GELTEX PHARMACEUTICALS INC, 10-Q, 1997-08-12

GELTEX PHARMACEUTICALS INC
10-Q, 1997-08-12
PHARMACEUTICAL PREPARATIONS

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<PAGE> 1
FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

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

For the quarterly period ended JUNE 30, 1997

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

For the transition period from _______ to ______

Commission file number 0-26872

GELTEX PHARMACEUTICALS, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)

DELAWARE 04-3136767 .
- ------------------------------- ---------------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)

303 Bear Hill Road
WALTHAM, MASSACHUSETTS 02154
- ---------------------------------------- ---------------------------------
(Address of principal executive offices) (Zip Code)

617-290-5888
-------------------------------
(Registrant's telephone number,
including area code)

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

The number of shares outstanding of each of the issuer's classes of common stock
as of the latest practicable date:

<TABLE>
<CAPTION>
CLASS OUTSTANDING AT JUNE 30, 1997
----- ----------------------------
<S> <C>
Common Stock, $.01 par value 13,642,206
</TABLE>
<PAGE> 2
GELTEX PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C>
PART I FINANCIAL INFORMATION

ITEM 1 Financial Statements

Condensed Balance Sheets as of June 30, 1997
and December 31, 1996....................................... 3

Condensed Statements of Operations for the three
months ended June 30, 1997 and 1996......................... 4

Condensed Statements of Operations for the six
months ended June 30, 1997 and 1996, and for the
period November 15, 1991 (date of inception)
through June 30, 1997....................................... 5

Condensed Statements of Cash Flows for the six
months ended June 30, 1997 and 1996, and for the
period from November 15, 1991 (date of inception)
through June 30, 1997....................................... 6

Notes to Condensed Financial Statements..................... 7

ITEM 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations............... 8

ITEM 3 Quantitative and Qualitative Disclosures
About Market Risk........................................... 10

PART II OTHER INFORMATION

ITEM 2 Changes in Securities....................................... 11

ITEM 4 Submission of Matters to a Vote of Securities Holders....... 11

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

SIGNATURES..................................................................... 13

EXHIBIT INDEX.................................................................. 14
</TABLE>

-2-
<PAGE> 3
PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

GELTEX PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

CONDENSED BALANCE SHEETS
(UNAUDITED)

<TABLE>
<CAPTION>
June 30, December 31,
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents ....................................... $ 17,406,949 $ 20,801,465
Marketable securities ........................................... 45,254,045 52,623,094
Prepaid expenses and other current assets ....................... 1,297,980 1,923,878
------------ ------------
Total current assets .............................................. 63,958,974 75,348,437
Long-term receivables ............................................. 20,000 20,000
Property and equipment, net ....................................... 5,424,203 2,246,910
Intangible assets, net ............................................ 418,874 453,123
------------ ------------
$ 69,822,051 $ 78,068,470
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses ........................... $ 3,089,064 $ 2,495,869
Current portion of long-term obligations ........................ 708,408 391,766
------------ ------------
Total current liabilities ......................................... 3,797,472 2,887,635
Long-term obligations, less current portion ....................... 1,563,722 124,360
Stockholders' equity:
Undesignated Preferred Stock, $.01 par value; 5,000,000 shares
authorized, none issued or outstanding ....................... -- --
Common Stock, $.01 par value, 50,000,000
shares authorized; 13,642,206 and 13,521,302 shares issued
and outstanding at June 30, 1997 and December 31, 1996,
respectively ................................................. 136,422 135,213
Additional paid-in capital ...................................... 108,589,393 105,407,670
Deferred compensation ........................................... (512,057) (46,129)
Deficit accumulated during the development stage ................ (43,797,349) (30,460,246)
Unrealized gain on available-for-sale securities ................ 44,448 19,967
------------ ------------
Total stockholders' equity ........................................ 64,460,857 75,056,475
------------ ------------
$ 69,822,051 $ 78,068,470
============ ============
</TABLE>

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

-3-
<PAGE> 4
GELTEX PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

<TABLE>
<CAPTION>
Three Months
Ended June 30,
--------------------
1997 1996
---- ----
<S> <C> <C>
Revenue:
License fee and research revenue $ 10 $ 47,544
Research grant ................. 24,000 63,767
----------- -----------
Total revenue ..................... 24,010 111,311
Costs and expenses:
Research and development ....... 6,867,969 4,229,261
General and administrative ..... 1,370,217 714,696
----------- -----------
Total costs and expenses .......... 8,238,186 4,943,957
----------- -----------
Loss from operations .............. (8,214,176) (4,832,646)
Interest income ................... 846,525 813,237
Interest expense .................. (11,772) (20,238)
----------- -----------
Net loss .......................... $(7,379,423) $(4,039,647)
=========== ===========
Net loss per share ................ $ (.54) $ (.32)
=========== ===========
Shares used in computing
net loss per share ............. 13,558,000 12,457,000
</TABLE>

The accompanying notes are an integral part of the financial statements

-4-
<PAGE> 5
GELTEX PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)

For the Period
November 15,
Six Months 1991 (date
Ended June 30, of inception)
------------------------ through
1997 1996 June 30, 1997
---- ---- --------------
<S> <C> <C> <C>
Revenue:
License fee and research
revenue ...................... $ 10 $ 47,544 $ 4,994,484
Research grant ................. 163,642 213,589 739,593
------------ ------------ ------------
Total revenue ..................... 163,652 261,133 5,734,077
Costs and expenses:
Research and development ....... 13,012,012 6,792,471 46,017,752
General and administrative ..... 2,278,964 1,283,229 9,255,588
Other, nonrecurring costs ...... -- -- 230,000
------------ ------------ ------------
Total costs and expenses .......... 15,290,976 8,075,700 55,503,340
------------ ------------ ------------
Loss from operations .............. (15,127,324) (7,814,567) (49,769,263)
Interest income ................... 1,812,546 1,184,874 6,220,169
Interest expense .................. (22,325) (42,389) (248,255)
------------ ------------ ------------
Net loss .......................... $(13,337,103) $ (6,672,082) $(43,797,349)
============ ============ ============
Net loss per share ................ $ (.99) $ (.58)
============ ============
Shares used in computing
net loss per share ............. 13,537,000 11,516,000
</TABLE>

The accompanying notes are an integral part of the financial statements

-5-
<PAGE> 6
GELTEX PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)

<TABLE>
<CAPTION>
For the Period
November 15,
Six Months 1991 (date
Ended June 30, of inception)
------------------------ through
1997 1996 June 30, 1997
---- ---- --------------
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net loss .............................................. $(13,337,103) $ (6,672,082) $ (43,797,349)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization ...................... 861,525 325,037 2,527,799
Issuance of Common Stock as compensation ........... -- -- 5,000
Changes in operating assets and liabilities:
Prepaid expenses and other current assets ........ 625,898 (792,672) (1,297,980)
Long-term receivables ............................ -- -- (20,000)
Accounts payable and accrued expenses ............ 593,195 88,899 3,089,064
------------ ------------ -------------
Net cash used in operating activities ................. (11,256,485) (7,050,818) (39,493,466)

INVESTING ACTIVITIES
Purchase of marketable securities ..................... (18,106,218) (56,850,213) (139,679,803)
Proceeds from sale and maturities of
marketable securities ................................ 25,481,170 15,896,955 94,451,628
Purchase of intangible assets ......................... (89,248) (111,119) (826,835)
Purchase of property and equipment, net ............... (3,787,049) (289,655) (6,390,310)
------------ ------------ -------------
Net cash used in investing activities ................. 3,498,655 (41,354,032) (52,445,320)

FINANCING ACTIVITIES
Sale of Common Stock and warrants, net of
issuance costs ....................................... 2,517,263 61,200,999 90,195,587
Proceeds from employee stock purchase plan ............ 71,468 57,132 185,461
Sale of Preferred Stock, net of issuance costs ........ -- -- 17,480,688
Proceeds from notes payable ........................... 2,038,449 -- 2,773,449
Payments on notes payable and capital lease obligations (263,866) (145,635) (1,289,450)
------------ ------------ -------------
Net cash provided by (used in) financing activities ... 4,363,314 61,112,496 109,345,735
------------ ------------ -------------
Increase (decrease) in cash and cash equivalents ...... (3,394,516) 12,707,646 17,406,949
Cash and cash equivalents at beginning of period ...... 20,801,465 12,179,988 --
------------ ------------ -------------
Cash and cash equivalents at end of period ............ $ 17,406,949 $ 24,887,634 $ 17,406,949
============ ============ =============

Schedule of noncash investing and financing activities:
Property and equipment acquired under capital leases . $ 1,110,000

</TABLE>

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

-6-
<PAGE> 7
GELTEX PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed financial statements for the three
and six months ended June 30, 1997 and 1996 and for the period November 15, 1991
(date of inception) through June 30, 1997 have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all the information and footnotes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, the accompanying condensed financial statements
include all adjustments, consisting of normal recurring accruals, necessary for
a fair presentation of the financial condition, results of operations and cash
flows for the periods presented. The results of operations for the interim
period ended June 30, 1997 are not necessarily indicative of the results to be
expected for the year ended December 31, 1997.

These financial statements should be read in conjunction with the
audited financial statements and notes thereto for the fiscal year ended
December 31, 1996 included in the Company's Annual Report on Form 10-K (File
Number 0-26872) as filed with the Securities and Exchange Commission.

2. NET LOSS PER SHARE

In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share," which is required to be adopted on
December 31, 1997. At that time, the Company will be required to change the
method currently used to compute earnings per share and to restate all prior
periods. Under the new requirements for calculating basic earnings per share,
the dilutive effect of stock options will be excluded. The impact is not
expected to result in a change in basic loss per share for the six months ended
June 30, 1997 or in the basic loss per share for the six months ended June 30,
1996. The impact of Statement 128 on the calculation of fully diluted earnings
per share for these periods is not expected to be material.

3. TERM LOAN AGREEMENT

In May 1997, the Company entered into a $5.0 million term loan
agreement with a bank to finance the cost of leasehold improvements to, and
equipment purchases for, its new facility. The agreement provides for repayment
of the principal amount of the loan in 48 equal monthly installments commencing
in January 1998. The loan bears interest at the bank's prime rate, and certain
equipment purchased with funds received under the term loan will be pledged as
collateral. In addition, under the agreement the Company is required to comply
with certain financial covenants involving its capital base, liquidity and debt
service coverage. At June 30, 1997, the Company had drawn $1.8 million on the
loan and expects to draw the balance by September 30, 1997.

4. JOINT VENTURE AGREEMENT

In June 1997, the Company entered into a joint venture with Genzyme
Corporation for the final development and commercialization of RenaGel(R) (the
"Joint Venture"). Under the terms of the Collaboration Agreement, the Company
licensed all of its rights to RenaGel(R) (outside of certain Pacific Rim
countries) to the Joint Venture, and the Company will receive $27.5 million,
consisting of a $2.5 million equity investment (received in June 1997), a $15.0
million payment due upon receipt of marketing approval from the Food and Drug
Administration ("FDA"), and a $10.0 million payment due one year after FDA
approval. Both companies have committed to fund fifty percent (50%) of the
costs associated with the final development and commercialization of
RenaGel(R), and, to the extent such commitments are satisfied, both companies
will share equally in all profits.

5. MANUFACTURING AGREEMENT

In April 1997, the Company entered into a contract manufacturing
agreement for RenaGel(R). Under the terms of the agreement, the Company is
required to fund capital equipment costs of approximately $6.0 million. The
Company may be obligated to pay up to $3.75 million in additional equipment
costs in the event that the Company requires the manufacturer to increase
capacity and implement certain manufacturing changes designed to result in a
lower product cost. The contract manufacturing agreement also requires the
Company to purchase minimum quantities of product beginning in 1998. The
minimums are based upon the Company's estimated product requirements and are
subject to increases as product sales increase and as the manufacturer
increases its capacity for the product. All of the above-referenced capital
equipment costs and the minimum purchase obligations are costs associated with
the Joint Venture with Genzyme Corporation and will be borne equally by the
Company and Genzyme Corporation. Additionally, the Joint Venture may seek third
party financing for the capital equipment costs.

In June 1997, the Company engaged another supplier, previously engaged
to do certain process development work, to proceed with certain development
efforts necessary to qualify as a source of supply for RenaGel(R). In
connection with this engagement, the Company agreed to purchase certain
quantities of product resulting from the development efforts and the supplier
agreed to waive payment of a $1.5 million royalty payment due in connection
with process development technology previously developed for the Company by
such supplier for so long as the Company complied with certain minimal
commercial supply commitments. All of the above referenced payments and
purchase obligations are costs associated with the Joint Venture and will be
borne equally by the Company and Genzyme Corporation.

6. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued
Statement No. 130, "Reporting Comprehensive Income", which is required to be
adopted for fiscal years beginning after December 15, 1997. The Statement
establishes standards for the reporting and display of comprehensive income and
its components in a full set of general purpose financial statements. Adoption
of this standard is not expected to have a material impact on the Company's
financial statements or results of operations.

In June 1997, the Financial Accounting Standards Board issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information", which is required to be adopted for fiscal years beginning after
December 15, 1997. The Statement changes the way public companies report
segment information in annual financial statements and also requires those
companies to report selected segment information in interim financial reports
to shareholders. Adoption of this standard is not expected to have a material
impact on the Company's financial statements or results of operations.

-7-
<PAGE> 8
GELTEX PHARMACEUTICALS, INC.
(A DEVELOPMENT STAGE COMPANY)

NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

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

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1997 AND 1996

The Company earned revenues of $24,000 during the three months ended
June 30, 1997 compared with $111,000 earned during the three months ended June
30, 1996. In both periods, revenue was earned under the Company's $2.0 million
grant from the United States Department of Commerce's Advanced Technology
Program. Under the terms of the grant, the Company will continue to receive
funding through the first calendar quarter of 1998. However, the amount of such
funding may continue to decrease as the portion of program expenses required to
be funded by the Company increases. In the period ended June 30, 1996, revenue
was also earned under one of the Company's collaborative agreements as
reimbursement for a portion of the costs incurred in connection with certain
preclinical studies. The Company expects that the amount of such reimbursement
will vary from period to period based upon the status of the studies.

The Company's total operating expenses for the three months ended June
30, 1997 were $8.2 million, as compared to $4.9 million during the three months
ended June 30, 1996. Research and development expenses increased to $6.9 million
for the three months ended June 30, 1997 from $4.2 million for the three months
ended June 30, 1996 due primarily to increased third party expenses associated
with the development of CholestaGel(R) non-absorbed cholesterol reducer and
RenaGel(R) non-absorbed phosphate binder. These expenses included the production
of clinical trial material, clinical trial expenses and process development
expenses, as well as increases in research and development personnel and related
costs. General and administrative expenses increased to $1.4 million for the
three months ended June 30, 1997 from $715,000 for the three months ended June
30, 1996 due primarily to increased business development expenses and increased
administrative personnel.

Interest income increased to $847,000 for the three months ended June
30, 1997 from $813,000 for the three months ended June 30, 1996 due primarily to
increases in cash balances attributable to the Company's sale of equity
securities through a public offering in May 1996.

SIX MONTHS ENDED JUNE 30, 1997 AND 1996

The Company earned revenue of $163,600 during the six months ended June
30, 1997 compared with $261,000 earned during the six months ended June 30,
1996. In both periods, revenue was earned under the Company's $2.0 million grant
from the United States Department of Commerce's Advanced Technology Program.
Under the terms of the grant, the Company will continue to receive funding
through the first calendar quarter of 1998. However, the amount of such funding
may continue to decrease as the portion of program expenses required to be
funded by the Company increases. In the period ended June 30, 1996, revenue was
also earned under one of the Company's collaborative agreements as reimbursement
for a portion of the costs

-8-
<PAGE> 9
incurred in connection with certain preclinical studies. The Company expects
that the amount of such reimbursement will vary from period to period based upon
the status of the studies.

The Company's total operating expenses for the six months ended June
30, 1997 were $15.3 million, as compared to $8.1 million during the six months
ended June 30, 1996. Research and development expenses increased to $13.0
million for the six months ended June 30, 1997 from $6.8 million for the six
months ended June 30, 1996 due primarily to increased third party expenses
associated with the development of CholestaGel(R) and RenaGel(R). These expenses
included the production of clinical trial material, clinical trial expenses and
process development expenses, as well as increases in research and development
personnel and related costs. General and administrative expenses increased to
$2.3 million for the six months ended June 30, 1997 from $1.3 million for the
six months ended June 30, 1996 due primarily to increased business development
expenses and increased administrative personnel costs.

Interest income increased to $1.8 million for the six months ended June
30, 1997 from $1.2 million for the six months ended June 30, 1996 due primarily
to an increase in cash balances resulting from the Company's secondary public
offering in May 1996.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1997, the Company had $62.7 million in cash, cash
equivalents and marketable securities as compared to $73.4 million at December
31, 1996.

At June 30, 1997, the Company had approximately $245,000 outstanding
and $755,000 available through December 18, 1997, on a $1.0 million equipment
line of credit with a bank and had an additional $199,800 outstanding on various
other lines of credit with the bank. All amounts outstanding bear interest at
the prime rate and are due in monthly installments through July 1999.

In June 1997, the Company entered into a joint venture with Genzyme
Corporation for the final development and commercialization of RenaGel(R) (the
"Joint Venture"). Under the terms of the Collaboration Agreement, the Company
licensed all of its rights to RenaGel(R) (outside of certain Pacific Rim
countries) to the Joint Venture, and the Company will receive $27.5 million,
consisting of a $2.5 million equity investment (received in June 1997), a $15.0
million payment due upon receipt of marketing approval from the Food and Drug
Administration ("FDA"), and a $10.0 million payment due one year after FDA
approval. Both companies have committed to fund fifty percent (50%) of the costs
associated with the final development and commercialization of RenaGel(R), and,
to the extent such commitments are satisfied, both companies will share equally
in all profits.

-9-
<PAGE> 10
manufacturer increases its capacity for the product. All of the above-referenced
capital equipment costs and the minimum purchase obligations are costs
associated with the Joint Venture with Genzyme Corporation and will be borne
equally by the Company and Genzyme Corporation. Additionally, the Joint Venture
may seek third party financing for the capital equipment costs.

In June 1997, the Company engaged another supplier, previously engaged to
conduct process development work, to proceed with certain development efforts
necessary to qualify as a source of supply for RenaGel(R). In connection with
this engagement, the Company agreed to purchase certain quantities of product
resulting from the development efforts, and the supplier agreed to waive payment
of a $1.5 million royalty payment due in connection with process development
technology previously developed for the Company by such supplier for so long as
the Company complied with certain minimal commercial supply commitments. All of
the above-referenced payments and purchase obligations are costs associated with
the Joint Venture and will be borne equally by the Company and Genzyme
Corporation.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
MARKET RISK

Not applicable.

-10-
<PAGE> 11
PART II. OTHER INFORMATION

ITEM 2. CHANGES IN SECURITIES

On June 17, 1997, the Company issued to Genzyme Corporation 100,000
shares of its Common Stock, $.01 par value per share, at a price of $25 per
share, or $2.5 million in the aggregate. Such shares were not registered under
the Securities Act of 1933, as amended, in reliance upon the exemption from
registration set forth in Section 4(2) of such Act as a transaction by an issuer
not involving any public offering. The Company's reliance on this exemption was
based on the manner of the offering (a negotiated sale in connection with a
business collaboration between the parties) and Genzyme's financial status,
investment experience and investment intent, as represented to the Company.

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

The Company's 1997 Annual Meeting of Stockholders was held May 22,
1997. The following is a description of the three matters submitted to a vote of
the stockholders at such meeting and the results of voting.

(i) At the meeting three directors were elected to serve on the Company's
Board of Directors for various terms as follows:

<TABLE>
<CAPTION>
Number of Shares Number of
Director Elected Term Expires Voted For Votes Withheld
- ---------------- ------------ --------- --------------
<S> <C> <C> <C>
J. Richard Crout 2000 8,529,547 30,700

Mark Skaletsky 2000 8,529,547 30,700

Henri Termeer 1998 8,529,547 30,700
</TABLE>

There were no broker non-votes or abstentions with respect to this matter.

-11-
<PAGE> 12
(ii) The stockholders also approved an amendment to the Company's 1992
Equity Incentive Plan to increase the number of shares of Common Stock reserved
for issuance under such plan from 1,725,000 to 2,000,000.

Number of Shares Voted For: 8,485,389; Against: 43,280;
Abstaining: 9,132; Broker Non-Votes: 22,446.

(iii) The stockholders also approved an amendment to the Company's 1995
Director Stock Option Plan to increase the number of shares of Common Stock
reserved for issuance under such plan from 75,000 to 110,000.

Number of Shares Voted For: 8,477,110; Against: 53,791;
Abstaining: 6,900; Broker Non-Votes: 22,446.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits.

See the Exhibit Index on page 14 hereto.

(b) Reports on Form 8-K.

None.

-12-
<PAGE> 13
GELTEX PHARMACEUTICALS, INC.
FORM 10-Q
JUNE 30, 1997

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.

GELTEX PHARMACEUTICALS, INC.

DATE: August 12, 1997 BY: /s/ Paul J. Mellett, Jr.
----------------------------
Paul J. Mellett, Jr.
Duly Authorized Officer and
Principal Financial Officer

-13-
<PAGE> 14
EXHIBIT INDEX

EXHIBIT NUMBER DESCRIPTION
-------------- -----------

4.3 First Amendment to Rights Agreement
between the Company and American Stock
Transfer & Trust Company

10.18* Collaboration Agreement among the
Company, Genzyme Corporation and
RenaGel LLC dated as of June 17, 1997

10.19 Purchase Agreement between the Company
and Genzyme Corporation dated as of
June 17, 1997

10.20* Operating Agreement of RenaGel LLC
dated as of June 17, 1997

10.21* License Agreement between the Company
and Nitto Boseki Co., Ltd. dated as of
June 9, 1997

27 Financial Data Schedule
(filed with electronic submission only)

- --------------------------

*Certain confidential material contained in Exhibits 10.18, 10.20 and 10.21 has
been omitted and filed separately with the Securities and Exchange Commission
pursuant to Rule 24b-2 of the Securities Act of 1934.

-14-

<PAGE> 1
Exhibit 4.3

FIRST AMENDMENT
TO
RIGHTS AGREEMENT

THIS FIRST AMENDMENT TO RIGHTS AGREEMENT (the "Amendment"), dated as of
July 29, 1997 is between GelTex Pharmaceuticals, Inc., a Delaware corporation
(the "Company"), and American Stock Transfer & Trust Company, a New York
corporation, as Rights Agent (the "Rights Agent").

WHEREAS, the Company and the Rights Agent have previously entered into a
Rights Agreement, dated as of March 1, 1996 (the "Rights Agreement");

WHEREAS, Section 27 of the Rights Agreement provides that prior to the
Distribution Date (as defined therein) and subject to certain exceptions, the
Company and the Rights Agent shall, if the Company so directs, supplement or
amend any provision of the Rights Agreement without the approval of any holders
of certificates representing shares of Common Stock of the Company, and this
Amendment is made prior to the Distribution Date; and

WHEREAS, the Board of Directors of the Company has determined that certain
amendments to the Rights Agreement are desirable and has directed that the
Company and the Rights Agent enter into this Amendment.

NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the adequacy and receipt of which are hereby
acknowledged, the parties hereby agree as follows:

Section 1. Section l(a) of the Rights Agreement is amended and restated in
its entirety to read as follows:

(a) "Acquiring Person" shall mean any person who or which, together
with all Affiliates and Associates of such Person, shall be the Beneficial
Owner of 20% or more of the shares of Common Stock then outstanding.
Notwithstanding the foregoing, the term "Acquiring Person" shall not
include:

(i) the Company, any Subsidiary of the Company, any employee
benefit plan of the Company or of any Subsidiary of the Company, or
any Person or entity organized, appointed or established by the
Company for or pursuant to the terms of any such plan;

(ii) any Person eligible to file statements with respect to
Beneficial Ownership of the Common Stock on Schedule 13G pursuant to
Rules 13d-1 (b) or 13d-2(b) of the General Rules and Regulations under
the Exchange Act who or which, prior to a Distribution Date, the Board
of Directors of the Company, acting by a vote of a majority of the
Continuing Directors (treating such Person as an Acquiring Person for
such purpose), determines, subject to such limitations and conditions
and for such period, if any, as of the Board of Directors may
establish, is not an Acquiring Person; or

<PAGE> 2

(iii) any such Person who has become such a Beneficial Owner
solely because (A) of a change in the aggregate number of shares of
Common Stock outstanding since the last date on which such Person
acquired Beneficial Ownership of any Common Stock or (B) it acquired
such Beneficial Ownership in the good faith belief that such
acquisition would not (x) cause such Beneficial Ownership to exceed
20% of the Common Stock then outstanding and such Person relied in
good faith in computing the percentage of its Beneficial Ownership on
publicly filed reports or documents of the Company which are
inaccurate or out-of-date or (y) otherwise cause a Distribution Date
or the adjustment provided for in Section 11(a)(ii) to occur.
Notwithstanding the foregoing, if any Person that is not an Acquiring
Person due to this clause (iii) does not reduce its percentage of
Beneficial Ownership of Common Stock to below 20% by the Close of
business on the fifth Business Day after notice from the Company (the
date of notice being the first day) that such Person's Beneficial
Ownership of Common Stock so exceeds 20%, such Person shall, at the
end of such five Business Day period, become an Acquiring Person (and
this clause (iii) shall no longer apply to such Person). For purposes
of this definition, the determination whether any Person acted in
"good faith" shall be conclusively determined by a vote of a majority
of the Continuing Directors (treating such Person as an Acquiring
Person for such purpose).

Section 2. Except as amended by this Amendment, the Rights Agreement shall
remain in full force and effect.

Section 3. This Amendment may be executed in any number of counterparts,
and each of such counterparts shall for all purposes be deemed to be an
original, and all such counterparts shall together constitute but one and the
same instrument.

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the date and year first above written.

ATTEST: GELTEX PHARMACEUTICALS, INC.

/s/ Elizabeth Grammer By: /s/ Mark Skaletsky
- ------------------------------- ---------------------------

ATTEST: AMERICAN STOCK TRANSFER & TRUST
COMPANY

/s/ Susan Silber By: /s/ Herbert J. Lemmer
- ---------------------- ---------------------------
SUSAN SILBER HERBERT J. LEMMER
Assistant Secretary VICE PRESIDENT

<PAGE> 1
EXHIBIT 10.18

Confidential Treatment has been requested
for certain information omitted and filed
separately with the SEC.

