<PAGE>


                       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, 2001

          [_] 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                                    134087132
(STATE OR OTHER JURISDICTION OF         (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
INCORPORATION OR ORGANIZATION)


                           5 KIRYAT MADA, HAR HOTZVIM
                             JERUSALEM 91236 ISRAEL
           (ADDRESS INCLUDING ZIP CODE OF PRINCIPAL EXECUTIVE OFFICES)

                                 +972-2-541-2700
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)


Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X NO

As of April 26, 2001, the registrant had outstanding 19,617,644 shares of
Common Stock, $0.001 par value.

<PAGE>

<TABLE>
<S>                                                                            <C>

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...................................................             10

PART II.  OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds.......................             10


Item 6.  Exhibits and Reports on Form 8-K................................             11


SIGNATURES...............................................................             12
</TABLE>


<PAGE>


Keryx Biopharmaceuticals, Inc. (Development Stage Company)

INTERIM CONSOLIDATED BALANCE SHEETS AS OF MARCH 31, 2001 AND DECEMBER 31, 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                   March 31       December 31
                                                                     2001            2000
                                                                 (Unaudited)      (Audited)
                                                                  -----------     -----------
<S>                                                            <C>              <C>

Assets

Current assets

Cash and cash equivalents                                         $18,440,177     $22,708,462
Investment securities, held-to-maturity                            13,531,820      15,492,568
Accrued interest receivable                                           537,921         595,200
Other receivables and prepaid expenses                                258,784         204,854
                                                                 ------------    ------------
Total current assets                                               32,768,702      39,001,084
                                                                 ------------    ------------
Investment securities, held-to-maturity                            14,808,600      10,103,644
                                                                 ------------    ------------
Investment in respect of employee
 severance obligations                                                164,906         136,173
                                                                 ------------    ------------
Fixed assets, net                                                     395,701         312,187
                                                                 ------------    ------------
Other assets (primarily intangible
 assets)                                                              764,373         711,268
                                                                 ------------    ------------

                                                                  $48,902,282     $50,264,356
                                                                  ===========     ===========

Liabilities and Stockholders' Equity

Accounts payable and accrued expenses                             $ 1,271,578     $   919,307
Accrued compensation and related liabilities                          326,193         173,899
                                                                 ------------    ------------
Total current liabilities                                           1,597,771       1,093,206
                                                                 ------------    ------------
Liability in respect of employee severance obligations                411,998         304,502
                                                                 ------------    ------------
Stockholder's equity

Common stock, $0.001 par value each (40,000,000 and
 40,000,000 shares authorized, 19,614,644 and 19,532,772
 shares issued and fully paid at March 31, 2001 and
 December 31, 2000, respectively)                                      19,614          19,533
Additional paid-in capital                                         75,051,930      76,565,052
Unearned compensation                                              (1,877,876)     (3,805,145)
Deficit accumulated during the development stage                  (26,301,155)    (23,912,792)
                                                                 ------------    ------------
                                                                   46,892,513      48,866,648
                                                                 ------------    ------------
                                                                  $48,902,282    $ 50,264,356
                                                                 ============    ============
</TABLE>


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

                                       -1-

<PAGE>

Keryx Biopharmaceuticals, Inc. (Development Stage Company)

INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS FOR THE THREE MONTHS
ENDED MARCH 31, 2001 AND 2000
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                            Amounts
                                                                           Accumulated
                                                                            During the
                                                                           Development
                                            Three months ended March 31       Stage
                                            ----------------------------   ------------
                                                2001             2000         2001
                                             ------------    ------------  ------------
                                             (Unaudited)     (Unaudited)   (Unaudited)
                                             ------------    ------------  ------------
<S>                                       <C>              <C>            <C>

Management fees from related party        $       --       $      --        $    299,997
                                           ------------     ------------     ------------

Expenses

Research and development expenses           2,031,306         1,400,879       17,615,563

General and administrative expenses         1,116,502         1,093,513       10,366,221
                                           ------------     ------------     ------------
Total operating expenses                    3,147,808         2,494,392       27,981,784
                                           ------------     ------------     ------------
Operating loss                             (3,147,808)       (2,494,392)     (27,681,787)

Interest income (expenses), net               869,535            54,672        1,760,917
                                           ------------     ------------     ------------
Net loss before income taxes               (2,278,273)       (2,439,720)     (25,920,870)

Income taxes                                  110,090            27,121          380,285
                                           ------------     ------------     ------------
Net loss                                  $(2,388,363)     $ (2,466,841)    $(26,301,155)
                                           ============     ============     ============

Basic and diluted loss per common share   $     (0.12)     $      (0.30)    $      (2.65)
                                           ============    ============      ============

Weighted average shares used in
 computing basic and diluted net loss per
 common share                              19,594,448         8,108,306        9,912,551
</TABLE>


