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 MARCH 31, 2002

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        COMMISSION FILE NUMBER 000-30929

                         KERYX BIOPHARMACEUTICALS, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

            DELAWARE                                   13-4087132
(STATE OR OTHER JURISDICTION OF         (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
 INCORPORATION OR ORGANIZATION)

                           101 Main Street, 17th Floor
                               Cambridge, MA 02142
           (ADDRESS INCLUDING ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)

                                  617-494-5515
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark (X) 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 [ ]

As of April 23, 2002, the registrant had outstanding 19,895,185 shares of Common
Stock, $0.001 par value.


<PAGE>

PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements

         Interim Consolidated Balance Sheets............................  1

         Interim Consolidated Statements of Operations..................  2

         Interim Consolidated Statements of Cash Flows..................  3

         Notes to Interim Consolidated Financial Statements.............  5

Item 2.  Management's Discussion and Analysis of Financial
           Condition and Results of Operations..........................  7

Item 3.  Quantitative and Qualitative Disclosures About
           Market Risk.................................................. 14

PART II. OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds...................... 14

Item 6.  Exhibits and Reports on Form 8-K............................... 15

SIGNATURES.............................................................. 16


<PAGE>

ITEM 1.  FINANCIAL STATEMENTS

Keryx Biopharmaceuticals, Inc. (A Development Stage Company)

Interim Consolidated Balance Sheets as of March 31, 2002
and December 31, 2001
--------------------------------------------------------------------------------
(in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                              March 31   December 31
                                                                2002        2001
                                                            (Unaudited)   (Audited)
                                                            -----------  -----------
<S>                                                          <C>           <C>
Assets

Current assets

Cash and cash equivalents                                    $ 23,895      $ 23,345
Investment securities, held-to-maturity                         9,537        14,308
Accrued interest receivable                                        95           203
Other receivables and prepaid expenses                            337           465
                                                             --------      --------
Total current assets                                           33,864        38,321

Investment in respect of employee
 severance obligations                                            328           291

Property, plant and equipment, net                              3,444         3,338

Deferred tax asset                                                172           115

Other assets (primarily intangible assets), net                 1,069         1,002
                                                             --------      --------

Total assets                                                 $ 38,877      $ 43,067
                                                             ========      ========

Liabilities and Stockholders' Equity

Accounts payable and accrued expenses                        $  2,005      $  2,376
Accrued compensation and related liabilities                      452           710
                                                             --------      --------
Total current liabilities                                       2,457         3,086

Liability in respect of employee severance obligations            975           766
                                                             --------      --------

Total liabilities                                               3,432         3,852
                                                             --------      --------

Stockholders' equity

Common stock, $0.001 par value per share (40,000,000 and
 40,000,000 shares authorized, 19,895,185 and 19,846,694
 shares issued and fully paid at March 31, 2002 and
 December 31, 2001, respectively)                                  20            19
Additional paid-in capital                                     73,657        74,025
Unearned compensation                                            (970)       (1,110)
Deficit accumulated during the development stage              (37,262)      (33,719)
                                                             --------      --------
Total stockholders' equity                                     35,445        39,215
                                                             --------      --------
Total liabilities and stockholders' equity                   $ 38,877      $ 43,067
                                                             ========      ========
</TABLE>

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


                                       -1-

<PAGE>

Keryx Biopharmaceuticals, Inc. (A Development Stage Company)

Interim Consolidated Statements of Operations for the Three Months
Ended March 31, 2002 and 2001
--------------------------------------------------------------------------------
(in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                                  Amounts
                                                   Three months ended           accumulated
                                               ----------------------------     during the
                                                March 31         March 31       development
                                                  2002             2001            stage
                                               (Unaudited)      (Unaudited)     (Unaudited)
                                               -----------     ------------    ------------
<S>                                            <C>             <C>             <C>
Management fees from related party             $         --    $         --    $        300
                                               ------------    ------------    ------------

Expenses

Research and development:
   Non-cash compensation                       $       (580)   $        353    $      8,015
   Other research and development                     2,943           1,678          17,331
                                               ------------    ------------    ------------
   Total research and development expenses            2,363           2,031          25,346
                                               ------------    ------------    ------------
General and administrative:
   Non-cash compensation                                 (6)             48           3,389
   Other general and administrative                   1,310           1,069          11,607
                                               ------------    ------------    ------------
   Total general and administrative expenses          1,304           1,117          14,996
                                               ------------    ------------    ------------
Total operating expenses                              3,667           3,148          40,342
                                               ------------    ------------    ------------
Operating loss                                       (3,667)         (3,148)        (40,042)