COLLABORATION AGREEMENT

among

GELTEX PHARMACEUTICALS, INC.,

GENZYME CORPORATION

and

RENAGEL LLC

dated as of June 17, 1997

<PAGE> 2

TABLE OF CONTENTS

ARTICLE 1. DEFINITIONS...................................................... 1
1.1. "Abbott Agreement"............................................... 1
1.2. "Affiliate"...................................................... 1
1.3. "Chugai Agreement"............................................... 2
1.4. "Chugai Territory"............................................... 2
1.5. "Collaboration Product".......................................... 2
1.6. "Commercialization Costs"........................................ 2
1.7. "Commercialization Plan"......................................... 2
1.8. "Development Costs".............................................. 2
1.9. "Development Plan" .............................................. 3
1.10. "Development Program" ........................................... 3
1.11. "Distribution *****"............................................. 3
1.12. "Distributor ********"........................................... 3
1.13. "Dow Agreement" ................................................. 4
1.14. "Dow Research Agreement" ........................................ 4
1.15. "Effective Date"................................................. 4
1.16. "Estimated Net Selling Price".................................... 4
1.17. "Field".......................................................... 4
1.18. "FDA"............................................................ 4
1.19. "Fully Absorbed Cost of Goods"................................... 4
1.20. "GAAP"........................................................... 5
1.21. "GelTex Companies"............................................... 5
1.22. "GelTex Patent Rights"........................................... 5
1.23. "GelTex Technology".............................................. 5
1.24. "Genzyme Patent Rights".......................................... 5
1.25. "Genzyme Technology"............................................. 6
1.26. "Major Market Countries"......................................... 6
1.27. "Manufacturing Know-how"......................................... 6
1.28. "Member"......................................................... 6
1.29. "NDA"............................................................ 6
1.30. "Net Profit"..................................................... 6
1.31. "Net Sales"...................................................... 6
1.32. "Nittobo License"................................................ 7
1.33. "Operating Agreement"............................................ 7
1.34. "Patent Rights".................................................. 7
1.35. "Program"........................................................ 7
1.36. "Program Costs".................................................. 7
1.37. "Program Management Team"........................................ 7
1.38. "Purchase Agreement"............................................. 7
1.39. "Regulatory Approvals"........................................... 7
1.40. "Regulatory Scheme".............................................. 8
1.41. "Specifications"................................................. 8

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 3

1.42. "Steering Committee"..............................................8
1.43. "Technology"......................................................8
1.44. "Territory".......................................................8
1.45. "Third Party".....................................................8
1.46. "Wholesale Acquisition Cost"......................................8

ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION........................ 8
2.1. General......................................................... 8
2.2. Exclusive Relationship.......................................... 9
2.3. Chugai Agreement................................................ 9
2.4. Nittobo License................................................. 10

ARTICLE 3. GRANTS AND RESERVATIONS OF RIGHTS............................... 10
3.1. Assignments and Licenses to RenaGel LLC......................... 10
3.1.1. Grants from GelTex..................................... 10
3.1.2. Grants from Genzyme.................................... 10
3.1.3. Technology or Patent Rights Developed Outside
the Program............................................ 11
3.1.4. RenaGel LLC Undertakings; Sublicenses.................. 11
3.2. Licenses of Rights from RenaGel LLC to GelTex and Genzyme....... 11
3.3. Reservation of Rights........................................... 12

ARTICLE 4. EQUITY INVESTMENTS; PROGRAM FUNDING............................. 12
4.1. Equity Investments. ............................................ 12
4.2. Program Funding Commitment...................................... 12
4.3. Program Funding Capital Contributions........................... 13
4.3.1. Initial Capital Contributions.......................... 13
4.3.2. Monthly Capital Contributions.......................... 13
4.3.3. Quarterly Statements; Quarterly Reconciliation......... 13
4.4. Distributions................................................... 13
4.5. Books of Account; Audit. ....................................... 14

ARTICLE 5. THE DEVELOPMENT PROGRAM......................................... 14
5.1. Conduct of the Development Program.............................. 14
5.1.1. General................................................ 14
5.1.2. Development Plan....................................... 14
5.1.3. Initial and Updated Development Plan................... 15
5.1.4. Execution and Performance.............................. 15
5.1.5. Attendance at Regulatory Meetings...................... 15
5.2. Development Information......................................... 16
5.2.1. Reports and Information Exchange....................... 16
5.2.2. Adverse Reaction Reporting............................. 16
5.2.3. Clinical and Regulatory Audits......................... 16
5.3. Regulatory Approval Filings..................................... 16
5.4. Facilities Visits............................................... 17

<PAGE> 4

ARTICLE 6. SALES, MARKETING AND ADMINISTRATIVE SERVICES.................... 17
6.1. Commercialization Plans......................................... 17
6.1.1. General................................................ 17
6.1.2. Initial and Updated Commercialization Plans............ 17
6.2. Exclusive Distributorship....................................... 17
6.3. Orders and Forecasting.......................................... 18
6.4. Prices and Payment Terms; Costs................................. 18
6.4.1. Prices................................................. 18
6.4.2. Terms of Payment....................................... 18
6.4.3. Marketing and Distribution Expenses.................... 18
6.5. Marketing Service............................................... 18
6.5.1. Exclusive Engagement................................... 18
6.5.2. Responsibilities of Genzyme............................ 18
6.6. Responsibilities of RenaGel LLC and GelTex...................... 20
6.7. General and Administrative Services............................. 20

ARTICLE 7. MANUFACTURE AND SUPPLY.......................................... 20
7.1. Process Development; Manufacturing Approvals.................... 20
7.2. Manufacture and Supply of Collaboration Products................ 21
7.2.1. General................................................ 21
7.2.2. Forecasts.............................................. 21
7.3. Certificates of Analysis........................................ 21
7.4. Certificates of Manufacturing Compliance........................ 22
7.5. Manufacture and Supply of Starting Material..................... 22
7.6. Access to Facilities............................................ 22

ARTICLE 8. MANAGEMENT...................................................... 23
8.1. Program Management Team......................................... 23
8.1.1. General................................................ 23
8.1.2. Development Program Functions.......................... 23
8.1.3. Commercialization Functions............................ 23
8.1.4. Minutes................................................ 23
8.2. Steering Committee.............................................. 24
8.2.1. General................................................ 24
8.2.2. Functions.............................................. 24
8.2.3. Minutes................................................ 24
8.3. General Disagreements........................................... 25

ARTICLE 9. INTELLECTUAL PROPERTY RIGHTS.................................... 25
9.1. Ownership....................................................... 25
9.1.1. Ownership of Discoveries and Improvements.............. 25
9.1.2. Ownership of Trademarks................................ 26
9.1.3. Cooperation of Employees............................... 26
9.2. Filing, Prosecution and Maintenance of Patent Rights............ 26

iii

<PAGE> 5

9.2.1. Filing, Prosecution and Maintenance..................... 26
9.2.2. Patent Filing Costs.................................... 26
9.3. Cooperation..................................................... 26
9.4. Notification of Patent Term Restoration......................... 27
9.5. No Other Technology Rights...................................... 27
9.6. Enforcement of Patent Rights; Defense of Infringement
Actions......................................................... 27
9.6.1. First Right to Respond................................. 27
9.6.2. Sharing of Litigation and Settlement Expenses.......... 27
9.6.3. Second Right to Respond................................ 28

ARTICLE 10. CONFIDENTIALITY................................................. 28
10.1. Nondisclosure Obligations....................................... 28
10.2. Terms of this Agreement......................................... 29
10.3. Publications.................................................... 29

ARTICLE 11. REPRESENTATIONS AND WARRANTIES.................................. 30
11.1. Authorization................................................... 30
11.2. Intellectual Property Rights.................................... 30
11.3. Warranties...................................................... 30
11.3.1. Genzyme Warranties...................................... 30
11.3.2. RenaGel LLC Warranties.................................. 31
11.3.3. GelTex Warranties....................................... 31
11.4. Disclaimer of Representations and Warranties.................... 31
11.5. Limitation of Liability......................................... 31

ARTICLE 12. INDEMNITY....................................................... 32
12.1. RenaGel LLC Indemnity Obligations............................... 32
12.2. Insurance....................................................... 32

ARTICLE 13. TERM AND TERMINATION............................................ 32
13.1. Term............................................................ 32
13.2. Termination..................................................... 32
13.2.1. For Certain Material Breaches........................... 32
13.2.2. For Failure to Make a Milestone Payment................. 33
13.2.3. For Convenience......................................... 33
13.2.4. Upon Change of Control.................................. 33
13.2.5. Upon Bankruptcy......................................... 33
13.3. Effects of Termination.......................................... 34
13.3.1. For Certain Material Breaches........................... 34
13.3.2. For Failure to Make a Milestone Payment................. 35
13.3.3. For Convenience......................................... 36
13.3.4. Upon a Change of Control................................ 37
13.3.5. Upon Bankruptcy......................................... 38
13.3.6. Fair Value.............................................. 39

<PAGE> 6

13.4. Inventory....................................................... 39
13.5. Survival of Rights and Duties................................... 40

ARTICLE 14. MISCELLANEOUS................................................... 40
14.1. Cooperation..................................................... 40
14.2. Exchange Controls............................................... 40
14.3. Withholding Taxes............................................... 40
14.4. Interest on Late Payments....................................... 40
14.5. Force Majeure................................................... 41
14.6. Assignment...................................................... 41
14.7. Severability.................................................... 41
14.8. Notices......................................................... 41
14.9. Applicable Law.................................................. 43
14.10. Arbitration..................................................... 43
14.10.1. General................................................ 43
14.10.2. Procedure.............................................. 43
14.11. Entire Agreement................................................ 44
14.12. Headings........................................................ 44
14.13. Independent Contractors......................................... 44
14.14. Waivers......................................................... 44
14.15. Counterparts.................................................... 44

Appendix A - Form of Press Release........................................... 47

<PAGE> 7

COLLABORATION AGREEMENT

THIS COLLABORATION AGREEMENT dated as of June 17, 1997 (the "AGREEMENT")
is made by and among GelTex Pharmaceuticals, Inc., a Delaware corporation having
its principal place of business at 303 Bear Hill Road, Waltham, Massachusetts
02154 ("GELTEX"), Genzyme Corporation, a Massachusetts corporation having its
principal place of business at One Kendall Square, Cambridge, Massachusetts
02139 ("GENZYME"), and RenaGel LLC, a Delaware limited liability company having
its principal place of business at 303 Bear Hill Road, Waltham, Massachusetts
02154 ("RENAGEL LLC"). GelTex, Genzyme and RenaGel LLC are sometimes referred to
herein individually as a "PARTY" and collectively as the "PARTIES."

R E C I T A L S

WHEREAS, GelTex is currently developing RenaGel(R) non-absorbed
phosphate binder, an orally administered hydrogel intended to control
hyperphosphatemia in patients with chronic kidney failure; and

WHEREAS, Genzyme has expertise in the areas of development and marketing
of bio-pharmaceutical products; and

WHEREAS, RenaGel LLC has been organized by GelTex for use as the vehicle
for a joint venture between GelTex and Genzyme to develop and commercialize the
Collaboration Products (as defined herein) throughout the world (excluding the
Chugai Territory (as defined herein)).

NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the Parties mutually agree as follows:

ARTICLE 1. DEFINITIONS

For purposes of this Agreement, the terms defined in this Article shall
have the meanings specified below. Certain other capitalized terms are defined
elsewhere in this Agreement.

1.1. "ABBOTT AGREEMENT" shall mean the Development Agreement dated
November 21, 1995 by and between GelTex and Abbott Laboratories ("ABBOTT").

1.2. "AFFILIATE" shall mean any corporation or other entity which
controls, is controlled by, or is under common control with a Party. A
corporation or other entity shall be regarded as in control of another
corporation or entity if it owns or directly or indirectly controls more than
fifty percent (50%) of the voting stock or other ownership interest of the other
corporation or entity, or if it possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of the corporation
or other entity or the

<PAGE> 8

power to elect or appoint more than fifty percent (50%) of the members of the
governing body of the corporation or other entity.

1.3. "CHUGAI AGREEMENT" shall mean the License Agreement dated as of
December 26, 1994 by and between GelTex and Chugai Pharmaceutical Co. Ltd.
("CHUGAI"), as in effect as of the Effective Date.

1.4. "CHUGAI TERRITORY" shall mean Japan, Taiwan, South Korea,
Peoples Republic of China, Singapore, Malaysia, India, Thailand, Vietnam,
Indonesia, Philippines, New Zealand and Australia.

1.5. "COLLABORATION PRODUCT" shall mean any product developed for use
in the Field by a Party utilizing, based upon or arising out of the GelTex
Patent Rights, the Genzyme Patent Rights, the GelTex Technology, the Genzyme
Technology or the Manufacturing Know-How owned or controlled by any Party,
including without limitation RenaGel(R) non-absorbed phosphate binder
("RENAGEL(R)") and any and all improvements, combination products, delivery
systems and dosage forms related thereto.

1.6. "COMMERCIALIZATION COSTS" with respect to a Collaboration
Product shall mean the direct variable costs and direct fixed costs incurred by
RenaGel LLC with respect to work performed by the Parties and their Affiliates
and subcontractors in connection with the conduct of the Commercialization Plan
for such Collaboration Product, including without limitation sales and marketing
costs related to performing market research, advertising, producing promotional
literature, sponsoring seminars and symposia, originating sales and providing
reimbursement and other patient support services, and distribution costs. For
purposes of this Section 1.6, "DIRECT VARIABLE COSTS" shall be deemed to be the
cost of labor, raw materials, supplies and other resources directly consumed in
the conduct of the Commercialization Plan. For purposes of this Section 1.6,
"DIRECT FIXED COSTS" shall be deemed to be the cost of facilities, utilities,
insurance, equipment depreciation and other fixed costs directly related to the
conduct of the Commercialization Plan, allocated based upon the proportion of
such costs directly attributable to support of the Commercialization Plan or by
such other method of cost allocation as may be approved by the Steering
Committee. All cost determinations made hereunder shall be made in accordance
with GAAP.

1.7. "COMMERCIALIZATION PLAN" shall mean the comprehensive plan for
the commercialization of a Collaboration Product, as more specifically described
in Section 6.1.1 hereof.

1.8. "DEVELOPMENT COSTS" with respect to a Collaboration Product
shall mean the direct variable costs and direct fixed costs incurred by RenaGel
LLC on or after the Effective Date with respect to work performed by the Parties
and their Affiliates and subcontractors in connection with the conduct of the
Development Plan for such Collaboration Product, including without limitation
(a) direct, out-of-pocket external costs, including clinical grants, clinical
laboratory fees, positive controls and the cost of studies conducted and
services

<PAGE> 9

provided by contract research organizations and individuals, consultants,
toxicology contractors and manufacturers necessary or useful for the purpose of
obtaining Regulatory Approvals for such Collaboration Product, (b) amounts paid
to GelTex and Genzyme by RenaGel LLC in respect of research and development and
pre-commercialization sales and marketing efforts as set forth in the
Development Plan for such Collaboration Product, (c) amounts paid to contract
manufacturers to develop a process for the manufacture of such Collaboration
Product (including amounts payable to Dow Chemical after the Effective Date
pursuant to the Dow Research Agreement) and for FDA qualification efforts and
amounts payable to Abbott pursuant to the Abbott Agreement after the Effective
Date, (d) amounts paid to purchase capital equipment used to manufacture such
Collaboration Product (including amounts payable to Dow Chemical after the
Effective Date pursuant to the Dow Agreement) and the Fully Absorbed Cost of
Goods for batches of such Collaboration Product manufactured and supplied for
use in pre-clinical and clinical trials, (e) costs related to data management,
statistical designs and studies, document preparation and other expenses
associated with the clinical testing program for such Collaboration Product and
(f) costs for preparing, submitting, reviewing or developing data or information
for the purpose of submission of applications to obtain Regulatory Approvals for
such Collaboration Product. For purposes of this Section 1.8, "DIRECT VARIABLE
COSTS" shall be deemed to be the cost of labor, raw materials, supplies and
other resources directly consumed in the conduct of the Development Program. For
purposes of this Section 1.8, "DIRECT FIXED COSTS" shall be deemed to be the
cost of facilities, utilities, insurance, equipment depreciation and other fixed
costs directly related to the conduct of the Development Program, allocated
based upon the proportion of such costs directly attributable to support of the
Development Program or by such other method of cost allocation as may be
approved by the Steering Committee. All cost determinations made hereunder shall
be made in accordance with GAAP.

1.9. "DEVELOPMENT PLAN" shall mean the comprehensive plan and budget
for the development of a Collaboration Product under the Development Program, as
more specifically described in Section 5.1.2 hereof.

1.10. "DEVELOPMENT PROGRAM" shall mean the pre-clinical and clinical
development of Collaboration Products, including the preparation and filing of
all applications for Regulatory Approvals for each Collaboration Product.

1.11. "DISTRIBUTION ******" with respect to Net Sales of a
Collaboration Product shall mean ********

1.12. "DISTRIBUTOR** *******" shall mean ******

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 10

*********. In the event that RenaGel LLC does not have sufficient items of gross
income to allocate to the GelTex Companies in accordance with Section 5.2(b) of
the Operating Agreement with respect to any two consecutive calendar quarters,
the Steering Committee shall adjust the Distributor** ******** to ensure, to the
extent possible, that for future calendar quarters the GelTex Companies will
receive an allocation of items of gross income and a subsequent distribution
from RenaGel LLC in an amount equal to the Distribution ******* during such
calendar quarters, or such other amount as may be owed to the GelTex Companies
as a result of a change in the aggregate Percentage Interest of the GelTex
Companies from fifty percent (50%).

1.13. "DOW AGREEMENT" shall mean the Contract Manufacturing Agreement
dated as of April 21, 1997 by and between GelTex and The Dow Chemical Company
("DOW CHEMICAL") and the related Ground Lease and Equipment Lease of even date
therewith.

1.14. "DOW RESEARCH AGREEMENT" shall mean the Research Services
Agreement dated as of September 1, 1996 by and between GelTex and Dow Chemical,
as amended by the Amendment to Research Service Agreement dated as of April 21,
1997.

1.15. "EFFECTIVE DATE" shall mean the date appearing on the cover page
of this Agreement.

1.16. "ESTIMATED NET SELLING PRICE" with respect to a Collaboration
Product shall mean the price estimated by the Steering Committee at which such
Collaboration Product will be sold by Genzyme to Third Party customers
purchasing such Collaboration Product for resale. The Estimated Net Selling
Price shall be set forth in the Commercialization Plan for such Collaboration
Product. The Steering Committee may adjust the Estimated Net Selling Price for a
Collaboration Product to the extent necessary or appropriate to reflect changes
in market conditions and actual sales experience.

1.17. "FIELD" shall mean all indications for non-absorbed products
which achieve their primary therapeutic effect by binding phosphate.

1.18. "FDA" shall mean the United States Food and Drug Administration,
any successor agency or the regulatory authority of any country other than the
United States with responsibilities comparable to those of the United States
Food and Drug Administration.

1.19. "FULLY ABSORBED COST OF GOODS" with respect to a Collaboration
Product shall mean (a) the transfer price for batches of such Collaboration
Product purchased from Third Party contract manufacturers plus the amount of the
royalties ("NITTOBO ROYALTIES") paid by GelTex to Nittobo with respect to the
manufacture of the Starting Material (hereinafter defined) and the cost of the
Starting Material (to the extent such cost is not incorporated into the transfer
price for the batches of the Collaboration Product) for the manufacture of
RenaGel(R) pursuant to the Nittobo License or (b) if such Collaboration Product
is

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
4

<PAGE> 11

manufactured by RenaGel LLC, the direct variable costs and direct fixed costs
associated with the manufacture of batches of such Collaboration Product plus
the Nittobo Royalties and the cost of the Starting Materials. For purposes of
this Section 1.19, "DIRECT VARIABLE COSTS" shall be deemed to be the cost of
labor, raw materials, supplies and other resources directly consumed in the
manufacture of batches of such Collaboration Product. For purposes of this
Section 1.19, "DIRECT FIXED COSTS" shall be deemed to be the cost of facilities,
utilities, insurance, equipment depreciation and other fixed costs directly
related to the manufacture of batches of such Collaboration Product. Direct
fixed costs shall be allocated to such Collaboration Product based upon the
proportion of such costs directly attributable to support of the manufacturing
process for such Collaboration Product. If a RenaGel LLC facility is used to
manufacture Collaboration Products and products for other programs of either
GelTex or Genzyme (including without limitation products for use in the Chugai
Territory), Fully Absorbed Cost of Goods shall be allocated in proportion to the
use of such facility for the manufacture of Collaboration Products and products
for such other programs. Fully Absorbed Cost of Goods shall exclude all costs
otherwise reimbursed pursuant to this Agreement. Except as otherwise provided in
this Agreement, all cost determinations made hereunder shall be made in
accordance with GAAP.

1.20. "GAAP" shall mean United States generally accepted accounting
principles, consistently applied, except when different accounting principles
are required under the terms of the Operating Agreement, in which case the
accounting principles mandated under the Operating Agreement shall control.

1.21. "GELTEX COMPANIES" shall mean GelTex and RenaGel, Inc., a
Delaware corporation and a wholly-owned subsidiary of GelTex ("RENAGEL, INC.").

1.22. "GELTEX PATENT RIGHTS" shall mean all present and, to the extent
such Patent Rights claim ********* that are discovered, made or conceived
during and in connection with the Program, future Patent Rights owned or
controlled by, or licensed (with the right to sublicense) to, GelTex, to the
extent that such Patent Rights cover a compound, composition, biological or
other material, product-by-process, method, apparatus, manufacturing or other
process, relating to or useful in the Field.

1.23. "GELTEX TECHNOLOGY" shall mean all present and, to the extent
such Technology is discovered, made or conceived during and in connection with
the Program, future Technology owned or controlled by, or licensed (with the
right to sublicense) to, GelTex relating to or useful in the Field, including
without limitation Chugai Program Technology (as defined in the Chugai
Agreement).

1.24. "GENZYME PATENT RIGHTS" shall mean Patent Rights claiming
********** discovered, made or conceived during and in connection with the
Program that are owned or controlled by, or licensed (with the right to
sublicense) to, Genzyme, to the extent that such Patent Rights cover a
compound, composition, biological or

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 12

other material, product-by-process, method, apparatus, manufacturing or other
process, relating to or useful in the Field.

1.25. "GENZYME TECHNOLOGY" shall mean Technology discovered, made or
conceived during and in connection with the Program, that is owned or controlled
by, or licensed (with the right to sublicense) to, Genzyme relating to or useful
in the Field.

1.26. "MAJOR MARKET COUNTRIES" shall mean *************.

1.27. "MANUFACTURING KNOW-HOW" shall mean all information, techniques,
inventions, discoveries, improvements, practices, methods, knowledge, skill,
experience and other technology, whether or not patentable or copyrightable, and
any patent applications, patents or copyrights based thereon, relating to or
necessary or useful for the production, packaging, storage and transportation of
Collaboration Products, including without limitation manufacturing processes
developed by Abbott and Dow Chemical pursuant to the Abbott Agreement and the
Dow Research Agreement, respectively, specifications, acceptance criteria,
manufacturing batch records, standard operating procedures, engineering plans,
installation, operation and process qualification protocols for equipment,
validation records, master files submitted to the FDA, process validation
reports, environmental monitoring processes, test data including
pharmacological, toxicological and clinical test data, cost data and employee
training materials.

1.28. "MEMBER" shall mean, upon execution and delivery of the
Operating Agreement, Genzyme, GelTex and RenaGel, Inc.

1.29. "NDA" shall mean a new drug application filed with the FDA after
completion of human clinical trials to obtain marketing approval for a
Collaboration Product.

1.30. "NET PROFIT" of RenaGel LLC for any period shall be equal to (a)
the sum during such period of (i) Net Sales of all Collaboration Products sold
directly by RenaGel LLC, (ii) all revenues received by RenaGel LLC from Third
Parties as consideration for sublicensing the manufacture, use, distribution or
sale of Collaboration Products and (iii) all other revenues of RenaGel LLC from
any source LESS (b) all expenses incurred by RenaGel LLC during such period,
including expenses incurred in respect of Development Costs and
Commercialization Costs. All cost determinations made hereunder shall be made in
accordance with GAAP.

1.31. "NET SALES" with respect to Collaboration Products shall mean
the gross invoiced sales price of such Collaboration Product billed (a) to
independent Third Party customers, including without limitation distributors
other than Genzyme and its Affiliates, in bona fide arms-length transactions and
(b) to Genzyme and its Affiliates, LESS, in both cases for purposes only of
calculating the payments set forth in Article 13 hereof, to the extent such
amounts are included in the gross invoiced sales price, actual: (i) freight and
insurance costs

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
6

<PAGE> 13

incurred in transporting such Collaboration Product to such customers; (ii)
quantity, cash and other trade discounts actually allowed and taken; (iii)
customs duties, surcharges and taxes and other governmental charges incurred in
connection with the exportation or importation of such Collaboration Product in
final form; (iv) bad debt expense; (v) amounts repaid or credited by reason of
rejections (due to Collaboration Product spoilage, damage, expiration of useful
life or otherwise) or retroactive price reductions; (vi) amounts incurred
resulting from governmental mandated rebate or discount programs; and (vii)
Third Party rebates and chargebacks actually allowed and taken, including
hospital buying group chargebacks, hospital buying group/group purchasing
organization administration fees or managed care organization rebates. The
Steering Committee shall determine how any transfers of Collaboration Products
by RenaGel LLC to Genzyme and its Affiliates for use as samples shall be treated
for purposes of this Section 1.31, and RenaGel LLC shall make such transfers in
accordance with such determination. The amount of Net Sales for any period shall
be determined on the basis of sales recorded in such period in accordance with
GAAP.

1.32. "NITTOBO LICENSE" shall mean the Agreement dated June 9, 1997 by
and between GelTex and Nitto Boseki Co., Ltd. ("NITTOBO")

1.33. "OPERATING AGREEMENT" shall mean the Operating Agreement of
RenaGel LLC dated of even date herewith by and among GelTex, Genzyme and
RenaGel, Inc.

1.34. "PATENT RIGHTS" shall mean patents, patent applications,
certificates of invention, or applications for certificates of invention,
together with any extensions, registrations, confirmations, reissues, divisions,
continuations or continuations-in-part, re-examinations or renewals thereof.

1.35. "PROGRAM" shall mean the collaboration among RenaGel LLC, GelTex
and Genzyme described in this Agreement.

1.36. "PROGRAM COSTS" shall mean all Program-related costs, including
without limitation Development Costs, Commercialization Costs, the Nittobo
Royalties and the costs of the Starting Material (to the extent such cost is not
included in the cost of the Collaboration Products purchased from contract
manufacturer(s)), in each case as such costs are incurred or accrued on or after
the Effective Date.

1.37. "PROGRAM MANAGEMENT TEAM" shall mean the joint team composed of
representatives of GelTex and Genzyme described in Section 8.1.1 hereof.

1.38. "PURCHASE AGREEMENT" shall mean the Purchase Agreement dated of
even date herewith by and between GelTex and Genzyme.

1.39. "REGULATORY APPROVALS" shall mean all approvals from regulatory
authorities in any country required lawfully to market Collaboration Products in
any such country, including without limitation any NDA approvals and any product
pricing approvals where applicable.

<PAGE> 14

1.40. "REGULATORY SCHEME" shall mean the United States Public Health
Service Act and the regulations, interpretations and guidelines promulgated
thereunder by the FDA or the regulatory scheme applicable to the Collaboration
Products in any country other than the United States, as such statutes,
regulations, interpretations and guidelines or regulatory schemes may be amended
from time to time.

1.41. "SPECIFICATIONS" with respect to a Collaboration Product shall
mean the written specifications for such Collaboration Product determined by the
Program Management Team and approved by the Steering Committee; provided, that
such specifications shall at all times comply with the relevant Regulatory
Scheme in the country of sale and in the country of use. The Specifications may
be amended from time to time by the Program Management Team; provided, that such
amendments are approved by the Steering Committee or the written agreement of
GelTex and Genzyme, as the case may be. Copies of such Specifications shall be
maintained by both GelTex and Genzyme, and shall become a part of this Agreement
as if incorporated herein.

1.42. "STEERING COMMITTEE" shall mean the governing body of RenaGel
LLC composed of representatives of GelTex and Genzyme described in Section 8.2.1
hereof.

1.43. "TECHNOLOGY" shall mean inventions, trade secrets, copyrights,
know-how, data and other intellectual property of any kind (including without
limitation any proprietary materials, compounds or reagents, but not including
Patent Rights).

1.44. "TERRITORY" shall mean all countries of the world, excluding the
Chugai Territory.

1.45. "THIRD PARTY" shall mean any entity other than RenaGel LLC,
GelTex, RenaGel, Inc. or Genzyme and their respective Affiliates.

1.46. "WHOLESALE ACQUISITION COST" with respect to a Collaboration
Product shall mean the price set by the Steering Committee as the catalogue
price for such Collaboration Product. The Steering Committee may adjust the
Wholesale Acquisition Cost for a Collaboration Product to the extent necessary
or appropriate to reflect changes in market conditions and actual sales
experience.

ARTICLE 2. SCOPE AND STRUCTURE OF THE COLLABORATION

2.1. GENERAL. GelTex has previously formed RenaGel LLC as the vehicle
for a joint venture between GelTex and Genzyme to develop and commercialize
Collaboration Products in and throughout the Territory. GelTex is the sole
initial member of RenaGel LLC and, immediately following the execution and
delivery of this Agreement, will transfer and assign one percent (1%) of its
interest in RenaGel LLC to RenaGel, Inc., and RenaGel, Inc. will be admitted as
a Member of RenaGel LLC. Immediately thereafter, GelTex will sell and assign to
Genzyme a fifty percent (50%) interest in RenaGel LLC (subject to adjustment
pursuant to Section 4.2 hereof and pursuant to the Operating Agreement) pursuant
to the Purchase Agreement and Article 4 hereof and, upon execution and delivery
of the Operating

<PAGE> 15

Agreement, Genzyme will be admitted as a Member of RenaGel LLC. RenaGel LLC will
undertake the Development Program for each of the Collaboration Products, with
each of the Parties assuming responsibility for those portions of the
Development Program allocated to it under this Agreement or under the
Development Plan. Upon completion of the Development Program, RenaGel LLC or its
designated subcontractor will manufacture the Collaboration Products for
commercial sale and Genzyme will market and sell the Collaboration Products as
exclusive distributor for RenaGel LLC on the terms and conditions set forth in
this Agreement or such other terms and conditions as the Parties may agree upon.

2.2. EXCLUSIVE RELATIONSHIP. During the term of this Agreement,
neither RenaGel LLC, GelTex nor Genzyme, nor any of their respective Affiliates
shall independently, or with a Third Party, conduct research regarding, or
engage in the manufacture, marketing, sale or distribution of, products in the
Field and in the Territory other than as part of the Program. In addition,
during the two-year period following termination of this Agreement, neither (a)
the breaching Party or its Affiliates in the case of termination pursuant to
Section 13.2.1 hereof, (b) Genzyme or its Affiliates in the case of termination
pursuant to Section 13.2.2 hereof, (c) the terminating Party and its Affiliates
in the case of termination pursuant to Section 13.2.3 hereof or (d) the
non-terminating Party and its Affiliates in the case of termination pursuant to
Sections 13.2.4 and 13.2.5 hereof shall independently, or with a Third Party,
conduct research regarding, or engage in the manufacture, marketing, sale or
distribution of, products in the Field in the Territory; provided, however, that
in the event that this Agreement is terminated pursuant to Section 13.2.3 and
the non-terminating Party does not exercise its option under Section 13.3.3(a),
then the restrictions set forth in this sentence shall not apply.

