DYAX CORP, S-1/A, 1998-07-30

DYAX CORP
S-1/A, 1998-07-30
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 30, 1998

REGISTRATION NO. 333-48483
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

AMENDMENT NO. 5

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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

DYAX CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C> <C>
DELAWARE 8731 04-3053198
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
ORGANIZATION)
</TABLE>

ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139, (617) 225-2500
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

HENRY E. BLAIR, PRESIDENT AND CHIEF EXECUTIVE OFFICER
DYAX CORP., ONE KENDALL SQUARE, CAMBRIDGE, MASSACHUSETTS 02139, (617) 225-2500
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)

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

Copies to:

<TABLE>
<S> <C>
NATHANIEL S. GARDINER, ESQ. STEVEN D. SINGER, ESQ.
PALMER & DODGE LLP HALE AND DORR LLP
ONE BEACON STREET 60 STATE STREET
BOSTON, MASSACHUSETTS 02108 BOSTON, MASSACHUSETTS 02109
(617) 573-0100 (617) 526-6000
</TABLE>

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ] _____

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____

If delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box. [ ]

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SECTION 8(a), MAY
DETERMINE.

================================================================================

<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED JULY 30, 1998

PROSPECTUS

2,250,000 SHARES

[DYAX CORPORATE LOGO]

COMMON STOCK

All of the shares of Common Stock offered hereby are being sold by Dyax
Corp., a Delaware corporation ("Dyax" or the "Company"). Prior to this offering,
there has been no public market for the Common Stock of the Company. It is
currently estimated that the initial public offering price will be between $6.00
and $7.00 per share. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. The Common Stock
has been approved for quotation on the Nasdaq National Market under the symbol
"DYAX."

Genzyme Corporation has agreed to purchase an aggregate of $3.0 million of
the Company's Common Stock in a private placement concurrent with this Offering
at a price per share equal to the Price to Public below. The sale of such shares
of Common Stock will not be registered in this Offering. See "Certain
Transactions."

THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=============================================================================================================
PRICE TO UNDERWRITING DISCOUNTS PROCEEDS TO
PUBLIC AND COMMISSIONS(1) COMPANY(2)
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $ $ $
- -------------------------------------------------------------------------------------------------------------
Total(3)....................... $ $ $
=============================================================================================================
</TABLE>

(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $1,100,000.

(3) The Company has granted to the several Underwriters a 30-day option to
purchase up to 337,500 additional shares of Common Stock solely to cover
over-allotments, if any. If all such shares are purchased, the total Price
to Public, Underwriting Discounts and Commissions and Proceeds to Company
will be $ , $ and $ , respectively. See
"Underwriting."

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

The shares are being offered by the several Underwriters when, as and if
delivered to and accepted by the Underwriters, and subject to various prior
conditions, including the right to reject orders in whole or in part. It is
expected that delivery of share certificates will be made against payment
therefor at the offices of ING Baring Furman Selz LLC in New York, New York on
or about , 1998.

ING BARING FURMAN SELZ LLC PACIFIC GROWTH EQUITIES, INC.

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

The date of this Prospectus is , 1998.
<PAGE> 3

[THE IMAGE APPEARING ON PAGE 2 DEPICTS DYAX CORP.'S TECHNOLOGY PLATFORMS,
COMMERCIAL STRATEGIES, AND SHORT-TERM AND FUTURE POTENTIAL REVENUES.]

[THE IMAGE APPEARING ON THE GATEFOLD COVER DEPICTS THE STEPS REQUIRED TO
GENERATE A PHAGE DISPLAY LIBRARY USING THE COMPANY'S PHAGE DISPLAY TECHNOLOGY.]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK,
INCLUDING BY ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS AND IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
<PAGE> 4

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the more detailed
information, including "Risk Factors" and the Consolidated Financial Statements,
including the Notes thereto, appearing elsewhere in this Prospectus. Investors
should carefully consider the information set forth under the heading "Risk
Factors." Unless otherwise indicated, the information in this Prospectus (i)
assumes the conversion of all series of outstanding shares of the Company's
Class A Convertible Preferred Stock (the "Convertible Preferred Stock") into
Common Stock upon consummation of this Offering, (ii) assumes no exercise of the
Underwriters' over-allotment option, (iii) reflects a 0.652-for-1 reverse stock
split of the Common Stock and (iv) reflects an amendment to the Company's
Restated Certificate of Incorporation to be effective upon closing of this
Offering to create a class of authorized but undesignated Preferred Stock.

THE COMPANY

Dyax has developed and patented a versatile, high throughput discovery
technology with broad applications in the development of new therapeutic,
diagnostic and separations products. The Company's proprietary phage
display-based technology platform ("Phage Display") permits scientists to
rapidly identify compounds that bind to targets of interest. The Company
believes that Phage Display is a powerful method that has significant advantages
over conventional, combinatorial chemistry and antibody-based approaches,
including increased speed and reduced costs for discovery of lead compounds. In
addition, the Company develops, manufactures and sells a broad range of
chromatography separations products under the Biotage tradename. Dyax is
pursuing a diversified business strategy which includes: (i) non-exclusive
licensing of its Phage Display patents (currently 30 licensees); (ii) discovery
of new therapeutic and diagnostic lead compounds through internal programs
(currently three leads) and collaborative arrangements (currently five
arrangements) using Phage Display; (iii) continued expansion of its Biotage
separations product lines (sold to over 50 leading pharmaceutical and
biotechnology companies); and (iv) application of Phage Display to develop
next-generation affinity separations products both through internal programs
(currently four programs) and through collaborative arrangements (currently
eight arrangements).

Molecular binding is the key to the discovery and function of most
therapeutic, diagnostic and separations products. Lead therapeutic and
diagnostic compounds are generally selected based on their ability to
distinguish between the correct target and other closely related molecules
(referred to as specificity) and on whether they bind tightly to a target under
appropriate conditions (referred to as affinity). Binding also plays a
significant role in the effectiveness of separations products, which are used to
purify material for the development and manufacture of a therapeutic product.
The failure to achieve high binding specificity and affinity can result in low
levels of efficacy, side effects and toxicities for therapeutic products,
inaccurate results for diagnostic products and reduced yield and purity using
separations products.

Phage Display combines the speed and diversity of a self-replicating
biological system with the flexibility of chemical synthesis. It allows
scientists to select binding compounds from a diverse set of up to hundreds of
millions of proteins displayed on the surface of a bacterial virus, or
bacteriophage, known commonly as a "phage." The Phage Display process generally
consists of: (i) generating a large collection of phage (referred to as a
library) that contains genes encoding up to hundreds of millions of related
proteins, or potential binding compounds; (ii) screening the library by exposing
it to a specified target and selecting those phage whose displayed proteins bind
to the target; and (iii) analyzing the selected binding compounds for relative
specificity and affinity to the target.

The Company believes that the identification of therapeutic, diagnostic and
separations lead compounds using Phage Display is faster, more efficient and
less costly than conventional, combinatorial chemistry or antibody-based
approaches. Conventional methods relied on a time consuming and costly process
of synthesis and evaluation of one compound at a time. With recent developments
in combinatorial chemistry, scientists can synthesize and simultaneously screen
libraries containing up to 100,000 different compounds. However, the identified
compounds must be individually synthesized to generate sufficient quantities for
evaluation and optimization, and the original library is used up in the process.
Monoclonal antibodies are another source of binding compounds. However, the
generation of monoclonal antibodies requires the immunization of animals through
a slow and inflexible process. In contrast to these methods, Phage Display
provides scientists the ability to generate within a period of weeks a
self-replicating library containing hundreds of millions of
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<PAGE> 5

potential binding compounds, as well as the flexibility to screen the library
against any target. The resulting library can be screened in a matter of days to
identify those compounds which best meet the desired structure, affinity,
specificity and binding and release characteristics for a target of interest.

As part of its patent licensing strategy, the Company has granted
non-exclusive licenses to its Phage Display patents to 30 licensees, including
Affymax Technologies, N.V. (and its parent, Glaxo Wellcome PLC), Bristol-Myers
Squibb Company, Chiron Corporation, Genzyme Corporation ("Genzyme"), Merck &
Co., Inc., Monsanto Company and Pharmacia & Upjohn, Co., in the fields of
therapeutics and antibody-based in vitro diagnostics. The Company's license
agreements generally provide for signing and maintenance fees, milestone
payments and royalties on any future product sales from licensees of its Phage
Display patents. Dyax has retained all rights to practice Phage Display in the
fields of in vivo imaging and separations.

To date, in its therapeutics and diagnostics programs, Dyax has used Phage
Display to identify three proprietary lead compounds with potential applications
in inflammatory diseases and certain cancers and one lead compound for in vivo
imaging of inflammation. The Company has corporate collaborative arrangements
with Debiopharm S.A. for the development of Dyax's principal lead therapeutic
compound and with EPIX Medical, Inc. for the development of a new in vivo
diagnostic product in the field of cardiovascular imaging. In addition, the
Company conducts funded discovery projects for Athena Neurosciences, Inc.,
SangStat Medical Corporation and Tularik Inc. to identify binding compounds for
their designated targets.

Genzyme has committed to purchase $3.0 million of the Company's Common
Stock at the initial public offering price in a private placement concurrent
with this Offering (the "Genzyme Investment"). In June 1998, the Company and
Genzyme entered into a non-binding letter of intent for the joint development
and commercialization of one of the Company's proprietary therapeutic compounds
for the treatment of chronic inflammatory diseases, with initial development to
be focused on the treatment of hereditary angioedema (the "Genzyme
Collaboration"). Subject to the negotiation of a definitive agreement, Dyax will
initially fund up to $6.0 million dollars of development costs and thereafter
the parties will fund equally all development costs. Upon signing the definitive
collaboration agreement, Genzyme will extend a $3.0 million line of credit to
the Company which it may use to fund a portion of such development costs or for
any of the Company's other research and development programs. In addition, the
Company will be entitled to receive significant milestone payments and up to 50%
of the profits from sales of products developed under this collaboration. The
Company believes that the proposed collaboration with Genzyme will provide Dyax
with significant financial and other resources to continue preclinical and
clinical development of this proprietary compound, although there can be no
assurance that such an agreement will be consummated. See "Certain
Transactions."

The Company currently is generating a majority of its revenues through the
sale of its Biotage separations products. The Company believes that its
cartridge-based separations systems provide significant advantages, including
greater speed and convenience, lower cost, improved safety and reproducible
performance. The Company's separations systems have been sold to over 50 leading
pharmaceutical and biotechnology companies, including Bachem AG, Bayer
Corporation, Genentech, Inc., F. Hoffmann-La Roche, Ltd., Merck & Co., Inc.,
Novartis AG, Pfizer, Inc. and Pharmacia & Upjohn, Co. The Company is also using
Phage Display in combination with its existing technology, experience and market
position in the separations business to develop next-generation affinity
separations products. Dyax believes that these affinity separations products
will reduce the time, cost and risk to both discover and manufacture complex
therapeutic products. The Company has corporate collaborative arrangements to
develop affinity separations products with CropTech Development Corporation and
Novo Nordisk A/S, as well as funded discovery projects to develop custom
affinity products for Argonex, Inc., Genetics Institute, Inc., Genzyme
Transgenics Corporation, Glaxo Research and Development Limited, Merck & Co.,
Inc. and Pall Corporation.

Certain existing stockholders of the Company have expressed a non-binding
interest in acquiring for investment purposes up to an aggregate of 220,766
shares of Common Stock in this Offering (based on an assumed offering price of
$6.50 per share, the mid-point of the filing range), including H&Q Healthcare
Investors (19,230 shares), H&Q Life Science Investors (19,230 shares) and New
York Life Insurance Company (153,846 shares) as well as certain directors and
officers of the Company, including Mr. Blair (15,384 shares), Dr. Dishman (9,230
shares) and Mr. Lewis (3,846 shares). Any sales to such individuals or

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entities will be made on the same terms as sales to other investors in this
Offering. See "Certain Transactions."

In the year ended December 31, 1997, approximately 78% of total revenues
resulted from the sales of separations products, approximately 15% of total
revenues consisted of funding from sponsored research and approximately 7% of
total revenues consisted of fees from patent licenses. Through March 31, 1998,
the Company had an accumulated deficit of $31.9 million. The Company was
incorporated in Delaware in 1989 under the name Biotage, Inc. and acquired
Protein Engineering Corporation ("PEC") in August 1995. The Company's principal
executive offices are located at One Kendall Square, Building 600, Cambridge,
Massachusetts 02139, and its telephone number is (617) 225-2500.

THE OFFERING

Common Stock offered by the
Company............................. 2,250,000 shares

Common Stock outstanding after the

Offering(1)(2).................... 9,987,562 shares

Use of Proceeds..................... To fund research and development,
repayment of $695,000 of indebtedness,
working capital and other general
corporate purposes, including possible
technology in-licensing and
acquisitions. See "Use of Proceeds."

Nasdaq National Market Symbol....... DYAX

See "Risk Factors" commencing on page 7 for a discussion of certain factors
that should be considered by prospective purchasers of the Common Stock offered
hereby.
- ---------------

(1) Includes 5,831,516 shares of Common Stock to be issued upon conversion of
outstanding shares of Convertible Preferred Stock. Excludes (i) 1,130,623
shares of Common Stock issuable upon the exercise of outstanding stock
options at a weighted average exercise price of $1.82 per share, of which
options to purchase 319,286 shares of Common Stock were exercisable as of
June 15, 1998, and (ii) 27,022 shares of Common Stock issuable upon the
exercise of outstanding warrants at an exercise price of $3.97 per share.
See "Description of Capital Stock" and See "Management -- Stock Plans."

(2) Includes 461,538 shares sold pursuant to the Genzyme Investment, assuming an
initial public offering price of $6.50 per share. See "Certain
Transactions."

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<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------

SUMMARY FINANCIAL DATA

THREE MONTHS
ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------------- -----------------
1993 1994 1995 1996 1997 1997 1998
------- ------- ------- ------- ------- ------- -------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Total revenues..................... $ 4,099 $ 2,713 $ 4,020 $ 7,037 $ 9,776 $ 1,879 $ 3,604
Operating expenses:
Cost of products sold............ 2,792 1,794 1,952 2,046 3,174 557 927
Research and development......... 894 894 1,343 3,140 5,575 1,222 1,631
Selling, general and
administrative(1).............. 3,054 2,604 2,710 4,170 6,827 1,620 2,232
Other expenses(2)................ -- -- 4,554 -- -- -- --
------- ------- ------- ------- ------- ------- -------
Total operating expenses.... 6,740 5,292 10,559 9,356 15,576 3,399 4,790
------- ------- ------- ------- ------- ------- -------
Loss from operations............... (2,641) (2,579) (6,539) (2,319) (5,800) (1,520) (1,186)
Interest income (expense), net..... (97) (89) (46) (78) 265 80 15
------- ------- ------- ------- ------- ------- -------
Net loss........................... $(2,738) $(2,668) $(6,585) $(2,397) $(5,535) $(1,440) $(1,171)
======= ======= ======= ======= ======= ======= =======
Pro forma net loss per
share -- basic and diluted(3).... $ (0.83) $ (0.16)
======= =======
Weighted average number of shares
used in computing pro forma net
loss per share -- basic and
diluted.......................... 6,706,680 7,194,103
========= =========
</TABLE>

<TABLE>
<CAPTION>
MARCH 31, 1998
--------------------------
ACTUAL AS ADJUSTED(4)
-------- --------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents................................. $ 3,688 $ 19,189
Working capital........................................... 4,312 19,813
Total assets.............................................. 10,021 25,522
Long-term debt and capital lease obligations, less current
portion................................................ 1,057 362
Accumulated deficit....................................... (31,875) (31,875)
Total stockholders' equity................................ 5,446 20,947

- ------------------------------
(1) Includes non-cash compensation expense of $75,000 and $263,000 in the year ended December 31, 1997
and the three months ended March 31, 1998, respectively, related to certain stock option grants.

(2) Includes write-offs of an intangible asset in the amount of $456,000 and incomplete technology in
the amount of $4,098,000 in the year ended December 31, 1995.

(3) See Note 2 to Notes to Consolidated Financial Statements for a description of the calculation of
pro forma net loss per share.

(4) As adjusted to reflect: (i) the sale of 461,538 shares of Common Stock in the Genzyme Investment
and (ii) the sale of 2,250,000 shares of Common Stock offered hereby at an assumed initial public
offering price of $6.50 per share less estimated underwriting discounts and commissions and offering
expenses payable by the Company and the use of the estimated net proceeds therefrom. See "Use of
Proceeds" and "Capitalization."

- ----------------------------------------------------------------------------------------------------------
</TABLE>

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RISK FACTORS

In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating the Company and its
business before purchasing shares of the Common Stock offered hereby. The
Prospectus may contain forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors,
including those set forth in the following risk factors and elsewhere in this
Prospectus.

DEPENDENCE ON PHAGE DISPLAY; NEW AND UNCERTAIN TECHNOLOGY; NO CLINICAL TRIALS OR
SALES OF PHAGE DISPLAY-DERIVED PRODUCTS TO DATE

The Company has invested substantial resources in Phage Display and
believes that the identification, development and commercialization of lead
binding compounds derived using this technology are critical to the Company's
success. All of the Company's Phage Display-derived product candidates are in
research or development, and neither the Company nor, to its knowledge, any of
its collaborative partners or licensees, has commenced clinical trials or
commercialized any products developed using Phage Display. The discovery and
development of therapeutic, diagnostic and affinity separations products derived
from Phage Display will be subject to risks of failure inherent in the product
development process. These risks include, among others, the possibilities that
(i) any therapeutic or diagnostic product candidates will be found to be
ineffective or toxic, or otherwise fail to receive necessary regulatory
approvals; (ii) any therapeutic or diagnostic product candidates, if safe and
effective, will prove difficult or impossible to manufacture on a large scale,
will be uneconomical to market, or will not achieve market acceptance; (iii)
proprietary rights of third parties will preclude the Company or its
collaborative partners or licensees from marketing any such products; and (iv)
third parties will market equivalent or superior products. In addition, there
can be no assurance that affinity separations products developed using Phage
Display will become accepted as effective technology for use in the development
and implementation of purification processes for pharmaceutical manufacture. As
a result, there can be no assurance that the Company will ever have marketable
products developed using Phage Display or that it will ever generate revenues
from any such products developed and marketed by its collaborative partners or
licensees or develop a sustainable, profitable business. In any event, the
Company does not expect to receive revenues from the sale of any of such
products for the next several years, if ever. The failure to identify, develop
and commercialize lead binding compounds derived using Phage Display by the
Company and/or by its collaborative partners and licensees would have a material
adverse effect on the Company's business, financial condition and results of
operations.

The Company's success will depend upon the acceptance of Phage Display as
an effective discovery process for therapeutic and diagnostic products by its
current and prospective collaborative partners and licensees. There can be no
assurance that the Company's current and prospective collaborative partners and
licensees will continue to use or adopt Phage Display or other technologies
developed by the Company rather than alternative technologies, or that the
Company will be able to attract future collaborative partners or licensees on
acceptable terms. See "Business."

HISTORY OF OPERATING LOSSES AND ACCUMULATED DEFICIT; UNCERTAINTY OF FUTURE
PROFITABILITY

The Company has a history of operating losses. For the years ended December
31, 1995, 1996 and 1997, the Company had net losses of approximately $6.6
million, $2.4 million, and $5.5 million, respectively, and $1.2 million for the
three months ended March 31, 1998. As of March 31, 1998, the Company had an
accumulated deficit of approximately $31.9 million. The Company anticipates that
its research and development efforts will increase significantly in the future
and it expects to incur significant operating losses over the next several
years. There can be no assurance that the Company will ever be able to generate
sufficient revenues from the sale of products to offset the expenses of these
efforts. The Company has not realized any significant revenues from the
achievement of milestones or royalties from the discovery, development or sale
of a commercial product by a collaborative partner or licensee and no such
revenue from these sources is expected for at least several years, if ever. To
date, substantially all revenues have been generated from: (i) sales of
chromatography separations systems and products; (ii) signing and maintenance
fees paid for
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<PAGE> 9

licenses of Phage Display patents; and (iii) research and development funding
paid by the Company's collaborative partners. The Company's ability to achieve
profitability will depend upon its ability, alone or with others, to introduce
new chromatography separations products, to develop affinity separations
products derived from Phage Display, to complete discovery and development of
therapeutic and diagnostic lead compounds and to establish additional
collaborative arrangements. There can be no assurance that the Company will ever
be able to achieve or sustain profitability. See "Selected Financial Data" and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

LIMITED REVENUES TO DATE FROM SEPARATIONS PRODUCTS; NEED TO DEVELOP NEW
SEPARATIONS PRODUCTS

The Company has received only limited revenues to date from the sale of
chromatography separations products. Many of the Company's existing separations
products are in highly competitive, mature markets. The Company's ability to
compete successfully in the market for chromatography separations products will
depend upon its ability to develop, introduce and market new
chromatography-based products and new products based upon the application of
Phage Display to the processes used in the manufacture of biopharmaceuticals.
The Company is seeking to develop or acquire new separations products. There can
be no assurance that the Company's BioFLASH product line under development will
be successfully introduced or that the Company will be successful in developing,
acquiring or selling any new products. To date, the Company's high pressure
liquid chromatography ("HPLC") separations products have had the protection of
certain patent rights licensed exclusively to the Company under a fully paid-up
license, which continues until the last to expire of the licensed patents. The
principal U.S. patent expired in February 1998, and certain of the licensed
foreign patents continue in effect, the last of which expires in 2001. The
Company cannot predict what impact, if any, the expiration of the underlying
patent will have on its separations business; however, the Company does not
believe that such impact, if any, will be material.

The Company is in the early stages of developing Phage Display-derived
affinity separations products. There can be no assurance that the Company's
affinity separations technology will result in commercialized products or that
such products will achieve market acceptance, which will depend in large part on
the Company's ability to develop and demonstrate the relative effectiveness,
efficiency, ease of use and safety of any such products compared to existing or
new separations technologies. If the Company's new chromatography products or
Phage Display-derived affinity separations products fail to achieve market
acceptance, it would have a material adverse effect on the Company's existing
separations business and on the Company's business, financial condition and
results of operations. See "Business -- Dyax Programs and Products -- Biotage
Separations Products and Research and Affinity Separations Development
Programs."

SIGNIFICANT FLUCTUATIONS IN REVENUES AND OPERATING RESULTS

The Company's current and planned expense levels are, to a large extent,
fixed in the short term, and are based in part on its expectations as to future
revenues. The Company may be unable to adjust spending in a timely manner to
compensate for any revenue shortfall. In addition, in any fiscal quarter the
Company may receive no payments from its collaborative partners. Consequently,
revenues are difficult to forecast and may vary significantly from quarter to
quarter or year to year and revenues or results of operations in any period will
not necessarily be indicative of revenues or operating results in subsequent
periods and should not be relied upon as any indication of future performance.

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<PAGE> 10

Due to the foregoing or other factors, it is likely that such quarterly
fluctuations in revenue or operating results will from time to time not meet the
expectations of securities analysts or investors, which may have a material
adverse effect on the price of the Company's Common Stock. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"-- No Prior Public Market for Common Stock; Volatility of Stock Price."

FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FUNDING

The Company anticipates that its existing capital resources, including
anticipated revenues and the net proceeds from this Offering, will be adequate
to fund the Company's operations through at least 1999, although there can be no
assurance that the Company will not need or choose to raise additional funds
through additional debt or equity financing before that date. The Company will
need additional debt or equity financing before that date if the Company's cash
requirements exceed its current expectations, if the Company generates less
revenue than currently projected or if the Company is unable to raise all of the
funding contemplated by this Offering. The Company's capital requirements depend
on numerous factors, including sales of existing and new Biotage separations
products, the ability of the Company to enter into additional collaborative
arrangements, competing technological and market developments, changes in the
Company's collaborative arrangements and licenses, the cost of preparing,
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the purchase of additional capital equipment, the
progress of the Company's drug discovery and separations technology programs and
the progress of the development and commercialization of milestone and
royalty-bearing compounds by the Company's collaborative partners and licensees.
In connection with the Genzyme Collaboration, the Company expects to fund
several million dollars in development costs. There can be no assurance that the
Company's existing separations business, collaborative arrangements and
licensing program will produce revenues adequate to fund the Company's operating
expenses.

The Company anticipates that it will be required to raise additional
capital in order to continue its operations. Such capital may be raised through
additional public or private financings, as well as collaborative arrangements,
borrowings and other sources. To the extent that additional capital is needed,
it may be raised through the issuance of debt or the sale of equity or
convertible debt securities, and the issuance of such securities could result in
dilution to the Company's existing stockholders. There can be no assurance that
additional funding, if necessary, will be available on acceptable terms, if at
all. If adequate funds are not available, the Company may be required to curtail
operations significantly or relinquish rights to its technologies, product
candidates, products or potential markets that the Company would not otherwise
relinquish. The failure to receive additional funding would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations."

DEPENDENCE ON COLLABORATIONS AND LICENSING

The Company's success will depend upon the formation of multiple
collaborative arrangements with third parties on a regular basis and the
continued licensing and broad practice of Phage Display by licensed third
parties. There can be no assurance that the Company will be able to establish
additional collaborative arrangements on acceptable terms, or that current or
any prospective collaborative arrangements, or development programs of Phage
Display licensees, will ultimately be successful. The Company's receipt of
revenues, if any, from any current and prospective collaborative and licensing
arrangements will be affected by the timing and efforts expended by the Company
and its existing collaborative partners and licensees, as well as the
proprietary position of the technology and products resulting from such
collaborative arrangements. The failure to enter into additional collaborative
or licensing arrangements would have a material adverse effect on the Company's
business, financial condition and results of operations.

The Company's collaborative arrangements do not obligate the collaborative
partners to develop or commercialize lead compounds discovered by the Company.
Collaborative partners may independently develop a competing lead compound
identified either on their own or in collaboration with others, including the
Company's competitors. In addition, there can be no assurance that current or
prospective collaborative

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partners will not pursue alternative technologies or develop alternative
products. A collaborative partner's performance under its agreement with the
Company could be materially adversely affected if such collaborative partner
were involved in a business combination or in the event that the collaborative
partner had a significant strategic shift in its business focus. The Company is
also dependent upon the expertise and dedication of sufficient resources by its
collaborative partners to develop and commercialize any products developed using
Phage Display. The amount and timing of resources that current and future
collaborative partners, if any, devote to collaborative arrangements with the
Company are not within the control of the Company. See "-- Dependence on Phage
Display; New and Uncertain Technology; No Clinical Trials or Sales of Phage
Display-Derived Products to Date."

The Company is dependent upon its collaborative partners and licensees to
inform Dyax of products developed using Phage Display-derived binding compounds.
Conflicts may arise between the Company and any of its collaborative partners
and licensees as to whether a product developed by the collaborative partner or
licensee is a Phage Display-derived product subject to milestone and royalty
payments to the Company. A product developed by a collaborative partner or
licensee may also be a derivative of one or more lead compounds provided to the
collaborative partner by the Company. While the Company's existing collaborative
arrangements and licenses provide that the Company retains milestone and royalty
payment rights with respect to potential products developed from Phage
Display-derived binding compounds, there can be no assurance that any of the
Company's collaborative partners and licensees will not dispute their obligation
to make payments with respect to any such products. Further, the Company's
collaborative partners and licensees generally may terminate their agreements
with the Company upon short notice. One collaborative arrangement with the
Company was recently terminated. The termination of a significant number of the
Company's existing or prospective collaborative arrangements or licenses would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Business -- Collaborations" and
"-- Uncertainties Related to Patents and Proprietary Rights."

UNCERTAINTIES RELATED TO PATENTS AND PROPRIETARY RIGHTS

Patent positions are complex in the fields of biotechnology, therapeutic
and diagnostic products and separation processes and products. In order for the
Company to commercialize a process or product, many patent rights of other
parties may need to be analyzed and often several licenses may be required. The
Company is aware of certain patents for which it will likely need to obtain
licenses to commercialize its products and technologies. While the Company
believes that it will be able to obtain such licenses, there can be no assurance
that such licenses, or licenses to other patent rights, will be available on
reasonable terms, if at all. In addition, from time to time the Company receives
notices of patents which may cover its product development activities as well as
any future product commercialization. For example, the Company recently received
a letter from Ixsys, Inc. ("Ixsys") advising of Ixsys's belief that the
Company's Phage Display technology falls within the scope of U.S. patent number
5,723,323 (the "5,723,323 Patent") issued in March 1998, which includes a claim
of invention to an isolated, diverse population of peptides, polypeptides or
proteins comprising greater than 100,000 different stochastic amino acid
sequences encoded by stochastic polynucleotide sequences. In their letter, Ixsys
offered terms for the Company to obtain a non-exclusive license under the
5,723,323 Patent and related patent rights. The Company is in the process of
evaluating these patent rights and the license offer. Based on advice of
counsel, however, the Company believes that the materials and methods currently
employed by the Company, including its practice of Phage Display, are not
covered by the 5,723,323 Patent. If the Company decides not to seek a license or
does not otherwise obtain the offered license to the 5,723,323 Patent, or if
licenses are not available to any other patents that may be required for its
activities, there can be no assurance that the Company will not become subject
to infringement claims or other legal proceedings, which could result in
substantial legal expenses over time. Since the scope of any such legal
proceedings is not known, the Company is unable to predict the outcome of such
proceedings or the likely effect of such proceedings on the Company's
operations.