Interest income, net                                    174             870           3,296
                                               ------------    ------------    ------------
Net loss before income taxes                         (3,493)         (2,278)        (36,746)

Income taxes                                             50             110             516
                                               ------------    ------------    ------------
Net loss                                       $     (3,543)   $     (2,388)   $    (37,262)
                                               ============    ============    ============
Basic and diluted net loss per common share    $      (0.18)   $      (0.12)   $      (3.16)
                                               ============    ============    ============

Weighted average shares used in
 computing basic and diluted net loss per
 common share                                    19,890,335      19,594,448      11,790,882
</TABLE>

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


                                       -2-

<PAGE>

Keryx Biopharmaceuticals, Inc. (A Development Stage Company)

Interim Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2002 and 2001
--------------------------------------------------------------------------------
(in thousands)

<TABLE>
<CAPTION>
                                                                                    Amounts
                                                                                  accumulated
                                                  Three months ended March 31     during the
                                                 ----------------------------     development
                                                    2002             2001            stage
                                                 (Unaudited)      (Unaudited)     (Unaudited)
                                                 -----------     ------------    ------------
<S>                                               <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                          $(3,543)         $(2,388)         $(37,262)

Adjustments to reconcile cash flows used in
  operating activities:
Revenues and expenses not involving cash flows:
Employee stock compensation expense                     4              138             8,860
Consultants' stock compensation expense              (590)             263             2,544
Issuance of common stock to technology licensor       359               --               359
Interest on convertible notes settled
  through issuance of preferred shares                 --               --               253
Provision for employee severance obligations          210              108               976
Depreciation and amortization                         211               15               584
Disposal of property, plant and equipment               2               --                30
Exchange rate differences                              11               --*               69
Changes in assets and liabilities:
Decrease (increase) in other receivables
  and prepaid expenses                                128              (54)             (332)
Decrease (increase) in accrued interest
  receivable                                          108               57               (95)
Increase in deferred tax asset                        (57)              --              (172)
(Decrease) increase in accounts payable
  and accrued expenses                                (31)             352             1,866
(Decrease) increase in accrued compensation
  and related liabilities                            (258)             152               452
                                                  -------          -------          --------
Net cash used in operating activities              (3,446)          (1,357)          (21,868)
                                                  -------          -------          --------
CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of fixed assets, net of disposals          (660)             (98)           (3,905)
Investment in other assets, net                       (67)             (53)           (1,091)
Purchase of investment securities-employee
  severance obligations                               (37)             (29)             (328)
Proceeds from sale and maturity of
  short-term securities                             4,771            1,961            (9,537)
Proceeds from sale and maturity of
  long-term securities                                 --           (4,705)               --
                                                  -------          -------          --------
Net cash provided by (used in)
  investing activities                            $ 4,007          $(2,924)         $(14,861)
                                                  -------          -------          --------
</TABLE>

* Amount less than $1 (thousand)

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


                                       -3-

<PAGE>

Keryx Biopharmaceuticals, Inc. (A Development Stage Company)

Interim Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 2002 and 2001 (continued)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                   Amounts
                                                                                 accumulated
                                                  Three months ended March 31     during the
                                                 ----------------------------     development
                                                    2002             2001            stage
                                                 (Unaudited)      (Unaudited)     (Unaudited)
                                                 -----------     ------------    ------------
<S>                                               <C>              <C>              <C>

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans                   $     --          $     --         $    500
Proceeds from long-term loans                          --                --            3,251
Issuance of convertible note, net                      --                --            2,150
Issuance of preferred shares, net and
  contributed capital                                  --                --            8,453
Receipts on account of shares previously
  issued                                               --                --                7
Proceeds from initial public offering, net
  of issuance costs                                    --                --           46,298
Proceeds from exercise of warrants and options         --                13               34
                                                  -------          --------         --------
Net cash provided by financing activities              --                13           60,693
                                                  -------          --------         --------
Effect of exchange rate on cash                       (11)               --*             (69)
                                                  -------          --------         --------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                         550            (4,268)          23,895
Cash and cash equivalents at beginning
  of period                                        23,345            22,708               --
                                                  -------          -------          --------
CASH AND CASH EQUIVALENTS AT END OF
 PERIOD                                          $ 23,895          $ 18,440         $ 23,895
                                                 ========          ========         ========
NON-CASH TRANSACTIONS
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
Conversion of Series A preferred stock to
  common stock                                         --                --              --*
Purchase of property, plant and equipment
  on credit                                          (339)               --              136