2.3. CHUGAI AGREEMENT. Genzyme and RenaGel LLC each hereby
acknowledges that GelTex has granted a license to Chugai to make, use and sell
RenaGel(R) in the Chugai Territory and that, pursuant to the Chugai Agreement,
GelTex is obliged to provide Chugai with copies of all U.S. regulatory filings
for RenaGel(R) and all data from toxicology and pharmacology studies and
clinical trials of RenaGel(R) conducted by or under the supervision of GelTex.
The Parties also understand that the contract manufacturer to be engaged by
RenaGel LLC hereunder may also be engaged by Chugai to manufacture RenaGel(R)
for development, use and/or sale in the Chugai Territory. Each of the Parties
hereby acknowledges that none of the amounts payable by Chugai to GelTex under
the Chugai Agreement are subject to this Agreement. The Parties hereby agree
that neither Genzyme nor RenaGel LLC shall bear any portion of the costs
attributable to the development or manufacture of RenaGel(R) or any other
products that may be subject to the Chugai Agreement for use in the Chugai
Territory. The Parties also hereby agree that if any equipment owned or leased
to RenaGel LLC is used for the manufacture of RenaGel(R) or any other products
that may be subject to the Chugai Agreement for use in the Chugai Territory,
GelTex and/or Chugai shall be solely responsible for the costs of the
manufacturing such products for Chugai and neither Genzyme nor RenaGel LLC shall
be entitled to any compensation for the use of such equipment; provided,
however, that at all times the manufacture of Collaboration Products in
accordance with Article 7 hereof shall be given priority with respect to the use
of all equipment owned or leased by RenaGel LLC, subject to any limitations set
forth in the Dow Agreement while such agreement is in full force and effect.
GelTex shall keep the Steering Committee informed as to any Chugai Program
Technology and Chugai In-Licensed

<PAGE> 16

Technology (as such terms are defined in the Chugai Agreement) that arises under
the Chugai Agreement and upon request by the Steering Committee agrees to
exercise its option under Section 2.2.2 of the Chugai Agreement to obtain a
license to any Chugai In-Licensed Technology deemed by the Steering Committee to
be necessary or desirable to include in the Program, which Technology shall be
sublicensed to RenaGel LLC pursuant to Section 3.1.1 hereof.

2.4. NITTOBO LICENSE. Pursuant to the Nittobo License, GelTex has
obtained the non-exclusive license to use certain technology owned by Nittobo
for the manufacture of the starting material (the "STARTING MATERIAL") for use
in the manufacture of RenaGel(R) in the Territory. GelTex shall use commercially
reasonable and diligent efforts to obtain the irrevocable and unconditional
consent of Nittobo to the grant of a sublicense by GelTex to RenaGel LLC under
the Nittobo License for the non-exclusive right (including the right to grant
sublicenses) to use, manufacture and sell the Starting Material, and shall grant
such a sublicense to RenaGel LLC promptly upon obtaining said consent from
Nittobo. GelTex shall be solely responsible for paying all amounts payable to
Nittobo under the Nittobo License other than the Nittobo Royalties, and GelTex
will not charge RenaGel LLC for such amounts.

ARTICLE 3. GRANTS AND RESERVATIONS OF RIGHTS

3.1. ASSIGNMENTS AND LICENSES TO RENAGEL LLC.
---------------------------------------

3.1.1. GRANTS FROM GELTEX. Except as otherwise expressly
provided herein, GelTex hereby grants to RenaGel LLC (a) the exclusive (except
with respect to licenses previously granted to (i) Dow Chemical and its
sublicensees, if any, pursuant to the Dow Agreement and (ii) Abbott
Laboratories, pursuant to the Abbott Agreement), irrevocable (during the term of
this Agreement), royalty-free right and license, with the right to grant
sublicenses, under the GelTex Patent Rights, the GelTex Technology and the
Manufacturing Know-How owned or controlled by GelTex to develop, make, have
made, use, offer for sale, sell, have sold, import and export Collaboration
Products for use in the Territory in the Field (provided, however, that with
respect to Manufacturing Know-How licensed by GelTex from Dow Chemical and
Abbott, the license granted by GelTex to RenaGel LLC for such Manufacturing
Know-How pursuant to this clause (a) shall be for the same level of exclusivity
as the rights held by GelTex with respect thereto), (b) the exclusive,
irrevocable (during the term of this Agreement) royalty-free right and license,
with the right to grant sublicenses, to use the registered trademark
"RenaGel(R)" in the Territory and (c) the non-exclusive, irrevocable (during the
term of this Agreement) right and sublicense under any Chugai In-Licensed
Technology (as defined in the Chugai Agreement) as to which GelTex may obtain a
license in accordance with Section 2.3 hereof to develop, make, have made, use,
offer for sale, sell, have made, sold, import and export Collaboration Products
for use in the Territory in the Field.

3.1.2. GRANTS FROM GENZYME. Except as otherwise expressly
provided herein, Genzyme hereby grants to RenaGel LLC the exclusive, irrevocable
(during the term of this Agreement), royalty-free right and license, with the
right to grant sublicenses, under the Genzyme Patent Rights, the Genzyme
Technology and the Manufacturing Know-How owned

<PAGE> 17

or controlled by Genzyme, to develop, make, have made, use, offer for sale,
sell, have sold, import and export Collaboration Products for use in the
Territory in the Field.

3.1.3. TECHNOLOGY OR PATENT RIGHTS DEVELOPED OUTSIDE THE
PROGRAM. In the event that either GelTex or Genzyme develops, acquires rights to
or otherwise comes to own or control Technology or Patent Rights after the
Effective Date other than in connection with the Program and such Technology or
Patent Rights are useful in the Field, the Party owning or controlling such
Technology or Patent Rights hereby grants to RenaGel LLC an option exercisable
at the discretion of the Steering Committee to obtain an exclusive, irrevocable
(during the term of this Agreement) right and license, with the right to grant
sublicenses, to such Technology or Patent Rights limited to use in the Territory
and in the Field to the extent necessary to enable RenaGel LLC to develop, make,
have made, use, offer for sale, sell, have sold, import and export Collaboration
Products, in each case subject only to RenaGel LLC's undertaking to pay (a) a
commercially reasonable portion of all costs incurred by GelTex or Genzyme, as
the case may be, to acquire such Technology or Patent Rights, (b) a commercially
reasonable portion of any and all development or other costs incurred by GelTex
or Genzyme, as the case may be, since the date such Party acquired such
Technology or Patent Rights and (c) all royalties, sublicense fees and other
costs or expenses payable to Third Parties associated with the acquisition or
use of such license by RenaGel LLC; provided, however, that if GelTex or Genzyme
does not own or have exclusive rights to such Technology or Patent Rights, the
license subject to RenaGel LLC's option hereunder shall be for the same level of
exclusivity as the rights held by GelTex or Genzyme with respect to such
Technology or Patent Rights.

3.1.4. RENAGEL LLC UNDERTAKINGS; SUBLICENSES In consideration
of the licenses granted under this Section 3.1, RenaGel LLC hereby undertakes to
pay all royalties, sublicense fees and other costs or expenses payable to Third
Parties associated with the acquisition or use of such license by RenaGel LLC.
Except as provided in Section 3.2 below, all sublicenses granted by RenaGel LLC
shall be subject to prior written approval by the Steering Committee.

3.2. LICENSES OF RIGHTS FROM RENAGEL LLC TO GELTEX AND GENZYME.
RenaGel LLC hereby grants to each of GelTex and Genzyme a non-exclusive,
irrevocable right and sublicense under the Patent Rights, Technology and
Manufacturing Know-How licensed to it pursuant to Section 3.1 above solely to
the extent required to permit such Party to perform its duties under this
Agreement. RenaGel LLC also hereby agrees to grant to each of GelTex and Genzyme
a non-exclusive, irrevocable right and sublicense under any Chugai In-Licensed
Technology or any other Technology or Patent Rights as to which RenaGel LLC
elects to obtain a license pursuant to Sections 2.3 and 3.1.3 above solely to
the extent required to permit such Party to perform its duties under this
Agreement. RenaGel LLC hereby grants to Genzyme a non-exclusive, irrevocable
(during the term of this Agreement) right and license to use any and all present
and future trademarks owned by or licensed (with the right to sublicense) to
RenaGel LLC, including without limitation the registered trademark "RenaGel(R)",
in connection with the commercialization of Collaboration Products in the
Territory to the extent required to permit Genzyme to perform its duties under
this Agreement.

<PAGE> 18

3.3. RESERVATION OF RIGHTS. Notwithstanding the license grants set
forth in Section 3.1 above, GelTex at all times reserves the right under the
GelTex Patent Rights, the GelTex Technology and the Manufacturing Know-How owned
or controlled by GelTex to (i) make, have made and use Collaboration Products
for research and development purposes outside of the Field, (ii) develop, make,
have made, use, offer for sale, sell, have sold, import and export products
outside the Field or outside of the Territory and (iii) grant licenses to Third
Parties for the foregoing purposes. Notwithstanding the license grants set forth
in Section 3.1 above, Genzyme at all times reserves the right under the Genzyme
Patent Rights, the Genzyme Technology and the Manufacturing Know-How owned or
controlled by Genzyme (i) to make, have made and use Collaboration Products for
research and development purposes outside of the Field, (ii) to develop, make,
have made, use, offer for sale, sell, have sold, import and export products
outside the Field and (iii) to grant licenses to Third Parties for the foregoing
purposes.

ARTICLE 4. EQUITY INVESTMENTS; PROGRAM FUNDING

4.1. EQUITY INVESTMENTS. Immediately after the execution and delivery
of this Agreement and the assignment by GelTex of one percent (1%) of its
interest in RenaGel LLC to RenaGel, Inc., GelTex shall (a) issue and sell to
Genzyme, and Genzyme shall purchase from GelTex, one hundred thousand (100,000)
shares of the common stock, $.01 par value per share, of GelTex (the "SHARES")
for an aggregate purchase price of Two Million Five Hundred Thousand Dollars
($2,500,000) payable by Genzyme to GelTex upon the execution and delivery of the
Purchase Agreement in accordance with the terms thereof and (b) assign, transfer
and sell to Genzyme a fifty percent (50%) interest in RenaGel LLC (subject to
adjustment pursuant to Section 4.2 below and pursuant to the Operating
Agreement) (the "LLC INTEREST") for an aggregate purchase price of Twenty-Five
Million Ten Dollars ($25,000,010) payable as follows: (i) Ten Dollars ($10)
payable by Genzyme to GelTex upon execution of the Purchase Agreement; (ii)
Fifteen Million Dollars ($15,000,000) payable by Genzyme to GelTex within thirty
(30) days following receipt by GelTex of FDA approval of the NDA for RenaGel(R);
and (iii) Ten Million Dollars ($10,000,000) payable by Genzyme to GelTex on the
first anniversary of the date of receipt by GelTex of FDA approval of the NDA
for RenaGel(R), all in accordance with the terms and conditions of the Purchase
Agreement. All of the aforementioned payments shall be made in United States
dollars by certified or bank check or wire transfer.

4.2. PROGRAM FUNDING COMMITMENT. Genzyme hereby undertakes to make
capital contributions to RenaGel LLC in an amount equal to fifty percent (50%)
of all Program Costs and GelTex hereby undertakes to make capital contributions
to RenaGel LLC on behalf of the GelTex Companies in an aggregate amount equal to
fifty percent (50%) of all Program Costs. In the event that either GelTex, on
behalf of the GelTex Companies, or Genzyme fails to make a capital contribution
pursuant to Section 4.3 below, and the other Party does not elect to terminate
this Agreement pursuant to Section 13.2.1 hereof, then the Percentage Interest
(as defined in the Operating Agreement) in RenaGel LLC and the future funding
responsibility of the defaulting Party (and, in the case of a default by GelTex,
RenaGel, Inc.) shall be adjusted proportionately as provided in Section 4.1(b)
of the Operating Agreement.

<PAGE> 19

4.3. PROGRAM FUNDING CAPITAL CONTRIBUTIONS.
-------------------------------------

4.3.1. INITIAL CAPITAL CONTRIBUTIONS. Within five (5) working
days after the Effective Date, GelTex, on behalf of the GelTex Companies, and
Genzyme shall each make a capital contribution to RenaGel LLC in an amount equal
to one-half of the Program Costs budgeted to be incurred by RenaGel LLC from the
Effective Date through and including July 31, 1997.

4.3.2. MONTHLY CAPITAL CONTRIBUTIONS. With respect to each
calendar month after July 1997, during the Program Genzyme and GelTex, on behalf
of the GelTex Companies, shall each make capital contributions to RenaGel LLC,
monthly in advance, not later than the fifteenth (15th) day of the prior
calendar month, in an aggregate amount equal to one-third of the Program Costs
budgeted to be incurred by RenaGel LLC in any then-current Development Plan or
Commercialization Plan for the calendar quarter in which such calendar month
occurs, allocated between such Parties in accordance with the funding
responsibility assumed by Genzyme and GelTex, on behalf of the GelTex Companies,
pursuant to Section 4.2 above. Upon receipt of each such capital contribution
from Genzyme or GelTex, as the case may be, RenaGel LLC shall promptly pay each
of the Parties an amount equal to that portion of the budgeted Program Costs to
which they are respectively entitled.

4.3.3. QUARTERLY STATEMENTS; QUARTERLY RECONCILIATION. Within
thirty (30) days after the end of each of the first three calendar quarters of
each year and within sixty (60) days after the end of each calendar year, each
of GelTex and Genzyme shall provide RenaGel LLC with a detailed itemization of
its Program Costs actually incurred during the previous quarter. Within thirty
(30) days following receipt of the quarterly statement of actual Program Costs
provided by each of GelTex and Genzyme, GelTex, on behalf of the GelTex
Companies, and Genzyme shall each make an additional capital contribution to
RenaGel LLC in accordance with the funding responsibility assumed by the
Parties pursuant to Section 4.2 above in the aggregate amount of any actual
Program Costs shown on such statement and not yet paid for, but only to the
extent that such amount, together with all prior capital contributions to date
during such year, does not exceed *** ****** of the Program Costs budgeted
year-to-date through the end of the quarter to which such statement relates
(except to the extent such excess is approved by the Steering Committee
pursuant to Sections 5.1.3 or 6.1.2 hereof). If the aggregate amount stated to
be due from RenaGel LLC in such quarterly statements for actual Program Costs
is less than the amount already contributed by the Parties to the capital of
RenaGel LLC with respect to budgeted Program Costs for such calendar quarter,
such excess shall be credited pro rata against the next successive monthly
capital contribution due from Genzyme, GelTex or RenaGel, Inc. hereunder.

4.4. DISTRIBUTIONS. Distributions shall be made semi-annually to each
Member in amounts determined in accordance with the Operating Agreement. Amounts
available for distribution shall be calculated for each calendar quarter after
the date of the first sale of a Collaboration Product by RenaGel LLC following
Regulatory Approval of such Collaboration Product and shall be reported to each
Member within ninety (90) days following the end of each such quarter. All
distributions to Members will be accompanied by a report setting forth

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 20

the basis for such distribution. Such reports shall be subject to audit rights
as set forth in Section 4.5 below, mutatis mutandis.

4.5. BOOKS OF ACCOUNT; AUDIT. GelTex shall keep and maintain proper
and complete books of account on behalf of RenaGel LLC. Each of GelTex and
Genzyme shall keep and maintain proper and complete records and books of account
documenting all Program Costs incurred by it. GelTex and Genzyme shall each
permit independent accountants retained by the other Parties to have access to
its records and books for the sole purpose of determining the appropriateness of
Program Costs charged by the non-auditing Party hereunder. Such examination
shall be conducted during regular business hours and upon reasonable advance
notice, at the auditing Party's own expense and no more than once in each
calendar year during the term of this Agreement and once during the three (3)
calendar years following the termination hereof. If such examination reveals
that such Program Costs have been overstated, any overpayment shall be promptly
refunded. The auditing Party shall pay the fees and expenses of the accountant
engaged to perform the audit, unless such audit reveals an overcharge of
******** or more for the period examined, in which case the Party who received
such overpayment shall pay all reasonable costs and expenses incurred by the
auditing Party in the course of making such determination, including the fees
and expenses of the accountant.

ARTICLE 5. THE DEVELOPMENT PROGRAM

5.1. CONDUCT OF THE DEVELOPMENT PROGRAM.
----------------------------------

5.1.1. GENERAL. Each of the Parties hereby agrees to
collaborate diligently in the development of Collaboration Products in the Field
and to use commercially reasonable and diligent efforts to develop, obtain
Regulatory Approvals for and bring to market Collaboration Products in the Field
and in the Territory as soon as practicable, all in accordance with the
Development Plan and the Commercialization Plan for each Collaboration Product.
The Parties agree to execute and substantially perform and to cooperate with
each other in carrying out the Development Plan for each Collaboration Product.
No Party shall be required to undertake activities in furtherance of the
Development Plan or Commercialization Plan in the absence of funding from
RenaGel LLC pursuant to the provisions of this Agreement. As used in this
Agreement, the term "COMMERCIALLY REASONABLE AND DILIGENT EFFORTS" shall mean
that level of effort which, consistent with the exercise of prudent scientific
and business judgment, is applied by the Party in question to its other
therapeutic products at a similar stage of development and with similar
commercial potential.

5.1.2. DEVELOPMENT PLAN. The Development Program shall be
conducted by RenaGel LLC under a Development Plan which shall describe the
proposed overall program of development for each of the Collaboration Products,
including pre-clinical studies, toxicology, formulation, clinical trials and
regulatory plans and other key elements necessary to obtain Regulatory Approvals
for each Collaboration Product. The Development Plan shall include a summary of
estimated Development Costs expected during the development process through
obtaining such Regulatory Approvals and a detailed description of and budget for
all development activities proposed for each calendar year for each
Collaboration Product.

* Confidential Treatment requested for information omitted and filed
separately with the the SEC.

<PAGE> 21

5.1.3. INITIAL AND UPDATED DEVELOPMENT PLAN. A preliminary
initial Development Plan has been agreed to by the Parties for the period
beginning on the Effective Date and ending on December 31, 1997. Within thirty
(30) days after the Effective Date, GelTex, in consultation with the Program
Management Team, shall submit to the Steering Committee for review and approval
the definitive initial Development Plan for the period beginning on the
Effective Date and ending on December 31, 1997. Upon such approval, the
definitive initial Development Plan shall be signed by an authorized
representative of each of GelTex and Genzyme. The Development Plan shall be
updated annually by the Program Management Team and submitted to the Steering
Committee for review and approval not later than sixty (60) days prior to
January 1 of each year during the Development Program. Each such updated
Development Plan shall include (a) an overall development plan for each
Collaboration Product which sets forth all major development tasks remaining to
be accomplished prior to submission of filings for Regulatory Approvals and (b)
a detailed description and budget for the development activities proposed for
the forthcoming calendar year, in each case including estimated time lines to
accomplish such major tasks or detailed activities, respectively. The Program
Management Team shall be primarily responsible for preparing the annual updates
to the Development Plan and, in connection with the preparation of such updates,
shall consult with GelTex and Genzyme regarding the identification, timing and
execution of and budget for the major tasks and detailed activities required to
perform the updated Development Plan. Each such updated Development Plan
approved by the Steering Committee shall be signed by an authorized
representative of each of GelTex and Genzyme. The members of the Program
Management Team shall actively consult with one another throughout the term of
the Development Program so as to adjust the specific work performed under the
Development Plan to conform to evolving developments in technology and the
results of the development work performed. While minor adjustments to the
Development Plan may be made from time to time upon approval of the Program
Management Team, significant changes in the scope or direction of the work and
any changes in funding exceeding ********* of the total amount budgeted in any
calendar year must be approved by the Steering Committee, in the absence of
which approval the most recently approved Development Plan shall remain in
effect.

5.1.4. EXECUTION AND PERFORMANCE. The Development Plan shall
allocate among the Parties responsibility for each of the activities described
therein. The Parties shall use commercially reasonable and diligent efforts to
conduct the activities described in the Development Plan. The Development
Program shall be supervised by the Program Management Team. The Program
Management Team will coordinate pre-clinical and clinical testing of the
Collaboration Products and work with designated individuals at GelTex and
Genzyme in the preparation of Regulatory Approval filings for the Collaboration
Products.

5.1.5. ATTENDANCE AT REGULATORY MEETINGS. Each Party shall
provide the others with prior notice of all meetings between representatives of
the notifying Party and regulatory authorities regarding any Collaboration
Product. Except as otherwise provided herein, the Party receiving such notice
shall have the right to have representatives present at all such meetings.

* Confidential Treatment requested for information omitted and filed
separately with SEC.

<PAGE> 22

5.2. DEVELOPMENT INFORMATION.
-----------------------

5.2.1. REPORTS AND INFORMATION EXCHANGE. RenaGel LLC shall own
all data accumulated from all pre-clinical studies and clinical trials of
Collaboration Products in the Territory. Each of GelTex and Genzyme shall use
commercially reasonable and diligent efforts to disclose to RenaGel LLC and to
the other Party all material information relating to any Collaboration Product
promptly after it is learned or its materiality is appreciated. The Party
performing or supervising clinical trials of Collaboration Products in
accordance with the Development Plan shall, on behalf and in the name of RenaGel
LLC, maintain the database of clinical trial data accumulated from all clinical
trials of Collaboration Products and of adverse reaction information for all
such Collaboration Products. Each Party shall keep the Program Management Team
informed as to its progress in the Development Plan. Within sixty (60) days
following the end of each calendar quarter during the Development Program, each
of GelTex and Genzyme shall provide to RenaGel LLC and to the other Party a
reasonably detailed written report, which shall describe the progress to date of
all activities for which such Party was allocated responsibility during such
quarter under the Development Plan.

5.2.2. ADVERSE REACTION REPORTING. Each of GelTex and Genzyme
shall notify RenaGel LLC and the other Party of any adverse reaction information
relating to any Collaboration Product within twenty-four (24) hours of the
receipt of such information and as necessary for compliance with regulatory
requirements. "ADVERSE REACTION INFORMATION" includes without limitation
information relating to any experience that (a) suggests a significant hazard,
contraindication, side effect or precaution, (b) is fatal or life threatening,
(c) is permanently disabling, (d) requires or prolongs inpatient
hospitalization, (e) involves a congenital anomaly, cancer or overdose or (f) is
one not identified in nature, specificity, severity or frequency in the current
investigator brochure or the United States labeling for the Collaboration
Product.

5.2.3. CLINICAL AND REGULATORY AUDITS. Each of GelTex and
Genzyme shall permit RenaGel LLC and the other Party or the representatives of
RenaGel LLC or the other Party to have access during regular business hours and
upon reasonable advance notice, at the auditing Party's own expense and no more
than once in each calendar year during the term of this Agreement, to the
non-auditing Party's records and facilities relating to the Development Program
for the purpose of monitoring compliance with Good Clinical Practice and other
applicable requirements of the Regulatory Scheme.

5.3. REGULATORY APPROVAL FILINGS. GelTex shall file the NDA for
RenaGel(R) with the FDA in GelTex's name and shall promptly assign such NDA to
RenaGel LLC upon receipt of FDA approval thereof. Regulatory Approval filings
for Collaboration Products other than the NDA to be filed with the FDA for
RenaGel(R) shall be filed in the name of RenaGel LLC or, if required with
respect to filings to be made with governmental regulatory authorities other
than the FDA, in such other name as may be agreed upon by the Steering Committee
(such as filings for European Regulatory Approvals). Prior to submission to the
FDA and other governmental regulatory authorities, the Parties, through the
Program Management Team, shall consult, cooperate in preparing and mutually
agree on the content and scope of the Regulatory Approval filings.

<PAGE> 23

5.4. FACILITIES VISITS. Representatives of GelTex and Genzyme may
visit all manufacturing sites and the sites of any clinical trials or other
experiments being conducted by the other Parties in connection with the
Development Program. If requested by the other Party, GelTex and Genzyme shall
cause appropriate individuals working on the Development Program to be available
for meetings at the location of the facilities where such individuals are
employed at times reasonably convenient to the Party responding to such request.

ARTICLE 6. SALES, MARKETING AND ADMINISTRATIVE SERVICES

6.1. COMMERCIALIZATION PLANS.
-----------------------

6.1.1. GENERAL. The commercialization of each Collaboration
Product shall be governed by a Commercialization Plan, which shall describe the
overall plan for commercializing such Collaboration Product, including (a) a
comprehensive marketing, sales, pricing, manufacturing, distribution and
licensing strategy for such Collaboration Product in all applicable countries,
including the Third Parties to be utilized and the arrangements with them that
have been or are proposed to be agreed upon (including without limitation
policies and procedures for adjustments, rebates, bundling and the like), (b)
the estimated launch date, market and sales forecasts (in numbers of patients
and local currency) and competitive analysis for such Collaboration Product and
(c) a detailed budget for the Commercialization Costs to be incurred in
connection with performing such Commercialization Plan.

6.1.2. INITIAL AND UPDATED COMMERCIALIZATION PLANS. Upon the
submission of all Regulatory Approval filings for a Collaboration Product in any
given country, Genzyme shall develop and submit to the Steering Committee for
review and approval an initial Commercialization Plan in accordance with its
customary standard for a product of comparable market potential, taking into
consideration factors such as market conditions, regulatory factors, competition
and the costs and profits of such Collaboration Product. Genzyme shall be
primarily responsible for developing each Commercialization Plan and, in
connection therewith, shall consult with GelTex regarding the identification,
timing and execution of and budget for the major commercialization tasks
required to perform the Commercialization Plan. Each Commercialization Plan
shall be updated annually by Genzyme, in consultation with GelTex as herein
provided, and shall be submitted to the Steering Committee for approval not
later than sixty (60) days prior to January 1 of each year. Each
Commercialization Plan approved by the Steering Committee shall be signed by an
authorized representative of each of GelTex and Genzyme. While minor adjustments
to the Commercialization Plan may be made from time to time without Steering
Committee approval, significant changes in the scope or direction of the work
and any changes in funding exceeding ********* of the total amount budgeted in
any calendar year must be approved by the Steering Committee, and in the absence
of such approval, the provisions of the most recently approved Commercialization
Plan shall remain in effect.

6.2. EXCLUSIVE DISTRIBUTORSHIP. RenaGel LLC hereby grants to Genzyme
the exclusive right to sell the Collaboration Products within the Territory and
for use within the Field.

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
17

<PAGE> 24

6.3. ORDERS AND FORECASTING. Genzyme shall purchase the Collaboration
Products exclusively from RenaGel LLC. As long as the Dow Agreement remains in
full force and effect, Genzyme shall provide RenaGel LLC with non-binding
forecasts and binding purchase orders in a manner consistent with RenaGel LLC's
obligations under Section 5.3 of the Dow Agreement. Genzyme shall place orders
for the Collaboration Products with RenaGel LLC on a purchase order setting
forth the quantity of Collaboration Products ordered, any specifications
therefor and the date required. RenaGel LLC, on the date set forth in the
applicable purchase order, shall sell the Collaboration Products to Genzyme for
resale within the Territory. All freight, insurance, duties and all other
charges associated with shipment of the Collaboration Products shall be
considered Commercialization Costs for such Collaboration Products only to the
extent such costs are not charged to Genzyme's customers.

6.4. PRICES AND PAYMENT TERMS; COSTS.
-------------------------------

6.4.1. PRICES. Genzyme shall purchase Collaboration Products
from RenaGel LLC at *******.

6.4.2. TERMS OF PAYMENT. Unless otherwise agreed by the Parties
in writing, payment by Genzyme to RenaGel LLC for Collaboration Products shall
be due within sixty (60) days of the date of invoice therefor.

6.4.3. MARKETING AND DISTRIBUTION EXPENSES. Genzyme's ordinary
expenses incurred in the course of performing its marketing and distribution
obligations hereunder shall constitute Commercialization Costs and, as such,
shall be reimbursed by RenaGel LLC, but only to the extent that such amounts,
together with all other Commercialization Costs to date during such calendar
year, do not exceed ************************** of the Commercialization
Costs budgeted in the Commercialization Plan then in effect for such calendar
year (except to the extent such excess is approved by the Steering Committee
pursuant to Section 6.1.2 above). Ordinary marketing and distribution expenses
include, but are not limited to, salaries and associated expenses for sales and
marketing personnel and support staff, advertising and promotion costs,
transportation expenses including insurance (but only to the extent not charged
to customers and only such proportion of all such costs directly attributable to
support of the Commercialization Plan), duties and taxes, and costs associated
with cash discounts and allowances and other marketing concessions to customers.

6.5. MARKETING SERVICE.
-----------------

6.5.1. EXCLUSIVE ENGAGEMENT. RenaGel LLC hereby engages Genzyme
on a exclusive basis to market Collaboration Products within the Territory and
for use within the Field. Genzyme hereby accepts such engagement and agrees (by
itself or through its Affiliates) to use commercially reasonable and diligent
efforts to establish each Collaboration Product in the markets, fulfill market
demand and meet the marketing and distribution goals set forth in the
Commercialization Plan for such Collaboration Product.

6.5.2. RESPONSIBILITIES OF GENZYME. Genzyme shall be solely
responsible for

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 25

all aspects of the marketing of the Collaboration Products in accordance with
the strategy, policies and procedures established in the Commercialization Plan,
including without limitation the responsibilities listed below.

