<PAGE>


                                                                 Exhibit 10.26


                              EMPLOYMENT AGREEMENT


An agreement between KERYX (ISRAEL) LTD., an Israeli company with it
principal place of business at 5 Kiryat Mada, Har Hotzvim, Jerusalem 91236
(the "Company") and NOA SHELACH I.D. No. 27853258, of Mazkeret Moshe 4,
Jerusalem 94316 (the "Employee").

WHEREAS the Company desires to employ the Employee in the position of Vice
President - Project Management (the "Position");

WHEREAS the Employee desires to be employed by the Company and fulfill the
responsibilities of the Position; and

WHEREAS the parties desire to set forth the conditions of employment pursuant to
which the Employee will be employed by the Company;

IT IS HEREBY AGREED BY AND BETWEEN THE PARTIES AS FOLLOWS:

1. PREAMBLE

The preamble to this Agreement and any attachments thereto are an integral part
of this Agreement.

2. JOB DESCRIPTION

The duties, responsibilities and authority of the Employee in the Position are
to oversee and manage all pre-clinical and clinical activities of the Company.
The Employee shall report directly to the Chief Executive Officer or his
designee. This description shall serve as a general statement of the duties,
responsibilities and authority of the Employee. Additional duties,
responsibilities and authority may be assigned to the Employee by the Company
from time to time in its discretion.

3. WORKING HOURS

The Employee shall be employed by the Company on a full-time basis, namely for
not less than forty-four (44) hours per week (inclusive of mealtime). The
Employee agrees that his position is considered to be a management position as
defined in the Hours of Work and Rest Law - 1951, which requires a special
measure of personal trust. Accordingly, the provisions of the Hours of Work and
Rest Law - 1951 shall not apply and the Employee shall not be entitled to
receive any additional payment for his work other than those that are set forth
in this Agreement.

4. TERM OF AGREEMENT

This Agreement shall take effect from the first day of the Employee's employment
with the Company as Vice President - Project Management, on December 20, 2000,
and shall remain in effect until one of the parties has given the notice
required by paragraph 6, below.

5. SALARY

     5.1 THE EMPLOYEE'S SALARY SHALL BE AS FOLLOWS:

         5.1.1.The Employee shall receive an annual gross salary of seventy two
               thousand dollars ($72,000) payable in New Israeli Shekels
               according the representative rate of exchange in effect each
               month at the time Company salaries are calculated. The Employee's
               salary shall be paid in twelve equal installments, monthly in
               arrears.

         5.1.2.The salary set forth in paragraph 4.1.1, above, shall be referred
               to as the "Global Salary".

               The Global Salary shall not be subject to, or include any
               generally-applicable increases, whether the statutory cost of
               living increase or any other industry-wide increase applicable as
               the result of collective bargaining agreements or other order of
               the Ministry of Labor and Welfare (such as Tzavei Harhava). By
               signing this Agreement and accepting


                                      -1-

<PAGE>

               employment pursuant to its terms, the Employee represents that
               s/he will not claim any such increase.

         5.1.3.The Employee shall not be entitled to receive any salary or
               payment of any kind other than the Global Salary and other
               payments specifically set forth in this Agreement.

     5.2. OTHER TERMS OF EMPLOYMENT

         5.2.1.EXPENSES

               The Employee shall be entitled, in accordance with the Company's
               standard policy in effect from time to time, to be reimbursed for
               expenses (Hotza'ot Eshel) incurred in Israel and abroad in
               connection with Company business.

         5.2.2.CONTINUING EDUCATION FUND

               The Employee shall be entitled to participate in the Company's
               continuing education fund (Keren Hishtalmut). The Company shall
               contribute an amount equal to five percent (5%) of the Employee's
               Global Salary and shall deduct two and a half percent (2.5%) of
               the Employee's Global Salary and transfer it as the Employee's
               contribution. The Employee consents to the deduction of this
               amount as his contribution to the continuing education fund.
               These contributions will be calculated up to the permissible
               tax-exempt salary ceiling according to the income tax regulations
               in effect from time to time. If the amount of the Company's
               contribution is greater than permitted by those regulations, the
               Employee shall not have the right to receive the excess amount.