SUPPLEMENTARY DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid for interest                           $     --*         $     --         $    139
Cash paid for income taxes                             --                48              238
</TABLE>

* Amount less than $1 (thousand)

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


                                       -4-

<PAGE>


Keryx Biopharmaceuticals, Inc. (A Development Stage Company)

Notes to the Interim Consolidated Financial Statements of March 31, 2002
--------------------------------------------------------------------------------

NOTE 1 - GENERAL

                              BASIS OF PRESENTATION

     The accompanying unaudited interim consolidated financial statements were
prepared in accordance with the instructions for Form 10-Q and, therefore, do
not include all disclosures necessary for a complete presentation of financial
condition, results of operations, and cash flows in conformity with generally
accepted accounting principles. All adjustments which are, in the opinion of
management, of a normal recurring nature and are necessary for a fair
presentation of the interim financial statements have been included.
Nevertheless, these financial statements should be read in conjunction with the
Company's audited financial statements contained in its Annual Report on Form
10-K for the year ended December 31, 2001. The results of operations for the
period ended March 31, 2002 are not necessarily indicative of the results that
may be expected for the entire fiscal year or any other interim period.

     Until November 1999, most of the Company's activities were carried out by
Partec Limited, an Israeli corporation formed in December 1996, and its
subsidiaries SignalSite Inc. (85% owned) and its wholly owned subsidiary,
SignalSite Israel Ltd., and Vectagen Inc. (87.25% owned) and its wholly owned
subsidiary, Vectagen Israel Ltd. (hereinafter collectively referred to as
"Partec"). In November 1999, the Company acquired substantially all of the
assets and liabilities of Partec and, as of that date, the activities formerly
carried out by Partec are now performed by the Company. At the date of the
acquisition, Keryx and Partec were entities under common control (the
controlling interest owned approximately 79.7% of Keryx and approximately 76% of
Partec) and accordingly, the assets and liabilities were recorded at their
historical cost basis by means of an "as if" pooling and Partec is being
presented as a predecessor company. Consequently, these financial statements
include the activities performed in previous periods by Partec by aggregating
the relevant historical financial information with the financial statements of
the Company as if they had formed a discrete operation under common management
for the entire development stage.

     The Company owns a 100% interest in Keryx (Israel) Ltd., incorporated in
Israel, Keryx Biomedical Technologies Ltd., incorporated in Israel, and Keryx
Securities Corp., a US corporation organized in Massachusetts. At present,
substantially all of the biopharmaceutical research and development activities
are in Israel, and therefore, the Company has one geographical segment.

                                 LOSS PER SHARE

     Basic net loss per share is computed by dividing the losses allocable to
common stockholders by the weighted average number of common shares outstanding
for the period. Diluted net loss per share does not reflect the effect of common
shares to be issued upon exercise of stock options and warrants, as their
inclusion would be anti-dilutive.


                                       -5-
<PAGE>

NOTE 2 - NEW ACCOUNTING PRONOUNCEMENTS

     In June 2001, the FASB issued SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets". SFAS 141 requires that the
purchase method of accounting be used for all business combinations. SFAS 141
specifies criteria that intangible assets acquired in a business combination
must meet to be recognized and reported separately from goodwill. SFAS 142
requires that goodwill and intangible assets with indefinite useful lives no
longer be amortized, but instead tested for impairment at least annually in
accordance with the provisions of SFAS 142. SFAS 142 also requires that
intangible assets with estimable useful lives be amortized over their respective
estimated useful lives to their estimated residual values, and reviewed for
impairment in accordance with SFAS 121 and subsequently, SFAS 144 after its
adoption.

     The Company adopted the provisions of SFAS 141 as of July 1, 2001, and the
provisions of SFAS 142 as of January 1, 2002. The adoption of SFAS 141 and SFAS
142 did not have a significant impact on the Company's consolidated financial
statements.

     In June 2001, the FASB issued SFAS 143, "Accounting for Asset Retirement
Obligations". SFAS 143 requires the Company to record the fair value of an asset
retirement obligation as a liability in the period in which it incurs a legal
obligation associated with the retirement of tangible long-lived assets that
result from the acquisition, construction, development and/or normal use of the
assets. The Company also records a corresponding asset which is depreciated over
the life of the asset. Subsequent to the initial measurement of the asset
retirement obligation, the obligation will be adjusted at the end of each period
to reflect the passage of time and changes in the estimated future cash flows
underlying the obligation. The Company is required to adopt SFAS 143 on January
1, 2003. The Company does not believe the adoption of SFAS 143 will have a
significant impact on its consolidated financial statements.