(a) Genzyme shall be primarily responsible for the
implementation of each Commercialization Plan, including without limitation
setting all terms of sale, including establishing pricing policies, credit terms
and cash discounts and allowances, formulating marketing plans, providing
patient information, providing customer support services, providing
reimbursement counselling services and sales force training.

(b) Genzyme shall employ sufficiently trained and
experienced individuals in numbers adequate to carry out its responsibilities
under this Article 6. Sales and support personnel shall be familiar with the
Collaboration Products and with competitive products and shall respond promptly
to customer requests for support.

(c) Genzyme shall provide instructions and appropriate
training to customers in the proper use and handling of the Collaboration
Products and shall monitor performance of the Collaboration Products.

(d) Prior to sale, Genzyme shall store, maintain and handle
Collaboration Products in accordance with the requirements of the Regulatory
Schemes and the normal and customary commercial practice with respect to
regulated medical products.

(e) Genzyme shall comply with all laws and government
regulations applicable to the sale of Collaboration Products within the
Territory.

(f) The Collaboration Products shall be sold under
trademarks selected by the Steering Committee and owned by or licensed to
RenaGel LLC in accordance with Sections 3.1.1 and 9.1.2 hereof.

(g) Genzyme shall not (i) establish any branch, sales
offices, warehouses or other facilities outside the Territory with respect to
the Collaboration Products, (ii) adopt a policy of actively selling
Collaboration Products outside the Territory nor undertake the active sale or
promotion of sales of Collaboration Products outside the Territory or (iii) seek
customers or solicit orders from a prospective customer with its principal
address or place of business located outside the Territory. Without RenaGel
LLC's prior consent, Genzyme may not deliver or tender, or cause to be delivered
or tendered, Collaboration Products outside of the Territory. Genzyme shall not
sell Collaboration Products to a customer if Genzyme knows that such customer
intends to remove those Collaboration Products from the Territory. If Genzyme
receives an order from a prospective customer located outside of the Territory
or who Genzyme knows intends to remove the Collaboration Products from the
Territory, Genzyme shall immediately refer that customer to GelTex.

(h) Genzyme shall maintain complete and accurate records of
all movements and transactions involving Collaboration Products by unit, by
batch number and by customer so that all such movements and transactions can be
traced quickly and effectively. Upon written request, Genzyme will provide
copies of such records to the other

<PAGE> 26

Parties, with access to facilities used by Genzyme in performing its duties
under this Article 6 during normal business hours and upon reasonable advance
notice for the purpose of inspecting such facilities for compliance with the
terms of this Agreement. The records maintained by Genzyme pursuant to this
clause (h) shall be subject to the other Parties' audit rights under Section 4.5
hereof.

(i) Within forty-five (45) days after the end of each
calendar quarter, Genzyme will report to RenaGel LLC the actual prices at which
all sales of Collaboration Products were made to its customers during the
preceding calendar quarter, future prospects for the Collaboration Products and
related issues. Genzyme shall report promptly to the Steering Committee in
writing the occurrence of each material incident of Collaboration Product
performance required to be reported to regulatory authorities, including without
limitation adverse reaction information in accordance with Section 5.2.2 hereof.

6.6. RESPONSIBILITIES OF RENAGEL LLC AND GELTEX. RenaGel LLC shall
supply Collaboration Products to Genzyme in accordance with purchase orders
placed pursuant to Section 6.3 above. Neither RenaGel LLC nor GelTex shall
actively solicit for its own account sales of Collaboration Products in the
Territory. Any solicitations or requests to purchase Collaboration Products
received by RenaGel LLC or GelTex from any customer or prospective customer with
its principal address or place of business located in the Territory or who
GelTex or RenaGel knows intends to use the Collaboration Products in the
Territory or ship such Collaboration Products into the Territory shall be
immediately referred to Genzyme.

6.7. GENERAL AND ADMINISTRATIVE SERVICES. General and administrative
services required by RenaGel LLC shall be provided at cost by either or both of
GelTex and Genzyme as determined by the Steering Committee. All such costs, in
addition to general and administrative costs payable to Third Parties (such as
accountants), shall be considered to be Program Costs.

ARTICLE 7. MANUFACTURE AND SUPPLY

Subject to the terms and conditions of this Agreement, Collaboration
Products shall be manufactured and supplied for pre-clinical and clinical
testing and for commercial sale upon the following terms and conditions:

7.1. PROCESS DEVELOPMENT; MANUFACTURING APPROVALS. The Parties will
use commercially reasonable and diligent efforts to develop a process for the
manufacture of each Collaboration Product and to scale-up that process to a
scale sufficient to manufacture and supply (a) the anticipated demand for
pre-clinical studies and clinical trials of such Collaboration Product in
accordance with the projections set forth in the Development Plan and (b) the
anticipated market demand for such Collaboration Product at the time Regulatory
Approval is obtained for such Collaboration Product in accordance with the
projections set forth in the Commercialization Plan for such Collaboration
Product. The development of the process for the manufacture of Collaboration
Products as well as the scale up of such process and all material issues
incident to the development of the ability to produce Collaboration Products for
commercial purposes in sufficient quantity and in a timely manner will be within

<PAGE> 27

the purview of the Program Management Team.

7.2. MANUFACTURE AND SUPPLY OF COLLABORATION PRODUCTS. RenaGel LLC
shall manufacture and supply, or cause to be manufactured and supplied,
Collaboration Products for clinical trials and commercial sale on the following
terms and conditions:

7.2.1. GENERAL. The Parties agree that they will initially use
Dow Chemical as a Third Party manufacturer and supplier of Collaboration
Products. GelTex will use its best efforts to, as soon as practicable after the
Effective Date, obtain Dow Chemical's irrevocable and unconditional written
consent to the assignment of the Dow Agreement and the Dow Research Agreement by
GelTex to RenaGel LLC with the same terms and conditions as in effect on the
Effective Date, and shall assign the Dow Agreement and the Dow Research
Agreement to RenaGel LLC as soon as such consent is obtained. Until such time as
GelTex receives the aforementioned consent from Dow Chemical, GelTex shall use
commercially reasonable and diligent efforts to cause Dow Chemical to
manufacture and supply Collaboration Products for pre-clinical studies and
clinical trials in quantities and within a time period sufficient to conduct the
activities set forth in the Development Plan and to meet market demand for
Collaboration Products ordered in accordance with the terms hereof. Thereafter,
RenaGel LLC shall use commercially reasonable and diligent efforts to
manufacture and supply, or cause Dow Chemical and/or such other contract
manufacturers engaged by RenaGel LLC to manufacture and supply, Collaboration
Products for pre-clinical studies and clinical trials in quantities and within a
time period sufficient to conduct the activities set forth in the Development
Plan and to meet market demand for Collaboration Products ordered in accordance
with the terms hereof. RenaGel LLC may subcontract with contract manufacturers
other than and in addition to Dow Chemical, including Genzyme and its
Affiliates, for the manufacture, supply or packaging of Collaboration Products;
provided that during the term of the Dow Agreement, RenaGel LLC's ability to
subcontract with contract manufacturers for the manufacture of RenaGel(R) shall
be subject to the terms of the Dow Agreement.

7.2.2. FORECASTS. The Program Management Team shall establish a
procedure for providing forecasts of requirements for Collaboration Products,
updating such forecasts and ordering Collaboration Product for such
requirements, in each case within time periods sufficient to enable RenaGel LLC
to manufacture such Collaboration Products, or cause such Collaboration Products
to be manufactured, as the case may be, to meet such forecasts in a commercially
reasonable and diligent manner; provided that during the term of the Dow
Agreement, such forecasts shall be consistent with the obligations set forth
under the Dow Agreement.

7.3. CERTIFICATES OF ANALYSIS. RenaGel LLC shall perform, or cause
its contract manufacturer(s) to perform, quality assurance and control tests on
each lot of Collaboration Products manufactured pursuant to this Agreement
before delivery and shall prepare, or cause its contract manufacturer(s) to
prepare and deliver to RenaGel LLC, a written report of the results of such
tests. Each test report shall set forth for each lot delivered the items tested,
specifications and results in a certificate of analysis containing the types of
information which shall have been approved by the Program Management Team or
required by the FDA or other applicable regulatory agency. RenaGel LLC shall
maintain such certificates for a period of

<PAGE> 28

not less than five (5) years from the date of manufacture and for so long as
required under applicable requirements of the FDA or other applicable regulatory
agency.

7.4. CERTIFICATES OF MANUFACTURING COMPLIANCE. RenaGel LLC shall
prepare, or cause its contract manufacturer(s) to prepare and deliver to RenaGel
LLC, and maintain for a period of not less than five (5) years and for so long
as required under applicable requirements of the FDA or other applicable
regulatory agency for each lot of Collaboration Products manufactured a
certificate of manufacturing compliance containing the types of information that
shall have been approved by the Program Management Team or required by the FDA
or other applicable regulatory agency, which certificate will certify that the
lot of Collaboration Products was manufactured in accordance with the
Specifications and the Good Manufacturing Practices of the FDA or other
applicable governmental regulatory agency as the same may be amended from time
to time. RenaGel LLC shall advise the other Parties immediately if an authorized
agent of the FDA or other governmental regulatory agency visits any facilities
where the Collaboration Products are being manufactured for an inspection with
respect to the Collaboration Products. RenaGel LLC shall furnish to the other
Parties the report by such agency of such visit, to the extent that such report
relates to Collaboration Products, within ten (10) business days of RenaGel
LLC's receipt of such report.

7.5. MANUFACTURE AND SUPPLY OF STARTING MATERIAL. Until such time as
RenaGel LLC obtains a sublicense under the Nittobo License pursuant to Section
2.4 hereof, GelTex shall manufacture and supply, or cause its contract
manufacturer(s) to manufacture and supply, the Starting Material for use by
RenaGel LLC or its contract manufacturer(s), as the case may be, in quantities
and within a period of time sufficient to enable RenaGel LLC or its contract
manufacturer(s), as the case may be, to meet its obligations under Section 7.2.
GelTex and its contract manufacturer(s) shall perform tests, prepare, deliver
and maintain test reports, certificates and notices of the type described in
Sections 7.3 and 7.4 above with respect to the manufacture and supply of the
Starting Material. Upon the grant of the sublicense under the Nittobo License by
GelTex to RenaGel LLC, RenaGel LLC shall manufacture and supply, or cause its
contract manufacturer(s) to manufacture and supply, the Starting Material, and
RenaGel LLC and its contract manufacturer(s) shall perform tests, prepare,
deliver and maintain test reports, certificates and notices of the type
described in Sections 7.3 and 7.4 above with respect to the manufacture and
supply of the Starting Material.

7.6. ACCESS TO FACILITIES. Each Party shall have the right to inspect
those portions of the manufacturing or storage facilities of (i) RenaGel LLC
where Collaboration Products are being manufactured or stored, (ii) any
subcontractor who is manufacturing or storing Collaboration Products for RenaGel
LLC, (iii) GelTex where Starting Material is being manufactured and stored or
(iv) any subcontractor who is manufacturing or storing Starting Material for
GelTex at any time during regular business hours and upon reasonable notice to
ascertain compliance with the Good Manufacturing Practices of the FDA or other
applicable governmental regulatory agency as the same may be amended from time
to time. Any confidential information disclosed to or otherwise gathered by the
Party conducting such inspection during any such inspection shall be deemed
"Information" as defined in Section 10.1 below.

<PAGE> 29

ARTICLE 8. MANAGEMENT

8.1. PROGRAM MANAGEMENT TEAM.
-----------------------

8.1.1. GENERAL. Within five (5) working days of the Effective
Date, the Parties shall establish a Program Management Team to oversee and
control development of Collaboration Products and to prepare for and oversee the
launch of Collaboration Products. The Program Management Team will be composed
of four (4) representatives appointed by GelTex and four (4) representatives
appointed by Genzyme. Such representatives will include individuals with
expertise and responsibilities in such areas as pre-clinical development,
clinical development, manufacturing, regulatory affairs, marketing, sales
management and reimbursement. The Program Management Team shall meet as needed
but not less than bi-weekly. The Team shall appoint one of its members to act as
Secretary. Such meetings shall be at times and places or in such form (e.g.,
telephone or video conference) as the members of the Program Management Team
shall agree. A Party may change one or more of its representatives to the
Program Management Team at any time. Members of the Program Management Team may
be represented at any meeting by another member of the Program Management Team,
or by a deputy. Any approval, determination or other action agreed to by a
majority of the members of the Program Management Team appointed by each of
GelTex and Genzyme or their deputies present at the relevant Team meeting shall
be the approval, determination or other action of the Program Management Team,
provided at least two (2) representatives of each of GelTex and Genzyme are
present at such meeting. Representatives of either GelTex and Genzyme who are
not members of the Program Management Team may attend meetings of the Team as
agreed to by the representative members of the other Party. The Project
Management Team may designate Project Leaders to the extent they deem it
necessary or advisable.

8.1.2. DEVELOPMENT PROGRAM FUNCTIONS. During the term of the
Development Program, the Program Management Team shall coordinate, expedite and
control the development of Collaboration Products to obtain Regulatory
Approvals. The Program Management Team will develop and recommend to the
Steering Committee Development Plans (including annual development budgets),
facilitate the flow of information with respect to development work being
conducted for each Collaboration Product on a worldwide basis, and discuss and
cooperate regarding such worldwide development.

8.1.3. COMMERCIALIZATION FUNCTIONS. Following submission of
filings for Regulatory Approvals for the first Collaboration Product, the
Program Management Team shall function as the operational staff of RenaGel LLC
and the functions of the Program Management Team shall be expanded to include:
(a) monitoring the commercialization of Collaboration Products pursuant to the
Commercialization Plan, including oversight of planning, annual budgeting,
manufacturing, marketing, sales and distribution, and licensing of Collaboration
Products; (b) monitoring actual expenses incurred in the manufacture, marketing,
sale and distribution of Collaboration Products; and (c) facilitating
cooperation regarding the worldwide commercialization and marketing activities
of the Parties.

8.1.4. MINUTES. The Program Management Team shall keep accurate
minutes of its deliberations which shall record all proposed decisions and all
actions recommended or

<PAGE> 30

taken. Draft minutes shall be sent to all members of the Program Management Team
and to all members of the Steering Committee within five (5) working days after
each meeting. All records of the Program Management Team shall at all times be
available to both GelTex and Genzyme.

8.2. STEERING COMMITTEE.
------------------

8.2.1. GENERAL. Within five (5) working days after the
Effective Date, the Parties shall establish a Steering Committee to oversee and
manage the collaboration contemplated by this Agreement. The Steering Committee
will be composed of three (3) representatives appointed by GelTex and three (3)
representatives appointed by Genzyme. Such representatives will be senior
officers and/or managers of their respective companies. The Steering Committee
will meet as needed but not less than once each calendar quarter. The Committee
shall appoint one of its members to act as Chairman or the Committee may elect
to appoint two of its members to act as Co-Chairmen. Such meetings shall be at
times and places or in such form (e.g., telephone or video conference) as the
members of the Steering Committee shall agree. A Party may change one or more of
its representatives to the Steering Committee at any time. Members of the
Steering Committee may be represented at any meeting by another member of the
Steering Committee, or by a deputy. Any approval, determination or other action
agreed to by unanimous consent of the members of the Steering Committee or their
deputies present at the relevant Committee meeting shall be the approval,
determination or other action of the Steering Committee, provided at least two
(2) representatives of each of GelTex and Genzyme is present at such meeting.
Representatives of either GelTex and Genzyme who are not members of the Steering
Committee may attend meetings of the Committee as agreed to by the
representative members of the other Party.

8.2.2. FUNCTIONS. The Steering Committee shall perform the
following functions: (a) determine the overall strategy for the Program in the
manner contemplated by this Agreement; (b) coordinate the activities of the
Parties hereunder; (c) settle disputes or disagreements that are unresolved by
the Program Management Team; (d) approve any agreements with Third Parties
regarding a Collaboration Product or which involve the grant of any rights
related to the development, manufacture or marketing of a Collaboration Product
and any material amendments or modifications thereto; (e) review and approve
each Development Plan, including each annual update, submitted to it pursuant to
Section 5.1.3 hereof; (f) review and approve each Commercialization Plan,
including each annual update, submitted to it for approval pursuant to Section
6.1.2 hereof; (g) serve as the governing body of RenaGel LLC; (h) set the
Estimated Net Selling Price, Wholesale Acquisition Cost and Distributor's
Discount for Collaboration Products; and (i) perform such other functions as
appropriate to further the purposes of this Agreement as determined by the
Parties.

8.2.3. MINUTES. The Steering Committee shall keep accurate
minutes of its deliberations which shall record all proposed decisions and all
actions recommended or taken. The Chairman shall be responsible for the
preparation of draft minutes. Draft minutes shall be sent to all members of the
Steering Committee within ten (10) working days after each meeting. All records
of the Steering Committee shall at all times be available to both GelTex and
Genzyme.

<PAGE> 31

8.3. GENERAL DISAGREEMENTS. All disagreements within the Program
Management Team and the Steering Committee shall be subject to the following:

(a) The representatives to the Team or Committee will
negotiate in good faith for a period of not less than thirty (30) days
to attempt to resolve the dispute. In the case of the Program Management
Team, any unresolved dispute shall be referred to the Steering Committee
for good faith negotiations for an additional period of not less than
thirty (30) days to attempt to resolve the dispute.

(b) In the event that the dispute is not resolved after the
period specified in clause (a) above, the representatives shall promptly
present the disagreement to the Chief Executive Officer of each of
GelTex and Genzyme or a designee of such Chief Executive Officer
reasonably acceptable to the other Party.

(c) Such executives shall meet or discuss in a telephone or
video conference each of GelTex and Genzyme's views and explain the
basis for such dispute.

(d) If such executives cannot resolve such disagreement
within sixty (60) days after such issue has been referred to them, then
such dispute shall be referred to arbitration as described in Section
14.10 hereof.

ARTICLE 9. INTELLECTUAL PROPERTY RIGHTS

9.1. OWNERSHIP. The Parties acknowledge that the ownership rights set
forth herein (i) shall not be affected by the participation in the discovery or
development of an Invention by the Program Management Team or the Steering
Committee in the course of discharging their duties hereunder and (ii) are
subject to the license grants set forth in Article 3 above.

9.1.1. OWNERSHIP OF DISCOVERIES AND IMPROVEMENTS. All right,
title and applications, patents or copyrights based thereon (collectively, the
"INVENTIONS") that are discovered, made or conceived during and in connection
with ********** . Each of GelTex and Genzyme shall promptly disclose to RenaGel
LLC and the other Party the making, conception or reduction to practice of
Inventions by employees or others acting on behalf of such Party. Patent Rights
and Technology covering ********* shall be automatically licensed to RenaGel
LLC in accordance with Section 3.1.1 hereof.

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 32

9.1.2. OWNERSHIP OF TRADEMARKS. The Steering Committee shall
select all trademarks for the sale and use of Collaboration Products and RenaGel
LLC shall bear all expenses thereof. RenaGel LLC shall own all such trademarks,
except for the registered trademark "RenaGel(R)," as to which it has been
granted a license pursuant to Section 3.1.1 hereof.

9.1.3. COOPERATION OF EMPLOYEES. Each of GelTex and Genzyme
represents and agrees that all employees or others acting on its behalf in
performing its obligations under this Agreement shall be obligated under a
binding written agreement to assign to such Party, or as such Party shall
direct, all Inventions made or conceived by such employee or other person. In
the case of non-employees working for other companies or institutions on behalf
of GelTex or Genzyme, GelTex or Genzyme, as applicable, shall have the right to
obtain licenses for all Inventions made by such non-employees on behalf of
GelTex or Genzyme, as applicable, in accordance with the policies of said
company or institution. GelTex and Genzyme agree to undertake to enforce such
agreements (including, where appropriate, by legal action) considering, among
other things, the commercial value of such Inventions.

9.2. FILING, PROSECUTION AND MAINTENANCE OF PATENT RIGHTS.
----------------------------------------------------

9.2.1. FILING, PROSECUTION AND MAINTENANCE. The Steering
Committee shall determine which Party shall be responsible for the filing,
prosecution and maintenance of all patent applications and patents included in
Patent Rights **********. Otherwise, each of GelTex and Genzyme shall be
responsible for the filing, prosecution and maintenance of all patent
applications and patents which make up its Patent Rights. For so long as any of
the license grants set forth in Article 3 hereof remain in effect and upon
request of the other Party, each of GelTex and Genzyme agrees to file and
prosecute patent applications and maintain the patents covering its Patent
Rights in all countries in the Territory selected by the Steering Committee in
accordance with the Commercialization Plan. Each of GelTex and Genzyme shall
consult with and keep the other fully informed of important issues relating to
the preparation and filing (if time permits), prosecution and maintenance of
such patent applications and patents, and shall furnish to the other Party
copies of documents relevant to such preparation, filing, prosecution or
maintenance in sufficient time prior to filing such document or making any
payment due thereunder to allow for review and comment by the other Party and,
to the extent possible in the reasonable exercise of its discretion, the filing
Party shall incorporate all such comments.

9.2.2. PATENT FILING COSTS. All costs associated with filing,
prosecuting and maintaining patent applications and patents covering each of
GelTex and Genzyme's Patent Rights specific to the Field shall be deemed
Development Costs; provided, however, that if the claims of any such Patent
Rights include claims outside the Field, each of RenaGel LLC and the Party
filing, prosecuting and maintaining such patents and patent applications shall
bear one-half (1/2) of such costs.

9.3. COOPERATION. Each of GelTex and Genzyme shall make available to
the other Party (or to the other Party's authorized attorneys, agents or
representatives) its employees, agents or consultants to the extent necessary or
appropriate to enable the appropriate Party to file, prosecute and maintain
patent applications and resulting patents with respect to

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
26

<PAGE> 33

inventions owned by a Party and for periods of time sufficient for such Party to
obtain the assistance it needs from such personnel. Where appropriate, each of
GelTex and Genzyme shall sign or cause to have signed all documents relating to
said patent applications or patents at no charge to the other Party.

9.4. NOTIFICATION OF PATENT TERM RESTORATION. Each of GelTex and
Genzyme shall notify the other Party of (a) the issuance of each United States
patent included within the notifying Party's Patent Rights, giving the date of
issue and patent number for each such patent, and (b) each notice pertaining to
any patent included within the notifying Party's Patent Rights which it receives
as patent owner pursuant to the Drug Price Competition and Patent Term
Restoration Act of 1984, including notices pursuant to ss.ss.101 and 103 of such
Act from persons who have filed an abbreviated NDA. Such notices shall be given
promptly, but in any event within ten (10) business days after receipt of each
such notice pursuant to such Act. Each of GelTex and Genzyme shall notify the
other Party of each filing for patent term restoration under such Act, any
allegations of failure to show due diligence and all awards of patent term
restoration (extensions) with respect to the notifying Party's Patent Rights.

9.5. NO OTHER TECHNOLOGY RIGHTS. Except as otherwise expressly
provided in this Agreement, under no circumstances shall a Party hereto, as a
result of this Agreement, obtain any ownership interest in or other right to the
Patent Rights, Technology or Manufacturing Know-How of the other Party,
including items owned, controlled or developed by the other Party, or
transferred by the other Party to said Party at any time pursuant to this
Agreement. It is understood and agreed that this Agreement does not grant either
Party any license or other right in the Patent Rights of the other Party other
than as specified in Article 3 hereof and this Article 9.

9.6. ENFORCEMENT OF PATENT RIGHTS; DEFENSE OF INFRINGEMENT ACTIONS.
GelTex and Genzyme shall each promptly notify the other in writing of any
alleged or threatened infringement of any patents or patent applications for
which they are responsible pursuant to Section 9.2 above or if either Party, or
any of their respective Affiliates, shall be individually named as a defendant
in a legal proceeding by a Third Party for infringement of a patent because of
the manufacture, use or sale of a Collaboration Product or because of attempts
to invalidate Genzyme or GelTex Patent Rights.

9.6.1. FIRST RIGHT TO RESPOND. Each of GelTex and Genzyme shall
have the first right to respond to or defend (in consultation with the Steering
Committee) against such challenge or infringement of the Patent Rights for which
it is responsible for pursuant to Section 9.3 above or charge of infringement.
In the event such Party elects to so respond or defend, the other Party will
cooperate with the responding Party's legal counsel, join in such suits as may
be brought by the responding Party to enforce its Patent Rights, and be
available at the responding Party's reasonable request to be an expert witness
or otherwise to assist in such proceedings.

9.6.2. SHARING OF LITIGATION AND SETTLEMENT EXPENSES. The costs
incurred (i) in responding to or defending against a challenge to or
infringement of a Party's Patent Rights specific to the Field or a charge that
the manufacture, use or sale of Collaboration Products

<PAGE> 34

infringe upon the Patent Rights of Third Parties, (ii) in settling any such
actions, which may not be done without the prior written consent of the Steering
Committee, which consent shall not be unreasonably withheld or delayed, and
(iii) as damages paid as a result of such actions shall be deemed Program Costs.

9.6.3. SECOND RIGHT TO RESPOND. If a Party does not exercise
its right to respond to or defend against challenges or infringements of its
Patent Rights as provided in Section 9.6.1 above within sixty (60) days of
becoming aware of or being notified of such challenges or infringements, then
the other Party shall have the option to do so at its sole cost; provided that
in such case all amounts so recovered from such Third Party shall be retained by
the Party undertaking such response or defense and the Party so responding shall
have no further obligations to the other Party with respect to the response or
defense thereof.

ARTICLE 10. CONFIDENTIALITY

10.1. NONDISCLOSURE OBLIGATIONS. Except as otherwise provided in this
Article 10, during the term of this Agreement and for a period of ****** years
thereafter, the Parties shall, and GelTex shall cause RenaGel, Inc. to, maintain
in confidence and use only for purposes specifically authorized under this
Agreement (a) confidential information and data resulting from or related to the
development of Collaboration Products and (b) all information and data not
described in clause (a) but supplied by another Party under this Agreement and
marked "Confidential."

For purposes of this Article 10, information and data described in
clause (a) or (b) of the preceding paragraph shall be referred to as
"INFORMATION." To the extent it is reasonably necessary or appropriate to fulfil
its obligations or exercise its rights under this Agreement, a Party may
disclose Information it is otherwise obligated under this Section not to
disclose to its Affiliates, sublicensees, consultants, outside contractors and
clinical investigators, on a need-to-know basis and on the condition that such
entities or persons agree to keep the Information confidential for the same time
periods and to the same extent as such Party is required to keep the Information
confidential; and a Party or its sublicensees may disclose such Information to
government or other regulatory authorities to the extent that such disclosure is
reasonably necessary to obtain patents or authorizations to conduct clinical
trials with and to market commercially Collaboration Products. The obligation
not to disclose Information shall not apply to any part of such Information
that: (i) is or becomes patented, published or otherwise becomes publicly known
other than by acts of the Party obligated not to disclose such Information or
its Affiliates or sublicensees in contravention of this Agreement; (ii) can be
shown by written documents to have been disclosed to the receiving Party or its
Affiliates or sublicensees by a Third Party, provided that such Information was
not obtained by such Third Party directly or indirectly from the other Party
under this Agreement; (iii) prior to disclosure under this Agreement, was
already in the possession of the receiving Party or its Affiliates or
sublicensees, provided that such Information was not obtained directly or
indirectly from the other Party under this Agreement; (iv) can be shown by
written documents to have been independently developed by the receiving Party or
its Affiliates without breach of any of the provisions of this Agreement; or (v)
is disclosed by the receiving Party or its Affiliates pursuant to a subpoena
lawfully issued by a court or

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
28

<PAGE> 35

governmental agency, provided that the receiving Party or its Affiliates, as the
case may be, notifies the other Parties immediately upon receipt of any such
subpoena.

10.2. TERMS OF THIS AGREEMENT. The Parties agree that the public
announcement of the execution of this Agreement shall be substantially in the
form of the press release attached to this Agreement as APPENDIX A and, from and
after the Effective Date, each Party shall be entitled to make or publish any
statement limited to the contents of such press release. The Parties further
agree to seek confidential treatment for the filing of this Agreement with the
Securities and Exchange Commission and shall agree upon the content of the
request for confidential treatment made by each Party in respect of such filing.
Except as permitted by the foregoing provisions or as otherwise required by law,
each of the Parties hereby agrees not to disclose any terms or conditions of
this Agreement to any Third Party without the prior consent of the other Party;
provided, that each Party shall be entitled to disclose the terms of this
Agreement without such consent to potential investors or other financing sources
on the condition that such entities or persons agree to keep such terms
confidential for the same time periods and to the same extent as such Party is
required to keep such terms confidential.

10.3. PUBLICATIONS. Each Party recognizes the mutual interest in
obtaining valid patent protection. Consequently, any Party, its employees or
consultants wishing to make a publication (including any oral disclosure made
without obligation of confidentiality) relating to work performed by such Party
as part of the Program (the "PUBLISHING PARTY") shall transmit to the other
Party (the "REVIEWING PARTY") a copy of the proposed written publication at
least forty-five (45) days prior to submission for publication, or an abstract
of such oral disclosure at least fifteen (15) days prior to submission of the
abstract or the oral disclosure, whichever is earlier. The Reviewing Party shall
have the right to (a) request a delay in publication or presentation in order to
protect patentable information, (b) propose modifications to the publication for
patent reasons or (c) request that the information be maintained as a trade
secret.