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<PAGE> 12

There can also be no assurance that any patents issued to the Company or
its collaborative partners, or for which the Company has licensed rights, will
not be challenged, narrowed, invalidated or circumvented, or that the rights
granted thereunder will provide competitive advantages to the Company. In
addition, there can be no assurance that (i) the Company will be able to obtain
patent protection for any therapeutic, diagnostic or separations products it may
develop; (ii) others will not obtain patents covering the manufacture, use or
sale of such products; (iii) the Company's patents or any future patents will
prevent other companies from designing their products or conducting their
activities so as to avoid the coverage of the claims of the Company's patents;
or (iv) others will not be able to develop other competing technologies to
supplement or replace the Company's processes or products.

There exists substantial patent litigation in the pharmaceutical,
biomedical and biotechnology industries. Patent litigation is generally
time-consuming, costly, involves complex legal and factual questions, and the
outcome is often difficult to predict. Litigation may be necessary to enforce
the Company's patent and license rights, to enforce or defend an infringement
claim, or to determine the scope and validity of others' proprietary rights.
Many of the Company's competitors have substantially greater resources than the
Company, and such competitors may be able to sustain the costs of complex
litigation to a greater degree and for a longer period of time than the Company.
In addition, such proceedings or litigation, could result in substantial costs
and a diversion of management's time and attention, subject the Company to
significant liabilities to third parties and require the Company to cease using
the technology or to license disputed rights from third parties (which licenses
may not be available at a reasonable cost, if at all), any of which events could
have a material adverse effect on the business, financial condition and results
of operations of the Company.

The Company is particularly dependent on its U.S. and foreign patents and
patent applications relating to its Phage Display technology (the "Phage Display
Patent Rights"). Although the Company is not aware of any challenges to the
Phage Display Patent Rights to date in the United States, there can be no
assurance that a challenge will not be brought in the future. The Company plans
to protect its patent rights, including the Phage Display Patent Rights, to the
maximum practical extent. There can be no assurance that the Company will have
sufficient resources necessary to defend its patent rights against all such
challenges. However, if the Company commences legal action against an alleged
infringer of any of the Company's patent rights, the alleged infringer can be
expected to claim that the Company's patent rights are invalid for one or more
alleged reasons, thus subjecting the Company's patent rights in question to a
judicial determination of validity with the attendant risk that an adverse
determination could result in a loss of patent rights. In addition, in certain
situations, an alleged infringer could seek a declaratory judgment of invalidity
of the Company's patents. Uncertainties resulting from the initiation and
continuation of any patent or related litigation, including those involving the
Phage Display Patent Rights, could have a material adverse effect on the
Company's ability to maintain and expand its licensing program and collaborative
arrangements and to compete in the marketplace pending resolution of the
disputed matter.

Two oppositions were filed in late 1997 against the Company's Phage Display
patent issued by the EPO. The Company expects that these oppositions, which
primarily relate to whether the written description of the inventions in the
Company's European patent is sufficient under EPO law, will not be resolved for
several years. The oppositions are currently being reviewed by the Company's
patent counsel, and Dyax intends to vigorously defend its European patent. The
Company is also prosecuting other pending patent applications in Europe which it
believes will provide the Company with additional patent protection for Phage
Display. There can be no assurance that the Company will prevail in the
opposition proceedings or any other opposition or litigation contesting the
validity or scope of its other foreign patents, if any, or that additional EPO
patents will be issued to Dyax covering Phage Display. If the Company is not
successful in its defense of its European patent, or if additional patents do
not result from its pending EPO patent applications, Dyax will not be able to
prevent other parties from using Phage Display in Europe.

The Phage Display Patent Rights are central to the Company's patent
licensing program. In connection with the licensing program, the Company
regularly monitors publications and other sources for information regarding the
practice by others of technology covered by the Phage Display Patent Rights, and
there are unlicensed parties whose activities the Company believes may be
covered by its issued patents. In such circumstances, the Company generally
seeks to negotiate a Phage Display license agreement. There can be no

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<PAGE> 13

assurance, however, that the Company will be able to identify all parties
practicing the Phage Display Patent Rights, all products derived by such
parties, including its licensees, or that the Company will be successful in
entering into license agreements with parties that the Company believes require
such a license. In jurisdictions where the Company has not applied for or
obtained patent rights, the Company will be unable to prevent others from
developing or selling products or technologies derived using Phage Display. In
addition, even in jurisdictions where the Company has Phage Display Patent
Rights, there can be no assurance that the Company will be able to prevent
others from selling or importing products or technologies derived elsewhere
using Phage Display. The inability of the Company to protect and enforce its
patent rights, whether by licensing or otherwise, could have a material adverse
effect on the Company's business, financial condition and results of operations.

The Company is aware that other parties have patents and pending
applications to various phage display inventions. The Company has filed, and in
the future may file, oppositions to European and other patents issued to others.
To date, the Company has filed oppositions against two European patents in the
general field of phage display. The Company does not believe these European
patents cover any of its present activities, but the Company cannot predict
whether the claims in these patents may, in their current or future form, cover
the Company's activities or the activities of its collaborative partners and
licensees. In addition, through its patent licensing program, the Company has
secured a limited freedom to practice some of these patent rights pursuant to
its standard license agreement, which contains a covenant by the licensee that
it will not sue the Company under certain of the licensee's phage display
improvement patents. The Company may from time to time seek affirmative rights
of license or ownership under existing patent rights relating to phage display
technology of others. There can be no assurance, however, that the Company will
be successful in maintaining any covenants of nonsuit from its licensees, or in
acquiring similar covenants in the future, or that the Company will be able to
obtain satisfactory licenses. The inability of the Company to obtain and
maintain such licenses and covenants could have a material adverse effect on the
Company's business, financial condition and results of operations.

To protect its existing and future chromatography separations products, the
Company relies primarily upon trade secrets and know-how, as well as the
experience and skill of its technical personnel. The Company also has several
patents and patent applications on its proprietary chromatography technology
which are not based on phage display, but it cannot predict the extent to which
any such patents or future patents will provide protection for its existing or
any new separations products.

In all of its activities, the Company relies substantially upon proprietary
materials and information, trade secrets and know-how to conduct its research
and development activities and to attract and retain collaborative partners,
licensees and customers. Although the Company takes steps to protect these
materials and information, including through the use of confidentiality and
other agreements with its employees, consultants and academic and commercial
relationships, there can be no assurance that these steps will be adequate, that
these agreements will not be violated, that there will be an available or
sufficient remedy for any such violation or that others will not also develop
similar proprietary information. See "Business -- Patents and Proprietary
Rights."

INTENSE COMPETITION; TECHNOLOGICAL OBSOLESCENCE

The industries in which the Company competes are characterized by intense
competition and rapid technological change. Competitors of the Company may
discover or develop important discovery technologies, targets or lead compounds
or therapeutic or diagnostic products in advance of Dyax or which are superior
to those developed by the Company or its collaborative partners, or may obtain
regulatory approvals of their products more rapidly than the Company and its
collaborative partners, any of which circumstances could have a material adverse
effect on the Company's business, financial condition and results of operations.
Competition is intense among organizations attempting to identify, optimize and
generate lead compounds for the development of therapeutic and diagnostic
products and technologies to improve purification in the manufacturing processes
for therapeutics. There are other advanced technologies and approaches for
generating and developing lead compounds for therapeutic, diagnostic and
separations products, including combinatorial chemistry, rational drug design,
molecular modeling and applications of phage display other

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<PAGE> 14

than those that are pursued by the Company. Many large pharmaceutical companies,
which represent one of the largest potential markets for the Company's products
and services, are developing these and other methodologies to improve the speed
with which targets and binding compounds can be identified. These other
approaches include high throughput robotics technology and automated parallel
synthesis of new compounds against which new targets may be screened, as well as
large collections of compounds already synthesized by competitors and other
compounds available from chemical supply catalogues. The Company also competes
with research departments of biotechnology companies, combinatorial chemistry
companies, governmental agencies and research and academic institutions, both in
the United States and abroad. Many of these competitors have substantially
greater capital resources, research and development staffs, facilities,
manufacturing and marketing experience, distribution channels and human
resources than the Company. The Company anticipates that it will also face
increased competition in the future as new companies enter the market and
advanced technologies are developed.

The Company's chromatography separations business competes with several
companies that manufacture, market and sell chromatography separations and
purification systems. Many of these competitors have substantially greater
financial, technical and management resources and experience in marketing and
distribution of chromatography systems than the Company, and in some cases have
had long-term relationships with the Company's existing customers. In addition,
many therapeutic and diagnostic product manufacturers have traditionally
assembled their own chromatography systems. Furthermore, there can be no
assurance that any future affinity separations products developed using Phage
Display will become accepted as effective technology for use in purification
processes for the manufacture of pharmaceutical and other products. See
"-- Dependence on Collaborations and Licensing," "-- Limited Revenues to Date
from Separations Products; Need to Develop New Separations Products" and
"Business -- Competition."

RELIANCE ON THIRD PARTIES FOR CONDUCT OF CLINICAL TRIALS AND MANUFACTURING

The Company has no preclinical or clinical development expertise and
intends to rely on third parties to design and conduct most of these activities,
if required. In addition, the Company has no manufacturing facilities for
therapeutics and diagnostics and intends to rely on third parties to produce the
materials for preclinical and clinical development purposes and commercial
manufacture. If any of these third parties are unable to perform these functions
or if the Company should encounter delays or difficulties with any such
providers, the development of one or more products could be delayed, which could
have a material adverse effect on the Company's business, financial condition
and results of operations. See "-- Extensive Government Regulations; No
Assurance of Regulatory Approval; Hazardous Materials" and
"Business -- Government Regulation."

EXTENSIVE GOVERNMENT REGULATION; NO ASSURANCE OF REGULATORY APPROVAL; HAZARDOUS
MATERIALS

The Company is subject to extensive governmental regulatory requirements
and a lengthy approval process for any therapeutic and diagnostic product
candidates it may develop. The development and commercial use of any therapeutic
or diagnostic products that may be developed by the Company will be regulated by
numerous federal, state and local governmental authorities in the United States,
including the U.S. Food and Drug Administration (the "FDA"), and comparable
foreign regulatory authorities. Such regulations govern or influence, among
other things, the testing, manufacture, safety, efficacy, labeling, storage,
record keeping, reporting, approval and advertising and promotion of such
products. The regulations are a significant factor in the production and
marketing of any therapeutic or diagnostic product that may be developed by any
of the Company's collaborative partners or licensees, or if the Company
discovers such a product candidate and decides to develop it beyond the
preclinical phase. The nature and the extent to which such regulation may apply
will vary depending on the product. Virtually all products developed by or on
behalf of the Company or its collaborative partners or licensees will require
regulatory approval by such authorities prior to commercialization. In
particular, therapeutic products are subject to rigorous preclinical and
clinical testing and other approval procedures established by the FDA and
foreign regulatory authorities. Non-compliance with applicable regulations can
result in clinical study holds or delays, total or partial suspension of
production, governmental refusal to grant approvals, warning letters, fines,
withdrawal, recall or seizure of

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<PAGE> 15

products, and civil and criminal penalties. The process of obtaining regulatory
approvals and the subsequent compliance with appropriate federal and foreign
regulations and statutes is time-consuming (usually requiring five to more than
ten years) and requires the expenditure of substantial resources. Even if FDA
regulatory approvals are obtained, a marketed product is still subject to
continuing review, and any later discovery of previously unknown problems or the
failure to comply with the applicable regulatory requirements may result in
product marketing restrictions or product withdrawal or recall as well as
possible civil or criminal sanctions. In addition, manufacturing facilities for
therapeutic and diagnostic products are subject to inspection by the FDA and
must comply with Good Manufacturing Practice ("GMP") regulations. To ensure full
technical compliance with such regulations, a manufacturer must spend funds,
time and effort in the areas of production and quality control.

FDA regulations also apply to the production facilities and processes used
to manufacture therapeutic and diagnostic products, including the Company's
separations products and technology used in such processes. The Company believes
that the manufacturing procedures for its separations products and the
manufacturing procedures of its media suppliers comply with FDA regulations, but
any determination to the contrary that has substantial potential to adversely
affect the safety or effectiveness of the product could have a material adverse
affect on the Company's separations business. In addition, any change by a
biopharmaceutical company in its manufacturing process or equipment could
necessitate additional FDA review and approval. Such requirements will make it
more difficult for the Company to sell separations products and processes to
customers that have already applied for or obtained FDA approval for production
processes using different chromatography equipment or separations media.
Post-approval changes in labeling or promotion may also necessitate further FDA
review and approval.

The research and development processes of the Company involve the
controlled use of hazardous materials. The Company is subject to federal, state
and local laws and regulations governing the use, manufacture, storage, handling
and disposal of such materials and certain waste products. Although the Company
believes that its activities currently comply with the standards prescribed by
such laws and regulations, the risk of accidental contamination or injury from
these materials cannot be completely eliminated. In the event of such an
accident, the Company could be held liable for any damages that may result, and
any such liability could exceed the Company's insurance coverage, if applicable,
and other resources of the Company. In addition, there can be no assurance that
the Company will not be required to incur significant costs to comply with
environmental laws and regulations in the future. The occurrence of any such
event or the incurrence of any such cost could have a material adverse effect on
the Company's business, financial condition and results of operations. See
"Business -- Government Regulation."

NEED TO ATTRACT AND RETAIN KEY EMPLOYEES

The Company is highly dependent on its executive officers and its
management, scientific, product development and sales staffs. While the Company
believes that only the loss of a senior employee or a significant number of the
members of any of its staffs would have a material adverse effect on the
Company's business or its financial condition and results of operations, there
can be no assurance that such a loss will not occur. The Company does not
maintain key-man life insurance with respect to any of its employees and does
not currently intend to obtain such insurance. The Company's future success will
depend upon its ability to identify, hire, motivate and retain additional
qualified personnel. There is intense competition for such personnel and there
can be no assurance that the Company will be able to continue to attract and
retain such personnel. The failure to attract and retain key personnel would
have a material adverse effect on the Company's business, financial condition
and results of operations. See "Business -- Employees" and "Management."

DEPENDENCE ON EXPANSION OF OPERATIONS AND MANAGEMENT OF GROWTH

The Company's success will depend upon the continued expansion of its
research and development and manufacturing operations, and its ability to enter
into additional collaborative and licensing arrangements. The Company's growth
has placed significant demands on the Company's management as well as its
administrative, technical, operational and financial resources. The Company's
ability to manage its growth will require it
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<PAGE> 16

to improve and implement new operational, financial and management information
systems and to expand, motivate and manage its workforce. No assurance can be
given that the Company will be successful in adding management and technical
personnel as needed to meet the staffing requirements for any additional
collaborative relationships or for any development, sales and/or marketing
efforts. The failure to successfully manage its expansion could have a material
adverse effect on the Company's business, financial condition and results of
operations. See "-- Need to Attract and Retain Key Employees,"
"Business -- Collaborations" and "-- Employees."

UNCERTAINTIES RELATED TO PRICING OF PRODUCTS AND THIRD PARTY REIMBURSEMENT

The Company's realization of revenues with respect to therapeutic and
diagnostic products developed through Phage Display, if any, will depend in part
upon the extent to which reimbursement for the cost of such therapeutic and
diagnostic products will be available from third party payors, such as
government health administration authorities, private health care insurers,
health maintenance organizations and pharmacy benefits management companies.
Third party payors are increasingly challenging the prices charged for such
products. Significant uncertainty exists as to the reimbursement status of newly
approved pharmaceutical products. There can be no assurance that third party
reimbursement will be available or sufficient for any products developed through
Phage Display. The inability to maintain price levels for such products could
adversely affect the Company's business, financial condition and results of
operations. In the United States there have been, and the Company expects that
there will continue to be, a number of federal and state proposals to implement
governmental pricing control. Furthermore, in certain foreign markets, pricing
or profitability of prescription pharmaceuticals is subject to governmental
control. See "Business -- Government Regulation."

POTENTIAL PRODUCT LIABILITY EXPOSURE AND INSURANCE

The preclinical study, clinical development, manufacturing and marketing of
therapeutic and diagnostic products, as well as the testing, marketing and sale
of chromatography and other separations products, exposes the Company to the
risk of substantial product liability claims. There can be no assurance that
product liability claims will not be asserted against the Company or that the
Company will not experience material product liability losses in the future. The
Company currently maintains product liability insurance coverage for its
separations products, but there can be no assurance that the current insurance
will continue to be available on acceptable terms or that such coverage will be
adequate for liabilities actually incurred. The Company does not currently
maintain product liability insurance for therapeutic or diagnostic products and
there can be no assurance that any such insurance coverage will be available on
acceptable terms, if and when the Company enters clinical trials and
commercializes any such product, or that such coverage will be adequate for
liabilities actually incurred. A successful claim brought against the Company in
excess of its insurance coverage would have a material adverse effect on the
Company's business, financial condition and results of operations.

NO PRIOR PUBLIC MARKET FOR COMMON STOCK; VOLATILITY OF STOCK PRICE

Prior to this Offering, there has been no public market for the Common
Stock, and there can be no assurance that an active public market for the Common
Stock will develop or be sustained after this Offering. The initial offering
price will be determined by negotiations between the Company and the
Representatives of the Underwriters and is not necessarily indicative of the
market price at which the Common Stock will trade after this Offering. The
market prices for securities of biotechnology and similarly capitalized
companies have been highly volatile, often for reasons that are unrelated to the
operating results of such companies. Announcements of technological innovations
or new commercial products by the Company or its competitors, developments
concerning proprietary rights, including patents and litigation matters,
publicity regarding actual or potential results with respect to products or
compounds under development by the Company or its collaborative partners,
regulatory developments in both the United States and abroad, public concern as
to the efficacy of new technologies, general market conditions and comments by
securities analysts, as well as quarterly fluctuations in the Company's revenues
and financial results among other factors, may have a significant impact on the
market price of the Common Stock. In particular, the realization of any of the
risks

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<PAGE> 17

described in these "Risk Factors" could have a dramatic and adverse impact on
such market price. See "Underwriting."

CONTROL BY MANAGEMENT AND EXISTING STOCKHOLDERS

Upon completion of this Offering, the Company's executive officers,
directors and affiliates will beneficially own approximately 33.9% of the
outstanding shares of Common Stock after giving effect to the purchase of an
aggregate of 220,766 shares of Common Stock (based on an assumed offering price
of $6.50 per share) by existing stockholders of the Company, each of whom has
expressed a non-binding interest in acquiring for investment purposes shares of
Common Stock in this Offering including H&Q Healthcare Investors, H&Q Life
Science Investors and New York Life Insurance Company as well as certain
directors and officers of the Company including Mr. Blair, Dr. Dishman and Mr.
Lewis (32.8% if the Underwriters' over-allotment option is exercised in full).
As a result, these stockholders will be able to exercise effective control over
all matters requiring stockholder approval, including the election of directors,
mergers and the sale of all or substantially all of the assets of the Company.
This may prevent or discourage unsolicited acquisition proposals or offers for
the Company's Common Stock. See "Certain Transactions," "Principal Stockholders"
and "Description of Capital Stock -- Anti-Takeover Measures."

ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER AND BY-LAW PROVISIONS; DELAWARE LAW

The Company's form of Amended and Restated Certificate of Incorporation to
be filed upon or after the closing of this Offering (the "Restated Certificate
of Incorporation") authorizes the Company's Board of Directors to issue, without
further stockholder approval, up to 1,000,000 shares of Preferred Stock with
voting, conversion and other rights and preferences that could adversely affect
the voting power or other rights of the holders of Common Stock. Although the
Company has no current plans to issue any shares of Preferred Stock, the
issuance of Preferred Stock or of rights to purchase Preferred Stock could be
used to discourage an unsolicited acquisition proposal. In addition, the
possible issuance of Preferred Stock could discourage a proxy contest, make more
difficult the acquisition of a substantial block of the Company's Common Stock
or limit the price that investors might be willing to pay in the future for
shares of the Company's Common Stock. The Restated Certificate of Incorporation
provides for staggered terms for the members of the Company's Board of Directors
which, together with certain provisions of the Company's Amended and Restated
By-laws and the Delaware General Corporation Law applicable to the Company,
could delay or make more difficult a merger, tender offer or proxy contest
involving the Company. Further, the Company's equity incentive plans generally
permit the Board of Directors to provide for acceleration of vesting of options
granted under such plans in the event of certain transactions which result in a
change of control of the Company. In addition, the Amended and Restated By-laws
that will become effective upon the closing of this Offering provide that the
Company will be subject to Section 203 of the Delaware General Corporation Law
which, subject to certain exceptions, restricts certain transactions and
business combinations between a corporation and a stockholder owning 15% or more
of the corporation's outstanding voting stock (an "interested stockholder") for
a period of three years from the date the stockholder becomes an interested
stockholder. These provisions may have the effect of delaying or preventing a
change of control of the Company without action by the stockholders and,
therefore, could adversely affect the price of the Company's Common Stock. See
"Management," "Description of Capital Stock -- Preferred Stock" and "Description
of Capital Stock -- Anti-Takeover Measures."

BROAD MANAGEMENT DISCRETION IN USE OF PROCEEDS

A substantial portion of the net proceeds to be received by the Company in
connection with this Offering will be allocated to working capital and general
corporate purposes. The Company is not yet able to estimate with any precision
the allocation of the majority of the proceeds from this Offering among the uses
of proceeds identified in this Prospectus, and the timing and amount of
expenditures will vary depending upon numerous factors. Purchasers of the Common
Stock offered hereby will be entrusting their funds to the Company's Board of
Directors and management, who will have broad discretion to allocate proceeds of
this Offering to uses that they believe are appropriate. There can be no
assurance that the proceeds of this Offering can or will be invested to yield a
positive return. See "Use of Proceeds."

16
<PAGE> 18

SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS

Future sales of Common Stock in the public market following this Offering
could adversely affect the market price of the Common Stock. Upon completion of
this Offering, the Company will have 9,987,562 shares of Common Stock
outstanding, after giving effect to the conversion of all outstanding shares of
Convertible Preferred Stock into shares of Common Stock and assuming no exercise
of currently outstanding options or warrants. Of these shares, the 2,250,000
shares sold in this Offering (plus any additional shares sold upon exercise of
the Underwriters' over-allotment option) will be freely transferable without
restriction under the Securities Act of 1933, as amended (the "Securities Act"),
except for shares purchased by "affiliates" of the Company as that term is used
under the Securities Act and the regulations promulgated thereunder. Certain
existing stockholders of the Company have expressed a non-binding interest in
acquiring for investment purposes an aggregate of 220,766 shares of Common Stock
in this Offering (based on an assumed offering price of $6.50 per share),
including H&Q Healthcare Investors, H&Q Life Science Investors and New York Life
Insurance Company as well as certain directors and officers of the Company,
including Mr. Blair, Dr. Dishman and Mr. Lewis. See "Certain Transactions." To
the extent such persons and entities purchase shares, such shares will be
subject to the lock-up agreements discussed below. Each holder who signed a
lock-up agreement has agreed, subject to certain limited exceptions, not to sell
or otherwise dispose of any of the shares held by them as of the date of this
Prospectus for a period of 180 days after the date of this Prospectus without
the prior written consent of ING Baring Furman Selz LLC. At the end of such
180-day period, approximately 7,705,020 shares of Common Stock (including
approximately 490,801 shares issuable upon exercise of vested options) will be
eligible for immediate resale, subject to compliance with Rule 144 and Rule 701.
The remainder of the approximately 61,805 shares of Common Stock outstanding or
issuable upon exercise of options or warrants held by existing stockholders or
option holders will become eligible for sale at various times over a period of
approximately two years, and could be sold earlier if the holders exercise any
available registration rights or upon vesting pursuant to the Company's standard
four year vesting schedule. The holders of 5,831,516 shares of Common Stock
issuable upon conversion of the Convertible Preferred Stock will have the right
in certain circumstances to require the Company to register their shares under
the Securities Act for resale to the public. In connection with the sale of
461,538 shares of Common Stock pursuant to the Genzyme Investment, the Company
will grant to Genzyme registration rights with respect to such shares,
exercisable commencing 180 days after the closing of the Offering. If such
holders, by exercising their demand registration rights, cause a large number of
shares to be registered and sold in the public market, such sales could have an
adverse effect on the market price for the Company's Common Stock. If the
Company were required to include in a Company-initiated registration shares held
by such holders pursuant to the exercise of their registration rights, such
sales may have an adverse effect on the Company's ability to raise needed
capital. In addition, the Company expects to file within 90 days after the date
of this Prospectus registration statements on Form S-8 registering a total of
approximately 2,282,000 shares of Common Stock, including those outstanding
shares which may be repurchased by the Company and shares issuable upon exercise
of outstanding stock options or reserved for issuance under the Company's equity
incentive plan and employee stock purchase plan. See "Management -- Stock
Plans," "Description of Capital Stock -- Registration Rights," "Shares Eligible
for Future Sale" and "Underwriting."

IMMEDIATE AND SUBSTANTIAL DILUTION; ABSENCE OF DIVIDENDS

Purchasers of the shares of Common Stock offered hereby will experience
immediate and substantial dilution estimated to be $4.42 per share in the net
tangible book value of their investment from the initial offering price.
Additional dilution will occur upon the exercise of outstanding options. See
"Dilution" and "Shares Eligible for Future Sale." The Company has never paid
dividends on its Common Stock and does not anticipate paying any cash dividends
in the foreseeable future. The Company currently intends to retain its earnings,
if any, for the development of its business. See "Dividend Policy."

17
<PAGE> 19

USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,250,000 shares of
Common Stock offered by the Company hereby are estimated to be approximately
$12,501,000 ($14,541,000 if the Underwriters' over-allotment option is exercised
in full) based on an assumed initial public offering price of $6.50 per share
and after deducting the underwriting discounts and commissions and other
estimated offering expenses payable by the Company.

The Company expects to use the net proceeds of this Offering along with the
$3.0 million to be received from the Genzyme Investment primarily to fund
research and development, the retirement of $695,000 of outstanding debt due
upon completion of this Offering, and for working capital and general corporate
purposes, including possible technology in-licensing and acquisitions. The
Company is not yet able to estimate precisely the allocation of the proceeds
among such uses, and the timing and amount of expenditures will vary depending
upon numerous factors, including sales of existing and new Biotage separations
products, the ability of the Company to enter into additional collaborative
arrangements, competing technological and market developments, changes in the
Company's collaborative arrangements and licenses, the cost of preparing,
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the purchase of additional capital equipment, the
progress of the Company's drug discovery and separations technology programs and
the progress of the development and commercialization of milestone and
royalty-bearing compounds by the Company's collaborative partners and licensees,
including the expenses required to internally develop lead therapeutic
compounds, the timing and amounts received under any collaborative arrangements
for the development of such compounds, the timing and receipt of license fees
and the revenues received from the sales of separations products. The Company's
Board of Directors and management retain complete discretion with respect to the
allocation of such proceeds and the timing of expenditures. Although the Company
may use a portion of the net proceeds for possible in-licensing or acquisition
of products and technologies that are complementary to those of the Company, or
acquisitions of complementary businesses, there are currently no commitments in
this regard. Pending such uses, the Company plans to invest the net proceeds in
investment grade, interest-bearing securities. The Company intends to invest and
use the proceeds so as not to be considered an "investment company" under the
Investment Company Act of 1940, as amended.

The Company believes that the net proceeds from this Offering and its
existing cash and cash equivalents will be sufficient to fund its operations
through at least 1999, although there can be no assurance that the Company will
not need or choose to raise additional funds through additional debt or equity
financing before that date. Thereafter, the Company may require additional funds
to support its operating requirements or for other purposes and may seek to
raise such additional funds through public or private equity financing or from
other sources. There can be no assurance that additional financing will be
available at all or that, if available, such financing would be obtainable on
acceptable terms to the Company or would not be dilutive. See "Risk
Factors -- Future Capital Needs; Uncertainty of Additional Funding," "-- Broad
Management Discretion in Use of Proceeds" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Liquidity and
Capital Resources."