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

                                       -2-

<PAGE>

Keryx Biopharmaceuticals, Inc. (Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED
MARCH 31, 2001 AND 2000
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                             Amounts
                                                                            Accumulated
                                                                             During the
                                                                            Development
                                           Three months ended March 31        Stage
                                           ----------------------------    -----------
                                                2001             2000         2001
                                           ------------    ------------    ------------
                                            (Unaudited)     (Unaudited)     (Unaudited)
                                           ------------    ------------    ------------
<S>                                      <C>                <C>            <C>

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss                                   $(2,388,363)   $ (2,466,841)   $(26,301,155)

Adjustments to reconcile cash flows in
  operating activities:

Revenues and expenses not involving
  cash flows:

Employee stock compensation expense            137,551         528,971       8,658,364

Consultants' stock compensation expense        263,487         814,069       3,609,085

Interest on convertible notes settled
  through issuance of preferred shares              --              --         252,966

Provision for employee severance obligations   107,496          11,424         411,998

Depreciation and amortization                   14,699           7,309         138,139

Exchange rate differences                          261           5,435          (3,247)

Changes in assets and liabilities:

Decrease (increase) in other receivables
  and prepaid expenses                         (53,930)        (68,832)       (254,306)

Decrease (increase) in accrued interest
  receivable                                    57,279              --        (537,921)

Increase (decrease) in related party                --        (141,483)             --

Increase (decrease) in other payable
  and accrued expenses                         352,271         126,497       1,267,379

Increase in accrued compensation and
  Related liabilities                          152,294          15,395         326,193
                                         --------------   --------------  -------------

Net cash used in operating activities       (1,356,955)     (1,178,926)    (12,432,505)
                                         --------------   --------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of fixed assets, net of
  disposals                                    (98,213)        (16,558)       (533,100)

Investment in other assets                     (53,105)       (134,142)       (765,342)

Purchase of investment securities-employee
  severance obligations                        (28,733)        (11,945)       (164,906)

Proceeds from sale and maturity of
  short term investments                     1,960,748              --     (13,531,820)

Investment in long-term securities          (4,704,956)             --     (14,808,600)
                                         --------------   --------------  -------------

Net cash used in investing activities       (2,924,259)   $   (162,645)   $(29,803,768)
                                         --------------   --------------  -------------
</TABLE>



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


                                       -3-

<PAGE>

Keryx Biopharmaceuticals, Inc. (Development Stage Company)

CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE THREE MONTHS ENDED MARCH 31, 2001
AND 2000 (CONTINUED)
-------------------------------------------------------------------------------


<TABLE>
<S>                                     <C>               <C>               <C>

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term loans                  $         --    $        --    $    500,000
Proceeds from long-term loans                             --             --       3,250,902
Issuance of convertible note, net                         --             --       2,150,000
Issuance of preferred shares, net and
 contributed capital                                      --      3,760,745       8,453,078
Receipts on account of shares previously
issued                                                    --             --           6,900
Proceeds from initial public offering, net                --             --      46,298,399
Proceeds from exercise of warrants                    13,190             --          13,924
                                                ------------    ------------   ------------
Net cash provided by financing activities             13,190      3,760,745      60,673,203
                                                ------------    ------------   ------------
Effect of exchange rate on cash                         (261)         5,435           3,247
                                                ------------    ------------   ------------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                     (4,268,285)     2,424,609      18,440,177
Cash and cash equivalents at beginning
  of period                                       22,708,462      4,126,735              --
                                                ------------    ------------   ------------
CASH AND CASH EQUIVALENTS AT END OF
 PERIOD                                         $ 18,440,177    $ 6,551,344    $ 18,440,177
                                                ============    ============   ============
NON - CASH TRANSACTIONS
Conversion of short-term loans into
  contributed capital                           $         --    $        --    $    500,000
Conversion of long-term loans into
  contributed capital                                     --             --       2,680,541
Conversion of long-term loans into
  convertible notes of Partec                             --             --         570,361
Conversion of convertible notes of Partec
  and accrued interest into stock in Keryx                --             --       2,973,376
Issuance of warrants to related party
  as finder's fee in private placement                    --             --         113,621
Declaration of stock dividend                             --             --           3,104
Conversion of Series A preferred stock to
  common stock                                            --             --             118

SUPPLEMENTARY DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid for interest                          $         --    $       100    $    137,461
Cash paid for income taxes                            48,105             --         166,536
</TABLE>


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


                                       -4-

<PAGE>

Keryx Biopharmaceuticals, Inc. (Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF MARCH 31, 2001
------------------------------------------------------------------------

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, 2000. The results of operations for the
period ended March 31, 2001 are not necessarily indicative of the results that
may be expected for the entire fiscal year or any other interim period.