     In August, 2001, the FASB issued SFAS 144, "Accounting for the Impairment
or Disposal of Long-Lived Assets". SFAS 144 addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. This Statement
requires that long-lived assets be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a
comparison of the carrying amount of an asset to future net cash flows expected
to be generated by the asset. If the carrying amount of an asset exceeds its
estimated future cash flows, an impairment charge is recognized by the amount by
which the carrying amount of the asset exceeds the fair value of the asset. SFAS
144 requires companies to separately report discontinued operations and extends
that reporting to a component of an entity that either has been disposed of (by
sale, abandonment, or in a distribution to owners) or is classified as held for
sale. Assets to be disposed of are reported at the lower of the carrying amount
or fair value less costs to sell. The Company adopted SFAS 144 as of January 1,
2002. The adoption of SFAS 144 did not have a significant impact on the
Company's consolidated financial statements.

NOTE 3 - STOCKHOLDERS' EQUITY

     The compensation committee of the Company's board of directors has granted,
during the three months ended March 31, 2002, 41,300 options to purchase shares
of the Company's common stock to the Company's employees and


                                       -6-
<PAGE>

consultants, pursuant to the Company's 2000 Stock Option Plan, adopted in June
2000. In addition, 39,467 options were forfeited during the three months ended
March 31, 2002. The exercise price of the options issued during the three months
ended March 31, 2002 ranged between $4.76 and $7.30 per share.

     Additionally, in January 2002, the Company issued unregistered shares of
its common stock, and granted 500,000 warrants exercisable for shares of its
common stock, to Yissum Research and Development Company of the Hebrew
University of Jerusalem in partial consideration for the grant by Yissum of an
exclusive license to technology relevant to the Company's core business. The
warrants are exercisable in up to four tranches, subject to the achievement of
specified research and development milestones.

NOTE 4 - INCOME TAXES

     In September 2001, one of the Company's Israeli subsidiaries received the
status of an "Approved Enterprise" which grants certain tax benefits in
accordance with Paragraph 51 of the "Law for the Encouragement of Capital
Investments, 1959," in Israel.

     Income arising from the subsidiary's Approved Enterprise is subject to zero
tax under the "Alternative Benefit Method" for a period of ten years. The
subsidiary believes that it has met the requirements for implementation of the
benefits under this program.

     In the event of distribution by the subsidiary of a cash dividend out of
retained earnings which were tax exempt due to the Approved Enterprise status,
the subsidiary would have to pay a 10% corporate tax on the amount distributed,
and the recipient would have to pay a 15% tax (to be withheld at source) on the
amounts of such distribution received. Should the subsidiary derive income from
sources other than the Approved Enterprise during the relevant period of
benefits, such income will be taxable at the regular tax rate of 36% in 2001 and
thereafter.

     Under its Approved Enterprise status, the subsidiary must maintain certain
conditions and submit periodic reports. Failure to comply with the conditions of
the Approved Enterprise status could cause the subsidiary to lose all previously
accumulated tax benefits. As the date of these financial statements the
subsidiary's management believes it complies with these conditions.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

     The following discussion should be read in conjunction with the unaudited,
consolidated financial statements and the related footnotes thereto, appearing
elsewhere in this report. This discussion contains certain forward-looking
statements regarding future events with respect to the Company. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. Without limiting the
foregoing, the words "believes," "anticipates," "plans," "expects," "intends,"
"should, "would," "will," "could," or "may," and similar expressions are
intended to identify forward-looking statements. There are a number of important
factors that could cause the Company's actual results to differ materially from
those indicated in such forward-looking statements, including those factors set


                                       -7-

<PAGE>

forth under the caption "Risk Factors" in the Company's Annual Report on Form
10-K for the year ended December 31, 2001, of which the captioned discussion is
expressly incorporated herein by reference. The forward-looking information
provided herein represents the Company's estimates as of the date of this
Quarterly Report on Form 10-Q. The Company expects that subsequent events and
developments may cause these estimates to change. The Company cautions you that
while it may elect to update this forward-looking information at some point in
the future, it specifically disclaims any obligation to do so.

OVERVIEW

     We were incorporated as a Delaware corporation in October 1998. We
commenced operations in November 1999, following our acquisition of
substantially all of the assets and certain liabilities of Partec Ltd. Partec
Ltd. is our predecessor company and began its operations in January 1997. Since
commencing operations, our activities have been primarily devoted to developing
our technologies, raising capital, purchasing assets and recruiting personnel.