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its capital stock
and does not anticipate paying cash dividends on the Common Stock in the
foreseeable future. Payment of future dividends, if any, will be at the
discretion of the Company's Board of Directors after taking into account various
factors, including the Company's financial condition, operating results,
restrictions imposed by financing arrangements, if any, legal and regulatory
restrictions on the payment of dividends, current and anticipated cash needs and
other factors that the Board of Directors deems relevant. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

18
<PAGE> 20

CAPITALIZATION

The following table sets forth the actual, pro forma and pro forma as
adjusted capitalization of the Company as of March 31, 1998. The pro forma
capitalization gives effect to the conversion of 8,944,043 shares of Class A
Convertible Preferred Stock into 5,831,516 shares of Common Stock upon the
closing of this Offering. The pro forma as adjusted capitalization gives effect
to: (i) the conversion upon the closing of this Offering of shares of
Convertible Preferred Stock into shares of Common Stock; (ii) the sale of
461,538 shares of Common Stock in the Genzyme Investment; and (iii) the issuance
and sale by the Company of 2,250,000 shares of Common Stock at an assumed
initial public offering price of $6.50 per share (after deducting underwriting
discounts and commissions and estimated offering expenses payable by the
Company) and the application of the net proceeds therefrom. This table should be
read in conjunction with the Company's Consolidated Financial Statements and
Notes thereto, "Use of Proceeds," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the other financial
information included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
MARCH 31, 1998
---------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
-------- --------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current portion of long-term debt and capital lease
obligations(1)............................................ $ 130 $ 130 $ 130
======== ======== ========
Long-term debt and capital lease obligations, less current
portion(1)................................................ 1,057 1,057 362
-------- -------- --------
Stockholders' equity (2):

Class A Convertible Preferred Stock, $.01 par value;
9,440,832 shares authorized in series; 8,944,043 shares
issued and outstanding actual; $25,947,000 liquidation
preference; none issued and outstanding pro forma and
pro forma as adjusted.................................. 27,258 -- --

Common Stock, $.01 par value; 20,000,000 shares
authorized; 1,435,270 shares issued and outstanding
actual; 7,266,786 shares pro forma; 30,000,000 shares
authorized pro forma as adjusted; 9,978,324 shares
issued and outstanding pro forma as adjusted(3)........ 14 73 100

Additional paid-in capital................................ 12,493 39,692 55,166

Receivable for common stock purchase...................... (418) (418) (418)

Accumulated deficit....................................... (31,875) (31,875) (31,875)

Deferred compensation..................................... (1,955) (1,955) (1,955)

Accumulated foreign currency translation adjustment....... (71) (71) (71)
-------- -------- --------
Total stockholders' equity........................ 5,446 5,446 20,947
-------- -------- --------
Total capitalization.............................. $ 6,503 $ 6,503 $ 21,309
======== ======== ========
</TABLE>

- ------------------------------
(1) Reflects the retirement of $695,000 of outstanding debt due upon the closing
of this Offering. See "Use of Proceeds."

(2) Effective upon the closing of this Offering, the Company's Restated
Certificate of Incorporation will be further amended and restated to, among
other matters, reduce the number of authorized shares of Preferred Stock
from 9,440,832 to 1,000,000. See "Description of Capital Stock -- Preferred
Stock."

(3) Excludes (i) 1,117,846 shares of Common Stock issuable upon the exercise of
options outstanding at March 31, 1998 at a weighted average exercise price
of $1.69 per share, of which options to purchase 278,833 shares of Common
Stock were exercisable, and (ii) 27,022 shares of Common Stock issuable upon
the exercise of warrants outstanding at March 31, 1998 at an exercise price
of $3.97 per share. Reflects (i) the conversion of 8,944,043 shares of
Convertible Preferred Stock into 5,831,516 shares of Common Stock upon the
completion of this Offering and (ii) the sale of 461,538 shares of Common
Stock in the Genzyme Investment. See "Management -- Stock Plans,"
"Description of Capital Stock," "Use of Proceeds," "Selected Consolidated
Financial Data" and Note 9 to Notes to Consolidated Financial Statements.

19
<PAGE> 21

DILUTION

The pro forma net tangible book value of the Company at March 31, 1998 was
$5,242,000, or $0.72 per share of outstanding Common Stock. Pro forma net
tangible book value per share is determined by dividing the amount of the
Company's total tangible assets less total liabilities by the number of
outstanding shares of Common Stock, which includes the conversion of all
outstanding Convertible Preferred Stock at the closing of this Offering. After
giving effect to the sale by the Company of (i) 461,538 shares of Common Stock
in the Genzyme Investment and (ii) 2,250,000 shares offered hereby (at an
assumed initial public offering price of $6.50 per share and after deducting the
underwriting discounts and commissions and other estimated offering expenses),
and the application of the net proceeds therefrom, the net tangible book value
of the Company at March 31, 1998 would have been $20,743,000, or $2.08 per
share. This represents an immediate increase in such net tangible book value of
$1.36 per share to existing stockholders and an immediate dilution of $4.42 per
share to new stockholders purchasing shares in this Offering. The following
table illustrates this dilution per share:

<TABLE>
<S> <C> <C>
Assumed initial public offering price....................... $ 6.50
------
Pro forma net tangible book value per share at March 31,
1998................................................... $0.72
Increase per share attributable to new investors.......... 1.36
-----
Pro forma net tangible book value per share after
offering.................................................. 2.08
------
Dilution per share to new investors(1)...................... $ 4.42
======
</TABLE>

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

(1) If the Underwriters' over-allotment option is exercised in full, dilution
per share to new investors would be $4.29.

The following table summarizes, on a pro forma basis at March 31, 1998, the
differences between the existing stockholders and the new investors with respect
to the number of shares purchased from the Company, the total consideration paid
and the average consideration paid per share.

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
--------------------- ---------------------- AVERAGE
NUMBER PERCENT AMOUNT PERCENT PRICE PER SHARE
---------- ------- ----------- ------- ---------------
<S> <C> <C> <C> <C> <C>
Existing stockholders............ 7,266,786 72.8% $37,568,000 68.1% $ 5.17
New investors.................... 2,711,538 27.2 17,625,000 31.9 6.50
---------- ----- ----------- -----
Total.................. 9,978,324 100.0% 55,193,000 100.0%
========== ===== =========== =====
</TABLE>

The foregoing tables and calculations assume no exercise of stock options
or warrants outstanding at March 31, 1998, at which date there were 1,117,846
shares of Common Stock issuable upon exercise of outstanding options at a
weighted average exercise price of $1.69 per share, of which options to purchase
278,833 shares of Common Stock were exercisable, and 27,022 shares of Common
Stock issuable upon exercise of outstanding warrants at an exercise price of
$3.97 per share. See "Management -- Stock Plans" and "Description of Capital
Stock." To the extent that such options become vested and are exercised, or the
warrants are exercised, there will be further dilution to new investors. See
"Risk Factors -- Immediate and Substantial Dilution; Absence of Dividends."

20
<PAGE> 22

SELECTED CONSOLIDATED FINANCIAL DATA

The following selected consolidated financial data with respect to the
Company's statement of operations data for each of the three years in the period
ended December 31, 1997 and with respect to the Company's balance sheet data at
December 31, 1996 and 1997 are derived from consolidated financial statements of
the Company which have been audited by PricewaterhouseCoopers LLP, independent
accountants, and are included elsewhere herein. The statement of operations data
for the years ended December 31, 1993 and 1994 and the balance sheet data for
December 31, 1993, 1994 and 1995 are also derived from audited consolidated
financial statements not included herein. The selected financial data as set
forth below as of March 31, 1998, and for the three months ended March 31, 1997
and 1998 have been derived from the Company's unaudited financial statements
which are included elsewhere herein. The unaudited financial statements have
been prepared by the Company on a basis consistent with the Company's audited
financial statements and, in the opinion of management, include all adjustments,
consisting of only normal recurring adjustments, necessary for a fair
presentation of the Company's results of operations and financial condition for
such periods. Operating results for the three months ended March 31, 1998 are
not necessarily indicative of results that may be expected for the entire year
ending December 31, 1998 or any subsequent period. The selected consolidated
financial data should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations," the Consolidated
Financial Statements and Notes thereto and other financial information included
herein. The historical results are not necessarily indicative of the results to
be expected in the future.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
------------------------------------------------------ ---------------------
1993 1994 1995 1996 1997 1997 1998
-------- -------- -------- --------- --------- --------- ---------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:

Revenues:
Product sales........................... $ 4,099 $ 2,713 $ 3,592 $ 4,478 $ 7,625 $ 1,336 $ 2,208
Product development..................... -- -- 428 1,060 1,440 301 904
License fees............................ -- -- -- 1,499 711 242 492
-------- -------- -------- --------- --------- --------- ---------
Total revenues..................... 4,099 2,713 4,020 7,037 9,776 1,879 3,604
-------- -------- -------- --------- --------- --------- ---------
Operating expenses:
Cost of products sold................... 2,792 1,794 1,952 2,046 3,174 557 927
Research and development................ 894 894 1,343 3,140 5,575 1,222 1,631
Selling, general and
administrative(1)..................... 3,054 2,604 2,710 4,170 6,827 1,620 2,232
Other expenses(2)....................... -- -- 4,554 -- -- -- --
-------- -------- -------- --------- --------- --------- ---------
Total operating expenses........... 6,740 5,292 10,559 9,356 15,576 3,399 4,790
-------- -------- -------- --------- --------- --------- ---------
Loss from operations...................... (2,641) (2,579) (6,539) (2,319) (5,800) (1,520) (1,186)
Interest income (expense), net............ (97) (89) (46) (78) 265 80 15
-------- -------- -------- --------- --------- --------- ---------
Net loss.................................. $ (2,738) $ (2,668) $ (6,585) $ (2,397) $ (5,535) $ (1,440) $ (1,171)
======== ======== ======== ========= ========= ========= =========
Net loss per common share:
Historical(3):
Basic and diluted..................... $ (30.88) $ (28.16) $ (27.53) $ (2.38) $ (5.14) $ (1.41) $ (0.86)
======== ======== ======== ========= ========= ========= =========
Weighted average number of shares --
basic and diluted.................. 88,667 94,755 239,212 1,006,730 1,076,469 1,022,948 1,362,587
======== ======== ======== ========= ========= ========= =========
Pro forma (unaudited)(4):
Basic and diluted..................... $ (0.83) $ (0.16)
========= =========
Weighted average number of shares --
Basic and diluted.................. 6,706,680 7,194,103
========= =========
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
---------------------------------------------------- ---------
1993 1994 1995 1996 1997 1998
-------- -------- -------- -------- -------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 1,951 $ 227 $ 1,959 $ 8,591 $ 4,664 $ 3,688
Working capital............................ 2,657 36 1,870 9,241 5,905 4,312
Total assets............................... 6,296 3,300 4,692 12,236 10,532 10,021
Long-term debt and capital lease
obligations, less current portion........ 43 -- 2,097 770 1,078 1,057
Accumulated deficit........................ (13,519) (16,187) (22,772) (25,169) (30,704) (31,875)
Total stockholders' equity................. 4,414 1,666 705 9,321 6,263 5,446
</TABLE>

- ---------------
(1) Includes compensation expense of $75,000 and $263,000 in the year ended
December 31, 1997 and the three months ended March 31, 1998, respectively,
related to certain stock option grants.
(2) Includes write-offs of an intangible asset in the amount of $456,000 and
incomplete technology in the amount of $4,098,000 in the year ended December
31, 1995. Also excludes the results of operations of PEC for periods before
its acquisition by the Company on August 11, 1995.
(3) Reflects a 0.1352-for-1 reverse stock split effected on August 11, 1995 and
a 0.652-for-1 reverse stock split effected on March 23, 1998, each of which
is applied retroactively for all years presented. Weighted average number of
shares for the years ended December 31, 1993 and 1994 and the period from
January 1, 1995 to August 10, 1995 reflects shares of Biotage, Inc. prior to
the acquisition of PEC.
(4) See Note 2 of Notes to Consolidated Financial Statements for a description
of the computation of pro forma net income (loss) per share. Based on the
number of shares outstanding as of March 31, 1998, after giving effect to
the conversion of all of the outstanding shares of Preferred Stock into
Common Stock. Excludes 1,117,846 shares of Common Stock issuable upon the
exercise of outstanding stock options, 639,299 shares of Common Stock
reserved for future issuance under the Company's 1995 Equity Incentive Plan
and 27,022 shares of Common Stock issuable upon the exercise of outstanding
warrants, as of such date. See "Management -- Stock Plans," "Description of
Capital Stock" and "Shares Eligible for Future Sale."

21
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis should be read in conjunction with
"Selected Consolidated Financial Data" and the Company's Consolidated Financial
Statements and Notes thereto included elsewhere in this Prospectus. Except for
the historical information contained herein, the discussion in this Prospectus
contains certain forward-looking statements that involve risks and
uncertainties, such as statements of the Company's plans, objectives,
expectations and intentions. The cautionary statements made in this Prospectus
should be read as being applicable to all related forward-looking statements
wherever they appear in this Prospectus. The Company's actual results could
differ materially from those discussed here. Factors that could cause or
contribute to such differences include those discussed in "Risk Factors," as
well as those discussed elsewhere in this Prospectus.

OVERVIEW

Dyax has developed and patented a versatile, high throughput discovery
technology with broad applications in the development of new therapeutic,
diagnostic and separations products. The Company's proprietary phage
display-based technology platform ("Phage Display") permits scientists to
rapidly identify compounds that bind to targets of interest. The Company
believes that Phage Display is a powerful method that has significant advantages
over conventional, combinatorial chemistry and antibody-based approaches,
including increased speed and reduced costs for discovery of lead compounds. In
addition, the Company develops, manufactures and sells a broad range of
chromatography separations products under the Biotage tradename. Dyax is
pursuing a diversified business strategy which includes: (i) non-exclusive
licensing of its Phage Display patents (currently 30 licensees); (ii) discovery
of new therapeutic and diagnostic lead compounds through internal programs
(currently three leads) and through collaborative arrangements (currently five
arrangements) using Phage Display; (iii) continued expansion of its Biotage
separations product lines (sold to over 50 leading pharmaceutical and
biotechnology companies); and (iv) application of Phage Display to develop
next-generation affinity separations products both through internal programs
(currently four programs) and through collaborative arrangements (currently
eight arrangements).

The Company is subject to risks common to companies in the biotechnology
industry including, but not limited to, dependence on collaborative
arrangements, development by the Company or its competitors of new technological
innovations, dependence on key personnel, protection of proprietary technology,
and compliance with FDA government regulations and approval requirements.

On August 11, 1995, the Company acquired Protein Engineering Corporation in
a transaction that was accounted for using the purchase method of accounting
and, therefore, the financial results of PEC before August 11, 1995 are not
included in the Company's consolidated financial results of operations for the
1995 fiscal year or any prior year. The excess of the purchase price over the
fair value of the net assets acquired was written off and recorded as a purchase
of incomplete technology, resulting in a non-cash charge to results of
operations of $3,942,000, which represents the value of acquired technologies
which had not reached commercialization at the time of acquisition. Since the
acquisition of PEC, the Company has invested in the continued development of
these compounds, has entered into a corporate collaborative partnership with
Debiopharm, S.A. for one of the compounds, and has continued to seek partners to
commercialize one or more of the remaining compounds, none of which is yet
complete. For the financial results of PEC before August 11, 1995, see the
consolidated financial statements of PEC beginning at page F-21.

The Company has a history of operating losses. For the years ended December
31, 1995, 1996 and 1997, the Company had net losses of approximately $6.6
million, $2.4 million, and $5.5 million, respectively and $1.2 million for the
three months ended March 31, 1998. As of March 31, 1998, the Company had an
accumulated deficit of approximately $31.9 million. The Company anticipates that
its research and development efforts will increase significantly in the future
and it expects to incur significant operating losses over the next several
years. There can be no assurance that the Company will ever be able to generate
sufficient revenues from the sale of products to offset the expenses of these
efforts. The Company has not realized any significant revenues from the
achievement of milestones or royalties from the discovery, development or sale

22
<PAGE> 24

of a commercial product by a collaborative partner or licensee and no
significant revenue from these sources is expected for at least several years,
if ever. To date, all revenues have been generated from: (i) sales of
chromatography separations systems and products; (ii) signing and maintenance
fees paid for licenses of Phage Display patents; and (iii) research and
development funding paid by the Company's collaborative partners. The Company's
ability to achieve profitability will depend upon its ability, alone or with
others, to introduce new chromatographic separations products, to develop
affinity separations products derived from Phage Display, to complete discovery
and development of therapeutic and diagnostic lead compounds and to establish
additional collaborative arrangements. There can be no assurance that the
Company will ever be able to achieve or sustain profitability. See "Risk
Factors -- History of Operating Losses and Accumulated Deficit; Uncertainty of
Future Profitability."

The Company has experienced significant fluctuations in its revenues and
operating results from quarter to quarter and year to year, and it expects these
fluctuations to continue in the future. The Company also expects that an
increasingly significant portion of its anticipated revenues for the foreseeable
future will be comprised of up-front fees and research and development funding
paid pursuant to collaborative and licensing arrangements. The Company believes
that future fluctuations in revenues and results may depend on various factors,
such as the timing of the Company's increased research and development expenses,
the establishment of new collaborations, the development and commercialization
programs of current and prospective collaborative partners, the completion of
certain milestones and the purchases of larger separations equipment systems by
customers. The Company's current and planned expense levels are, to a large
extent, fixed in the short term, and are based in part on its expectations as to
future revenues. Substantially all of the Company's product development revenue
in 1995 and 1996, and less than 10% of product development revenue in 1997, was
generated by one such collaborative arrangement, which was terminated in 1998.
In the first quarter of 1998, the Company is receiving research funding under
eleven collaborative arrangements and anticipates that in 1998 no single
collaborative arrangement will contribute a majority of the Company's research
revenue. In any one fiscal quarter, however, the Company may receive no payments
from its collaborative partners. Consequently, results of operations are
difficult to forecast and may vary significantly from quarter to quarter or year
to year and revenue or results in any period will not necessarily be indicative
of results in subsequent periods and should not be relied upon as any indication
of future performance. Such quarterly fluctuations in revenue or financial
results will from time to time not meet the expectations of market analysts or
investors, which may have a material adverse effect on the price of the
Company's Common Stock. See "Risk Factors -- Significant Fluctuations in
Revenues and Operating Results."

The Company's product sales are derived from sales of Biotage
chromatography separations systems and products. The Company's product
development revenues are derived from collaborative product development
agreements and may include signing fees, funding for research and development,
payments based on the achievement of certain milestones and royalties on any
product sales derived from the collaboration. The Company's license fees are
generated from non-exclusive licenses the Company grants to third parties to use
the Company's patent rights. Standard terms of the Company's license agreements
generally include non-refundable signing fees, non-refundable annual maintenance
fees, milestone payments and royalties on product sales.

RESULTS OF OPERATIONS

Three Months Ended March 31, 1998 and 1997

Total revenue increased 92% to $3,604,000 for the three months ended March
31, 1998 from $1,879,000 for the three months ended March 31, 1997. Product
sales, product development revenue and license fees accounted for 61%, 25% and
14%, respectively, of total revenues in the first quarter of 1998 as compared
with 71%, 16% and 13%, respectively, in the first quarter of 1997. For the first
quarter of 1998, product sales increased 65% to $2,208,000 from $1,336,000 for
the first quarter of 1997, of which 89% represented sales of FLASH and Parallex
chromatography products introduced since the first quarter of 1997. The 200%
increase in product development revenue to $904,000 in the first quarter of 1998
from $301,000 in the first quarter of 1997 resulted from the seven funded
discovery projects established during 1997 and in the first quarter of 1998,
continuing work on three of the Company's corporate collaborative partnerships
and a one-time

23
<PAGE> 25

payment of $250,000 received in connection with the termination of a product
development agreement. See "-- Overview." License revenue increased 103% to
$492,000 for the first quarter of 1998 from $242,000 in the first quarter of
1997. The 1998 license revenue included signing fees of $258,000 from new
licensees in addition to $234,000 of annual maintenance fees and royalties from
licenses entered into in prior years.

The cost of products sold increased to $927,000 for the three months ended
March 31, 1998 from $557,000 for the three months ended March 31, 1997 following
increases in product sales from quarter to quarter. The cost of products sold as
a percentage of product sales for both the first quarter of 1997 and 1998 was
42%. The change in product mix from quarter to quarter did not result in a
change in cost of products sold as a percentage of product sales.

Research and development expense increased 33% to $1,631,000 for the three
months ended March 31, 1998 from $1,222,000 for the three months ended March 31,
1997. The increase was the result of funded research for the new research
discovery collaborative arrangements in the field of separations entered into
during 1997 and 1998 together with an increase in the Company's ongoing internal
efforts to develop products in therapeutic, diagnostic and separation products.

Selling general and administrative expenses increased 38% to $2,232,000 for
the three months ended March 31, 1998 from $1,620,000 for the three months ended
March 31, 1997 as the Company expanded its sales and marketing personnel both
domestically and in Europe to support increases in product sales, and increased
its executive staff and administrative infrastructure in support of increased
revenues, research and development and general operations.

The net loss for the three months ended March 31, 1998 was $1,171,000
compared to $1,440,000 for the three months ended March 31, 1997.

Years Ended December 31, 1997 and 1996

Total revenue increased 39% to $9,776,000 for the year ended December 31,
1997 from $7,037,000 for the year ended December 31, 1996. Product sales,
product development revenue and license fees accounted for 78%, 15% and 7%,
respectively, of total revenues in 1997 as compared with 64%, 15% and 21%,
respectively, in 1996. For 1997, product sales increased 70% to $7,625,000 from
$4,478,000 for 1996, as the Company introduced new separations products and
added to its separations sales and marketing personnel. Of the increase in
product sales, 40% was due to the new FLASH and Parallex chromatography products
introduced in 1997. The 36% increase in product development revenue to
$1,440,000 in 1997 from $1,060,000 in 1996 resulted from five new funded
discovery projects and three of the new corporate collaborative partnerships
established during 1997, principally to fund research using Phage Display in the
field of separations. The Company entered into five funded discovery projects in
the field of separations in 1997, all of which are expected to be completed by
mid-1998. Any further product development work thereafter related to these
agreements will require further action by the sponsoring company. The Company
also entered into four corporate collaborative partnerships during 1997, all of
which are ongoing and three of which provide Dyax funding and will be subject to
the achievement of milestones during 1998 in order for Dyax to receive continued
product development funding. The 53% decrease in license revenue to $711,000 for
1997 from $1,499,000 for 1996, was due principally to a $1,000,000 paid-up
license fee from a single customer received and recorded in 1996. The 1997
license revenue included $414,000 of new license fees as well as $297,000 of
annual maintenance fees from licenses signed in 1996.

The cost of products sold increased to $3,174,000 for the year ended
December 31, 1997 from $2,046,000 for the year ended December 31, 1996 following
increases in product sales from year to year. The cost of products sold as a
percentage of product sales decreased to 42% in 1997 from 46% in 1996. The
decrease in cost of products sold as a percentage of product sales was
principally the result of changes in product mix and, to a lesser extent,
increased manufacturing efficiencies resulting from higher unit volumes.

Research and development expense increased 78% to $5,575,000 for the year
ended December 31, 1997 from $3,140,000 for the year ended December 31, 1996.
The increase was the result of funded research for the new research discovery
collaborative arrangements in the field of separations entered into during 1997
together

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<PAGE> 26

with increases in the Company's ongoing internal efforts to develop products in
therapeutics, diagnostics and separations. In addition to the direct costs
associated with the increase in scientific personnel, 1997 results also included
twelve months of expenses associated with expanded laboratory facilities
occupied at the end of September 1996.

Selling, general and administrative expenses increased 64% to $6,827,000
for the year ended December 31, 1997 from $4,170,000 for the year ended December
31, 1996, as the Company invested in increasing its separations sales and
marketing personnel both domestically and in Europe to support current and
planned increases in product sales and in support of expanded revenues, research
and development and general operations.

Interest income for the year ended December 31, 1997 and the year ended
December 31, 1996 was derived from investment of excess cash reserves in money
market funds, with a higher average invested balance accounting for the increase
in 1997 over 1996. Interest expense is related to long-term debt outstanding in
both 1997 and 1996.

The net loss for the year ended December 31, 1997 was $5,535,000 compared
to $2,397,000 for the year ended December 31, 1996.

Years Ended December 31, 1996 and 1995

Total revenue increased 75% to $7,037,000 for the year ended December 31,
1996 from $4,020,000 for the year ended December 31, 1995. Product sales,
product development revenue and license fees accounted for 64%, 15% and 21%,
respectively, of total revenues in 1996 as compared with 89%, 11% and 0%,
respectively, in 1995. For 1996, product sales increased 25% to $4,478,000 from
$3,592,000 for 1995. The 148% increase in product development revenue to
$1,060,000 in 1996 from $428,000 in 1995 resulted principally from increased
activity during 1996 in a research discovery collaborative arrangement
established during 1995 with one customer. The Company's Phage Display licensing
program, which began in 1996, generated license revenue that included a
$1,000,000 paid-up license fee from one customer.

The cost of products sold increased to $2,046,000 for the year ended
December 31, 1996 from $1,952,000 for the year ended December 31, 1995,
following increases in product sales from year to year. The cost of products
sold as a percentage of products sales decreased to 46% in 1996 from 54% in
1995. The decrease in cost of products sold as a percentage of product sales was
principally the result of changes in product mix and, to a lesser extent,
increased manufacturing efficiencies resulting from higher unit volumes.

Research and development expenses increased 134% to $3,140,000 for the year
ended December 31, 1996 from $1,343,000 for the year ended December 31, 1995.
The increase was principally accounted for by the increase in funded research
for the new research discovery collaborative arrangement entered into during
1995, increases in the Company's ongoing internal efforts developing products in
therapeutics, imaging and separations and the effects of the merged operations
of PEC included for a full year in 1996 as compared to approximately four and
one-half months during 1995. In addition to the direct costs associated with the
increase in scientific personnel, 1996 included three months of expenses
associated with expanded laboratory facilities occupied at the end of September
1996.

Selling, general and administrative expenses increased 54% to $4,170,000
for the year ended December 31, 1996 from $2,710,000 for the year ended December
31, 1995, principally as a result of increased expenditures for research and
development and general operations to support increased revenue levels. In
addition, this increase was due in part to additions to a core management team
to support its expanding business activities.

During 1995, the Company determined that technology acquired in 1989, which
related to a product line no longer being pursued by the Company, had no
commercial value. Accordingly, the Company recorded a charge to operations of
$456,000 to write off the net amortized book value of patents, trademarks and
licenses related to this product line and the related technology. There were no
comparable transactions during 1996.

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<PAGE> 27

Interest income for the year ended December 31, 1996 and the year ended
December 31, 1995 was derived from investment of excess cash reserves in money
market funds. Interest expense is related to long-term debt outstanding in both
1996 and 1995.

The net loss for the year ended December 31, 1996 was $2,397,000 compared
to $6,585,000 for the year ended December 31, 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company has funded its operations since it acquired PEC in 1995
principally through product sales, funding received from product development
collaborative arrangements, license fees, interest income on excess cash
reserves, sales of equity securities (which provided aggregate net cash proceeds
during this period of approximately $15,660,000) and capital leases.

At March 31, 1998, the Company had cash and cash equivalents totaling
$3,688,000. Cash in the amount of $701,000 was used by operating activities
during the period ended March 31, 1998. The Company purchased $259,000 of fixed
assets, repaid $46,000 of long-term debt and received $21,000 in proceeds from
the exercise of stock options during the first quarter of 1998. Cash in the
amount of $5,720,000 was used by operating activities during the year ended
December 31, 1997. The Company purchased $961,000 of fixed assets and repaid
$121,000 of long-term debt during 1997. The Company received $2,573,000 of net
proceeds from the sale of Convertible Preferred Stock and the exercise of stock
options and $445,000 of net proceeds from a sale-leaseback of fixed assets in
1997.

Genzyme has committed to purchase $3.0 million of the Company's Common
Stock in the Genzyme Investment. In June 1998, the Company and Genzyme entered
into a non-binding letter of intent for the joint development and
commercialization of one of the Company's proprietary therapeutic compounds for
the treatment of chronic inflammatory diseases, with initial development to be
focused on the treatment of hereditary angioedema. Subject to the negotiation of
a definitive agreement, Dyax will initially fund up to $6.0 million dollars of
development costs and thereafter the parties will fund equally all development
costs. Upon signing the definitive collaboration agreement, Genzyme will extend
to the Company a $3.0 million line of credit which the Company may use to fund a
portion of such development costs or for any of the Company's other research and
development programs. In addition, the Company will be entitled to receive
significant milestone payments and up to 50% of the profits from sales of
products developed under this collaboration. The Company believes that the
proposed collaboration with Genzyme will provide Dyax with significant financial
and other resources to continue preclinical and clinical development of this
proprietary compound, although there can be no assurance that such an agreement
will be consummated. See "Certain Transactions."

