10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2006

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

For the transition period from                      to                     .

Commission file number 0-20713

ENTREMED, INC.

(Exact name of registrant as specified in its charter)

Delaware	58-1959440
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

9640 Medical Center Drive
Rockville, Maryland

(Address of principal executive offices)

20850

(Zip code)

(240) 864-2600

(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 þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o     Accelerated filer þ     Non-accelerated filer o

Indicate by checkmark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the most recent practicable date.

Class	Outstanding at May 5, 2006
Common Stock $.01 Par Value	74,051,323

ENTREMED, INC.
Table of Contents

	PAGE
PART I. FINANCIAL INFORMATION
Item 1 — Financial Statements
Consolidated Balance Sheets as of March 31, 2006 and December 31, 2005		3
Consolidated Statements of Operations for the Three Months Ended March 31, 2006 and 2005		4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2006 and 2005		5
Notes to Consolidated Financial Statements		6
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		11
Item 3 — Quantitative and Qualitative Disclosures About Market Risk		18
Item 4 — Controls and Procedures		18
Part II. OTHER INFORMATION
Item 1 — Legal Proceedings		18
Item 1A – Risk Factors		19
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		19
Item 3 — Defaults upon Senior Securities		19
Item 4 — Submission of Matters to a Vote of Security Holders		19
Item 5 — Other Information		19
Item 6 — Exhibits		20
SIGNATURES		21

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Exchange Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements also may be included in other statements that we make. All statements that are not descriptions of historical facts are forward-looking statements. These statements can generally be identified by the use of forward-looking terminology such as “believes,” “expects,” “intends,” “may,” “will,” “should,” or “anticipates” or similar terminology. These forward-looking statements include, among others, statements regarding the timing of our clinical trials, our cash position and future expenses, and our future revenues.

Our forward-looking statements are based on information available to us today, and we will not update these statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable as of the date thereof, actual results could differ materially from those currently anticipated due to a number of factors, including risks relating to the early stage of our product candidates under development, operating losses and anticipated future losses; the value of our common stock; our need for additional capital; intense competition and rapid technological change in the biopharmaceutical industry; uncertainties relating to our patent and proprietary rights; uncertainties relating to clinical trials, estimated clinical trial commencement dates, government regulation and uncertainties of obtaining regulatory approval on a timely basis or at all. Additional information on the factors and risks that could affect our business, financial condition and results of operations, are contained in our filings with the U.S. Securities and Exchange Commission (SEC), which are available at www.sec.gov.

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EntreMed, Inc.
Consolidated Balance Sheets

	March 31, 2006			December 31, 2005
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	20,803,773		$	11,407,652
Short-term investments		29,320,615			18,674,736
Accounts receivable		89,615			3,723,433
Note receivable		—			1,000,000
Interest receivable		68,203			181,231
Prepaid expenses and other		379,877			338,462
Total current assets		50,662,083			35,325,514
Property and equipment, net		976,032			915,337
Other assets		9,812			191,034
Total assets	$	51,647,927		$	36,431,885
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,986,836		$	5,487,014
Payable to related parties		188,827			228,380
Accrued liabilities		1,921,235			1,038,975
Current portion of loan payable		793,431			—
Current portion of deferred rent		68,083			60,969
Total current liabilities		5,958,412			6,815,338
Deferred rent, less current portion		211,372			230,206
Loan payable, less current portion		542,686			—
Total liabilities		6,712,470			7,045,544
Minority interest		17,242			17,151
Stockholders’ equity:
Convertible preferred stock, $1.00 par value; 5,000,000 shares authorized and 3,350,000 shares issued and outstanding at March 31, 2006 and December 31, 2005, respectively (liquidation value — $43,715,500 and $33,500,000, respectively)		3,350,000			3,350,000
Common stock, $.01 par value:
120,000,000 shares authorized, 74,051,323 and 51,106,857 shares issued and outstanding at March 31, 2006 and December 31, 2005, respectively		740,513			511,069
Additional paid-in capital		345,320,478			295,392,194
Deferred stock-based compensation		—			(102,000	)
Treasury stock, at cost: 874,999 shares held at March 31, 2006 and
December 31, 2005, respectively		(8,034,244	)		(8,034,244	)
Accumulated deficit		(296,458,532	)		(261,747,829	)
Total stockholders’ equity		44,918,215			29,369,190
Total liabilities and stockholders’ equity	$	51,647,927		$	36,431,885

See accompanying notes.

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EntreMed, Inc.
Consolidated Statements of Operations
(Unaudited)

	Three Months Ended
	March 31, 2006			March 31, 2005
Revenues:
Licensing	$	—		$	23,874
Royalties		—			1,375
		—			25,249
Costs and expenses:
Research and development		4,011,100			4,379,356
General and administrative		1,816,694			1,260,822
Acquired In-Process R&D		29,128,061			—
		34,955,855			5,640,178
Investment income		278,465			158,461
Interest expense		(48,713	)		—
Gain on sale of assets		15,400			—
Net loss	$	(34,710,703	)	$	(5,456,468	)
Dividends on Series A convertible preferred stock		(251,250	)		(251,250	)
Net loss attributable to common shareholders	$	(34,961,953	)	$	(5,707,718	)
Net loss per share (basic and diluted)	$	(0.53	)	$	(0.13	)
Weighted average number of common shares outstanding (basic and diluted)		66,297,950			43,345,118

See accompanying notes.

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EntreMed, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

	THREE MONTH PERIOD ENDED
	MARCH 31,
	2006			2005
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(34,710,703	)	$	(5,456,468	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		121,375			127,825
Gain on sale of fixed assets		(15,400	)		—
Write-off of acquired in-process R&D		29,128,061			—
Discount of premium on ST investments		(116,513	)		—
Stock-based compensation expense		348,909			—
Amortization of deferred stock-based compensation expense		43,713			—
Minority interest		90			10
Changes in operating assets and liabilities, net of acquisition:
Accounts receivable		3,683,100			2,937,469
Interest receivable		113,028			(44,102	)
Prepaid expenses and other		998			103,500
Deferred rent		(11,720	)		(4,813	)
Accounts payable		(2,575,813	)		744,539
Payable to related parties		(39,553	)		1,576,679
Accrued liabilities		(1,426,803	)		(884,209	)
Deferred revenue		—			(23,874	)
Net cash used in operating activities		(5,457,231	)		(923,444	)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition, net of cash received		(2,552,385	)		—
Proceeds from sale of property and equipment, net		15,400			—
Purchases of short term investments		(17,959,367	)		(8,407,078	)
Maturities of short term investments		7,430,000			—
Purchases of furniture and equipment		(32,599	)		(4,457	)
Net cash used in investing activities		(13,098,951	)		(8,411,535	)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of loan		(112,006	)		—
Net proceeds from sale of common stock		28,064,309			9,978,274
Net cash provided by financing activities		27,952,303			9,978,274
Net increase in cash and cash equivalents		9,396,121			643,295
Cash and cash equivalents at beginning of period		11,407,652			20,425,495
Cash and cash equivalents at end of period	$	20,803,773		$	21,068,790
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	$	48,713		$	—
Non-cash investing activity:
Stock issued in connection with the acquisition	$	21,920,801		$	—

See accompanying notes.

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ENTREMED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2006 (unaudited)

1. Basis of Presentation

     Our accompanying 2006 unaudited consolidated financial information includes the accounts of our controlled subsidiaries, Miikana Therapeutics, Inc. (Miikana) and Cytokine Sciences, Inc. All intercompany balances and transactions have been eliminated in consolidation.

     The accompanying unaudited consolidated financial statements have been prepared in accordance with U. S. generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, such consolidated financial statements do not include all of the information and disclosures required by U. S. generally accepted accounting principles for complete financial statements. In the opinion of our management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2006 are not necessarily indicative of the results that may be expected for the year ending December 31, 2006. For further information, refer to our audited consolidated financial statements and footnotes thereto included in our Form 10-K for the year ended December 31, 2005.

2. Short-Term Investments

     Short-term investments consist primarily of corporate debt securities, all of which mature within one year. The Company has classified these investments as available for sale. Such securities are carried at aggregate cost which approximates market. The cost of securities sold is calculated using the specific identification method. Unrealized gains and losses on these securities, if any, are reported as accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity. There were no unrealized gains or losses as of March 31, 2006. Realized gains and losses and declines in value judged to be other than temporary on securities available for sale, if any, are included in operations. Short-term investments are principally uninsured and subject to normal credit risk.

3. Stock-Based Compensation

     The Company has adopted incentive and nonqualified stock option plans whereby 10,983,333 shares of the Company’s common stock were reserved for grants to various executive, scientific and administrative personnel of the Company as well as outside directors and consultants, of which 589,536 shares remain available for grant under the Company’s 2001 Long-term Incentive Plan as of March 31, 2006. Options granted under the plan generally vest over a period of up to four years, are not transferable and generally expire ten years from the date of grant.

     Effective January 1, 2006, the Company adopted the fair value recognition provisions of Statement 123 (revised 2004) “Share-Based Payment” (“SFAS 123R”) and interpretative literature within SEC Staff Accounting Bulletin No. 107, Share-Based Payment, (SAB 107), using the

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modified prospective transition method and therefore has not restated results for prior periods. Under this transition method, stock-based compensation expense for the three months ended March 31, 2006 includes compensation expense for all stock-based compensation awards granted prior to, but not yet vested as of January 1, 2006, based on the original grant date fair value estimated in accordance with the provisions of SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”). Stock-based compensation expense for all stock-based compensation awards granted after January 1, 2006 is based on the grant date fair value estimated in accordance with the provisions of SFAS 123R. The Company recognizes these compensation costs for stock options granted prior to January 1, 2006 on an accelerated method, and for stock options granted after January 1, 2006 the compensation costs are recognized based on a straight-line method over the requisite service period, which is generally the option vesting term ranging from three to four years. Prior to the adoption of SFAS 123R, the Company recorded stock-based compensation under Accounting Principles Board (“APB”) Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”).

     The Company uses the Black-Scholes-Merton valuation model to estimate the fair value of stock options granted to employees. Option valuation models, including Black-Scholes-Merton, require the input of highly subjective assumptions, and changes in the assumptions used can materially affect the grant date fair value of an award. These assumptions include the risk free rate of interest, expected dividend yield, expected volatility, and the expected life of the award.

     Expected Volatility—Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. The Company uses the historical volatility based on the weekly price observations of its common stock during the period immediately preceding the share-based award grant that is equal in length to the award’s expected term (up to a maximum of five years). EntreMed believes that historical volatility within the last five years represents the best estimate of future long term volatility.

     Risk-Free Interest Rate—This is the average interest rate consistent with the yield available on a U.S. Treasury note (with a term equal to the expected term of the underlying grants) at the date the option was granted.

     Expected Term of Options—This is the period of time that the options granted are expected to remain outstanding. EntreMed adopted SAB 107’s simplified method for estimating the expected term of share-based awards granted during the three months ending March 31, 2006.

     Expected Dividend Yield—EntreMed has never declared or paid dividends on its common stock and does not anticipate paying any dividends in the foreseeable future. As such, the dividend yield percentage is assumed to be zero.

     Forfeiture Rate—This is the estimated percentage of options granted that are expected to be forfeited or cancelled on an annual basis before becoming fully vested. The Company estimates the forfeiture rate based on historical forfeiture experience for similar levels of employees to whom options were granted.

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     Following are the weighted-average assumptions used in valuing the stock options granted to employees during the three-month periods ended March 31, 2006 and 2005:

	THREE MONTH PERIOD ENDED
	MARCH 31
	2006			2005
Expected volatility		103.40	%		121.00	%
Risk-free interest rate		4.75	%		4.00	%
Expected term of option	5 years			5 years
Forfeiture rate		5.00	%		0.00	%
Expected dividend yield		0.00	%		0.00	%

     A summary of the Company’s stock options and warrants granted to employees and directors and related information for the three months ended March 31, 2006 follows:

				Weighted
				Average
	Number of			Exercise
All Employee Options	Shares			Price
Outstanding at January 1, 2006		7,962,017		$	9.04
Granted		41,640			2.27
Exercised		(7,500	)		1.09
Expired		(66,668	)		15.00
Forfeited		—			—
Outstanding at March 31, 2006		7,929,489		$	8.97
Vested and expected to vest at March 31, 2006		7,921,104		$	9.25
Exercisable at March 31, 2006		6,761,613		$	10.07

     As of March 31, 2006, there was approximately $2 million of total unrecognized compensation cost related to nonvested employee stock options. That cost is expected to be recognized over a weighted-average period of up to four years.

     Cash received from option exercises under all share-based payment arrangements for the three months ended March 31, 2006 and 2005, was $11,456 and $150,095, respectively. Due to the availability of net operating loss carryforwards and research tax credits, tax deductions for option exercises were not recognized in the three months ended March 31, 2006.

     Total employee share-based compensation expense recognized for the three months ended March 31, 2006 are as follows:

	Three Months Ended
	March 31, 2006
Research and development		103,955
General and administrative		288,667
Share-based compensation expense	$	392,622
Net share-based compensation expense, per common share:
Basic and diluted	$	0.006

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     The following table illustrates the effect on net loss and net loss per share if the Company had applied the fair value recognition provision of Statement 123 to options granted under the Company’s stock option plans for the three months ended March 31, 2005. For purposes of this pro-forma disclosure, the value of the options is estimated using a Black-Scholes Merton option-pricing formula and amortized to expense over the options’ vesting periods.

	Three months ended
	March 31, 2005
Actual net loss	$	(5,456,468	)
Deduct: Stock-based employee compensation expense if SFAS No. 123 had been applied to all awards		(692,891	)
Add: Stock-based employee compensation included in reported net loss		—
Proforma net loss	$	(6,149,359	)
Dividend on Series A convertible preferred stock		(251,250	)
Proforma net loss per share available to common shareholders	$	(6,400,609	)
Net loss per share:
Basic and diluted — as reported	$	(.13	)
Basic and diluted — pro forma	$	(.15	)

4. Acquisition

     In January 2006 the Company acquired Miikana Therapeutics, a private biotechnology company. Pursuant to the Merger Agreement, EntreMed acquired all of the outstanding capital stock of Miikana Therapeutics, Inc. in exchange for 9.96 million shares of EntreMed common stock and the assumption of certain obligations. In addition, based on the success of the acquired pre-clinical programs, EntreMed may pay up to an additional $18 million upon the achievement of certain clinical and regulatory milestones. Such additional payments will be made in cash or shares of stock at EntreMed’s option. Through the acquisition we acquired rights to MCK-1 a Phase 2 clinical candidate licensed from Hoffman-LaRoche, Inc. (“Roche”) by Miikana in April 2005. Under the terms of the agreement Roche may be entitled to receive future payments upon successful completion of developmental milestones. We do not anticipate paying any of these milestones in 2006. Roche is also eligible to receive royalties on sales and certain one-time payments based on attainment of annual sales milestones. The Company has also acted as guarantor on the unpaid balance of approximately $1.5 million under a loan agreement with Venture Lending & Leasing IV, Inc. dated October 1, 2004. The final payment is due in October 2007.

     Miikana purchase price allocation

      Miikana is a development stage company, accordingly the acquisition of Miikana is treated as an asset purchase. In accordance with EITF 98-3 “Determining Whether a Nonmonetary Transaction Involves Receipt of Productive Asset or of a Business,” the purchase price was allocated to the tangible and intangible assets acquired and liabilities assumed based on our estimated fair values at the acquisition date. An independent third-party valuation firm was engaged to assist in determining the fair values of various research and development projects in Miikana’s pipeline that, as of the acquisition date, had not reached technological feasibility and had no alternative use. This valuation required the use of significant estimates and assumptions including but not limited to:

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• determining the timing and expected costs to complete the in-process projects,

• projecting regulatory approvals,

• estimating future cash flows from product sales resulting from in-process projects, and

• developing appropriate discount rates and probability rates by project.

     We believe the fair values assigned to the assets acquired and liabilities assumed are based upon reasonable assumptions given current available facts and circumstances.

     The total purchase price allocated was $29.7 million, consisting of 9,964,000 shares of our common stock with a fair value of $21.9 million, assumed debt of $1.5 million, assumed current liabilities of $2.3 million, $1 million loaned to Miikana prior to the closing and acquisition costs of $3 million. The fair value of common stock was determined using the closing price at the date of acquisition.

     We allocated the purchase price to the tangible assets and in-process research and development based on their estimated fair market values. The purchase price allocation was as follows:

Fair value of assets acquired	$	600,000
In-process research and development		29,100,000
Total	$	29,700,000

     The value of the in-process research and development was determined by estimating the expected cash flows from the projects once commercially viable, discounting the net cash flows back to their present value. A discount rate of 18.5% was used which approximates the cost of equity capital based on a composite of measures including, risk free rates, equity risk premiums, market capitalization and industry.

5. Licensing Agreement

     In January 2006 the Company entered into a License Agreement with Elan Corporation, plc in which EntreMed has been granted rights to utilize Elan’s proprietary NanoCrystal Technology to develop the oncology product candidate, Panzem^® NCD (2ME2 or 2-methoxyestradiol). Under the terms of the License Agreement, Elan is eligible to receive payments upon the achievement of certain clinical, manufacturing, and regulatory milestones. Milestones related to the initiation of Phase 2 clinical trials have been paid and there are no additional milestones due at this time. Additionally, Elan will receive royalty payments based on sales of Panzem^® NCD. Under the License Agreement and corresponding Services Agreement, Elan will manufacture EntreMed’s Panzem^® NCD, a NanoCrystal Technology formulation with improved bioavailability and absorption.

6. Sale of Securities

     In February 2006 the Company entered into definitive agreements with institutional investors for the private placement of units consisting of shares of common stock and warrants at a purchase price of $2.3125 per unit. In connection with the placement, the Company received gross proceeds

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of approximately $30 million and issued approximately 13 million shares of common stock and warrants to purchase up to 6.5 million additional shares of common stock at an exercise price of $2.50 per share. The warrants are not exercisable until six months after the closing. In April 2006, the Company registered the resale of the shares and the shares underlying the warrants.

7. Related Party Transactions

     The Company receives legal services from a law firm with which one of the Company’s officers is associated. During the three months ended March 31, 2006 these services totaled $278,000, the majority representing patent work. These costs are recorded as research and development expenses of $208,000, general and administrative expenses of $54,000 and costs related to the Miikana acquisition of $16,000. At March 31, 2006 amounts payable to these parties are reflected on our balance sheet as payable to related parties in the amount of $189,000. The Company completed a sale of common stock and warrants in February 2006. Celgene Corporation, the Company’s largest shareholder, acquired 864,864 shares of common stock and 432,432 warrants convertible into shares of common stock in the transaction (see footnote 6).

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

OVERVIEW

     We are a clinical-stage pharmaceutical company focused on developing next generation multi-mechanism oncology and anti-inflammatory drugs that target disease cells directly and the blood vessels that nourish them. We are focused on developing drugs that are safe and convenient, and provide the potential for improved patient outcomes. Panzem^® (2-methoxyestradiol or 2ME2), one of our lead drug candidates, is currently in Phase 2 clinical trials for cancer, as well as in preclinical development for rheumatoid arthritis. MKC-1, a novel cell cycle inhibitor acquired through the acquisition of Miikana Therepeutics, is also in Phase 2 clinical trials for cancer. We also recently announced that ENMD-1198, a novel tubulin binding agent discovered by EntreMed, commenced a Phase 1 clinical trial for cancer.

     In January 2006, we acquired Miikana Therepeutics, Inc., a clinical-stage biopharmaceutical company with research laboratories in Toronto, Canada. As a result of the transaction, we enhanced our pipeline with the addition of a Phase 2 drug candidate, MKC-1, and two preclinical programs, one in aurora kinase inhibition and one in HDAC inhibition.

     Our goal is to develop and commercialize therepeutics based on our scientific expertise in angiogenesis, cell cycle regulation and inflammation — processes vital to the progression of cancer and other diseases. Our three product candidates are based on these mechanisms. Our expertise has also led to the identification of new molecules, including new chemical entities derived from 2ME2, modulators of fibroblast growth factor-2 (FGF-2) activity, proteinase activated receptor-2 (PAR-2) antagonists, and tissue factor pathway inhibitor (TFPI) peptides.

     In order to further advance of our commercial objectives, we may seek strategic alliances, licensing relationships and co-development partnerships with other companies to develop compounds for both oncology and non-oncology therapeutic areas.

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CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES

     The preparation of our financial statements in conformity with accounting principles generally accepted in the U.S. requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actual results could differ materially from those estimates. Our critical accounting policies, including the items in our financial statements requiring significant estimates and judgments, are as follows:

- Revenue Recognition — The Company recognizes revenue in accordance with the provisions of Staff Accounting Bulletin No. 104, Revenue Recognition, whereby revenue is not recognized until it is realized or realizable and earned. Revenue is recognized when all of the following criteria are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price to the buyer is fixed and determinable and collectibility is reasonably assured.

- Royalty Revenue — Royalties from licenses are based on third-party sales and recorded as earned in accordance with contract terms, when third-party results are reliably measured and collectibility is reasonably assured. We expect that the majority of our 2006 revenues will be from royalties on the sale of Thalomid^®, which we expect to begin to recognize in the third quarter. In 2004 certain provisions of a purchase agreement dated June 14, 2001 by and between Bioventure Investments kft (“Bioventure”) and the Company were satisfied, and, as a result, beginning in 2005 we are entitled to share in the royalty payments received by Royalty Pharma Finance Trust, successor to Bioventure, on annual Thalomid^® sales above a certain threshold. Based on the licensing agreement royalty formula, annual royalty sharing commences with Thalomid^® annual sales of approximately $225 million. The Company is eligible to receive royalty payments under a February 2004 agreement with Children’s Medical Center Corporation (“CMCC”) and Alchemgen Therapeutics. Under the agreement, Alchemgen received rights to market endostatin and angiostatin in Asia. We do not expect to receive royalties under this agreement in 2006. In the future, royalty payments, if any, will be recorded as revenue when received and/or when collectibility is reasonably assured.

- Research and Development — Research and development expenses consist primarily of compensation and other expenses related to research and development personnel, research collaborations, costs associated with pre-clinical testing and clinical trials of our product candidates, including the costs of manufacturing the product candidates, and facilities expenses. Research and development costs are expensed as incurred.

- Stock-Based Compensation — Issued in December 2004, Statement of Financial Accounting Standards No. 123R (“SFAS 123R”) requires public companies to recognize expense associated with share-based compensation arrangements, including employee stock options and stock purchase plans, using a fair value-based option pricing model, and eliminates the alternative to use the intrinsic value method of accounting for share-based payments. SFAS 123R is effective for our fiscal year beginning January 1, 2006. Adoption of the expense provisions of SFAS 123R have a material impact on our results of operations. We have applied the modified prospective transition method; accordingly, compensation expense is reflected in the financial statements beginning January 1, 2006 with no restatement of prior

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periods. Compensation expense is recognized for awards that are granted, modified, repurchased or cancelled on or after January 1, 2006, as well as for the portion of awards previously granted that have not vested as of January 1, 2006. For the adoption of SFAS 123R, we have selected the straight-line expense attribution method, whereas our previous expense attribution method was the graded-vesting method, an accelerated method, described by FIN 28.

     Any future changes to our share-based compensation strategy or programs would likely affect the amount of compensation expense recognized under SFAS 123R and the comparability to our prior period footnote disclosures of pro forma net earnings and earnings per share. Share-based compensation expense recognized in Q1 2006 totaled $393,000.

RESULTS OF OPERATIONS

For the Three Months Ended March 31, 2006 and March 31, 2005.

     - Revenues. There were no revenues recorded during the quarter ended March 31, 2006 compared to $25,000 in the corresponding 2005 period. We do not expect to record revenue in 2006 until the third quarter. Our 2006 revenues, if any, will result from Celgene’s sale of Thalomid^®. We earn royalties pursuant to a 2001 agreement with Royalty Pharma, as noted above.

     Research and Development Expenses. From inception through March 31, 2006, we have incurred research and development expenses of $242,491,000. At March 31, 2006, accumulated direct project expenses for Panzem^®, our lead drug candidate, totaled $36,574,000. Reflected in our R&D expenses totaling $4,011,000 for the three-month period ended March 31, 2006 are direct project expenses for Panzem^® of $1,280,000, $414,000 related to ENMD-1198, a tubulin binding agent that recently entered Phase 1 trials for cancer, and $432,000 related to MKC-1, a Phase 2 clinical candidate acquired with Miikana in January 2006. Research and development expenses for the corresponding 2005 period were $4,379,000, which included $1,380,000 direct project expenses for Panzem^® and $810,000 related to ENMD-1198. There were no Miikana costs reported in 2005. The 2006 decrease results primarily from the recording of a $1,000,000 upfront licensing fee in the period ended March 31, 2005 related to the license of Celgene’s small molecule tubulin inhibitor compounds.

     The balance of our R&D expenditures includes facilities costs and other departmental overhead, and expenditures related to the advancement of our pre-clinical pipeline. These costs totaled $1,885,000 and $1,189,000 for the three-month period ended March 31, 2006 and 2005, respectively. The 2006 increase is primarily attributable to the Miikana asset acquisition.