     We are a development stage company and have no product sales to date. Our
major sources of working capital have been proceeds from various private
placements of equity securities and our initial public offering. We have two
wholly owned subsidiaries, Keryx Biomedical Technologies Ltd. and Keryx (Israel)
Ltd., which engage in research and development activities and administrative
activities in Israel.

     Research and development expenses consist primarily of salaries and related
personnel costs, fees paid to consultants and outside service providers for
laboratory development and other expenses relating to the design, development,
testing, and enhancement of our product candidates. We expense our research and
development costs as they are incurred.

     General and administrative expenses consist primarily of salaries and
related expenses for executive, finance and other administrative personnel,
recruitment expenses, professional fees and other corporate expenses, including
business development and general legal activities.

     Our results of operations include non-cash compensation expense as a result
of the grants of stock and stock options. Compensation expense for options
granted to our employees and directors represents the difference between the
intrinsic value of our common stock and the exercise price of the options at the
date of grant. We account for stock-based employee and director compensation
arrangements in accordance with the provisions of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," and FASB issued
Interpretation No. 44, "Accounting for Certain Transactions Involving Stock
Compensation," and comply with the disclosure provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation." Compensation for options granted to consultants has been
determined in accordance with SFAS No. 123, as the fair value of the equity
instruments issued, and according to the guidelines set forth in EITF 96-18,
"Accounting for Equity Instruments that are Issued to Other than Employees for
Acquiring, or in Conjunction with Selling, Goods or Services," and EITF 00-18
"Accounting by a Grantee for an Equity Instrument to be Received in Conjunction
with Providing Goods and Services." APB Opinion No. 25 has been applied in
accounting for fixed and milestone-based stock options to our employees and
directors as allowed by SFAS No. 123. The compensation cost is recorded over the
respective vesting periods of the individual stock options. The expense is


                                       -8-

<PAGE>

included in the respective categories of expense in the statement of operations.
We expect to record additional non-cash compensation expense in the future,
which may be significant. However, because some of the options issued to
consultants either do not vest immediately or vest upon the achievement of
certain milestones, the total expense is uncertain.

Critical Accounting Policies

     The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of these financial statements requires us to make
estimates and judgments that affect the reported amount of assets and
liabilities and related disclosure of contingent assets and liabilities at the
date of our financial statements and the reported amounts of revenues and
expenses during the applicable period. Actual results may differ from these
estimates under different assumptions or conditions.

     Critical accounting policies are defined as those that are reflective of
significant judgments and uncertainties, and may potentially result in
materially different results under different assumptions and conditions. In
applying these critical accounting policies, our management uses its judgment to
determine the appropriate assumptions to be used in making certain estimates.
These estimates are subject to an inherent degree of uncertainty. For a detailed
discussion of the application of these and other accounting policies, please see
Note 1 in the Notes to our Consolidated Financial statements. Our critical
accounting policies include the following:

     Foreign currency translation. In preparing our consolidated financial
statements, we translate non-US dollar amounts in the financial statements of
our Israeli subsidiaries into US dollars. Under the relevant accounting guidance
the treatment of any gains or losses resulting from this translation is
dependent upon management's determination of the functional currency. The
functional currency is determined based on management's judgment and involves
consideration of all relevant economic facts and circumstances affecting the
subsidiaries. Generally, the currency in which a subsidiary transacts a majority
of its transactions, including billings, financing, payroll and other
expenditures would be considered the functional currency. However, any
dependency upon the parent and the nature of the subsidiary's operations must
also be considered. If any subsidiary's functional currency is deemed to be the
local currency, then any gain or loss associated with the translation of that
subsidiary's financial statements would be included as a separate part of our
stockholders' equity under the caption "cumulative translation adjustment."
However, if the functional currency of the subsidiary is deemed to be the US
dollar then any gain or loss associated with the translation of these financial
statements would be included within our statement of operations. Based on our
assessment of the factors discussed above, we consider the US dollar to be the
functional currency for each of our Israeli subsidiaries. Therefore all gains
and losses from translations are recorded in our statement of operations.