The Company anticipates that its existing capital resources, including the
net proceeds from this Offering, will be adequate to fund the Company's
operations through at least 1999, although there can be no assurance that the
Company will not need or choose to raise additional funds through additional
debt or equity financing before that date. The Company will need additional debt
or equity financing before that date if the Company's cash requirements exceed
its current expectations, if the Company generates less revenue than currently
projected, or if the Company is unable to raise all of the funding contemplated
by this Offering. The Company's capital requirements will depend on numerous
factors, including the ability of the Company to enter into additional
collaborative arrangements, competing technological and market developments,
changes in the Company's existing collaborative relationships, the cost of
filing, prosecuting, defending and enforcing patent claims and other
intellectual property rights, the purchase of additional capital equipment, the
progress of the Company's drug discovery and separations technology programs and
the progress of the commercialization of milestone and royalty-bearing compounds
by the Company's collaborative partners. The Company anticipates that it will be
required to raise additional capital in order to continue to conduct its
operations. Such capital may be raised through additional public or private
financings, as well as collaborative arrangements, borrowings and other
available sources. To the extent that additional capital is needed, it may be
raised through the sale of equity or convertible debt securities, and the
issuance of such securities could result in dilution to the Company's existing
stockholders. There can be no assurance that additional funding, if necessary,
will be available on acceptable terms, if at all. If adequate funds are not
available, the Company

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<PAGE> 28

may be required to curtail operations significantly or to obtain funds through
entering into arrangements with collaborative partners or others that may
require the Company to relinquish rights to certain of its technologies, product
candidates, products or potential markets that the Company would not otherwise
relinquish. The failure to receive additional funding would have a material
adverse effect on the Company's business, financial condition and results of
operations. See "Risk Factors -- Future Capital Needs; Uncertainty of Additional
Funding." There can be no assurance that the Company's existing separations
business, collaborative arrangements and non-exclusive licensing program will
produce revenue adequate to fund the Company's operating expenses. See "Risk
Factors."

The Company is a party to opposition proceedings in the European Patent
Office. The cost of these proceedings, which are not expected to be resolved for
several years, is not expected to have a material adverse effect on the
Company's operations. However, the Company cannot predict the extent or the cost
of such proceedings.

Currently, the Company assumes what it believes to be is a non-material
amount of foreign currency risk associated primarily with inventory and accounts
receivable transactions originating from its U.K. subsidiary. The Company
believes that the financial effects of foreign currency exchange risks are
minimal because the inventory and accounts receivable transactions are generally
short term in nature, the Company has not entered into hedging transactions to
control foreign currency exchange risk. If the magnitude of inventory and
accounts receivable transactions associated with the U.K. subsidiary increase,
or if the nature of these transactions become longer term, the Company plans to
implement policies and procedures to enter into hedging transactions to manage
the associated foreign currency exchange risk.

The Company believes that inflation has had no significant impact on the
Company's business to date.

RECENTLY ISSUED FINANCIAL AND ACCOUNTING STANDARDS

In September 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The Company will implement SFAS No. 130 and SFAS No. 131,
which require the Company to report and display certain information related to
comprehensive income and operating segments, respectively, as required in the
year ending December 31, 1998. The Company believes that the adoption of SFAS
No. 130 and SFAS No. 131 will not adversely impact the Company's business,
financial condition or results of operations.

YEAR 2000

The Company is aware of the issues that many computer systems will face as
the millennium ("Year 2000") approaches. The Company already has installed Year
2000 compliant software in many of its major systems. The cost of the effort to
complete this activity for the balance of the Company's systems is not expected
to be material. The Company believes that the Year 2000 issue will not pose
significant operational problems. However, Year 2000 issues could have a
significant impact on the Company's business, financial condition and results of
operations if modifications cannot be completed on a timely basis, unforeseen
needs or problems arise, or if the systems operated by suppliers, collaborative
partners or licensees are not Year 2000 compliant.

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<PAGE> 29

BUSINESS

OVERVIEW

Dyax has developed and patented a versatile, high throughput discovery
technology with broad applications in the development of new therapeutic,
diagnostic and separations products. The Company's proprietary phage
display-based technology platform ("Phage Display") permits scientists to
rapidly identify compounds that bind to targets of interest. The Company
believes that Phage Display is a powerful method that has significant advantages
over conventional, combinatorial chemistry and antibody-based approaches,
including increased speed and reduced costs for discovery of lead compounds. In
addition, the Company develops, manufactures and sells a broad range of
chromatography separations products under the Biotage tradename. Dyax is
pursuing a diversified business strategy which includes: (i) non-exclusive
licensing of its Phage Display patents (currently 30 licensees); (ii) discovery
of new therapeutic and diagnostic lead compounds through internal programs
(currently three leads) and through collaborative arrangements (currently five
arrangements) using Phage Display; (iii) continued expansion of its Biotage
separations product lines (sold to over 50 leading pharmaceutical and
biotechnology companies); and (iv) application of Phage Display to develop
next-generation affinity separations products both through internal programs
(currently four programs) and through collaborative arrangements (currently
eight arrangements).

BACKGROUND

Molecular binding is the key to the function of most therapeutic,
diagnostic and separations products. The binding of a molecule to another
molecule (target) is the mechanism nature uses to modulate biochemical and
physiological processes such as cellular growth, differentiation, metabolism and
death. To effect these processes, naturally occurring binding molecules
typically distinguish between the correct target and other closely related
molecules (specificity) and bind tightly to the target (affinity) under
appropriate physiological conditions. Therapeutic and diagnostic products bind
to targets, including cellular receptors, ion channels or enzymes, to achieve a
desired effect, and are generally selected for their binding specificity and
affinity for the target. Binding also plays a significant role in the
separations products used to purify material for the development and manufacture
of a therapeutic product.

The discovery, development and commercialization of effective therapeutic,
diagnostic and separations products is a time consuming, risky and expensive
process. For therapeutic products, the process starts with the identification of
a target that is involved in a disease. The safety and efficacy of a therapeutic
product is dependent on its specificity and affinity for the target. Scientists
typically screen libraries containing tens to hundreds of thousands of naturally
occurring or synthesized chemical compounds to identify those that bind to the
target. These binding compounds are then optimized one at a time via iterative
design, synthesis and testing to achieve desired binding specificity and
affinity for the target. Although combinatorial chemistry, computer modeling and
automated laboratory equipment have increased the throughput of the screening
and optimization process, the number of compounds that can be evaluated is still
limited by the time and cost required for chemical synthesis of each selected
compound. The accuracy of in vitro and in vivo diagnostic products also is
dependent on high specificity and high affinity binding to the target. Mouse
monoclonal antibodies continue to be the dominant type of binding compound used
for the development of diagnostic products. However, the generation of antibody
products using an animal system is a time-consuming, costly process and cannot
be used for targets that are toxic or nonimmunogenic to the animal. Products
used in traditional separations processes to purify therapeutic compounds also
rely on binding. These multi-step processes generally involve chromatography,
the separation of different molecules through media in a column. Separations
processes are typically developed through time-consuming trial and error and can
constitute over 50% of the cost to manufacture a therapeutic product for
commercial sales. The failure to achieve high specificity and high affinity
binding can result in side effects, toxicities and low levels of efficacy for
therapeutic products, inaccurate results for diagnostic products and reduced
yield and purity achieved with separations products.

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THE DYAX SOLUTION

The Company believes that Phage Display can reduce costs, shorten
development times and lead to the commercialization of more effective
therapeutic, diagnostic and separations products. Phage Display is a versatile,
high throughput technology platform that is used for the discovery and
development of binding compounds. Using the speed and diversity of a
self-replicating biological system, Phage Display allows scientists to generate
and screen quickly up to hundreds of millions of potential binding compounds to
identify more rapidly those compounds that bind with the desired specificity and
affinity to a target of interest under predetermined conditions. In the
discovery of therapeutic products, scientists can use Phage Display to identify
high specificity and high affinity binding compounds more rapidly than by other
existing methods. In the discovery of diagnostic products, Phage Display can be
used to identify and isolate specific binding compounds, including antibodies,
more reliably and efficiently than by using an animal system. For separations
processes, the Company believes that Phage Display can provide a powerful tool
to develop products to purify therapeutic products more cost effectively and
efficiently, thereby streamlining the development of manufacturing processes for
these products.

Living organisms, such as viruses, have the ability to present (display) a
foreign gene product (protein) on their surfaces. Beginning in the late 1980's,
scientists began exploring the use of such organisms as a means for the display
and identification of proteins of interest. Dyax scientists developed Phage
Display, a patented technology for displaying large collections of proteins on
filamentous "phage," a virus which infects laboratory bacteria. Dyax's Phage
Display has become the preferred method to display and select proteins with
desired binding properties.

Features and Advantages of Phage Display

The Company's Phage Display process generally consists of: (i) generating a
Phage Display library; (ii) screening the library and isolating phage that
display proteins (including structured peptides) that bind to the target of
interest; and (iii) producing and characterizing the selected binding compounds.
To start the Phage Display process, genes containing the instructions to produce
and display a wide variety of new proteins are inserted into phage genomes. Each
phage receives one distinct gene variant and, therefore, displays only one new
protein on its surface. The collection of phage produced in this manner is known
as a Phage Display "library." A Phage Display library can be generated in a few
weeks and can contain up to hundreds of millions of proteins that are potential
binding compounds. Scientists can screen Phage Display libraries to select
rapidly those proteins or peptides that bind to a target of interest. Screening
a Phage Display library involves exposing a Phage Display library to the target
under conditions in which binding is desired, removing phage that do not bind to
the target, dissociating bound phage from the target and amplifying the bound
phage by infecting laboratory bacteria. Screening is performed in small volumes,
usually less than one milliliter, in standard 96-well plates, and can generally
be done in a single day. Phage selected in the first round of screening are
generally amplified through growth in the host bacteria and rescreened to narrow
down the collection of phage to those that display binding compounds with
desired binding properties. The selected phage can then be amplified to produce
sufficient quantities for initial evaluation and identification of lead
compounds. See "-- Dyax Technology."

The Company believes that Phage Display has the following advantages over
combinatorial chemistry and monoclonal antibody technology for the
identification of binding compounds:

Diversity: Phage Display libraries can contain up to hundreds of millions
of potential binding compounds that are variations based on a single protein or
peptide framework. The size of the library (diversity) significantly improves
the likelihood of identifying binding compounds with high specificity and high
affinity for the target. This diversity is far greater than that achievable with
current combinatorial chemistry approaches.

Speed: Phage Display libraries can usually be generated in a few weeks and
screened several times in a few days to identify a group of related binding
compounds. Using conventional or combinatorial chemistry approaches, this
process would generally require between several months and several years to
complete. The

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Company believes that Phage Display can therefore reduce significantly the time
and expense required to identify compounds with desired binding characteristics.

Amplification: Phage Display is based on a self-replicating biological
system. Accordingly, the phage displaying a selected binding compound will
replicate into millions of identical copies in its bacterial host in less than
one day. This provides sufficient phage for initial characterization of the
displayed binding compound. Once generated, an entire Phage Display library can
be amplified and stored and subsequently used for a potentially unlimited number
of screenings. By comparison, amplification of compounds and libraries developed
using combinatorial chemistry techniques requires significant additional time
and resources for chemical synthesis.

Rapid Optimization: Screening of Phage Display libraries results in the
identification of groups of related binding compounds with high specificity and
high affinity for the desired target. These compounds can then be used as the
basis for successive generations of Phage Display libraries. Due to the relative
ease of library generation, Phage Display enables the rapid optimization of
compounds for the desired binding specificity and affinity.

Controlled Binding and Release: Phage Display can also be used to select
compounds which alternately bind to and release from a target under specific
conditions (e.g., changes in acidity or salt concentration or the presence of
contaminants) that simulate those encountered in a separations process used in
the manufacture of a therapeutic product. The Company believes that this ability
to control or predetermine the conditions under which selected compounds bind
and release will result in the development of more efficient and cost effective
separations products.

Focused Design: Each Phage Display library is generated based on a single
protein or peptide framework that allows scientists to select the desired
product properties such as structure, size, stability and lack of
immunogenicity. During library design, the exact degree and location of the
variability is controlled allowing for the conservation of certain of the
original framework characteristics.

Small Molecule Design and Discovery: The structural information of binding
compounds identified using Phage Display can be used to design small molecule
(nonpeptidic) compounds with comparable binding activity. Alternatively, Phage
Display-derived binding compounds can be used both for target validation and in
high throughput competitive binding assays to screen panels of small molecules
for those that interact at the same binding sites on the therapeutic targets.

BUSINESS STRATEGY

Dyax is using Phage Display and its expertise in separations technology to
pursue a diversified business strategy of non-exclusive patent licensing,
discovery and development of therapeutic and diagnostic products, and
development of innovative chromatography and affinity separations products. Dyax
is currently generating revenues from sales of its separations products, funding
from sponsored research and fees from patent licenses, while maintaining a
long-term focus on its therapeutic and diagnostic product development programs,
the expansion of its existing separations product lines and the development of
affinity separations products. The following are the principal elements of the
Company's strategy:

License Phage Display: Dyax intends to continue to license its Phage
Display patents widely to permit and encourage the broad application of Phage
Display, and to obtain revenues from license fees, potential milestone payments
and royalties on Phage Display-derived products. Dyax offers non-exclusive
licenses in the fields of therapeutics, antibody-based in vitro diagnostics.
Under these licenses, Dyax has retained all rights to practice Phage Display in
the fields of separations and in vivo imaging. To date, 30 licensees are
licensed under Dyax's Phage Display patents.

Discover and Internally Develop Therapeutic and Diagnostic Leads: To date,
Dyax has used Phage Display to identify three proprietary lead therapeutic
compounds with potential applications that include inflammatory diseases and
certain cancers and one lead diagnostic compound for in vivo imaging of
inflammation. Dyax intends to discover and develop additional leads and
anticipates that initial leads arising from internally funded programs will be
selected for therapeutic and diagnostic targets that are readily available

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in the public domain; however, the Company also intends to identify new leads
for therapeutic and diagnostic targets that it discovers or licenses from
others. Dyax further plans to pursue an internally funded program to use Phage
Display to identify and develop new targeting agents for in vivo imaging using
nuclear medicine.

Leverage Phage Display Through Collaborations: Dyax is leveraging its
proprietary technology in the fields of therapeutics, diagnostics and
separations by entering into discovery and development collaborative
arrangements with biotechnology, pharmaceutical and diagnostics companies. The
Company is currently engaged in four collaborative arrangements and is
performing or has completed more than nine funded lead discovery projects. Under
these arrangements, Dyax generally receives research funding and potential
future revenue upon commercialization of any resulting products. The Company
intends to enter into additional collaborative arrangements for new lead
discovery and preclinical and clinical evaluation of its current and future lead
therapeutic and diagnostic compounds, while potentially retaining product rights
by field or geographic area.

Continue to Develop and Market Innovative Separations Products: Dyax
believes that it is well positioned to meet the purification challenges of
complex therapeutic products such as proteins and vaccines. The Company intends
to leverage its existing Biotage chromatography product line through the
introduction of innovative affinity separations products designed to meet the
emerging needs of the combinatorial chemistry and genomics markets. Through
collaborative arrangements with pharmaceutical and biotechnology companies, Dyax
is using Phage Display to identify binding compounds, known as "affinity
ligands," that can potentially be used in products designed to purify quickly
and inexpensively therapeutics in commercial quantities. Dyax plans to develop
proprietary affinity separations products for purifying a customer's specific
compound and for separating classes of molecules that may be used by a number of
customers.

DYAX PROGRAMS AND PRODUCTS

Dyax's business activities consist of: (i) a patent licensing program; (ii)
discovery and development programs in therapeutics, in vivo imaging and other
diagnostics; and (iii) the manufacture and sale of its Biotage chromatography
products and systems and research and development of innovative separations
products. See "Risk Factors -- Dependence on Phage Display; New and Uncertain
Technology; No Clinical Trials or Sales of Phage Display-Derived Products to
Date."

Patent Licensing Program

The Company has established a broad licensing program of its Phage Display
patents for use in the fields of therapeutics, antibody-based in vitro
diagnostics and Phage Display research kits. Through this program, Dyax grants
companies and research institutes non-exclusive licenses to practice Dyax's
Phage Display patents in their discovery and development efforts in the licensed
fields. Since the inception of this licensing program in 1996, the Company has
licensed 30 licensees. Dyax believes that the success of its patent licensing
program provides support for its patent position in Phage Display and the
utility of Phage Display as an enabling discovery technology. Under these
licenses, Dyax has retained all rights to practice Phage Display in the fields
of separations and in vivo imaging.

The Company's license agreements generally provide for a signing fee,
annual maintenance fees, milestone payments based on successful product
development and royalties based on any future product sales. In addition, under
the terms of the Company's standard license agreement, the licensee covenants
not to sue the Company under certain of the licensee's Phage Display improvement
patents, if any, which the Company believes will give it greater freedom to
practice enhancements to Phage Display. To date, licensees have been offered
standardized payment terms or, for certain fields, the ability to choose from a
matrix of fees and royalties. The matrix generally ranges from lower signing and
maintenance fees with higher milestone payments and royalties to higher signing
and maintenance fees with lower milestone payments and royalties. The fees and
royalty rates under this program are subject to change from time to time. In the
case of Affymax Technologies, N.V. (and its parent, Glaxo Wellcome PLC), Dyax
negotiated a fully paid-up license. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

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The Company's licensees include Affymax Technologies, N.V. (and its parent,
Glaxo Wellcome PLC), Amersham Pharmacia Biotech, Biosite Diagnostics
Incorporated, Bristol-Myers Squibb Company, Cambridge Antibody Technology
Limited, Chiron Corporation, Chugai Biopharmaceuticals, Inc., Corvas
International, Inc., Cytogen Corporation, DuPont Merck Pharmaceutical Company,
Genzyme Corporation, IGEN International, Inc., Invitrogen Corp., Merck & Co.,
Inc., Millennium BioTherapeutics, Inc., Monsanto Company, MorphoSys GmbH, New
England BioLabs, Inc., Novagen, Inc., Pharmacia & Upjohn, Co., Praecis
Pharmaceuticals Inc., Prizm Pharmaceuticals, Inc., R.W. Johnson Pharmaceutical
Research Institute, Scios, Inc., Stratagene, Inc., Tera Biotechnology
Corporation, The Burnham Institute, The University of Texas Southwestern Medical
Center at Dallas, and Utrecht Biotechnology Systems B.V. The Company expects
that the number of its licensees will change from time to time.

Therapeutic and Diagnostic Discovery and Development Programs

Dyax is using Phage Display internally and through collaborative
arrangements to discover and develop therapeutic and diagnostic product
candidates. The following table summarizes the Company's therapeutic and
diagnostic discovery and development programs. This table is qualified in its
entirety by reference to the more detailed descriptions appearing elsewhere in
this Prospectus.

DYAX THERAPEUTIC AND DIAGNOSTIC PROGRAMS

<TABLE>
<CAPTION>
LEAD
DISEASE AREA/INDICATION COMPOUND STATUS COLLABORATOR
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<S> <C> <C> <C>
THERAPEUTICS:
Pulmonary Inflammation/Cystic Fibrosis EPI-HNE4 Preclinical(1) Debiopharm

Chronic Inflammation/Hereditary EPI-KAL2 Lead Genzyme(4)
Angioedema and Inflammatory Bowel Identified(2)
Disease

Cancer/Prostate Cancer EPI-PLA2 Lead --
Identified(2)
DIAGNOSTICS:
Inflammation/Infection EPI-HNE4 Preclinical(1) University of
Massachusetts
Medical Center
Pulmonary Disease/Deep Vein Thrombosis -- Discovery(3) EPIX Medical
and Pulmonary Embolism
</TABLE>

- ---------------
(1) "Preclinical" indicates efficacy and toxicology testing in vitro and in
animals and may include process development and manufacturing scale-up for
initial trials.

(2) "Lead Identified" indicates that a lead compound has been identified that
meets certain criteria, but which may need to be further evaluated or
modified before preclinical development, if any.

(3) "Discovery" indicates initial Phage Display screening or molecular design of
a group of compounds before a lead compound is identified.

(4) Subject to negotiation of definitive collaboration agreement. See "Certain
Transactions."

Therapeutics

The first step in the discovery and development of a therapeutic product is
generally the identification of a molecular target that is involved in a
disease. Once a target has been identified, the next step is typically a search
for a compound that will bind to this target to achieve a desired effect. This
time-consuming and costly step includes the screening of conventional libraries
of chemical compounds which can contain tens to

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hundreds of thousands of independent potential binding compounds and the
development of biological assays for evaluation of selected compounds. The cost
and time associated with traditional drug development limits the number of
potential drug candidates that can be evaluated. In addition, scientific
advances, such as genomics and related target discovery technologies, are
resulting in the identification of thousands of new therapeutic target
candidates. To take advantage of this increasing number of target candidates,
pharmaceutical and biotechnology companies are seeking more efficient methods
for target validation and identification of binding compounds that can lead to
new therapeutic products. Advances in combinatorial chemistry have increased
throughput of binding compound discovery compared to traditional discovery
methods, but the chemical synthesis of selected compounds still requires months
to years of expensive research.

Using Phage Display, the Company believes scientists can discover binding
compounds with high specificity and high affinity more rapidly than by
conventional and combinatorial chemistry approaches. Phage Display libraries of
up to hundreds of millions of potential binding compounds can be generated in a
few weeks. These libraries are thousands of times greater in size than those
that can be generated using, for example, combinatorial chemistry. Furthermore,
the protein framework of the Phage Display library can be selected or designed
to ensure that all compounds in a library have predetermined properties, such as
structure, size, stability and lack of immunogenicity. Scientists can then use
Phage Display to rapidly select groups of related proteins that bind to a
therapeutic target with high specificity and high affinity. The Company believes
that by analyzing binding compounds identified through Phage Display with the
Company's proprietary structure activity relationship ("SAR") technology, it
will be possible to accelerate the process of small molecule drug design. In
addition, Phage Display can be used in conjunction with genomics technologies to
provide high-throughput analysis and purification of new gene products for
validating novel therapeutic targets. See "-- Dyax Technology."

Dyax's current programs in therapeutic discovery and development are:

Inflammation. Inflammatory disorders occur when the immune system
overreacts to a perceived foreign substance. One aspect of this overreaction is
the activation of neutrophils and the release of neutrophil elastase, an enzyme
that digests proteins including bacterial and cellular debris. The unregulated
production of neutrophil elastase is thought to be the primary cause of tissue
damage and abnormal inflammatory response in disorders such as pulmonary
inflammation (cystic fibrosis, chronic bronchitis and emphysema), chronic
inflammation and acute inflammatory disorders (appendicitis and acute
respiratory distress syndrome). Another protease, plasma kallikrein, is elevated
at the inflammatory sites of rheumatoid arthritis and inflammatory bowel
disease. Plasma kallikrein is thought to contribute to the pathology of
rheumatoid arthritis both by activating an enzyme that degrades the collagen
matrix and by causing release of molecules that activate other inflammatory
cells. Similarly, activation of a localized inflammatory response by kallikrein
may contribute to the pathology of inflammatory bowel disease.

Using Phage Display, Dyax has discovered a proprietary lead compound,
EPI-HNE4, that binds to and inhibits human neutrophil elastase. EPI-HNE4 is
currently in preclinical development for the treatment of inflammation resulting
from cystic fibrosis, an inherited disorder characterized by pulmonary
inflammation that leads to abnormally thick mucus secretions which impair
pulmonary function and can result in fatal infections. Because EPI-HNE4 binds to
its target protease with high specificity and high affinity, the Company
believes that it will reduce the inflammatory response while not interfering
with other physiological processes. Additional indications for EPI-HNE4 may
include other causes of pulmonary inflammation and acute inflammatory disorders.
Dyax has entered into an agreement to develop EPI-HNE4 with Debiopharm S.A., a
Swiss pharmaceutical company ("Debiopharm"). See "-- Collaborations."

Using Phage Display, Dyax has also discovered EPI-KAL2, a proprietary lead
compound which binds to and inhibits plasma kallikrein. Like EPI-HNE4, EPI-KAL2
is a small, stable protein that can be delivered by injection. The Company
intends to work with academic investigators to test EPI-KAL2 in animal models of
chronic inflammatory disease including hereditary angioedema and inflammatory
bowel disease. In June 1998, the Company and Genzyme entered into a non-binding
letter of intent for the joint development and commercialization of EPI-KAL2 for
the treatment of chronic inflammatory diseases, with initial development to be
focused on inflammation resulting from hereditary angioedema. Subject to the
negotiation of a definitive

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<PAGE> 35

agreement, Dyax will initially fund up to several million dollars of development
costs and thereafter the parties will fund equally all development costs. Upon
signing the definitive collaboration agreement, Genzyme will extend to the
Company a line of credit which the Company may use to fund a portion of such
development costs or for any of the Company's other research and development
programs. In addition, the Company will be entitled to receive significant
milestone payments and up to 50% of the profits from sales of products developed
under this collaboration. The Company believes that the proposed collaboration
with Genzyme will provide Dyax with significant financial and other resources to
continue preclinical and clinical development of this proprietary compound,
although there can be no assurance that such an agreement will be consummated.
See "Certain Transactions." Genzyme has also committed to purchase $3.0 million
of the Company's Common Stock in the Genzyme Investment.

Dyax is using its SAR technology to design and synthesize an orally
available small molecule with the inhibitory capabilities of EPI-HNE4 and
intends to similarly design and synthesize a small molecule comparable to
EPI-KAL2. Orally available drugs are generally preferred for use in patients
with chronic inflammatory conditions compared to drugs delivered by inhalation
or injection. Dyax scientists have used the SAR data generated from EPI-HNE4 and
related binding compounds selected through Phage Display to design and
synthesize small molecule compounds that retain the neutrophil elastase
inhibitory activity of EPI-HNE4 and have affinities in the range of existing
therapeutic products. Dyax is continuing to design additional small molecule
compounds with the same inhibitory profile, aiming to achieve higher
specificity, higher affinity and potentially greater efficacy with fewer side
effects than existing treatments for inflammation.

Cancer. Cancer is characterized by uncontrolled cellular growth, which can
lead to death. Growth and metastasis of some cancers has been shown to be
dependent on the activity of the protease, plasmin. Using Phage Display, Dyax
has discovered EPI-PLA2, a potent and specific inhibitor of plasmin. Dyax is
evaluating EPI-PLA2 in cell-based models of prostate cancer metastasis in
collaboration with the M.D. Anderson Cancer Center at the University of Texas.
The Company also intends to evaluate EPI-PLA2 for treatment of other metastatic
cancers.

Other Therapeutic Discovery Programs. The Company is also planning to
pursue other therapeutic discovery programs. One such indication is multiple
sclerosis ("MS"), the primary neurodegenerative disease of young adults, which
is caused when the patient's immune system attacks the protective protein layer
that insulates neurons of the central nervous system. The research group of Dr.
Stephen Hauser, a leading investigator in MS at the University of California,
San Francisco, has identified a protease involved in the entry of immune system
components into the central nervous system, where they attack the neurons and
initiate an MS episode. Dyax recently entered into a consulting agreement with
Dr. Hauser to assist the Company in developing a program to use Phage Display to
discover and develop a potential treatment for MS. The Company intends to
identify other opportunities for therapeutic product discovery and development
using Phage Display.

Therapeutic Discovery Collaborations. The Company has also entered into
funded discovery collaborative arrangements with Athena Neurosciences, Inc.,
SangStat Medical Corporation and Tularik Inc. Generally, in these collaborative
arrangements, the Company screens its Phage Display libraries to identify
compounds that bind to a collaborative partner's therapeutic or diagnostic
targets of interest. Generally, if the collaborative partner chooses to continue
to develop the binding compound into therapeutic lead candidates, the Company
will be entitled to receive milestone payments and/or royalties on future
product sales based on the collaborative partner's successful development and
marketing of such leads as products.

Diagnostics

A diagnostic product generally consists of a detectable marker linked to a
binding compound with specificity and affinity for a molecular target, thereby
indicating the presence or absence of that target. The higher the specificity
and affinity of the binding compound used in a diagnostic product, the more
accurate and sensitive the test. In the case of in vivo diagnostic imaging to
detect certain disease conditions, it is also necessary to have a targeting
agent that will localize rapidly to the target tissue or organ after it is
administered to the patient.