If the Reviewing Party requests a delay as described in clause (a)
above, the Publishing Party shall delay submission or presentation of the
publication for a period of ninety (90) days to enable patent applications
protecting each Party's rights in such information to be filed. Upon the
expiration of forty-five (45) days, in the case of proposed written disclosures,
or fifteen (15) days, in the case of an abstract of proposed oral disclosures,
from transmission of such proposed disclosures to the Reviewing Party, the
Publishing Party shall be free to proceed with the written publication or the
oral presentation, respectively, unless the Reviewing Party has requested the
delay described above.

To the extent possible in the reasonable exercise of its discretion, the
Publishing Party shall incorporate all modifications proposed under clause (b)
above. If a trade secret that is the subject of a request made under clause (c)
above cannot be otherwise protected without unreasonable expense to the
Reviewing Party, such information shall be omitted from the publication.

<PAGE> 36

ARTICLE 11. REPRESENTATIONS AND WARRANTIES

11.1. AUTHORIZATION. Each Party warrants and represents to the other
Parties that (a) it has the legal right and power to enter into this Agreement,
to extend the rights and licenses granted to the other in this Agreement, and to
perform fully its obligations hereunder, (b) this Agreement has been duly
executed and delivered and is a valid and binding agreement of such Party,
enforceable in accordance with its terms, (c) such Party has obtained all
necessary approvals to the transactions contemplated hereby and (d) such Party
has not made nor will it make any commitments to others in conflict with or in
derogation of such rights or this Agreement.

11.2. INTELLECTUAL PROPERTY RIGHTS.
----------------------------

11.2.1. GelTex hereby represents and warrants that immediately
prior to the execution and delivery of this Agreement, (a) it possesses an
exclusive right, title and interest to the GelTex Patent Rights and the GelTex
Technology in the Territory (except for licenses granted to Dow Chemical and
Abbott Laboratories and certain manufacturing technology owned by Nittobo or
covered by the Abbott and the Dow Agreements as to which GelTex has
non-exclusive licenses), (b) that the GelTex Patent Rights and the GelTex
Technology are free and clear of any lien or other encumbrance and (c) that it
has the right to (i) enter into the obligations set forth in this Agreement and
(ii) grant the rights and licenses set forth in Article 3 hereof.

11.2.2. GelTex warrants that it is not aware of any issued
patent that would be infringed by the manufacture and sale of Collaboration
Products as contemplated by this Agreement.

11.2.3. GelTex hereby represents and warrants that it shall use
commercially reasonable and diligent efforts (a) during such time as GelTex is
obliged to supply the Starting Material pursuant to Section 7.5 to either (i)
maintain the Nittobo License in full force and effect during the term of this
Agreement or (ii) supply RenaGel LLC or its contract manufacturer(s), as the
case may be, Starting Material in accordance with Section 7.5 hereof in a manner
such that the manufacture, use and sale of such Starting Material will not
infringe any Third Party patents, including but not limited to those covered by
the Nittobo License and (b) if RenaGel LLC is obliged to supply the Starting
Material pursuant to Section 7.5 hereof, to maintain the Nittobo License in full
force and effect during the term of this Agreement or until such time as GelTex
receives prior written authorization from the Steering Committee to terminate
the Nittobo License. GelTex further represents that, *********.

11.3. WARRANTIES.
----------

11.3.1. GENZYME WARRANTIES. Genzyme warrants that the
Collaboration Products sold pursuant to Section 6.1.3 hereof will be marketed
and sold in all material

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
30

<PAGE> 37

respects in accordance with the conditions of any applicable Regulatory
Approvals and any applicable labelling claims.

11.3.2. RENAGEL LLC WARRANTIES. RenaGel LLC warrants that the
Collaboration Products delivered pursuant to Section 7.2 hereof will conform in
all material respects to the Specifications, the conditions of any applicable
Regulatory Approvals regarding the manufacturing process and any applicable
requirements of the Regulatory Scheme regarding the manufacturing process.
RenaGel LLC further warrants that the Starting Material delivered by RenaGel LLC
or its contract manufacturer(s) pursuant to Section 7.5 hereof will conform in
all material respects to the conditions of any applicable Regulatory Approvals
regarding the manufacturing process and any applicable requirements of the
Regulatory Scheme regarding the manufacturing process.

11.3.3. GELTEX WARRANTIES. GelTex warrants that the Starting
Material delivered by GelTex or its contract manufacturer(s) pursuant to Section
7.5 hereof will conform in all material respects to the conditions of any
applicable Regulatory Approvals regarding the manufacturing process and any
applicable requirements of the Regulatory Scheme regarding the manufacturing
process.

11.4. DISCLAIMER OF REPRESENTATIONS AND WARRANTIES. EXCEPT AS
OTHERWISE EXPRESSLY SET FORTH IN THIS AGREEMENT, NONE OF GELTEX, GENZYME OR
RENAGEL LLC MAKES ANY REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND,
EITHER EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND THE NON-INFRINGEMENT OF
ANY THIRD-PARTY PATENTS OR PROPRIETARY RIGHTS. ALL UNIFORM COMMERCIAL CODE
WARRANTIES ARE EXPRESSLY DISCLAIMED BY THE PARTIES.

11.5. LIMITATION OF LIABILITY. It is agreed by the Parties that no
Party shall have a right to or shall claim special, indirect or consequential
damages, including lost profits, for breach of this Agreement. Remedies shall be
limited to claims for amounts due hereunder or as otherwise provided in this
Agreement, including claims for indemnification as provided in Section 12.1
hereof.

<PAGE> 38

ARTICLE 12. INDEMNITY

12.1. RENAGEL LLC INDEMNITY OBLIGATIONS. The Operating Agreement shall
provide that RenaGel LLC shall indemnify each of the Members and their
respective Affiliates, employees and agents for any act performed by such Member
within the scope of the authority conferred upon such Member under this
Agreement; provided, that it shall be a condition to such indemnity that (i) the
Member seeking indemnification acted in good faith and in a manner reasonably
believed to be in, or not opposed to, the best interests of RenaGel LLC, (ii)
the act for which indemnification is sought did not constitute gross negligence
or wilful misconduct by such Member and (iii) payment and indemnification of any
matter disposed of by a compromise payment by such Member, pursuant to consent
decree or otherwise, shall have been approved by the Members, which approval
shall not be unreasonably withheld, or by a court of competent jurisdiction.

12.2. INSURANCE. RenaGel LLC shall maintain product liability
insurance with respect to development, manufacture and sales of Collaboration
Products in an amount reasonably believed by Genzyme and GelTex to be adequate
and customary for the development, manufacture and sale of novel therapeutic
products. Genzyme, GelTex and Dow Chemical shall be named as additional insureds
on any such policy.

ARTICLE 13. TERM AND TERMINATION

13.1. TERM. The term of this Agreement shall be perpetual unless
terminated pursuant to Section 13.2 below.

13.2. TERMINATION. This Agreement may be terminated in the following
circumstances:

13.2.1. FOR CERTAIN MATERIAL BREACHES. If (a) either GelTex or
Genzyme fails to use commercially reasonable and diligent efforts to perform any
material duty imposed upon such Party under this Agreement or a Development
Plan, (b) either GelTex or Genzyme fails to make the program funding capital
contributions in accordance with Article 4 hereof, (c) Genzyme fails to use
commercially reasonable and diligent efforts to commercialize any Collaboration
Product in any Major Market Country in accordance with the Commercialization
Plan for such Collaboration Product or (d) (1) if GelTex is obliged to supply
the Starting Material pursuant to Section 7.5 hereof, GelTex fails to either
maintain the Nittobo License in full force and effect or supply RenaGel LLC or
its contract manufacturer(s), as the case may be, Starting Material in
accordance with Section 7.5 hereof in a manner such that the manufacture, use
and sale of such Starting Material will not infringe any Third Party patents,
including but not limited to those covered by the Nittobo License or (2) if
RenaGel LLC is obliged to supply the Starting Material pursuant to Section 7.5
hereof, GelTex fails to maintain the Nittobo License in full force and effect
and the Steering Committee has not provided GelTex with prior written
authorization to terminate the Nittobo License, and, in any case described in
clauses (a) - (d), such failure to perform is not cured within ninety (90) days
of written notice thereof from the non-breaching Party, the non-breaching Party
may elect, in its sole discretion, to (i) enforce the terms of this Agreement

<PAGE> 39

and seek any and all remedies available to it at law and in equity, (ii) in the
case of clause (b) above, waive the terms of Article 4 with respect to any one
or more required capital contributions and cause the Percentage Interests (as
defined in the Operating Agreement) and future funding responsibilities of the
Parties to be adjusted in accordance with Section 4.2 hereof or (iii) terminate
this Agreement with the consequences set forth in Section 13.3.1 below. Such
90-day period shall be extended to one hundred eighty (180) days if the
breaching Party has engaged in good faith efforts to remedy such default within
such 90-day period and indicated in writing to the non-breaching Party prior to
the expiration of such 90-day period that it believes that it will be able to
remedy the default within such 180-day period, but such extension shall apply
only so long as the breaching Party is engaging in good faith efforts to remedy
such default.

13.2.2. FOR FAILURE TO MAKE A MILESTONE PAYMENT. In the event
that Genzyme fails to make a milestone payment pursuant to Article 4 hereof and
such failure is not cured within sixty (60) days of written notice thereof from
GelTex, GelTex may elect, in its sole discretion, to either (a) enforce the
terms of this Agreement and seek any and all remedies available to it at law and
in equity or (b) terminate this Agreement with the consequences set forth in
Section 13.3.2 below.

13.2.3. FOR CONVENIENCE. Either GelTex or Genzyme may elect to
terminate this Agreement for any reason at any time after the earlier of (i)
such time as GelTex has received FDA approval for the NDA for RenaGel(R) or (ii)
******* if GelTex has not received FDA approval of the NDA for RenaGel(R) on or
before such date upon one (1) year prior written notice to the other Party
(during which one-year period the obligations of the Parties, including without
limitation obligations with respect to capital contributions, shall continue in
full force and effect).

13.2.4. UPON CHANGE OF CONTROL. Either GelTex or Genzyme may
elect to terminate this Agreement (effective as of the effective date of such
transaction) in the event that:

(a) any Third Party or group of related Third Parties shall
directly or indirectly become the beneficial owner of capital stock representing
fifty percent (50%) or more of the total voting rights of all of the capital
stock of the other Party then outstanding or otherwise acquires the power to
direct or cause the direction of the management and policies of such Party or
the power to elect or appoint more than fifty percent (50%) of the members of
the Board of Directors of such Party; and

(b) the other Party shall consolidate or merge with any
other person and the stockholders of such Party of record immediately prior to
the consummation of such transaction do not beneficially own capital stock
representing fifty percent (50%) or more of the total voting rights of the
surviving corporation after the consummation of such transaction.

13.2.5. UPON BANKRUPTCY. Either GelTex or Genzyme may terminate
this Agreement upon the bankruptcy, insolvency, dissolution or winding-up of the
other Party, except in the case of a petition in bankruptcy filed involuntarily
against a Party, if such petition is dismissed within sixty (60) days of the
date of its filing.

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
33

<PAGE> 40

13.3. EFFECTS OF TERMINATION.
----------------------

13.3.1. FOR CERTAIN MATERIAL BREACHES. In addition to the rights
and duties set forth in Sections 13.4 and 13.5 below, RenaGel, Inc. shall have
the following rights and GelTex and Genzyme shall have the following rights and
duties upon termination of this Agreement pursuant to Section 13.2.1(iii) above:

(a) the non-breaching Party shall obtain from the breaching
Party the exclusive and irrevocable right and license, with the right to grant
sublicenses, under the breaching Party's Patent Rights, Technology and
Manufacturing Know-How to develop, make, have made, use, offer for sale, sell,
have sold, import and export Collaboration Products in the Territory and in the
Field, and the breaching Party shall execute such documents and take all action
as may be necessary or desirable to affect the foregoing; provided, that any
license granted hereunder shall be subject to the obligation of the
non-breaching Party to use commercially reasonable and diligent efforts to
develop and market Collaboration Products pursuant to such license;

(b) the breaching Party shall assign and transfer all of its
interest in RenaGel LLC to the non-breaching Party, and the non-breaching Party
may dissolve RenaGel LLC in its sole discretion, provided that in the event that
GelTex is the breaching Party, it shall also cause RenaGel, Inc. to assign and
transfer all of its interest in RenaGel LLC to Genzyme;

(c) all licenses granted pursuant to Article 3 shall be
revoked and, if RenaGel LLC is dissolved, the sublicense under the Nittobo
License (if obtained) and any applicable Regulatory Approval and clinical data
owned or licensed by RenaGel LLC and any trademarks owned or licensed by RenaGel
LLC shall be assigned or licensed to the non-breaching Party;

(d) the non-breaching Party shall become obligated to pay
the breaching Party an amount equal to *******, plus interest thereon at the
Base Rate of interest declared from time to time by The First National Bank
of Boston in Boston, Massachusetts from the date of termination to the date
payment is made (the "BREACH BUYOUT AMOUNT"), payable as follows:

(1) if the non-breaching Party elects to sell or
otherwise dispose of all or any portion of its or its Affiliates' right, title
and interest in the Collaboration Products, then the non-breaching Party shall,
upon any such sale or other disposition, pay the breaching Party an amount equal
to *******;

(2) for as long as the non-breaching Party
(together, in the case of GelTex, with RenaGel, Inc.) has not sold or otherwise
disposed of all or a portion of its

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 41

(together, in the case of GelTex, with RenaGel, Inc.'s) right, title and
interest in the Collaboration Products which is equal to or greater than the
breaching Party's (together, in the case of GelTex, with RenaGel, Inc.'s)
Percentage Interest (as defined in the Operating Agreement) as of the date of
termination, the non-breaching Party shall pay the breaching Party (and, in the
event that GelTex is the breaching Party, RenaGel, Inc.) ******** shall equal
(i) the breaching Party's (and, in the event that GelTex is the breaching Party,
RenaGel, Inc.'s) ********; and

(3) on the ******** of the date of termination, the
non-breaching Party shall pay the breaching Party (and, in the event that
GelTex is the breaching Party, RenaGel, Inc.) the difference between the
aggregate amounts paid pursuant to clauses (1) and (2) above and the Breach
Buyout Amount; provided, that the aggregate amount of all payments made under
clauses (1), (2) and (3) shall not exceed the Breach Buyout Amount; and

(e) if Genzyme has not paid all of the payments described in
Section 4.1 on or before the date of termination, termination of this Agreement
shall not relieve Genzyme of its obligation to pay any such unpaid amount at
such time as it becomes due and payable in accordance with the schedule set
forth in Section 4.1, and if GelTex is the non-breaching Party and such payments
remain unpaid after they have become due and payable, GelTex shall have the
right to offset the payments otherwise due to Genzyme pursuant to clause (d)
above in an amount equal to the outstanding payments due and payable to GelTex
pursuant to Section 4.1 hereof.

13.3.2. FOR FAILURE TO MAKE A MILESTONE PAYMENT. In addition to
the rights and duties set forth in Sections 13.4 and 13.5 below, GelTex shall
have the following rights and duties upon termination of this Agreement pursuant
to Section 13.2.2(b) above:

(a) GelTex shall obtain from Genzyme the exclusive and
irrevocable right and license, with the right to grant sublicenses, under the
Genzyme's Patent Rights, Technology and Manufacturing Know-How to develop, make,
have made, use, offer for sale, sell, have sold, import and export Collaboration
Products in the Territory and in the Field, and Genzyme shall execute such
documents and take all action as may be necessary or desirable to affect the
foregoing; provided, that any license granted hereunder shall be subject to the
obligation of GelTex to use commercially reasonable and diligent efforts to
develop and market Collaboration Products pursuant to such license;

(b) Genzyme shall assign and transfer all of its interest in
RenaGel LLC to GelTex, and GelTex may dissolve RenaGel LLC in its sole
discretion;

(c) all licenses granted pursuant to Article 3 shall be
revoked and, if RenaGel LLC is dissolved, any applicable Regulatory Approval and
clinical data owned or

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
35

<PAGE> 42

licensed by RenaGel LLC and any trademarks owned or licensed by RenaGel LLC
shall be assigned to GelTex; and

(d) GelTex shall become obligated to pay Genzyme an amount
equal to ********* plus interest thereon at the Base Rate of interest declared
from time to time by The First National Bank of Boston in Boston, Massachusetts
from the date of termination to the date payment is made less the aggregate
amount of the milestone payments described in Section 4.1 that have not been
paid by Genzyme as of such termination, whether or not all such payments have
become due (the "MILESTONE BREACH BUYOUT AMOUNT"), payable on the terms and
conditions and in accordance with the scheduled of payments set forth in Section
13.3.1.(d), mutatis mutandis.

13.3.3. FOR CONVENIENCE. In addition to the rights and duties
set forth in Sections 13.4 and 13.5 below, RenaGel, Inc. shall have the
following rights and GelTex and Genzyme shall have the following rights and
duties upon termination of this Agreement pursuant to Section 13.2.3 above:

(a) the non-terminating Party shall have an option
exercisable upon written notice to the terminating Party within the one-year
period provided in Section 13.2.3 hereof to obtain from the terminating Party
the exclusive and irrevocable right and license, with the right to grant
sublicenses, under the terminating Party's Patent Rights, Technology and
Manufacturing Know-How to develop, make, have made, use, offer for sale, sell,
have sold, import and export Collaboration Products in the Territory and in the
Field, and the terminating Party shall execute such documents and take all
action as may be necessary or desirable to affect the foregoing; provided, that
any license granted hereunder shall be subject to the obligation of the
non-terminating Party to use commercially reasonable and diligent efforts to
develop and market Collaboration Products pursuant to such license;

(b) upon exercise of its license option provided in
paragraph (a) of this Section 13.3.3, the terminating Party shall assign and
transfer all of its interest in RenaGel LLC to the non-terminating Party, and
the non-terminating Party may dissolve RenaGel LLC in its sole discretion,
provided that in the event that GelTex is the terminating Party, it shall also
cause RenaGel, Inc. to assign and transfer all of its interest in RenaGel LLC to
Genzyme;

(c) upon exercise of its license option provided in
paragraph (a) of this Section 13.3.3, all licenses granted pursuant to Article 3
shall be revoked and, if RenaGel LLC is dissolved, the sublicense under the
Nittobo License (if obtained) and any applicable Regulatory Approval and
clinical data owned or licensed by RenaGel LLC and any trademarks owned or
licensed by RenaGel LLC shall be assigned to the non-terminating Party;

(d) upon the exercise of its license option provided in
paragraph (a) of this Section 13.3.3, the non-terminating Party shall become
obligated to pay to the terminating Party an amount equal ********

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 43
*********** plus interest thereon at the Base Rate of interest declared from
time to time by The First National Bank of Boston in Boston, Massachusetts from
the date of termination to the date payment is made (the "CONVENIENCE BUYOUT
AMOUNT"), payable on the terms and conditions and in accordance with the
scheduled of payments set forth in Section 13.3.1.(d), mutatis mutandis;

(e) if the license option provided in paragraph (a) of this
Section 13.3.3 is not exercised, then all right, title and interest in the
Collaboration Products shall be sold to the highest bidder within ********
from the date of termination and the proceeds shall be allocated between the
Members in proportion to their Percentage Interests (as defined in the Operating
Agreement) in RenaGel LLC as of the date of termination and RenaGel LLC shall be
dissolved; and

(f) if Genzyme has not paid all of the payments described in
Section 4.1 on or before the date of termination, termination of this Agreement
shall not relieve Genzyme of its obligation to pay any such unpaid amount at
such time as it becomes due and payable in accordance with the schedule set
forth in Section 4.1, and if GelTex is the non-terminating Party and such
payments remain unpaid after they have become due and payable, GelTex shall have
the right to offset the payments otherwise due to Genzyme pursuant to clause (d)
above in an amount equal to the outstanding payments due and payable to GelTex
pursuant to Section 4.1 hereof.

13.3.4. UPON A CHANGE OF CONTROL. In addition to the rights and
duties set forth in Sections 13.4 and 13.5 below, RenaGel, Inc. shall have the
following rights and GelTex and Genzyme shall have the following rights and
duties upon termination of this Agreement pursuant to Section 13.2.4 above:

(a) the terminating Party shall obtain from the
non-terminating Party the exclusive and irrevocable right and license, with the
right to grant sublicenses, under the non-terminating Party's Patent Rights,
Technology and Manufacturing Know-How to develop, make, have made, use, offer
for sale, sell, have sold, import and export Collaboration Products in the
Territory and in the Field, and the non-terminating Party shall execute such
documents and take all action as may be necessary or desirable to affect the
foregoing; provided, that any license granted hereunder shall be subject to the
obligation of the terminating Party to use commercially reasonable and diligent
efforts to develop and market Collaboration Products pursuant to such license;

(b) the non-terminating Party shall assign and transfer all
of its interest in RenaGel LLC to the terminating Party, and the terminating
Party may dissolve RenaGel LLC in its sole discretion, provided that in the
event that GelTex is the non-terminating Party, it shall also cause RenaGel,
Inc. to assign and transfer all of its interest in RenaGel LLC to Genzyme;

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
37

<PAGE> 44

RenaGel LLC is dissolved, the sublicense under the Nittobo License (if obtained)
and any applicable Regulatory Approval and clinical data owned or licensed by
RenaGel LLC and any trademarks owned or licensed by RenaGel LLC shall be
assigned or licensed to the terminating Party;

(d) the terminating Party shall become obligated to pay to
the non-terminating Party an amount equal to *********** plus interest thereon
at the Base Rate of interest declared from time to time by The First National
Bank of Boston in Boston, Massachusetts from the date of termination to the date
payment is made (the "CHANGE OF CONTROL BUYOUT AMOUNT"), payable on the terms
and conditions and in accordance with the scheduled of payments set forth in
Section 13.3.1.(d), mutatis mutandis; and

(e) in any event, if Genzyme has not paid all of the
payments described in Section 4.1 on or before the date of termination,
termination of this Agreement shall not relieve Genzyme of its obligation to pay
any such unpaid amount at such time as it becomes due and payable in accordance
with the schedule set forth in Section 4.1, and if GelTex is the terminating
Party and such payments remain unpaid after they have become due and payable,
GelTex shall have the right to offset the royalty payments otherwise due to
Genzyme pursuant to clause (d) above in an amount equal to the outstanding
payments due and payable to GelTex pursuant to Section 4.1 hereof.

13.3.5. UPON BANKRUPTCY. In addition to the rights and duties
set forth in Sections 13.4 and 13.5 below, RenaGel, Inc. shall have the
following rights and GelTex and Genzyme shall have the following rights and
duties upon termination of this Agreement pursuant to Section 13.2.5 above:

(a) the terminating Party shall obtain from the
non-terminating Party the exclusive, irrevocable, royalty-bearing right and
license, with the right to grant sublicenses, under the non-terminating Party's
Patent Rights, Technology and Manufacturing Know-How to develop, make, have
made, use, offer for sale, sell, have sold, import and export Collaboration
Products in the Territory and in the Field, and the non-terminating Party shall
execute such documents and take all action as may be necessary or desirable to
affect the foregoing; provided, that any license granted hereunder shall be
subject to the obligation of the terminating Party to use commercially
reasonable and diligent efforts to develop and market Collaboration Products
pursuant to such license;

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 45

(c) all licenses granted to Article 3 shall be revoked and,
if RenaGel LLC is dissolved, the sublicense under the Nittobo License (if
obtained) any applicable Regulatory Approval and clinical data owned or licensed
by RenaGel LLC and any trademarks owned or licensed by RenaGel LLC shall be
assigned or licensed to the terminating Party;

(d) the terminating Party shall become obligated to pay to
the non-terminating Party an amount equal to ********* plus interest thereon at
the Base Rate of interest declared from time to time by The First National Bank
of Boston in Boston, Massachusetts from the date of termination to the date
payment is made (the "BANKRUPTCY BUYOUT AMOUNT"), payable on the terms and
conditions and in accordance with the scheduled of payments set forth in
Section 13.3.1.(d), mutatis mutandis.

(e) if Genzyme has not paid all of the payments described in
Section 4.1 on or before the date of termination, termination of this Agreement
shall not relieve Genzyme of its obligation to pay any such unpaid amount at
such time as it becomes due and payable in accordance with the schedule set
forth in Section 4.1, and if GelTex is the terminating Party and such payments
remain unpaid after they have become due and payable, GelTex shall have the
right to offset the payments otherwise due to Genzyme pursuant to clause (d)
above in an amount equal to the outstanding payments due and payable to GelTex
pursuant to Section 4.1 hereof.

13.3.6. FAIR VALUE. For purposes of this Section 13.3, the
********** In the event that GelTex and Genzyme are unable to agree upon the
Fair Value within ******** of the date of termination, the Fair Value shall be
determined by an investment banking firm selected by mutual agreement of GelTex
and Genzyme, and the costs and expenses incurred in connection with the
engagement of such investment banking firm shall be shared equally by GelTex and
Genzyme.

13.4. INVENTORY. Upon the termination of this Agreement, if Genzyme
does not obtain a license pursuant to Sections 13.3.1(a), 13.3.3(a), 13.3.4(a)
or 13.3.5(a), GelTex shall have the option to repurchase Genzyme's inventory of
Collaboration Products acquired by Genzyme pursuant to Article 6 hereof. Within
ten (10) days after such termination, GelTex shall elect in writing to either
(a) permit Genzyme to sell off its remaining inventory or Collaboration
Products, provided that Genzyme shall comply with all of the terms and
conditions of this Agreement restricting such selling activities as in effect
immediately prior to such termination, or (b) repurchase Genzyme's inventory of
Collaboration Products. If GelTex fails to make such an election, Genzyme shall
be permitted to sell-off its remaining

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 46

inventory of Collaboration Products in accordance with clause (a) of this
Section 13.4. Any repurchase of Genzyme's inventory of Collaboration Products
shall be at the price * to be reasonably determined by the Parties.

13.5. SURVIVAL OF RIGHTS AND DUTIES. No termination of this Agreement
shall eliminate any rights or duties accrued prior to such termination. The
provisions of Articles 1, 10 and 12 and Sections 2.2, 3.3, 4.1 (to the extent
certain payments by Genzyme have not been made prior to termination), 4.3, 4.5,
9.1.1, 9.1.3, 9.3, 9.5, 13.3, 13.4, 13.5, 14.1, 14.3, 14.4, 14.9 and 14.10
hereof shall survive any termination of this Agreement.

ARTICLE 14. MISCELLANEOUS

14.1. COOPERATION. If either GelTex or Genzyme (the "ASSUMING PARTY")
shall assume the Program rights from the other Party (the "RESPONSIBLE PARTY")
in accordance with the provisions of Article 13 hereof, the Responsible Party
shall promptly provide to the Assuming Party (or any Third Party or Affiliate
designated by the Assuming Party) all Technology, Manufacturing Know-How and
access to regulatory filings sufficient to allow the Assuming Party to perform
the duties assumed. The Responsible Party shall further use its best efforts to
provide all assistance required by the Assuming Party with respect to such
transfer so as to permit the Assuming Party to begin to perform such duties as
soon as possible to minimize any disruption in the continuity of supply or
marketing of Collaboration Products. In addition, if upon the date this
Agreement is terminated Collaboration Products are being manufactured in
facilities owned or leased by the Responsible Party (including facilities
subleased by RenaGel LLC from the Responsible Party), the Responsible Party
agrees to lease such facilities to the Assuming Party on commercially reasonable
terms for a period of up to *

14.2. EXCHANGE CONTROLS. All payments due hereunder shall be paid in
United States dollars. If at any time legal restrictions prevent the prompt
remittance of part or all payments with respect to any country where a
Collaboration Product is sold, payment shall be made through such lawful means
or methods as the Parties may determine.

14.3. WITHHOLDING TAXES. If applicable laws or regulations require
that taxes be withheld from payments made hereunder, the Party paying such taxes
will (a) deduct such taxes, (b) timely pay such taxes to the proper authority
and (c) send written evidence of payment to the Party from whom such taxes were
withheld within sixty (60) days after payment. Each Party will assist the other
Parties in claiming tax refunds, deductions or credits at such other Party's
request and will cooperate to minimize the withholding tax, if available, under
various treaties applicable to any payment made hereunder.

14.4. INTEREST ON LATE PAYMENTS. Any payments to be made hereunder
that are not paid on or before the date such payments are due under this
Agreement shall bear interest, to the extent permitted by applicable law, at the
Base Rate of interest declared from time to time by The First National Bank of
Boston in Boston, Massachusetts, calculated on the number of days payment is
delinquent.

* Confidential Treatment Requested for information omitted and filed separately
with the SEC.

<PAGE> 47

14.5. FORCE MAJEURE. No Party shall be held liable or responsible to
the other Parties nor be deemed to have defaulted under or breached this
Agreement for failure or delay in fulfilling or performing any term of this
Agreement when such failure or delay is caused by or results from causes beyond
the reasonable control of the affected Party, including but without limitation
fire, floods, embargoes, war, acts of war (whether war is declared or not),
insurrections, riots, civil commotions, strikes, lockouts or other labor
disturbances, acts of God or acts, omissions or delays in acting by any
governmental authority or one or both of the other Parties; provided, however,
that the Party so affected shall use commercially reasonable and diligent
efforts to avoid or remove such causes of non-performance, and shall continue
performance hereunder with reasonable dispatch whenever such causes are removed.
Each Party shall provide the other Parties with prompt written notice of any
delay or failure to perform that occurs by reason of force majeure. The Parties
shall mutually seek a resolution of the delay or the failure to perform as noted
above.