     The expenditures that will be necessary to execute our business plan are subject to numerous uncertainties, which may adversely affect our liquidity and capital resources. As of March 31, 2006, we have two product candidates, Panzem^® NCD and MKC-1, in Phase 2 clinical trials for cancer. We expect our R&D expenses to trend higher reflecting the costs of supporting multiple Phase 2 trials including the costs of securing clinical drug supply. In addition, ENMD-1198 recently commenced Phase 1 clinical trials in cancer. Completion of clinical trials may take several years or more, but the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product candidate.

13

     We estimate that clinical trials of the type we generally conduct are typically completed over the following timelines:

	ESTIMATED
	COMPLETION
CLINICAL PHASE	PERIOD
Phase I	1 Year
Phase II	1-2 Years
Phase III	2-4 Years

     The duration and the cost of clinical trials may vary significantly over the life of a project as a result of differences arising during the clinical trial protocol, including, among others, the following:

- the number of patients that ultimately participate in the trial;

- the duration of patient follow-up that seems appropriate in view of the results;

- the number of clinical sites included in the trials; and

- the length of time required to enroll suitable patient subjects.

     We test our potential product candidates in numerous pre-clinical studies to identify indications for which they may be product candidates. We may conduct multiple clinical trials to cover a variety of indications for each product candidate. As we obtain results from trials, we may elect to discontinue clinical trials for certain product candidates or for certain indications in order to focus our resources on more promising product candidates or indications.

     Our proprietary product candidates also have not yet achieved FDA regulatory approval, which is required before we can market them as therapeutic products. In order to proceed to subsequent clinical trial stages and to ultimately achieve regulatory approval, the FDA must conclude that our clinical data establish safety and efficacy. Historically, the results from pre-clinical testing and early clinical trials have often not been predictive of results obtained in later clinical trials. A number of new drugs and biologics have shown promising results in clinical trials, but subsequently failed to establish sufficient safety and efficacy data to obtain necessary regulatory approvals.

     An important element of our business strategy is to pursue the research and development of a range of product candidates for a variety of oncology and non-oncology indications. This allows us to diversify the risks associated with our research and development expenditures. As a result, we intend to pursue development of our existing product candidates internally or through development partnerships, as well as through the acquisition and subsequent development of promising candidates. The goal is to align our future capital requirements with multiple product candidates and to increase the likelihood that our future financial success is not substantially dependent on any one product candidate. To the extent we are unable to maintain a broad range of product candidates, our dependence on the success of one or a few product candidates would increase.

14

     Furthermore, our business strategy includes the option of entering into collaborative arrangements with third parties to complete the development and commercialization of our products. In the event that third parties take over the clinical trial process for one of our product candidates, the estimated completion date would largely be under the control of that third party rather than us. We cannot forecast with any degree of certainty which proprietary products or indications, if any, will be subject to future collaborative arrangements, in whole or in part, and how such arrangements would affect our capital requirements.

     As a result of the uncertainties discussed above, among others, we are unable to estimate the duration and completion costs of our research and development projects. Our inability to complete our research and development projects in a timely manner or our failure to enter into collaborative agreements, when appropriate, could significantly increase our capital requirements and could adversely impact our liquidity. These uncertainties could force us to seek additional, external sources of financing from time to time in order to continue with our business strategy. Our inability to raise additional capital, or to do so on terms reasonably acceptable to us, would jeopardize the future success of our business.

     Research and development expenses consist primarily of compensation and other expenses related to research and development personnel, research collaborations, costs associated with internal and contract pre-clinical testing and clinical trials of our product candidates, including the costs of manufacturing the product candidates, and facilities expenses. Research and development expenses decreased to $3,907,000 in the quarter ended March 31, 2006 from $4,379,000 for the corresponding period in 2005. The 2006 expenses include Miikana research and development costs of $914,000; however the decrease in 2006 primarily results from the recording of a $1,000,000 upfront fee associated with the license of Celgene’s small molecule tubulin inhibitor compounds for the treatment of cancer in the corresponding 2005 period. In addition to the absence of the licensing fee, the overall decrease in R&D expenses during the quarter ended March 31, 2006 was specifically impacted by the following:

- Outside Services — We utilize outsourcing to conduct our product development activities. Larger-scale small molecule synthesis, in vivo testing and data analysis are examples of the services that we outsource. In the three-month period ended March 31, 2006, EntreMed expended $338,000 on these activities versus $482,000 in the same 2005 period. The decrease reflects the progression of ENMD-1198 from the preclinical to the clinical stage of development. The 2006 expense includes $35,000 related to Miikana’s outside services.

- Collaborative Research Agreements — EntreMed made payments to collaborators of $201,000 and $105,000 for the three months ended March 31, 2006 and 2005, respectively. Our collaborative efforts are primarily directed towards further exploration of 2ME2 mechanism-of-action (MOA) and Panzem^Ò non-oncology applications. The 2006 expense includes $85,000 related to Miikana’s collaborative efforts in regard to MKC-1.

- Clinical Trial Costs — Clinical trial costs increased to $475,000 in the three months ended March 31, 2006, from $201,000 in the three-month period ended March 31, 2005. The increase reflects the initiation of Phase 2 clinical trials for Panzem^Ò NCD, in addition to $161,000 related to the initiation of Phase 2 clinical trials for MKC-1. Costs of such trials include the clinical site fees, monitoring costs and data management costs.

15

- Contract Manufacturing Costs — The costs of manufacturing the material used in clinical trials for our product candidates is reflected in contract manufacturing. These costs include bulk manufacturing, encapsulation and fill and finish services, and product release costs. Contract manufacturing costs for the three months ended March 31, 2006 decreased to $774,000 from $879,000 during the same period in 2005. Included in the 2006 amount is $73,000 related to the encapsulation of material for the Phase 2 trials for MKC-1. The 2006 decrease results from the timing of manufacturing activities.

     Also reflected in our 2006 research and development expenses for the three-month period ended March 31, 2006 are personnel costs of $1,135,000, patent costs of $225,000 and facility and related expenses of $341,000, including Miikana’s expenses of $389,000, $46,000 and $20,000, respectively. In the corresponding 2005 period, these expenses totaled $735,000, $121,000 and $336,000, respectively.

     Our 2005 research and development expenses for the three-month period ended March 31, 2005 also include an upfront payment of $1,000,000 to Celgene Corporation for the license of tubulin inhibitor compounds. In connection with this license agreement, we paid a $200,000 success fee to Ferghana Partners, Inc.

     General and Administrative Expenses. General and administrative expenses include compensation and other expenses related to finance, business development and administrative personnel, professional services and facilities.

     General and administrative expenses increased to $1,865,000, including Miikana’s expenses of $239,000, in the three-month period ended March 31, 2006 from $1,260,000 in the corresponding 2005 period. In addition to Miikana’s general and administrative expenses, the increase relates to the recording of stock-based compensation in the amount of $289,000, pursuant to the adoption of SFAS 123R.

     Investment income. Investment income increased by 76% in the three-month period ended March 31, 2006 to $278,000 from $158,000 in the corresponding 2005 period as a result of higher yields on higher invested balances in interest bearing cash accounts and investments during the 2006 period.

     Dividends on Series A convertible preferred stock. The Consolidated Statement of Operations for the periods ended March 31, 2006 and 2005 reflect a dividend of $251,250 relating to Series A Convertible Preferred Stock held by Celgene pursuant to a Securities Purchase Agreement dated December 31, 2002. The holders of Series A Preferred Stock will accumulate dividends at a rate of 6% and will participate in dividends declared and paid on our common stock, if any. All accumulated dividends must be paid before any dividends may be declared or paid on the common stock. The Company has no plans to pay any dividends in the foreseeable future.

LIQUIDITY AND CAPITAL RESOURCES

     To date, we have been engaged primarily in research and development activities. As a result, we have incurred and expect to continue to incur operating losses for 2006 and the foreseeable future before we commercialize any products. Under the terms of the license agreements for 2ME2 and Celgene’s tubulin inhibitor program, we must be diligent in bringing potential products to market

16

and may be required to make future milestone payments totaling approximately $850,000 and $25.25 million, respectively. In addition, pursuant to the MKC-1 license agreement with Roche, we may be required to make payments based upon the attainment of certain milestones. If we fail to comply with the milestones or fail to make any required sponsored research or milestone payment, we could face the termination of the relevant license agreement. As of March 31, 2006, none of these milestones have been reached and, as such, there are no payments due.

     In February 2006, we raised gross proceeds of approximately $30 million through the sale of units consisting of warrants and shares of common stock. At March 31, 2006, we had cash and short term investments of approximately $50 million with working capital of approximately $45 million.

     We invest our capital resources with the primary objective of capital preservation. As a result of trends in interest rates, we have invested in some securities with maturity dates of more than 90 days to enhance our investment yields. As such, some of our invested balances are classified as short-term investments rather than cash equivalents in our unaudited consolidated financial statements at March 31, 2006.

     To accomplish our business plans, we will be required to continue to conduct substantial development activities for some or all of our proposed products. The acquisition of Miikana Therapeutics in January 2006 provides an additional product pipeline, including MKC-1, a cell cycle regulator, which entered Phase 2 oncology trials in January 2006. In conjunction with the acquisition, we assumed certain separation obligations totaling approximately $500,000. Under our current operating plans, which include supporting two Phase 2 and one Phase 1 clinical trials for oncology compounds, we expect our 2006 results of operations to reflect a net loss of approximately $60 million which reflects non-cash charges of $29,100,000 associated with the Miikana asset acquisition and $2 million pursuant to the adoption of SFAS 123R. This projection is subject to judgment and estimation and could significantly change. We expect that the majority of our 2006 revenues will continue to be from royalties on the sale of Thalomid^®. Based on historical trend and analyst consensus for Thalomid^® sales in 2006, we expect to record royalty sharing revenues in excess of $3 million in 2006; however, there can be on assurance in this regard. In addition, under our licensing agreement with Oxford Biomedica, PLC and Oxford Biomedica (UK) Limited Oxford, we are entitled to receive payments upon the achievement of certain milestones. However, we do not control the drug development efforts of Oxford and have no control over when or whether such milestones will be reached. We do not believe that we will receive any developmental milestone payments under these agreements in 2006.

     Based on our assessment of our current capital resources coupled with anticipated inflows, in the absence of additional financing, we believe that we will have adequate resources to fund planned operations for more than twelve months. Our estimate may change, however, based on our decisions with respect to future clinical trials related to our three clinical drug candidates, the timing of receipt of milestone payments, developments in our business including the acquisition of additional intellectual property, other investments in new or complementary technology, and our success in executing our current business plan.

     To address our long-term capital needs we intend to continue to pursue strategic relationships that would provide resources for the further development of our product candidates. There can be no assurance, however, that these discussions will result in relationships or additional funding. In

17

addition, we may continue to seek capital through the public or private sale of securities, if market conditions are favorable for doing so. If we are successful in raising additional funds through the issuance of equity securities, stockholders will likely experience substantial dilution, or the equity securities may have rights, preferences or privileges senior to those of the holders of our common stock. If we raise funds through the issuance of debt securities, those securities would have rights, preferences and privileges senior to those of our common stock. There can be no assurance that we will be successful in seeking additional capital.

INFLATION AND INTEREST RATE CHANGES

     Management does not believe that our working capital needs are sensitive to inflation and changes in interest rates.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     The primary objective of our investment activities is to preserve our capital until it is required to fund operations while at the same time maximizing the income we receive from our investments without incurring investment market volatility risk. Our investment income is sensitive to the general level of U.S. interest rates. In this regard, changes in the U.S. interest rates affect the interest earned on our cash and cash equivalents. Due to the short-term nature of our cash and cash equivalent holdings, a 10% movement in market interest rates would not materially impact on the total fair market value of our portfolio as of March 31, 2006.

ITEM 4. CONTROLS AND PROCEDURES

     The Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the first quarter of 2006. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in ensuring that the Company (including its consolidated subsidiaries) records, processes, summarizes and reports information it is required to disclose in its Exchange Act filings within the required time periods.

     There was no change in the Company’s internal control over financial reporting that occurred during the first quarter of 2006 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     EntreMed is subject in the normal course of business to various legal proceedings in which claims for monetary or other damages may be asserted. Management does not believe such legal proceedings, except as otherwise disclosed herein, are material.

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ITEM 1A. RISK FACTORS

     For information regarding factors that could affect the Company’s results of operations, financial condition and liquidity, see the risk factors discussion set forth in Item 1A of EntreMed’s Annual Report on Form 10-K for the fiscal year ended December 31, 2005 and the information under “Special Note Regarding Forward-Looking Statements” included in this report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

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

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable.

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ITEM 6.   EXHIBITS

Exhibits
2.1	Agreement and Plan of Merger By and Among EntreMed Inc., E.M.K. Sub Inc., Miikana Therapeutics Inc., and Stockholder Representative, effective December 22, 2005 (filed on December 23, 2005 as Exhibit 2.1 to the Company’s Current Report on Form 8-K and incorporated herein by reference)
10.1	License Agreement By and Between Elan Pharma International Ltd., and EntreMed Inc., effective January 9, 2006*
10.2	Research, Development, and Commercialization Agreement By and Between Hoffmann-La Roche Inc., F. Hoffmann-La Roche Ltd., and Miikana Therapeutics Inc., effective April 20, 2005*
31.1	Rule 13a-14(a) Certification of President and Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer

* Certain portions of this exhibit have been omitted based upon a request for confidential treatment. The omitted portions have been filed with the Commission pursuant to our application for confidential treatment.

20

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.

	ENTREMED, INC.
	(Registrant)
Date: May 10, 2006	/s/ James S. Burns
	James S. Burns
	President and Chief Executive Officer
Date: May 10, 2006	/s/ Dane R. Saglio
	Dane R. Saglio
	Chief Financial Officer

21

EXHIBIT INDEX

2.1	Agreement and Plan of Merger By and Among EntreMed Inc., E.M.K. Sub Inc., Miikana Therapeutics Inc., and Stockholder Representative, effective December 22, 2005 (filed on December 23, 2005 as Exhibit 2.1 to the Company’s Current Report on Form 8-K and incorporated herein by reference)
10.1	License Agreement By and Between Elan Pharma International Ltd., and EntreMed Inc., effective January 9, 2006
10.2	Research, Development, and Commercialization Agreement By and Between Hoffmann-La Roche Inc., F. Hoffmann-La Roche Ltd., and Miikana Therapeutics Inc., effective April 20, 2005
31.1	Rule 13a-14(a) Certification of President and Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer

22

EX-10.1

Exhibit 10.1

EXECUTION COPY

ELAN PHARMA INTERNATIONAL
LIMITED

AND

ENTREMED, INC.

LICENSE AGREEMENT

INDEX

1.	Definitions and Interpretation	1
2.	The License	7
3.	Intellectual Property	8
4.	Non-Competition	15
5.	Registration, Marketing and the Promotion of the Product	15
6.	Financial Provisions	15
7.	Manufacture and Supply	18
8.	Payments, Reports and Audits	19
9.	Duration and Termination	19
10.	Consequences of Termination	21
11.	Warranties, Indemnification and Liability	22
12.	Confidentiality	25
13.	Miscellaneous Provisions	26
Schedule 1	EPIL Patents	31
Schedule 2	EntreMed Patents	39
Schedule 3	Technological Competitors	40
Schedule 4	Commercial Unit Dose Cost of Goods Pricing	41
Schedule 5	Key Terms for Manufacturing and Supply Agreement	42
i

THIS LICENSE AGREEMENT is dated January 9, 2006

PARTIES:

(1)	ELAN PHARMA INTERNATIONAL LIMITED, a company incorporated under the laws of Ireland, having its registered office at Monksland, Athlone, Co Westmeath, Ireland (“EPIL”); and
(2)	ENTREMED, INC., a Delaware corporation, having its principal place of business at 9640 Medical Center Drive, Rockville, MD 20850 (“EntreMed”).

BACKGROUND:

(A)	EPIL possesses certain proprietary technology as well as proprietary know-how and confidential information used or useful in the manufacture and use of pharmaceutical products containing nanoparticles.
(B)	EntreMed possesses certain rights to intellectual property rights covering the Compound (as defined below).
(C)	EntreMed wishes to obtain the right to utilize certain EPIL Intellectual Property to commercialize the Product in the Field in the Territory in accordance with the terms and conditions set out below.
(D)	Simultaneously with or shortly after the execution of this Agreement, EntreMed intends to enter into a Services Agreement with EDDI, an EPIL Affiliate, that will contain a Development Plan for further research and development of the Product and that will grant EDDI the exclusive right to supply the Product to EntreMed for preclinical, clinical and regulatory purposes.
(E)	Following the execution of this Agreement and the Services Agreement, EPIL and EntreMed intend to enter into a Manufacturing and Supply Agreement that will establish the terms by which EPIL or an Affiliate will manufacture and supply to EntreMed its entire requirement of the Product for commercial supply in the Territory.

TERMS:

The Parties agree as follows:

1.	DEFINITIONS AND INTERPRETATION
1.1.	Definitions. In this Agreement:
	“Affiliate” means any corporation or entity controlling, controlled or under common control with EPIL or EntreMed, as the case may be. For the purposes of this Agreement, “control” means the direct or indirect ownership of more than 50% of the issued voting shares or other voting rights of the subject entity to elect directors, or if not meeting the preceding criteria, any entity owned or controlled by or owning or controlling at the maximum control or ownership right permitted in the country where such entity exists.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 1

“Agreement” means this license agreement (which expression shall be deemed to include its Recitals and Schedules).

“API” means active pharmaceutical ingredient.

“Business Days” means Monday to Friday inclusive, excluding any days on which the clearing banks are generally closed in Dublin and/or New York.

“cGMP” means the then current regulations set forth in 21 C.F.R. Parts 210-211, 820 or 21 C.F.R. Subchapter C (drugs) quality system regulations and the requirements thereunder imposed by the FDA and, as applicable, the equivalent regulations and requirements imposed by other RHAs in the Territory.

“Claims” means all and any claims (whether successful or otherwise), demands, settlement amounts, losses, liabilities, damages, costs and expenses, including reasonable attorneys’ fees and expenses and legal costs.

“Commercially Reasonable Efforts” means those efforts of a party which are consistent with those utilised by such party for its own internally developed or in-licensed pharmaceutical products, taking into account all factors that impact the manufacturing, development, marketing and sales of such products, as applicable.

“Compound” means EntreMed’s proprietary compound 2-methoxyestradiol (2ME2) having the following chemical formula:

For the avoidance of doubt, Compound does not include any analogs or derivatives of 2ME2 including, but not limited to, EntreMed compound ENMD-1198.

“Compound Data” means data relating to the Compound generated by EntreMed or EDDI pursuant to the Services Agreement and/or Development Plan.

“CSA” means the Clinical Supply Agreement dated July 12, 2004, as amended, entered into by EntreMed and EDDI including all of its appendices, schedules and exhibits thereto related to the Compound.

“DDP” (delivery duty paid) shall have the same meaning as in the ICC Incoterms 2000, International Rules for the Interpretation of Trade Terms, ICC Publications No. 560.

“Development Plan” shall have the meaning ascribed thereto in the Services Agreement.

“DMF” or “Drug Master File” means any confidential detailed information submitted by EPIL, EDDI or its Affiliates to any RHA in the Territory about any facilities, processes or articles that

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 1

are used by EPIL, EDDI or its Affiliates in the manufacture, processing, packaging or storage of the Product.

“EDDI” means EPIL’s Affiliate, Elan Drug Delivery, Inc., a Delaware Corporation, having its principal place of business at 3000 Horizon Drive, King of Prussia, PA 19406.

“EEA” means the member states of the European Economic Area, as the same may change from time to time.

“Effective Date” means the date of this Agreement as set forth in the header on page 1 herein.

“EntreMed Improvements” means any and all improvements under the EntreMed Patents, the EntreMed Know-How and/or to the Compound that have been conceived, created, developed and/or otherwise invented by EntreMed or its Affiliates and/or EPIL or its Affiliates and such Parties’ Third Party contractors under the Services Agreement, or otherwise pursuant to this Agreement, the Manufacture and Supply Agreement, the CSA, the MEEA or the Letter Agreement.

“EntreMed Intellectual Property” means the EntreMed Know-How, the EntreMed Patents and the EntreMed Improvements and the Compound.

“EntreMed Know-How” means any and all rights owned, licensed or controlled by EntreMed or its Affiliates as of the Effective Date (otherwise than pursuant to the EPIL License) to any scientific, pharmaceutical or technical information, data, discovery, invention (whether patentable or not), know-how, substances, techniques, processes, systems, formulations and designs and expertise relating to the Compound which is not generally known to the public.

“EntreMed Patents” means any and all rights under any and all patent applications and/or patents, now existing, currently pending or hereafter filed, or acquired or licensed by EntreMed or its Affiliates relating to the Compound, including without limitation as set forth in Schedule 2, and any foreign counterparts thereof and all divisionals, continuations, continuations-in-part, any foreign counterparts thereof and all patents issuing on any of the foregoing and any foreign counterparts thereof, together with all registrations, reissues, re-examinations, supplemental protection certificates, or extensions thereof, and any foreign counterparts thereof.

“EntreMed Trademark” means EntreMed’s rights to use the trademark(s) Panzem® or such other trademarks as EntreMed may from time to time reasonably specify.

“EPIL Improvements” means     *                            any and all improvements to the EPIL Patents, the EPIL Know-How, the EPIL Technology     *                            that have been conceived, created, developed and/or otherwise invented by EPIL or its Affiliates and/or EntreMed or its Affiliates and such Parties’ Third Party contractors under the Services Agreement, or otherwise pursuant to this Agreement, the Manufacture and Supply Agreement, the CSA, the MEEA or the Letter Agreement.

“EPIL Intellectual Property” means the EPIL Know-How, the EPIL Patents and the EPIL Improvements.

“EPIL Know-How” means any and all rights owned, licensed or controlled by EPIL or its Affiliates as of the Effective Date to any scientific, pharmaceutical or technical information, data, discovery, invention (whether patentable or not), know-how, substances, techniques, processes,

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 2

systems, formulations, designs and expertise relating to the EPIL Technology which is not generally known to the public.

“EPIL Patents” means any and all rights under any and all patent applications and/or patents, now existing, currently pending or hereafter filed by EPIL relating to the EPIL Technology, including without limitation as set forth in Schedule 1, and any foreign counterparts thereof and all divisionals, continuations, continuations-in-part, any foreign counterparts thereof and all patents issuing on any of the foregoing, and any foreign counterparts thereof, together with all registrations, reissues, re-examinations, supplemental protection certificates, or extensions thereof, and any foreign counterparts thereof.

“EPIL Technology” means EPIL’s proprietary technology directed to:

(a) nanoparticulate colloidal dispersions of compounds stabilized against agglomeration of the nanoparticles and EPIL’s proprietary methods, equipment and materials used for making such dispersions (such technology is commonly referred to by EPIL as NanoCrystal® Technology); and

(b) EPIL’s proprietary processes for converting said dispersions into intermediates and/or finished tablet or capsule formulations and the intermediates, tablets and capsules created using such proprietary processes including the NanoMill® System; and

as more fully described in the EPIL Patents and applied in the EPIL Know-How.

“EPIL Trademark” means “NanoCrystal^®”, “NanoMill^®” or such other trademarks as EPIL may from time to time reasonably specify.

“EU” means the member states of the European Union, as same may change from time to time in terms of member states.

“EXW” (ex works) has the same meaning as in the ICC Incoterms 2000, International Rules for the Interpretation of Trade Terms, ICC Publication No. 560.

“FDA” means the United States Food and Drug Administration or any other successor agency whose approval is necessary to market the Product in the US.

“Field” means oral prescription pharmaceutical products for use in humans. Diagnostics are specifically excluded.

“Force Majeure” means any cause or condition beyond the reasonable control of the Party obliged to perform, including acts of God, acts of government (in particular with respect to the refusal to issue necessary import or export licenses), fire, flood, earthquake, war, riots or embargoes or strikes affecting a Party.

“Generic” means each generic version of Product that is legally substitutable for the Product as follows: (i) in the US, is approved under 21 U.S.C. 505(j) (or any successor legislation) or which has an “AB” rating with respect to Product; (ii) in the EU, is authorised to be placed on the market in accordance with Article 10 of Directive 2001/83/EC as amended (when implemented by such member states) by Directive 2004/27 (or any successor legislation); (iii) in countries of the Territory other than the US and the EU where such pharmaceutical product: (a) contains the same active pharmaceutical ingredients as Product; (b) is approved by an abridged procedure that

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 3

relies in whole or in part on safety and efficacy data generated for any approval of Product; and (c) has the same or substantially the same labelling as the Product.

“Governmental Authority” means all governmental and regulatory bodies, agencies, departments or entities, which regulate, direct or control commercial and other related activities in the Territory.

“Highly Confidential Information” shall have the meaning ascribed thereto in the Services Agreement.

“ICH” means the International Conference on Harmonization.

“ICH Qualifying Batch” means batches of Product intended for stability studies to support registration of the first commercial Product in the Territory.