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<PAGE> 36

For the past twenty years, the method of producing monoclonal antibodies
using the natural immune system of the mouse (hybridoma technology) has been the
best available means of supplying binding compounds for in vitro and in vivo
diagnostics. In this method, a desired target is selected and injected into a
mouse, which produces antibodies. The mouse antibody-producing cells are then
isolated and propagated outside the animal. However, using hybridoma technology
for the discovery and development of antibody products has inherent limitations,
such as time, the inability to utilize certain types of targets (including those
which are toxic or nonimmunogenic to the animal) and the inability to control
specificity of antibodies produced in the mouse. As targeting agents for in vivo
imaging, mouse antibodies have additional limitations, including long clearance
times and slow penetration to the disease foci requiring 24 to 48 hours of
hospitalization after injection before a useful image can be obtained and
immunogenicity that limits the number of times a patient can be safely imaged
with any mouse antibodies.

For in vivo diagnostic imaging products, Dyax believes that Phage Display
will enable the identification of binding compounds that are smaller in size and
have higher specificity and affinity and greater bioavailability than mouse
monoclonal antibodies, and that these compounds will be more effective
diagnostic imaging agents that will permit more accurate and, in some cases,
earlier diagnosis of disease. For in vitro diagnostic applications, the most
immediate opportunity is the use of Phage Display as a source of monoclonal
antibody reagents. Phage Display can be used to display large collections of
human antibodies. The Company believes that Phage Display allows more rapid
identification of antibodies and other binding compounds than hybridoma
technology and could potentially replace animals as a source of antibodies for
diagnostic and research applications. Phage Display libraries can be screened in
high throughput formats so that antibodies that bind to any diagnostic target
can be isolated cost-effectively in a few weeks, compared to the six to nine
months required to immunize, isolate and propagate antibody-producing cells from
mice.

Dyax's current programs for the discovery and development of in vivo
diagnostics are:

Inflammation/Infection Imaging. Disease indications that are likely
candidates for inflammation-infection imaging include inflammatory bowel
disease, fever of unknown origin, arthritis, certain autoimmune disorders and
pulmonary diseases. The Company believes that there is a need for an imaging
agent that can provide early and accurate identification of both sterile and
infectious inflammatory sites in vivo and that there are no sensitive, specific
products for rapid diagnosis of these disorders currently available. The most
common tools currently available for locating inflammation are time-consuming,
inaccurate and/or expensive. Dyax is evaluating a modified form of EPI-HNE4 in
preclinical studies as a diagnostic imaging agent for sites of inflammation
(including infection) in collaboration with scientists at the University of
Massachusetts Medical Center. Preclinical development of EPI-HNE4 as an agent
for imaging inflammation has been supported by a Phase I Small Business
Innovation Research grant from the National Institutes of Health. The imaging
agent being developed by Dyax consists of EPI-HNE4 as the targeting portion with
technetium-99 as the detectable marker.

Cardiovascular Imaging. Disease indications that are likely candidates for
cardiovascular imaging include deep vein thrombosis ("DVT") and pulmonary
embolism ("PE"). DVT is caused by the formation of a fibrous blood clot in the
veins of the lower limbs. PE results when a DVT clot breaks loose and travels to
the lungs, where it can block blood flow. Dyax is collaborating with EPIX
Medical Inc. ("EPIX") using Phage Display to identify binding compounds for a
molecular component of fibrous blood clots which could be used in an imaging
agent for DVT and PE. Under the collaborative arrangement, Dyax has identified a
group of potential binding compounds. The product under development with EPIX
will be based on a novel labeling chemistry that increases the sensitivity of an
image generated using magnetic resonance imaging ("MRI"). EPIX plans to develop
the identified binding compounds for use in MRI, while Dyax has retained the
right to develop these compounds for use in nuclear medicine imaging. See
"-- Collaborations."

Other In Vivo Diagnostic Programs: Dyax intends to evaluate additional
Phage Display-derived binding compounds for use in in vivo diagnostic imaging.
These compounds may be discovered through internally funded programs or may be
licensed from other sources. For example, the Company recently signed an
agreement with The Burnham Institute ("Burnham"), one of the Company's patent
licensees, to evaluate for use in in vivo diagnostic imaging Phage
Display-derived binding compounds discovered at Burnham's. Under

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<PAGE> 37

the terms of this agreement, the Company has the exclusive right to evaluate all
of these binding compounds and the option to license them exclusively for in
vivo diagnostic imaging.

Biotage Separations Products and Research and Affinity Separations Development
Programs

Purification of a therapeutic product is a complex, multi-step process,
which can account for over 50% of a product's manufacturing costs. A widely used
separations technology, chromatography, is used to purify the desired product or
to remove impurities from the production mixture during the discovery,
development and manufacturing of a therapeutic product. Chromatography is a
technology that separates molecules in a liquid mixture using differential
adsorption of molecules. In this technology, molecules pass through a chamber,
or column, packed with separations media. The migration rates of different
molecules through the column vary due to differences in the strength of binding
interactions with the media in the column. In conventional chromatography,
separations are based on broad physical properties such as size, charge or
hydrophobicity, and the types of available, standard chromatography media has
changed little in recent years. Chromatographic separations are achieved by
selection of the surface chemistry of the media and the solvent composition such
that different molecules exit the column at different times and therefore can be
collected and/or detected in purified form. For a given separation, the
available media generally has unpredictable specificity and there has been no
practical way to modify the existing materials to create specific binding to a
particular target. Thus, the development of useful separation processes relies
on trial and error and is time consuming and labor intensive.

The Company believes that Phage Display is a powerful tool for developing
new affinity separations media that can cost effectively and efficiently purify
increasingly complex therapeutic products. In affinity chromatography, a ligand
that binds with high specificity and high affinity to either the desired
compound or a specific class of impurities to be removed is attached to the
media. When the desired compound is captured on the affinity media, impurities
are washed away. By changing the solvent conditions, the desired compound can be
released from the media resulting in a product that is (in most cases) at higher
concentration than in the original mixture. Alternatively, a specific class of
impurities is captured on the media to allow the desired product to flow through
in a purified form. Phage Display can be used to generate small, stable ligands
that have high specificity and high affinity for the desired compound or
impurity. Since affinity chromatography can purify the desired compound in one
column, one such affinity chromatography column can replace multiple
conventional chromatography columns which otherwise would be required. Dyax has
developed compounds that bind and release in predetermined conditions, such as
those conditions that can be used for process-scale separations. The Company
believes that these new affinity separations products can reduce the time, cost
and risk associated with pharmaceutical purification at the discovery,
development and production scale. Dyax plans to combine its Biotage
chromatography systems with any affinity chromatography media that may be
derived through Phage Display to provide system solutions for the purification
of natural products, peptides, proteins, organic compounds and other molecules.
See "Risk Factors -- Limited Revenues to Date from Separations Products; Need to
Develop New Separations Products."

Biotage Separations Products

Dyax develops, manufactures and sells chromatography separations systems
and is a leader in the development, manufacture and sale of cartridge
chromatography products and systems, which it sells under the Biotage trade
name. The Company's prepacked, disposable cartridges can be packed with a wide
range of media from a variety of sources. The Company believes that its
cartridge-based systems provide competitive advantages to its customers compared
to manually packed systems, including greater speed and convenience, lower cost,
improved safety (no exposure of production personnel to media) and reproducible
performance leading to significant cost savings due to reduction of labor and
decreased solvent usage. The Company has sold its current line of Biotage
chromatography products and systems to over 50 leading pharmaceutical and
biotechnology companies worldwide, including Bachem AG, Bayer Corporation,
Genentech, Inc., F. Hoffmann-La Roche, Ltd., Merck & Co., Inc., Novartis,
Pfizer, Inc., Pharmacia & Upjohn Co. and Wyeth-Ayerst Laboratories, Inc. (a
subsidiary of American Home Products Corporation).

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<PAGE> 38

The following are the Company's principal chromatography products:

FLASH Chromatography Systems and Cartridges: FLASH systems are
designed to efficiently and cost effectively purify a single chemical
compound from a complex synthetic mixture. The FLASH systems range in price
from $2,500 for discovery and development scale systems to over $100,000
for production scale systems. The manufacturing scale systems can replace
other processes, including chromatography using large glass or steel
columns or batch adsorption and filtration using larger tanks and filters.
The FLASH systems include radial compression modules that are designed to
enhance performance by stabilizing the media and increasing flow rates. The
Company believes that the FLASH product line, which was introduced by the
Company in 1994, is the only commercially available line of prepacked
disposable cartridges for separations from the discovery scale to the
manufacturing scale.

Parallex Parallel Purification System: Dyax's automated Parallex
system is a high throughput, high-resolution chromatography workstation
designed for the combinatorial chemistry market. The integrated system
includes four independent high pressure liquid chromatography ("HPLC")
columns, bar-coded sample input and intelligent fraction collection based
on analysis of the compounds as they emerge from the columns using a
proprietary four-channel, dual wavelength UV detector. HPLC technology is
widely used in the pharmaceutical industry, particularly for purification
of synthetic organic molecules, synthetic peptides, oligonucleotides and
natural products. Information is tracked and stored using the Company's
proprietary software that can interface with commercially available central
data management systems. Up to 900 samples can be run and purified
automatically in a 24-hour period. To the Company's knowledge, there is
currently no similar product available for this emerging market that can
integrate the data from several hundred samples per day at comparable
efficiency. The list prices for the Parallex systems, which were introduced
by the Company in 1997, range from $190,000 to over $240,000.

Kiloprep Systems and Cartridges: The Company's Kiloprep systems are
high resolution chromatography systems that use prepacked HPLC cartridges
and radial compression technology for discovery, development and
manufacturing scale purifications. Kiloprep HPLC systems work with a
variety of solvents, include advanced automation features and provide
documentation and validation for current GMP regulatory environments.
Manufacturing scale Kiloprep systems are built to individual customer
specifications. By contrast, competing process-scale HPLC systems rely on
prepacked stainless steel columns or user-packed HPLC columns. Kiloprep
cartridges are used exclusively in the Kiloprep system for purifications
from the milligram to the kilogram scale. The list prices for the Kiloprep
systems, which were introduced by the Company in 1990, range from $50,000
for laboratory systems to over $300,000 for custom ordered manufacturing
scale systems.

ProPrep Chromatography Systems: The Company's ProPrep systems are
customized to meet the requirements of development and manufacturing scale
chromatography applications for cGMP production of biologics. The Company
believes that, compared to other commercially available systems, the
ProPrep line provides a superior turn-key, highly engineered system with
superior gradient performance and an "explosion proof" design that allows
the system to be used in a hazardous manufacturing plant environment. These
systems will be used to support the new BioFLASH prepacked chromatography
cartridges described below. The Company also plans to improve overall
purification performance of any new affinity separations media that
incorporate binding compounds discovered through Phage Display by using the
ProPrep hardware and software technology platforms. The prices for ProPrep
systems, which were introduced by the Company in 1993, range from $150,000
to over $500,000.

BioFLASH Prepacked Cartridges and Systems: The Company's BioFLASH
cartridges, which are expected to be introduced in the second half of 1998,
will consist of prepacked, disposable cartridges containing media
specifically designed for separations of biological materials. Virtually
any chromatography media for separating biological material can be packed
in these cartridges. This product line, which is derived from the Company's
FLASH chromatography systems for traditional chemical separations, is
designed to allow operation of the BioFLASH cartridges in a stand alone or
radially compressed format. The Company believes that BioFLASH cartridges
and systems will have competitive advantages over

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existing products for development and manufacturing scale because they
provide reproducible performance, higher pressure ratings (i.e., faster,
higher resolution separations) and reduced cross-contamination and
sterilization capability for virtually any bioseparation that is currently
carried out in a glass or stainless steel column. The Company plans to use
the BioFLASH product line as the platform for its Phage Display-derived
affinity separations products under development.

Affinity Separations Development Programs

Dyax is using Phage Display to develop new affinity separations products
which it believes will be more effective than conventional separations
technologies. The Company has established a collaborative arrangement with Novo
Nordisk to use Phage Display to develop new tools for the rapid evaluation of
certain of Novo Nordisk's therapeutic candidates. Dyax has several funded
discovery projects with different companies, including Argonex, Inc., Genetics
Institute, Inc., Genzyme Transgenics Corporation, Glaxo Research and Development
Limited, Merck & Co., Inc. and Pall Corporation. These projects seek to identify
one or more potential binding compounds that can be attached to media for
development into affinity separations products for purification of the
collaborative partner's designated therapeutic product. To date, Dyax has
discovered affinity ligands for such products as a viral vaccine, tissue
plasminogen activator, a recombinant blood product and transgenic animal and
plant products. Under certain of these programs, the Company has delivered
affinity separations products containing Phage Display-derived affinity ligands
for testing and evaluation. Further, in one of these programs, the partner has
agreed to proceed with the development of the affinity ligand for use in
purification of a biotherapeutic product. The Company is continuing to seek
collaborative partners in the discovery and development of affinity separations
products.

In addition to its custom-designed affinity separations products program,
Dyax is developing proprietary affinity separations products, including products
under development in a collaborative arrangement with CropTech for broad
commercial applications. The Company believes that these products will have
applications in research as well as in the process and manufacturing markets. To
date, none of the Company's affinity separations products have been used for
commercial scale manufacturing and there can be no assurance that such products
or other products developed in the future, if any, will be used for commercial
scale manufacturing. See "-- Collaborations."

DYAX TECHNOLOGY

Phage Display

Phage Display is used to select proteins that bind to a target of interest.
The selection is made from a diverse set of up to hundreds of millions of
proteins displayed on the surface of a bacterial virus, bacteriophage, known
commonly as "phage." The Company's Phage Display process generally consists of:
(i) generating a large collection of phage, known as a "library," that contains
genes encoding up to hundreds of millions of related proteins, or potential
binding compounds, (ii) screening the library by exposing it to a specified
target and isolating those phage whose displayed proteins bind to the target;
and (iii) analyzing the selected binding compounds by sequencing their genes and
by producing and characterizing small quantities for relative specificity and
affinity to the target.

Generating a Phage Display Library. The generation of a Phage Display
library is based upon a single protein framework and contains up to hundreds of
millions of variations of this protein. The first step in generating a library
is the selection of the protein framework upon which the library will be
created. This selection is based on desired product properties, such as
structure, size, stability, or lack of immunogenicity. Scientists then determine
which amino acids in the framework will be varied. Amino acids that contribute
to the chosen framework properties are not varied. The exact number and type of
different amino acids that are varied is also controlled, so that the resulting
Phage Display library consists of a diverse set of chemical entities, each of
which retains the desired physical and chemical properties of the original
framework.

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<PAGE> 40

GENERATING A PHAGE DISPLAY LIBRARY

[GENERATION OF A PHAGE DISPLAY LIBRARY]
The next step is the creation of a collection of genes encoding the
designed variations of the framework protein. Scientists can easily generate
diverse collections of up to hundreds of millions of different synthetic DNA
sequences. Each new DNA sequence, or gene, encodes a single protein sequence
that will be displayed on the surface of the individual phage that contain this
gene. The new DNA sequences are combined with phage genome DNA and certain
enzymes so that the new DNA is inserted into a specific location of the phage
genome, such that the encoded protein will be displayed on the phage surface as
a fusion to one of the existing (naturally occurring) phage proteins. The phage
is a physical link between the displayed protein and its gene.

The new phage genomes are then transferred into laboratory bacteria, where
the phage genome directs the bacterial cells to produce thousands of copies of
each new phage. The resulting collection of phage is the Phage Display library.
Because the Phage Display library can be reproduced by infecting a new culture
of laboratory bacteria to produce thousands more copies of each phage, libraries
can be maintained for a potentially unlimited number of screenings.

In addition to the creation of synthetic DNA sequences for a Phage Display
library, scientists can also use naturally occurring genes, such as genomic DNA
(all genes in an organism) or cDNA (sequences that represent all the expressed
genes in a cell or organism) as sources of the genes for a library. For example,
Phage Display libraries of human antibodies can be used to isolate monoclonal
antibodies in a significantly shorter period of time than required for existing
hybridoma technology.

Screening Phage Display Libraries. Once a Phage Display library is
generated, scientists can select binding compounds with high specificity and
high affinity by exposing the library to specified targets of interest and
isolating the phage that display compounds that bind to the target. For certain
applications of Phage Display, such as separations, scientists can design the
binding and release conditions into the selection. Each individual phage
contains the gene encoding one potential binding compound, and when its
displayed protein is selected in the screening procedure, it can be retrieved
and amplified by growth in laboratory bacteria.

To screen a Phage Display library, the library is exposed to the target
under desired binding conditions. The target is normally attached to a fixed
surface, such as the bottom of a tube, or a bead, allowing phage whose potential
binding compounds do not bind to the target to be removed. Once these unbound
phage are washed away, the phage containing the selected binding compounds can
be released from the target. Since the phage are still viable, they can be
amplified rapidly by again infecting bacteria. This property of ready
amplification is unique to biological systems. Binding compounds identified
during the first round of selection generally include some that bind to the
target molecule with varying degrees of specificity and affinity.

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<PAGE> 41

Therefore, the amplified phage are again exposed to the target molecule in
another round of screening, to enrich for those phage whose displayed binding
compounds have the desired specificity and affinity. The procedure is repeated
several times until a group of related binding compounds with the desired
characteristics can be identified.

SCREENING A PHAGE DISPLAY LIBRARY

[SCREENING OF A PHAGE DISPLAY LIBRARY]
Evaluation of Selected Binding Compounds. Screening Phage Display
libraries generally results in the identification of one or more groups of
related binding compounds. These groups of compounds are valuable in providing
information about which chemical features are necessary for binding to the
target with specificity and affinity, as well as which features can be altered
without affecting binding. Using DNA sequencing, scientists can determine the
amino acid sequences of the binding compounds and identify the essential
components of desired binding properties by comparing similarities and
differences in such sequences. If desired, the binding compounds can be further
optimized by building additional Phage Display libraries based on these key
components and repeating this process. Small amounts of the binding compound can
be produced by growing and purifying the phage. For production of larger
amounts, the gene can be removed from the phage DNA and placed into a standard
recombinant protein expression system. Alternatively, if the identified binding
compound is sufficiently small, it can be chemically synthesized. These binding
compounds can be evaluated for desired properties including affinity,
specificity and stability under conditions that will be encountered in its
intended use. From each group of compounds, a lead compound with the best
properties can be identified and developed and tested as a therapeutic,
diagnostic or affinity separations product.

Other Technologies

Structure Activity Relationship Technology. The SAR information obtained
from the group of Phage Display-derived binding compounds can be used to
initiate small molecule drug design. The framework selected or designed to
generate a Phage Display library can be structured so that the amino acids that
interact with the target during binding are from a small, structurally
constrained region of the protein framework. Selection of binding compounds from
such Phage Display libraries does not yield a single result, but rather a group
of closely related variants of the framework protein that bind to the target.
Dyax believes that its proprietary SAR technology, including molecular modeling
and computational chemistry capabilities, can be used for the discovery of small
molecules that are potentially orally available drug candidates. Traditionally,
structure-based rational drug design has relied on determination of the three
dimensional structure of the therapeutic target, which requires large quantities
of purified material. In contrast, Dyax's SAR approach does

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not require structural information regarding the target molecule. Small molecule
drug candidates are instead designed using information derived from the group of
binding compounds selected through Phage Display, and can be performed with a
part of the target or with impure preparations of the whole target. The
structured peptide and small protein binding compounds discovered through Phage
Display are less complex and substantially more accessible to three-dimensional
structural determination through nuclear magnetic resonance and X-ray
crystallography methods than most therapeutic targets. Dyax has used this
strategy to design small molecule neutrophil elastase binding compounds that
have demonstrated the desired inhibitory activity in in vitro assays. See
"-- Dyax Programs and Products -- Therapeutic and Diagnostic Discovery and
Development Programs -- Therapeutics."

Subtractive Antibody Screening. Subtractive antibody screening ("SAS") is
a differential screening technology that identifies genes encoding cell surface
or secreted proteins that are expressed in one cell type (target cell type),
such as a diseased tissue type and not in another cell type (subtractive cell
type). Most therapeutic targets for which drugs exist today are either cell
surface or secreted proteins, which are more accessible to drugs. Dyax has
licensed exclusive rights to SAS technology developed by the Whitehead Institute
for Biomedical Research at the Massachusetts Institute of Technology and
Massachusetts General Hospital. Scientists using the SAS technology first
isolate the cell surface or secreted proteins from the target cell type. These
proteins are injected into an animal to generate antibodies. The antibodies that
recognize proteins from a subtractive cell type, such as a normal tissue type,
are removed. The remaining antibodies will bind to proteins that are unique to
the target cell or tissue type. The genes encoding protein products which react
with the remaining antibodies can be cloned using existing cDNA expression
cloning techniques. Dyax scientists plan to use SAS to identify novel accessible
target proteins. Dyax intends to use targets identified through SAS to screen
its Phage Display libraries to discover binding compounds that could be leads
for therapeutic and diagnostic products. In the event that the Company
successfully commercializes one or more therapeutic products that bind to
proteins identified using the SAS technology resulting in agreed upon product
sales milestones, the Company will be obligated under the license agreement to
pay to MIT up to approximately $1.7 million in milestone payments and license
fees for each such product.

COLLABORATIONS

To date, the Company has received a significant portion of its revenue from
its corporate collaborative partnerships and funded discovery projects and the
Company expects that it will continue to rely on several collaborative partners
to fund different product development efforts and new research and development
efforts for the foreseeable future.

Therapeutics and Diagnostics

Dyax is leveraging its Phage Display in therapeutics and diagnostics
through discovery and development collaborative arrangements with biotechnology,
pharmaceutical and diagnostics companies. Currently, the Company has two
corporate collaborative partnerships (under which Dyax and its partner each have
on-going development rights and/or obligations) and three funded discovery
projects (under which Dyax's obligation, absent further agreement, is limited to
conducting a discovery project and Dyax is entitled to milestone and royalty
payments if the other party proceeds with development) for applications of its
Phage Display technology. The Company's principal ongoing therapeutic and
diagnostic corporate collaborative partnerships are:

Debiopharm. In March 1997, Dyax entered into a Research and Development
Agreement with Debiopharm for the clinical development of the Company's
neutrophil elastase inhibitors, including EPI-HNE4. Under the terms of the
agreement, Debiopharm will undertake at its own expense the development and
production of EPI-HNE4 for the treatment of inflammation resulting from cystic
fibrosis and other chronic pulmonary inflammatory disorders, in exchange for an
option to obtain an exclusive commercial license for therapeutic uses of
EPI-HNE4 in the European market. This option is exercisable by Debiopharm at no
additional cost until March 2000, subject to extension. Dyax has the right to
use the regulatory information, including preclinical, clinical and
manufacturing data, generated by Debiopharm and retained all rights to develop
and produce EPI-HNE4 in all other fields and territories. If Debiopharm
exercises the option, the Company is entitled to receive a royalty on revenues
received by Debiopharm from the use or sale in the European market of
therapeutic products developed using such information. In the event the Company
chooses to use information owned solely by Debiopharm for therapeutic uses of
EPI-HNE4, the
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Company will be obligated to pay to Debiopharm a royalty on revenues received by
the Company from the use or sale of products outside Europe.

EPIX. In June 1997, Dyax entered into a Collaboration Agreement with EPIX
pursuant to which EPIX agreed to fund a research program in which the Company
will use Phage Display to identify peptides for use in thrombi imaging
applications. EPIX and Dyax agreed, following the completion of the research
program, to jointly identify and develop compounds that specifically target
pulmonary embolism and deep vein thrombosis for use in MRI and nuclear medicine
in vivo imaging agents used to diagnose these disorders. EPIX will be
responsible for the development of, and will have exclusive commercial rights
to, imaging agents developed for the MRI field and the Company will be
responsible for the development of, and will have the exclusive commercial
rights to, imaging agents for the nuclear medicine field. If any products are
successfully developed under the agreement, the Company is entitled to receive
royalties from sales of MRI products and EPIX is entitled to receive royalties
from any sales of nuclear medicine products. EPIX may terminate the agreement
during the Research Program, and either EPIX or the Company may terminate the
agreement after the completion of the Research Program, upon three months' prior
notice. Unless sooner terminated, the EPIX agreement terminates with respect to
the covered products on a country by country basis 15 years after the first
commercial sale of such products in each country.

Discovery Projects. In addition to the two corporate collaborative
partnerships described above, the Company has also entered into funded discovery
projects with Athena Neurosciences, Inc., SangStat Medical Corporation and
Tularik Inc. Generally, the Company screens its Phage Display libraries to
identify compounds which bind to a collaborative partner's therapeutic or
diagnostic targets of interest. In addition, if the collaborative partner
chooses to continue to develop the binding compound into therapeutic leads, then
the Company will be entitled to receive milestone payments and/or royalties on
product sales based on the collaborative partner's successful development and
marketing of leads as products.

Separations

Dyax is also leveraging its Phage Display in the field of separations to
develop novel affinity separations technologies and products. In this field, the
Company has two corporate collaborative partnerships and several funded
discovery projects.

Novo Nordisk. Also in March 1997, the Company and Novo Nordisk A/S
established a two-year collaboration to use the Company's Phage Display
technology to develop new tools for the rapid purification and evaluation of
certain of Novo Nordisk's therapeutic candidates. During such period the Company
expects to perform agreed upon research in this field in exchange for funding
from Novo Nordisk in an amount equal to the cost of one full-time scientist.
Novo Nordisk has the right to develop further any purification tools identified
by Dyax in its therapeutic development programs, and if Novo Nordisk does so,
the Company will be entitled to receive license and product-development
milestones in the future.

CropTech. In October 1997, in connection with a $4.3 million Advanced
Technology Program grant from the National Institute of Standards and
Technology, CropTech Development Corporation ("CropTech") and Dyax entered into
a four-year Joint Collaboration Agreement to develop novel technologies for the
production and separation of large volume protein products, therapeutic
glycoproteins and bioactive peptides. Under the agreement, CropTech agreed to
use its transgenic plant technology to develop novel expression systems for
these therapeutic products and Dyax agreed to use Phage Display to develop
affinity separations systems for use in purifying the protein and peptide
products.

Discovery Projects. Typically, in the funded discovery projects, the
corporate sponsors have agreed to fund the Company to use Phage Display to
discover affinity ligands for evaluation in the purification and separations
processes of the sponsor's pharmaceutical product candidates. These sponsors,
which include Argonex, Genetics Institute, Genzyme Transgenics, Glaxo Research
and Development Limited, Merck and Pall, generally fund the Company's costs of
identifying and testing a custom affinity ligand and are obligated to make a
milestone payment upon the successful evaluation of the ligand. Upon completion
of the discovery phase, the sponsor generally has the option to expand the
project to a development phase and/or to negotiate a license agreement for the
commercial use of the affinity ligand in conjunction with a media to purify the
sponsor's product, although no product has yet reached this stage. The Company's
discovery phase projects to

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date have included discovery of affinity ligands for such products as a viral
vaccine, tissue plasminogen activator, a recombinant blood product and
transgenic animal and plant products.

The Company's collaborative arrangements are generally subject to
termination on prior written notice from the collaborative partner. One
collaborative arrangement was terminated in 1998. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations." In addition,
there can be no assurance that the Company will be able to negotiate
collaborative arrangements on acceptable terms in the future, if at all, or that
the Company's current or future collaborative arrangements will be successful
and provide the Company with the anticipated benefits, or that current or future
collaborative partners will not pursue or develop alternative technologies or
products. See "Risk Factors -- Dependence on Collaborations and Licensing."

COMPETITION

The industries in which the Company competes are characterized by intense
competition and rapid technological change. New developments occur and are
expected to continue to occur at a rapid pace, and there can be no assurance
that discoveries or commercial developments by the Company's competitors will
not render some or all of the Company's technologies or potential products
obsolete or non-competitive, which would have a material adverse effect on the
Company's business, financial condition and results of operations.

The Company's Phage Display technology is one of several technologies
available to generate libraries of compounds which can be used to discover and
develop new products. Other technologies used by the pharmaceutical, diagnostics
and biotechnology industries to identify molecules which bind to a desired
target include high throughput screening of chemical and natural products and
combinatorial chemistry. Further, the Company licenses other parties in the
fields of therapeutic and antibody-based in vitro diagnostic products on a
non-exclusive basis under its Phage Display patent portfolio, and, therefore,
its licensees may compete with the Company in the development of specific
therapeutic and diagnostic products.

