<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 JUNE 30, 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 July 18, 2001, the issuer had outstanding 19,732,341 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
           Markets.........................................................  10

PART II.  OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds.........................  11

Item 4.  Submission of Matters to a Vote of Security Holders...............  11

Item 6.  Exhibits and Reports on Form 8-K..................................  12

SIGNATURES.................................................................  12

<PAGE>


Keryx Biopharmaceuticals, Inc. (Development Stage Company)

Interim Consolidated Balance Sheets as of June 30, 2001 and December 31, 2000
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                  June 30         December 31
                                                                  2001            2000
                                                                  (Unaudited)     (Audited)
                                                                  -----------     -----------
<S>                                                             <C>              <C>

Assets

Current assets

Cash and cash equivalents                                         $21,717,433     $22,708,462
Investment securities, held-to-maturity                             8,246,753      15,492,568
Accrued interest receivable                                           553,512         595,200
Other receivables and prepaid expenses                                604,648         204,854
                                                                  -----------     -----------
Total current assets                                               31,122,346      39,001,084
                                                                  -----------     -----------
Investment securities, held-to-maturity                            14,077,721      10,103,644
                                                                  -----------     -----------
Investment in respect of employee
 severance obligations                                                202,257         136,173
                                                                  -----------     -----------
Fixed assets, net                                                   1,125,809         312,187
                                                                  -----------     -----------
Other assets (primarily intangible
 assets), net                                                         699,870         711,268
                                                                  -----------     -----------

                                                                  $47,228,003     $50,264,356
                                                                  ===========     ===========

Liabilities and Stockholders' Equity

Accounts payable and accrued expenses                             $ 2,144,139     $   919,307
Accrued compensation and related liabilities                          436,307         173,899
                                                                 ------------    ------------
Total current liabilities                                           2,580,446       1,093,206
                                                                 ------------    ------------
Liability in respect of employee severance obligations                522,510         304,502
                                                                 ------------    ------------
Stockholders' equity

Common stock, $0.001 par value each (40,000,000 and
 40,000,000 shares authorized, 19,729,341 and 19,532,772
 shares issued and fully paid at June 30, 2001 and
 December 31, 2000, respectively)                                      19,729          19,533
Additional paid-in capital                                         75,051,815      76,565,052
Unearned compensation                                              (1,196,978)     (3,805,145)
Deficit accumulated during the development stage                  (29,749,519)    (23,912,792)
                                                                  ------------    ------------
                                                                   44,125,047      48,866,648
                                                                  ------------    ------------
                                                                  $47,228,003     $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
And Six Months Ended June 30, 2001 and 2000
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                                                                     Amounts
                                                                                                                 Accumulated
                                                                                                                  During the
                                                                                                                 Development
                                                         Three months ended              Six months ended              Stage
                                                 ---------------------------     ---------------------------    ------------
                                                     June 30         June 30         June 30        June 30          June 30
                                                 -----------    ------------     -----------    ------------    ------------
                                                        2001            2000            2001           2000             2001
                                                 -----------    ------------     -----------    ------------    ------------
                                                 (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)     (Unaudited)
                                                 -----------    ------------     -----------    ------------    ------------
<S>                                            <C>            <C>              <C>            <C>             <C>

Management fees from related party               $         -    $          -    $          -     $        -     $    299,997
                                                 -----------    ------------     -----------    ------------    ------------
Expenses
Research and development expenses                  2,711,314       1,128,791       4,742,620       2,529,670      20,326,877
General and administrative expenses                1,275,384       2,175,083       2,391,886       3,268,596      11,641,605
                                                 -----------    ------------     -----------    ------------    ------------
     Total operating expenses                      3,986,698       3,303,874       7,134,506       5,798,266      31,968,482
                                                 -----------    ------------     -----------    ------------    ------------
Operating loss                                    (3,986,698)     (3,303,874)     (7,134,506)     (5,798,266)    (31,668,485)

Interest income, net                                 548,823          97,947       1,418,358         152,619       2,309,740
                                                 -----------    ------------     -----------    ------------    ------------
Net loss before income taxes                      (3,437,875)     (3,205,927)     (5,716,148)     (5,645,647)    (29,358,745)

Income taxes                                          10,489          27,879         120,579          55,000         390,774
                                                 -----------    ------------     -----------    ------------    ------------
Net loss                                          (3,448,364)     (3,233,806)     (5,836,727)     (5,700,647)    (29,749,519)
                                                  ===========    ============     ===========    ============    ============


Basic and diluted loss per common share               ($0.17)         ($0.40)         ($0.30)         ($0.70)         ($2.95)

Weighted average shares used in computing
basic and diluted net loss per common share       19,721,973       8,108,306       19,659,159       8,108,306      10,092,509
</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 Six Months Ended
June 30, 2001 and 2000
-------------------------------------------------------------------------------