“In Market” means the sale of the Product in the Territory by EntreMed, or where applicable, by a permitted sub-licensee, to an unaffiliated Third Party, such as a wholesaler, distributor, managed care organisation, hospital or pharmacy, and shall exclude the transfer pricing of the Product by one EntreMed Affiliate to another EntreMed Affiliate or a permitted sub-licensee.

“Letter Agreement” means the letter agreement entered into by EntreMed and EPIL dated May 9, 2005.

“Manufacturing and Supply Agreement” means the agreement that will be entered into by EntreMed and EPIL or its Affiliate, for the manufacture and supply of Product in the Field in the Territory by EPIL or its Affiliate to EntreMed.

“MEEA” means the Master Experimental Evaluation Agreement dated May 18, 2004 entered into by EntreMed and EDDI including all of its appendices, schedules and exhibits thereto related to the Compound.

“*                “

“NanoMill® System” means the milling system designed and developed by or on behalf of EPIL and its Affiliates for preparing nanoparticulate dispersions for pharmaceutical formulations, including the milling equipment and appropriate milling media and stabilizing materials, and associated manuals, protocols and know-how.

“NCD” means NanoCrystal^® colloidal dispersion.

“Net Sales” shall, subject to the provisions of Clause 6.7, mean in the case of Product sold by EntreMed, or by a sub-licensee, the aggregate gross In Market sales proceeds billed for the Product by EntreMed, or by a sub-licensee, as the case may be, in accordance with generally accepted accounting principles, less the following deductions relating to such sales, provided that all such deductions shall be commercially reasonable and consistent with standard industry practices and are actually paid and not recouped:

(i) trade, cash or quantity discounts, allowances, adjustments and rejections, and any other adjustments, including those granted on account of price adjustments, billing errors, rebates, chargeback rebates, fees, reimbursements or similar payments granted or given to

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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	wholesalers or other distributors, buying groups, health care insurance carriers or other institutions;
(ii)	rebates, recalls (other than where the Product is replaced without charge), returns, rejected goods and damages goods not covered by insurance;
(iii)	price reductions or rebates imposed by Governmental Authorities and any payment in respect of sales to any Governmental Authority in respect of any government-subsidized program, including Medicare and Medicaid rebates or other payments under managed care agreements;
(iv)	sales, excise, turnover, inventory, value-added and similar taxes assessed on the royalty-bearing sale of such Product, but not including any taxes on income paid by or assessed against EntreMed or a sub-licensee;
(v)	transportation, importation, shipping, insurance and other handling expenses directly chargeable to the royalty-bearing sale of the Product, but only to the extent that such expenses are separately delineated in the applicable invoices;
(vi)	chargebacks granted to drug wholesalers or their customers in cases where there are not direct shipments to such customers by EntreMed or its sublicense.

For the avoidance of doubt, costs associated with changes to packaging or labelling shall not be deducted from Net Sales.

“Party” or “Parties” means EPIL and its Affiliates or EntreMed or its Affiliates, individually or collectively, as referred to herein.

“Pivotal Study” means a clinical study whose primary objective is to obtain a definitive evaluation of the therapeutic efficacy and safety of the Product in patients for the particular indication in question.

“Post-Phase 1b Clinical Study” in this Agreement means any clinical study initiated post phase I.

“Product” means liquid, tablet or capsule formulations for oral administration being developed pursuant to the Development Plan that incorporate the EPIL Technology and contain the Compound as the sole active ingredient. For the avoidance of doubt, injectable formulations are specifically excluded from this Agreement.

“Prosecute” means in relation to a class of intellectual property:

(a)	to secure the grant of any patent application within such class;
(b)	to file and prosecute patent applications on patentable inventions and discoveries relating to that class;
(c)	to defend all such applications against Third Party oppositions; and
(d)	to maintain in force any issued letters patent relating to the same

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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and “Prosecution” has a corresponding meaning.

“Regulatory Application” means any regulatory application or any other application for marketing approval for the Product, which EntreMed will file with the FDA or with any other RHA in the Territory, including any supplements or amendments thereto which EntreMed may file.

“Regulatory Approval” means the final approval to market the Product in any country of the Territory, including pricing and reimbursement approval and any other approval which is required to launch the Product in the normal course of business.

“RHA” means any relevant government health authority (or any successor agency thereof) in any country of the Territory, including the FDA, whose approval is necessary to market and sell the Product in the relevant country of the Territory.

“Related Agreements” means the Services Agreement and the Manufacturing and Supply Agreement.

“Services Agreement” means the agreement, and all appendices, schedules, exhibits and amendments thereto, between EntreMed and EDDI that is signed simultaneously with this Agreement, or shortly thereafter, and that contains a Development Plan for EDDI to perform certain development activities for the formulation of the Product and such other services as may be agreed by the Parties.

“Technological Competitor” means a person or entity listed in Schedule 3, and divisions, subsidiaries and successors thereof                 *                . For this definition “competitors” shall mean companies that have or use technology that is directed to and/or suitable for providing substantially similar or comparable enhancements to the solubility characteristics of active pharmaceutical ingredients as those provided by EPIL Technology.

“Term” means the term of this Agreement, as set out in Clause 9.3 herein.

“Territory” means all of the countries of the world.

“Third Party” means any individual or entity not a Party to this Agreement other than an Affiliate of a Party.

“US” or “USA” means the United States of America and its possessions and territories, including but not limited to Puerto Rico.

“Valid Claim” means any claim of an issued and unexpired patent included within the EPIL Intellectual Property which has not been held unenforceable, unpatentable or invalid by a decision of a court or government agency of competent jurisdiction, that is unappealable or unappealed within the time allowed for appeal, or which has not expressly been admitted by the holder of the patent or supplementary protection certification to any person to be invalid or unenforceable.

“VAT” or “Value Added Tax” means (i) any tax imposed in compliance with the Sixth Directive of the Council of the European Communities (77/388/EEC) and (ii) any other tax of a similar

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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	fiscal nature, whether imposed in a member state of the European Union or anywhere else in the Territory.
	“$” and “US$” mean US Dollars.
1.2.	Further Definitions. In addition, the following definitions have the meanings in the Clauses corresponding thereto, as set forth below:

Definition	Clause
“Compensation Fee”	6.2
“Confidential Information”	12.1
“Designated Manufacturer”	7.3
“Disclosing Party”	12.14
“Due Date”	8.8
“EntreMed Logo”	3.6.1.2
“EPIL License”	2.1
“Extended Term”	9.2
“Firm”	3.5.5
“Infringement Claim”	3.4.1
“Initial Term”	9.1
“License Milestone Payments”	6.1
“Manufacturing License”	7.3
“Notice”	13.11.1
“Statement”	8.1
“Quality Agreement”	Schedule 5, paragraph 4

1.3. Interpretation. In this Agreement:

1.3.1	the singular includes the plural and vice versa, and unless the context or subject otherwise requires, references to words in one gender include references to the other genders;
1.3.2	unless the context otherwise requires, reference to a recital, article, paragraph, provision, clause or schedule is to a recital, article, paragraph, provision, clause or schedule of or to this Agreement;
1.3.3	the headings in this Agreement are inserted for convenience only and do not affect its construction; and
1.3.4	the expressions “include”, “includes”, “including”, “in particular” and similar expressions shall be construed without limitation.

2.

THE LICENSE

2.1.

EPIL License to EntreMed. Subject to the terms of this Agreement, EPIL hereby grants to EntreMed an exclusive license (the “EPIL License”) to the EPIL Intellectual Property to import, export, use, conduct clinical evaluations in support of Regulatory Applications, offer for sale, market, distribute and sell the Product in the Field in the Territory, subject to    *                                        . For the avoidance of doubt, the EPIL License shall not include the right to perform any

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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	formulation and/or process development activities for the Product unless this has been agreed pursuant to the Services Agreement.
2.2.	Sub-licensing. Subject to the prior written consent of EPIL which shall not be unreasonably withheld, delayed or conditioned, EPIL grants to EntreMed the right to grant sub-licenses in respect of the EPIL Intellectual Property to import, export, use, offer for sale, market, distribute and sell the Product in one or more countries of the Territory, subject to the following conditions:

2.2.1	Any sub-license granted shall be in the same terms as the terms of this Agreement insofar as they are applicable, mutatis mutandis, but excluding the right to grant a sub-license;
2.2.2	For the avoidance of doubt, EntreMed shall ensure that EPIL shall have the same rights of audit and inspection vis-à-vis a sub-licensee as EPIL has vis-à-vis EntreMed pursuant to this Agreement.
2.2.3	EntreMed shall be liable to EPIL and its Affiliates for all acts and omissions of any sub-licensee as though such acts and omissions were by EntreMed.
2.2.4	EntreMed shall not disclose any Confidential Information of EPIL or its Affiliates in its dealings with sublicensees without the prior written consent of EPIL, which consent shall not be unreasonably withheld or delayed.
*

3.	INTELLECTUAL PROPERTY
3.1.	Ownership of Intellectual Property.

3.1.1	EPIL shall remain the sole owner of the EPIL Intellectual Property.
3.1.2	EntreMed shall remain the sole owner of the EntreMed Intellectual Property.

3.2. Patent Prosecution and Maintenance.

3.2.1	EPIL, at its sole discretion and expense, may Prosecute the EPIL Intellectual Property in the Territory.
3.2.2	EntreMed, at its sole discretion and expense, may Prosecute the EntreMed Intellectual Property in the Territory.
3.2.3	Each Party shall provide the other with reasonable support in the Prosecution of the EPIL Intellectual Property and the EntreMed Intellectual Property in respect of any inventions that were developed under this Agreement or Related Agreements and shall provide all information and/or data in its possession that is reasonably necessary or proper to support any relevant patent application in the Territory. Further, the Parties shall execute and deliver all documents and instruments that are reasonably necessary or proper to support the Prosecution of the EPIL Intellectual Property and the EntreMed Intellectual Property as the other Party may request.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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3.3. Enforcement.

3.3.1	EPIL and EntreMed shall promptly inform each other in writing of any actual or alleged unauthorized use of the EPIL Intellectual Property or the EntreMed Intellectual Property by a Third Party of which it becomes aware and provide the other Party with any available evidence of such unauthorized use.
3.3.2	EPIL shall have the right to enforce for EPIL’s own benefit (including by agreement or by litigation) EPIL Intellectual Property at its own instigation. EntreMed shall reasonably cooperate with EPIL to enforce such rights. In the event such proceedings are related to the Product, EntreMed shall be kept advised at all times of such suit or proceedings brought by EPIL.
3.3.3	EntreMed shall have the right to enforce for EntreMed’s own benefit (including by agreement or through litigation) EntreMed Intellectual Property at its own instigation. EPIL shall reasonably cooperate with EntreMed to enforce such rights. In the event such proceedings are related to the Compound, EPIL shall be kept advised at all times of such suit or proceedings brought by EntreMed.

3.4. Infringement Claims.

3.4.1	Each of the Parties shall promptly notify the other Party in writing of any Claims made or brought against either of them alleging infringement or other unauthorised use of the proprietary rights of a Third Party arising from the manufacture, importation, use, offer for sale, sale or other commercialization of the Product in the Territory (“Infringement Claim”).
3.4.2.	EntreMed shall indemnify and hold harmless Elan against all Infringement Claims related to the manufacture, importation, use, offer for sale, sale or other commercialization of the Product in the Territory resulting from:

3.4.2.1

a breach by EntreMed of its representations and warranties set forth in Clauses 11.2.3 to 11.2.6; or

3.4.2.2

intellectual property which is owned by, licensed to (which for clarity does not include the EPIL License which is governed pursuant to other terms and conditions contained in this Agreement) or controlled by EntreMed, any Affiliate of EntreMed or a permitted sub-licensee in the country in question, or which is/was generated pursuant to some agreement between EntreMed (or an Affiliate or permitted sub-licensee) on the one hand and a Third Party on the other.

3.4.3	Subject to Clauses 3.4.4, 3.4.5 and 3.4.6, EPIL shall indemnify and hold harmless EntreMed against all Infringement Claims resulting from a breach by EPIL of its representations and warranties set forth in Clauses                *               ..
	For the avoidance of doubt, the parties agree that EntreMed shall indemnify and hold harmless EPIL against all claims (whether successful or otherwise), demands, settlement amounts, damages, losses, liabilities, costs and expenses

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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	(including reasonable attorneys’ fees) which may arise in connection with any Infringement Claim related to the manufacture, importation, use, offer for sale, sale or other commercialization of the Product in the Territory where such Infringement Claim does not result from a breach by EPIL of any of its representations or warranties set forth in Clauses *                        ..
3.4.4	Subject to Clause 3.4.5 and Clause 3.4.6, EPIL’s aggregate cumulative liability pursuant to Clause 3.4.3 (and/or under any other provision of this Agreement) in respect of those Infringement Claims for which EPIL is liable under Clause 3.4.3 shall not exceed certain limitations as follows:

3.4.4.1	*    % (    *     per cent)of any lump sum payment due to a Third Party as a result of a court order or settlement in respect of the Infringement Claim (including a claim for damages); and
3.4.4.2	*    % (    *     per cent) of any license fees due to a Third Party under any license entered into in accordance with Clause 3.5 (or as applicable, payments in the nature of a royalty on sales ordered to be paid to such Third Party by a court of competent jurisdiction in a final judgment under such an Infringement Claim).

3.4.5	EntreMed will be entitled to recover amounts due by EPIL to EntreMed under Clause 3.4.4 as a credit against the sums payable by EntreMed to EPIL under the provisions of Clause 6 during the Initial Term, provided however that the maximum credit which may be claimed by EntreMed will be     *    % (    *     per cent) of the sums otherwise payable in that quarter.
	Any deficit remaining in EntreMed’s recovery of amounts due by EPIL to EntreMed under Clauses 3.4.3 and 3.4.4 following recovery by EntreMed within the limitations set forth in this Clause 3.4.5 may be carried over to subsequent calendar quarters, subject always to the preceding paragraph. Any deficit at the end of the Initial Term shall be borne by EntreMed and EPIL shall have no liability to EntreMed in relation thereto.
	For the avoidance of doubt, EntreMed shall indemnify and hold harmless EPIL against all Infringement Claims to the extent that they are in excess of the limits set forth in Clause 3.4.4 and this Clause 3.4.5.
3.4.6	The Parties hereby agree that EntreMed shall consult with EPIL prior to making references to EPIL Intellectual Property in any proceedings and obtain EPIL’s permission to make such references, except to the extent required by applicable law. Save as specifically provided otherwise in this Clause 3.4, the provisions of Clause 11.7 shall apply as regards the conduct of any Infringement Claim.
	With reference to the provisions of Clause 11.7.4, EPIL and EntreMed shall consult as regards any actions EPIL or EntreMed proposes to take in order to mitigate any loss or liability in respect of any Infringement Claim, such as EntreMed ceasing to sell the Product, the Parties agreeing to modify the Product, or either or both of the Parties entering into a licensing or settlement negotiation with the Third Party.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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In the event that the Parties are unable to agree on such action, (1)     *                                                                                                                                                                                                                    and (2) EntreMed shall be entitled to take such action as it may reasonably consider expedient pursuant to the terms as set forth in Clause 3.5 herein. In the event that EntreMed fails to take such action as reasonably requested by EPIL, EntreMed shall indemnify and hold EPIL harmless against all Infringement Claims as they related to the manufacture,                                                                     *                                                                              of the Product in the Territory to the extent that they relate to the period after the date of the direction to take such action.

3.5. Third Party Licenses.

3.5.1	Notice. If EntreMed reasonably believes that the sale of Products would infringe the intellectual property rights of a Third Party unless a license is obtained from such Third Party, and that such infringement arises as a result of the incorporation of the EPIL Technology into the Product, EntreMed shall so inform EPIL by written notice, which shall include documents supporting EntreMed’s position and shall notify EPIL that it has thirty (30) days in which to respond.
3.5.2	Counter-Notice. EPIL shall have thirty (30) days to review the notice from EntreMed and to agree or disagree with EntreMed’s belief by written counter-notice. If EPIL disagrees with EntreMed’s belief, then EPIL shall provide EntreMed with documents supporting EPIL’s position. EntreMed shall have thirty (30) days from the date of receipt to review the documents from EPIL. Failure by EPIL to respond to EntreMed’s notice, or by EntreMed to respond to EPIL’s notice, shall be taken for the purposes of the decision as to whether to obtain a license under this Clause 3.5 (but for the avoidance of doubt, not for any other purpose whatsoever) as accession to the position of the other Party. The Parties agree that the time periods as set forth in this Clause 3.5.2 may be reasonably extended by the mutual written agreement of the Parties.
3.5.3	Use of Documents. All documents exchanged by the Parties shall be maintained in confidence and shall not be used for any other purpose than the resolution of the scope of a Third Party’s intellectual property rights as it pertains to the sale of a Product as set forth in this Agreement.
3.5.4	Resolution. If EPIL disagrees with EntreMed’s position pursuant to the terms as set forth in Clause 3.5.2 herein and if EntreMed maintains its original position after such review period, then the matter shall be referred first to the officers of EPIL and EntreMed having responsibility for the subject matter of the dispute, or their designees. Such officers, or their designees, as the case may be, shall negotiate in good faith to resolve such dispute in a mutually satisfactory manner. If such efforts do not result in a mutually satisfactory resolution of the dispute within thirty (30) days of such referral, the matter shall be referred to the chief executive officer of each Party, or their respective designees.
3.5.5	Final Resolution. If the Parties’ chief executive officers or their designees do not resolve the dispute within thirty (30) days of the matter being referred to them (or such longer time periods as may be mutually agreed in writing by the Parties), an independent mutually acceptable Third Party law firm with suitable expertise in the

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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	field of intellectual property in pharmaceuticals (the “Firm”) shall be appointed to determine whether, in its opinion, the sale of the Products would infringe such Third Party intellectual property. Once appointed, the Firm shall not be used by either Party for matters pertaining to the EPIL Intellectual Property or the EntreMed Intellectual Property, other than subsequent disputes under this Clause 3.5. The costs of the Firm shall be borne by the Party with whom the Firm disagrees.
3.5.6	Disputes Not To Be Reopened. The procedure in Clauses 3.5.1 to 3.5.5 shall not be used more than once in relation to any particular Third Party intellectual property allegedly infringed, absent new and relevant facts.
3.5.7	Negotiation. If the Parties or the Firm determine that a license should be obtained, EPIL shall have the initial right to negotiate such license. In the event that EPIL is unsuccessful in obtaining such a license within one hundred and twenty (120 days) of its first meeting with such Third Party, then EntreMed shall have the right to negotiate such license.
3.5.8	Terms. The Party attempting to negotiate the license shall:

3.5.8.1	use all Commercially Reasonable Efforts to achieve commercially reasonable terms;
3.5.8.2	keep the other Party reasonably informed of such negotiations;
3.5.8.3	submit to the other Party any draft terms before approval (insofar as they affect that other Party);
3.5.8.4	reasonably take into account any comments the other Party may have; and
3.5.8.5	without prejudice to the generality of the foregoing, use all Commercially Reasonable Efforts to ensure that the license is sub-licensable to EntreMed (in the case of EPIL) or freely transferable to EPIL (in the case of EntreMed).

3.5.9 Unrelated Licenses. Nothing in this Clause 3.5 shall be construed as affecting EntreMed’s rights to obtain licenses wholly unrelated to the incorporation of the EPIL Technology in the Product, at its own expense.

3.6. Trademarks.

3.6.1 EntreMed Trademark.

3.6.1.1	EntreMed shall market the Product in the Territory under the EntreMed Trademark.
3.6.1.2	EntreMed grants to EPIL and its Affiliates for the Term a royalty free, worldwide, non-exclusive license to the EntreMed Trademark and, if different, trademarks showing EntreMed’s corporate logo (the “EntreMed Logo”), for the purpose of EPIL’s promotion of its activities and of the EPIL Technology.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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3.6.1.3	EPIL shall ensure that each reference to and use of the EntreMed Trademark and EntreMed Logo by EPIL is in a manner approved by EntreMed and accompanied by an acknowledgement, in a form approved by EntreMed, that the same is a trademark (or registered trademark) of EntreMed.
3.6.1.4	EPIL shall not use the EntreMed Trademark or EntreMed Logo in any way which might materially prejudice its distinctiveness or validity or the goodwill of EntreMed therein.
3.6.1.5	EPIL shall not use any trademarks or trade names so resembling the EntreMed Trademark or EntreMed Logo as to be likely to cause confusion or deception.
3.6.1.6	EntreMed will be entitled to conduct all enforcement proceedings relating to the EntreMed Trademark or EntreMed Logo and shall at its sole discretion decide what action, if any, to take in respect of any infringement or alleged infringement of the EntreMed Trademark or EntreMed Logo or passing-off or any other claim or counter-claim brought or threatened in respect of the use or registration of the EntreMed Trademark or EntreMed Logo. Any such proceedings shall be conducted at EntreMed’s expense and for its own benefit.

3.6.2 EPIL Trademark.

3.6.2.1	EntreMed shall prominently display the appropriate EPIL Trademark on the packaging of the Product and on all promotional materials in relation to the Product to acknowledge that EPIL Intellectual Property has been applied in developing and manufacturing the Product.
3.6.2.2	EPIL grants to EntreMed for the Term a paid-up, worldwide, non-exclusive license to the EPIL Trademark, solely for the purpose of fulfilling EntreMed’s obligations under this Clause 3.6.2.2 and exercising its rights under this Agreement.
3.6.2.3	EntreMed shall ensure that each reference to and use of the EPIL Trademark by EntreMed is in a manner approved by EPIL and accompanied by an acknowledgement, in a form approved by EPIL, that the same is a trademark (or registered trademark) of EPIL.
3.6.2.4	EntreMed shall not use the EPIL Trademark in any way which might materially prejudice its distinctiveness or validity or the goodwill of EPIL therein.
3.6.2.5	EntreMed shall not use any trademarks or trade names so resembling the EPIL Trademark as to be likely to cause confusion or deception.
3.6.2.6	EPIL will be entitled to conduct all enforcement proceedings relating to the EPIL Trademark and shall at its sole discretion decide what action, if any, to take in respect of any infringement or alleged infringement of the EPIL Trademark or passing-off or any other claim or counter-claim brought or

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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threatened in respect of the use or registration of the EPIL Trademark. Any such proceedings shall be conducted at EPIL’s expense and for its own benefit.

4. NON-COMPETITION

In order to provide adequate protection of EPIL Know-How, EPIL Confidential Information and EPIL Highly Confidential Information, EntreMed and its Affiliates shall not develop, market or sell in combination with a Technological Competitor any     *     formulation containing the Compound, other than the Product: (i) in the EEA for a period of     *     beginning on the date of first In Market sale of the Product in the EEA, or (ii) elsewhere in the Territory     *     .

5.	REGISTRATION, MARKETING AND THE PROMOTION OF THE PRODUCT
5.1.	Regulatory Matters. Except as specified otherwise in this Agreement or in the Related Agreements, EntreMed shall own and shall be responsible for filing for and maintaining all necessary Regulatory Approvals, including for the manufacture of the Compound and any necessary export or import licenses in relation to the Compound and/or the Product.
5.2.	Diligent Efforts. EntreMed shall use Commercially Reasonable Efforts:

5.2.1	to obtain Regulatory Approvals for the Product; and
5.2.2	to market and promote the Product with a view to achieving the commercial potential of the Product throughout the Territory.

5.3. Required Markings. All trade packaging and marketing materials shall:

5.3.1	to the extent permitted by law, include due acknowledgement that the Product is developed and manufactured by EPIL or its Affiliate; and
5.3.2	have marked representative patent number(s) including that of the formulation patent in respect of the EPIL Patents on the Product, or otherwise reasonably communicate to the trade the existence of any EPIL Patents for the countries within the Territory in such a manner as to ensure compliance with, and enforceability under, applicable laws.

5.4. Launch. EntreMed shall use Commercially Reasonable Efforts to effect the     *     commercial launch of the Product:

5.4.1	in the USA     *     days of the Regulatory Approval in the USA, subject to the timely receipt of launch stocks under the Manufacturing and Supply Agreement and there not being any Infringement Claim pending; and
5.4.2	in the United Kingdom, Germany, France, Italy and Japan     *     days after the relevant Regulatory Approval, subject to the timely receipt of launch stocks under the Manufacturing and Supply Agreement and there not being any pending Infringement Claim.

5.5. Reporting. EntreMed shall promptly notify EPIL in writing of the date that the Product is administered in the first patient in a Post-Phase 1b Clinical Study and in the first patient in the

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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First Pivotal Study. EntreMed also shall promptly notify EPIL in writing of (i) the submission date of all Regulatory Applications, (ii) the date that all such submissions are accepted for filing by the relevant RHA, where applicable, and (iii) the date of all Regulatory Approvals.

Following the first Regulatory Approval of the Product in a country in the Territory, the Parties shall meet as often as reasonably requested by the other (not more than once per calendar quarter). At such meetings, EntreMed shall report on the ongoing sales performance of the Product in each country of the Territory,                         *                                                                                   for the next quarterly period. Such meetings may be held by telephone. If held in person, each Party shall be responsible for its own costs in respect of travel and accommodation expenses in attending such meetings.