The Company's therapeutic and in vivo diagnostic compounds under
development are expected to address one or more indications in the therapeutic
or diagnostic markets. The Company will face significant competition in these
markets. Also, several companies are using conventional antibody technology and
other means to identify products for use as imaging agents, which may compete
with any future imaging products of the Company. Although Dyax's goal is to
focus its development efforts on selected disease markets in which it believes
there is an unmet need, there can be no assurance that others will not have
competing products in development or on the market or that the Company will be
able to successfully develop such products.

Chromatography is only one of several types (e.g.,centrifugation,
filtration, etc.) of separations processes used in the manufacture of
therapeutic products. Dyax will continue to face intense competition from other
suppliers of separations products. The principal competitors in the Company's
target markets include Amersham Pharmacia Biotech, Millipore Corporation, E.
Merck AG, Bio-Rad Laboratories Inc., BioSepra, Inc. and Waters Corporation. In
addition, many pharmaceutical companies have historically assembled their own
chromatography systems. The Company is not aware of any major competitor in the
prepacked disposable cartridge market where its FLASH cartridges are marketed
and for which BioFLASH is targeted. Three former employees of the Company's
Biotage label products group have established their own chromatography business,
which is the subject of a lawsuit initiated by the Company alleging
misappropriation of trade secrets. Although the Company has been able to launch
and sell chromatography products in desired niche markets to date, the continued
success of these products will depend upon customer acceptance, price and
proprietary position, as well as the successful introduction of new products.
The Company's strategy for its custom affinity separations products is to retain
all proprietary rights to its Phage Display intellectual property for the
separations field and to retain all rights to any affinity ligands it develops.
There can be no assurance that others will not be able to use conventional or
combinatorial chemistry approaches, or develop new technology, to identify
binding molecules for use in separating and purifying products, including
molecules which may compete with the Company's affinity ligands. See "Risk
Factors -- Intense Competition; Technological Obsolescence."

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PATENTS AND PROPRIETARY RIGHTS

The Company's success will be significantly dependent upon its ability to
obtain patent protection for its products and technologies under development, to
defend its issued patents, including patents related to Phage Display,
biotechnology and separations products, and to avoid the infringement of patents
issued to others. The Company's policy generally is to file for patent
protection on new methods and technology useful for the display of binding
molecules, new therapeutic, diagnostic and separation product candidates
identified through Phage Display, and new chromatography separation methods.

Patent positions are complex in the fields of biotechnology, therapeutic
and diagnostic products and separation processes and products. In order for the
Company to commercialize a process or product, many patent rights of other
parties may need to be analyzed and often several licenses may be required. The
Company is aware of certain patents for which it will likely need to obtain
licenses to commercialize its products and technologies. While the Company
believes that it will be able to obtain such licenses, there can be no assurance
that such licenses, or licenses to other patent rights, will be available on
reasonable terms, if at all. In addition, from time to time the Company receives
notices of patents which may cover its product development activities as well as
any future product commercialization. For example, the Company recently received
a letter from Ixsys, Inc. advising of Ixsys's belief that the Company's Phage
Display technology falls within the scope of U.S. patent number 5,723,323 (the
"5,723,323 Patent") issued in March 1998, which includes a claim to invention of
an isolated, diverse population of peptides, polypeptides or proteins comprising
greater than 100,000 different stochastic amino acid sequences encoded by
stochastic polynucleotide sequences. In their letter Ixsys offered terms for the
Company to obtain a non-exclusive license under the 5,723,323 Patent and related
patent rights. The Company is in the process of evaluating these patent rights
and the license offer. Based on advice of counsel, however, the Company believes
that the materials and methods currently employed by the Company, including its
practice of Phage Display, are not covered by the 5,723,323 Patent. If the
Company decides not to seek a license or does not otherwise obtain the offered
license to the 5,723,323 Patent, or if licenses are not available to any other
patents that may be required for its activities, there can be no assurance that
the Company will not become subject to infringement claims or other legal
proceedings, which could result in substantial legal expenses over time. Since
the scope of any such legal proceedings is not known, the Company is unable to
predict the outcome of such proceedings or the likely effect of such proceedings
on the Company's operations.

Dyax's proprietary position in the field of phage display is based upon its
patent rights, technology, proprietary information, trade secrets and know-how.
Dyax's patents and patent applications for its Phage Display include U.S. Patent
Nos. 5,571,698, 5,403,484 and 5,223,409, EPO Patent No. 436,597, two allowed or
pending U.S. patent applications, and 15 allowed or pending foreign patent
applications (the "Phage Display Patent Rights"). These Phage Display Patent
Rights contain claims covering inventions in the field of the surface display of
proteins and certain other peptides, including surface display on bacteriophage.

In addition to the Phage Display Patent Rights, Dyax has filed for patent
protection on certain of the proteins and peptides it has identified using Phage
Display. Dyax recently was issued U.S. Patent No. 5,666,143 covering sequences
of peptides which have neutrophil elastase inhibitory activity, including the
sequence for EPI-HNE4, which is in preclinical testing as a therapeutic and
imaging agent. The Company also has pending applications covering plasmin
kallikrein and plasmin peptide inhibitors, as well as peptide compounds which
can be used in the separation and purification of specific biopharmaceuticals.

Although the Company is not aware of any legal challenges to the Phage
Display Patent Rights to date in the United States, there can be no assurance
that a challenge will not be brought in the future. The Company plans to protect
its patent rights, including the Phage Display Patent Rights, to the maximum
practical extent. There can be no assurance that the Company will have
sufficient resources necessary to defend its patent rights against any such
challenges. However, if the Company commences legal action against an alleged
infringer of any of the Company's patent rights, the alleged infringer can be
expected to claim that the Company's patent rights are invalid for one or more
reasons, thus subjecting the Company's patent rights to a judicial determination
of validity with the attendant risk that an adverse determination could result
in the loss of the patent rights. In addition, in certain situations, an alleged
infringer could seek a declaratory judgment of

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invalidity of the Company's patents. Uncertainties resulting from the initiation
and continuation of any patent or related litigation, including those involving
the Company's Phage Display patents, could have a material adverse effect on the
Company's ability to maintain and expand its licensing program and collaborative
arrangements and to compete in the marketplace pending resolution of the
disputed matter. See "Risk Factors -- Uncertainties Related to Patents and
Proprietary Rights."

The Phage Display Patent Rights are central to the Company's non-exclusive
patent licensing program. The Company offers non-exclusive licenses under the
Phage Display Patent Rights to companies and non-profit institutes in the field
of therapeutics, antibody-based in vitro diagnostics and Phage Display research
products. To date, Dyax has licensed its Phage Display Patent Rights to more
than 25 companies. Dyax has retained the exclusive rights, and does not intend
to broadly license others, in the fields of in vivo diagnostic products and
separations. In connection with the licensing program, the Company regularly
monitors publications and other sources for information regarding the practice
by others of technology covered by the Phage Display Patent Rights. The Company
believes that there are unlicensed parties whose activities may be covered by
its issued patents. In such circumstances, the Company generally seeks to
negotiate a Phage Display license agreement. There can be no assurance, however,
that the Company will be able to identify all parties practicing the Phage
Display Patent Rights, all products derived by such parties, including its
licensees, or that the Company will be successful in entering into license
agreements with parties that the Company believes require such a license. In
jurisdictions where the Company has not applied for or obtained patent rights,
the Company will be unable to prevent others from developing or selling products
or technologies derived using Phage Display. In addition, in jurisdictions where
the Company has Phage Display Patent Rights, there can be no assurance that the
Company will be able to prevent others from selling or importing products or
technologies derived using Phage Display. The inability of the Company to
protect and enforce its patent rights, whether by licensing or otherwise, could
have a material adverse effect on the Company's business, financial condition
and results of operations.

The Company is aware that other parties have patents and pending
applications to various phage display inventions. The Company has filed, and in
the future may file, oppositions to European and other patents issued to others.
To date, the Company has filed oppositions against two European patents in the
general field of phage display. The Company does not believe these European
patents cover any of its present activities, but the Company cannot predict
whether the claims in these patents may, in their current or future form, cover
the Company's activities or the activities of its collaborative partners and
licensees. In addition, through its patent licensing program, the Company has
secured a limited freedom to practice some of these patent rights pursuant to
its standard license agreement, which contains a covenant by the licensee that
it will not sue the Company under certain of the licensee's phage display
improvement patents. The Company may from time to time seek affirmative rights
of license or ownership under existing patent rights relating to phage display
technology of others. There can be no assurance, however, that the Company will
be successful in maintaining the existing covenants of nonsuit from its
licensees, or in acquiring similar covenants in the future, or that the Company
will be able to obtain satisfactory licenses. The inability of the Company to
obtain and maintain such licenses and covenants could have a material adverse
effect on the Company's business, financial condition and results of operations.

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To protect its existing and future chromatography separations products, the
Company relies primarily upon trade secrets and know-how, as well as the
experience and skill of its technical personnel. The Company also has several
patents and patent applications on its proprietary chromatography technology
which are not based on Phage Display, but it cannot predict the extent to which
any such patents or future patents will provide protection for its existing and
new separations products. See "Risk Factors -- Limited Revenues to Date from
Separations Products; Need to Develop New Separations Products."

In all of its activities, the Company places substantial reliance on
proprietary materials and information, trade secrets and know-how to conduct its
research and development activities and to attract and retain collaborative
partners, licensees and customers. Although the Company takes steps to protect
these materials and information, including through the use of confidentiality
and other agreements with its employees, consultants and academic and commercial
relationships, there can be no assurance that these steps will be adequate, that
these agreements will not be violated, that there will be an available or
sufficient remedy for any such violation or that others will not also develop
similar proprietary information. See "Risk Factors -- Uncertainties Related to
Patents and Proprietary Rights."

GOVERNMENT REGULATION

The production and marketing of any of the Company's future therapeutic or
diagnostic products will be subject to numerous governmental laws and
regulations on safety, effectiveness and quality, both in the United States and
in other countries where the products are intended to be sold. In addition, the
Company's research and development activities in the United States are subject
to various health and safety, employment and other laws and regulations.
Although the Company believes that it is in substantial compliance with all
applicable federal, state, local and foreign legal requirements, there can be no
assurance that government authorities will agree that the Company is in
compliance with all laws, that such requirements will not be changed or that new
requirements will not be adopted, any one of which could have a material adverse
effect on the Company's business, financial condition and results of operations.

United States FDA Approval

In the United States, products intended for in vitro diagnostic use and in
vivo diagnostic and therapeutic use in humans are subject to rigorous FDA
regulation. In addition, products intended for use in the manufacture of these
products, such as separations equipment, are subject to certain FDA manufacture
and quality standards.

The steps required before a new pharmaceutical or in vivo diagnostic
product can be sold in the United States include: (i) preclinical tests; (ii)
submission of an Investigative New Drug Application to the FDA which must become
effective before initial human clinical testing can begin; (iii) human clinical
trials to establish safety and effectiveness of the product, which normally
occurs in three Phases monitored by the FDA; (iv) submission and approval by the
FDA of a New Drug or Biologics License Application; and (v) compliance with the
FDA's GMP regulations and facility and equipment validation and inspection. The
requirements for testing and approval for in vitro diagnostic products may be
somewhat less onerous than for pharmaceutical products, but similar steps are
required. The Company cannot make any assurances that its therapeutic or
diagnostic product candidates, such as its neutrophil elastase inhibitor
EPI-HNE4, or the products of its partners and licensees, will be able to
successfully complete the FDA-required testing and approvals.

Certain of the Company's separations products are intended for use in the
manufacturing processes of clinical grade and commercial grade therapeutic and
diagnostic products. These separations products, therefore, are required to be
manufactured and delivered in accordance with certain GMP requirements, and
other applicable rules and regulations, and further may require the customer to
comply with certain quality and inspection regulations prior to use. The Company
has not yet produced any separations products under GMP conditions. There can be
no assurance that the Company or its customers will be successful in complying
with FDA and other regulations to permit the full clinical and commercial use of
the Company's separations products.

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Foreign Regulatory Approval

Many countries outside the United States require the testing and marketing
of pharmaceutical and diagnostic products to be approved by governmental
authorities similar to the FDA. The approval procedures vary from country to
country. In the European Community (the "EC") for example, two different
approval procedures may apply to the products of the Company and its partners
and licensees: a centralized procedure which is mandatory for certain
biotechnology products and available as an approval option for certain other
products; and a decentralized procedure which requires approval by a regulatory
agency in each EC member state. Additionally, national laws of EC member states
govern clinical trials, manufacturing procedures, advertising and promotion and
pricing and reimbursement. Exporting of unapproved products to foreign countries
for testing, approval, or marketing is subject to United States law and that of
the importing country, and may require FDA approval.

Other Regulation

In addition to the laws and regulations which apply to the development,
manufacture and sale of the Company's products, the Company's operations are
subject to numerous federal, state and local laws and regulations. The research
and development activities of the Company involve the controlled use, storage,
handling and disposal of hazardous materials, chemicals and radioactive
compounds and, as a result, the Company is required to comply with regulations
and standards of the Occupational Safety and Health Act, Nuclear Regulatory
Commission, and other safety and environmental laws. Although the Company
believes that its activities currently comply with all applicable laws and
regulations, the risk of accidental contamination or injury cannot be completely
eliminated. In the event of such an accident, the Company could be held liable
for any damages that result, which could have a material adverse affect on the
Company's business, financial condition and results of operations.

MANUFACTURING

The Company manufactures and sells chromatography systems and cartridges.
Components for chromatography systems are manufactured to the Company's
specifications by subcontractors. For certain prepacked cartridges, the Company
purchases commercial media which it repacks and sells in disposable cartridges.
A small number of components of the Company's chromatography systems are
currently purchased from single sources. However, the Company believes that
alternative sources for these components are readily available, if necessary,
and that it will be able to enter into acceptable agreements to obtain these
components from such alternate sources at similar costs with only a temporary
disruption or delay in production.

For its new affinity separations products, the Company plans to supply
separations media containing Phage Display-derived affinity ligands directly to
customers and collaborative partners, and may from time to time license a third
party to supply its own requirements. For those affinity separations products
which are sold by the Company for use in a customer's or collaborative partner's
clinical or commercial manufacturing processes, the products will need to be
manufactured under GMP conditions. The Company has not yet established a
facility to manufacture affinity separations products under GMP conditions, and
there can be no assurance that the Company will be able to do so by the time
such facility is needed. The Company is currently contracting the production of
affinity ligands from manufacturers who have GMP facilities; however, should
this situation change, the Company's inability to obtain these components could
have a material adverse effect on its business, financial condition or results
of operations.

In addition, the Company currently plans to rely on third party
manufacturers for production of its therapeutic lead candidates under
development. There can be no assurance that such third parties will be able to
successfully complete on behalf of the Company the required preclinical studies,
clinical development, regulatory approval, manufacturing and marketing of any
such therapeutic products. See "-- Government Regulation."

SALES AND MARKETING

For the therapeutic, in vivo diagnostic and in vitro diagnostic products
which result from its research and development efforts, Dyax primarily plans to
commercialize such products through licensing, marketing, distribution and other
arrangements with pharmaceutical and diagnostic companies. If the Company
decides
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to market and sell any such product directly, Dyax does not expect to establish
direct sales capability until such time as one or more therapeutic or diagnostic
products in development obtain regulatory approval and are ready to be
commercialized.

The Biotage separations business has a sales and marketing group of 18
people in the United States and Europe. Outside of the United States and certain
European countries, the Company sells these products through distributors. As
new products are introduced and the market for the Biotage label products grows,
the Company anticipates increasing its direct marketing and sales capacity.

For the custom affinity separations products business, Dyax has ongoing
marketing efforts to develop new collaborative arrangements. For other affinity
ligand products that the Company may develop outside of a collaborative
arrangement, the Company plans to market and sell the ligands, either as
stand-alone products or integrated with separations media and equipment, through
a combination of direct sales, distributors and other marketing arrangements.

To the extent that the Company establishes a direct sales capability for
therapeutic or diagnostic products, or undertakes to expand its marketing and
sales capabilities for the separations business, there can be no assurance that
such efforts will be successful. Further, the Company's ability to sustain and
grow the sales of separation products under the Biotage label is dependent upon
its ability to retain and attract qualified marketing and sales staff, which
cannot be assured. See "Risk Factors -- Dependence on Expansion of Operations
and Management of Growth."

FACILITIES

The Company currently leases and occupies 22,500 square feet of laboratory
and office space in Cambridge, Massachusetts, as well as 20,000 square feet of
manufacturing and office space in Charlottesville, Virginia. The leases for the
Cambridge facilities expire in December 1999 and the lease for the
Charlottesville facility expires in April 2002. Dyax also leases approximately
4,000 square feet of office space in the United Kingdom to support marketing
efforts for its Biotage label products. The Company believes that its current
space is adequate for its needs through 1999 and that it will be able to obtain
additional space, as needed, on commercially reasonable terms.

EMPLOYEES

Dyax had 89 employees on June 15, 1998, including 26 employees with Ph.D's.
Of the Company's employees, 28 were employed in research and development in
Cambridge, Massachusetts and 24 were employed in development and manufacture of
chromatography separations products and systems in Charlottesville, Virginia.
None of the Company's employees is represented by a collective bargaining
agreement and the Company believes that its relations with its employees are
good.

LEGAL PROCEEDINGS

The Company is a party to patent oppositions in the European Patent Office.
The Company is not a party in any other material legal proceedings. See
"-- Patents and Proprietary Rights" and "-- Competition."

YEAR 2000

The Company is aware of the issues that many computer systems will face as
the millennium ("Year 2000") approaches. The Company has installed Year 2000
compliant software in many of its major systems. The cost of the effort to
complete this activity for the balance of the Company's systems is not expected
to be material. The Company believes that the Year 2000 issue will not pose
significant operational problems. However, Year 2000 issues could have a
significant impact on the Company's business, financial condition and results of
operations if modifications cannot be completed on a timely basis, unforeseen
needs or problems arise, or if the systems operated by suppliers, collaborative
partners or licensees are not Year 2000 compliant.

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STRATEGIC AND SCIENTIFIC ADVISORS

Dyax has a Strategic Advisory Committee as well as scientific advisory
boards for the therapeutics, diagnostics and separations research programs.
Members of the Strategic Advisory Committee meet with the Company's management
on a quarterly basis and, like the members of the scientific advisory boards,
are available to the Company's management and scientific staff on an as-needed
basis for consultation in their respective areas of expertise. All of the
advisors are employed by and/or have consulting arrangements with other entities
and are expected to devote only a small portion of their time to the Company. No
advisor is employed by the Company. Advisors' other commitments to or consulting
or advisory contracts with their employers or other entities may conflict or
compete with their obligations to the Company.

The Company's advisors are paid an annual retainer for attending meetings,
reimbursed for their expenses and have been granted options to purchase Common
Stock under the Company's Amended and Restated 1995 Equity Incentive Plan. The
Company has entered into consulting agreements with a number of the Scientific
Advisory Board members. The agreements generally are subject to termination by
either party with advance notice.

<TABLE>
<CAPTION>
NAME PROFESSIONAL AFFILIATION ADVISOR SINCE
---- ------------------------ -------------
<S> <C> <C>
STRATEGIC ADVISORS

Charles L. Cooney, Ph.D......... Professor, Department of Chemical and 1992
Biochemical Engineering and Executive
Officer, Department of Chemical Engineering,
Massachusetts Institute of Technology.
Peter Feinstein................. Chairman, Feinstein Kean Partners Inc. and 1997
Kendall Strategies Inc.
James W. Fordyce................ General Partner, Prince Ventures LP, and 1997
President, Albert and Mary Lasker Foundation.
John G. Gorman, M.D............. Director, Blood Bank and Professor of 1998
Pathology, New York University School of
Medicine.
Harvey F. Lodish, Ph.D.......... Professor of Biology, Massachusetts Institute 1997
of Technology and Member, Whitehead Institute
for Biomedical Research.
William A. Scott, Ph.D.......... President and Chief Executive Officer, 1997
Physiome Sciences, Inc., and previously
Senior Vice President of Exploratory and Drug
Discovery Research, Bristol-Myers Squibb
Pharmaceutical Research Institute.
Thomas P. Stossel, M.D.......... American Cancer Society Professor of 1995
Medicine, Harvard Medical School, and Senior
Physician, Hematology-Oncology Division,
Brigham and Women's Hospital.
Henri A. Termeer................ Chairman, President and Chief Executive 1997
Officer, Genzyme Corporation.
Christopher T. Walsh, Ph.D...... Hamilton Kuhn Professor, Department of 1997
Biological Chemistry and Molecular
Pharmacology, Harvard Medical School.
George M. Whitesides, Ph.D...... Mallinckrodt Professor of Chemistry, Harvard 1995
University.
Peter Wirth, Esq................ Executive Vice President and Chief Legal 1997
Officer, Genzyme Corporation.
</TABLE>

49
<PAGE> 51

<TABLE>
<CAPTION>
NAME PROFESSIONAL AFFILIATION ADVISOR SINCE
---- ------------------------ -------------
<S> <C> <C>
SCIENTIFIC ADVISORS -- THERAPEUTICS AND DIAGNOSTICS

Thomas J. Brady, M.D............ Director, Nuclear MRI Center, Massachusetts 1996
General Hospital; Professor of Radiology,
Harvard Medical School.
Alan J. Fischman, M.D., Ph.D.... Director, Nuclear Medicine Massachusetts 1998
General Hospital
Leonard Guarente, Ph.D.......... Professor of Biology, Massachusetts Institute 1995
of Technology.
Jordan Gutterman, M.D........... Virginia Cockrell Professor of Medicine, 1996
University of Texas, M.D. Anderson Cancer
Center.
Phillip W. Robbins, Ph.D........ Professor of Biochemistry, Massachusetts 1995
Institute of Technology.
Thomas M. Roberts, Ph.D......... Chair, Department of Cancer Biology at Dana 1995
Farber Cancer Institute; Chair, Division of
Medical Sciences and Professor of Pathology,
Harvard Medical School.
H. William Strauss, M.D......... Chief, Division of Nuclear Medicine, Stanford 1998
University.
Ralph Weissleder, M.D.. Ph.D.... Director, Center for Molecular Imaging 1998
Research, Massachusetts General Hospital
Andrew Wright, Ph.D............. Professor of Microbiology, Tufts University 1995
Medical School.

SCIENTIFIC ADVISORS -- SEPARATIONS

Stuart E. Builder, Ph.D......... Consultant, and formerly Staff Scientist, 1996
Strategic Development, Genentech Inc.
Hubert Koster, Ph.D............. Professor of Chemistry and Biochemistry, 1997
University of Hamburg; President and Chief
Executive Officer, Sequenom, Inc.
Jack Johanssen, Ph.D............ President and CEO, Boston Probes, Inc. 1997
Irving W. Wainer, Ph.D.......... Professor of Pharmacology, Georgetown 1996
University Medical Center; Director,
Georgetown University Bioanalytical Center.
</TABLE>

50
<PAGE> 52

MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company, as of June 1, 1998,
are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>

Henry E. Blair.................................. 54 Chairman of the Board, President and Chief
Executive Officer

L. Edward Cannon, Ph.D.......................... 51 Executive Vice President, President,
Therapeutic and Diagnostic Division and
Director

Robert A. Dishman, Ph.D......................... 54 Executive Vice President, President,
Separations Division and Director

Keith S. Ehrlich................................ 47 Senior Vice President, Finance and
Administration, and Chief Financial Officer

Robert Charles Ladner, Ph.D..................... 54 Senior Vice President and Chief Science
Officer

Constantine E. Anagnostopoulos, Ph.D.(1)........ 75 Director

James W. Fordyce(1)(2).......................... 55 Director

Thomas L. Kempner(2)............................ 70 Director

Henry R. Lewis, Ph.D.(1)(2)..................... 72 Director
</TABLE>

- ---------------
(1) Member of Compensation Committee
(2) Member of Audit Committee

HENRY E. BLAIR. Mr. Blair has served as the Chairman of the Board and
President of the Company since the acquisition of PEC by the Company in August
1995 and as acting Chief Executive Officer from August 1995 until his
appointment as Chief Executive Officer in April 1997. He also served as a
director and officer of the Company since its formation in 1989. Mr. Blair is
also a director of and consultant to Genzyme Corporation, a company he
co-founded in 1981. Mr. Blair also co-founded Biocode, Inc. and GelTex
Pharmaceuticals, Inc. In addition, he is a director of Celtrix Pharmaceuticals,
Inc. and Genzyme Transgenics Corporation and a member of the Board of Overseers
at each of the Tufts University School of Medicine and the Lahey Hitchcock
Clinic.

L. EDWARD CANNON, PH.D. Dr. Cannon has served as Executive Vice President
of the Company and President of the Therapeutics and Diagnostics Division. He
was Chief Executive Officer and held other senior management roles at PEC from
October 1992 to August 1995 and has been a director of the Company since the
merger of PEC with the Company. Dr. Cannon founded Hygeia Sciences, Inc. in 1980
and served as Chief Scientific Officer and Senior Vice President from 1986 to
1991.

ROBERT A. DISHMAN, PH.D. Dr. Dishman has served as Executive Vice
President of the Company and President of the Separations Division since the
merger of PEC with the Company and as a director since April 1994. He was
President and Chief Executive Officer of the Company from April 1994 until
August 1995. Prior to April 1994, Dr. Dishman co-founded and served as Chief
Executive Officer of the predecessor of ArQule Inc. and served as Executive Vice
President and Chief Operating Officer of Sepracor, Inc. Dr. Dishman also served
as President of Millipore's MilliGen (BioScience) Division, which he founded,
and Vice President, Business, Development and Marketing, of Millipore's Waters
Chromatography Division.

KEITH S. EHRLICH. Mr. Ehrlich joined the Company in January 1998 as Senior
Vice President, Finance and Administration, Chief Financial Officer and
Treasurer. From October 1993 to January 1998, he served as Vice President,
Finance and Administration, and Chief Financial Officer of Oravax, Inc. From May
1991 to October 1993, he served as Treasurer and Director of Finance of Vertex
Pharmaceutics, Inc. Previously, Mr. Ehrlich was a senior audit manager of
Coopers & Lybrand L.L.P.

ROBERT CHARLES LADNER, PH.D. Dr. Ladner joined the Company as Senior Vice
President and Chief Science Officer in August 1995. He was a co-founder of PEC
where he served as Senior Vice President and

51
<PAGE> 53

Scientific Director from 1987 until its merger with the Company. Previously, Dr.
Ladner served as Senior Scientist of Genex Corp., where he was an inventor of
single chain antibodies.

CONSTANTINE E. ANAGNOSTOPOULOS, PH.D. Dr. Anagnostopoulos has been a
director of the Company since 1991. He is a Managing General Partner of Gateway
Associates L.P., a venture capital management firm which is the general partner
of Gateway Venture Partners II and Gateway Venture Partners III. Dr.
Anagnostopoulos has been a corporate officer of Monsanto Company. He is a
director of Genzyme Corporation.

JAMES W. FORDYCE. Mr. Fordyce has been a director of the Company since
August 1995. Since 1981, he has served as a general partner of Prince Ventures
Partners LP, a venture capital management firm, and its affiliated partnerships.
Prince Venture Partners IV is a venture capital limited partnership, managed by
Prince Ventures LP, which specializes in early stage investments in companies
involved in the medical and life science areas. He is also President of the
Albert and Mary Lasker Foundation.

THOMAS L. KEMPNER. Mr. Kempner has been a director of the Company since
August 1995 and previously was a director of PEC. Mr. Kempner is the Chairman
and Chief Executive Officer of Loeb Partners Corporation, an investment banking,
registered broker/dealer and registered investment advisory firm. He is also
President of Pinpoint Partners Corporation, the general partner of the Loeb
Investment Partnerships. Mr. Kempner is also a director of Alcide Corporation,
CCC Information Services Group, Inc., Energy Research Corporation, IGENE
BioTechnology, Inc., Intermagnetics General Corporation and Roper Starch
Worldwide, Inc.

HENRY R. LEWIS, PH.D. Dr. Lewis has been a director of the Company since
August 1995 and previously was a director of PEC. Mr. Lewis is a consultant to
several companies. From 1986 to February 1991, Mr. Lewis was the Vice Chairman
of the Board of Directors of Dennison Manufacturing Company, a manufacturer and
distributor of products for the stationery, technical paper and industrial and
retail systems markets. From 1982 to 1986, Mr. Lewis was a Senior Vice President
of Dennison Manufacturing Company. Mr. Lewis is a director of Genzyme
Corporation.