<TABLE>
<CAPTION>

                                                                               Amounts
                                                                               Accumulated
                                                                               During the
                                                                               Development
                                                Six months ended June 30       Stage
                                              ------------    ------------    ------------
                                                  2001             2000            2001
                                              ------------    ------------    ------------
                                               (Unaudited)     (Unaudited)     (Unaudited)
                                              ------------    ------------    ------------
<S>                                         <C>             <C>              <C>

CASH FLOWS FROM OPERATING ACTIVITIES
Net loss                                      $ (5,836,727)  $(5,700,647)   $ (29,749,519)

Adjustments to reconcile cash flows in
 operating activities:
Revenues and expenses not involving cash flows:
Employee stock compensation expense                818,448     2,695,555        9,339,261
Consultants' stock compensation expense            263,487       736,810        3,609,085
Interest on convertible notes settled
  through issuance of preferred shares                --             --           252,966
Provision for employee severance obligations       218,008        41,367          522,510
Depreciation and amortization                       37,345        16,124          160,785
Exchange rate differences                           21,299           232           17,791
Changes in assets and liabilities:
Decrease (increase) in other receivables
  and prepaid expenses                            (399,794)       44,503         (600,170)
Decrease (increase) in accrued interest
  receivable                                        41,688           --          (553,512)
Increase (decrease) in related party                  --        (141,483)           --
Increase (decrease) in accounts payable
  and accrued expenses                           1,224,832       462,850        2,139,940
Increase in accrued compensation and
  related liabilities                              262,408        25,494          436,307
                                               ------------    ------------   ------------

Net cash used in operating activities           (3,349,006)   (1,819,195)     (14,424,556)
                                               ------------    ------------   ------------
CASH FLOWS FROM INVESTING ACTIVITIES

Purchases of fixed assets, net of disposals       (850,967)      (32,802)      (1,285,854)
Investment in other assets, net                     11,398      (260,392)        (700,839)
Purchase of investment securities-employee
  severance obligations                            (66,084)      (24,673)        (202,257)
Proceeds from sale and maturity of
  short-term investments                         7,245,815          --         (8,246,753)
Investment in long-term securities              (3,974,077)         --        (14,077,721)
                                               ------------    ------------   ------------
Net cash resulting from (used in)
  investing activities                        $  2,366,085   $  (317,867)   $ (24,513,424)
                                               ------------    ------------   ------------
</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 Six Months Ended June 30, 2001 and
(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                                  --         3,767,647      8,453,078
Receipts on account of shares previously
  issued                                               --              --            6,900
Proceeds from initial public offering, net
  of issuance costs                                    --          (723,894)    46,298,399
Proceeds from exercise of warrants                   13,191            --           13,925
                                               ------------    ------------   ------------
Net cash provided by financing activities            13,191       3,043,753     60,673,204
                                               ------------    ------------   ------------
Effect of exchange rate on cash                     (21,299)           (232)       (17,791)
                                               ------------    ------------   ------------
NET INCREASE (DECREASE) IN CASH AND CASH
  EQUIVALENTS                                      (991,029)        906,459     21,717,433
Cash and cash equivalents at beginning
  of period                                      22,708,462       4,126,735          --
                                               ------------    ------------   ------------
CASH AND CASH EQUIVALENTS AT END OF
 PERIOD                                        $ 21,717,433     $ 5,033,425   $ 21,717,433
                                               ============    ============   ============
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                       $          350    $      --      $   137,811
Cash paid for income taxes                          120,244           --          238,675
</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 June 30, 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 June 30, 2001 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 Ltd., 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 wholly-owned subsidiary, Keryx (Israel) Ltd., 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
subsidiaries. Consequently, the amounts accumulated during the development stage
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 fair 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 June 30, 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 received 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 June 30, 2001, the compensation
committee has issued incentive stock options to purchase 30,000 shares of common
stock to employees and non-qualified options to purchase 423,200 shares of
common stock, of which


                                       -6-

<PAGE>

Keryx Biopharmaceuticals, Inc. (Development Stage Company)

Notes to the Interim Consolidated Financial Statements of June 30, 2001
(continued)
-------------------------------------------------------------------------------

17,000 were forfeited subsequent to issuance, to employees and consultants, in
each case at an exercise price set based upon the fair market value defined by
Keryx's Option Plans. The exercise prices of these options range between
$6.56-$14.55 per share. 4,018,800 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 CONDITION 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 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.

         During the six months ended June 30, 2001, additional paid in capital,
was reduced by approximately $1.5 million due to the amortization of previously
issued shares and the revaluation of options issued to consultants, in
accordance with EITF 96-18.


                                       -7-
<PAGE>

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 2001 COMPARED TO THE THREE MONTHS ENDED
JUNE 30, 2000

         Revenue. We did not have any revenues for either of the three-month
periods ending June 30, 2001 or June 30, 2000.