         The accompanying unaudited interim consolidated financial statements
for the period ended March 31, 2001 have been prepared in order to present the
financial position, results of operations and cash flows relating to the
Company's activities for all periods covered by the statements. Until November
1999, most of the Company's activities were carried out by Partec Limited, an
Israeli corporation, and its subsidiaries (hereinafter collectively referred to
as "Partec"). The subsidiaries of Partec during the period prior to November
1999 were 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. In November 1999, the Company and its subsidiary 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
and its subsidiary. 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. This has been effected by means of an "as if" pooling and
Partec is being presented as a "predecessor" company.


                                 LOSS PER SHARE

         Basic 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 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.


                              NON-CASH COMPENSATION

         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 employees 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


                                       -5-

<PAGE>


Keryx Biopharmaceuticals, Inc. (Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF MARCH 31, 2001
(CONTINUED)
-------------------------------------------------------------------------------


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 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
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.


Note 2 - New Accounting Pronouncements

         In June 1998 the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 ("Statement 133")
"Accounting for Derivative Instruments and for Hedging Activities." In June 2000
the FASB issued Statement of Financial Accounting Standards Board Statement No.
138 ("Statement 138"), "Accounting for Certain Derivative Instruments and
Certain Hedging Activity, an Amendment of Statement 133." Statement 133 and
Statement 138 require companies to recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value.
They also require that changes in fair value of a derivative be recognized
currently in earnings unless specific hedge accounting criteria are met. The
Company adopted Statement 133 and statement 138 on January 1, 2001. The adoption
of Statement 133 and Statement 138 had no impact on the Company's balance sheet
or statement of operations.


Note 3 - Stockholders' equity

         A. In January 2000, 39,180 shares of Series A convertible preferred
stock were issued as part of the continuation of the private placement commenced
in 1999 in consideration for $3.9 million.

         B. In June 2000, the stockholders approved an increase in authorized
capital stock from 20,000,000 shares to 40,000,000 shares of common stock, par
value $0.001, which increase took effect on the completion of the Company's
initial public offering.

         C. In June 2000, the board of directors declared a 3:2 common stock
dividend which was effective in conjunction with the Company's initial public
offering, whereby the stockholders receive one share of common stock for each
two shares of common stock held of record at July 15, 2000. These financial
statements have been prepared to retroactively reflect the stock dividend.

         D. In June 2000, the Company adopted a stock option plan (the "new
plan") pursuant to which the compensation committee of the Company's board of
directors may grant stock options to directors, consultants, and employees. The
new plan authorizes option grants to purchase up to 4,455,000 shares of
authorized but unissued common stock. As of March 31, 2001 the compensation
committee has issued incentive stock options to purchase 30,000 shares of common
stock to employees and non-qualified options, of which 17,000 were forfeited, to
purchase 310,800 shares of common stock to employees and consultants in each
case at an exercise price set based upon the previous


                                       -6-

<PAGE>


Keryx Biopharmaceuticals, Inc. (Development Stage Company)

NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS OF MARCH 31, 2001
(CONTINUED)
-------------------------------------------------------------------------------


day's closing price of the Company's common stock on Nasdaq. The exercise prices
of these options range between $6.56-$14.55 per share. 4,131,200 shares of
common stock remain available for grant.

         E. The Company completed its initial public offering of 4.6 million
shares of its common stock at $10 per share pursuant to a Registration Statement
on Form S-1 (Registration no. 333-37402) which was effective on July 28, 2000.
Additionally, the underwriters exercised their over-allotment option and
purchased an additional 600,000 shares of the Company's common stock, at $10 per
share, on August 30, 2000. Total proceeds of this offering, including the
exercise of the over-allotment option, were approximately $46.3 million, net of
underwriting fees and estimated offering expenses of approximately $5.7 million.

         As a result of the offering, all outstanding shares of Series A
Convertible Preferred Stock automatically converted into 6,114,962 shares of
common stock.


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

         The following discussion should be read in conjunction with the
accompanying unaudited, condensed 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 forth under the caption "Risk Factors" in the Company's Annual
Report on Form 10-K for the year ended December 31, 2000, of which the captioned
discussion is expressly incorporated herein by reference.

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., our
predecessor company that began its operations in January of 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, more recently, our initial public offering of 5,200,000
common shares at $10 per share. We have a 100% wholly owned subsidiary, Keryx
(Israel) Limited, which engages in research and development activities and
administrative functions 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.

         During the quarter ended March 31, 2001 additional paid in capital
(options), was reduced by approximately $1.5 million due to the amortization of
previously issued and the revaluation of options issued to consultants, in
accordance with EITF 96-18.

                                       -7-

<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED MARCH 31,
2000

         Revenue. We did not have any revenues for either of the three-month
periods ending March 31, 2001 or March 31, 2000.