BOARD OF DIRECTORS

The Company's Restated Certificate of Incorporation provides for a
classified board of directors consisting of three classes, with each class being
as nearly equal in number as possible. The term of one class expires and their
successors are elected for a term of three years at each annual meeting of the
Company's stockholders. The Company has designated three Class I directors (Mr.
Blair and Drs. Cannon and Dishman), two Class II directors (Messrs. Fordyce and
Kempner) and two Class III directors (Drs. Anagnostopoulos and Lewis). These
Class I, Class II and Class III directors will serve until the annual meeting of
stockholders to be held in 1999, 2000 and 2001, respectively, and until their
respective successors are duly elected and qualified, or until their earlier
resignation or removal. The Certificate provides that directors may be removed
only for cause by a majority of stockholders. See "Description of Capital
Stock -- Anti-Takeover Measures." There are no family relationships among any of
the directors or executive officers.

BOARD COMMITTEES

The Company has standing Audit and Compensation Committees of the Board of
Directors. The Audit Committee consists of Messrs. Fordyce and Kempner and Dr.
Lewis. The primary function of the Audit Committee is to assist the Board of
Directors in the discharge of its duties and responsibilities by providing the
Board with an independent review of the financial health of the Company and of
the reliability of the Company's financial controls and financial reporting
systems. The Audit Committee reviews the general scope of the Company's annual
audit, the fee charged by the Company's independent accountants and other
matters relating to internal control systems.

The Compensation Committee of the Board of Directors determines the
compensation to be paid to all executive officers of the Company, including the
Chief Executive Officer. The primary function of the

52
<PAGE> 54

Compensation Committee is to administer the Company's Amended and Restated 1995
Equity Incentive Plan. The Compensation Committee consists of Mr. Fordyce and
Drs. Anagnostopoulos and Lewis.

DIRECTOR COMPENSATION

Directors who are also employees of the Company do not receive additional
compensation for their services as directors. After the completion of this
Offering, each non-employee director will be paid $12,000 per year as
compensation for services as a director. Non-employee directors who serve as a
chairman of a committee of the Board of Directors will be paid an additional
$3,000 per year.

Any non-employee director is also eligible to receive stock options granted
under the Company's Amended and Restated 1995 Equity Incentive Plan. In January
1998, each non-employee director of the Company was granted an option to
purchase 19,560 shares of Common Stock at an exercise price of $4.60 per share.
Such options vest and become exercisable with respect to 6,520 shares on each of
(i) the date of grant; (ii) the earlier of the next annual meeting of
stockholders or the one-year anniversary of the date of grant; and (iii) the
date one year after the last vesting date.

EXECUTIVE COMPENSATION

Summary Compensation Table. The following table sets forth certain
compensation information for the Chief Executive Officer of the Company and the
three other executive officers of the Company whose salary and bonus for the
fiscal year ended December 31, 1997 exceeded $100,000 (together, the "Named
Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL LONG-TERM
COMPENSATION COMPENSATION
--------------- ------------
AWARDS
------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION SALARY(1) OPTIONS COMPENSATION(2)
--------------------------- --------------- ------------ ---------------
<S> <C> <C> <C>
Henry E. Blair(3)................................ $202,500 48,900 $668
President and Chief Executive Officer
Robert A. Dishman, Ph.D. ........................ 200,000 39,120 668
Executive Vice President
L. Edward Cannon, Ph.D. ......................... 160,000 39,120 668
Executive Vice President
Robert Charles Ladner, Ph.D. .................... 160,000 39,120 668
Senior Vice President and Chief Science Officer
</TABLE>

- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission (the
"Commission"), other compensation in the form of perquisites and other
personal benefits has been omitted in those instances where the aggregate
amount of such perquisites and other personal benefits constituted less than
the lesser of $50,000 or 10% of the total amount of annual salary and bonus
for the executive officer for the year ended December 31, 1997. No bonuses
were paid for services rendered during the year ended December 31, 1997.

(2) Represents the group term life insurance premiums paid by the Company for
each of the Named Executive Officers.

(3) On March 30, 1997, Mr. Blair was granted a restricted stock award pursuant
to which he purchased 114,100 shares of Common Stock at a purchase price of
$0.77 per share. These shares vest over 48 substantially equal monthly
installments commencing on the first day of the month following the date of
grant. The value of the restricted stock award is based on the fair market
value of the Common Stock on the date of grant as determined by the Board of
Directors ($0.77 per share) less the purchase price paid by Mr. Blair ($0.77
per share). As of December 31, 1997, Mr. Blair held an aggregate of 92,706
shares of unvested restricted stock, then valued at $72,917. There was no
public trading market for the Common Stock as of December 31, 1997. This
value was determined by multiplying the fair market value of the Common
Stock most recently determined by the Board of Directors ($1.53 per share)
before that date by the number of unvested shares held and subtracting the
aggregate purchase price paid for such shares. No dividends were paid in
1997 on the outstanding shares of restricted stock.

In January 1998, Mr. Ehrlich joined the Company as Senior Vice President,
Finance and Administration, Chief Financial Officer and Treasurer. Pursuant to
his employment agreement with the Company, Mr. Ehrlich

53
<PAGE> 55

receives an annual salary of $165,000 and is eligible to receive a bonus of
$50,000. Mr. Ehrlich was granted an option to purchase 91,280 shares of Common
Stock, 22,820 of which vest in full six months after the date of commencement of
his employment and 68,460 of which vest in 48 substantially equal monthly
installments commencing on the date of his employment.

For additional information regarding compensation, see "-- Employment
Agreements."

Option Grants. The following table sets forth certain information
regarding options granted by the Company to the Named Executive Officers during
the fiscal year ended December 31, 1997:

OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
--------------------------------------------------------- VALUE AT ASSUMED
NUMBER OF PERCENT OF TOTAL ANNUAL RATES OF STOCK
SHARES OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO EXERCISE OPTION TERM(4)
OPTIONS EMPLOYEES IN PRICE PER EXPIRATION -----------------------
NAME GRANTED(1) FISCAL YEAR(2) SHARE(3) DATE 5% 10%
---- ------------- ---------------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Henry E. Blair................ 48,900 7.8% $1.53 10/30/07 $438,818 $737,113
Robert A. Dishman, Ph.D....... 39,120 6.2 1.53 10/30/07 351,054 589,690
L. Edward Cannon, Ph.D ....... 39,120 6.2 1.53 10/30/07 351,054 589,690
Robert Charles Ladner,
Ph.D........................ 39,120 6.2 1.53 10/30/07 351,054 589,690
</TABLE>

- ---------------
(1) Options were granted under the Amended and Restated 1995 Equity Incentive
Plan and become exercisable generally in 48 equal monthly installments
commencing on the first day of each calendar month following the date of
grant, subject to continued employment with the Company.

(2) Based on an aggregate of 629,067 options granted by the Company in the year
ended December 31, 1997 to employees of and consultants to the Company,
including the Named Executive Officers.

(3) The exercise price is equal to the fair market value of the Common Stock on
the date of grant as determined by the Board of Directors.

(4) Amounts represent hypothetical gains for the respective options if exercised
at the end of the option term. There was no public trading market for the
Common Stock as of December 31, 1997. Accordingly, these values have been
calculated based on the assumed initial public offering price of $6.50 per
share. These gains are based on assumed rates of stock price appreciation of
5% and 10% compounded annually from the date that the respective options
were granted until their expiration date. These assumptions are not intended
to forecast future appreciation of the Company's stock price. The potential
realizable value computation does not take into account federal or state
income tax consequences or option exercises of appreciated stock.

Option Exercises and Year-End Values. The following table sets forth
certain information concerning exercisable and unexercisable stock options held
by the Named Executive Officers as of December 31, 1997:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES

<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
FISCAL YEAR-END FISCAL YEAR-END(1)
SHARES ACQUIRED VALUE ----------------------------- -----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- --------------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Henry E. Blair............. 9,253 $ 57,298 2,037 / 46,855 $ 10,116 / $ 232,682
Robert A. Dishman,
Ph.D. ................... 64,044 394,626 397 / 56,158 2,459 / 301,794
L. Edward Cannon, Ph.D. ... -- -- 64,442 / 56,157 397,089 / 301,789
Robert Charles Ladner,
Ph.D. ................... 19,489 119,695 9,778 / 45,700 59,555 / 237,028
</TABLE>

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

(1) There was no public trading market for the Common Stock as of December 31,
1997. Accordingly, pursuant to the rules of the Commission, these values
have been calculated based on an assumed initial public offering price of
$6.50 per share less the aggregate exercise price.

54
<PAGE> 56

EMPLOYMENT AGREEMENTS

The only executive officers of Dyax with employment agreements are Dr.
Dishman, Dr. Ladner and Mr. Ehrlich.

Under the terms of Dr. Dishman's employment agreement dated February 18,
1998, he is entitled to an annual base salary of not less than $200,000. If Dr.
Dishman's employment is terminated without cause, the Company is required to pay
to Dr. Dishman severance payments at his annual base salary rate for six months,
which shall be extended for up to an additional six months if he does not obtain
comparable employment (subject to reduction for any amounts earned during such
period), and all unvested stock options held by Dr. Dishman shall be
accelerated. In addition, the Company granted Dr. Dishman a restricted stock
award to purchase 78,240 shares of Common Stock at a price of $4.60 per share
(the "Restricted Stock Award"). Upon the purchase of the entire Restricted Stock
Award and the exercise in full of an accelerated option granted in 1997 to
purchase 39,120 shares of Common Stock (the "1997 Option"), the Company agreed
to loan to Dr. Dishman an aggregate of $453,600 pursuant to two promissory notes
in the amounts of $360,000 and $93,600 (the "Notes"), respectively. The Notes,
which are each secured by a corresponding pledge of the shares of Common Stock
purchased under the Restricted Stock Award and received upon exercise of the
1997 Option, respectively, are payable in four years, subject to acceleration
and become due (i) immediately if Dr. Dishman's employment is terminated other
than by the Company without cause or (ii) on the second anniversary of the date
of issuance if the Company completes an initial public offering or is sold. As
long as Dr. Dishman remains employed by the Company, the Company shall forgive
all interest accrued on the notes annually or through the date of any earlier
termination of employment.

Under the terms of Dr. Ladner's employment agreement, Dr. Ladner is
entitled to an annual base salary of not less than $125,000. If Dr. Ladner's
employment is terminated without cause, the Company is required to pay to Dr.
Ladner severance payments at his annual base salary rate for 12 months and 50%
of his unvested stock options shall be accelerated. This employment agreement
terminates in August 1998.

Under the terms of Mr. Ehrlich's employment agreement, if Mr. Ehrlich's
employment is terminated without cause or if his position and responsibilities
are adversely affected as a result of a change in control (as defined in the
employment agreement), the Company is required to pay to Mr. Ehrlich six months
severance, all of his unvested stock options shall be accelerated and the
exercise period for all vested options shall be extended for an additional three
years after termination.

STOCK PLANS

Amended and Restated 1995 Equity Incentive Plan. The Company's 1995 Equity
Incentive Plan was adopted in August 1995 and amended and restated in January
1998 (as amended and restated, the "Equity Plan"). The Equity Plan is designed
to provide the Company flexibility in awarding equity incentives by providing
for multiple types of incentives that may be awarded. The purpose of the Equity
Plan is to attract and retain key employees of and consultants to the Company
and to enable them to participate in the long-term growth of the Company. The
Equity Plan provides for the grant of stock options (incentive and
nonstatutory), stock appreciation rights, performance shares, restricted stock
or stock units for the purchase of an aggregate of 2,184,200 shares of Common
Stock, subject to adjustment for stock splits and similar capital changes.
Awards under the Equity Plan can be granted to officers, employees and other
individuals as determined by the Compensation Committee of the Board of
Directors, each of whose members is a "non-employee director" within the meaning
of Rule 16b-3 under the Securities Act. The Compensation Committee selects the
participants and establishes the terms and conditions of each option or other
equity right granted under the Equity Plan, including the exercise price, the
number of shares subject to options or other equity rights and the time at which
such options become exercisable. The exercise price of all "incentive stock
options" within the meaning of Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code"), granted under the Equity Plan must be at least equal to
100% of the fair market value of the option shares on the date of grant. The
term of any incentive stock option granted under the Equity Plan may not exceed
ten years.

55
<PAGE> 57

As of March 31, 1998, options to purchase an aggregate of 1,391,684 shares
of Common Stock had been granted under the Equity Plan. Options to purchase
237,715 shares were exercised as of such date and options to purchase 36,123
shares had been cancelled. Of the options to purchase an aggregate of 1,117,846
shares of Common Stock that were outstanding as of such date, options to
purchase 278,833 shares were exercisable. As of March 31, 1998, awards to
purchase 192,340 shares of Restricted Common Stock had been granted under the
Equity Plan. See "-- Executive Compensation." Except as set forth above, no
other awards have been granted under the Equity Plan.

1998 Employee Stock Purchase Plan. In January 1998, the Company adopted
the Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") under
which employees may purchase shares of Common Stock at a discount from fair
market value. There are 97,800 shares of Common Stock reserved for issuance
under the Purchase Plan. To date, no shares of Common Stock have been issued
under the Purchase Plan. The Purchase Plan is intended to qualify as an employee
stock purchase plan within the meaning of Section 423 of the Code. Rights to
purchase Common Stock under the Purchase Plan are granted at the discretion of
the Compensation Committee, which determines the frequency and duration of
individual offerings under the Purchase Plan and the dates when stock may be
purchased. Eligible employees participate voluntarily and may withdraw from any
offering at any time before stock is purchased. Participation terminates
automatically upon termination of employment. The purchase price per share of
Common Stock in an offering is 85% of the lesser of its fair market value at the
beginning of the offering period or on the applicable exercise date and may be
paid through payroll deductions, periodic lump sum payments or a combination of
both. The Purchase Plan terminates on January 30, 2008.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The Compensation Committee is responsible for determining salaries,
incentives and other forms of compensation for directors, officers and other
employees of the Company. The Compensation Committee also administers various
incentive compensation and benefit plans. See "Management -- Stock Plans." The
Compensation Committee currently consists of Drs. Anagnostopoulos and Lewis and
Mr. Fordyce. See "Principal Stockholders" and "Certain Transactions."

56
<PAGE> 58

CERTAIN TRANSACTIONS

Pursuant to the voting rights of the holders of the Company's Class A
Convertible Preferred Stock contained in the Company's Restated Certificate of
Incorporation, Mr. Fordyce was elected to the Company's Board of Directors in
August 1995. These voting rights will terminate upon the completion of this
Offering following the automatic conversion of all outstanding shares of Class A
Convertible Preferred Stock into shares of Common Stock.

Since August 1995, the Company has issued and sold 8,944,043 shares of
Class A Convertible Preferred Stock convertible into an aggregate of 5,831,516
shares of Common Stock.

Dr. Anagnostopoulos, a director of the Company, is a general partner of
Gateway Associates, L.P., the general partner of Gateway Venture Partners, a
stockholder of the Company. In August 1995, the Company issued to Gateway
Venture Partners III, L.P. an aggregate of 191,409 shares of Class A Series 1
Convertible Preferred Stock pursuant to a recapitalization of the Company. Also
in August 1995, the Company issued and sold to Gateway Venture Partners III,
L.P. an aggregate of 150,000 shares of Class A Series 3 Convertible Preferred
Stock at a purchase price of $2.00 per share. In October 1996, the Company
issued and sold to Gateway Venture Partners III, L.P. an aggregate of 75,000
shares of Class A Series 4 Convertible Preferred Stock at a purchase price of
$3.13 per share. Pursuant to the Company's Restated Certificate of
Incorporation, all of such shares of Class A Convertible Preferred Stock will
automatically convert into 271,498 shares of Common Stock upon the closing of
this Offering.

Mr. Fordyce, a director of the Company, is a general partner of Prince
Ventures Partners LP, the general partner of Prince Venture Partners IV, a
stockholder of the Company. In August 1995, the Company issued and sold to
Prince Venture Partners IV an aggregate of 375,000 shares of Class A Series 3
Convertible Preferred Stock at a purchase price of $2.00 per share. In October
1996, the Company issued and sold to Prince Venture Partners IV an aggregate of
478,556 shares of Class A Series 4 Convertible Preferred Stock at a purchase
price of $3.13 per share. In September 1997, in an arm's length transaction,
Prince Venture Partners IV purchased from a group of related stockholder of the
Company an aggregate of (i) 119,946 shares of Class A Series 1 Convertible
Preferred Stock at a purchase price of $1.73 per share and (ii) 20,413 shares of
Common Stock at a purchase price of $0.50 per share. Pursuant to the Company's
Restated Certificate of Incorporation, all of such shares of Class A Convertible
Preferred Stock will automatically convert into 634,723 shares of Common Stock
upon the closing of this Offering.

Mr. Kempner, a director of the Company, is the President of Pinpoint
Partners Corporation, the general partner of each of Loeb Investment Co. 106,
Loeb Investment Co. 106A, Loeb Investment Co. 106B and Loeb Investment Co. 106C
(collectively, "Loeb Investment Partnerships"), each of which is a stockholder
of the Company. In August 1995, the Company issued to the Loeb Investment
Partnerships an aggregate of 279,990 shares of Class A Series 2 Convertible
Preferred Stock pursuant to the merger with PEC. Also in August 1995, the
Company issued and sold to certain of the Loeb Investment Partnerships an
aggregate of 150,000 shares of Class A Series 3 Convertible Preferred Stock at a
purchase price of $2.00 per share. In October 1996, the Company issued and sold
to certain of the Loeb Investment Partnerships an aggregate of 286,845 shares of
Class A Series 4 Convertible Preferred Stock at a purchase price of $3.13 per
share. In March 1997, the Company issued and sold to certain of the Loeb
Investment Partnerships an aggregate of 32,644 shares of Class A Series 4
Convertible Preferred Stock at a purchase price of $3.13 per share. Pursuant to
the Company's Restated Certificate of Incorporation, all of such shares of Class
A Convertible Preferred Stock will automatically convert into 488,660 shares of
Common Stock upon the closing of this Offering.

In March 1997, the Company awarded Henry E. Blair a right to purchase
114,100 shares of Restricted Common Stock pursuant to the Equity Plan at a
purchase price of $0.77 per share in connection with becoming the full-time
Chief Executive Officer of the Company. The unvested Restricted Common Stock,
which vests over 48 substantially equal monthly installments, is subject to
repurchase by the Company at the original purchase price if Mr. Blair ceases to
be employed by the Company.

The Company is a party to employment agreements with certain of its
executive officers. For information regarding these agreements and a grant of
restricted stock to Dr. Dishman, see "Management -- Employment Agreements." See
also "Restricted Stock Purchase Agreements" and "Notes Receivable for Sale of

57
<PAGE> 59

Restricted Stock" in Note 9 to Notes to Consolidated Financial Statements, which
are incorporated herein by reference.

Henry E. Blair, the President, Chief Executive Officer and Chairman of the
Board of the Company, also serves as an outside director of and consultant to
Genzyme and as an outside director of Genzyme Transgenics Corporation, which is
owned 43% by Genzyme. In 1996, the Company entered into a sublease agreement
with Genzyme for laboratory and office facilities in Cambridge, Massachusetts
which extends to December 1999. The remaining commitment for the sublease
totalled $1,230,000 at December 31, 1997, and $143,000 and $590,000 and was
recorded as rent expense during 1996 and 1997, respectively. The Company does
not believe that it obtained rental rates any more favorable than those
available from third parties. During 1996, the Company also signed two of its
non-exclusive patent license agreements with Genzyme. The Company recorded
license revenues of $54,000 and $50,000 in 1996 and 1997, respectively, in
connection with the signing and maintenance fees for these two agreements. In
addition, the Company has entered into two funded discovery projects with
Genzyme Transgenics Corporation resulting in recorded revenues of $45,000 and
$145,000 in 1996 and 1997, respectively.

Genzyme has also committed to purchase in the Genzyme Investment that
number of shares of Common Stock of the Company equal to $3.0 million divided by
the initial public offering price. Accordingly, upon the closing of this
offering, Dyax will sell to Genzyme 461,538 shares of Common Stock at the
assumed initial public offering price of $6.50 per share (the mid-point of the
filing range) for aggregate consideration of $3.0 million. The actual number of
shares will be determined by dividing $3.0 million by the initial public
offering price. In addition, with respect to such shares, the Company will grant
to Genzyme certain demand and "piggyback" registration rights exercisable
commencing 180 days after the closing of this Offering. In June 1998, the
Company and Genzyme entered into a non-binding letter of intent for the joint
development and commercialization of EPI-KAL2 for the treatment of chronic
inflammatory diseases, with initial development to be focused on inflammation
resulting from hereditary angioedema. Subject to the negotiation of a definitive
agreement, Dyax will initially fund up to $6.0 million dollars of development
costs and thereafter the parties will fund equally all development costs. Upon
signing the definitive collaboration agreement, Genzyme will extend to the
Company a $3.0 million line of credit which the Company may use to fund a
portion of such development costs or for any of the Company's other research and
development programs. In addition, the Company will be entitled to receive
significant milestone payments and up to 50% of the profits from sales of
products developed under this collaboration. In its negotiations with Genzyme,
the Company does not believe that it will obtain terms and conditions any more
favorable than those available from third parties. The Company believes that the
proposed collaboration agreement with Genzyme will provide Dyax with significant
financial and other resources to continue preclinical and clinical development
of EPI-KAL2, although there can be no assurance that such an agreement will be
consummated.

Certain existing stockholders of the Company have expressed a non-binding
interest in acquiring for investment purposes an aggregate of 220,766 shares of
Common Stock in this Offering (based on an assumed offering price of $6.50 per
share), including H&Q Healthcare Investors (19,230 shares), H&Q Life Science
Investors (19,230 shares) and New York Life Insurance Company (153,846 shares)
as well as certain directors and officers of the Company, including Mr. Blair
(15,384 shares), Dr. Dishman (9,230 shares) and Mr. Lewis (3,846 shares). Any
sales to such individuals or entities will be made on the same terms as sales to
other investors in this Offering.

58
<PAGE> 60

PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding the beneficial
ownership of the Common Stock as of June 15, 1998, and as adjusted to reflect
the sale of the shares of the Common Stock offered hereby by the Company, by (i)
all those known by the Company to be beneficial owners of more than 5% of its
outstanding Common Stock, (ii) each director of the Company, (iii) each of the
Named Executive Officers of the Company and (iv) all directors and executive
officers of the Company as a group:

<TABLE>
<CAPTION>
PERCENTAGE OF SHARES
BENEFICIALLY OWNED
NUMBER OF SHARES BEFORE AFTER
BENEFICIAL OWNERS BENEFICIALLY OWNED(1) OFFERING OFFERING(2)
----------------- ---------------------- ------------ -----------
<S> <C> <C> <C>
PRINCIPAL STOCKHOLDERS:

New York Life Insurance Company(3)............. 681,037 9.4% 6.8%
Loeb Investment Partnerships(4)................ 650,907 8.9% 6.5%
Prince Venture Partners IV(5).................. 648,033 8.9% 6.5%
Oak Investment Partnerships(6)................. 461,223 6.3% 4.6%
GMMI SBIC, L.P.(7)............................. 458,275 6.3% 4.6%
BancBoston Ventures, Inc.(8)................... 416,614 5.7% 4.2%
Hambrecht & Quist Group(9)..................... 381,630 5.2% 3.8%
Gateway Venture Partnerships(10)............... 285,811 3.9% 2.9%

DIRECTORS AND EXECUTIVE OFFICERS:**
Henry E. Blair(11)............................. 660,238 9.1% 6.6%
L. Edward Cannon, Ph.D.(12).................... 65,657 0.9% *
Robert A. Dishman, Ph.D.(13)................... 189,384 2.6% 1.9%
Robert Charles Ladner, Ph.D.(14)............... 166,786 2.3% 1.7%
Keith S. Ehrlich(15)........................... 31,375 * *
Constantine E. Anagnostopoulos, Ph.D.(16)...... 293,212 4.0% 2.9%
James W. Fordyce(17)........................... 656,385 9.0% 6.6%
Thomas L. Kempner(18).......................... 657,929 9.0% 6.6%
Henry R. Lewis, Ph.D.(19)...................... 47,830 * *
All current executive officers and directors as
a group (9 persons)(20)...................... 2,768,796 37.1% 27.1%
</TABLE>

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

* Indicates beneficial ownership of less than one percent.

** The address of the directors and executive officers is One Kendall Square,
Cambridge, MA 02139

(1) Reflects the conversion, prior to or contemporaneously with the closing of
this Offering, of all outstanding shares of Preferred Stock of the Company
into an aggregate of 5,831,516 shares of Common Stock. The number of shares
of Common Stock deemed outstanding after this Offering includes: (i) the
2,250,000 shares of Common Stock of the Company being offered for sale in
this Offering and (ii) 461,538 shares of Common Stock to be sold in the
Genzyme Investment. The persons and entities named in the table have sole
voting and investment power with respect to the shares beneficially owned
by them, except as noted below. Share numbers include shares of Common
Stock issuable pursuant to the outstanding options and warrants that may be
exercised within the 60-day period following June 15, 1998.

(2) The shares of the named holder which are beneficially owned but are not
outstanding are the only such beneficially owned shares that are treated as
outstanding for purposes of computing the percentage ownership of the named
holder.

(3) New York Life Insurance Company has expressed a non-binding interest in
acquiring for investment purposes up to 153,846 shares in this Offering
(based on an assumed offering price of $6.50 per share). If all of such
shares are purchased, New York Life Insurance Company will beneficially own
8.4% of the Common Stock after the Offering. The stockholder's address is
51 Madison Avenue, New York, NY 10010.

(4) Includes: (i) 125,813 shares owned by Loeb Investment Co. 106, (ii) 218,988
shares owned by Loeb Investment Co. 106A, (iii) 97,800 shares owned by Loeb
Investment Co. 106B, and (iv) 208,307 shares owned by Loeb Investment Co.
106C (collectively, "Loeb Investment Partnerships"). Pinpoint Partners
Corporation, the general partner of each of the Loeb Investment
Partnerships, exercises sole voting and investment control with respect to
all shares held by each of the Loeb Investment Partnerships. The
stockholder's address is c/o Irwin Rowe, 61 Broadway, 24th Floor, New York,
NY 10006.

59
<PAGE> 61

(5) Prince Ventures Limited Partnership, the general partner of Prince Venture
Partners IV, exercises sole voting and investment control with respect to
all shares held by Prince Venture Partners IV. The stockholder's address is
10 South Wacker Drive, Suite 2575, Chicago, IL 60606.

(6) Includes 442,064 shares held by Oak Investment Partners IV Limited Partners
and 19,159 shares held by Oak IV Affiliates Fund Limited Partnership
(collectively, "Oak Investment Partnerships"). Oak Investment Partners IV
Limited Partners, the general partner of each of the Oak Investment
Partnerships, exercises sole voting and investment control with respect to
all shares held by each of the Oak Investment Partnerships. The
stockholder's address is One Gorham Island, Westport, CT 06880.

(7) GMM Investors Corp., the general partner of GMMI SBIC, L.P., exercises sole
voting and investment control with respect to all shares held by GMMI SBIC,
L.P. The stockholder's address is 425 Park Avenue, New York, N.Y. 10022.

(8) The stockholder's address is 100 Federal Street, Boston, MA 02110.

(9) Includes 200,221 shares of Common Stock held by H&Q Healthcare Investors
and 181,409 shares of Common Stock held by H&Q Life Science Investors.
Hambrecht & Quist Capital Management Incorporated, a wholly-owned
subsidiary of Hambrecht & Quist Group, is the investment adviser for each
of H&Q Healthcare Investors and H&Q Life Science Investors. H&Q Healthcare
Investors and H&Q Life Science Investors have expressed a non-binding
interest in acquiring for investment purposes up to an aggregate of 38,460
shares in this Offering (based on an assumed offering price of $6.50 per
share). If all of such shares are purchased, H&Q Healthcare Investors and
H&Q Life Science Investors together will beneficially own 4.2% of the
Common Stock after the Offering. The stockholders' address is 50 Rowes
Wharf, 4th Floor, Boston, Massachusetts 02110.

(10) Includes 226 shares held by Gateway Venture Partners II, L.P. and 285,586
shares held by Gateway Venture Partners III, L.P. (collectively, "Gateway
Venture Partnerships"). Gateway Associates, L.P., the general partner of
each of the Gateway Venture Partnerships, exercises sole voting and
investment control with respect to all shares held by each of the Gateway
Venture Partnerships. The stockholder's address is 8000 Maryland Avenue,
Suite 1190, St. Louis, MO 63150.

