmaceuticals, Inc., filed as Exhibit 3.2 to the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2001, filed on March 26, 2002 (File No. 000-30929), and incorporated herein by reference.
	31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 11, 2004.

	KERYX BIOPHARMACEUTICALS, INC.
Date: November 11, 2004	By:	/s/ Ron Bentsur
		Ron Bentsur
		Vice President, Finance and Investor Relations (Principal Financial and Accounting Officer)

	32

31.1	Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 11, 2004.
31.2	Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, dated November 11, 2004.
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated November 11, 2004.
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, dated November 11, 2004.