                                       -9-
<PAGE>

     Accounting for income taxes. As part of the process of preparing our
consolidated financial statements we are required to estimate our income taxes
in each of the jurisdictions in which we operate. This process involves
management estimating our actual current tax exposure together with assessing
temporary differences resulting from differing treatment of items, for tax and
accounting purposes. These differences result in deferred tax assets and
liabilities, which are included within our consolidated balance sheet. We must
then assess the likelihood that our deferred tax assets will be recovered from
future taxable income and, to the extent we believe that recovery is not likely,
we must establish a valuation allowance. To the extent we establish a valuation
allowance or increase this allowance in a period, we must include an expense
within the tax provision in the statement of operations. Significant management
judgment is required in determining our provision for income taxes, our deferred
tax assets and liabilities and any valuation allowance recorded against our net
deferred tax assets. We have fully offset our US deferred tax asset with a
valuation allowance. Our lack of earnings history and the uncertainty
surrounding our ability to generate taxable income prior to the expiration of
such deferred tax assets were the primary factors considered by management in
establishing the valuation allowance. The deferred tax asset in our financial
statements relates to our wholly owned Israeli subsidiaries.

     Stock Compensation. During historical periods we have granted either
options or warrants to employees, directors and consultants. In applying SFAS
No. 123, we use the Black-Scholes pricing model to calculate the fair market
value of our options and warrants. The Black-Scholes model takes into account
volatility in the price of our stock, the risk-free interest rate, the estimated
life of the option or warrant, the closing market price of our stock and the
exercise price. For purposes of the calculation, it was assumed that no
dividends will be paid during the life of the options and warrants.

     In accordance with EITF 96-18, "Accounting for Equity Instruments that are
Issued to Other than Employees for Acquiring, or in Conjunction with Selling,
Goods or Services," total compensation expense for options issued to consultants
is determined at the "measurement date." The expense is recognized over the
vesting period for the options. Until the measurement date is reached, the total
amount of compensation expense remains uncertain. We record option compensation
based on the fair value of the options at the reporting date. These options are
then revalued, or the total compensation is recalculated based on the then
current fair value, at each subsequent reporting date. This results in a change
to the amount previously recorded in respect of the option grant and additional
expense or a negative expense may be recorded in subsequent periods based on
changes in the assumptions used to calculate fair value, such as changes in
market price, until the measurement date is reached and the compensation expense
is determined.


                                      -10-

<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2002 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 2001

     Revenue. We did not have any revenues for the three months ended March 31,
2002 and March 31, 2001.

     Research and Development Expenses. Research and development expenses
increased by $332,000 to $2,363,000 for the three months ended March 31, 2002,
as compared to expenses of $2,031,000 for the three months ended March 31, 2001.
Net of non-cash compensation, research and development expenses increased by
$1,265,000 to $2,943,000. The increase in research and development expenses was
due primarily to license payments associated with a technology agreement signed
during the quarter, increased personnel and related costs, increased facilities
related costs and increased non-manufacturing clinical development costs. These
increases were partially offset by a decline in manufacturing expenses
associated with KRX-101 clinical trial materials. We expect our research and
development costs to continue to increase significantly over the next several
years as we expand our research and product development efforts and implement
our business strategy. Non-cash compensation expense related to stock option
grants and warrant issuances was negative $580,000 for the three months ended
March 31, 2002 as compared to $353,000 for the three months ended March 31,
2001. This negative non-cash compensation expense was primarily due to the
revaluation of previously issued options to consultants.

     General and Administrative Expenses. General and administrative expenses
increased by $187,000 to $1,304,000 for the three months ended March 31, 2002,
as compared to expenses of $1,117,000 for the three months ended March 31, 2001.
Net of non-cash compensation, general and administrative expenses increased by
$241,000 to $1,310,000. The increase in general and administrative expenses was
due primarily to increased personnel and management expenses, partially offset
by a reduction in outside consulting service costs. We expect our general and
administrative expenses to continue to increase over the next several years as
we implement our business strategy and commercialize our products. Non-cash
compensation expense related to stock option grants was negative $6,000 for the
three months ended March 31, 2002 as compared to $48,000 for the three months
ended March 31, 2001.

     Interest Income, Net. Interest income, net, decreased by $696,000 to
$174,000 for the three months ended March 31, 2002, as compared to income of
$870,000 for the three months ended March 31, 2001. The decrease this period
resulted from a lower level of invested funds and the general decline in
interest rates, when compared to the same period last year.

     Income Taxes. Income tax expense decreased by $60,000 to $50,000 for the
three months ended March 31, 2002, as compared to an expense of $110,000 for the
three months ended March 31, 2001. The decrease in income tax expense is
attributable to the lower income tax rate used for one of our subsidiaries that
attained Israeli Approved Enterprise status (see Note 4 above). As of March 31,
2002, we have recorded a deferred tax asset against income taxes for the period
then ended. Income tax expense is attributable to taxable income from the
continuing operations of our subsidiaries in Israel. This income is eliminated
upon consolidation of our financial statements.