         5.2.3.RESERVE DUTY

               The Employee shall be entitled to receive his full Global Salary
               and other payments while performing reserve duty, provided that
               any amount received by the Employee from the I.D.F. or any other
               source (excluding Damei Calcala) is transferred to the Company
               or, in the alternative, an amount equal to that received from the
               I.D.F. or any other source is deducted from the Global Salary
               payable to the Employee.

         5.2.4.ANNUAL LEAVE AND RECREATION PAY (DAMEI HAVRA'A)

            a.   The Employee shall be entitled to twenty (20) working days of
                 paid annual leave each year. The Employee shall not be allowed
                 to accrue more than thirty (30) working days of annual leave
                 except in unusual circumstances and with the permission of the
                 Company.

            b.   Should the Employee's annual leave balance exceed thirty (30)
                 days at the end of any calendar year, the excess number of days
                 shall be paid out in accordance with the provisions of the
                 Annual Leave Law - 1951.

            c.   The Company shall pay the Employee for five (5) days of
                 recreation (damei havra'a) each year in accordance with the
                 normal practice of the Company in effect from time to time.

         5.2.5.SICKNESS AND DISABILITY INSURANCE

            a.   The Employee shall be entitled to the number of days for sick
                 leave permitted by law. Compensation for sick days utilized
                 shall be paid according to his Global Salary only upon the
                 presentation of medical documentation.

            b.   The Employee shall be covered by disability insurance that
                 provides monthly compensation. The cost of such insurance shall
                 not exceed two and half percent (2.5%) of the Employee's Global
                 Salary.

            c.   Notwithstanding the provisions of subparagraph (a), above, the
                 Employee shall not be entitled to receive compensation for sick
                 leave if such compensation is covered by the Employee's
                 disability insurance referred to in subparagraph (b), above.
                 However, should the amounts received by the Employee pursuant
                 to such disability insurance be less than the amount that is
                 properly payable as compensation for the Employee's

                                      -2-

<PAGE>

                 available sick leave, according to the Global Salary, the
                 Company shall pay the difference

            d.   It is understood and agreed the Employee cannot redeem unused
                 sick leave.

            e.   For the avoidance of doubt, it is understood and agreed that
                 the payments made by the Company in consideration of sick leave
                 covers all obligations of the Company pursuant to the Sick
                 Leave Law - 1976.

     5.3. PENSION BENEFITS AND SEVERANCE PAYMENTS

         5.3.1.The Company will pay into a Provident Fund (Kupat Gemel) (in the
               meaning of paragraph 47 of the Income Tax Ordinance) in the form
               of Manager's Insurance or another form according to the
               Employee's choice and the Company's agreement, an amount equal to
               thirteen and one third percent (13 1/3 %) from the monthly Global
               Salary paid to the Employee, and the Employee will pay, on his
               own account, an amount equal to five percent (5%) from that
               Global Salary.

         5.3.2.The Employee agrees that the Company shall be entitled to deduct
               the Employee's contribution (5%) from the Employee's salary.

         5.3.3.For the avoidance of doubt, it is clarified that under no
               circumstance shall the Company's contribution exceed thirteen and
               one third percent (13 1/3 %) of the Global Salary in any one
               month.

         5.3.4.Five percent (5%) of the thirteen and one third percent (13 1/3
               %) that the Company contributes as set forth above and the five
               percent (5%) the Employee contributes, together with linkage and
               interest on the contributions, will be treated as pension
               benefits for the Employee or his survivors.

         5.3.5.The remaining eight and one third percent (8 1/3 %) of the
               Company's contribution, together with linkage and interest on
               that portion, will be utilized to pay severance benefits to the
               Employee or his descendants in the event of the termination of
               his employment with the Company, except in those circumstances
               discussed below.

         5.3.6.In the event that the Employee chooses Manager's Insurance, the
               policy shall belong to the Company as long as it employs the
               Employee and it makes the required payments on the policy.

               The payments made into the Kupat Gemel pursuant to paragraph
               5.3.1, above, shall fulfill the Company's obligation for
               severance payment pursuant to the Severance Compensation Law -
               1963.