14.6. ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by any Party without the consent of the other Parties; provided,
however, that either GelTex or Genzyme may, without such consent, assign its
rights and obligations under this Agreement (a) in connection with a corporate
reorganization, to any member of an affiliated group, all or substantially all
of the equity interest of which is owned and controlled by such Party or its
direct or indirect parent corporation or (b) in connection with a merger,
consolidation or sale of substantially all of such Party's assets to an
unrelated Third Party; provided, however, that such Party's rights and
obligations under this Agreement shall be assumed by its successor in interest
in any such transaction and shall not be transferred separate from all or
substantially all of its other business assets, including those business assets
that are the subject of this Agreement. 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 in writing.

14.7. SEVERABILITY. Each Party hereby agrees that it does not intend
to violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more provisions
of this Agreement be or become invalid, the Parties hereto shall substitute, by
mutual consent, valid provisions for such invalid provisions, which valid
provisions in their economic effect are sufficiently similar to the invalid
provisions that it can be reasonably assumed that the Parties would have entered
into this Agreement with such valid provisions. In case such valid provisions
cannot be agreed upon, the invalidity of one or several provisions of this
Agreement shall not affect the validity of this Agreement as a whole, unless the
invalid provisions are of such essential importance to this Agreement that it is
to be reasonably assumed that the Parties would not have entered into this
Agreement without the invalid provisions.

14.8. NOTICES. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery or courier) or courier, postage prepaid (where
applicable), addressed to such other Party at its address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor in accordance with this Section 14.8, and shall be effective upon
receipt by

<PAGE> 48

the addressee.

If to GelTex Pharmaceuticals, Inc.
GelTex or 303 Bear Hill Road
RenaGel, Inc.: Waltham, Massachusetts 02154
Attention: President
Facsimile: (617) 672-5822

with a copy to: GelTex Pharmaceuticals, Inc.
303 Bear Hill Road
Waltham, Massachusetts 02154
Attention: Corporate Counsel
Facsimile: (617) 672-5822

If to Genzyme Corporation
Genzyme: One Kendall Square
Cambridge, Massachusetts 02139
Attention: President
Facsimile: (617) 374-7423

with a copy to: Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
Attention: Chief Legal Counsel
Facsimile: (617) 252-7553

If to RenaGel RenaGel LLC
LLC (if such c/o Genzyme Corporation
notice is sent One Kendall Square
by GelTex): Cambridge, Massachusetts 02139
Attention: President
Facsimile: (617) 374-7423

with a copy to: Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
Attention: Chief Legal Counsel
Facsimile: (617) 252-7553

If to RenaGel RenaGel LLC
LLC (if such c/o GelTex Pharmaceuticals, Inc.
notice is sent 303 Bear Hill Road
by Genzyme): Waltham, Massachusetts 02154
Attention: President
Facsimile: (617) 672-5822

<PAGE> 49

with a copy to: GelTex Pharmaceuticals, Inc.
303 Bear Hill Road
Waltham, Massachusetts 02154
Attention: Corporate Counsel
Facsimile: (617) 672-5822

14.9. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.

14.10. ARBITRATION. Any disputes arising between the Parties relating
to, arising out of or in any way connected with this Agreement or any term or
condition hereof, or the performance by either Party of its obligations
hereunder, whether before or after termination of this Agreement (a "DISPUTE"),
which has not resolved in accordance with the provisions of Section 8.3 hereof,
shall be finally resolved by binding arbitration as herein provided.

14.10.1. GENERAL. Except as otherwise provided in this Section
14.10, any arbitration hereunder shall be conducted under the commercial rules
of the American Arbitration Association. Each such arbitration shall be
conducted in the English language by a panel of three arbitrators (the
"ARBITRATION PANEL"). Each of GelTex and Genzyme shall appoint one arbitrator to
the Arbitration Panel and the third arbitrator shall be appointed by the two
arbitrators appointed by GelTex and Genzyme. The Arbitration Panel shall be
convened upon delivery of the Notice of Arbitration (as defined below). Any such
arbitration shall be held in Boston, Massachusetts. The Arbitration Panel shall
have the authority to grant specific performance, and to allocate between the
Parties the costs of arbitration in such equitable manner as it shall determine.
Judgment upon the award so rendered may be entered in any court having
jurisdiction or application may be made to such court for judicial acceptance of
any award and an order of enforcement, as the case may be.

14.10.2. PROCEDURE.
---------

(a) Whenever a Party (the "CLAIMANT") shall decide
to institute arbitration proceedings, it shall give written notice to that
effect (the "NOTICE OF ARBITRATION") to the other Party (the "RESPONDENT"). The
Notice of Arbitration shall set forth in detail the nature of the Dispute, the
facts upon which the Claimant relies and the issues to be arbitrated
(collectively, the "ARBITRATION ISSUES"). Within thirty (30) days of its receipt
of the Notice of Arbitration, the Respondent shall send the Claimant and the
Arbitration Panel a written Response (the "RESPONSE"). The Response shall set
forth in detail the facts upon which the Respondent relies. In addition, the
Response shall contain all counterclaims which the Respondent may have against
the Claimant which are within the Arbitration Issues, whether or not such claims
have previously been identified. If the Response sets forth a counterclaim, the
Claimant may, within thirty (30) days of the receipt of the Response, deliver to
the Respondent and the Arbitration Panel a rejoinder answering such
counterclaim.

(b) Within fifteen (15) days after the later of (i)
the expiration of the period provided in clause (a) above for the Claimant to
deliver a rejoinder or (ii) the completion of any discovery proceedings
authorized by the Arbitration Panel: (A) the Claimant shall send to the
Arbitration Panel a proposed resolution of the Arbitration Issues

<PAGE> 50

and a proposed resolution of any counterclaims set forth in the Response (the
"CLAIMANT'S PROPOSAL"), including the amount of monetary damages, if any, or
other relief sought; and (B) the Respondent shall send to the Arbitration Panel
a proposed resolution of the Arbitration Issues, a proposed resolution of any
counterclaims set forth in the Response and a proposed resolution of any
rejoinder submitted by the Claimant (the "RESPONDENT'S PROPOSAL"), including the
amount of monetary damages, if any, or other relief sought. Once both the
Claimant's Proposal and the Respondent's Proposal have been submitted, the
Arbitration Panel shall deliver to each Party a copy of the other Party's
proposal.

(c) The Arbitration Panel shall issue an opinion
with respect to any Dispute, which opinion shall explicitly accept either the
Claimant's Proposal or the Respondent's Proposal in its entirety (the "FINAL
DECISION"). The Arbitration Panel shall not have the authority to reach a Final
Decision that provides remedies or requires payments other than those set forth
in the Claimant's Proposal or the Respondent's Proposal. The concurrence of two
(2) arbitrators shall be sufficient for the entry of a Final Decision. The
arbitrators shall issue a Final Decision within one (1) month from the later of
(i) the last day for submission of proposals under clause (b) above or (ii) the
date of the final hearing on any Dispute held by the Arbitration Panel. A Final
Decision shall be binding on all of the Parties.

14.11. ENTIRE AGREEMENT. This Agreement, together with the Operating
Agreement and the Purchase Agreement contain 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 are
expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by the Parties. Each of the Parties hereby acknowledges that this Agreement, the
Operating Agreement and the Purchase Agreement are each the result of mutual
negotiation and therefore any ambiguity in their respective terms shall not be
construed against the drafting Party.

14.12. HEADINGS. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.

14.13. INDEPENDENT CONTRACTORS. It is expressly agreed that GelTex and
Genzyme shall be independent contractors and that, except as members of RenaGel
LLC, the relationship between the two Parties shall not constitute a
partnership, joint venture or agency. Neither GelTex nor Genzyme shall have the
authority to make any statements, representations or commitments of any kind, or
to take any action, which shall be binding on the other, without the prior
consent of the other Party to do so.

14.14. WAIVERS. No delay on the part of any party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any waiver on the part of any party of any such right, power or privilege, nor
any single or partial exercise of any such right, power or privilege, preclude
any further exercise thereof or the exercise of any other such right, power or
privilege.

14.15. COUNTERPARTS. This Agreement may be executed in two or more
counterparts,

<PAGE> 51

each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

<PAGE> 52

IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.

GELTEX PHARMACEUTICALS, INC.

By: /s/ Mark Skaletsky
-----------------------------------
Title: President and CEO

GENZYME CORPORATION

By: /s/ Peter Wirth
-----------------------------------
Title: Executive Vice President

RENAGEL LLC

By: GelTex Pharmaceuticals, Inc.

By: /s/ Mark Skaletsky
-----------------------------------
Title: President and CEO

<PAGE> 1

Exhibit 10.19

PURCHASE AGREEMENT

between

GELTEX PHARMACEUTICALS, INC.

and

GENZYME CORPORATION

dated as of June 17, 1997

<PAGE> 2

TABLE OF CONTENTS

ARTICLE 1. PURCHASE AND SALE OF SHARES AND LLC INTEREST................... 1
1.1. Authorization..................................................... 1
1.2. Sale and Purchase of the Shares; Sale, Assignment and
Purchase of the LLC Interest; Payments......................... 2
1.3. Delivery of Certificates.......................................... 2

ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF GELTEX........................ 2
2.1. Organization and Qualification of GelTex.......................... 2
2.2. Capitalization.................................................... 2
2.3. RenaGel, Inc...................................................... 3
2.4. RenaGel LLC....................................................... 3
2.5. Issuance and Sale of Shares; Sale and Assignment of
LLC Interest................................................... 4
2.6. Ownership of LLC Interest......................................... 4
2.7. Authority for Agreement........................................... 4
2.8. SEC Reports....................................................... 4
2.9. Financial Statements.............................................. 4
2.10. Absence of Undisclosed GelTex Liabilities........................ 5
2.11. No Material Adverse Change....................................... 5
2.12. Tax Matters...................................................... 5
2.13. No Breach........................................................ 6
2.14. Actions and Proceedings.......................................... 7
2.15. Compliance with Laws............................................. 7
2.16. Brokerage........................................................ 7
2.17. Full Disclosure.................................................. 7

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF GENZYME....................... 8
3.1. Authority for Agreement........................................... 8
3.2. Investment........................................................ 8
3.3. Restrictions on Transferability; Legend........................... 8
3.4. Experience........................................................ 8
3.5. Brokerage......................................................... 9

ARTICLE 4. CONDITIONS PRECEDENT............................................ 9
4.1. Certificates and Documents........................................ 9
4.2. Opinion of Counsel................................................ 9

ARTICLE 5. MISCELLANEOUS................................................... 10
5.1. Assignment........................................................ 10
5.2. Severability...................................................... 10
5.3. Notices........................................................... 10
5.4. Applicable Law.................................................... 11

(i)

<PAGE> 3

5.5. Entire Agreement.................................................. 11
5.6. Headings.......................................................... 11
5.7. Counterparts...................................................... 11

(ii)

<PAGE> 4

PURCHASE AGREEMENT

THIS PURCHASE AGREEMENT dated as of June 17, 1997 (the "AGREEMENT") is
made by and among GelTex Pharmaceuticals, Inc., a Delaware corporation having
its principal place of business at 303 Bear Hill Road, Waltham, Massachusetts
02154 ("GELTEX"), and Genzyme Corporation, a Massachusetts corporation having
its principal place of business at One Kendall Square, Cambridge, Massachusetts
02139 ("GENZYME"). Capitalized terms not defined herein shall have the
respective meanings ascribed to them in the Collaboration Agreement of even date
herewith (the "COLLABORATION AGREEMENT") by and among GelTex, Genzyme and
RenaGel LLC, a Delaware limited liability company having its principal place of
business at 303 Bear Hill Road, Waltham, Massachusetts 02154 ("RENAGEL LLC").
GelTex and Genzyme are sometimes referred to herein individually as a "PARTY"
and collectively as the "PARTIES."

R E C I T A L S

WHEREAS, GelTex, Genzyme and RenaGel LLC have entered into a
Collaboration Agreement for the development and commercialization of
Collaboration Products throughout the world (excluding the Chugai Territory);
and

WHEREAS, in contemplation of such collaboration, GelTex has formed
RenaGel LLC and RenaGel, Inc., a Delaware corporation and a wholly-owned
subsidiary of GelTex ("RENAGEL, INC."), and has assigned one percent (1%) of its
interest in RenaGel LLC to RenaGel, Inc.; and

WHEREAS, in connection with such collaboration, GelTex desires to issue
and sell to Genzyme and Genzyme desires to purchase from GelTex shares of its
Common Stock; and

WHEREAS, in connection with the collaboration, GelTex desires to sell
and assign to Genzyme and Genzyme desires to purchase from GelTex a fifty
percent (50%) interest in RenaGel LLC.

NOW THEREFORE, in consideration of the premises and of the covenants
herein contained, the Parties mutually agree as follows:

ARTICLE 1. PURCHASE AND SALE OF SHARES AND LLC INTEREST

1.1. AUTHORIZATION. GelTex has duly authorized (a) the issuance and
sale by GelTex to Genzyme of 100,000 shares (the "SHARES") of GelTex's Common
Stock, $0.01 par value per share ("COMMON STOCK") and (b) the sale and
assignment by GelTex to Genzyme of a fifty percent (50%) interest in RenaGel LLC
(subject to adjustment pursuant to Section 4.2 of the Collaboration Agreement
and pursuant to the Operating Agreement of RenaGel LLC of even date herewith by
and among GelTex, Genzyme and RenaGel, Inc. (the "OPERATING AGREEMENT")) (the
"LLC INTEREST").

<PAGE> 5

1.2. SALE AND PURCHASE OF THE SHARES; SALE, ASSIGNMENT AND PURCHASE
OF THE LLC INTEREST; PAYMENTS. Concurrently with the execution and delivery of
this Agreement, GelTex hereby (a) issues and sells to Genzyme, and Genzyme
hereby purchases from GelTex, the Shares for an aggregate purchase price of Two
Million Five Hundred Thousand Dollars ($2,500,000) payable by Genzyme to GelTex
upon execution of this Agreement and (b) sells, assigns and transfers to
Genzyme, and Genzyme hereby purchases from GelTex the LLC Interest for an
aggregate purchase price of Twenty-Five Million Ten Dollars ($25,000,010)
payable as follows: (i) Ten Dollars ($10) payable by Genzyme to GelTex upon
execution of this Agreement; (ii) Fifteen Million Dollars ($15,000,000) payable
by Genzyme to GelTex within thirty (30) days following receipt by GelTex of FDA
approval of the NDA for RenaGel(R) non-absorbed phosphate binder ("RENAGEL(R)");
and (iii) Ten Million Dollars ($10,000,000) payable by Genzyme to GelTex on or
before the first anniversary of the date of receipt by GelTex of FDA approval of
the NDA for RenaGel(R). All of the aforementioned payments shall be made in
United States dollars by certified or bank check or wire transfer.

1.3. DELIVERY OF CERTIFICATES. On the date hereof, GelTex will
deliver to Genzyme one or more certificates representing the Shares registered
in the name of Genzyme.

ARTICLE 2. REPRESENTATIONS AND WARRANTIES OF GELTEX

In connection with the issuance and sale of the Shares and the sale and
assignment of the LLC Interest by GelTex to Genzyme, GelTex hereby makes the
following representations and warranties to Genzyme.

2.1. ORGANIZATION AND QUALIFICATION OF GELTEX. GelTex is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and lawful authority to
own, lease and operate its assets, properties and business and to carry on its
business as now being and as heretofore conducted. GelTex is qualified or
otherwise authorized to transact business as a foreign corporation in the
Commonwealth of Massachusetts, which is the only jurisdiction (in the United
States and outside of the United States) in which such qualification or
authorization is required by law and in which the failure to so qualify or be
authorized could have a material adverse effect on GelTex or its assets,
properties, business, operations or condition (financial or otherwise) (the
"BUSINESS OF GELTEX").

2.2. CAPITALIZATION.
--------------

(a) GelTex is authorized to issue 50,000,000 shares of
Common Stock, of which 13,539,002 shares were issued and outstanding as of June
9, 1997 and 5,000,000 shares

<PAGE> 6

of Preferred Stock, $0.01 par value per share, 500,000 of which have been
designated "Series A Junior Participating Preferred Stock" and none of which are
issued and outstanding. No other class of capital stock of GelTex is authorized
or outstanding. All of the issued and outstanding shares of GelTex's capital
stock are duly authorized and are validly issued, fully paid, nonassessable and
free of pre-emptive rights. None of the issued and outstanding shares have been
issued in violation of any federal or state law except for violations as would
not have a material adverse effect on the Business of GelTex.

(b) Options representing in the aggregate the right to
purchase 1,103,656 shares of Common Stock pursuant to GelTex's 1992 Equity
Incentive Plan and GelTex's 1995 Director Stock Option Plan and (ii) warrants
representing in the aggregate the right to purchase 11,400 shares of Common
Stock, are outstanding as of the date hereof.

(c) 250,000 shares of Common Stock are reserved for issuance
under GelTex's 1995 Employee Stock Purchase Plan as of the date hereof.

(d) Except (i) as set forth in paragraphs (a), (b) and (c)
of this Section 2.2, or as a result of the exercise of outstanding options or
rights set forth therein, (ii) for certain rights of repurchase granted to
GelTex in connection with the exercise of certain unvested stock options and
(iii) for any Rights or shares that may be issued or purchased upon certain
circumstances described in the Rights Agreement by and between GelTex and
American Stock Transfer and Trust Company dated March 1, 1996, there are not, as
of the Effective Date, any other shares of GelTex capital stock authorized or
outstanding or any subscriptions, options, conversion or exchange rights,
warrants, repurchase or redemption agreements, or other agreements, commitments
or obligations of GelTex to issue, transfer, sell, repurchase or redeem any
shares of its capital stock or other securities of GelTex. To the best knowledge
of GelTex, there are no written stockholder agreements, voting trusts, proxies
or other agreements, instruments or understandings with respect to the voting of
the capital stock of GelTex.

2.3. RENAGEL, INC.. RenaGel, Inc. is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
As of the date hereof, GelTex is the sole stockholder of RenaGel, Inc. and Mark
Skaletsky is the sole director of RenaGel, Inc.

2.4. RENAGEL LLC. RenaGel LLC is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and lawful authority to own, lease and
operate its assets, properties and business and to carry on its business as
contemplated by the Collaboration Agreement. Other than in the Commonwealth of
Massachusetts, RenaGel LLC is not required to be qualified or otherwise
authorized to transact business as a foreign limited liability company in any
jurisdiction (in the United States and outside of the United States) in which
such qualification or authorization is required by law and in which the failure
to so qualify or be authorized could have a material adverse effect on RenaGel
LLC or its assets, properties business,

<PAGE> 7

operations or condition (financial or otherwise) (the "BUSINESS OF RENAGEL
LLC"). The appropriate documents have been filed to qualify RenaGel LLC as a
foreign limited liability company in the Commonwealth of Massachusetts.
Immediately prior to the execution and delivery of this Agreement, GelTex is
the sole member of RenaGel LLC and GelTex and RenaGel, Inc. each hold a fifty
percent (50%) ownership interest in RenaGel LLC. GelTex has previously
exclusively licensed (subject to certain exceptions described in the
Collaboration Agreement) to RenaGel LLC all of its right, title and interest in
RenaGel(R) and other non-absorbed phosphate binders and technology relating
thereto, including without limitation all patents, know-how, trade secrets, and
pre-clinical and clinical data.

2.5. ISSUANCE AND SALE OF SHARES; SALE AND ASSIGNMENT OF LLC
INTEREST. The issuance and delivery of the Shares and the sale of the LLC
Interest by GelTex have been duly authorized and the Shares have been duly
reserved for issuance by all necessary corporate action on the part of GelTex,
and the Shares, when issued and paid for, will be duly and validly issued, fully
paid and non-assessable. Based in part on the representations made by Genzyme
set forth in Article 4 below, the offer, issuance and sale of the Shares and the
offer and sale of the LLC Interest pursuant to this Agreement are exempt from
registration under the Securities Act of 1933, as amended (the "SECURITIES
ACT"), and applicable state securities laws. GelTex has complied with all
applicable federal and state securities laws in connection with the offer,
issuance and sale of the Shares and the offer and sale of the LLC Interest.

2.6. OWNERSHIP OF LLC INTEREST. GelTex is the legal and beneficial
owner of all of the LLC Interest, free and clear of all liens, encumbrances,
restrictions and claims of all kinds. GelTex has full legal right, power and
authority to sell, assign, convey, transfer and deliver the LLC Interest to
Genzyme pursuant to this Agreement. The assignment by GelTex of the LLC
Interest, together with the execution of the Operating Agreement, pursuant to
the provisions hereof will transfer to Genzyme valid title to the LLC Interest,
free and clear of all liens, encumbrances, restrictions and claims of every kind
arising through GelTex.

2.7. AUTHORITY FOR AGREEMENT. The execution, delivery and performance
by GelTex of this Agreement has been duly authorized by all necessary corporate
action, and this Agreement has been duly executed and delivered by GelTex. This
Agreement constitutes the valid and binding obligation of GelTex enforceable
against GelTex in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting the rights and remedies of
creditors generally and to general principles of equity.

2.8. SEC REPORTS. GelTex has previously delivered to Genzyme its (i)
Annual Report on Form 10-K for the year ended December 31, 1996 (the "GELTEX
10-K"), as filed with the Securities and Exchange Commission (the "SEC"), (ii)
all proxy statements relating to GelTex's meetings of stockholders held or
currently scheduled to be held since December 31,

4
<PAGE> 8

1996 and (iii) all other reports filed by GelTex with the SEC under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") since December
31, 1996. As of their respective dates, such reports complied in all material
respects with applicable SEC requirements and did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. GelTex has timely
filed with the SEC all reports required to be filed under Section 13, 14 or
15(d) of the Exchange Act since December 31, 1996.

2.9. FINANCIAL STATEMENTS. The financial statements contained in the
GelTex 10-K and in GelTex's quarterly report on Form 10-Q for the quarter ended
March 31, 1997 (the "GELTEX 10-Q") have been prepared from, and are in
accordance with, the books and records of GelTex and present fairly, in all
material respects, the financial condition and results of operations of GelTex
as of and for the periods presented therein, all in conformity with United
States generally accepted accounting principles, consistently applied, except as
otherwise noted therein and subject (in the case of the unaudited financial
statements included in the GelTex 10-Q) to normal year-end adjustments, which
are not, in the aggregate, material.

2.10. ABSENCE OF UNDISCLOSED GELTEX LIABILITIES. As of December 31,
1996, GelTex had no material liabilities of any nature, whether accrued,
absolute, contingent or otherwise, (a) required to be reflected or disclosed on
the balance sheets dated December 31, 1996 (or the notes thereto) included in
the GelTex 10-K that were not adequately reflected or reserved against on such
balance sheets or (b) for the payment of any dividends, or any other
distribution, to the stockholders of GelTex. Except for certain capital
contributions and process development funding required pursuant to the Contract
Manufacturing Agreement and the Research Services Agreement by and between
GelTex and Dow Chemical and a payment of $1,500,000 required to be made to
Abbott Laboratories as a one time royalty payment (which GelTex and Abbott
Laboratories have agreed to re-characterize as a payment for FDA qualification
work), all of which have been previously disclosed to Genzyme, GelTex has no
liabilities, other than liabilities (i) adequately reflected or reserved against
on such balance sheet, (ii) reflected in GelTex's unaudited consolidated balance
sheets (or the notes thereto) included in the GelTex 10-Q, (iii) incurred since
December 31, 1996 in the ordinary course of business or (iv) that would not, in
the aggregate, have a material adverse effect on GelTex.

2.11. NO MATERIAL ADVERSE CHANGE. Since December 31, 1996, there has
not been any material adverse change in the assets, properties, business,
prospects, results of operations or financial condition of GelTex taken as a
whole, except for continuing losses from operations.

2.12. TAX MATTERS.
-----------

(a) Except for any taxes that may be due upon the completion
of an on-going Massachusetts Department of Revenue sales tax audit, and except
for any taxes that

5
<PAGE> 9

may be due upon the filing of the 1996 Federal and state income tax returns
currently under extension, GelTex has paid or caused to be paid all federal,
state, county, local, foreign and other taxes, including without limitation
income taxes, estimated taxes, alternative minimum taxes, excise taxes, sales
taxes, use taxes, import duties, value-added taxes, gross receipts taxes,
franchise taxes, capital stock taxes, employment and payroll-related taxes,
withholding taxes, stamp taxes, transfer taxes, windfall profit taxes,
environmental taxes and property taxes, whether or not measured in whole or in
part by net income and all deficiencies, or other additions to such taxes and
interest, fines and penalties thereon (hereinafter, "TAXES" or, individually, a
"TAX") required to be paid by GelTex through the date hereof whether disputed or
not. The provisions for Taxes reflected in the financial statements referenced
in Section 2.8 above are adequate to cover any and all Tax liabilities of GelTex
in respect of its assets, properties, business and operations during the periods
covered by said financial statements and all prior periods. Except for its
knowledge of the on-going Massachusetts Department of Revenue sales tax audit,
GelTex does not know of any Tax deficiency or claim for additional Taxes or
interest thereon or penalties in connection therewith, asserted or threatened to
be asserted against GelTex by any taxing authority.

(b) GelTex has in accordance with applicable law timely
filed or received an extension for filing of all Tax reports or returns required
to be filed by it through the date hereof. Each of the Tax reports and returns
filed by GelTex correctly and accurately reflects the amount of its Tax
liability for such period and other required information. Except for its
knowledge of the on-going Massachusetts Department of Revenue sales tax audit,
there has not been any audit of any Tax return filed by GelTex and no audit of
any Tax return of GelTex is in progress and GelTex has not been notified by any
Tax authority that any such audit is contemplated or pending. No waiver or
agreement by GelTex is in force for the extension of time for the assessment or
payment of any Tax. No claim has ever been made by an authority in a
jurisdiction where GelTex does not file reports or returns that GelTex is or may
be subject to taxation by that jurisdiction. There are no security interests on
any of the assets of GelTex that arose in connection with any failure (or
alleged failure) to pay any Taxes. GelTex has never entered into a closing
agreement pursuant to Section 7121 of the Internal Revenue Code of 1986, as
amended (the "CODE").

(c) For purposes of this Agreement, all references to
sections of the Code shall include any predecessor provisions to such sections
and any similar provisions of federal, state, local or foreign law.

2.13. NO BREACH. The execution, delivery and performance of this
Agreement, the Collaboration Agreement and the Operating Agreement and the
consummation of the transactions contemplated hereby and thereby will not: (i)
violate any provision of the Restated Certificate of Incorporation or By-laws of
GelTex, the Certificate of Incorporation or By-laws of RenaGel, Inc. or the
Certificate of Formation of RenaGel LLC; (ii) violate, conflict with or result
in the breach of any of the terms or conditions of, result in modification of
the effect of, or otherwise give any other contracting party the right to
terminate, or constitute (or with notice or lapse of time or both constitute) a
default under, any material instrument, contract or

<PAGE> 10

other agreement to which GelTex is a party or to which any of the assets or
properties of GelTex or RenaGel LLC may be bound or subject; (iii) violate any
order, judgment, injunction, award or decree of any court, arbitrator or
governmental or regulatory body against, or binding upon, GelTex, RenaGel, Inc.
or RenaGel LLC or upon the securities, properties, assets or business of GelTex,
RenaGel, Inc. or RenaGel LLC; (iv) violate any statute, law or regulation of any
jurisdiction as such statute, law or regulation relates to GelTex, RenaGel, Inc.
or RenaGel LLC or to the securities, properties, assets or business of GelTex,
RenaGel, Inc. or RenaGel LLC, respectively; (v) require the approval, consent or
authorization of, or registration or filing with, any foreign, federal, state,
local or other governmental or regulatory body or the approval, consent, waiver
or notification of any stockholder, creditor, lessor or other non-governmental
and non-regulatory persons; or (vi) result in the creation of any lien or other
encumbrance on the assets or properties of GelTex, RenaGel, Inc. or RenaGel LLC,
excluding from clauses (ii) - (vi) such matters as would not in the aggregate
have a material adverse effect on the Businesses of GelTex, RenaGel, Inc. or
RenaGel LLC or upon the transactions contemplated hereby or by the Collaboration
Agreement or the Operating Agreement. Prior to the date hereof, neither RenaGel
LLC nor RenaGel, Inc. was a party to any contracts or agreements with a Third
Party.

2.14. ACTIONS AND PROCEEDINGS. There are no outstanding orders,
judgments, injunctions, awards or decrees of any court, governmental or
regulatory body or arbitration tribunal against GelTex or RenaGel LLC or
affecting any of their respective properties or rights. There are no actions,
suits or claims or legal, administrative or arbitral proceedings or, to the best
knowledge of GelTex, investigations (whether or not the defense thereof or
liabilities in respect thereof are covered by insurance) pending or, to the best
knowledge of GelTex, threatened against GelTex or RenaGel LLC or affecting any
of their respective properties or rights. To the best knowledge of GelTex, there
is no fact, event or circumstance that may give rise to any suit, action, claim,
investigation or proceeding that individually or in the aggregate could have a
material adverse effect upon the transactions contemplated hereby or upon the
Businesses of GelTex or RenaGel LLC. References in this Agreement to the
Business of RenaGel, Inc. or RenaGel LLC mean the assets, properties, business,
operations or condition (financial or otherwise) of RenaGel, Inc. or RenaGel
LLC, as applicable.