     Impact of Inflation. The effects of inflation and changing prices on our
operations were not significant during the periods presented.


                                      -11-

<PAGE>

Liquidity and Capital Resources

     We have financed our operations from inception primarily through various
private and public financings. As of March 31, 2002, we had received net
proceeds of $46.3 million from our initial public offering, and $11.6 million
from private placement issuances of common and preferred stock, including $2.9
million raised through the contribution by holders of their notes issued by our
predecessor company.

     As of March 31, 2002, we had $33.5 million in cash, cash equivalents,
interest receivable and short-term securities, a decrease of $4.4 million from
December 31, 2001. Cash used in operating activities for the period ended March
31, 2002 was $3.4 million as compared to $1.4 million for the comparable period
ended March 31, 2001. This increase in cash used in operating activities was due
primarily to increased expenses associated with the expansion of our business.
Net cash provided by investing activities was $4.0 million for the period ended
March 31, 2002. Cash provided by investing activities was primarily the result
of the maturity of short-term securities, partially offset by capital
expenditures.

     We have incurred negative cash flow from operations since our inception. We
anticipate incurring negative cash flow from operations for the foreseeable
future. We have spent, and expect to continue to spend, substantial amounts in
connection with implementing our business strategy, including our planned
product development efforts, our clinical trials, and our research and discovery
efforts.

     As of March 31, 2002, we have known contractual obligations, commitments
and contingencies of $3,242,000. Of this amount, $1,599,000 relates to research
agreements, of which $911,000 is due within the next year, a total of $500,000
is due between one and three years, with the remaining $188,000 due between four
and five years. The additional $1,643,000 relates to operating lease
obligations, of which $562,000 is due within the next year, a total of $807,000
is due between one and three years, with the remaining $274,000 due between four
and five years.

<TABLE>
<CAPTION>
                                                                       Payments Due by Period
                                     ----------------------------------------------------------------------------------------

Contractual Obligations                  Total       Less than 1 Year        1-3 Years        4-5 Years       After 5 Years
-----------------------                  -----       ----------------        ---------        ---------       -------------
<S>                                    <C>                <C>                 <C>              <C>
Research Agreements                    $1,599,000         $911,000            $500,000         $188,000             --

Operating Leases                       $1,643,000         $562,000            $807,000         $274,000             --

Total Contractual Cash Obligations     $3,242,000       $1,473,000          $1,307,000         $462,000             --
</TABLE>

     Additionally, we have undertaken to make milestone payments to certain of
our licensors, contingent upon attaining certain goals, of up to approximately
$4.0 million. In certain cases, such payments will reduce any royalties due on
sales of related products. In the event that the milestones are not achieved, we
remain obligated to pay one licensor $50,000 annually thereafter until the
license expires.


                                      -12-

<PAGE>

     We believe that our $33.5 million in cash, cash equivalents, and short-term
securities as of March 31, 2002 will be sufficient to enable us to meet our
planned operating needs and capital expenditures until at least mid-2003. Our
cash and cash equivalents as of March 31, 2002 are invested in highly liquid
investments such as cash, money market accounts, short-term US corporate debt
securities, and short-term obligations of domestic governmental agencies. As of
March 31, 2002, we are unaware of any known trends or any known demands,
commitments, events, or uncertainties that will, or that are reasonably likely
to, result in a material increase or decrease in our required liquidity. We
expect that our liquidity needs throughout 2002 will continue to be funded from
existing cash, cash equivalents, and short-term securities.

     Our forecast of the period of time through which our cash, cash equivalents
and short-term securities will be adequate to support our operations is a
forward-looking statement that involves risks and uncertainties. The actual
amount of funds we will need to operate is subject to many factors, some of
which are beyond our control.

These factors include the following:

     o    the progress of our research activities;

     o    the number and scope of our research programs;

     o    the progress of our pre-clinical and clinical development activities;

     o    the progress of the development efforts of parties with whom we have
          entered into research and development agreements;

     o    our ability to maintain current research and development programs and
          to establish new research and development and licensing arrangements;

     o    our ability to achieve our milestones under licensing arrangements;

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

     o    the costs and timing of regulatory approvals.

     We have based our estimate on assumptions that may prove to be wrong. We
may need to obtain additional funds sooner or in greater amounts than we
currently anticipate. Potential sources of financing include strategic
relationships, public or private sales of our stock or debt and other sources.
We may seek to access the public or private equity markets when conditions are
favorable due to our long-term capital requirements. We do not have any
committed sources of financing at this time, and it is uncertain whether
additional funding will be available when we need it on terms that will be
acceptable to us, or at all. If we raise funds by selling additional shares of
common stock or other securities convertible into common stock, the ownership
interest of our existing stockholders will be diluted. If we are not able to
obtain financing when needed, we may be unable to carry out our business plan.
As a result, we may have to significantly limit our operations and our business,
financial condition and results of operations would be materially harmed.