         5.3.7.Upon the termination of the Employee's employment, for whatever
               reason, and upon his final departure from the Company, the
               Employee or his descendants shall be entitled to receive the
               ownership of all rights which have accrued on his behalf in the
               Kupat Gemel or the ownership of the Manager's Insurance policy,
               as appropriate and subject to the provisions of paragraphs 6.1
               and 6.2, below.

         5.3.8.In the event that there is a difference in the Employee's favor
               between the amount to which he is entitled to receive pursuant to
               the Severance Compensation Law - 1963 and the severance payment
               amount (including linkage and interest) that is in the Kupat
               Gemel or Manager's Insurance policy, the Company shall pay that
               difference.

         5.3.9.For the avoidance of doubt, it is understood that in the event
               that the severance payment amount (including linkage and
               interest) that is in the Employee's Kupat Gemel or Manager's
               Insurance policy exceeds the amount to which he is entitled to
               receive as severance compensation pursuant to the Severance
               Compensation Law - 1963, the difference shall not be transferred
               to the Employee, including to his pension account, but shall be
               the property of the Company.

                                      -3-

<PAGE>


6. TERMINATION OF EMPLOYMENT

     6.1. Either party may terminate the Employee's employment with the Company
          without cause at any time upon the legally required notice. The
          Company shall have the right, in its sole discretion, to require the
          Employee to continue working for the Company during the notice period.

     6.2. Notwithstanding the foregoing, the Company may terminate the Employee
          immediately and without prior notice in the following circumstances:
          (a) a serious breach of faith; (b) the Employee committed a criminal
          offense connected to his employment with the Company or his place of
          employment; (c) the Employee refused to comply with or violated the
          reasonable instructions of the Board of Directors, the Chief Executive
          Officer, the Chief Financial Officer or their designee.

     6.3. In the event that Employee's employment has been terminated in
          accordance with paragraph 6.2, above, the Employee shall not be
          entitled to receive any severance payment whatsoever, whether from the
          Company or pursuant to paragraph 5.3.7, above.

7.   TAXES AND OTHER PAYMENTS

     7.1. The Company shall not be liable for the payment of taxes or other
          payments for which the Employee is responsible as result of this
          Agreement or any other legal provision, and the Employee shall be
          personally liable for such taxes and other payments.

     7.2. The Employee hereby agrees that the Company deduct from his Global
          Salary the Employee's national insurance fees, income tax and other
          amounts required by law or the terms of this Agreement, and provide
          the Employee with documentation of such deductions.

8.   THE OBLIGATIONS OF THE EMPLOYEE

     8.1. The Employee agrees to devote his time, energy, abilities and
          experience to the performance of his duties, effectively and in good
          faith.

     8.2. During the period of his employment, the Employee shall not be
          employed for pay by any other party other than the Company. The
          Employee must receive the prior written consent of the Company before
          assuming an unpaid position outside the Company.

     8.3. The Employee agrees to immediately inform the Company of any Company
          issue or transaction in which the Employee has a direct or indirect
          personal interest and/or where such issue or transaction could cause a
          conflict of interest for the Employee in the fulfillment of his
          responsibilities as an employee of the Company.

     8.4. The Employee hereby gives irrevocable instructions and permission to
          the Company to deduct from any amounts owed to the Employee by the
          Company, including amounts payable as severance compensation, (a) any
          debt he has or will have to the Company; and/or (b) any amount that
          was wrongfully or mistakenly paid to him by the Company. Any such
          amounts to be deducted shall be calculated in real terms as of the
          date of the deduction, including linkage to cost of living index.

     8.5. The Employee declares that the terms and conditions of his employment
          are personal and confidential and will not be disclosed by him.

     8.6. The Employee declares that he is free to enter into this Agreement and
          that he has no obligations of any kind to any third party that would
          impair this Agreement, either as an employee or an independent
          contractor. The Employee further declares that as long as he remains
          an employee of the Company, he will not incur any such obligations.