6.	FINANCIAL PROVISIONS
6.1.	License Milestone Payments. In consideration of the grant of the EPIL License, EntreMed shall pay to EPIL the following non-refundable amounts:

6.1.1	US$             *             upon the earlier of (i) EntreMed’s announcement of a Post-Phase1b Clinical Study or (ii) the administration of Product to the first patient in a Post-Phase1b Clinical Study;
6.1.2	Notwithstanding the milestone payment made under Clause 6.1.1(i) or 6.1.1(ii), US$             *             upon the administration of Product to the first patient in a post-Phase1b clinical study;
6.1.3	US$             *             upon the earlier of (i) EntreMed’s announcement of the first Pivotal Study or (ii) the administration of Product to the first patient in the first Pivotal Study in support of a Regulatory Application;
6.1.4	US$             *             upon the administration of Product to the first patient in the first Pivotal Study in support of a Regulatory Application;
6.1.5	US$             *             upon completion of production and packaging of the first ICH Qualifying Batch of Product;
6.1.6	US$             *             upon the execution of all validation protocols and the completion of a validation report for the commercial manufacturing process;
6.1.7	US$             *             upon the acceptance for filing of the first Regulatory Application in the US;
6.1.8	US$             *             upon the acceptance for filing of the first Regulatory Application in the EEA         *                                                     ;
6.1.9	US$             *             upon the             *             acceptance for filing of the first Regulatory Application in Japan         *                                                     ;
6.1.10	US$             *             upon the (i) successful FDA pre-approval inspection (PAI) of a commercial manufacturing facility, as indicated by FDA     *

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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    *    , (ii) notification by the FDA that the FDA waives the PAI,                               *                                                                                                                                                 ;

6.1.11	US$     *     upon the first In Market Sale in the US;
6.1.12	US$               *               the first In Market sale in the EEA               *               ; and
6.1.13	US$ upon               *               the first In Market sale in Japan or               *               .
	the payments described in this Clause 6.1 being “License Milestone Payments”.

6.2.	Compensation Fee. In the event that EntreMed executes a Third Party agreement for the supply of Compound for               *               , EntreMed will pay to EPIL a compensation fee of               *               the “Compensation Fee”). For clarification purposes, the Compensation Fee will not be required to be paid in the event that EntreMed discontinues the development of the Product for any reason and               *              .
6.3.	Not Subject to Future Performance Obligations. The License Milestone Payments shall not be subject to future performance obligations of EPIL to EntreMed and shall not be applicable against future services provided by EPIL to EntreMed.
	The terms of Clause 6.1 relating to the License Milestone Payments are independent and distinct from the other terms of this Agreement.
6.4	Royalty on Sales for the Initial Term. In further consideration of the grant of the EPIL License, EntreMed shall pay to EPIL a non-refundable stepped royalty of               *               of aggregate Net Sales for the first               *               of annual aggregate Net Sales in the Territory increasing to               *               of aggregate Net Sales for all amounts of annual aggregate Net Sales greater than               *              in the Territory, for the Initial Term.
6.5	Royalty on Sales for the Extended Term and any additional Extended Term. In further consideration of the continuing grant by EPIL to EntreMed of a license to use the EPIL Know-How during the Extended Term, EntreMed shall pay to EPIL a non-refundable royalty of               *               of aggregate Net Sales in the Territory provided this Agreement has not been terminated               *               pursuant to Clause 9.
6.6	Generic Competition. If during any calendar quarter of the Extended Term, one or more Generics is marketed and all such Generics achieve in any country of the Territory an aggregate market share of not less than     *     percent (    *     %) (calculated by reference to the total sales of the Product and all Generics, as demonstrated to the reasonable satisfaction of EPIL), the royalty payable to EPIL shall be reduced to     *     percent (    *     %) in respect of that country in that calendar quarter. For the avoidance of doubt, no such reduction shall apply after such circumstances are eliminated, nor in any country where such circumstances do not apply.
6.7.	Bundling. During the Term, in the event that EntreMed, its Affiliates or a permitted Third Party sub-licensee shall sell to Third Party purchasers the Product together with other products, with pricing of the Product tied to pricing or volume of purchase of other products (by the method

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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commonly known in the pharmaceutical industry as “bundling”), then for the purposes of determining the Net Sales of the Product,             *             . The Net Sales of such permitted bundled products (meaning the combined price at which the Product and other product(s) are sold) will be multiplied by a fraction, the numerator of which is standard price for the Product multiplied by the number of units of Product sold in the bundled products and the denominator of which is the numerator plus the sum of the standard prices of the other products in the product bundle multiplied by the number of units of these products sold as part of the product bundle.

For the avoidance of doubt, in the event that EntreMed, its Affiliates or a permitted Third Party sub-licensee sells the Product with other products which (i) are not prescription products and/or (ii) which are generic products, and the price attributable to the Product is less than the average price of “arms length” sales to similar customers for the reporting period in which sales occur (such sales to be excluded from the calculation of the average price of “arms length” sales), Net Sales for any such sales shall be             *             .

6.8.	Method of calculation of fees. The Parties acknowledge and agree that the methods for calculating the milestones, royalties and fees under this Agreement are for the purposes of the convenience of the Parties, are freely chosen and not coerced.
7.	MANUFACTURE AND SUPPLY
7.1.	Manufacturing and Supply Agreement. The Parties agree that they, or their respective Affiliates, will negotiate in good faith a Manufacturing and Supply Agreement for the commercial supply of Product which they shall aim to execute on or before the first anniversary of entering into this Agreement. The Parties agree that the Manufacturing and Supply Agreement shall incorporate Clauses 7.2 and 7.3 and the key terms set out in Schedule 5.
7.2.	Supply. The Parties agree that EPIL or an Affiliate shall have the exclusive right to manufacture and supply to EntreMed, its Affiliates and permitted sub-licensees their entire requirement of the Product in the Territory for commercial purposes in accordance with the Manufacturing and Supply Agreement that will be negotiated in good faith between the Parties or between EntreMed and an Affiliate of EPIL. The cost of goods for Product supplied pursuant to the Manufacturing and Supply Agreement containing a    *     percent (    *    %) API concentration shall be as set out in Schedule 4. The cost of goods for Product supplied under the Manufacturing and Supply Agreement             *             . The Parties further agree that the Manufacturing and Supply Agreement shall contain provisions relating to        *
	.
7.3.	Right to Manufacturing License. Subject to the terms of this Agreement and the Manufacturing and Supply Agreement, the Parties further agree that in the event EPIL or any EPIL Affiliate is unable to manufacture the Product for commercial purposes for reasons of failure to supply (as such will be set out in more detail in the Manufacturing and Supply Agreement), EPIL shall grant to EntreMed a non-exclusive license under the EPIL Intellectual Property to make or have made the Product in the Field in the Territory (“the Manufacturing License”). Subject to the prior

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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written consent of EPIL which shall not be unreasonably withheld or delayed, EntreMed shall have the right to grant a sub-license of the Manufacturing License             *                                                                                                                 . Additionally, in the event that EntreMed, or as the case may be, the sub-licensee of the Manufacturing License entrusted with the manufacture of the Product (either, the “Designated Manufacturer”) becomes             *                                                                                                                 the Designated Manufacturer shall not be entitled to exercise manufacturing rights hereunder (or under the sub-license of the Manufacturing License, as applicable) or if manufacturing rights were previously exercised prior to the event in question such manufacturing rights shall automatically revert to EPIL. In either event, EPIL and EntreMed (or             *             ) shall co-operate in good faith to locate an independent Third Party manufacturer who is not             *             and is capable of manufacturing the Product.

8.	PAYMENTS, REPORTS AND AUDITS
8.1.	Records. Commencing with the first In Market sale in the Territory, EntreMed shall keep true and accurate records of gross sales of the Product, the items deducted from the gross amount in calculating the Net Sales, the Net Sales and the royalties payable to EPIL under Clauses 6.4. and 6.5, as applicable EntreMed shall deliver to EPIL a written statement (the “Statement”) thereof within forty-five (45) days following the end of each calendar quarter, (or any part thereof in the first or last calendar quarter of this Agreement) for such calendar quarter. The Statement shall outline on a country-by-country basis, the calculation of the Net Sales from gross revenues during that calendar quarter, the applicable percentage rate, and a computation of the sums due to EPIL. The Parties’ financial officers shall agree upon the precise format of the Statement.
8.2.	Foreign Currency. Payments due on Net Sales of the Product based on sales amounts in a currency other than US$ shall first be calculated in the foreign currency and then converted to US$ on the basis of the exchange rate in effect for the purchase of US$ with such foreign currency quoted in the Wall Street Journal (or comparable publication if not quoted in the Wall Street Journal) over the five (5) business days prior to the end of the relevant calendar quarter in which such payment is due.
8.3.	VAT. All payments to EPIL are exclusive of any applicable value added or any other sales tax, for which EntreMed will be additionally liable if applicable.
8.4.	Taxes. If EntreMed is required by law to pay or withhold any income or other taxes on behalf of EPIL with respect to any monies payable to EPIL under this Agreement:

8.4.1	EntreMed shall deduct them from the amount of such monies due;
8.4.2	any such tax required to be paid or withheld shall be an expense of and borne solely by EPIL;
8.4.3	EntreMed shall promptly provide EPIL with a certificate or other documentary evidence to enable EPIL to support a claim for a refund or a foreign tax credit.

8.5. Double Tax Co-operation. EPIL and EntreMed agree to co-operate reasonably as may be necessary to take advantage of any double taxation agreements or similar agreements as may, from time to time, be available in order to enable EntreMed to make such payments to EPIL without any deduction or withholding.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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8.6. Timing. Payments to EPIL shall be made as follows:

8.6.1	each of the License Milestone Payments shall be paid within fifteen (15) calendar days of the achievement of the relevant event to which they relate; and
8.6.2	payment of royalties shall be made upon provision of the Statement (45 days following the end of the calendar quarter).

8.7.	Manner of Payment. All payments due hereunder shall be made in US$ to the designated bank account of EPIL in accordance with such timely written instructions as EPIL shall from time to time provide.
8.8.	Interest. Without prejudice to EPIL’s other remedies hereunder, EntreMed shall pay interest to EPIL on sums not paid to EPIL on the date on which payment should have been made pursuant to the applicable provisions of this Agreement (“Due Date”) over the period from the Due Date until the date of actual payment (both before and after judgement) at the Prime Rate publicly announced by Morgan Guaranty Trust Company of New York at its principal office on the Due Date (or next to occur Business Day, if such date is not a Business Day) plus             *            %, such interest to payable on demand from time to time and compounded monthly. Interest shall be payable both before and after judgment.
8.9.	Audit. For the one hundred and eighty (180) day period following the close of each calendar year of the Agreement, EntreMed will, in the event that EPIL reasonably requests such access, provide EPIL’s independent certified accountants (reasonably acceptable to EntreMed) with access, during regular business hours, no more than once per calendar year unless a discrepancy is discovered, and subject to the confidentiality provisions as contained in this Agreement, to EntreMed’s books and records relating to the Product, solely for the purpose of verifying the accuracy and reasonable composition of the calculations under this Agreement for the calendar year then ended.
8.10.	Correction of Discrepancies. In the event of a discovery of a discrepancy, a correcting payment shall be made by EntreMed to EPIL together with interest at the rate specified in Clause 8.8. If the discrepancy exceeds     *     percent     *    %) of the amount due then additionally the cost of such accountants shall be borne by EntreMed.
9.	DURATION AND TERMINATION
9.1.	Initial Term. This Agreement shall be deemed to have come into force on the Effective Date and, subject to the rights of termination outlined in this Clause 9 and the provisions of applicable laws, will expire on a country-by-country basis:

9.1.1	on the*         anniversary of the date of the first In Market sale of the Product in the country concerned; or
9.1.2	in any country upon the expiration of the life of the last to expire patent having a Valid Claim where such patent is included in the EPIL Intellectual Property in that country;
	whichever date is*         to occur (the “Initial Term”).

9.2. Continuation. At the end of the Initial Term in such country, this Agreement shall continue automatically for     *     year periods thereafter (collectively known as the “Extended Term”),

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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unless the Agreement has been terminated by     *     by serving one (1) year’s written notice     *     immediately prior to the end of the Initial Term or any such additional Extended Term

9.3.	Term. The Initial Term and the Extended Term shall collectively be referred to as the “Term” in this Agreement.
9.4.	Breach / Insolvency. In addition to the rights of termination provided for elsewhere in this Agreement, either Party will be entitled forthwith to terminate this Agreement by written notice to the other Party if:

9.4.1	that other Party commits a material breach of any of the provisions of this Agreement, and fails to cure the same within sixty (60) days after receipt of a written notice from another Party hereto giving full particulars of the breach and requiring it to be remedied; provided, that if the breaching Party has proposed a course of action to cure the breach and is acting in good faith to cure same but has not cured the breach by the sixtieth (60th) day after receipt of a written notice, such period shall be extended by such period as is reasonably necessary to permit the breach to be cured, provided that such period shall not be extended by more than thirty (30) additional days, unless otherwise agreed in writing by the Parties;
9.4.2	that other Party goes into liquidation under the laws of any applicable jurisdiction (except for the purposes of amalgamation or reconstruction and in such manner that the company resulting therefrom effectively agrees to be bound by or assume the obligations imposed on that other Party under this Agreement);
9.4.3	a receiver, administrator, examiner, trustee or similar officer is appointed over all or substantially all of assets of that other Party under the laws of any applicable jurisdiction; or
9.4.4	any proceedings are filed or commenced by that other Party under bankruptcy, insolvency or debtor relief laws, or anything analogous to any of the foregoing under the laws of any applicable jurisdiction occurs in relation to that other Party.

9.5. Additional EntreMed Termination Rights. EntreMed shall be entitled to terminate this Agreement for any country or countries of the Territory by written notice to EPIL where:

9.5.1	the sale of the Product is prohibited by the RHA in such country or countries;
9.5.2	despite having used Commercially Reasonable Efforts, EntreMed is unable to obtain Regulatory Approval for the Product in such country or countries so as to permit a reasonable commercial return for EntreMed.

9.6. Additional EPIL Termination Rights. In further addition to the rights and termination provided for elsewhere in this Agreement, EPIL shall be entitled to terminate this Agreement for any country or countries of the Territory in the event that EntreMed fails to file a Regulatory Application in the United States within             *             of the date that Pivotal Studies are completed in relation to the first Product indication. However:

9.6.1 If,             *            , EntreMed has and is continuing to use Commercially Reasonable Efforts to complete the supporting clinical studies and file such US

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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Regulatory Application, EPIL will consider in good faith whether or not it deems it appropriate to exercise such right of termination;

9.6.2

In the event that the EntreMed’ failure to file such US Regulatory Application is due to EPIL’s or its Affiliate’s decision not to manufacture the Product,     *                                      ;

9.6.3

In the event that, during the Term, EntreMed, its sublicensee or their respective Affiliates             *                                                                                                                                                                                                                                                                                                           , EPIL,     *    , shall be entitled to terminate this Agreement and the Related Agreements in their entirety.

9.7.	Cross-Termination. In the event this Agreement is terminated     *    , pursuant to the terms as set forth in this Clause 9, other than the surviving provisions as set forth in the Related Agreements, the MEEA and the CSA, as these agreements pertain to the Compound and/or the Product, if applicable, the Related Agreements, the MEEA and the CSA shall automatically terminate and be of no further legal force and effect as related to Compound and/or the Product.
10.	CONSEQUENCES OF TERMINATION
10.1.	General Consequence. Upon exercise of those rights of termination specified in Clause 9 herein or elsewhere in this Agreement, this Agreement shall, subject to Clauses 10.2, automatically terminate forthwith and be of no further legal force or effect.
10.2.	Specific Consequences. Upon termination of the Agreement by either Party, or upon termination by EPIL of the EPIL License for a particular country under Clauses 9.6 herein, the following shall be the consequences relating to the Territory or the particular country, as applicable:

10.2.1	any sums that were due from EntreMed to EPIL under the provisions of this Agreement prior to its termination or expiry, or become due by virtue of such termination or expiry, shall be paid in full within thirty (30) calendar days of termination of this Agreement or termination of the EPIL Licence in a particular country, as applicable, and EPIL shall not be liable to repay to EntreMed any amount of money paid or payable by EntreMed to EPIL up to the date of the termination of this Agreement;
10.2.2	where a License Milestone Payment is due by reference to some period after an event, and termination occurs after such event but before the due date for such License Milestone Payment, such License Milestone Payment shall become immediately due and payable and shall be paid in accordance with the provisions of Clause 10.2.1; and for the avoidance of doubt, EntreMed’ liability for any then accrued License Milestone Payments shall not otherwise be affected by virtue of termination of this Agreement;
10.2.3	all representations and warranties shall insofar are appropriate remain in full force and effect;
10.2.4	the provisions of this Agreement regarding with respect to confidentiality and non-use of materials or confidential information shall remain in effect for a further period of 10 (ten) years from such date of termination.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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10.2.5	the rights of inspection and audit shall continue in force for the period referred to in the relevant provisions of this Agreement;
10.2.6	the license granted by EPIL to EntreMed of the EPIL Trademark under Clause 3.6.2.2 shall automatically terminate;
10.2.7	any other provision of this Agreement which, by its nature, is intended to continue after termination, shall survive termination;
10.2.8	any sub-license granted under Clause 2.2 shall automatically terminate;.

11.	WARRANTIES, INDEMNIFICATION AND LIABILITY
11.1.	EPIL Warranties. EPIL represents and warrants to EntreMed as of the Effective Date, as follows:

11.1.1	EPIL has the right to enter into this Agreement and grant the EPIL License.
11.1.2	Other than the Merck Agreement, there are no agreements between EPIL and any Third Party that conflict with the EPIL License.
11.1.3	EPIL is the owner of the EPIL Patents.
11.1.4	EPIL or its Affiliates are not obligated to assign to any sublicensee or any Third Party any EntreMed Improvements made by EPIL or its Affiliates or made on EPIL’s behalf by its sublicensees or Third Party contract manufacturers.
11.1.5	Except for the oppositions in the European Patent Office of EP-B-499299 and EP-1185371 EPIL has not been notified or does not otherwise have knowledge of any infringement proceedings, actions, suits or complaints pending against nor any outstanding injunctions, judgments, orders, decrees, rulings or other charges against EPIL or any Affiliate of EPIL in connection with the EPIL Patents or the EPIL Know How in the Territory that may affect the making, using, or selling of the Product.
11.1.6	To the best knowledge of EPIL, with no special search, the use of the EPIL Technology in the making, using, selling or importation of the Product does not infringe any intellectual property rights of a Third Party patents in the Territory.

11.2. EntreMed Warranties. EntreMed represents and warrants to EPIL as of the Effective Date, as follows:

11.2.1	EntreMed has the right to enter into this Agreement and the Related Agreements.
11.2.2	There are no agreements between EntreMed and any Third Party that conflict with this Agreement.
11.2.3	EntreMed is the owner or exclusive licensee of the EntreMed Patents.
11.2.4	EntreMed or its Affiliates are not obligated to assign to any sublicensee or any Third Party any EPIL Improvements made by EntreMed or its Affiliates or made on EntreMed’s behalf by its sublicensees or Third Party contract manufacturers.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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11.2.5	EntreMed has not been notified of any infringement proceedings, actions, suits or complaints pending against nor any outstanding injunctions, judgments, orders, decrees, rulings or other charges against EntreMed or any Affiliate of EntreMed in connection with the EntreMed Patents or the EntreMed Know-How in the Territory that may affect the making, using, or selling of the Product.
11.2.6	To the best knowledge of EntreMed, with no special search, the use of the EntreMed Intellectual Property in the making, using, selling or importation of the Product does not infringe any intellectual property rights of a Third Party in the Territory.

11.3.	Mutual Indemnification. Each of the Parties shall indemnify and hold harmless the other Party against all Claims insofar as they arise out of or in connection with any breach by the first Party of any of its representations, obligations or warranties under this Agreement or from the first Party’s fraud or wilful misconduct.
11.4.	Infringement Claims. The Parties acknowledge that Clause 3.4 herein contains the Parties’ full agreement as regards liability for Infringement Claims, save to the extent that Clause 3.4 incorporates other provisions of this Agreement by specific cross-reference.
11.5.	Indemnification (Medical Claims). EntreMed shall indemnify EPIL against all Claims made or brought against EPIL or its Affiliates seeking damages for personal injury (including death) and/or for the cost of medical treatment, caused by or attributed to the Product.
11.6.	Sub-licensees. With reference to Clause 2.2.3 herein, EntreMed shall indemnify and hold harmless EPIL or its Affiliates to the extent that any Claims arise out of any such acts or omissions of any sub-licensee.
11.7.	Conduct of Claims. The Party seeking an indemnity shall:

11.7.1	fully and promptly notify the other Party of any Claim or proceedings, or threatened Claim or proceedings;
11.7.2	permit the indemnifying Party to take full control of such Claim or proceedings at its sole cost and expense, with counsel of the indemnifying Party’s choice, provided that the indemnifying Party shall reasonably and regularly consult with the indemnified Party in relation to the progress and status of such Claim or proceedings;
11.7.3	co-operate in the investigation and defence of such Claim or proceedings; and
11.7.4	take all reasonable steps to mitigate any loss or liability in respect of any such Claim or proceedings.

The indemnifying Party may settle a Claim on terms which provide only for monetary relief and do not include any admission of liability. Save as aforesaid, neither the indemnifying Party nor the Party to be indemnified shall acknowledge the validity of, compromise or otherwise settle any Claim without the prior written consent of the other, which shall not be unreasonably withheld.

11.8. Exclusion of Implied Warranties. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, ENTREMED ACKNOWLEDGES THAT THE EPIL LICENSE IS GRANTED ON AN “AS IS” BASIS, WITHOUT REPRESENTATION OR WARRANTY WHETHER EXPRESS OR IMPLIED INCLUDING WARRANTIES OF MERCHANTABILITY, FITNESS

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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FOR A PARTICULAR PURPOSE, OR INFRINGEMENT OF THIRD PARTY RIGHTS, AND ALL SUCH WARRANTIES ARE EXPRESSLY DISCLAIMED TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAWS.

11.9.	Exclusion of Consequential Loss. WITHOUT PREJUDICE TO THE OBLIGATION OF EITHER PARTY TO INDEMNIFY THE OTHER IN RESPECT OF CLAIMS BY A THIRD PARTY, NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, EPIL AND ENTREMED SHALL NOT BE LIABLE TO THE OTHER BY REASON OF ANY REPRESENTATION OR WARRANTY, CONDITION OR OTHER TERM OR ANY DUTY OF COMMON LAW, OR UNDER THE EXPRESS TERMS OF THIS AGREEMENT, FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, INCIDENTAL OR PUNITIVE LOSS OR DAMAGE (WHETHER FOR LOSS OF CURRENT OR FUTURE PROFITS, LOSS OF ENTERPRISE VALUE OR OTHERWISE) AND WHETHER OCCASIONED BY THE NEGLIGENCE OF THE RESPECTIVE PARTIES, THEIR EMPLOYEES OR AGENTS OR OTHERWISE.
11.10.	Extension of Indemnification. Where this Agreement provides for the indemnification of a Party to this Agreement or for the limitation of a Party’s liability, such indemnification and/or limitation (as the case may be) shall also apply for the benefit of such Party’s Affiliates and the employees, officers, directors and agents of any of them, acting in such capacity.
11.11.	Indemnification of Affiliates. Where this Agreement provides for the indemnification of a Party, such indemnification shall also apply for the benefit of such Party’s Affiliates and the employees, officers, directors and agents of any of them, acting in such capacity.
12.	CONFIDENTIALITY
12.1.	Confidential Information: The Parties agree that it will be necessary, from time to time, to disclose to each other confidential and proprietary information, including without limitation, inventions, trade secrets, specifications, designs, data, know-how and other proprietary information relating to EPIL Intellectual Property, EntreMed Intellectual Property, the Product, processes, services and business of the disclosing Party.
	The foregoing shall be referred to collectively as “Confidential Information”.
12.2.	Exclusion. Confidential Information shall be deemed not to include:

12.2.1	information which is in the public domain;
12.2.2	information which is made public through no breach of this Agreement;
12.2.3	information which is independently developed by a Party, as evidenced by such Party’s records; or
12.2.4	information that becomes available to a receiving Party on a non-confidential basis, whether directly or indirectly, from a source other than the other Party hereto, which source did not acquire this information on a confidential basis.

12.3. Use of Confidential Information. Any Confidential Information disclosed by the disclosing Party shall be used by the receiving Party exclusively for the purposes of fulfilling the receiving Party’s

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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obligations or exercising its rights under this Agreement or Related Agreements and for no other purpose.