                                      -13-

<PAGE>

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Interest Rate Risk. The primary objective of our investment activities is
to preserve principal while at the same time maximizing the income we receive
from our investments without significantly increasing risk. Some of the
securities that we invest in may have market risk. This means that a change in
prevailing interest rates may cause the principal amount of the investment to
fluctuate. For example, if we hold a security that was issued with a fixed
interest rate at the then-prevailing rate and the prevailing interest rate later
rises, the principal amount of our investment will probably decline. We maintain
our portfolio in cash equivalents and short- and long-term interest bearing
securities, including corporate debt, money market funds and government debt
securities. The average duration of all of our investments in 2001 was less than
one year. Due to the short-term nature of these investments, we believe we have
no material exposure to interest rate risk arising from our investments.
Therefore, no quantitative tabular disclosure is required.

     Foreign Currency Rate Fluctuations. While our Israeli subsidiaries
primarily transact business in New Israel Shekels or NIS, most operating
expenses and commitments are linked to the US dollar. As a result, there is
currently minimal exposure to foreign currency rate fluctuations. Any foreign
currency revenues and expenses are translated using the daily average exchange
rates prevailing during the year and any transaction gains and losses are
included in net income. In the future, our subsidiaries may enter into NIS-based
commitments that may expose us to foreign currency rate fluctuations. We may use
hedging instruments, including forward contracts, to minimize any foreign
currency rate fluctuation exposure. Any hedging transactions that we enter into
may not adequately protect us against currency rate fluctuations and may result
in losses to us.

PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

     (c)  Recent Sales of Unregistered Securities

     On January 10, 2002, we issued unregistered shares of our common stock, and
warrants exercisable for shares of our common stock, to Yissum Research and
Development Company of the Hebrew University of Jerusalem in partial
consideration for the grant by Yissum of an exclusive license to technology
relevant to our core business. The warrants are exercisable in up to four
tranches, subject to our achievement of specified research and development
milestones at an exercise price equal to $6.19. No person acted as an
underwriter with respect to this transaction. On the basis of representations
made by the licensor, we relied on Section 4(2) of the Securities Act of 1933,
as amended, for an exemption from the registration requirements of the
Securities Act.

     (d)  Use of Proceeds From Registered Securities

     We received net proceeds (after deducting underwriting discounts and
commissions and offering expenses) of $46.3 million from the sale of 5,200,000
shares of common stock in our initial public offering in July 2000. As of March
31, 2002, we have used the net proceeds of this offering as follows:


                                      -14-

<PAGE>

               o    approximately $3.7 million to fund clinical development for
                    KRX-101 for diabetic nephropathy;

               o    approximately $1.6 million to fund clinical trials
                    development for KRX-123 for hormone-resistant prostate
                    cancer;

               o    approximately $8.0 million to fund expansion of our KinAce
                    platform and to further develop the compounds we have
                    generated with it; and

               o    approximately $10.1 million to use as working capital and
                    for general corporate purposes.

     We intend to continue using the net proceeds of this offering to fund these
ongoing activities, as appropriate. The timing and amounts of our actual
expenditures will depend on several factors, including the timing of our entry
into collaboration agreements, the progress of our clinical trials, the progress
of our research and development programs, the results of other pre-clinical and
clinical studies and the timing and costs of regulatory approvals.

     Until we use the net proceeds, we intend to invest the funds in short and
long-term, investment-grade, interest-bearing instruments.


ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          The exhibits listed on the Exhibit Index are included with this
          report.

     (b)  Reports on Form 8-K

          None.


                                      -15-

<PAGE>

                                   SIGNATURES

     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.

                                    KERYX BIOPHARMACEUTICALS, INC.


Date:  May 1, 2002                  By: /s/ Robert Gallahue, Jr.

                                    Robert Gallahue, Jr.
                                    Chief Financial Officer and Treasurer
                                    (Principal Financial and Accounting Officer)


                                  EXHIBIT INDEX

     The following exhibits are filed as part of this Quarterly Report on Form
10-Q:

99.1 Risk Factors - Those statements set forth in pages 19 through 25 of the
Company's Annual Report on Form 10-K for the year ended December 31, 2001 under
the caption "Risk Factors" are incorporated herein by reference.


                                      -16-