2.15. COMPLIANCE WITH LAWS. Neither GelTex nor RenaGel LLC is in
violation of any statute, law, rule or regulation, or in default with respect to
any judgment, writ, injunction, decree, rule or regulation of any court or
governmental agency or instrumentality specifically naming GelTex or RenaGel
LLC, including without limitation laws relating to environmental protection,
except for such violations or defaults which do not, individually or in the
aggregate, materially and adversely affect the Businesses of GelTex or RenaGel
LLC.

2.16. BROKERAGE. No broker, finder, agent or similar intermediary has
acted on behalf of GelTex in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with GelTex or any action taken by
either GelTex or RenaGel, Inc.

7
<PAGE> 11
2.17. FULL DISCLOSURE. No representation or warranty of GelTex
contained in this Agreement nor the GelTex 10-K or the GelTex 10-Q, taken as a
whole as of the date hereof, (i) contains an untrue statement of a material fact
or omits to state a material fact (i) required to be stated therein or necessary
to make the statements made, in the context in which made, not false or
misleading or (ii) omits to state a material fact that materially adversely
affects, or (in the reasonable business judgment of GelTex based on facts of
which it has knowledge) is likely to materially adversely affect the Business of
GelTex, and, to the best knowledge of GelTex, no other document or paper
furnished by or on behalf of GelTex to Genzyme (or any of its agents) pursuant
to this Agreement or in connection with the transactions contemplated hereby,
taken as a whole as of the date hereof together with the representations and
warranties of GelTex contained in this Agreement and the GelTex 10-K and GelTex
10-Q contains an untrue statement of a material fact. There is no fact known to
GelTex that has not been disclosed to Genzyme in this Agreement or otherwise
that materially adversely affects, or (in the reasonable business judgment of
GelTex based on facts of which it has knowledge) is likely to materially
adversely affect the Business of RenaGel LLC.

ARTICLE 3. REPRESENTATIONS AND WARRANTIES OF GENZYME

In connection with the purchase by Genzyme of the Shares and the LLC
Interest from GelTex, Genzyme hereby makes the following representations and
warranties to GelTex.

3.1. AUTHORITY FOR AGREEMENT. The execution, delivery and performance
by Genzyme of this Agreement has been duly authorized by all necessary corporate
action, and this Agreement has been duly executed and delivered by Genzyme. This
Agreement constitutes the valid and binding obligation of Genzyme enforceable
against Genzyme in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting the rights and remedies of
creditors generally and to general principles of equity.

3.2. INVESTMENT. Genzyme is acquiring the Shares and the LLC Interest
solely for its own account, for investment and not with a view to, or for sale
in connection with, any distribution thereof, nor with any present intention of
distributing or selling the same; Genzyme does not have any present plans to
enter into any contract, undertaking, agreement or arrangement relating thereto.

3.3. RESTRICTIONS ON TRANSFERABILITY; LEGEND. Genzyme understands
that neither the Shares nor the LLC Interest has been registered under the
Securities Act or under the securities laws of any state or other jurisdiction
in reliance upon exemptions thereunder. Genzyme acknowledges and is aware that
neither the Shares nor the LLC Interest can be resold unless the Shares or the
LLC Interest, respectively, are registered under the Securities Act and any
applicable securities law of any state or other jurisdiction, or an exemption
from registration is available, and that it has no rights to require that the
Shares or the LLC Interest be registered under the Securities Act or any state
securities laws.

8
<PAGE> 12
3.4. EXPERIENCE. Genzyme has carefully reviewed (i) the
representations concerning GelTex and RenaGel LLC contained in this Agreement,
(ii) the GelTex 10-K and (iii) the GelTex 10-Q, and has had the opportunity to
make detailed inquiry concerning GelTex, RenaGel LLC and their respective
businesses and personnel. The officers of GelTex have made available to Genzyme
any and all written information which it has requested and have answered to
Genzyme's satisfaction all inquiries made by Genzyme. Genzyme has adequate net
worth and means of providing for its current needs and contingencies to sustain
a complete loss of its investment in GelTex and RenaGel LLC. Genzyme's overall
commitments to investments which are not readily marketable is not
disproportionate to its net worth, and Genzyme's investment in the Shares and
the LLC Interest will not cause such overall commitment to become excessive.
Genzyme has sufficient knowledge and experience to evaluate the risk of its
investment in each of GelTex and RenaGel LLC.

3.5. BROKERAGE. No broker, finder, agent or similar intermediary has
acted on behalf of Genzyme in connection with this Agreement or the transactions
contemplated hereby, and there are no brokerage commissions, finders fees or
similar fees or commissions payable in connection therewith based on any
agreement, arrangement or understanding with Genzyme, or any action taken by it.

ARTICLE 4. CONDITIONS PRECEDENT

4.1. CERTIFICATES AND DOCUMENTS. Contemporaneously with the execution
of this Agreement, GelTex shall deliver to Genzyme:

(a) The Restated Certificate of Incorporation of GelTex, certified
by the Secretary of State of Delaware as of the most recent practicable date;

(b) The Certificate of Formation of RenaGel LLC, certified by the
Secretary of the State of Delaware as of the most recent practicable date;

(c) The Certificate of Incorporation of RenaGel, Inc., certified by
the Secretary of the State of Delaware as of the most recent practicable date;

(d) Certificate, as of the most recent practicable date, as to the
corporate good standing and legal existence of GelTex issued by the Secretary of
State of Delaware and the Secretary of the Commonwealth of Massachusetts, each
confirming such good standing and legal existence as of such date, together with
a facsimile from the Secretary of State of Delaware confirming the legal
existence of GelTex as of the most recent practicable date;

(e) Facsimile from the Secretary of State of Delaware dated the most
recent practicable date confirming the corporate good standing and legal
existence of RenaGel LLC on the most recent practicable date;

9
<PAGE> 13

(f) By-laws of GelTex, certified by its Secretary as of the most
recent practicable date; and

(g) Resolutions of the Board of Directors of GelTex authorizing and
approving all matters in connection with this Agreement and the transactions
contemplated hereby, certified by the Secretary of GelTex as of the most recent
practicable date.

4.2. OPINION OF COUNSEL. Contemporaneously with the execution of this
Agreement, GelTex shall deliver to Genzyme an opinion of counsel to GelTex,
dated as of the date hereof and addressed to Genzyme, in a form reasonably
acceptable to Genzyme and its counsel.

ARTICLE 5. MISCELLANEOUS

5.1. ASSIGNMENT. This Agreement may not be assigned or otherwise
transferred by any Party without the consent of the other Party; provided,
however, that either Party may, without such consent, assign its rights and
obligations under this Agreement (a) in connection with a corporate
reorganization, to any member of an affiliated group, all or substantially all
of the equity interest of which is owned and controlled by such Party or its
direct or indirect parent corporation or (b) in connection with a merger,
consolidation or sale of substantially all of such Party's assets to an
unrelated Third Party; provided, however, that such Party's rights and
obligations under this Agreement shall be assumed by its successor in interest
in any such transaction and shall not be transferred separate from all or
substantially all of its other business assets, including those business assets
that are the subject of this Agreement. 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 in writing.

5.2. SEVERABILITY. Each Party hereby agrees that it does not intend
to violate any public policy, statutory or common laws, rules, regulations,
treaty or decision of any government agency or executive body thereof of any
country or community or association of countries. Should one or more provisions
of this Agreement be or become invalid, the Parties hereto shall substitute, by
mutual consent, valid provisions for such invalid provisions, which valid
provisions in their economic effect are sufficiently similar to the invalid
provisions that it can be reasonably assumed that the Parties would have entered
into this Agreement with such valid provisions. In case such valid provisions
cannot be agreed upon, the invalidity of one or several provisions of this
Agreement shall not affect the validity of this Agreement as a whole, unless the
invalid provisions are of such essential importance to this Agreement that it is
to be reasonably assumed that the Parties would not have entered into this
Agreement without the invalid provisions.

10
<PAGE> 14

5.3. NOTICES. Any consent, notice or report required or permitted to
be given or made under this Agreement by one of the Parties hereto to the other
shall be in writing, delivered personally or by facsimile (and promptly
confirmed by personal delivery or courier) or courier, postage prepaid (where
applicable), addressed to such other Party at its address indicated below, or to
such other address as the addressee shall have last furnished in writing to the
addressor in accordance with this Section 5.3, and shall be effective upon
receipt by the addressee.

If to GelTex Pharmaceuticals, Inc.
GelTex: 303 Bear Hill Road
Waltham, Massachusetts 02154
Attention: President
Facsimile: (617) 672-5822

with a copy to: GelTex Pharmaceuticals, Inc.
303 Bear Hill Road
Waltham, Massachusetts 02154
Attention: Corporate Counsel
Facsimile: (617) 672-5822

If to Genzyme Corporation
Genzyme: One Kendall Square
Cambridge, Massachusetts 02139
Attention: President
Facsimile: (617) 374-7423

with a copy to: Genzyme Corporation
One Kendall Square
Cambridge, Massachusetts 02139
Attention: Chief Legal Counsel
Facsimile: (617) 252-7553

5.4. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts.

5.5. ENTIRE AGREEMENT. This Agreement together with the Collaboration
Agreement and the Operating Agreement contain 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 are
expressly merged in and made a part of this Agreement. This Agreement may be
amended, or any term hereof modified, only by a written instrument duly executed
by the Parties. Each of the Parties hereby acknowledges that this Agreement, the
Collaboration Agreement and the Operating Agreement are each the result of
mutual negotiation and therefore any ambiguity in their respective terms shall
not be construed against the drafting Party.

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<PAGE> 15

5.6. HEADINGS. The captions to the several Articles and Sections
hereof are not a part of this Agreement, but are merely guides or labels to
assist in locating and reading the several Articles and Sections hereof.

5.7. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.

GELTEX PHARMACEUTICALS, INC.

By: /s/ Mark Skaletsky
--------------------------------------
Title: President and CEO

GENZYME CORPORATION

By: /s/ Peter Wirth
--------------------------------------
Title: Executive Vice President

<PAGE> 1

EXHIBIT 10.20

Confidential Treatment Requested
for information omitted and filed
separately with the SEC.

OPERATING AGREEMENT

RENAGEL LLC

dated as of June 17, 1997

<PAGE> 2

TABLE OF CONTENTS

ARTICLE 1. FORMATION AND MEMBERSHIP........................................ 1
SECTION 1.1 Formation.................................................. 1
SECTION 1.2 Member..................................................... 2
SECTION 1.3 Management................................................. 2

ARTICLE 2. OFFICES, NAME, ETC.............................................. 2
SECTION 2.1 Principal Office........................................... 2
SECTION 2.2 Registered Office; Resident Agent.......................... 2
SECTION 2.3 Name....................................................... 3
SECTION 2.4 Term....................................................... 3
SECTION 2.5 Business Ventures.......................................... 3

ARTICLE 3. PURPOSES AND POWERS............................................. 3
SECTION 3.1 Purpose.................................................... 3
SECTION 3.2 Powers..................................................... 4

ARTICLE 4. MEMBERS AND THEIR CONTRIBUTIONS AND LOANS....................... 4
SECTION 4.1 Contributions.............................................. 4
SECTION 4.2 Capital Accounts........................................... 5
SECTION 4.3 Loans...................................................... 6
SECTION 4.4 Additional Members......................................... 6
SECTION 4.5 Liability of Members....................................... 6
SECTION 4.6 Withdrawal of Members...................................... 7

ARTICLE 5. ALLOCATIONS..................................................... 7
SECTION 5.1 Certain Definitions........................................ 7
SECTION 5.2 Allocations of Profit and Loss............................. 10
SECTION 5.3 Special Allocations........................................ 11

ARTICLE 6. DISTRIBUTIONS................................................... 14
SECTION 6.1 Distribution of Company Funds.............................. 14

ARTICLE 7. INDEMNIFICATION................................................. 14
SECTION 7.1 Indemnification of Members................................. 14

ARTICLE 8. ASSIGNABILITY OF MEMBERSHIP INTERESTS........................... 16
SECTION 8.1 Assignment................................................. 16
SECTION 8.2 Substitute Members......................................... 17
SECTION 8.3 Rights of Assignees........................................ 17
SECTION 8.4 Other Restrictions......................................... 18

ARTICLE 9. FISCAL YEAR, ACCOUNTING, INSPECTION OF BOOKS.................... 18
SECTION 9.1 Fiscal Year and Accounting................................. 18

<PAGE> 3

SECTION 9.2 Inspection of Books........................................ 18

ARTICLE 10. DISSOLUTION.................................................... 18
SECTION 10.1 Events of Dissolution..................................... 18
SECTION 10.2 Consent to Continue Company............................... 19
SECTION 10.3 Distribution Upon Dissolution............................. 19

ARTICLE 11. GENERAL PROVISIONS............................................. 20
SECTION 11.1 Complete Agreement; Modification.......................... 20
SECTION 11.2 Governing Law; Severability............................... 21
SECTION 11.3 Notice.................................................... 21
SECTION 11.4 Pronouns.................................................. 21
SECTION 11.5 Titles.................................................... 22
SECTION 11.6 Successors and Assigns.................................... 22
SECTION 11.7 Counterparts.............................................. 22

<PAGE> 4

OPERATING AGREEMENT

RENAGEL LLC

THIS OPERATING AGREEMENT (this "AGREEMENT") is made and adopted as of
June 17, 1997 by and among GelTex Pharmaceuticals, Inc., a Delaware corporation
having its principal place of business at 303 Bear Hill Road, Waltham,
Massachusetts 02154 ("GELTEX"), RenaGel, Inc., a Delaware corporation and a
wholly-owned subsidiary of GelTex having its principal place of business at 303
Bear Hill Road, Waltham, Massachusetts 02154 ("RENAGEL, INC."), Genzyme
Corporation, a Massachusetts corporation having its principal place of business
at One Kendall Square, Cambridge, Massachusetts 02139 ("GENZYME") and such other
persons who may become members of RenaGel LLC (the "COMPANY") in accordance with
law or the terms hereof (hereinafter collectively referred to as the "MEMBERS"
and individually as a "MEMBER"). GelTex and RenaGel, Inc. are hereinafter
collectively referred to as the "GELTEX COMPANIES." Capitalized terms used but
not defined herein shall be given the same meaning as provided in the
Collaboration Agreement of even date herewith among the Company, GelTex and
Genzyme ("COLLABORATION AGREEMENT").

ARTICLE 1. FORMATION AND MEMBERSHIP

SECTION 1.1 FORMATION. The Company has been organized as a limited
liability company pursuant to the Delaware Limited Liability Company Act (the
"ACT"). The Act shall govern the rights and liabilities of the parties hereto
except as otherwise expressly stated herein.

<PAGE> 5

SECTION 1.2 MEMBER. The sole initial Member of the Company was GelTex.
Following the execution and delivery of the Collaboration Agreement, GelTex
assigned one percent (1%) of its interest in the Company to RenaGel, Inc., and
RenaGel, Inc. was admitted as a Member of the Company. The Company elected under
Section 754 of the Internal Revenue Code of 1986, as amended ("IRC"), to apply
the provisions of Sections 734(b) and 743(b) of the IRC. Thereafter, effective
upon execution and delivery of the Purchase Agreement of even date herewith by
and between GelTex and Genzyme (the "PURCHASE AGREEMENT"), GelTex has sold and
assigned to Genzyme a fifty percent (50%) interest in the Company (subject to
adjustment as provided herein and in Section 4.2 of the Collaboration
Agreement). Upon execution and delivery of this Agreement, GelTex and RenaGel,
Inc. each hereby consent to the admission of Genzyme as a Member of the Company
and Genzyme is hereby admitted as a Member of the Company. Hence, the Members of
the Company are those persons listed on SCHEDULE A attached hereto, as amended
from time to time.

SECTION 1.3 MANAGEMENT. The Company shall be managed by the Steering
Committee provided for in Section 8.2 of the Collaboration Agreement

ARTICLE 2. OFFICES, NAME, ETC.

SECTION 2.1 PRINCIPAL OFFICE. The principal office of the Company shall
be located at 303 Bear Hill Road, Waltham, Massachusetts 02154 or such place
within the Commonwealth of Massachusetts as may be determined by the Members
from time to time. The Company shall maintain its records at such address.

SECTION 2.2 REGISTERED OFFICE; RESIDENT AGENT. The name and address of
the Company's registered agent for service of process in the State of Delaware
shall be Corporation

<PAGE> 6

Service Company, 1013 Centre Road, Wilmington, Delaware 19805-1297. The name and
address of the Company's registered agent for service of process in the
Commonwealth of Massachusetts shall be GelTex Pharmaceuticals, Inc., 303 Bear
Hill Road, Waltham, Massachusetts 02154.

SECTION 2.3 NAME. The business of the Company shall be conducted under
the name of "RenaGel LLC".

SECTION 2.4 TERM. The term of the Company shall commence upon the filing
of the Certificate of Formation (the "EFFECTIVE DATE") and shall be perpetual
until it is terminated as hereinafter provided.

SECTION 2.5 BUSINESS VENTURES. Any Member may engage independently or
with others in other business ventures of every nature and description, and
neither the Company nor any Member shall have any rights in and to such
independent ventures or the income or profits derived therefrom; provided,
however, that a Member's participation in such venture is subject to and
consistent with the provisions of Section 2.2 of the Collaboration Agreement.

ARTICLE 3. PURPOSES AND POWERS

SECTION 3.1 PURPOSE. The purpose of the Company is to: (i) develop and
commercialize the Collaboration Products; (ii) act as a partner in limited
partnerships, general partnerships and limited liability partnerships, and as a
member of limited liability companies; and (iii) engage in any other business
permitted under the Act that the Members shall deem desirable or expedient.

<PAGE> 7

SECTION 3.2 POWERS. The Company shall have all the powers necessary or
convenient to the conduct, promotion or attainment of the business, trade,
purposes or activities of the Company, including, without limitation, all the
powers of an individual, partnership, corporation or other entity.

ARTICLE 4. MEMBERS AND THEIR CONTRIBUTIONS AND LOANS

SECTION 4.1 CONTRIBUTIONS.
-------------

(a) Each Member has agreed to contribute the amounts and/or property
set forth in Sections 3.1, 3.3, 4.2 and 4.3 of the Collaboration Agreement. The
amount so contributed is hereinafter referred to as each Member's "CAPITAL
CONTRIBUTION". The cash and agreed value of any property contributed by each
Member as of the date hereof is set forth in SCHEDULE A attached hereto.

(b) Pursuant to the terms of the Collaboration Agreement, GelTex, on
behalf of the GelTex Companies, and Genzyme each has undertaken to make monthly
Capital Contributions to the Company in the amount equal to fifty percent (50%)
of all Program Costs (as defined in the Collaboration Agreement). If either
Genzyme or GelTex (on behalf of the GelTex Companies) fails to make all or any
portion of a monthly Capital Contribution, the other Member may elect to make
such Contribution (or a portion thereof). If either Genzyme or GelTex (on behalf
of the GelTex Companies) fails to make all or any portion of a monthly Capital
Contribution, the Percentage Interests (as defined below) shall be adjusted to
correspond to the percentage of cumulative Capital Contributions made by or on
behalf of each Member and subsequent monthly Capital Contributions shall be made
by the Members in proportion to their adjusted Percentage Interests.

<PAGE> 8

(c) No interest shall accrue on any Capital Contributions, and no
Member shall have the right to withdraw or to be repaid any capital it has
contributed, except as otherwise specifically provided in this Agreement.

(d) Each Member's percentage interest ("PERCENTAGE INTEREST") is as
set forth in SCHEDULE A hereto, subject to adjustment as provided in Section
4.1(b) of this Agreement.

SECTION 4.2 CAPITAL ACCOUNTS. A separate account (a "CAPITAL ACCOUNT")
shall be maintained for each Member and adjusted in accordance with Treasury
Regulation Section 1.704-1(b) as follows:

(a) There shall be credited to each Member's Capital Account the
amount of such Member's Capital Contribution as of the date, and to the extent,
that such Capital Contribution has been paid, and such Member's allocable share
of Net Profits (and any items in the nature of income or gain separately
allocated to such Member); and there shall be charged against each Member's
Capital Account the amount of all distributions to such Member and such Member's
allocable share of Net Losses (and any items in the nature of losses or
deductions separately allocated to such Member). Capital Contributions made by
or on behalf of the GelTex Companies shall be credited to their Capital Accounts
in proportion to their relative Percentage Interests.

(b) If the Company at any time distributes any of its assets in kind
to any Member, the Capital Account of each Member shall be adjusted to account
for that Member's allocable share (as determined under Section 5.1 below) of the
Net Profits or Net Losses that would have been realized by the Company had it
sold the assets that were distributed at their respective fair market values
immediately prior to their distribution.

<PAGE> 9

(c) In the event any Member's interest is transferred in accordance
with the terms of this Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it relates to the transferred interest.

SECTION 4.3 LOANS. The Members shall not make loans to the Company
unless the Members unanimously agree in writing to make such loans.

SECTION 4.4 ADDITIONAL MEMBERS. Except as otherwise provided in Section
8.2 below with respect to Substitute Members, additional Members may only be
admitted with the prior written unanimous approval of the Members. Such
additional Members shall execute and acknowledge a counterpart to this Agreement
or shall otherwise evidence in writing their agreement to be bound by the terms
hereof in such manner as the Members shall determine.

SECTION 4.5 LIABILITY OF MEMBERS.
--------------------

(a) No Member shall be liable for the obligations of the Company
solely by reason of being a Member.

(b) No Member shall be required to make any contributions to the
capital of the Company other than as provided in this Article 4.

(c) No Member shall be personally liable to the Company or its other
Members for monetary damages for breach of fiduciary duty as a Member to the
extent permitted by applicable law; provided, however, that this provision shall
not eliminate the liability of a Member (i) for any breach of the Member's duty
of loyalty to the Company or its other Members, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law or (iii) for any transaction from which the Member derived an improper
personal benefit. No amendment to or repeal of this Section 4.5(c) shall apply
to or have any effect on the liability

<PAGE> 10

or alleged liability of any Member for or with respect to any acts or omissions
of such Member occurring prior to such amendment or repeal.

SECTION 4.6 WITHDRAWAL OF MEMBERS. No Member shall have the right to
withdraw from the Company or to demand a return of its capital interest at any
time except upon termination and dissolution of the Company, unless agreed to by
the unanimous written consent of the other Members.

ARTICLE 5. ALLOCATIONS

SECTION 5.1 CERTAIN DEFINITIONS. For purposes of this Agreement, the
following terms shall have the meanings given them in this Article 5:

(a) "ADJUSTED CAPITAL ACCOUNT" for a Member means such Member's
Capital Account (i) reduced by the net adjustments, allocations
and distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6) which, as of the end of the
Company's taxable year are reasonably expected to be made to
such Member, and (ii) increased by the sum of (A) the amounts a
Member is deemed obligated to restore pursuant to the
penultimate sentences of Treasury Regulation Sections
1.704-2(g)(1) and 2(i)(5), (B) the excess, if any, of such
Member's Capital Contribution over such Member's actual paid-in
capital contribution and (C) that portion of any indebtedness of
the Company (other than "partner nonrecourse debt" as defined in
Treasury Regulation Section 1.704-2(b)(4)) with respect to which
the Member bears the economic risk of loss that such
indebtedness would not be repaid out of the assets of the
Company if all of the assets

<PAGE> 11

of the Company were sold at their respective book values as of
the end of the fiscal period and the proceeds from the sales
together with any amounts described in clause (B) above, were
used to pay the liabilities of the Company.

(b) "NET PROFITS" and "NET LOSSES" mean the taxable income
or loss, as the case may be, for a period (or from a
transaction) as determined in accordance with Section
703(a) of the IRC (for this purpose, all items of
income, gain, loss or deduction required to be
separately stated pursuant to IRC Section 703(a)(1)
shall be included in taxable income or loss) computed
with the following adjustments:

(i) To the extent required by (and in the
manner described in) Treasury Regulation
1.704-1(b)(2), items of gain, loss and
deduction shall be computed based upon
the book values of the Company's assets
rather than upon such assets' adjusted
bases for federal income tax purposes
(if different);

(ii) Any tax-exempt income received by the
Company shall be included as an item of
gross income;

(iii) The amount of any adjustments to the
adjusted bases (or book values if clause
(i) above applies) of any assets of the
Company pursuant to IRC Section 743
shall not be taken into account; and

<PAGE> 12

(iv) Any expenditure of the Company described
or treated as being described in IRC
Section 705(a)(2)(B) shall be treated as
a deductible expense.

(c) "MEMBER LOAN NONRECOURSE DEDUCTIONS" means any Company
deductions that would be Nonrecourse Deductions if they
were not attributable to a liability owed to or
guaranteed by a Member within the meaning and intent of
Treasury Regulation Section 1.704-2(i).

(d) "MEMBER LOAN MINIMUM GAIN" has the meaning set forth in
Treasury Regulation Section 1.704-2(i)(3).

(e) "MINIMUM GAIN" has the meaning set forth in Treasury
Regulation Section 1.704-2(d). Minimum Gain shall be
computed separately for each Member in a manner
consistent with the Treasury Regulations under IRC
Section 704(b).

(f) "NONRECOURSE DEDUCTIONS" has the meaning set forth in
Treasury Regulation Section 1.704-2(b)(1). The amount of
Nonrecourse Deductions for a taxable year of the Company
shall be determined according to the provisions of
Treasury Regulation Section 1.704-2(c).

(g) "NONRECOURSE LIABILITY" means any liability of the
Company with respect to which no Member has personal
liability, as determined in accordance with IRC Section
752 and the Treasury Regulations promulgated thereunder.

<PAGE> 13

SECTION 5.2 ALLOCATIONS OF PROFIT AND LOSS. As of the end of each fiscal
year of the Company, or at the time any allocation is determined to be necessary
by the Members, Net Profits or Net Losses shall be allocated as follows:

(a) Except as provided in Sections 5.2(b) and 5.3, any allocation
required by this Section 5.2 to be made to the Members shall be allocated among
the Members in proportion to their respective Percentage Interests.

(b) After making the special allocations provided for in Section
5.3, there shall be allocated to the GelTex Companies items of gross income of
the Company in an amount equal to (i) the excess, if any, of the cumulative
************** All amounts allocated to the GelTex Companies shall be shared by
them in proportion to their relative Percentage Interests.

(c) With respect to the allocation of Net Losses or Net Profits
pursuant to this Section 5.2 among the Members for any fiscal year in which an
additional or substitute Member is admitted to the Company or there is an
adjustment to the Percentage Interests during such fiscal year, all Net Losses
or Net Profits so allocable shall be allocated in a manner which takes into
account the varying Percentage Interests during such fiscal year based on an
accounting convention chosen by the Members. In no event shall a retroactive
allocation of Net Losses be made pursuant to this Section 5.2.

*Confidential Treatment Requested for information omitted and filed separately
with the SEC.

<PAGE> 14

SECTION 5.3 SPECIAL ALLOCATIONS. Notwithstanding the provisions of
Section 5.2 above, the following allocations of Net Profits and Net Losses and
items thereof shall be made:

(a) If, during any year a Member unexpectedly receives any
adjustment, allocation or distribution described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6) and, as a result of such adjustment,
allocation or distribution, such Member's Adjusted Capital Account has a
negative balance (computed with the adjustments set forth in clauses (i) and
(ii) of Section 5.1(a)), then items of gross income for such year (and, if
necessary, subsequent years) shall first be allocated to such Member in the
amount necessary to eliminate such negative balance as quickly as possible. This
Section 5.3(a) is intended to constitute a "qualified income offset" provision
within the meaning of the above Treasury Regulations, and shall be so
interpreted.

(b) Nonrecourse Deductions for a taxable year or other period shall
be specially allocated among the Members in proportion to their Percentage
Interests.

(c) Any Member Loan Nonrecourse Deduction for any taxable year or
other period shall be specially allocated to the Member or Members who bear the
risk with respect to the loan to which the Member Loan Nonrecourse Deduction is
attributable in accordance with Treasury Regulation Section 1.704-2(b).

(d) In no event shall Net Losses of the Company be allocated to a
Member if such allocation would cause or increase a negative balance in such
Member's Adjusted Capital Account.

(e) Except as set forth in Treasury Regulation Section
1.704-2(f)(2), (3) and (4), if, during any taxable year, there is a net decrease
in Minimum Gain, each Member, prior to any other allocation pursuant to this
Article 5, shall be specially allocated items of gross income and

<PAGE> 15

gain for such taxable year (and, if necessary, subsequent taxable years) in an
amount equal to that Member's share of the net decrease in Minimum Gain,
computed in accordance with Treasury Regulation Section 1.704-2(g). Allocation
of gross income and gain pursuant to this Section 5.3(e) shall be made first
from gain recognized from the disposition of Company assets subject to
non-recourse liabilities (within the meaning of the Treasury Regulations
promulgated under IRC Section 752), to the extent of the Minimum Gain
attributable to those assets, and thereafter, from a pro rata portion of the
Company's other items of income and gain for the taxable year. It is the intent
of the parties hereto that any allocation pursuant to this Section 5.3(e) shall
constitute a "minimum gain chargeback" under Treasury Regulation Section
1.704-2(f). With respect to a net decrease in Member Loan Minimum Gain, items of
gross income shall be specially allocated consistent with the preceding
sentence, and Treasury Regulation Section 1.704-2(i)(4).