         Research and Development Expenses. Research and development expenses
increased by $630,427 to $2,031,306 for the three months ended March 31, 2001,
as compared to $1,400,879 for the three months ended March 31, 2000. Net of
non-cash compensation of $353,244 for the three months ended March 31, 2001 and
$528,971 for the three months ended March 31, 2000, research and development
expenses increased by $806,154 due primarily to manufacturing expenses
associated with KRX-101 clinical trial inventory and expenditures on expansion
of our existing research and development activities during the period. We expect
our research and development costs to increase significantly over the next
several years as we expand our research and product development efforts and
implement our business strategy.

         General and Administrative Expenses. General and administrative
expenses increased by $22,989 to $1,116,502 for the three months ended March 31,
2001 as compared to general and administrative expenses of $1,093,513 for the
three months ended March 31, 2000. Net of non-cash compensation of $47,794 for
the three months ended March 31, 2001 and $814,069 for the three months ended
March 31, 2000, general and administrative expenses increased by $789,264, due
primarily to professional services and expansion of our existing general and
administrative activities. 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 future products.

         Interest Income (Expense), Net. Interest income (expense), net,
increased to $869,535 for the three months ended March 31, 2001, as compared to
$54,672 for the three months ended March 31, 2000. The increase resulted from a
higher level of invested funds due primarily to proceeds from the initial public
offering that closed in August 2000.

         Income Taxes. Income tax expense increased to $110,090 for the three
months ended March 31, 2001, as compared to $27,121 for the three months ended
March 31, 2000. This increase is attributable to taxable income from the
continuing operations of our subsidiary 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.

LIQUIDITY AND CAPITAL RESOURCES

         We have financed our operations from inception primarily through
various private and public financings. As of March 31, 2001, we had received net
proceeds of $46.3 million from our initial public offering, $11.6 million from
private placement issuances of common and preferred stock, which includes $2.9
million raised through the contribution by holders of notes issued by our
predecessor company.

         As of March 31, 2001, we had $47.3 million in cash, cash equivalents,
interest receivable and short and long-term investments. Cash used in operating
activities for the three-month period ended March 31, 2001 was $1.3 million as
compared to $1.2 million for the three-month period ended March 31, 2000. This
increase was due primarily to increased expenses associated with the expansion
of our business. Net cash used in investing activities was $3.0 million for the
three month period ended March 31, 2001, consisting primarily of investment of
the Company's initial public offering proceeds in long term securities, costs
incurred in connection with patent applications and related capital
expenditures.

         In connection with research services provided to us, we are obligated
to make payments totaling $505,000 to Yissum Research Development Company of the
Hebrew University of Jerusalem periodically until December 15, 2001. In
addition, in connection with our license agreement for KRX-101, we are obligated
to make milestone payments to Alfa Wassermann, the licensor, of up to $2,950,000
and annual payments in the aggregate of up to $900,000.

                                       -8-

<PAGE>


CURRENT AND FUTURE FINANCING NEEDS

         We have incurred negative cash flow from operations since we started
our business. 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. Based on our current plans, we believe that our existing
cash, cash equivalents and investments will be sufficient to enable us to meet
our planned operating needs until at least mid-2002.

         Our forecast of the period of time through which our financial
resources 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 shares 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.

NEW ACCOUNTING PRONOUNCEMENTS

         See Note 2 in Item 1 - Financial Statements.

                                       -9-

<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
currently maintain an investment portfolio of primarily money market investments
and certificates of deposits with maturities of less than 90 days. We expect to
maintain our portfolio in cash equivalents and short and long-term, interest
bearing securities, including, money market funds, corporate bonds 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 subsidiary
primarily operates 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 subsidiary 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.

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


PART II.  OTHER INFORMATION


ITEM 2.   CHANGES IN SECURITIES AND USE OF PROCEEDS



         (d) Use of Proceeds

         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. We have used
and intend to continue using the net proceeds of this offering as follows:

         o        approximately $11.8 million to fund clinical trials for
                  KRX-101 for diabetic nephropathy;

         o        approximately $2.7 million to fund clinical trials for KRX-123
                  for hormone-resistant prostate cancer;

         o        approximately $14.8 million to fund expansion of our KinAce
                  platform and to further develop the compounds we have
                  generated with it; and

         o        approximately $17.0 million to use as working capital and for
                  general corporate purposes.

         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.


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<PAGE>


         Until we use the net proceeds, we intend to invest the funds in
short-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.


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<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 14, 2001           By: /s/ Robert Gallahue, Jr.

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


                                      -12-

<PAGE>


                                  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 26 of the Company's Annual Report on Form 10-K
                     for the year ended December 31, 2000 under the caption
                     "Risk Factors" are incorporated herein by reference.


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