         Research and Development Expenses. Research and development expenses
increased by $1,582,523 to $2,711,314 for the three months ended June 30,
2001, as compared to $1,128,791 for the three months ended June 30, 2000. Net
of non-cash compensation of $645,930 for the three months ended June 30, 2001
and $846,002 for the three months ended June 30, 2000, research and
development expenses increased by $1,782,595 due primarily to growth in
personnel, increased pre-clinical work to advance our KinAce platform and
manufacturing expenses associated with KRX-101 clinical trial inventory
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 decreased by $899,699 to $1,275,384 for the three months ended June 30,
2001 as compared to general and administrative expenses of $2,175,083 for the
three months ended June 30, 2000. Net of non-cash compensation of $34,968 for
the three months ended June 30, 2001 and $1,243,323 for the three months ended
June 30, 2000, general and administrative expenses increased by $308,656 due
primarily to growth in personnel necessary to service the greater general and
administrative activities associated with operating as a publicly-traded
research and development company. 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, Net. Interest income, net, increased to $548,823 for
the three months ended June 30, 2001, as compared to $97,947 for the three
months ended June 30, 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 decreased to $10,489 for the three
months ended June 30, 2001, as compared to $27,879 for the three months ended
June 30, 2000. This decrease is attributable to a change in tax estimates during
the second quarter. Taxable income is a result of 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.

SIX MONTHS ENDED JUNE 30, 2001 COMPARED TO THE SIX MONTHS ENDED JUNE 30, 2000

         Revenue. We did not have any revenues for either of the six-month
periods ending June 30, 2001 or June 30, 2000.

         Research and Development Expenses. Research and development expenses
increased by $2,212,950 to $4,742,620 for the six months ended June 30, 2001,
as compared to $2,529,670 for the six months ended June 30, 2000. Net of
non-cash compensation of $999,174 for the six months ended June 30, 2001 and
$1,374,973 the six months ended June 30, 2000, research and development
expenses increased by $2,588,749 due primarily to growth in personnel,
increased pre-clinical work to advance our KinAce platform and manufacturing
expenses associated with KRX-101 clinical trial inventory 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 decreased by $876,710 to $2,391,886 for the six months ended June 30,
2001 as compared to general and administrative expenses of $3,268,596 for the
six months ended June 30, 2000. Net of non-cash compensation of $82,762 for the
six months ended June 30, 2001 and $2,057,392 for the six


                                       -8-

<PAGE>


months ended June 30, 2000, general and administrative expenses increased by
$1,097,920 due primarily to growth in personnel necessary to service the greater
general and administrative activities associated with operating as a
publicly-traded research and development company. 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, Net. Interest income, net, increased to $1,418,358 for
the six months ended June 30, 2001, as compared to $152,619 for the six months
ended June 30, 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 $120,579 for the six
months ended June 30, 2001, as compared to $55,000 for the six months ended June
30, 2000. This increase 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.


LIQUIDITY AND CAPITAL RESOURCES

         We have financed our operations from inception primarily through
various private and public financings. As of June 30, 2001, 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, which includes
$2.9 million raised through the contribution by holders of notes issued by our
predecessor company.

         As of June 30, 2001, we had $44.6 million in cash, cash equivalents,
interest receivable and short and long-term investments. Cash used in operating
activities for the six-month period ended June 30, 2001 was $3.4 million as
compared to $1.8 million for the six-month period ended June 30, 2000. This
increase was due primarily to increased expenses associated with the expansion
of our business. Net cash resulting from investing activities was $2.4 million
for the six-month period ended June 30, 2001, caused primarily from the maturity
of short-term investments offset in part by long-term investments and capital
expenditures.

         In connection with research services provided to us, we are obligated
to make payments totaling $179,000 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.

         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.


                                       -9-

<PAGE>


         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.


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 value of 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 value of 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, money market funds, corporate
bonds and government debt securities. The average duration of all of our
investments to date in 2001 have been 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 operate 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.


                                      -10-

<PAGE>


         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.

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


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company held its Annual Meeting of Stockholders on Wednesday,
May 23, 2001. The following represents the results of the voting on proposals
submitted to a vote of stockholders at such meeting:

         To elect the following persons to serve as directors of the Company
until the next annual meeting of stockholders and until their successors are
duly elected and qualified.

<TABLE>
<CAPTION>

                                                      Number of Votes
                                                   For              Abstaining
                                             ----------------      -----------
<S>                                         <C>                   <C>

     Morris Laster, M.D.                        11,868,726             56,854
     Malcolm Hoenlein                           11,918,726              6,854
     Peter Morgan Kash                          11,918,726              6,854
     Mark H. Rachesky, M.D.                     11,918,726              6,854
     Lindsay A. Rosenwald, M.D.                 11,918,726              6,854
     Wayne Rothbaum                             11,918,726              6,854
     J. Wilson Totten, M.D.                     11,918,726              6,854
</TABLE>


                                      -11-

<PAGE>


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.



                                   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:   August 13, 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.


                                      -13-