12.4.	Non-Disclosure. Except as otherwise specifically provided in this Agreement, each Party shall disclose Confidential Information of the other Party only to those employees, representatives and agents requiring knowledge thereof in connection with fulfilling the Party’s obligations under this Agreement, and not to any other Third Party.
12.5.	Obligation to Inform. Each Party further agrees to inform all such employees, representatives and agents of the terms and provisions of this Agreement relating to Confidential Information and to obtain their agreement hereto as a condition of receiving Confidential Information.
12.6.	Care. Each Party shall exercise the same standard of care as it would itself exercise in relation to its own confidential information (but in no event less than a reasonable standard of care) to protect and preserve the proprietary and confidential nature of the Confidential Information disclosed to it by the other Party.
12.7.	Return of Information. Upon termination or expiration of this Agreement, each Party shall promptly, upon the written request of the other Party, return all documents and any copies thereof containing Confidential Information belonging to, or disclosed by, such other Party, save that it may retain one copy of the same solely for the purposes of ensuring compliance with this Clause 12.
12.8.	Attribution. Any breach of this Clause 12 by any person informed by one of the Parties is considered a breach by the Party itself.
12.9.	Acknowledgment. The Parties agree that the obligations of this Clause 12 are necessary and reasonable in order to protect the Parties’ respective businesses. The Parties further agree that monetary damages may be inadequate to compensate a Party for any breach by the other Party of its covenants and agreements with respect to confidentiality, and that each Party shall be entitled to seek injunctive or other equitable relief against the threatened or continued breach of those provisions, in addition to with any other remedy which may be available.
12.10.	Compound Data. For the purpose of demonstrating to Third Parties the benefits of the EPIL Technology, EPIL shall be entitled, subject to the prior written consent of EntreMed which shall not be unreasonably withheld, conditioned or delayed, to disclose to Third Parties the numerical values underlying the Compound data provided that EPIL does not disclose EntreMed’s name or the name of the Compound and that the above consent requirement shall not be deemed to apply to any numerical values that have already been publicly disclosed by EntreMed.
12.11.	Announcements. No announcement or public statement concerning the existence, subject matter or any term of this Agreement, or its performance, shall be made by or on behalf of any Party without the prior written approval of the other, such approval not to be unreasonably withheld, conditioned or delayed.
12.12.	Joint Press Release. The Parties agree to discuss the issue of a joint press release announcing the execution of this Agreement. If the Parties decide not to issue a joint press release regarding this event, then each Party shall be entitled to issue its own press release, but the wording of each such release shall be agreed to by the other Party in writing before publication. Following the publication of said initial press release(s), each Party shall be free to disclose, without the other Parties’ prior written consent, the existence of this Agreement, the identity of the other Party and

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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the terms of the Agreement that have already been publicly disclosed in the initial press release(s) but in no circumstance may either Party disclose any other information regarding the existence, subject matter, or any term of this Agreement (such as confidential information or commercially sensitive information on financial terms) or its performance, without the prior written consent of the other.

12.13	Other Disclosures. EntreMed shall be entitled to provide (i) a copy of this Agreement and Related Agreements in which all financial terms have been redacted to Third Parties that have expressed a genuine and legitimate interest in partnering or collaborating with EntreMed to commercialize the Product in the Territory or (ii) a full copy of this Agreement or Related Agreements to Third Parties that have expressed a genuine and legitimate interest in acquiring EntreMed or substantially all of EntreMed’s business assets. EPIL shall be entitled to provide a full copy of this Agreement and Related Agreements to Third Parties that have expressed an interest in acquiring EPIL Technology from EPIL as it relates to the manufacture or commercialization of Product. In each case, each such Third Party shall be bound by a confidentiality agreement with terms and conditions that are at least as restrictive as that set forth in this Article 12. The Parties further agree that EntreMed’s right to supply any such information to a Third Party that is a Technological Competitor shall require EPIL’s prior written consent,         *         .
12.14.	Required Disclosures. A Party (the “Disclosing Party”) will be entitled to make an announcement or public statement concerning the existence, subject matter or any term of this Agreement, or to disclose Confidential Information that the Disclosing Party is required to make or disclose pursuant to:
	12.14.1     a valid order of a court or Governmental Authority; or
	12.14.2     any other requirement of law or any securities or stock exchange;
	provided that if the Disclosing Party becomes legally required to make such announcement, public statement or disclosure hereunder, the Disclosing Party shall give the other Party prompt notice of such fact to enable the other Party to seek a protective order or other appropriate remedy concerning any such announcement, public statement or disclosure, including confidential treatment and/or appropriate redactions.
	The Disclosing Party shall fully co-operate with the other Party in connection with that other Party’s efforts to obtain any such order or other remedy. If any such order or other remedy does not fully preclude announcement, public statement or disclosure, the Disclosing Party shall make such announcement, public statement or disclosure only to the extent that the same is legally required.
13.	MISCELLANEOUS PROVISIONS
13.1.	Force Majeure. Neither Party shall be liable for failure or delay in the performance of any of its obligations under this Agreement if such failure or delay results from Force Majeure, but any such failure or delay shall be remedied by such Party as soon as practicable.
13.2.	Assignment.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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13.2.1 EntreMed shall not be entitled to subcontract or delegate the whole or any part of its duties hereunder or to assign this Agreement to its Affiliate(s) where EntreMed becomes an Affiliate of a Technological Competitor unless the provisions of Clause 2.2 have been fully complied with. Subject to the foregoing, each Party be entitled without the consent of the other:

13.2.1.1	to subcontract or delegate the whole or any part of its duties hereunder to its Affiliate(s); and/or
13.2.1.2	to assign this Agreement to its Affiliate, provided that such assignment has no material adverse tax implications for the other Party.

13.2.2 Except as provided for in Clause 13.2.1, this Agreement may not be assigned by a Party without the prior written consent of the other, which shall not be unreasonably withheld or delayed.

13.3.	Parties Bound. This Agreement shall be binding upon and run for the benefit of the Parties, their successors and permitted assigns.
13.4.	Relationship of the Parties. In this Agreement, nothing shall be deemed to constitute a partnership between the Parties or make either Party an agent for the other, for any purpose whatsoever.
13.5.	Entire Agreement. Without prejudice to Clause 13.13, this Agreement, together with the Related Agreements, constitutes the entire agreement and understanding between the Parties with respect to its subject matter, and except as expressly provided, supersedes all prior representations, writings, negotiations or understandings with respect to that subject matter.
	Nothing in this Clause 13.5 shall exclude any liability which any Party would otherwise have to the other Party or any right which either of them may have to rescind this Agreement in respect of any statements made fraudulently by the other prior to the execution of this Agreement or any rights which either of them may have in respect of fraudulent concealment by the other.
13.6.	Severability. If any provision in this Agreement is deemed to be, or becomes invalid, illegal, void or unenforceable under applicable laws, such provision will be deemed amended to conform to applicable laws so as to be valid and enforceable, or if it cannot be so amended without materially altering the intention of the parties, it will be deleted, but the validity, legality and enforceability of the remaining provisions of this Agreement shall not be impaired or affected in any way.
13.7.	Further Assurance. Each Party shall do and execute, or arrange for the doing and executing of, each necessary act, document and thing reasonably within its power to implement this Agreement.
13.8.	Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute this Agreement.
13.9.	Waivers. A failure to exercise or delay in exercising a right or remedy provided by this Agreement or by law does not constitute a waiver of the right or remedy or a waiver of other rights or remedies. No single or partial exercise of a right or remedy provided by this Agreement

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 27

or by law prevents further exercise of the right or remedy or the exercise of another right or remedy.

13.10.	Variations. No variation of this Agreement shall be effective unless it is made in writing and signed by each of the Parties.
13.11.	Notices.

13.11.1 A notice under or in connection with this Agreement (a “Notice”):

13.11.1.1	shall be in writing; and
13.11.1.2	may be delivered personally or sent by first class post (and air mail if overseas) or by fax to the Party due to receive the Notice at its address set out below:

13.11.2 The address referred to in Clause 13.11.1.2 is:

(a) in the case of EPIL:

Address:	Elan Pharma International Limited
	Monksland
	Athlone
	Co. Westmeath
	Ireland
Fax:	+353 90 649 2427
Marked for the attention of :		Vice President and General Counsel
		Elan Drug Technologies

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 28

(b) in the case of EntreMed:

Address:	EntreMed, Inc.
	9640 Medical Center Drive
	Rockville, MD 20850
Fax:	+1 240 864 2624
Marked for the attention of :		Vice President of Corporate Development

13.11.3 Notice is deemed given:

13.11.3.1	if delivered personally, when the person delivering the notice obtains the signature of a person at the address referred to in Clause 13.11.1.2;
13.11.3.2	if sent by post, except air mail, two Business Days after posting it;
13.11.3.3	if sent by air mail, six Business Days after posting it;
13.11.3.4	if sent by fax, when confirmation of its transmission has been recorded by the sender’s fax machine.

13.12	Set-off. Each of the Parties will be entitled but not obliged to set-off against any amount of money payable to it by the other Party under this Agreement, any amount of money payable by it to the other Party under this Agreement.
13.13	To the extent there is a conflict in the terms, conditions or procedures as set forth in this Agreement, the Related Agreements, the MEEA, and the CSA the terms, conditions or procedures of this Agreement shall govern. The Parties further agree that the Letter Agreement shall terminate in its entirety upon the Effective Date.
13.14	Governing Law and Jurisdiction: This Agreement shall be governed by and construed in accordance with the laws of New York, without regard to its conflict of laws rules, and shall be subject to the exclusive jurisdiction of New York.

***

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 29

SIGNED

/s/ Elan Pharma International Limited
Duly authorised for and on behalf of:
ELAN PHARMA INTERNATIONAL LIMITED

SIGNED

/s/ EntreMed, Inc.
Duly authorised for and on behalf of:
ENTREMED, INC.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 30

SCHEDULE 1               EPIL PATENTS

Title of Invention	Country	Patent/Appln. No.
Surface Modified Drug Nanoparticles	U.S.	5,145,684
	EU	EP 499299
	Argentina	AR 255241
	Australia	654836
	Canada	2,059,432
	*	*
	Columbia	24635
	Finland	108333
	Hungary	221,586
	*	*
	Israel	100754
	Japan	92/11226
	S. Korea	200061
	Malaysia	MY-108134-A
	Mexico	176345
	New Zealand	241362
	Norway	303668
	Philippines	29069
	Russia	2066553
	Singapore	55104
	Taiwan	NI-071312
Solid Dose Nanoparticulate Compositions Comprising a Synergistic Combination of a Polymeric Surface Stabilizer and Dioctyl Sodium Sulfosuccinate	U.S.	6,375,986
	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 31

Title of Invention	Country	Patent/Appln. No.
	*	*
	*	*
	*	*
Nanoparticulate dispersions comprising a synergistic combination of a polymeric surface stabilizer and dioctyl sodium sulfosuccinate	U.S.	6,592,903
Nanoparticulate Compositions of Angiogenesis Inhibitors	U.S.	10/392,403
	*	*
	*	*
	Japan	2003-577857
	*	*
Redispersible Nanoparticulate Film Matrices With Protective Overcoats	U.S.	5,573,783
	Canada	2,212,803
	Europe	EP 812187
	*	*
Continuous Method of Grinding Pharmaceutical Substances	U.S.	5,718,388
	Argentina	Patent No. AR 253558 V1
	Canada	Patent. No. 2,190,134
	Taiwan	Patent No. NI-122518
	Europe	EP 804161
	Israel	Patent No. 113851
	Japan	Patent No. 3607294
	Malaysia	Patent No. MY-113,569-A
	Philippines	Patent No. 31497
	Venezuela	Patent No. 0854/95
Method of Grinding Pharmaceutical Substances	U.S.	5,862,999
	Argentina	Patent No. AR 254497 V1
	*	*
	Taiwan	Patent No. NI-112433
	Europe	EP 760653

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 32

Title of Invention	Country	Patent/Appln. No.
	Israel	Patent No. 113852
	*	*
	Malaysia	Patent No. MY-112,458-A
	Philippines	Patent No. 1-1995-50573
	Venezuela	Patent No. 0853-95
Methods for Preventing Crystal Growth and Particle Aggregation in Nanoparticle Compositions	U.S.	6,267,989
	*	*
	Canada	Patent No. 2,367,096
	Europe	EP 1161229
Process of Preparing Therapeutic Compositions Containing Nanoparticles	U.S.	5,510,118
Use of Ionic Cloud Point Modifiers to Prevent Particle Aggregation During Sterilization	U.S.	5,298,262
Use of Non-Ionic Cloud Point Modifiers to Minimize Nanoparticulate Aggregation During Sterilization	U.S.	5,346,702
Use of Purified Surface Modifiers to Prevent Particle Aggregation During Sterilization	U.S.	5,352,459
	Argentina	Patent No. AR 255267 V1
	Mexico	Patent No. 190632
Method of Preparing Stable Drug Nanoparticles	U.S.	5,534,270
Formulations of Compounds as Nanoparticulate Dispersions in Digestible Oils or Fatty Acids	U.S.	5,571,536
	U.S.	5,560,931
	Europe	EP 808154
Microprecipitation of Nanoparticulate Pharmaceutical Agents	U. S.	5,560,932
Pharmaceutical Compositions Containing Polyalkylene Block Copolymers Which Gel at Physiological Temperature	U.S.	5,565,188
	U.S.	5,705,194
	*	*
	Europe	EP 810855

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 33

\

Title of Invention	Country	Patent/Appln. No.
	*	*
Sulfated Non-Ionic Block Copolymer Surfactant as Stabilizer Coatings for Nanoparticle Compositions	U.S.	5,569,448
Formulations of Oral Gastrointestinal Therapeutic Agents in Combination with Pharmaceutically Acceptable Clays	U. S.	5,585,108
Butylene Oxide-Ethylene Oxide Block Copolymer Surfactants as Stabilizer Coatings for Nanoparticle Compositions	U.S.	5,587,143
	*	*
	Europe	EP 804162
	Israel	Patent No. 114354
	Japan	Patent No. 3710811
Sugar Based Surfactant for Nanocrystals	U.S.	5,622,938
Microprecipitation of Nanoparticulate Pharmaceutical Agents Using Surface Active Material Derived From Similar Pharmaceutical Agents	U.S.	5,716,642
Use of PEG-Derivatized Lipids as Surface Stabilizers for Nanoparticle Compositions	U.S.	6,270,806
	*	*
	Canada	Patent No. 2,362,508
	Europe	EP 1156788
Controlled Release of Nanoparticle Compositions	*	*
	*	*
	*	*
	*	*
Bioadhesive Nanoparticle Compositions Having Cationic Surface Stabilizers	US	6,428,814
	*	*
	*	*
	*	*
	Europe	EP 1217993
Small Scale Mill and Method Thereof	US	6,431,478

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 34

Title of Invention	Country	Patent/Appln. No.
	US	6,745,962
	*	*
	*	*
	*	*
	Europe	EP 1185371
Rapidly Disintegrating Oral Dosage Form	US	6,316,029
	*	*
	*	*
	*	*
	*	*
Nanoparticulate Compositions Comprising Copolymers of Vinyl Pyrrolidone and Vinyl Acetate as Surface Stabilizers	*	*
	*	*
	*	*
	*	*
	*	*
Stabilization of Chemical Compounds Using Nanoparticulate Technology	*	*
	*	*
	*	*
	*	*
Compositions Having a Combination of Controlled Release and Immediate Release Characteristics	U.S.	6,908,626
	*	*
	*	*
	*	*
Apparatus for Sanitary Wet Milling	U.S.	6,582,285
	*	*
	*	*
	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 35

Title of Invention	Country	Patent/Appln. No.
	*	*
Fast Dissolving Dosage Forms Having Reduced Friability	*	*
	*	*
	*	*
	*	*
	*	*
Method of Grinding Pharmaceutical Substances	U.S.	5,518,187
	Argentina	Patent No. 251001
	Australia	Patent No. 660852
	*	*
	Taiwan	Patent No. NI-69476
	Czech Republic	Patent No. 284802
	Europe	Patent No. EP 600528
	Finland	Patent No. 108399
	Hungary	Patent No. 210928
	*	*
	South Korea	Patent No. 312798
	Malaysia	Patent No. MY-109,419-A
	Mexico	Patent No. 189779
	New Zealand	Patent No. 248813
	*	*
	Philippines	Patent No. 31118
	Slovak Republic	Patent No. 281078
	*	*
	Venezuela	Patent No. 1484-93
Liquid Dosage Compositions of Stable Nanoparticulate Active Agents	*	*
	*	*
	*	*
	*	*
	*	*
Low Viscosity Liquid Dosage Forms	*	*
	*	*
	*	*
	*	*
	*	*
System and Method for Milling Materials	U.S.	U.S. Patent No. 6,742,734

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 36

Title of Invention	Country	Patent/Appln. No.
	*	*
	*	*
	*	*
	*	*
	*	*
Surface Modified Anticancer Nanoparticles	U.S.	Patent No. 5,399,363
	Canada	Patent No. 2098242
	Europe	Patent No. EP 577215
	*	*
	Mexico	Patent No. 205097
	Norway	Patent No. 308193
	Taiwan	Patent No. NI-079294

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 37

SCHEDULE 2 ENTREMED PATENTS

			Serial No./	Issue Date/
Title	Country	Appl Type/Status	Filing Date	Patent No.
Estrogenic Compounds as	US	Parent	8/6/1993	4/2/1996
Anti-Mitotic Agents	05213-0190	Issued	08/102,767	5,504,074
Estrogenic Compounds as	Canada	Nat’l Phase-PCT	2/5/1996
Anti-Mitotic Agents	05213-0190CA	Pending	2,168,850
Estrogenic Compounds as	EPO	Nat’l Phase-PCT	2/23/1996
Anti-Mitotic Agents	05213-0190EP	Issue Fee Paid	94924120.2
Estrogonic Compounds as	Hong Kong	Nat’l Phase-PCT	12/28/1998
Anti-Mitotic Agents	05213-0190HK	Pending	98115897.5
Estrogenic Compounds as	Japan	Nat Phase PCT	2/6/1996
Anti-Mitotic Agents	05213-0190JP	Pending	506502/95
Estrogenic Compounds as	US	Continuation	12/12/1995	8/26/1997
Anti-Mitotic Agents	05213-0191	Issued	08/571,265	5,661,143
Estrogenic Compounds as	EPO	Division	8/1/2005
Anti-Mitotic Agents	05213-0191EP	Pending	05016659.4
Estrogenic Compounds as	US	Division	4/25/1997	4/6/4999
Anti-Mitotic Agents	05213-0192	Issued	08/838,699	5,892,069

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 38

SCHEDULE 3 TECHNOLOGICAL COMPETITORS

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Page 39

SCHEDULE 4 COMMERCIAL UNIT DOSE COST OF GOODS PRICING

Commercial Product Cost of Goods per 1000mg unit dose

		*
*                    r	*	*	*	*
*	*	*	*	*
*	*	*	*	*
*	*	*	*	*
*	*	*	*	*

*

*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

SCHEDULE 5

KEY TERMS FOR MANUFACTURING AND SUPPLY AGREEMENT

1.	EPIL to be the sole and exclusive supplier of Product to EntreMed in the Territory for commercial supplies._________________
	*
	.
2.	EPIL to own and be responsible for (i) filing regulatory approvals in regard to EPIL Technology, (ii) DMFs that EPIL or its Affiliates may file in respect of EPIL Technology and the application of EPIL Technology as regards the Product and/or the manufacture of Product, and (iii) all necessary manufacturing approvals for the commercial manufacture of the Product. EntreMed to be responsible for filing for and maintaining all other necessary Regulatory Approvals, including for the manufacture of the Compound and any necessary export or import licenses in relation to the Compound and/or the Product. For the avoidance of doubt, EntreMed shall own and be responsible for the NDA and all other applications for regulatory approval for the Product.
3.	EPIL to supply Product that is manufactured in accordance with and conforms to agreed specifications and to all applicable laws and regulations for supply and manufacturing, including cGMP. Product to be provided     *     bulk packaging. Product packaging to conform to written standards that are to be agreed by the Parties.
4.	EntreMed to supply Compound on time, free of charge     *     EPIL’s facility and in sufficient quantities to enable EPIL to meet firm purchase orders. Compound to (i) conform to specifications, (ii) be accompanied by a certificate of analysis, and (iii) be supplied, packaged and labeled in accordance with EPIL requirements that are to be set out in a quality agreement (“Quality Agreement”) to be negotiated in good faith between the Parties in relation to the commercial manufacture and supply of Product. The Quality Agreement will also address issues related             *            .
5.	Detailed forecasting, ordering and delivery provisions to be negotiated in good faith between the Parties and to be fully set out in Manufacturing and Supply Agreement.
6.	The Parties to establish                                                                *
7.	Until the     *     anniversary of the date that the Product is provided for commercial use in Territory, the price per unit of Product to be as per Schedule 4,     *    . To the extent that the characteristics of final Product vary from the Product as specified on Schedule 4, the price will be as per Schedule 4 adjusted as is reasonably and directly commensurate to such variance     *    . Price increases shall be     *    , although
	.
8.	EntreMed to have right to review and approve proposed changes in advance of their implementation specific to the Product manufacturing, testing, or controls documentation which require prior Regulatory Authority approval as well as any other changes that may be specified as requiring EntreMed approval in the Quality Agreement.
9.	EntreMed to have     *     consent for EPIL use of Third Party subcontractors. EntreMed to also have right to audit EPIL and subcontractors relevant to the Product manufacturing and testing no more than     *     per calendar year, unless for cause.
10.	EPIL to manufacture and supply commercial Product to EntreMed through the EPIL facility located in Athlone, Ireland. Within     *     after the first commercial sale of Product,     *     a second

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

	manufacturing facility                                         *                                         that can manufacture and supply commercial Product in accordance with specifications, cGMPs and all relevant regulatory laws.     *     to be responsible for the costs of the process transfer to     *     manufacturing facility in anticipation of the commercial scale-up of the Product                                         *                                         and for the costs of process transfer, validation and maintenance                                         *                                        . Site transfers requested by     *     from and after the NDA filing other than those mentioned above shall be subject to reasonable prior consent and shall be at     *     cost.
11.	EntreMed to order safety stock through agreed order and forecast procedures.                                         *                                        .
12.	EPIL to identify Third Parties that are reasonably acceptable to EntreMed for purposes of granting a Manufacturing License in the event of a failure to supply, an event that will be negotiated in good faith and defined by the Parties in the Manufacturing and Supply Agreement. The cost of such technology transfer shall be borne by     *    .
13.	Release and rejection provisions (e.g., defects and latent defects) reasonably acceptable to the Parties, with EPIL to have a specified time (e.g.,    *     days) rectify the issue. EntreMed to be refunded where Product cannot be reworked or replaced within specified time, although Parties agree that EntreMed shall not be entitled to a refund where non-conformity is due to the supply of defective Compound or where the noncomformity is otherwise attributable to the negligent acts or omissions EntreMed.
14.	*    to be responsible for coordinating any Product recall and ensuring that recalls are conducted in a commercially reasonable manner. Costs of recall shall be borne by EntreMed unless (i) the recall arises from EPIL’s failure to supply Product in accordance with agreed specifications and cGMP or from the negligent acts or omissions of EPIL in manufacturing the Product or from EPIL’s breaches of the Manufacturing and Supply Agreement                                         *                                        .
15.	EPIL responsible for compliance to cGMP and applicable laws for supply and manufacture, adherence to specifications and indemnifications resulting from its breach thereof. EntreMed responsible for marketing and promotion, and for recalls and indemnification arising otherwise. Indemnification provisions will correspond to such responsibilities.
16.	Term of the manufacture and supply agreement will be the Term of the License Agreement.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

EX-10.2

Exhibit 10.2

RESEARCH, DEVELOPMENT
AND COMMERCIALIZATION AGREEMENT

     This Research, Development and Commercialization Agreement (“Agreement”) is entered into as of this 20^th day of April, 2005, by and between:

     on the one hand,

Hoffmann-La Roche Inc., a corporation organized and existing under the laws of the State of New Jersey, with its principal place of business at 340 Kingsland Street, Nutley New Jersey 07110 (“Roche Nutley”), and F.Hoffmann-La Roche Ltd, a Swiss corporation, with its principal office at Grenzacherstrasse 124, CH-4070 Basel, Switzerland (“Roche Basel”; Roche Nutley and Roche Basel are collectively referenced as “Roche”),

     and on the other hand,

     Miikana Therapeutics Inc., a corporation organized and existing under the laws of the State of California, with its principal place of business at 6519 Dumbarton Circle, Fremont, CA 94555 USA (“Miikana”). Miikana and Roche each may be referred to herein as a “Party,” and collectively as “Parties.’

     WHEREAS, Roche owns or possesses certain patent rights, know-how and regulatory filings with respect to various orally active cell cycle inhibitors (“CCI”), including the CCI compounds known as     *    ;

     WHEREAS, Roche believes that     *     and related compounds have the potential to become a drug with significant worldwide annual sales, and that Miikana has the ability to realize the potential of certain of these compounds;

     WHEREAS, Miikana desires to develop     *     , and/or     *     and ensure that it is diligently developed and commercialized worldwide so as to realize promptly its therapeutic and commercial potential;

     WHEREAS, Miikana desires to obtain rights from Roche so that Miikana, either on its own     *     , and/or     *     and realizes its therapeutic and commercial potential;

     WHEREAS, Miikana desires to obtain an exclusive license under Roche’s patent rights, know-how and regulatory filings to begin development and commercialization     *     ,     *     and/or     *     ; and

     WHEREAS, Roche is willing to grant an exclusive license to Miikana under such patent rights and know-how.