(f) In the event that Net Profits, Net Losses or items thereof are
allocated to one or more Members pursuant to paragraphs (a) or (d) above,
subsequent Net Profits and Net Losses will first be allocated (subject to the
provisions of paragraphs (a) through (d)) to the Members in a manner designed to
result in each Member having a Capital Account balance equal to what it would
have been had the original allocation of Net Profits, Net Losses or items
thereof pursuant to paragraphs (a) or (d) not occurred.

(g) The respective Percentage Interests in the Net Profits and Net
Losses or items thereof shall remain as set forth above (subject to adjustment
as provided in Section 4.1(b) and Article 5) unless changed by amendment to this
Agreement or by an assignment of an interest in the Company authorized by the
terms of this Agreement. Except as otherwise provided herein,

<PAGE> 16

for tax purposes, all items of income, gain, loss, deduction or credit shall be
allocated to the Members in the same manner as are Net Profits and Net Losses;
provided, however, that if, as a result of clause (i) of Section 5.1(b), the
book value of any property of the Company was used in computing Net Profits or
Net Losses, then items of income, gain, deduction or credit related to such
property for tax purposes shall be allocated among the Members so as to take
account of the variation between the adjusted basis of the property for tax
purposes and its book value in the manner provided for under IRC Section 704(c).

(h) If a Member's Percentage Interest is reduced (provided the
reduction does not result in a complete termination of the Member's interest in
the Company), the Member's share of the Company's "unrealized receivables" and
"substantially appreciated inventory" (within the meaning of IRC Section 751)
shall not be reduced, so that, notwithstanding any other provisions of this
Agreement to the contrary, that portion of the Net Profit otherwise allocable
upon a liquidation or dissolution of the Company pursuant to Article 5 hereof
which is taxable as ordinary income (recaptured) for federal income tax purposes
shall, to the extent possible without increasing the total gain to the Company
or to any Member, be specially allocated among the Members in proportion to the
deductions (or basis reductions treated as deductions) giving rise to such
recapture.

(i) In each taxable year of the Company, items of deduction and
credit attributable to Program Costs shall be allocated to the Members in
proportion to the Capital Contributions which funded the applicable expenditure.

<PAGE> 17

ARTICLE 6. DISTRIBUTIONS

SECTION 6.1 DISTRIBUTION OF COMPANY FUNDS. The timing of distributions
by the Company (other than distributions in dissolution to which Section 10.3
applies) shall be determined in accordance with the provisions of Section 4.4 of
the Collaboration Agreement. Such distributions shall be made first one hundred
percent (100%) to the GelTex Companies until the GelTex Companies have received
distributions equal to the amount of items of gross income allocated to them
pursuant to Section 5.2(b) hereof and, thereafter, to the Members in proportion
to their positive Capital Accounts reduced by the amounts of their initial
Capital Contributions listed in SCHEDULE A hereto on the date hereof; provided,
however, that the amount of Net Profit distributable to the Members shall be
reduced by the amount required to fund the budgeted capital, working capital and
reserve requirements of the Company during the one hundred and eighty (180) day
period following the proposed distribution date and by such other amounts as the
Steering Committee reasonably determines to be necessary or appropriate for the
operation of the Company.

ARTICLE 7. INDEMNIFICATION

SECTION 7.1 INDEMNIFICATION OF MEMBERS.
--------------------------

(a) The Company shall, to the fullest extent permitted by the Act,
as amended from time to time, indemnify each Member, each Member's Affiliates,
and the respective directors, officers, employees and agents of each Member and
its Affiliates (collectively, "INDEMNIFIED PERSONS") from and against all
expenses and liabilities (including counsel fees, judgments, fines, excise
taxes, penalties and amounts paid in settlements) reasonably incurred by or
imposed upon an Indemnified Person in connection with any threatened, pending or
completed action, suit or

<PAGE> 18

other proceeding, whether civil, criminal, administrative or investigative, in
which such Indemnified Person may become involved by reason of (i) any act
performed by such Indemnified Person in connection with the performance of and
within the scope of the authority conferred by the Collaboration Agreement or
(ii) such Indemnified Person's service as a director, officer, manager or member
of the Company or any of its subsidiaries or, if such service was undertaken at
the request of the Company, such Indemnified Person's service as a director,
officer or trustee of, or in a similar capacity with, another organization.

(b) Indemnification may include payment by the Company of expenses
in defending an action or proceeding in advance of the final disposition of such
action or proceeding upon receipt of an undertaking by the Indemnified Person to
repay such payment if it is ultimately determined that such Indemnified Person
is not entitled to indemnification under this Article 7, which undertaking may
be accepted without reference to the financial ability of the Indemnified Person
to make such repayments.

(c) The Company shall not indemnify any Indemnified Person in
connection with a proceeding (or part thereof) initiated by such person unless
such Indemnified Person is successful on the merits, the proceeding was
authorized by the Members or the proceeding seeks a declaratory judgment
regarding such Indemnified Person's own conduct.

(d) The indemnification rights provided in this Article 7 (i) shall
not be deemed exclusive of any other rights to which Indemnified Persons may be
entitled under any law, agreement or vote of disinterested Members or otherwise
and (ii) shall inure to the benefit of the heirs, executors and administrators
of Indemnified Persons. The Company may, to the extent authorized from time to
time by its Members, grant indemnification rights to employees or agents

<PAGE> 19

of the Company or persons other than Indemnified Persons serving the Company and
such rights may be equivalent to, or greater or less than, those set forth in
this Article 7.

(e) No indemnification shall be provided for any Indemnified Person
with respect to (i) any matter as to which such Indemnified Person shall have
been finally adjudicated in any proceeding not to have acted in good faith in
the reasonable belief that such Indemnified Person's action was in the best
interests of the Company, (ii) any act which constitutes gross negligence or
wilful misconduct or (iii) any matter disposed of by a compromise payment by
such Indemnified Person, pursuant to a consent decree or otherwise, unless the
payment and indemnification thereof have been approved by the Members, which
approval shall not unreasonably be withheld, or by a court of competent
jurisdiction.

(f) Any amendment or repeal of the provisions of this Article 7
shall not adversely affect any right or protection of an Indemnified Person with
respect to any act or omission of such Indemnified Person occurring prior to
such amendment or repeal.

ARTICLE 8. ASSIGNABILITY OF MEMBERSHIP INTERESTS

SECTION 8.1 ASSIGNMENT.
----------

(a) Except in accordance with Article 13 of the Collaboration
Agreement, a Member may not assign his or her interest in whole or in part to
any assignee which is not already a Member without the prior written consent of
all of the other Members who may or may not consent in their absolute
discretion.

(b) An assignment of a Member's interest does not of itself dissolve
the Company or permit the assignee to participate in the business and affairs of
the Company or to become a Member or exercise any rights or powers of a Member.

<PAGE> 20

SECTION 8.2 SUBSTITUTE MEMBERS. No assignee of a Member's interest
(other than an assignee which is already a Member) shall have the right to be
admitted as a substitute member in place of the assignor (a "SUBSTITUTE MEMBER")
unless:

(a) the assignor shall designate in writing satisfactory to
the other Members the intention that the assignee is to become a
Substitute Member;

(b) the assignee shall agree in writing to be bound by all
of the terms of this Agreement;

(c) all of the other Members consent in writing to the
admission of the assignee as a Substitute Member, which consent may be
withheld in their absolute discretion;

(d) the assignee shall execute and/or deliver such
instruments, including without limitation, an opinion of counsel
satisfactory to the Members, to the effect that such proposed assignment
and substitution does not violate the registration requirements of state
or federal securities laws, and such instrument as the Members deem
necessary or desirable to effect such assignee's admission as a
Substitute Member and to evidence the assignee's acceptance of the terms
of this Agreement; and

(e) the assignee shall pay all reasonable expenses in
connection with the assignee's admission as a Substitute Member.

SECTION 8.3 RIGHTS OF ASSIGNEES. An assignee who does not become a
Substitute Member shall succeed only to the rights of the assignor to receive
allocations and distributions

<PAGE> 21

from the Company as provided in Articles 5, 6 and 10 hereof, and shall not have
the right to become a Member or exercise any rights or powers of a Member.

SECTION 8.4 OTHER RESTRICTIONS. A Member may not pledge, encumber or
hypothecate any of its interest without the consent of the other Members.

ARTICLE 9. FISCAL YEAR, ACCOUNTING, INSPECTION OF BOOKS

SECTION 9.1 FISCAL YEAR AND ACCOUNTING. Except as otherwise approved by
the Members, or required by law, the fiscal year of the Company shall be the
calendar year and the books of the Company shall be kept on the accrual method.

SECTION 9.2 INSPECTION OF BOOKS. The books of the Company shall at all
times be available for inspection and audit by any Member at the Company's
principal place of business during business hours. The Company shall furnish
each Member with all necessary tax reporting information as to its interest in
the Company, with an annual balance sheet and profit and loss statement and with
a cash flow statement showing any distributions made to the Members, within
sixty (60) days after the close of each fiscal year.

ARTICLE 10. DISSOLUTION

SECTION 10.1 EVENTS OF DISSOLUTION. The term of the Company shall
commence on the Effective Date and shall be in full force and effect until the
earliest of the following:

(a) the sale or disposition of all or substantially all of
the Company property;

(b) the dissolution of the Company by the unanimous written
consent of the Members;

(c) the bankruptcy or dissolution of a Member other than
RenaGel, Inc.; provided, however, that if there are at least two remaining
Members, the Members may consent

<PAGE> 22

to the continuation of the business of the Company after the occurrence of such
an event, pursuant to Section 18-802 of the Act and Section 10.2 of this
Agreement;

(d) the entry of a decree of judicial dissolution under
Section 18-802 of the Act;

(e) the occurrence of any event, other than those referred
to in paragraph (d), which causes dissolution of a limited liability company
under the Act; or

(f) upon the occurrence of an event and at the time
specified in Article 13 of the Collaboration Agreement.

Notwithstanding the dissolution of the Company, the business of the
Company shall continue to be governed by this Agreement until the winding up of
the Company occurs.

SECTION 10.2 CONSENT TO CONTINUE COMPANY. The Members may vote to
continue the business of the Company within 90 days after the occurrence of an
event of dissolution set forth in Section 10.1(d) of this Agreement, pursuant to
and in accordance with Section 18-801(4) of the Act. The agreement of the
remaining Members holding a majority of the remaining Percentage Interests shall
constitute the consent of the Members to the continuation of the Company.

SECTION 10.3 DISTRIBUTION UPON DISSOLUTION. (a) After payment of
liabilities owing to creditors, the Members or liquidator shall set up such
reserves as they deem reasonably necessary for any contingent or unforeseen
liabilities or obligations of the Company, including the expenses of
liquidation. Such reserves may be paid over by the Members or liquidator to a
bank, to be held in escrow for the purpose of paying any such contingent or
unforeseen liabilities or obligations and, at the expiration of such period as

<PAGE> 23

the Members or liquidator may deem advisable, such reserves shall be distributed
to all of the Members or their assigns in the manner set forth in Section
10.3(b) below. In the event that any part of such net assets consists of
securities or other non-cash assets, the Members or liquidator may (but shall
not be required to) take whatever steps they deem appropriate to convert such
assets into cash or into any other form that would facilitate the distribution
thereof.

(b) After payment has been made pursuant to Section 10.3(a) above,
the Members or the liquidator shall cause the remaining net assets of the
Company to be distributed to and among the Members in proportion to and to the
extent of their positive Capital Account balances (after such balances have been
adjusted to reflect all allocations of Net Profits and Net Losses and the
payments made in Section 10.3(a) above). Cash and non-cash assets shall be
distributed to each Member on a pro rata basis, or in such other manner as the
Members may agree, with all noncash assets being distributed on the basis of
their fair market value.

(c) The Company shall terminate when all property has been
distributed among the Members. Upon such termination, the Members shall execute
and cause to be filed a certificate of cancellation of the Company, as provided
for in Section 18-203 of the Act, and any and all other documents necessary in
connection with the termination of the Company.

ARTICLE 11. GENERAL PROVISIONS

SECTION 11.1 COMPLETE AGREEMENT; MODIFICATION. This Agreement, the
Collaboration Agreement and the Purchase Agreement together contain a complete
statement of all the agreements among the parties with respect to the Company.
There are no representations, agreements, arrangements or undertakings, oral or
written, between or among the parties to this Agreement relating to the subject
matter of this Agreement which are not fully expressed in this

<PAGE> 24

Agreement. This Agreement may be amended or modified only with the unanimous
consent of the Members.

SECTION 11.2 GOVERNING LAW; SEVERABILITY. All questions with respect to
the construction of this Agreement and the rights and liabilities of the parties
shall be determined in accordance with the applicable provisions of the laws of
the State of Delaware, and this Agreement is intended to be performed in
accordance with, and only to the extent permitted by, all applicable laws,
ordinances, rules and regulations of such state. If any provision of this
Agreement, or the application thereof to any person or circumstances, shall, for
any reason and to any extent, be invalid or unenforceable, the remainder of this
Agreement and the application of that provision to other persons or
circumstances shall not be affected but rather be enforced to the extent
permitted by law.

SECTION 11.3 NOTICE. All notices, requests, consents and statements
hereunder shall be deemed to have been properly given if mailed from within the
United States by prepaid certified mail, return receipt requested, or if sent by
prepaid telegram, or overnight delivery service, or if hand delivered, addressed
in each case if to the Company at its principal place of business and, if to any
Member, to the address set forth herein, or to such other address or addresses
as any such Member shall have theretofore designated in writing to the Company
in accordance with this Section 11.3.

SECTION 11.4 PRONOUNS. Feminine or masculine pronouns shall be
substituted for the neuter pronouns, neuter pronouns for masculine or feminine
pronouns, plural for the singular and the singular for the plural, in any place
in this Agreement where the context may require such substitution.

<PAGE> 25

SECTION 11.5 TITLES. The titles of Articles and Sections are included
only for convenience and shall not be construed as a part of this Agreement or
in any respect affecting or modifying its provisions.

SECTION 11.6 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and inure to the benefit of all parties hereto and their heirs, successors,
assigns and legal representatives.

SECTION 11.7 COUNTERPARTS. This Agreement may be signed in one or more
counterparts and all counterparts so executed shall constitute one agreement
binding on all parties hereto, notwithstanding that all parties have not signed
the original or the same counterpart.

<PAGE> 26

IN WITNESS WHEREOF, we have affixed our signatures as of the day first
above written.

MEMBERS:
- --------

GELTEX PHARMACEUTICALS, INC.

By: /s/ Mark Skaletsky
---------------------------------
Print Name: Mark Skaletsky
Title: President and CEO

RENAGEL, INC.

By: /s/ Mark Skaletsky
---------------------------------
Print Name: Mark Skaletsky
Title: President

GENZYME CORPORATION

By: /s/ Peter Wirth
---------------------------------
Print Name: Peter Wirth
Title: Executive Vice President

<PAGE> 27

SCHEDULE A
----------

MEMBERS CAPITAL CONTRIBUTION PERCENTAGE INTEREST
- ------- -------------------- -------------------

<S> <C> <C>
GelTex Pharmaceuticals, Inc. $24,500,000 49.00%

RenaGel, Inc. $ 500,000 1.00%

Genzyme Corporation $25,000,000 50.00%
----------- ------

TOTAL: $50,000,000 100.00%

</TABLE>

<PAGE> 1

EXHIBIT 10.21

Confidential Treatment requested
for information omitted and filed
separately with the SEC.

LICENSE AGREEMENT

THIS AGREEMENT is made on the 9th day of June, 1997, between Nitto Boseki Co.,
Ltd., a corporation organized under the laws of Japan, having its principal
place of business at 5-5, Nihombashi Tomizawacho, Chuo-ku, Tokyo 103, Japan
(hereinafter called "Nittobo"), and GelTex Pharmaceuticals, Inc., a corporation
organized under the laws of the State of Delaware, U.S.A., having its principal
place of business at 303 Bear Hill Road, Waltham, Massachusetts 02154, U.S.A.
(hereinafter called "GelTex").

WHEREAS:

A. Nittobo developed and possesses process Patents for *******

B. GelTex has developed certain medicines named RenaGel and CholestaGel
which are produced from ***** as starting material, and wishes to have
manufacturing license right from Nittobo for producing ***** for
pharmaceutical purposes.

C. Nittobo is willing to grant a license to GelTex in accordance with the
terms and conditions provided hereunder.

NOW, THEREFORE, in consideration for the mutual promises and obligations
expressed herein, the parties agree as follows.

Article 1 DEFINITIONS

1.1 ******** shall mean ********

1.2 ******** shall mean ********

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 2

and known as Nittobo's ********* manufactured in accordance with the
Licensed Patents.

1.3 "RenaGel" shall mean ********** used for the treatment of
hyperphosphatemia.

1.4 "CholestaGel" shall mean ********* used for the treatment of
hypercholesterolemia.

1.5 "*****" shall mean ******** material to be
manufactured as an intermediate to the GelTex Product hereunder.

1.6 "GelTex Product" shall mean RenaGel and CholestaGel.

1.7 "Licensed Patents" shall mean ********* and their corresponding
patents registered in all countries as described in Annex I (List of
the Licensed Patents) attached hereto, together with any divisions,
continuations or continuations-in-part thereof.

1.8 "Know-How" shall mean trade secret and confidential information held by
Nittobo which are useful for manufacture of **** and are actually
employed by Nittobo for its commercial production. For the purpose of
this Agreement, GelTex shall have no objection to include those
confidential informations Nittobo has provided to GelTex during the
course of negotiation of the sale of **** to GelTex.

1.9 "Territory" shall mean all the countries other than Japan, South Korea,
Republic of China (Taiwan), People's Republic of China, Singapore,
Malaysia, India, Thailand, Vietnam, Indonesia, Philippines, New Zealand
and Australia. (such countries to be referred to as the "Chugai
Territory")

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 3
3

Article 2 GRANT OF LICENSE

2.1 Nittobo hereby grants to GelTex a non-exclusive license under the
Licensed Patents and the Know-How to manufacture and sell ******
in the Territory for the sole purpose of (i) using ****** as
the starting material of GelTex Products to be sold in the Territory,
and (ii) using ********** as the starting material for RenaGel to be
manufactured by Dow or Abbott and sold by Chugai in the Chugai
Territory, if Chugai requires ****** and if only Nittobo does not sell
such ****** to Chugai. Provided however that GelTex will use best
efforts to arrange for its contract manufacturers of RenaGel to
purchase ***** from Nittobo for the exclusive use of Chugai, if and
when Nittobo becomes ready and wants to provide ***** to said GelTex
contract manufacturers and if Chungai so desires.

2.2 The license hereunder shall be non transferable, and GelTex shall have
no right to sublicense any other party without having Nittobo's prior
written approval, provided, however, that such approval shall not be
unreasonably withheld, and that GelTex shall be allowed to sublicense to
The Dow Chemical Company, Chemie Linz and/or Salsbury Chemical for
manufacture of ***** to be used in the manufacture of GelTex Products.

2.3 GelTex shall guarantee that the sublicensees of GelTex hereunder shall
have the same obligations to Nittobo as GelTex shall owe to Nittobo
hereunder, and shall submit to Nittobo a written consent of said
sublicensee(s) that they shall agree to the terms and conditions of this
Agreement and shall have obligation to be bound by this Agreement.

2.4 GelTex shall expressly agree that GelTex and its approved sublicensees
shall have no right to make use of ***** for any other purposes than
manufacturing RenaGel and CholestaGel.

Article 3 TRANSFER OF TECHNOLOGY

3.1 Within three (3) months of receipt of the first Initial Payment under

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 4

Article 4.1.1, Nittobo will provide the Know-How to GelTex in the form
of documents, drawings and explanations. Within one month from receipt
of the Know-How, GelTex shall specify those information to Nittobo,
which fall in Article 5.3 together with written evidence to support the
same.

3.2 GelTex employees or employees of GelTex's sublicensees who are
designated by GelTex and accepted by Nittobo, but not exceeding six
people, will be sent to Nittobo's plant in Japan up to seven (7) working
days to learn the process of making **** including the Know-How. The
specification of **** shall be as described in Annex II attached hereto.

If reasonably requested by GelTex, Nittobo will dispatch its personnel
to GelTex or to its sublicensee for up to thirty (30) man-days to assist
GelTex or such sublicensee in setting up and implementing the Know-How.

3.4 All reasonable costs and expenses associated with transfer of the
Know-How shall be paid by GelTex to Nittobo upon presentation by Nittobo
of invoices properly documenting any such costs and expenses, and GelTex
shall reimburse Nittobo for all Nittobo's assistance requested by GelTex
at a rate of US$ 800 per person per working day, plus round trip
business class air fare, traveling, accommodation, subsistence and
communication expenses while Nittobo's employee is assisting GelTex or
its sublicensee with respect to the Know-How. In addition, it is
GelTex's obligation to prepare a translator while GelTex's or its
sublicensee's employees are in Japan or Nittobo's employee is in USA, or
sublicensee's country.

Article 4 ROYALTIES

4.1 In consideration of the license granted hereunder, GelTex shall make the
following payments to Nittobo:

4.1.1 Upon execution of this Agreement, the first Initial Payment of
****

4.1.2 On the first and second anniversaries of the execution of this

* Confidential Treatment Requested for information omitted and filed separately
with the SEC.

<PAGE> 5

Agreement, a payment of *****, respectively.

4.1.3 During the period any of the Licensed Patents is in effect in
any area in the Territory;

(i) *****

(ii) *****

(iii) *****

4.1.4 After all the Licensed Patents expire in all areas in the
Territory in consideration of the Know-How license hereunder;

(i) *****

(ii) *****

4.2 GelTex and its approved sublicensees shall keep true records relating to
manufacture and sales of **** in sufficient detail to enable the
royalties payable to be determined, and shall twice per calendar year
during

* Confidential Treatment Requested for information omitted and filed separately
with the SEC.

<PAGE> 6

normal business hours permit accountants and personnel appointed by
Nittobo to inspect such records and make copies thereof.

4.3 The royalty report shall be sent to Nittobo within sixty (60) days for
the end of such semi-annual period. The running royalty shall be
calculated and paid semi-annually (January - June, July - December)
within sixty (60) days of the end of each semi-annual period. The
formality and items to be contained in the royalty reports shall be
agreed between Nittobo and GelTex.

4.4 Any withholding taxes imposed on Nittobo regarding payments from GelTex
or its approved sublicensees to Nittobo shall be born by Nittobo, and
GelTex or its approved sublicensees shall deduct such withholding tax
from royalty payments otherwise due Nittobo and pay such withholding
tax to the appropriate tax authorities and shall furnish Nittobo with
appropriate evidence in order to enable Nittobo to claim exemption
from or income credit for any tax so payable.

4.5 GelTex shall agree that any payments made hereunder shall be
non-refundable, and termination of this Agreement shall not terminate
GelTex's obligation to pay royalties on sales that may have accrued but
have not yet been paid to Nittobo.

Article 5 CONFIDENTIALITY

5.1 The Know-How is and shall remain the property of Nittobo and GelTex
shall maintain and shall have its approved sublicensees maintain in
confidence the Know-How and shall not disclose it to any third party
except to the party expressly permitted by Nittobo hereunder.

5.2 Notwithstanding the foregoing, GelTex may disclose the Know-How to
officers and employees of GelTex and the approved sublicensees, who
specifically need to know such Know-How in order to accomplish the
manufacture of ****, and GelTex shall bear all responsibility and
liability to have such officers and employees comply with the
confidentiality obligations hereunder, whether or not such officers and

* Confidential Treatment Requested for information omitted and filed separately
with the SEC.

<PAGE> 7

employees continue to be officers or employees of GelTex or the approved
sublicensees.

5.3 The obligation of confidence hereunder shall not extend to information
which:

(a) is already in GelTex's possession prior to receiving it from
Nittobo;

(b) is or subsequently becomes public domain through no fault of
GelTex;

(d) is independently developed by GelTex without reliance upon the
confidential information disclosed by Nittobo.

5.4 The obligation of confidence hereunder shall not prohibit the disclosure
of any information that GelTex or its sublicensees are required to
disclose by law or regulation, or the disclosure of any information that
may be necessary in order for GelTex to satisfy its regulatory
obligations.

5.5 The obligation of GelTex and its approved sublicensees hereunder shall
survive termination of this Agreement.

Article 6 REPRESENTATIONS, ETC.

6.1 Nittobo does not warrant that the License Patents is valid and that ****
manufactured by the License Patents and/or the Know-How does not
infringe on the intellectual property rights owned by third parties.

6.2 Nittobo specifically invites GelTex's attention to the fact that since
Nittobo is selling *** only as industrial chemicals for use as a reagent
and flocculating agent, Nittobo cannot give any warranty as to ****
suitability for medical or pharmaceutical use.

6.3 GelTex shall ******

* Confidential Treatment Requested for information omitted and filed separately
with the SEC.

<PAGE> 8
8

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

Nittobo shall give GelTex prompt written notice of ********

6.4 In no event shall Nittobo be liable for any indirect, incidental, or
consequential damage arising out of or pertaining to **** or any use
thereof, including any alleged defect of ****, whether such claim for
damages is allegedly based on a breach of warranty, negligence, product
liability or otherwise.

6.5 GelTex shall, at its own expense, be responsible for (i) complying with
all applicable laws and regulations that affect when and where **** may
be used or imported, and (ii) obtaining all approvals, licenses, etc.
that may be required under such laws or regulations.

Article 7 TERM AND TERMINATION

7.1 This Agreement shall become effective upon signing the Agreement by the
duly authorized representatives of the parties and shall terminate

(i) when the Licensed Patents expire in all countries in the
Territory and all the Know-How loses its confidential status as
identified in Article 5.3, or

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 9

(ii) when GelTex and all its approved sublicensees cease production
of **** for a period of twelve (12) consecutive months.

7.2 If either party fails to perform any material obligation and does not
remedy any such failure within one (1) month of written notification
of the default by the other party, the other party may forthwith
terminate this Agreement.

7.3 Either party may terminate this Agreement immediately by giving written
notice of termination in the event that the other party (a) becomes
insolvent, files for bankruptcy or company reorganization, composition
or any similar act; or (b) dissolves, ceases doing business, or
changes its business substantially.

7.4 In the event of termination of this Agreement, other than in accordance
with the provisions of Article 7.1(i), GelTex shall immediately cease
use of the Know-How, nor thereafter utilize the Licensed Patents.

7.5 The provisions of this Article shall not limit any other additional
remedies available to Nittobo or GelTex on termination of the Agreement.

Article 8 GENERAL PROVISIONS

8.1 A waiver by either party of any term or condition of this Agreement in
any instance shall not be deemed or construed to be a waiver of such
term or condition of the future, or of any subsequent breach thereof.
All rights, remedies, undertakings or obligations contained in this
Agreement shall be cumulative and none of them shall be in limitation of
any other right, remedy, undertaking or obligation of either party.

8.2 Neither this Agreement nor any of the rights or obligations provided
herein may be assigned by either party without the express written
consent of the other party. This Agreement and the rights and
obligations hereunder shall, however, be binding upon and inure to the
benefit of each party's successors and permitted assigns.

* Confidential Treatment requested for information omitted and filed
separately with the SEC.
<PAGE> 10
10

8.3 If any part of this Agreement is found to be invalid or unenforceable,
the remainder of the Agreement shall continue in full force and effect
consistent with the intent of the parties.

8.4 This Agreement incorporates the parties' entire agreement and supersedes
all prior understandings or agreements between the parties as to the
subject matter hereof. This Agreement may only be modified, altered or
amended by a writing of subsequent date signed by all parties.

8.5 This Agreement is to be governed by and construed according to the laws
of Japan.

8.6 Any dispute between the parties concerning this Agreement or the
performance of any obligation arising hereunder shall be resolved by
binding arbitration in Tokyo, Japan, according to the rules of the Japan
Commercial Arbitration Association. The decision of the arbitrator(s)
shall be final, and the parties hereby waive any right to appeal or
review of such decision.

IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, or
caused their duly authorized representatives to

Nitto Boseki Co., Ltd.

By: /s/ Atsuhiko Sagara
------------------------------------
Atsuhiko Sagara
Title: President

GelTex Pharmaceuticals, Inc.

By: /s/ Joseph E. Tyler
------------------------------------
Joseph E. Tyler
Title: Vice President, Manufacturing

<PAGE> 11
11

Annex I

LIST OF LICENSED PATENTS

-----------------------------------------------------------------------
Country Appln No. Reg. No.
Appln Date Reg. Date

-----------------------------------------------------------------------

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

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<PAGE> 12

Annex II

SPECIFICATION OF *****

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

* Confidential Treatment requested for information omitted and filed
separately with the SEC.

<ARTICLE> 5

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