     8.7. The Employee agrees to keep confidential (a) all professional,
          scientific, commercial, and business information; and (b) any other
          information or document that comes to the Employee's knowledge in
          connection with the affairs of the Company (collectively, the
          "Confidential

                                      -4-

<PAGE>

          Information"), and agrees not to use or exploit the Confidential
          Information or to disclose it to any third party where such use,
          exploitation or disclosure in not directly related to the affairs of
          the Company, unless the Company gives prior written authorization of
          such disclosure.

     8.8. The Employees agrees that during his employment by the Company and
          thereafter he (a) will not disseminate or otherwise make use of the
          Confidential Information or of other non-public information of which
          he learned while working for the Company, except where such
          dissemination or use is directly related to the affairs of the
          Company; (b) will maintain the confidentiality of the Confidential
          Information; and (c) will not in any way act to injure the reputation
          of the Company or its parent company.

     8.9. For one (1) year after the termination for any reason of his
          employment by the Company, the Employee shall not be employed in any
          business or give any services to a third party that competes with the
          Company or whose activities conflict with the activities of the
          Company, unless the Company has given its prior written consent.

     8.10.Upon termination of his employment, the Employee agrees to assist the
          Company with an orderly transition of his responsibilities and to
          return to the Company any documents, information and/or materials that
          were given to him or which were created by him in connection with his
          employment.

9.   INTELLECTUAL PROPERTY RIGHTS

     9.1. The Employee declares that he is aware that anything that is done by
          him in the Company or in connection with the Company, whether it be an
          invention, a discovery, or the development of an idea or a thing, all
          within the framework of the Company's business (the Development")
          shall belong to and be controlled by the Company.

     9.2. The Company shall have the right to fully utilize and exploit the
          Development, as it sees fit, including changing it, registering part
          or all of it as a patent, whether in Israel or abroad, selling it,
          transferring it to a third party, all without being required to either
          receive the Employee's consent or pay the Employee any additional
          payment for such Development apart from any payment he receives
          pursuant to this Agreement.

     9.3. The Development and any subsequent intellectual property arising
          therefrom shall remain the sole property of the Employer even after
          the Employee's employment terminates for any reason. The termination
          of this Agreement, whether due to its breach or its own terms, shall
          not impair the Company's exclusive rights in the Development.

     9.4. The Employee may not do anything with the Development or any related
          materials without the knowledge and prior consent of the Company. The
          Employee declares that he neither has nor will have any rights in the
          Development or its fruits and that all rights to the Development and
          its fruits shall fully reside in the Company.

     9.5. Even in the event that at the time of the termination of the
          Employee's employment for any reason the Development has not been
          completed, the Employee shall be prohibited from any continued
          activity in connection with the subject of the Development, alone or
          in concert with others, that is not explicitly allowed in writing by
          the Company.

         The Company alone will be the sole owner of the uncompleted Development
         and shall have the sole right to complete the Development or to take
         any other action in connection with the Development.

10.  GENERAL

     10.1.It is agreed that the provisions of this Agreement represent the full
          scope of the agreement between the parties and that neither side shall
          be bound by any promises, declarations, exhibits, agreements or
          obligations, oral or written, that are not included in this Agreement
          prior to its execution. Any changes or amendments to this Agreement
          must be in writing and signed by both parties.

                                      -5-

<PAGE>

     10.2.The parties agree that the appropriate court in Jerusalem, Israel
          shall have exclusive jurisdiction of any legal claim lodged by one
          party against the other arising from the terms of this Agreement.

11.  NOTICES

     11.1.A notice that is sent by registered mail to a party at its address as
          set forth in paragraph 11.2, below, shall be deemed received three (3)
          days after its posting, and the receipt stamped by the post office
          shall represent definitive evidence of the date of mailing.

     11.2.The addresses of the parties for the purposes of this Agreement are:

         KERYX (ISRAEL) LTD.:

         5 Kiryat Mada
         POB 23706
         Jerusalem 91236

         EMPLOYEE:

         Mozkeret Moshe 4
         -----------------

         Jerusalem 94316
         -----------------


IN WITNESS WHEREOF the parties have hereunto set their hands at the place and on
the date first above written.


Keryx (Israel) Ltd.
By

/s/ Morris Laster                           /s/ Noa Shelach
------------------------------              ------------------------------------
                                            Noa Shelach









                                      -6-