     NOW THEREFORE, in consideration of the foregoing and of the mutual covenants hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Parties mutually agree as follows:

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

ARTICLE 1

DEFINITIONS

     As used in this Agreement, the following terms shall have the following meanings, and singular forms, plural forms and derivative forms, (i.e. other parts of speech) shall be interpreted accordingly:

     1.1 “Affiliate” means any corporation or non-corporate business entity that directly or indirectly controls, is controlled by, or is under common control with a Party to this Agreement. As used in this definition, the term “control” (with correlative meanings for the terms “controlled by” and “under common control with”) means that an entity owns greater than fifty percent (>50%) of the voting stock of the subject entity with the ability to elect a majority of the board (or managing members) of such entity, or otherwise has the power to govern and control the financial and the operating policies and management of the subject entity, whether through the ownership or control of voting securities, by contract or otherwise. With respect to Roche, the term “Affiliate” shall not include Genentech, Inc., nor Chugai Pharmaceutical Co., Ltd, unless Roche opts for such inclusion by giving written notice to Miikana.

     1.2 “Combination Product” means a finished product containing a Compound or Derivative in combination with one or more other active pharmaceutical ingredients, devices, equipment or components that are not themselves Licensed Products.

     1.3 “Commencement” means, with respect to a clinical trial, the date upon which the first patient receives the first dose of an item that is the subject of such clinical trial.

     1.4 “Commercialize” means to make, have made, develop, use, sell, have sold, offer for sale, and import.

     1.5 “Compound” means (a) the compound known as     *     and/or           , or (b) any compound that is a salt, ester or polymorph of     *     and/or     *    .

     1.6 “Controlled” means, with respect to Know-How or patents, that the applicable Party has licensed (or otherwise obtained rights to or under) such Know-How or patents from a Third Party and such Party has the right to grant sublicenses to such Know-How or patents.

     1.7 “Derivative” means a metabolite, prodrug or regioisomer     *     and     *     that is claimed, generically or specifically, in the Roche Patent Rights.

     1.8 “Development Plan” means the model plan for guiding the development of Licensed Products, the first draft of which is set forth in Appendix C.

     1.9 “Dollars” or “$” means US dollars.

     1.10 “Effective Date” means the date first mentioned above.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-2-

     1.11 “FDA” means the United States Food and Drug Administration and any successor entity thereto.

     1.12 “FD&C Act” means the US Federal Food, Drug and Cosmetic Act, as amended, and the equivalent laws and regulations in any foreign countries or jurisdictions.

     1.13 “Field” means all therapeutic, prophylactic, and other pharmaceutical uses, applications and indications.

     1.14 “First Commercial Sale” means the first sale of a Licensed Product in a particular country to a Third Party following its approval for marketing and sale by the applicable Regulatory Agency in such country.

     1.15 “Global Alliance Director” means an employee of Roche who is selected by Roche to be the point person with primary responsibility for communications and interactions with Miikana.

     1.16 “IND” means an Investigational New Drug Application filed with the FDA and covering administration of a Compound or Derivative.

     1.17 “Inventions” means any and all useful ideas, concepts, methods, procedures, processes, improvements, inventions, discoveries, and reductions to practice, whether or not patentable, which arise from or are first made, conceived or first reduced to practice in the course of the activities conducted pursuant to or in exercise of a right granted under this Agreement.

     1.18 “Know How” means all non-patented data, information, methods, procedures, processes, materials and other know-how. Know-How includes but is not limited to: biological, chemical, biochemical, toxicological, pharmacological, metabolic, formulation, clinical, regulatory, manufacturing, analytical and stability information and data (other than such information and data which is or becomes the subject of a patent or patent application).

     1.19 “Licensed Product” means any product containing a Compound or a Derivative, including all formulations, dosages, and dosage forms thereof.

     1.20 “Maior Market” means any of the     *     .

     1.21 Miikana Group” means Miikana, its Affiliates and sublicensees under this Agreement.

     1.22 “Miikana Know-How” means all Know-How that is related to the Compound, a Derivative, or a Licensed Product, and is owned or Controlled by the Miikana Group and in which the Miikana Group has a transferable interest.

     1.23 “Miikana Patent Rights” means all Patents in the Territory that (a) claim a Compound, Derivative or Licensed Product, or the manufacture or use thereof, and (b) are owned or Controlled by Miikana or any of its Affiliates during the term of this Agreement.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-3-

     1.24 “NDA” means a New Drug Application accepted for filing with a Regulatory Agency for a Compound or Derivative.

     1.25 “Net Sales” means, with respect to Miikana, the amount of gross sales of all Licensed Products in the Territory invoiced by the Miikana Group to Third Parties, as reduced by the following deductions to the extent actually allowed or incurred with respect to such sales: (a) transportation charges, and other shipping charges, such as insurance, (b) sales, value-added and excise taxes, customs, duties, and any other governmental charges, to the extent imposed upon the sale of the Licensed Product and paid by the selling party, provided that no income taxes shall be deducted from gross sales of Licensed Product to calculate Net Sales, (c) distributors fees, rebates or allowances actually granted or allowed, including government and managed care rebates, (d) quantity discounts, cash discounts or chargebacks actually granted, allowed or incurred, (e) allowances or credits to customers, not in excess of the selling price of Licensed Product, on account of governmental requirements, rejections, recalls or returns, and (f) allowances for bad debt actually documented to have occurred solely as a result of sale of the Licensed Product.

     If a Licensed Product is contained within a Combination Product then Net Sales for such Combination Product, for purposes of calculating the royalties owed on sale of such Combination Product, shall be reduced by multiplying Net Sales of such Combination Product (as determined above) by the fraction A/(A+B) where A is the selling price of the Compound-containing unit if sold separately and B is the selling price of the other active pharmaceutical ingredients, devices, equipment or components in the Combination Product if sold separately. If the Compound-containing unit or one or more of such active pharmaceutical ingredients, devices, equipment or components in the Combination Product are not sold separately, then the parties shall negotiate in good faith a formula for adjusting Net Sales to reflect the relative value of the contribution of the Compound-containing unit to the total sales price of the Combination Product.

     1.26 “Patent” means (a) any patent, including re-examinations, reissues, renewals, extensions and term restorations thereof, and any foreign counterpart of any of the foregoing, and (b) any pending application for patent, including, without limitation, provisional applications, continuations, continuations-in-part, divisional and substitute applications, inventors’ certificates, and extensions, and any foreign counterpart of any of the foregoing.

     1.27 “Phase I” means, with respect to the United States, the first phase of human clinical trials using a limited number of human subjects to gain evidence of the safety and tolerability of a Licensed Product and information regarding pharmacokinetics and potentially pharmacological activity for such Licensed Product, Compound or Derivative, which human clinical trials are completed prior to the initiation of Phase II, as described in 21 C.F.R. § 312.21(a), as may be amended, or, with respect to any other country or jurisdiction, the equivalent of such a clinical trial in such other country or jurisdiction.

     1.28 “Phase II” means, with respect to the United States, the second phase of human clinical trials of a Licensed Product in human subjects to gain evidence of the efficacy in one or more indications and expanded evidence of the safety of such Licensed Product, Compound or Derivative, as well as an indication of the dosage regimen required, as described in

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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21 C.F.R.§ 312.21(b), as may be amended, or, with respect to any other country or jurisdiction, the equivalent of such a clinical trial in such other country or jurisdiction.

     1.29 “Phase III` means, with respect to the United States, the third phase of human clinical trials of a Licensed Product, which are large-scale trials to gain evidence of the efficacy and safety in a number of human subjects sufficient to support Registration for such Licensed Product, Compound or Derivative with the FDA, as described in 21 C.F.R. § 312.21(c), as may be amended, or, with respect to any other country or jurisdiction, the equivalent of such a clinical trial in such other country or jurisdiction.

     1.30 “Registration” in relation to any Licensed Product means such approvals by the applicable Regulatory Agency in a country (or community or association of countries) included in the Territory (including, where applicable, price approvals) that are required to be obtained prior to marketing and selling such Licensed Product in such country or jurisdiction.

     1.31 “Regulatory Agency” means, with respect to any particular country or jurisdiction, the governmental authorities, bodies, commissions, agencies and/or other instrumentalities of such country or jurisdiction (the EMEA with respect to the EU), with the primary responsibility for the evaluation or approval of pharmaceutical products before such product can be tested, marketed, promoted, distributed or sold in such country, including such governmental bodies that have jurisdiction over the conduct of clinical trials and/or the pricing of such pharmaceutical product. The term “Regulatory Agency” includes the FDA.

     1.32 “Regulatory, Filing means any filing with a Regulatory Agency relating to or to permit or request, as applicable, the clinical evaluation or Registration of a Licensed Product. Regulatory Filings include without limitation INDs and NDAs.

     1.33 “Roche Know-How” means all Know-How which on the Effective Date is owned or Controlled by Roche and in which Roche has a transferable interest.

     1.34 “Roche Patent Rights” means all Patents in the Territory listed on Appendix A, and any future Patents that claim priority from or the benefit of the filing date of any of the patents and applications listed in Appendix A, and including any and all extensions, supplementary protection certificates and the like with respect to any of the foregoing.

     1.35 “Territory” means the entire world, subject to Section 12.7(a).

     1.36 “Third Party” means any party other than Roche, Roche’s Affiliates, Miikana, or Miikana’ Affiliates.

     1.37 “Transfer Know-How” means the Roche Know-How identified on Appendix B.

     1.38 “US” means the United States of America, its territories and possessions.

     1.39 “Valid Claim” means a claim contained in (i) an issued and unexpired patent included within the Roche Patent Rights or Miikana Patent Rights that has not been held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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competent jurisdiction, which decision is not subject to any further appeal, and that has not been admitted to be invalid or unenforceable through abandonment, reissue, disclaimer or otherwise or (ii) a patent application which is included within the Roche Patent Rights or Miikana Patent Rights and has been pending for less than     *     from the priority date. If a claim of a patent application that ceased to be a Valid Claim under item (ii) because of the passage of time later issues as a part of a patent within item (i), then it shall again be considered to be a Valid Claim effective as of the issuance of such patent.

ARTICLE 2

GRANT OF LICENSE

     2.1 Grant. Subject to the terms and conditions of this Agreement, Roche hereby grants to Miikana and its Affiliates, and Miikana hereby accepts on its and their behalf, a sole and exclusive license, with full rights to sublicense as provided in Section 2.2, under the Roche Patent Rights and Roche Know-How, to (a) develop, use, sell, offer for sale, and import Licensed Products in the Territory, and (b) make and have made Licensed Products in the Territory for such development, use, sale, offering for sale, and importation. Notwithstanding anything to the contrary in this Section 2.1, Roche shall retain all rights under the Roche Patent Rights and Roche Know How for any other purpose. Miikana’s rights to import in the Territory shall not include     *     . Subject to the terms and conditions of this Agreement, Roche also grants to Miikana, its Affiliates and sublicensees immunity from suit from Roche and its Affiliates under any Patent owned or controlled by Roche or its Affiliates on the Effective Date, and any other Patent that claims priority from or the benefit of the filing date of any of the foregoing Patents, with respect to making, using, selling, offering for sale or importing of Licensed Product in a formulation in existence as of the Effective Date (which includes without limitation any additional dosages, dosage forms, and separate packagings thereof).

     2.2 Right to Sublicense. Miikana and its Affiliates shall have the right to sublicense the rights granted under Section 2.1 to Third Parties (which will have no right to further sublicense, except to the Affiliates of such Third Party sublicensees). If Miikana grants such sublicenses, then all such sublicenses shall conform to and be in accordance with the terms of this Agreement. Miikana assumes full responsibility for the performance of all obligations under this Agreement and will remain obligated to Roche for all royalties due under this Agreement by reason of the operations of any such sublicense.

     2.3 Covenant Regarding License Scope. Miikana hereby covenants and agrees that it and its Affiliates shall not, during the term of this Agreement, knowingly practice any Roche Patent Rights or Roche Know How outside the scope of the license granted by Roche in Section 2.1.

     2.4 Diligence. If Miikana has not completed a     *     clinical trial within ___    *    ___years after the Effective Date with respect to any Licensed Product, then Roche may terminate all licenses granted herein. Following such termination by Roche under this Section 2.4     *    .

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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ARTICLE 3

RESEARCH AND DEVELOPMENT REIMBURSEMENT AND MILESTONE
PAYMENTS

     3.1 Fees. Miikana shall pay to Roche in consideration for the rights granted herein a fee which shall be non-refundable, and non-creditable, and shall consist of (a)     *                shares of Miikana Series A Preferred stock, issued on the Effective Date pursuant to the Stock Purchase Agreement attached hereto as Appendix E, and (b)     *     in cash, owing as of the Effective Date and payable on or before the dates set forth below:

Time	Amount
By the earlier of either (a) June 30, 2005, or (b) the closing date of Miikana’s Series B Financing	*
By September 30, 2005	*

Of the above, the     *                shares of Miikana Series A Preferred stock and Dollars ___    *    ___shall be issued and paid to F.Hoffmann-La Roche Ltd and the remaining     *     Dollars ( $    *     ) shall be paid to Hoffmann-La Roche Inc.

     3.2 Milestone Payments. Miikana shall pay to Roche non-refundable, non-creditable milestone payments in the amounts specified in tabular form below (each a “Milestone Payment”) no later than     *     days after the first occurrence of each of the following events with respect to each Licensed Product, as they occur:

Milestones	Payments (Dollars)
Commencement Phase III	*
NDA Filing in the USA	*
NDA Filing outside the USA	*
First Commercial Sale in the USA	*
First Commercial Sale outside the USA	*
First time annual sales in the Territory exceed     *	*
First time annual sales in the Territory exceed     *	*

All milestones payments set forth under this Section 3.2 shall be paid to Roche only once for a given Licensed Product containing a particular Compound or particular Derivative, and once

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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paid shall be non-refundable. For clarity, once any milestone payment is paid to Roche under this Section 3.2 for a given Licensed Product, such payment shall not be owed with respect to any other Licensed Product containing the same Compound or Derivative even if such milestone is subsequently achieved again by the Licensed Product having a different dosage, dosage form, package, formulation, modes of administration or intended indication. Of course, if another Licensed Product has a different Compound or Derivative than the previous Licensed Product, then Miikana shall pay to Roche the milestones set forth under this Section 3.2 with respect to such other Licensed Product. If development of a Licensed Product is terminated prior to First Commercial Sale of such Licensed Product, then Miikana may credit such milestone payments paid to Roche with respect to such Licensed Product against milestone payments that become due for a subsequent Licensed Product. The term “annual sales” shall mean Net Sales in a given calendar year.

ARTICLE 4

ROYALTIES

     4.1 Royalties in General. For each Licensed Product, the obligation of Miikana to pay Roche royalties based on sales of the Licensed Product in a given country shall commence on the date of the First Commercial Sale of such Licensed Product by the Miikana Group in such country and shall continue until the     *     of (a) the date upon which there no longer exists in such country a Patent within the Roche Patent Rights having a Valid Claim that claims the manufacture, use or sale of such Licensed Product in such country, or (b) subject to Section 4.3, the date which is     *     years after the date of First Commercial Sale of such Licensed Product in such country. Miikana shall pay or cause to be paid to Roche a royalty based on Net Sales made by the Miikana Group in the Territory, on a country-by-country basis, at the applicable incremental royalty rate as provided for in the table below in this Section 4.1, subject to reduction as provided in Section 4.3.

Total, Territory wide Annual Net Sales in a single calendar year	Royalty Rate
Amount of Net Sales up to and including     *	*
Amount of Net Sales over     *     and up to and including     *	*
Amount of Net Sales over     *     and up to and including     *	*
Amount of Net Sales over     *	*

     4.2 Accrual of Royalties. No royalty shall be due or owing from the use or distribution of a Licensed Product in transactions where no consideration is received by the Miikana Group, such as when a Licensed Product is made or used for tests or development purposes or is distributed as samples. No royalties shall be payable on sales among entities within the Miikana Group, but royalties shall be payable on subsequent sales by entities within the Miikana Group to a Third Party. No multiple royalties shall be payable under this Agreement because a commercialized Licensed Product is covered by more than one Valid Claim or is covered by both a claim with respect to Know-Haw and a Valid Claim.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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     4.3 Reduction for Third Party Licenses.

          (a) If Miikana pays royalties, upfront fees or milestone payments to Third Parties pursuant to intellectual property license agreements covering the manufacture, use or sale of Licensed Products and negotiated at arm’s length, then Miikana may credit     *     of such payments paid to such Third Parties against the amounts otherwise payable pursuant to Section 4.1.

          (b) Likewise, if no Patent within the Roche Patent Rights has a Valid Claim that claims the manufacture, use or sale of such Licensed Product in a country, then Miikana may credit     *     of the royalties otherwise due from sales in such country against the amounts otherwise payable pursuant to Section 4.1.

          (c) The credit provided by Section 4.3(a) shall be effective only for Licensed Products sold after any payments required by the licenses from such Third Parties are incurred. Miikana shall provide Roche with written notice of such a requirement within     *     after it becomes effective, and such notice shall include the name of the Third Party, the patents under which payments are being paid to the Third Party, and the element of the Licensed Product to which the third-party intellectual property applies. In no event shall royalties payable pursuant to Section 4.1 be reduced, due to application of this Section 4.3, by more than     *     of the amount that otherwise would be owed.

ARTICLE 5

ROYALTY REPORTS AND ACCOUNTING

     5.1 Royalty Payments; Royalty Reports. After the First Commercial Sale and for the remaining term of this Agreement, Miikana shall submit with each payment of royalties to Roche a written royalty report (“Royalty Report”) covering sales of Licensed Product for each Miikana fiscal quarter (currently ending on or about the last day of March, June, September, and December) with the following information provided on a country-by-country basis for the Major Market countries and for the rest of the world as a whole:

          (a) Net Sales showing all deductions starting with gross sales;

          (b) the royalties, payable in Dollars, which shall have accrued hereunder in respect to such Net Sales;

          (c) withholding taxes, if any, required by law to be deducted in respect of such sates;

          (d) the exchange rates used in determining the amount of Dollars; and

          (e) the royalty rates applied to calculate royalties due hereunder.

     Royalty Reports shall be due for the entire Territory no later than     *     days after the end of the fiscal quarter to which they pertain.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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     5.2 Exchange Rate; Manner of Payment. All payments due under this Agreement shall be made in Dollars via wire transfer of immediately available funds, or by such other commercially reasonable means as may be designated by Roche. Royalty payments due on Net Sales in countries in the Territory outside the US shall be made in Dollars, after being converted by Miikana using the average rate of exchange for such currencies during the applicable calendar quarter, as retrieved from     *     system for the applicable period. If by law, regulations or fiscal policies, remittance of royalties in Dollars, or removal of currency from the country, is prohibited or restricted, Miikana will notify Roche and payment of the royalty obligation shall be made by deposit thereof in local currency to the credit of Roche in a recognized banking institution in such country designated by Rode. If in any country or jurisdiction, the law, regulations or fiscal policies prohibit both the transmittal and deposit of royalties on sales in such country, royalty payments calculated as a percentage of Net Sales in that country shall be suspended for as long as such prohibition is in effect and as soon as such prohibition ceases, all royalties that Roche would have otherwise been entitled to shall be transmitted or deposited to the extent allowable.

     5.3 Payment Due Dates. Royalties shown to have accrued by each Royalty Report provided for under Article 5 of this Agreement shall be due and payable     *     after the end of the fiscal quarter to which they pertain. Payment of royalties in whole or in part may be made in advance of such due date. All royalty and other payments due to Roche hereunder, shall be made in Dollars and delivered to the account specified below or to any other account specified by Roche:

     WIRE PAYMENT TO:

Account of.	Hoffmann-La Roche Inc
Account No.:	*
Bank Name:	*
	*
ABA Routing No:	*

     5.4 Right to Audit

          (a) Upon written request to Miikana and at least     *     prior notice from Roche, at Roche’s expense and not more that     *     a calendar year, Roche’s independent certified public accountants may perform, on the behalf of Roche, an audit in accordance with GAAP standards of such of Miikana’ books and records during normal business hours as may be reasonably necessary to verify the accuracy of the Royalty Reports furnished by Miikana and to confirm payments made hereunder with respect to any quarterly period ending not more than     *     prior to the date of such request. Audits may be performed no more than once for a given audit period.

          (b) Miikana shall keep, and shall cause its Affiliates, sublicensees, and Affiliates’ sublicensees to keep, complete and accurate records pertaining to the sale of Licensed Products and the royalties and other amounts payable under this Agreement in sufficient detail to permit Roche to confirm the accuracy of all payments due hereunder for no less than     *    

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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after the time periods to which such records relate. Miikana shall include in each written sublicense granted by it pursuant to this Agreement a provision requiring the sublicensee to keep and maintain records of sales made pursuant to such sublicense and to grant access to such records by Roche’s auditor subject to the same terms and conditions as stated in this Section 5.4. Such records shall be sufficient for Roche to determine Net Sales on a country-by-country basis.

          (c) Upon the expiration of     *     following the end of any quarterly royalty payment period, the calculation of royalties payable with respect to such quarter shall be binding and conclusive upon Roche (except with respect to any audit then underway, and except for fraud or intentional misrepresentation), and the Miikana Group shall be released from any liability or accountability with respect to royalties for such fiscal year.

          (d) Any report prepared by the auditor, shall disclose only the conclusions of the auditor regarding the audit and the amount of any underpayment or overpayment of royalties, if any, without disclosure of or reference to supporting documentation. A copy of such report shall be sent or otherwise provided to Miikana by the auditor at the same time it is sent or otherwise provided to Roche.

          (e) If an auditor’s report shows any underpayment of royalties, Miikana shall remit, or shall cause its Affiliates, sublicensees, or Affiliates’ sublicensees to remit, to Roche the amount of such underpayment within     *     after Roche’s receipt of the auditor’s report. If the amount of any underpayment of royalties is in excess of     *     of the total royalties due to Roche with respect to the period covered by the Auditor’s report, then Miikana shall reimburse Roche for the cost of the audit in which the underpayment was discovered, the underpayment, and interest on the underpayment at the     *     rate plus     *     . Any overpayment of royalties shall be fully creditable against future royalties payable in subsequent royalty periods.

     5.5 Confidentiality of Records. Roche agrees that all information subject to review under this Article 5 or under any sublicense agreement (other than the reported results of such review) is confidential and that Roche and the auditor shall retain all such information in confidence, although this condition is not intended to restrict Roche from enforcing any term or provision of this Agreement in arbitration or court.

     5.6 Recruiting of forecasted sales. Commencing after the First Commercial Sale, each year in June, Miikana shall provide Roche with a good faith Net Sales forecast for the following     *     . This annual forecast shall be for informational purposes only and shall not confer any right or obligation on either Party with respect to projected sakes figures. The forecast will consist of Miikana’s reasonable estimate of the quarterly Net Sales for the two remaining quarters in the then current year and the four quarters in the following year.     *         *    .

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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ARTICLE 6

RESEARCH, DEVELOPMENT AND MARKETING

     6.1 Development. Prior to the Effective Date, Roche has conducted research and development of the Compound. Miikana has drafted a Development Plan to guide the further clinical development of the Compound and have appended it at Appendix C. The Development Plan merely serves as a guide and may undergo substantive changes as it is implemented.

     6.2 Liaison.

          (a) At the Effective Date of this Agreement, Roche shall assign a Global Alliance Director to be the liaison with Miikana. The Global Alliance Director will be the Roche point person with primary responsibility for communications and interactions with Miikana related to:

(i)     *    

(ii)     *    

(iii)     *    

(iv)     *    

(v)     *    

          (b) Similarly and for reasons including those set out in Section 6.2(a). Miikana shall assign a liaison with Roche.

     6.3 Development Program.

          (a) Miikana shall, at its expense, conduct a clinical and commercial development program relating to the use of a Licensed Product using commercially reasonable efforts (“Development Program”) consistent with the Development Plan. Miikana shall provide ___    *    ___written reports to the Global Alliance Director on the progress of the Development Program, and     *     shall provide to the Global Alliance Director a written status report of all Development Program activities.

          (b) At a minimum, the Development Plan shall include a Phase-to-Phase progression of the program that is results- and regulatory-based. Miikana shall conduct a Phase II clinical program in accordance with the Development Plan. The clinical portion of the Development Plan shall be designed to obtain sufficient data to support progressing to one or

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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more pivotal clinical trials designed to obtain sufficient data to support Registration in at least one indication in the Field.

          (c) Based on the Phase II clinical data and correspondence from Regulatory Agencies concerning such Phase II data, Miikana shall,     *     after completion of all Phase II clinical trials, either (i) commence one or more pivotal clinical trials designed to obtain sufficient data to support Registration in at least one indication in the Field or (ii) notify Roche that it is terminating the Agreement.

          (d) The Development Plan may be reasonably modified and updated at any time as is deemed necessary at the discretion of Miikana.

          (e) Reversion to Roche. Notwithstanding anything in this Agreement to the contrary, if at any time and for any reason, whether scientific, technical, medical, economic, commercial or otherwise, Miikana shall determine that it is not reasonable to continue clinical trials or other development of Licensed Products, it may deliver a written notice of such determination to Roche, and its election to cease further development, in which event, Roche may terminate the Agreement and all licenses granted herein pursuant to Section 12.3(b). Likewise, if Miikana determines not to pursue the development or commercialization of a Licensed Product in any of the following sub-territories: (i) the US, (ii) Japan, (iii) the European Union (in such case at least     *     of the Major Markets in the European Union), then Miikana shall provide Roche with written notice of its decision and shall terminate this Agreement with respect to such sub-territory, within     *     following Roche’s receipt of such notice, in which event, Roche may terminate the Agreement and all licenses granted herein solely for such sub-territory pursuant to Section 12.3(b).

ARTICLE 7

PATENT RIGHTS

     7.1 Patent Prosecution and Maintenance.

          (a) Roche shall, at its sole expense, prosecute any and all patent applications within the Roche Patent Rights to obtain patents thereon and to maintain all patents included in the Roche Patent Rights. Interferences, nullification proceedings and oppositions shall be considered a part of the prosecution and maintenance of the Roche Patent Rights.

          (b) Miikana shall, at its sole expense, prosecute any and all patent applications within the Miikana Patent Rights, to obtain patents thereon and to maintain all patents included in the Miikana Patent Rights using patent counsel of its choice. Interferences, nullification proceedings and oppositions shall be considered a part of the prosecution and maintenance of the Miikana Patent Rights.

          (c) Miikana and Roche shall each keep the other reasonably informed of its prosecution of the Miikana Patent Rights or Roche Patent Rights, as the case may be. Each Party agrees to provide the other Party with a written report no less frequently than once each year updating the other Party with respect to the status of its prosecution of the Miikana Patent Rights or Roche Patent Rights. If either Party fails to perform its obligations under Section

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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7.9(a) or (b), then the other shall have the right to perform such activities on its behalf. At the request of the other Party at anytime during the term of this Agreement each Party shall execute such documents as the other Party may deem necessary or advisable to protect or perfect its rights in the relevant Patent Rights, and shall assist the other party in obtaining, defending and enforcing such Party’s rights therein. Each Party hereby appoints the other as its attorney-in-fact to execute on its behalf any documents deemed necessary or advisable by the other Party to protect or perfect its rights to any relevant Patent Rights.

     7.2 Discontinuance/Abandonment. Notwithstanding won 7.1, each of Roche and Miikana shall have the right to discontinue the prosecution of any patent application, or to abandon any patent, encompassed within the Roche Patent Rights or Miikana Patents, as the case may be. If a party (“Abandoning Party”) decides to abandon or allow to lapse any patent application or patent within its patent rights (Roche Patent Rights or Miikana Patent Rights, as the case may be), then the Abandoning Party shall inform the other party (“Non-Abandoning Party”) at least     *     prior to such abandonment or lapse and the Non-Abandoning Party shall be given the opportunity to have such patent assigned to it from the Abandoning Party. If a Roche patent application or patent is assigned to Miikana, then for so long as such patent application or patent remains in effect it shall be considered Roche Patent Rights for purposes of royalty payments under Article 4; provided, however, Miikana shall be entitled to credit     *     of its costs actually incurred in prosecuting and maintaining such patents against any future payments under Article 4, subject to audit by Roche under Section 5.4.

     7.3 Status of Patent Rights. Within     *     after each anniversary of the Effective Date, each of Roche and Miikana shall advise the other Party as to the then-current status of any patent applications or patents within the advising Party’s Patent Rights specifically relevant to any Licensed Product.

     7.4 Ownership of Future Inventions and Know-How.

          (a) Miikana shall disclose to Roche any Inventions related to the Compound, Derivatives, Licensed Products, or any data generated through their use with respect to which it intends to file a patent application. Disclosure pursuant to this Section 7.4(a) shall be made not later than one month prior to filing a patent application with respect to such items.

          (b) Patentable and unpatentable Inventions or Know-How made, developed or conceived by Miikana personnel alone (or jointly with one another) shall be the sole property of Miikana (“Miikana Inventions”). Miikana shall have sole discretion and responsibility to prepare file, prosecute and maintain patent applications for Miikana Inventions, and shall be responsible for related interference proceedings.

          (c) Patentable and unpatentable Inventions or Know-How made, developed or conceived by Roche personnel alone (or jointly with one another) shall be the sole property of Roche (“Roche Inventions”). Roche shall have sole discretion and responsibility to prepare file, prosecute and maintain patent applications for Roche Inventions, and shall be responsible for related interference proceedings.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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          (d) Patentable or unpatentable Inventions or Know-How jointly made, developed or conceived by Miikana and Roche personnel shall be jointly owned, unless the Parties agree otherwise. Patent applications for joint inventions shall be prepared and prosecuted jointly.

          (e) In no event shall any disclosure of compounds, inventions or other information in accordance with this Section 7.4 be construed as an offer to sell those compounds, inventions or other information. Any disclosure under this Section 7.4 shall be subject to the confidentiality provisions of this Agreement.

ARTICLE 8

INFRINGEMENT

     8.1 Applicability. The provisions of this Article 8 shall govern the Parties’ rights and obligations, as between themselves, with respect to actions against Third Parties for infringement of the patents or misappropriation of the Know-How licensed under this Agreement. Notwithstanding the foregoing, in the case of patents and Know-How licensed under this Agreement that is owned by a Third Party, then the Parties’ rights to enforce such patents or any right in such Know-How shall be subject to the rights of such Third Party set forth in its agreement with the Party that Controls such patents or Know-How.

     8.2 Third Party Infringement.

          (a) If either Miikana or Roche becomes aware of any product made, used, sold or imported in the Territory which it believes to (i) infringe a Valid Claim within the Roche Patent Rights (“Field Infringement”) or the Miikana Patent Rights, (ii) or constitute a misappropriation of Know-How owned or Controlled by either Party covering or relating to a Licensed Product or its manufacture or use, then such Party (the “Notifying Party”) shall promptly (     *     in the event of receiving a Paragraph IV Certification described in 21 C.F.R. § 314.50(i)(A)(4)) advise the other Party of all the relevant facts and circumstances known by the Notifying Party in connection with the infringement or misappropriation.

          (b) The Parties agree that Roche shall have the right, at its own expense, but not the obligation, to enforce Roche Patent Rights against Field Infringement and Miikana shall have the right, at its own expense, but not the obligation, to enforce Miikana Patent Rights against infringement. Miikana and its Affiliates shall fully cooperate with Roche with respect to the investigation and prosecution of such alleged Field Infringement or misappropriation including (without limitation) the joining of Miikana and its Affiliates as a party to such action, as may be required by the law of the particular forum where enforcement is being sought. Roche and its Affiliates shall fully cooperate with Miikana with respect to the investigation and prosecution of such alleged infringement of the Miikana Patent Rights or misappropriation including (without limitation) the joining of Roche and its Affiliates as a party to such action, as may be required by the law of the particular forum where enforcement is being sought.

          (c) If Roche elects to proceed with an enforcement action pursuant to Section 8.2(b), then Miikana shall have the right to intervene and pursue its own damages claim

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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against any alleged Field Infringement if such Field Infringement is caused by the manufacture, use or sale of a product containing a Compound or Derivative. Any such intervention by Miikana under this Section 8.2(c) shall be controlled by Miikana with respect to such damages claim; however, Roche shall remain in control of the defense against any claim, counterclaim or defense of patent invalidity or unenforceability related to any such Field Infringement.

          (d) Roche grants to Miikana the right to enforce the Roche Patent Rights against Field Infringement, if:

               (i) Roche fails, within     *     (     *     in the event of the filing of a Paragraph IV Certification) after receiving notice from Miikana of the Field Infringement to (1) notify Miikana that Roche elects to proceed with an enforcement action pursuant to Section 8.2(b), (2) take reasonable action to investigate such alleged infringement, and (3) promptly thereafter, institute an action to abate such alleged infringement and to prosecute such action diligently (i.e. within     *     or     *     in the event of the filing of a Paragraph IV Certification), or

               (ii) Roche earlier notifies Miikana that Roche does not plan to terminate the infringement or institute such action solely pursuant to Section 8.2(b).

Roche and its Affiliates shall fully cooperate with Miikana, at Miikana’s expense, with respect to the investigation and prosecution of such alleged infringement including (but not limited to) the joining of Roche and its Affiliates as a party to such action, as may be required by the law of the particular forum where enforcement is being sought. Any such enforcement action by Miikana under Roche Patent Rights shall be limited to enforcement against Field Infringement caused by the manufacture, use or sale of a product containing a Compound or Derivative, and shall not without the advance written consent of Roche extend to any other infringement.

          (e) If Roche is prosecuting an infringement action under Section 8.2(b), then Roche shall have the right to control such litigation and shall bear all legal expenses (including court costs and legal fees and expenses), including settlement thereof. If a claim for damages is brought by Miikana pursuant to Section 8.2(c), then Miikana shall have such right to control such claim for damages and shall bear all its legal expenses (except as provided otherwise in the event that Roche should join as a party to such action). No settlement or consent judgment or other voluntary final disposition of any infringement action brought by a Party pursuant to this Section 8.2 may be entered into without the prior written consent of the other Party if such settlement would require the other Party to be subject to an injunction or to make a monetary payment or would restrict the claims in or admit any invalidity of any of the Roche Patent Rights or Miikana Patent Rights or significantly adversely affect the rights of the other Party to this Agreement.

Roche shall be entitled to keep, out of all damages or costs recovered by Roche in connection with any action filed by Roche under Section 8.2(b), and after first reimbursing both parties for any out-of-pocket costs and expenses incurred in bringing the action (“Roche Net Recovery”), an amount equal to: (i)     *     of such Roche Net Recovery for actions against a Field Infringement that do not involve manufacture, use or sate of a product containing a Compound or Derivative, and (ii)     *     of the Roche Net Recovery from any action to the extent

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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involving manufacture, use or sale of a product containing a Compound or Derivative, and the rest of such Roche Net Recovery shall be provided to Miikana. Miikana shall be entitled to keep     *     of all damages or costs recovered by Miikana in connection with any claim for damages brought by Miikana under Section 8.2(c) or 8.2(d), after first reimbursing both parties for any out-of-pocket costs and expenses incurred in bringing the action (“Miikana Net Recovery”), and the rest of such Miikana Net Recovery     *     shall be provided to Roche. If the Parties jointly prosecute such infringement action and jointly share expenses, then the Parties will split     *     all damages or costs recovered, after first reimbursing each Party pari passu for any out-of-pocket expenses in such action. If the recovery of a Party prosecuting an action solely under this Section 8.2 does not exceed the Parties’ costs in such action, then each Party shall be reimbursed pari passu for any out-of-pocket expenses incurred in such action.

          (f) Sections 8.2(b)-(e) shall apply mutatis mutandis to trade secret misappropriation actions relating to activities as it does to enforcement of Valid Claims against Field Infringement.

          (g) Neither Party shall be entitled to grant covenants not to sue or other similar rights under patents owned or controlled by the other Party, provided, however, Miikana may grant licenses and sublicenses in accordance with Section 2.2.

ARTICLE 9

REPRESENTATIONS AND WARRANTIES

     9.1 Representations and Warranties of Roche. Roche hereby represents and warrants to Miikana as of the Effective Date that:

          (a) Roche Nutley and Roche Basel are duty incorporated, validly existing and in good standing, with the corporate power and authority to enter into this Agreement and to perform their obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Roche. This Agreement has been duly executed and delivered by Roche and constitutes the valid, binding and enforceable obligation of Roche, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors’ fights generally from time to time in effect and to general principles of equity.

          (b) Roche is not subject to, or bound by, any provision of

               (i) any articles or certificates of incorporation or by-laws;

               (ii) any mortgage, deed of trust, lease, note, shareholders’ agreement, bond, indenture, license, permit, trust, custodianship, or other instrument, agreement or restriction; or

               (iii) any judgment, order, writ, injunction or decree or any court, governmental body, administrative agency or arbitrator;

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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that would prevent, or be violated by, or under which there would be a default as a result of, nor is the consent of any Third Party required for, the execution, delivery and performance by Roche of this Agreement and the obligations contained herein, including without limitation, the grant to Miikana of the license described in Section 2.1 hereof.

          (c) ___    *     under the Roche Patent Rights for purposes other than the manufacture, use, offer for sale, importation or sale of a Compound or Derivative, or any product containing a Compound or Derivative; (ii) with the exception of license rights that may have been or may be granted under the Roche Patent Rights for purposes other than the manufacture, use, offer for sale, importation or sale of a Compound or Derivative, or any product containing a Compound or Derivative     *     ; and (iii) other than facts made available to Miikana during due diligence and facts contained in patent oppositions and other publicly available records (such as prosecution histories and the like), there     *     .

     9.2 Representations and Warranties of Miikana. Miikana hereby represents and warrants to Roche as of the Effective Date that:

          (a) Miikana is a corporation duly incorporated, validly existing and in good standing under the laws of the jurisdiction of its organization, with the corporate power and authority to enter into this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all requisite corporate action on the part of Miikana. This Agreement has been duly executed and delivered by Miikana and constitutes the valid, binding and enforceable obligation of Miikana, subject to applicable bankruptcy, reorganization, insolvency, moratorium and other laws affecting creditors’ rights generally from time to time in effect and to general principles of equity.

          (b) Miikana is not subject to, or bound by, any provision of:

               (i) any articles or certificates of incorporation or by-laws;

               (ii) any mortgage, deed of trust, lease, note, shareholders’ agreement, bond, indenture, license, permit, trust, custodianship, or other instrument, agreement or restriction, or

               (iii) any judgment, order, writ, injunction or decree or any court, governmental body, administrative agency or arbitrator,

that would prevent, or be violated by, or under which there would be a default as a result of, nor is the consent of any Third Party required for, the execution, delivery and performance by Miikana of this Agreement and the obligations contained herein.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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     9.3 Disclaimer of Warranties. EXCEPT AS SET FORTH EXPRESSLY IN THIS AGREEMENT, EACH PARTY HEREBY EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES OF ANY KIND, EXPRESSED OR IMPLIED, INCLUDING WITHOUT LIMITATION THE WARRANTIES OF DESIGN, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THE INTELLECTUAL RIGHTS OF THIRD PARTIES. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, BOTH PARTIES ACKNOWLEDGE AND DISCLAIM ANY WARRANTY AS TO: (1) THE SUCCESS OF ANY DEVELOPMENT OR CLINICAL TRIAL, STUDY OR TEST COMMENCED BY UNDER THIS AGREEMENT; OR (11) REGULATORY APPROVAL, PRODUCT INTRODUCTION, SAFETY, USEFULNESS OR COMMERCIAL SUCCESS OF ANY LICENSED PRODUCT.

ARTICLE 10

CONFIDENTIALITY

     10.1 Treatment of Confidential Information. Except as otherwise provided in this Article 10, during the term of this Agreement and for a period of     *     thereafter, Miikana and its Affiliates will retain in confidence and use only for purposes of this Agreement any information, data, and materials supplied by Roche or on behalf of Roche to Miikana and its Affiliates under this Agreement, and Roche will retain in confidence and use only for purposes of this Agreement any information, data, and materials supplied by Miikana or on behalf of Miikana to Roche under this Agreement. For purposes of this Agreement, all such information and data which a Party is obligated to retain in confidence shall be called “Confidential Information” of the disclosing Party.

     10.2 Right to Disclose. To the extent it is reasonably necessary or appropriate to fulfill its obligations or exercise its rights under this Agreement or any rights which survive termination or expiration hereof, Miikana and Roche each may disclose the Confidential Information of the other Party to their respective Affiliates, sublicensees, consultants, outside contractors, clinical investigators or other Third Parties provided that such entities or persons agree in writing (a) to keep the Confidential Information confidential for the same time periods and to the same extent as Miikana and Roche are required to keep the Confidential Information confidential and (b) to use the Confidential Information only for such purposes as Miikana and Roche (as applicable) are entitled to use the Confidential Information. Each Party or its Affiliates or sublicensees may disclose such Confidential Information of the other Party to government or other regulatory authorities to the extent that such disclosure (i) is reasonably necessary to obtain patents or authorizations to conduct clinical trials with or to market commercially the Licensed Products, provided such Party is otherwise entitled to engage in such activities under this Agreement; (ii) is otherwise legally required; (iii) is in facilitation of a Party’s relationship with its existing or prospective investors; or (iv) is permitted pursuant to Section 14.7; provided that if a Party is legally required to make such a disclosure under (ii), it shall first have given prompt notice to the other Party hereto to enable it to seek any available exemptions from or limitations on such a disclosure, or to apply for confidential treatment or a protective order.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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     10.3 Release From Restrictions. The foregoing obligations in respect of disclosure and use of Confidential Information shall not apply to any part of such Confidential Information that the receiving Party, or its Affiliates (all collectively referred to as the “Receiving Party”) can demonstrate by competent evidence:

          (a) is or becomes publicly available other than by acts of the Receiving Party in breach of this Agreement;

          (b) is disclosed to the Receiving Party or its Affiliates or-sublicensees by a Third Party who had the right to disclose such Confidential Information to the Receiving Party;

          (c) prior to disclosure under this Agreement, was already in the possession of the Receiving Party or its Affiliates or-sublicensees, provided such Confidential Information was not obtained, directly or indirectly, from the other Party under this Agreement; or

          (d) was independently discovered or developed by the Receiving Party without resort to or use of any Confidential Information of the disclosing Party.

     10.4 Confidentiality of Agreement. Except as otherwise required by law or the terms of this Agreement or mutually agreed upon by the Parties hereto, each Party shall treat as confidential the terms; and conditions of this Agreement, except that Roche and Miikana may each disclose such terms and conditions and the achievement of milestone and other significant events under this Agreement to its Affiliates and sublicensees, and to current and potential investors, merger partners or acquirors. Furthermore, either Party in connection with its current or future status as a public company may disclose the terms of this Agreement to the extent required by the federal securities laws, and provided, that the disclosing Party shall seek confidential treatment of key business terms contained in this Agreement, including but not limited to the royalty rates, the research and development reimbursement and the milestone payments; provided, however, that the disclosing Party shall duly consider reasonable and timely suggestions, advice and input from the non-disclosing Party with respect to seeking confidential treatment of key business terms contained in the Agreement. After execution of this Agreement, the Parties shall release the joint press release, the text of such shall be mutually agreeable to each Party, announcing the execution of the Agreement. In addition, the Parties have agreed to the publicity-related provisions that are set forth in Section 14.7.

     10.5 Return of Confidential Information. Upon termination of this Agreement by either Party for any reason, the rights of each Party to retain and use the Confidential Information of the other shall be as provided in Article 12, provided, however, that each Party may retain a single archival copy of the other Party’s Confidential Information solely for the purpose of determining the extent of disclosure of Confidential Information hereunder and assuring compliance with the surviving provisions of this Agreement.

ARTICLE 11

TRANSFERS AND ACCESS^- REGULATORY

     11.1 Transfer of Know-How. Within     *     after the Effective Date, Roche shall transfer to Miikana all of the Transfer Know-How to the extent available.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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Within     *     after the Effective Date, Roche shall transfer to Miikana the remainder of the Transfer Know-How. Roche agrees to provide to Miikana upon Miikana’s reasonable request and at Miikana’s sole expense the prosecution files and histories of the Roche Patent Rights that are not publicly available.

     11.2 Support. During the period beginning     *     thereafter, Roche shall allow Miikana to have     *     with available Roche key personnel at Roche’s facilities to answer questions pertaining to the Roche Know-How. During this     *     , Roche shall provide Miikana with reasonable access to key employees, if any, who are available at the time of request. All such requests by Miikana shall be made to the Roche employee designated to coordinate such requests. Such access shall not exceed     *    , of which no more than     *     shall be from any one of the following groups:     *     .

     11.3 Regulatory Affairs.

          (a) During the Term, Miikana shall (i) control and be solely responsible for making all needed Regulatory Filings relating to the development of Licensed Products and for seeking and maintaining Registrations of Licensed Products in the Field throughout the Territory, in such countries as it selects; and (ii) own and be responsible for preparing and submitting all Regulatory Rulings, including preparing all applications and reports necessary as part of an IND, NDA, DMF, BLA or other necessary filing required for Registration. Roche shall assign to Miikana all rights, title and interest in and to all Regulatory Filings that Roche has made with respect to any Compound or Derivative and all licenses, authorizations and permits that Roche has obtained with respect to clinical trials of any Compound or Derivative. Roche shall permit Miikana to access, and shall provide Miikana with sufficient rights to reference and use in association with exercising its rights and performing its obligations under this Agreement, all records pertaining to Compounds, Derivatives or Licensed Products as are in the possession and Control of Roche and are reasonably necessary for obtaining Registrations for Licensed Products.

          (b) In conducting any research or development activities under this Agreement, Miikana shall (i) ensure that its employees, agents, clinical institutions and clinical investigators comply with all FDA statutory and regulatory requirements with respect to Licensed Products, including but not limited to the Federal Food, Drug and Cosmetic Act, as amended, the Public Health Service Act, Institutional Review Boards, GCP, GLP, IND regulations, and any conditions imposed by a reviewing IRB or the FDA; and (ii) not utilize, in conducting studies on Licensed Products, any person or entities that at such time are debarred by the FDA, or that, at such time, are under investigation by the FDA for debarment action pursuant to the provisions of 21 U.S.C. § 335.

     11.4 Meetings with Regulatory Authorities. Miikana shall inform Roche of any meeting between Miikana and any Regulatory Authority to the extent that such meeting relates to the development of the Licensed Product. Roche shall be entitled, at its own expense, to have a Roche representative attend any such meeting.

     11.5 Supply of Active Compound. Miikana shall purchase from Roche at least ___    *    ___of     *     Compound (“ * ”) for     *    

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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    *     payable within     *     days after the Effective Date. Roche shall deliver such MBP to Miikana within     *     days after receiving Miikana’s payment. Roche shall retain in storage     *     of MBP for a period of     *     beginning on the Effective Date. If Miikana wants Roche to store MBP beyond the     *     of the Effective Date, then Miikana shall pay to Roche     *     and Roche shall store such MBP until the second anniversary of the Effective Date. If Miikana wants to purchase the entire     *     of MBP at any time during the time in which such MBP is stored by Roche, then Miikana may do so by paying Roche     *     and Roche shall deliver such MBP to Miikana within     *     days after receiving Miikana’s payment. MBP supplied to Miikana under this Section 11.5 shall comply with the specifications set forth in Appendix D. Transfer shall be     *     at a location identified by Roche. If the MBP fails to comply with the specifications set forth in Appendix D, then Miikana shall dispose of the non-complying_-MBP at its own cost and Roche shall reimburse Miikana for the payment made for such MBP.

     11.6 Product Recalls. Each Party shall advise the other if it determines that an event, incident, or circumstance has occurred which may result in the need for a recall or other removal of any Licensed Product, or a lot or lots thereof, from the market.

ARTICLE 12

TERM AND TERMINATION

     12.1 Term. This Agreement shall become binding upon the Effective Date. This Agreement shall continue thereafter in full force and effect, unless terminated sooner pursuant to Sections 12.2 or 12.3 below, until it expires upon the expiration of both Parties’ obligation to pay royalties to the other hereunder (such expiration of the term of this Agreement without termination, “Expiration”).

     12.2 Miikana Right to Terminate.

          (a) For Material Breach at any Time. Miikana may terminate this Agreement, as a whole, at any time if (i) Roche materially breaches the Agreement and (ii) such material breach is not cured by Roche within     *     after Miikana provides Roche with written notice of such breach, or, if such breach cannot be cured through commercially reasonable efforts within such     *     , and Roche has (within such time period) submitted a plan for cure as promptly as is reasonably practicable through the application of commercially reasonable efforts with a cure date reasonably acceptable to Miikana, after the earlier of the cure date agreed to by Miikana or the date Roche ceases commercially reasonable efforts to cure such breach.

          (b) For Convenience. Miikana may terminate this Agreement for convenience, upon     *     days prior written notice to Roche, provided that such notice of termination may not occur until     *     . Miikana may commence to wind down all of its activities under this Agreement immediately upon such notice. Mikana may terminate this Agreement pursuant to this Section 12.2(b) either in its entirety or in any or the following areas: (1) the US as a whole; (2) the European Union and

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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the territories and possessions of its member countries as a whole; (3) Japan and its territories and possessions as a whole; and (4) for countries not encompassed within (1), (2) and (3), in individual countries (and their territories and possessions) on a country-by-country basis.

          (c) EU Termination. As regards termination for convenience in the European Union pursuant to this Section 12.20, such termination shall be initially effective as of the expiration of the     *     notice period in each country that is at that time a member of the European Union (together with their territories and possessions), and within each country (together with its territories and possessions) that subsequently becomes a member of the European Union,     *     after it becomes such a member.

     12.3 Roche’s Right to Terminate.

          (a) For Material Breach at any Time. Roche may terminate this Agreement, as a whole, at any time if (i) Miikana materially breaches the Agreement and (ii) such material breach is not cured by Miikana within     *     after Roche provides Miikana with written notice of such breach, or, if such breach cannot be cured through commercially reasonable efforts within such     *     , and Miikana has (within such time period) submitted a plan for cure as promptly as is reasonably practicable through the application of commercially reasonable efforts with a cure date reasonably acceptable to Roche, after the earlier of the cure date agreed to by Roche or the date Miikana ceases commercially reasonable efforts to cure such breach. If Miikana files a petition for bankruptcy, dissolution, liquidation or winding up of affairs, then such petition shall not relieve Miikana of its obligation for continued performance under this Agreement pending a decision on such petition.

          (b) For Miikana’s Discontinuance of the Development Plan. Notwithstanding anything in this Agreement to the contrary, Roche may terminate the Agreement and all licenses granted herein following receipt of written notice from Miikana of Miikana’s decision to discontinue all of Miikana’s activities under the Development Plan pursuant to Section 6.3(c) in either the Territory or a sub-territory (as defined in Section 6.3(e)), as applicable. Following such termination and at Roche’s request, Miikana shall negotiate in good faith with Roche to license on commercially reasonable terms to Roche the Miikana Patent Rights and Miikana Know-How related solely to the Licensed Products.

     12.4 General Effect of Expiration or Termination. Upon Expiration or termination of this Agreement for any reason, all rights and obligations of the Parties hereunder shall cease, except as explicitly provided for below in this Article 12 or elsewhere in this Agreement. Expiration or termination of this Agreement shall not relieve the Parties of any obligation to make payments or otherwise to the extent related to events or other facts in existence prior to such Expiration or termination.

     12.5 Rights Upon Expiration or Any Termination.

          (a) Upon Expiration of this Agreement in any country, Miikana shall continue to have a royalty-free, perpetual right to Commercialize Licensed Products in the Territory, as the license granted Miikana in Section 2.1 shall automatically become royalty-free, non-exclusive and perpetual in the country of Expiration.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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          (b) Upon Expiration or termination of this Agreement for any reason, the following Sections and Articles shall survive such expiration or termination, subject to any later termination dates provided for therein: Sections 5.1 and 5.2 (with respect to payments having accrued during the term of this Agreement); Sections 5.4; 5.5; and 9.3, and Articles 1, 8 (as relates to infringement occurring during the term of this Agreement), 10, 12, 13 and 14.

     12.6 Rights Upon Certain Miikana Terminations.

          (a) Upon termination by Miikana for Roche’s uncured material breach of this Agreement pursuant to Section 12.2(a), the following Sections shall survive such termination in addition to the Sections and Articles set forth to survive in Section 12.5(b): Sections 2.1; and 3.1, 3.2 and 3.3 (with continued milestone payments); Article 4 (with continued royalty payments) and all other Sections and Articles governing the mechanics of milestone and royalty payments hereunder. The licenses granted by Roche to Miikana shall become     *     if Miikana terminates under Section 12.2(a).

          (b) If Miikana terminates this Agreement for any reason, other than Roche’s uncured material breach of this Agreement pursuant to Section 12.2(a), then Miikana’s obligations pursuant to Section 3.1 shall survive such termination.

     12.7 Rights Upon Roche Termination for Cause and Other Miikana Terminations. If Roche terminates this Agreement pursuant to Section 12.3, or Miikana terminates this Agreement for convenience pursuant to Sections 12.2(b), 12.2(c) or 12.2(4), then:

          (a) Reverted Territory: Reverted Products. The Territory, in the case of a termination in whole, and the terminated country or countries (together with their territories and possessions) in the case of a partial termination, shall be deemed to be the “Reverted Territory” effective as of the effective date of such termination. In the case of a partial termination, the Reverted Territory shall thereafter be excluded from the Territory for all purposes under this Agreement, but this Agreement will remain in effect in the remaining Territory. All Licensed Products in the Reverted Territory shall, effective upon the effective date of such termination, be deemed “Reverted Products.”

          (b) No Further Representations. The Miikana Group shall discontinue making any representation regarding its status as a licensee of or distributor for Roche in the Reverted Territory, for all Reverted Products. The Miikana Group shall cease conducting any activities with respect to the marketing, promotion, sale or distribution of the Reverted Products in the Reverted Territory.

          (c) Technology License. Miikana hereby grants to Roche, effective upon such termination, the right to negotiate a license on commercially reasonable terms under (i) any patent or patent application owned by Miikana (or any Miikana Affiliate) covering the Reverted Products having been developed or commercialized by the Miikana Group during the term of this Agreement, and (ii) all Know-How owned or Controlled by Miikana and its Affiliates relevant to Reverted Products, solely for Roche to Commercialize Reverted Products in the Reverted Territory, and to manufacture Reverted Products anywhere in the world for such Commercialization, and (iii) any Regulatory Filings of Miikana in the Reverted Territory.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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          (d) Remaining Quantities. At Roche’s request, Miikana shall sell to Roche ___    *    ___quantities of Compound or Derivative related to Reverted Products in the possession of the Miikana Group, in the case of a Territory-wide termination, or in their possession and labeled for sale in any country of the Reverted Territory, in the case of a partial termination, subject to all the disclaimers in Section 9.3. Such sale shall be     *     at a location identified by Miikana.

          (e) No Further Sales. Miikana covenants that promptly upon such termination it and its Affiliates and former sublicensees hereunder shall cease to sell, and thereafter shall not sell, any Reverted Product in the Reverted Territory prior to     *     after the effective date of termination.

          (f) Cross-Border Sales After Partial Termination. To the extent permitted by law, Miikana shall take reasonable measures to prevent any sales of Licensed Product originally sold by it in the Territory into the Reverted Territory. Such measures shall include without limitation, to the extent permitted by law: (i) refraining from selling quantities of Licensed Products to any entity Miikana has reason to believe (including as a result of written notice from Roche) may cause such quantities to be resold in the Reverted Territory, and (ii) contractually requiring each of its sublicensees and distributors of Licensed Produces to refrain from selling quantities of Licensed Products to any entity that the sublicensee or distributor has reason to believe may cause such quantities to be resold in the Reverted Territory. If Roche believes that Licensed Product originally sold by Miikana in the Territory is being sold in the Reverted Territory, senior executives of the Parties shall meet to discuss the situation. If such resale is occurring, then the Parties shall mutually agree on an equitable mechanism to compensate Roche for lost sales of Reverted Products in the Reverted Territory. In addition, this Section 12.7(f) shall apply to Roche mutatis mutandis to require that Roche must guard against Reverted Product originally sold in the Reverted Territory being resold into the Territory.

ARTICLE 13

INDEMNIFICATION

     13.1 Indemnification by Miikana. Subject to Sections 13.3 and 14.14 hereof, Miikana hereby agrees to defend, indemnify and hold harmless Roche and its Affiliates and licensors, and their directors, officers, employees and agents (“Roche Indemnitees”) from and against any liabilities, losses, fines, penalties, damages, expenses (including reasonable attorney’s fees and expenses and expenses incurred in connection with the enforcement of this provision), resulting from any Third Party suits, actions, or claims brought or threatened after the Effective Date of this Agreement and which arise out of claims against Roche brought by Third Parties after the Effective Date of this Agreement, including but not limited to, any actions in contract (including breach of warranty) tort (including negligence, strict liability or commercial torts) which arise, result from, or relate to:

               (i) any breach of any of the representations or warranties of Miikana contained in Section 9.2 hereof,

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

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               (ii) the gross negligence, recklessness or willful misconduct of the Miikana and its Affiliates; and

               (iii) any development or Commercialization (including without limitation; any manufacture, storage, use or possession) of Compound, Derivative or Licensed Product by Miikana, its Affiliates, sublicensees and distributors.

Items (i) through (iv) are hereinafter collectively referred to as a “Roche Loss.” Miikana shall have no obligation to indemnify Roche, to the extent that any Roche Loss arises out of the gross negligence or willful misconduct of any Roche Indemnitee or Roche’s breach of this Agreement.

     13.2 Indemnification by Roche. Subject to Sections 13.3 and 14.14 hereof, Roche hereby agrees to indemnify and hold harmless Miikana and its Affiliates and, sublicensees, and their directors, officers, employees and agents (Miikana Indemnitees”) from and against any liabilities, losses, fines, penalties, damages, expenses (including reasonable attorney’s fees and expenses and expenses incurred in connection with the enforcement of this provision), resulting from any Third Party suits, actions, or claims brought or threatened after the Effective Date of this Agreement and which arise out of claims against Miikana brought by Third Parties after the Effective Date of this Agreement, including but not limited to, any actions in contract (including breach of warranty), tort (including negligence, strict liability or commercial torts) which arise, result from, or relate to:

               (i) any breach of any of the representations or warranties of Roche contained in Section 9.1 hereof, and

               (ii) the gross negligence, recklessness or willful misconduct of Roche, its Affiliates or agents.

Items (i) through (ii) are hereinafter collectively referred to as an “Mikkana Loss.” Roche shall have no obligation to indemnify Miikana, to the extent that any Miikana loss arises out of the gross negligence or willful misconduct of any Miikana Indemnitee or Miikana breach of this Agreement.

     13.3 Indemnification Procedures With Respect to Third Party Claims.

          (a) To be eligible to seek indemnification under this Article 13 in respect to a liability, loss, fine, penalty, damage, expense, action, or claim brought against such Indemnitee by a Third Party (such claim hereinafter referred to as a “Third Party Claim”), a Miikana Indemnitee or Roche Indemnitee (each, an “Indemnitee”) shall promptly give written notice thereof to the Party from whom indemnification is sought (such Party hereinafter referred to as the “Indemnitor”) within a reasonable period of time after the assertion of such Third Party Claim by such Third Party; provided, however, that the failure to provide written notice of such Third Party Claim within a reasonable period of time shall not relieve the Indemnitor of any of its obligations hereunder, except to the extent that the Indemnitor is prejudiced by such failure. The Indemnitor shall have the right to assume the complete control of the defense, compromise or settlement of any Third Party Claim (provided that no settlement of any Third Party Claim shall include any admission of wrongdoing on the part of an Indemnitee, without the prior written consent of such Indemnitee, which consent shall not be unreasonably withheld),

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-26-

including, at its own expense, employment of legal counsel. At any time thereafter the Indemnitor shall be entitled to exercise, on behalf of the Indemnitee, any rights which may mitigate the extent or amount of such Third Party Claim; provided, however, that if the Indemnitor shall have exercised its right to assume control of such Third Party Claim, the Indemnitee (i) may, in its sole discretion and at its own expense (which expense shall not be subject to indemnification hereunder), employ legal counsel to represent it (in addition to the legal counsel employed by the Indemnitor) in any such matter, and in such event legal counsel selected by the Indemnitee shall be required to confer and cooperate with such counsel of the Indemnitor in such defense, compromise or settlement for the purpose of informing and sharing information with the Indemnitor; (ii) shall, at its own expense, make available to Indemnitor those employees, officers and directors or Indemnitee whose assistance, testimony or presence is necessary or appropriate to assist the Indemnitor in evaluating and in defending any such Third Party Claim (provided, however, that any such access shall be conducted in such a manner as not to interfere unreasonably with the operations of the businesses of Indemnitee); and (iii) shall otherwise fully cooperate with the Indemnitor and its legal counsel in the investigation and defense of such Third Party Claim.

          (b) If the Parties acting in good faith cannot agree as to the applicability of Section 13.1 and/or 13.2 to a particular Third Party Claim, then each Party (and its respective Indemnitees) reserves the right to conduct its own defense of such Third Party Claim and seek indemnification from the applicable Party upon its resolution.

ARTICLE 14

GENERAL PROVISIONS

     14.1 Force Maieure. Neither Party shall be held liable or responsible to the other Party nor be deemed to have defaulted under or breached this Agreement for failure or delay in fulfilling or performing any term of this Agreement, other than an obligation to make payments hereunder, when such failure or delay is caused by or results from fire; flood; earthquake; tornado; embargo; government regulation; prohibition or intervention; war; act of war (whether war be declared or not); insurrection; act of terrorism; riot; civil commotion; strike; lockout; act of God or any other cause beyond the reasonable control of the affected Party to anticipate, prevent, avoid or mitigate (a “Force Majeure Event”) so long as the affected Party uses commercially reasonable efforts to overcome the effects of the Force Majeure Event; provided, however, that any failure or delay in fulfilling a term of this Agreement shall not be considered a result of a Force Majeure Event if it arises from a knowing₌failure of Miikana or Roche to comply with applicable laws and regulations.

     14.2 Further Assurances. Each Party hereto agrees to perform such acts, execute such further instruments, documents or certificates, and provide such cooperation in proceedings and actions as may be reasonably requested by the other Party in order to carry out the intent and purpose of this Agreement, including without limitation the registration or recordation of the rights granted hereunder.

     14.3 Severabilitv. Both Parties hereby expressly acknowledge and agree that it is the intention of neither Party to violate any public policy, statutory or common law, rules,

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-27-

regulations, treaty or decision of any government agency or executive body thereof of any country or community or association of countries and specifically agree that if any word, sentence, paragraph, clause or combination thereof in this Agreement is found by a court or executive body with judicial powers having jurisdiction over this Agreement or any of the Parties hereto in a final unappealed order, to be in violation of any such provisions in any country or community or association of countries, then in such event such words, sentences, paragraphs, clauses or combination shall be inoperative in such country or community or association of countries (or reformed, for example but without limitation, to apply for a shorter period of time, such that their effect is in compliance with law) and the remainder of this Agreement shall remain binding upon the Parties hereto.

     14.4 Notices. Any notice required or permitted to be given hereunder shall be in writing and shall be deemed to have been properly given if delivered in person, or if mailed by registered or certified mail (return receipt requested) postage prepaid, or by a nationally recognized overnight courier, or by facsimile (and promptly confirmed by registered, certified mail, overnight courier or fax receipt), to the addresses given below or such other addresses as may be designated in writing by the Parties from time to time during the term of this Agreement. Any notice sent by overnight courier or facsimile shall be deemed received on the first business day after posted with the courier or transmittal. Any notice sent by registered, certified mail shall be deemed received on     *     business day following the date of posting.

In the case of Miikana:

Miikana Therapeutics
6519 Dumbarton Circle
Fremont, CA 94555
Attention: President

Telephone No.: (510) 818-2750
Facsimile No.: (510) 818-9955

and:

Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Attention: Barclay James Kamb, Esq.

Telephone No.: (650) 843-5052
Facsimile No.: (650) 849-7400

In the case of Roche:

Hoffmann-La Roche Inc.
340 Kingsland Street

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Nutley, NJ 07110
Attention: Corporate Secretary

-28-

and:

F. Hoffmann-La Roche Ltd
Grenzacherstrasse 124
CH-4070 Basel
Switzerland
Attention: Corporate Law

     14.5 Assignment. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and permitted assigns of the Parties hereto, but neither this Agreement nor any of the rights, interests or obligations hereunder of any Party hereto shall be assigned without the prior written consent of the other Party (which may be withheld for any reason), provided, however, that either Party may, without such consent, assign this Agreement in whole or in part-(i) to a successor corporation in connection with the transfer or sale of all or substantially all of its business to which this Agreement pertains or in the event of the merger or consolidation with another corporation; and (ii) to an Affiliate. Any purported assignment in violation of the preceding sentence shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement.

     14.6 Performance by Affiliates. Each of Roche and Miikana acknowledge that their obligations and rights under this Agreement may be performed and exercised by Affiliates of Roche and Miikana, respectively. Obligations of the Party for which one of its Affiliates is performing hereunder shall be deemed to extend to such performing Affiliate. Each of Roche and Miikana guarantee performance of this Agreement by its Affiliates. Wherever in this Agreement the Parties delegate responsibility to Affiliates or local operating entities, the Parties agree that such entities shall not make decisions inconsistent with this Agreement, amend the terms of this Agreement or act contrary to its terms in any way. Further, if a Party’s Affiliate breaches any aspect of this Agreement performance of which has been delegate to such Affiliate or acts in any way inconsistently with the foregoing sentence, then the other Party shall be entitled to proceed against the Party whose Affiliate so breached, and shall not first be required to proceed against the Affiliate that so breached.

     14.7 Publicity. Except for the details in the press release to be agreed upon by the Parties, and as required by law, stock exchange or regulatory authority, except to the extent otherwise required by law or regulation, neither Party, nor any of its Affiliates, shall originate any publicity, news release or other public announcement, written or oral, relating to the confidential terms or conditions contained in this Agreement without the prior written approval of the other Party.

     14.8 Amendment. The Parties hereto may amend, modify or after any of the provisions of this Agreement, but only by a written instrument that explicitly refers to this Agreement and is duly executed by both Parties hereto.

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-29-

     14.9 Entire Agreement. This Agreement contains the entire understanding of the Parties with respect to the subject matter hereof. All express or implied agreements and understandings, either oral or written, heretofore made with respect to such subject matter are expressly superceded by this Agreement.

     14.10 Waiver. The failure of a Party to enforce at any time for any period any of the provisions hereof shall not be construed as a waiver of such provisions or of the rights of such Party thereafter to enforce each such provisions.

     14.11 No Implied Licenses. Except as expressly and specifically provided under this Agreement, the Parties agree that neither Party is granted any implied rights to or under any of the other Party’s current or future patents, trade secrets, copyrights, moral rights, trade or service marks, trade dress, or any other intellectual property rights.

     14.12 No Joint Venture. The Parties agree that the relationship of Roche and Miikana established by this Agreement is that of independent licensee and licensor. Furthermore, the Parties agree that this Agreement does not, is not intended to, and shall not be construed to, establish a partnership or joint venture, and nor shall this Agreement create or establish an employment, agency or any other relationship. Except as may be specifically provided herein, neither Party shall have any right, power or authority, nor shall they represent themselves as having any authority to assume, create or incur any expense, liability or obligation, express or implied, on behalf of the other Party, or otherwise act as an agent for the other Party for any purpose.

     14.13 No Third Party Beneficiaries. All rights, benefits and remedies under this Agreement are solely intended for the benefit of Roche and Miikana, and no Third Party shall have any rights whatsoever to (i) enforce any obligation contained in this Agreement; (ii) seek a benefit or remedy for any breach of this Agreement; or (iii) take any other action relating to this Agreement under any legal theory, including but not limited to, actions in contract, tort (including but not limited to negligence, gross negligence and strict liability), or as a defense, setoff or counterclaim to any action or claim brought or made by the Parties.

     14.14 Limitation of Liability. IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY FOR ANY LOSS OF PROFITS, LOSS OF BUSINESS OR INTERRUPTION OF BUSINESS, OR FOR ANY OTHER INDIRECT, SPECIAL, INCIDENTAL, CONSEQUENTIAL OR PUNITIVE DAMAGES OF ANY KIND, EVEN If SUCH PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH LOSS OR DAMAGES. IN NO CASE SHALL EITHER PARTY BE LIABLE FOR ANY REPRESENTATION OF WARRANTY MADE BY THE OTHER PARTY TO ANY THIRD PARTY.

     14.15 Governing Law. This Agreement is to be construed in accordance with, and governed by, Swiss law, except in relation to the principles governing conflict of laws. This Agreement shall not be governed by the United Nations Convention of International Contracts on the Sale of Goods (Vienna Convention), except that questions affecting the construction and effect of any patent shall be determined by the laws of the country in which such patent has been

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-30-

granted. Litigation relating to the subject matter of this Agreement shall be brought in a court in Basel, Switzerland.

     14.16 Headings. The article, section and paragraph headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

     14.17 Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same document.

     14.18 Dispute Resolution. The Parties recognize that disputes as to certain matters may from time to time arise during the term of this Agreement which relate to either Party’s rights and/or obligations hereunder. The Parties shall seek to amicably resolve disputes arising under this Agreement in an expedient manner by mutual cooperation and without resort to litigation. To reach amicable resolution, the Parties agree to refer such disputes to the senior management of each Party for them to seek joint resolution before resorting to litigation.

Remainder of this page intentionally left blank

     In Witness Hereof, the Parties have executed this Agreement effective as of the Effective Date.

Hoffmann-La Roche Inc.
By:	/s/ Hoffmann La-Roche Inc.
	Name:
	Title:
F. Hoffmann-La Roche Ltd F.		Hoffmann-La Roche Ltd
By:	/s/ F. Hoffmann-La Roche Ltd.	By:	/s/ F. Hoffmann-La Roche Ltd
	Name:		Name:
	Title:		Title:
Miikana Therapeutics Inc.
By:	/s/ Dinesh V. Patel
	Name: Dinesh V. Patel, Ph.D.
	Title: President

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-31-

Appendix A

List of Roche Patent Rights

Count Code	Application No.	Patent No.
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*

Count Code	Application No.	Patent No.
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-2-

Appendix A

List of Roche Patent Rights (continued)

Roche Patent Series 20077

Count Code	Application No.	Patent No.
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-3-

Count Code	Application No.	Patent No.
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-4-

Count Code	Application No.	Patent No.
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-5-

Appendix A

List of Roche Patent Rights (continued)

Country Code	Application No.	Patent No.
*	*
*	*	*
*	*	*
*	*	*
*	*
*	*
*	*
*	*
*	*
*	*	*
*	*	*
*	*
*	*	*
*	*
*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*
*	*
*	*
*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-6-

Country Code	Application No.	Patent No.
*	*	*
*	*
*	*	*
*	*
*	*	*
*	*	*
*	*	*
*	*
*	*	*
*	*	*
*	*
*	*	*
*	*	*
*	*	*
*	*
*	*
*	*
*	*	*
*	*
*	*	*
*	*	*
*	*	*
*	*
*	*	*
*	*	*
*	*	*
*	*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-7-

Country Code	Application No.	Patent No.
*	*	*
*	*	*
*	*
*	*
*	*
*	*	*
*	*
*	*	*
*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-8-

Appendix A

List of Roche Patent Rights (continued)

Roche Patent Series 20524

Country Code	Application No.	Patent No.
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-9-

Country Code	Application No.	Patent No.
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*	*
*	*
*	*
*	*
*	*
*	*	*
*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-10-

Appendix A

List of Roche Patent Rights (continued)

Roche Patent Series 20690

Country Code	Application No.	Patent No.
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-11-

Appendix A

List of Roche Patent Rights (continued)

Roche Patent Series 20798

Country Code	Application No.	Patent No.
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*	*
*	*
*	*
*	*	*
*	*	*
*	*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-12-

Appendix A

List of Roche Patent Rights (continued)

Roche Patent Series 20865

Country Code	Application No.	Patent No.
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

-13-

APPENDIX B

Transfer of Know How

Binder No./Color	Description	Date	HLR No.
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*
*	*	*
*	*	*	*
*	*	*	*
*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*
*	*	*	*
*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*

Binder No./Color	Description	Date	HLR No.
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*	*	*
*	*
*	*
*	*	*	*
*	*	*	*
*	*
*	*	*
*	*	*	*
*	*	*	*
*	*
*	*	*	*
*	*	*	*
*

Green Corner Report
No./Binder No.	Description
*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

2

*	*
*	*
*
*	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
*	*
*	*
*	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
*	*
	*
	*
*	*
	*
	*
	*

Binder No./Color	Description
*	*
*	*
*

Binder No./Color	Description
*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

3

*	*
*	*
*	*
*	*
*	*
*	*
*	*1
*
*

Binder No./Color	Description
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*
	*

¹

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

4

Appendix C

Development Plan

Phase 2:

Ø	*
	Ø	*
	Ø	*
	Ø	*
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	Ø	*
Ø	*
Ø	*
	Ø	*
	Ø	*
	Ø	*
		Ø	*
	Ø	*
Ø	*

*	*	*	*	*
*	*	*	*	*

*
Phase 1b/ co-administration \trials
	Ø	*
		Ø	*
		Ø	*
	Ø	*
		Ø	*
		Ø	*
	Ø	*
		Ø	*
			Ø	*
		Ø	*
		Ø	*
	Ø	*
	Ø	*
	Ø	*
	Ø	*
		Ø	*
		Ø	*
			Ø	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

	Ø	*
		Ø	*
	Ø	*
		Ø	*
Ø	*
		Ø	*
Ø	*

*	*	*	*	*
*	*	*	*	*

*
	o	*
	o	*
	o	*
	o	*
		o	*
	o	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

*
o		*
o		*
o		*
*
o	*
	o	*
	o	*
	o	*
	o	*
		§	*
		§	*
		§	*
		§	*
		§	*
o	*
	o	*
	o	*
	o	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Glossary Of Abbreviations

*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*
*	*

* The marked portions have been omitted pursuant to a request for confidential treatment and filed separately with the Securities Exchange Commission.

Appendix D

Active Compound Specifications

Appendix E

Stock Purchase Agreement

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER

I, James S. Burns, certify that:

1. I have reviewed this quarterly report on Form 10-Q of EntreMed, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2006

/s/ James S. Burns

James S. Burns

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Dane R. Saglio, certify that:

1. I have reviewed this quarterly report on Form 10-Q of EntreMed, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 10, 2006

/s/ Dane R. Saglio

Dane R. Saglio

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of EntreMed, Inc. (the “Company”) on Form 10-Q as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, James S. Burns, as Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)	The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report.

     The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

	/s/ James S. Burns
May 10, 2006	James S. Burns
	President and CEO

EX-32.2

Exhibit 32.2

CERTIFICATION BY CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report of EntreMed, Inc. (the “Company”) on Form 10-Q as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dane R. Saglio, as Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of my knowledge, that:

(1)	The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and
(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report.

     The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

	/s/ Dane R. Saglio
May 10, 2006	Dane R. Saglio
	Chief Financial Officer