(11) Includes (i) 114,100 shares which are held in trust for the benefit of Mr.
Blair's spouse and child and (ii) 9,167 shares of Common Stock issuable
upon exercise of outstanding options exercisable within the 60-day period
following June 15, 1998. Mr. Blair has expressed a non-binding interest in
acquiring for investment purposes up to 15,384 shares in this Offering
(based on an assumed offering price of $6.50 per share). If all of such
shares are purchased, Mr. Blair will beneficially own 6.7% of the Common
Stock after the Offering.

(12) Includes 65,657 shares of Common Stock issuable upon exercise of
outstanding options exercisable within the 60-day period following June 15,
1998.

(13) Includes 6,338 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following June 15, 1998. Dr.
Dishman has expressed a non-binding interest in acquiring for investment
purposes up to 9,230 shares in this Offering (based on an assumed offering
price of $6.50 per share). If all of such shares are purchased, Dr. Dishman
will beneficially own 2.0% of the Common Stock after the Offering.

(14) Includes: (i) 58,853 shares of Common Stock held jointly with Dr. Ladner's
spouse; (ii) 9,058 shares of Common Stock held by Dr. Ladner's spouse;
(iii) 44,541 shares of Common Stock held by Dr. Ladner's children as to
which Dr. Ladner disclaims beneficial ownership; (iv) an aggregate of
24,534 shares of Common Stock held in trust by Dr. Cannon for Dr. Ladner's
children as to which Dr. Ladner disclaims beneficial ownership; and (v)
14,839 shares of Common Stock issuable upon exercise of outstanding options
exercisable within the 60-day period following June 15, 1998.

(15) Consists of 31,375 shares of Common Stock issuable upon exercise of
outstanding options exercisable within the 60-day period following June 15,
1998.

(16) Includes 285,811 shares held by Gateway Venture Partners. Dr.
Anagnostopoulos, a director of the Company, is a general partner of Gateway
Associates, L.P., the general partner of Gateway Venture Partners. Also
includes 6,519 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following June 15, 1998.

(17) Includes 648,033 shares held by Prince Venture Partners IV. Mr. Fordyce, a
director of the Company, is a general partner of Prince Ventures Limited
Partnership, the general partner of Prince Venture Partners IV. Also
includes 8,352 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following June 15, 1998.

(18) Includes 650,907 shares of Common Stock held by Loeb Investment
Partnerships. Mr. Kempner, a director of the Company, is the President of
Pinpoint Partners Corporation, the general partner of each of the Loeb
Investment Partnerships. Also includes 7,022 shares of Common Stock
issuable upon exercise of outstanding options exercisable within the 60-day
period following June 15, 1998.

(19) Includes 7,469 shares of Common Stock issuable upon exercise of outstanding
options exercisable within the 60-day period following June 15, 1998. Mr.
Lewis has expressed a non-binding interest in acquiring for investment
purposes up to 3,846 shares in this Offering (based on an assumed offering
price of $6.50 per share). If all of such shares are purchased, Mr. Lewis
will beneficially own less than 1% of the Common Stock after the Offering.

(20) Includes 157,738 shares of Common Stock issuable upon exercise of
outstanding options exercisable within the 60-day period following June 15,
1998.

60
<PAGE> 62

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company currently consists of
20,000,000 shares of Common Stock, $0.01 par value per share, and 9,440,832
shares of Preferred Stock, $0.01 par value per share. Upon the completion of
this Offering, the authorized capital stock of the Company will consist of
30,000,000 shares of Common Stock and 1,000,000 shares of Preferred Stock after
giving effect to the amendment and restatement of the Company's Restated
Certificate of Incorporation to delete references to the Class A Series 1,
Series 2, Series 3 and Series 4 Convertible Preferred Stock (collectively the
"Class A Preferred Stock"). On June 15, 1998 there were outstanding an aggregate
of (i) 1,444,508 shares of Common Stock and (ii) 8,944,043 shares of Preferred
Stock, consisting of 1,942,936 shares of Class A Series 1 Convertible Preferred
Stock, 703,970 shares of Class A Series 2 Convertible Preferred Stock, 2,000,000
shares of Class A Series 3 Convertible Preferred Stock, and 4,297,137 shares of
Class A Series 4 Convertible Preferred Stock, all of which shares will
automatically convert into an aggregate of 5,831,516 shares of Common Stock upon
the completion of this Offering. As of the date of this Prospectus, the Company
had approximately 260 stockholders. Upon the closing of this Offering, after
giving effect to (i) the conversion of the Class A Preferred Stock into
5,831,516 shares of Common Stock, and (ii) the purchase by Genzyme of 461,538
shares of Common Stock in the Genzyme Investment, the Company will have
9,987,562 shares of Common Stock outstanding.

The following summary of certain provisions of the Common Stock and
Preferred Stock does not purport to be complete and is subject to, and qualified
in its entirety by (i) the provisions of the Company's Restated Certificate of
Incorporation and By-laws (each as filed and in effect, respectively, upon or
after the closing of this Offering and included as exhibits to the Registration
Statement) and (ii) the provisions of applicable law.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share on matters to be
voted upon by the stockholders. There are no cumulative voting rights. Holders
of Common Stock are entitled to receive dividends, if declared by the Board of
Directors, out of funds legally available therefor. See "Dividend Policy." Upon
the liquidation, dissolution or winding up of the Company, holders of Common
Stock are entitled to share ratably in the assets of the Company available for
distribution to its stockholders, subject to the preferential rights of any then
outstanding shares of Preferred Stock. No shares of Preferred Stock will be
outstanding immediately following the closing of this Offering. The Common Stock
outstanding upon the effective date of the Registration Statement, and the
shares offered by the Company hereby, upon issuance and sale, will be fully paid
and nonassessable.

PREFERRED STOCK

The Company is currently authorized to issue 9,440,832 shares of Preferred
Stock. Upon the completion of this Offering, all of the issued and outstanding
shares of Preferred Stock will be converted into an aggregate of 5,831,516
shares of Common Stock. Immediately following such conversion, such shares of
Preferred Stock will be cancelled, retired and eliminated from the Company's
authorized shares of capital stock and the number of authorized shares of
Preferred Stock will be decreased to 1,000,000 shares.

Upon completion of this Offering, the Company's Board of Directors will
have the authority to issue up to 1,000,000 shares of Preferred Stock in one or
more series and to fix the relative rights, preferences, privileges,
qualifications, limitations and restrictions thereof, including dividend rights,
dividend rates, conversion rights, voting rights, terms of redemption,
redemption prices, liquidation preferences, sinking fund terms and the number of
shares constituting any series or the designation of such series, without
further vote or action by the stockholders. The Company believes that the power
to issue Preferred Stock will provide flexibility in connection with possible
certain corporate transactions. The issuance of Preferred Stock could adversely
affect the voting power of the holders of Common Stock, restrict their rights to
receive payment upon liquidation and have the effect of delaying, deferring or
preventing a change-in-control of the Company. See "Description of

61
<PAGE> 63

Capital Stock -- Anti-Takeover Provisions." The Company has no present plans to
issue any shares of Preferred Stock.

WARRANTS

In connection with the merger of the Company with PEC, the Company issued
warrants to purchase an aggregate of 27,022 shares of Common Stock at an
exercise price of $3.97 per share in substitution for warrants previously issued
by PEC. The warrants will expire on August 10, 2000. The exercise price of each
warrant is subject to adjustment in the event of a stock split, combination or
dividend by the Company.

ANTI-TAKEOVER MEASURES

In addition to the Board of Directors' ability to issue shares of Preferred
Stock, the Restated Certificate of Incorporation and the By-laws contain several
other provisions that are commonly considered to discourage unsolicited
acquisition proposals. The Restated Certificate of Incorporation includes a
provision classifying the Board of Directors into three classes with staggered
three-year terms, and the By-laws include a provision prohibiting stockholder
action by written consent except as otherwise provided by law. Under the
Restated Certificate of Incorporation and By-laws, the Board of Directors may
enlarge the size of the Board of Directors and fill any vacancies. The Restated
Certificate of Incorporation requires the approval of the holders of at least
66 2/3% of the outstanding capital stock of the Company prior to (i) the merger
of the Company into another entity, (ii) the sale or disposition of all or
substantially all of the Company's assets and (iii) engaging in any other
business combination transaction, unless such transaction has been approved by a
majority of the Board of Directors. Further, provisions of the Restated
Certificate of Incorporation and the By-laws provide that the stockholders may
amend certain provisions of the Restated Certificate of Incorporation or the
By-laws only with the affirmative vote of the holders of 66 2/3% of the
Company's outstanding capital stock. The By-laws provide that nominations for
directors may not be made by stockholders at any annual or special meeting
unless the stockholder intending to make such a nomination notifies the Company
of its intention a specified period in advance and furnishes certain
information. The By-laws also provide that special meetings of the Company's
stockholders may be called only by the President or the Board of Directors and
require advance notice of business to be brought by a stockholder before the
annual meeting.

Upon the consummation of the offering made hereby, the Company will be
subject to the provisions of Section 203 of the Delaware General Corporation
Law, a law regulating corporate takeovers (the "Anti-Takeover Law"). In certain
circumstances, the Anti-Takeover Law prevents certain Delaware corporations,
including those whose securities are listed on the Nasdaq National Market, from
engaging in a "business combination" (which includes a merger or sale of more
than ten percent of the corporation's assets) with an "interested stockholder"
(a stockholder who owns 15% or more of the corporation's outstanding voting
stock) for three years following the date on which such stockholder became an
"interested stockholder" subject to certain exceptions, unless the transaction
is approved by the Board of Directors and the holders of at least 66 2/3% of the
outstanding voting stock of the corporation (excluding shares held by the
interested stockholder). The statutory ban does not apply if, upon consummation
of the transaction in which any person becomes an interested stockholder, the
interested stockholder owns at least 85% of the outstanding voting stock of the
corporation (excluding shares held by persons who are both directors and
officers or by certain employee stock plans). A Delaware corporation subject to
the Anti-Takeover Law may "opt out" of the Anti-Takeover Law with an express
provision either in its certificate of incorporation or By-laws resulting from a
stockholders' amendment approved by at least a majority of the outstanding
voting shares; such an amendment is effective twelve months from adoption. The
Company has not "opted out" of the Anti-Takeover Law.

The foregoing provisions of the Restated Certificate of Incorporation and
By-laws and Delaware law could have the effect of discouraging others from
attempting hostile takeovers of the Company and, as a consequence, they may also
inhibit temporary fluctuations in the market price of the Common Stock that
might result from actual or rumored hostile takeover attempts. Such provisions
may also have the effect of preventing changes in the management of the Company.
It is possible that such provisions could make it more difficult to accomplish
transactions which stockholders may otherwise deem to be in their best
interests.

62
<PAGE> 64

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is Boston EquiServe,
LP.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of this Offering, the Company will have 9,987,562 shares of
Common Stock outstanding, assuming no exercise of the Underwriters'
over-allotment option or of any other outstanding options or warrants. Of these
shares, the 2,250,000 shares sold in this Offering will be freely tradable,
without restriction or further registration under the Securities Act, except for
shares purchased by "affiliates" of the Company as that term is defined in Rule
144 under the Securities Act. Certain existing stockholders of the Company have
expressed a non-binding interest in acquiring for investment purposes an
aggregate of 220,766 shares of Common Stock in this Offering (based on an
assumed offering price of $6.50 per share), including H&Q Healthcare Investors,
H&Q Life Science Investors and New York Life Insurance Company as well as
certain directors and officers of the Company, including Mr. Blair, Dr. Dishman
and Mr. Lewis. See "Certain Transactions." To the extent such persons and
entities purchase shares, such shares will be subject to the lock-up agreements
discussed below.

The remaining 7,737,562 outstanding shares of Common Stock are owned by
existing stockholders or will be owned by Genzyme and are deemed "Restricted
Shares" under Rule 144. These may not be resold, except pursuant to an effective
registration statement or an applicable exemption from registration. Of these
remaining shares, approximately 868,787 shares of Common Stock will be eligible
for sale immediately under Rule 144 and approximately 333,882 shares will become
eligible for resale under Rules 144 and 701 on the ninety-first day after the
effectiveness of this Offering. Stockholders of the Company, holding in the
aggregate 6,073,355 shares of Common Stock excluding any shares purchased in
this Offering by certain persons and entities affiliated with existing
stockholders of the Company who have expressed an interest in acquiring for
investment purposes shares of Common Stock in this Offering, have agreed to
enter into the 180-day lock-up agreements described below. At the end of such
180-day period, 6,011,550 of such shares of Common Stock will become eligible
for sale under Rules 144 and 701. The remaining Restricted Shares will become
eligible from time to time thereafter upon the expiration of the minimum
one-year holding period prescribed by Rule 144.

In general, under Rule 144, as recently amended, a person (or persons whose
shares are aggregated), including an affiliate, who has beneficially owned
Restricted Shares for at least one year from the later of the date such
Restricted Shares were acquired from the Company and (if applicable) the date
they were acquired from an affiliate, is entitled to sell, within any
three-month period, a number of shares that does not exceed the greater of 1% of
the then outstanding shares of Common Stock (approximately 100,487 shares
immediately after the offering) or the average weekly trading volume in the
public market during the four calendar weeks preceding such sale. Sales under
Rule 144 are also subject to certain requirements as to the manner and notice of
sale and the availability of public information concerning the Company. All
sales of shares of the Company's Common Stock, including Restricted Shares, held
by affiliates of the Company must be sold under Rule 144, subject to the
foregoing volume limitations and other restrictions. In addition, under Rule
144(k), if a period of at least two years has elapsed between the later of the
date restricted securities were acquired from the Company or (if applicable) the
date they were acquired from an Affiliate of the Company, a stockholder who is
not an Affiliate of the Company at the time of sale and has not been an
Affiliate of the Company for at least three months prior to the sale is entitled
to sell the shares immediately without compliance with the foregoing
requirements under Rule 144.

The Company's directors and executive officers and certain of its
stockholders have agreed that they will not, without the prior written consent
of the representatives of the Underwriters, offer to sell, sell, contract to
sell, grant any option to sell or otherwise dispose of or require the Company to
file with the Commission a registration statement under the Securities Act to
register any shares of Common Stock or securities convertible or exchangeable
for shares of Common Stock or warrants or other rights to acquire shares of
Common Stock during the 180-day period following the effective date of the
Registration Statement.

63
<PAGE> 65

The Company plans to file registration statements under the Securities Act
to register approximately 2,184,200 and 97,800 shares of Common Stock issuable
under the Equity Plan and the Purchase Plan, respectively, 90 days after the
date of this Prospectus. Upon registration, such shares will be eligible for
immediate resale upon exercise, subject, in the case of affiliates, to the
volume, manner of sale and notice requirements of Rule 144.

No prediction can be made as to the effect, if any, that market sales of
additional shares or the availability of such additional shares for sale will
have on the market price of the Common Stock. Nevertheless, sales of substantial
amounts of Common Stock in the public market may have an adverse impact on the
market price for the Common Stock. See "Risk Factors -- Dilution."

REGISTRATION RIGHTS

The holders of the 5,831,516 shares of Common Stock to be issued upon
conversion of the Class A Preferred Stock (the "Registrable Shares") are
entitled to certain rights with respect to registration of the Registrable
Shares under the Securities Act commencing on October 31, 1998. In addition, in
connection with the sale to Genzyme of 461,538 shares of Common Stock (the
"Genzyme Shares") at the assumed initial public offering price of $6.50 (the
midpoint of the filing range) in the Genzyme Investment, the Company expects to
grant to Genzyme certain demand and piggyback registration rights exercisable
commencing 180 days after the closing of this Offering. If the Company proposes
to register any of its securities under the Securities Act, either for its own
account or for the account of other security holders, such holders are entitled
to notice of such registration and are entitled to include such Registrable
Shares and Genzyme Shares, as the case may be, in the registration. The rights
are subject to certain conditions and limitations, among them, the right of the
underwriters of a registered offering to limit the number of shares included in
such registration. Holders of Registrable Shares and the Genzyme Shares
benefiting from these rights may also require the Company to file at its expense
a registration statement under the Securities Act with respect to their shares
of Common Stock and, subject to certain conditions and limitations, the Company
is required to use its best efforts to effect such registration. Furthermore,
such holders may, subject to certain conditions and limitations, require the
Company to file additional registration statements on Form S-3 with respect to
such shares. Such holders did not have the right to have shares of Common Stock
registered under the Securities Act as part of this Offering.

64
<PAGE> 66

UNDERWRITING

Each of the Underwriters named below (collectively, the "Underwriters"),
for which ING Baring Furman Selz LLC and Pacific Growth Equities, Inc., are
acting as representatives (the "Representatives"), have severally agreed,
subject to the terms and conditions set forth in the underwriting agreement
dated as of , 1998 (the "Underwriting Agreement"), to purchase, and the
Company has agreed to sell to each of the Underwriters, the aggregate number of
shares of Common Stock set forth opposite its name below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
---- ---------
<S> <C>
ING Baring Furman Selz LLC..................................
Pacific Growth Equities, Inc................................

---------
Total............................................. 2,250,000
</TABLE>

The Underwriting Agreement provides that the obligations of the several
Underwriters are subject to the approval of certain legal matters by counsel and
various other conditions. The nature of the Underwriters' obligations is such
that they are committed to purchase all of the above shares if any are
purchased. The Representatives have advised the Company that the Underwriters
propose to offer the shares of Common Stock directly to the public at the public
offering price set forth on the cover page of this Prospectus and to certain
dealers at such price less a concession not in excess of $ per share. The
Underwriters may allow, and such dealers may re-allow, a concession not in
excess of $ per share to certain other dealers. After the offering, the
offering price and other selling terms may be changed by the Representatives.

Prior to the offering made hereby, there has been no public market for the
Common Stock. Accordingly, the initial public offering price for the Common
Stock will be determined by negotiations among the Company and the
Representatives. Among the factors to be considered in such negotiations are the
Company's results of operations and current financial condition, estimates of
the business potential and prospects of the Company, the experience of the
Company's management, the economics of the industry in general, the general
condition of the equities market and other relevant factors. There can be no
assurance that any active trading market will develop for the Common Stock or as
to the price at which the Common Stock may trade in the public market from time
to time subsequent to the offering.

Certain persons participating in the offering may over-allot or effect
transactions that stabilize, maintain or otherwise affect the market price of
the Common Stock at levels above those which might otherwise prevail in the open
market, including by entering stabilizing bids, effecting syndicate covering
transactions or imposing penalty bids. A stabilizing bid means the placing of
any bid or the effecting of any purchase, for the purpose of pegging, fixing or
maintaining the price of the Common Stock. A syndicate covering transaction
means the placing of any bid on behalf of the underwriting syndicate or the
effecting of any purchase to reduce a short position created in connection with
the offering. A penalty bid means an arrangement that permits the Underwriters
to reclaim a selling concession from a syndicate member in connection with this
offering when shares of Common Stock sold by the syndicate member are purchased
in syndicate covering transactions. Such transactions may be effected on the
Nasdaq National Market, in the over-the-counter market or otherwise. Such
stabilizing, if commenced, may be discontinued at any time.

The Company has granted to the Underwriters an option, expiring 30 days
from the date of this Prospectus, to purchase up to 337,500 additional shares of
Common Stock on the same terms as set forth on the cover page of this
Prospectus, solely to cover over-allotments, if any, incurred in the sale of the
shares of Common Stock offered hereby. If the Underwriters exercise the option,
each Underwriter will have a firm commitment, subject to certain conditions, to
purchase such number of additional shares of Common Stock as is proportional to
such Underwriter's initial commitment to purchase shares from the Company.

65
<PAGE> 67

The Company, each of its officers and directors and certain stockholders
have agreed that during the period beginning from the date of this Prospectus
and continuing to and including the date 180 days after the date of this
Prospectus, not to offer, sell, contract to sell or otherwise dispose of any
shares of Common Stock, any securities of the Company that are substantially
similar to the shares of the Common Stock or that are convertible or
exchangeable into Common Stock or securities that are substantially similar to
the shares of the Common Stock (other than pursuant to the Company's employee
stock option plans) without the prior written consent of ING Baring Furman Selz
LLC, except for the shares of Common Stock offered in connection with this
offering.

At the request of the Company, the Underwriters have reserved up to 125,000
shares of Common Stock for sale at the public offering price to directors,
officers and employees of the Company. The number of shares of Common Stock
available for sale to the general public will be reduced to the extent such
persons purchase the reserved shares. Any reserved shares not so purchased will
be offered by the Underwriters on the same terms as all other shares offered
hereby.

The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act, or to contribute to
payments that the Underwriters may be required to make in respect thereof.

The Representatives have informed the Company that the Underwriters do not
intend to confirm sales to any accounts over which they exercise discretionary
authority.

Certain existing stockholders of the Company have expressed a non-binding
interest in acquiring for investment purposes an aggregate of 220,766 shares of
Common Stock in this Offering (based on an assumed offering price of $6.50 per
share), including H&Q Healthcare Investors (19,230 shares), H&Q Life Science
Investors (19,230 shares) and New York Life Insurance Company (153,846 shares)
as well as certain directors and officers of the Company, including Mr. Blair
(15,384 shares), Dr. Dishman (9,230 shares) and Mr. Lewis (3,846 shares). See
"Certain Transactions." To the extent such persons and entities purchased
shares, such shares will be subject to lock-up agreements. See "Shares Eligible
for Future Sale."

The principal address of ING Baring Furman Selz LLC is 230 Park Avenue, New
York, New York 10169. The principal address of Pacific Growth Equities, Inc. is
353 Sacremento Street, San Francisco, California 94111.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Palmer & Dodge LLP, Boston, Massachusetts. Nathaniel S.
Gardiner, a partner of Palmer & Dodge LLP, is the Secretary of the Company.
Certain legal matters are being passed upon for the Underwriters by Hale and
Dorr LLP, Boston, Massachusetts.

EXPERTS

Statements relating to United States patent matters involving the Company's
Phage Display patents in the portions of this Prospectus entitled "Risk
Factors -- Uncertainties Related to Patents and Proprietary Rights" (except for
the last paragraph relating to employee confidentiality) and
"Business -- Patents and Proprietary Rights" (except for the last two
paragraphs), insofar as they constitute summaries of matters of United States
patent law, have been reviewed and approved by special patent counsel to the
Company, Yankwich & Associates, as experts in patent law.

The consolidated balance sheets of the Company at December 31, 1997 and
1996 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for each of the three years in the period
ended December 31, 1997 appearing in this Prospectus and Registration Statement
have been included herein in reliance on the report of PricewaterhouseCoopers
LLP, independent accountants, given on the authority of that firm as experts in
accounting and auditing.

66
<PAGE> 68

The consolidated statements of operations and accumulated deficit and cash
flows of PEC for the period from January 1, 1995 to August 11, 1995 appearing in
this Prospectus and Registration Statement have been included herein in reliance
on the report of PricewaterhouseCoopers LLP, independent accountants, given on
the authority of that firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Commission a Registration Statement on Form
S-1 (the "Registration Statement") under the Securities Act, with respect to the
shares of Common Stock offered hereby. This Prospectus does not contain all of
the information set forth in the Registration Statement and the exhibits and
schedules thereto. For further information with respect to the Company and the
Common Stock offered hereby, reference is made to the Registration Statement and
the exhibits and schedules thereto. All statements made in this Prospectus
regarding the contents of any contract, agreement or other document filed as an
exhibit to the Registration Statement are qualified by reference to the copy of
such document filed as an exhibit to the Registration Statement. A copy of the
Registration Statement may be inspected without charge at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549; and at the Commission's regional offices at 500 West Madison Street,
Chicago, Illinois 60661; and 7 World Trade Center, New York, New York 10048.
Copies of all or any part thereof may be obtained from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at
prescribed rates. Such reports and other information can also be reviewed
through the Commission's web site (http://www.sec.gov).

Statements made in this Prospectus as to the contents of any contract,
agreement or other document referred to are not necessarily complete. With
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference.

The Company intends to furnish to its stockholders annual reports
containing audited consolidated financial statements certified by an independent
public accounting firm and make available to its stockholders quarterly reports
containing unaudited interim financial information for the first three fiscal
quarters of each fiscal year of the Company.

The Company has filed for trademark protection for the Dyax mark and the
Dyax logo. The Company has registered the Kiloprep mark in the United States,
Japan, Germany and the United Kingdom. In addition, the Company considers
"Biotage" as a trade name and considers Parallex, ProPrep and BioFLASH to be
trademarks. All other trademarks or service marks appearing in this Prospectus
are the property of their respective holders.

67
<PAGE> 69

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
DYAX CORP.

Report of Independent Accountants........................... F-2
Consolidated Balance Sheets as of December 31, 1996 and 1997
and March 31, 1998 (unaudited) and March 31, 1998
(unaudited) Pro Forma..................................... F-3
Consolidated Statements of Operations for the years ended
December 31, 1995, 1996 and 1997 and for the three months
ended March 31, 1997 (unaudited) and March 31, 1998
(unaudited)............................................... F-4
Consolidated Statements of Changes in Stockholders' Equity
for the years ended December 31, 1995, 1996 and 1997 and
for the three months ended March 31, 1998 (unaudited)..... F-5
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997 and for the three months
ended March 31, 1997 (unaudited) and March 31, 1998
(unaudited)............................................... F-6
Notes to Consolidated Financial Statements.................. F-7

PROTEIN ENGINEERING CORPORATION

Report of Independent Accountants........................... F-21
Consolidated Statement of Operations and Accumulated Deficit
for the period from January 1, 1995 to August 11, 1995.... F-22
Consolidated Statement of Cash Flows for the period from
January 1, 1995 to August 11, 1995........................ F-23
Notes to Consolidated Financial Statements.................. F-24
</TABLE>

F-1
<PAGE> 70

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Dyax Corp.:

We have audited the accompanying consolidated balance sheets of Dyax Corp.
as of December 31, 1996 and 1997, and the related consolidated statements of
operations, changes in stockholders' equity, and cash flows for each of three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Dyax Corp. as
of December 31, 1996 and 1997, and the consolidated results of its operations
and its cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.

/s/ PRICEWATERHOUSECOOPERS LLP
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
March 23, 1998

F-2
<PAGE> 71

DYAX CORP.

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31, 1998
--------------------------- ---------------------------------
1996 1997 ACTUAL PRO FORMA (NOTE 2)
------------ ------------ ------------ ------------------
(UNAUDITED)
<S> <C> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................. $ 8,591,000 $ 4,664,000 $ 3,688,000 3,688,000
Accounts receivable, (net of allowances
for doubtful accounts of $41,000,
$81,000 and $81,000 at December 31, 1996
and 1997 and March 31, 1998,
respectively)........................... 1,363,000 2,273,000 2,258,000 2,258,000
Inventories............................... 1,282,000 1,873,000 1,661,000 1,661,000
Other current assets...................... 150,000 286,000 223,000 223,000
------------ ------------ ------------ ------------
Total current assets............... 11,386,000 9,096,000 7,830,000 7,830,000
Fixed assets, net........................... 505,000 1,151,000 1,310,000 1,310,000
Other assets, net........................... 345,000 285,000 881,000 881,000
------------ ------------ ------------ ------------
Total assets....................... 12,236,000 10,532,000 10,021,000 10,021,000
============ ============ ============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued expenses..... 1,633,000 2,145,000 3,086,000 3,086,000
Deferred revenue.......................... 384,000 891,000 302,000 302,000
Current portion of long term debt......... 121,000 68,000 43,000 43,000
Current portion of capital leases......... 7,000 87,000 87,000 87,000
------------ ------------ ------------ ------------
Total current liabilities.......... 2,145,000 3,191,000 3,518,000 3,518,000
Long term debt.............................. 763,000 695,000 695,000 695,000
Capital leases.............................. 7,000 383,000 362,000 362,000
------------ ------------ ------------ ------------
Total liabilities.................. 2,915,000 4,269,000 4,575,000 4,575,000
Commitments
Stockholders' equity:
Class A convertible preferred stock;
9,440,832 shares authorized in series;
8,161,283, 8,944,043 and 8,944,043
shares issued and outstanding at
December 31, 1996 and 1997 and March 31,
1998 actual and none outstanding on a
pro forma basis, respectively;
$25,947,000 liquidation preference at
March 31, 1998.......................... 24,821,000 27,258,000 27,258,000 --
Common stock, $.01 par value, 20,000,000
shares authorized, 1,021,455 and
1,278,114 shares issued at December 31,
1996 and 1997, respectively; and
1,435,270 and 7,266,786 shares issued on
March 31, 1998 actual and on a pro forma
basis, respectively..................... 10,000 13,000 14,000 73,000
Additional paid-in capital.................. 9,629,000 11,519,000 12,493,000 39,692,000
Receivable for common stock purchase........ -- -- (418,000) (418,000)
Accumulated deficit......................... (25,169,000) (30,704,000) (31,875,000) (31,875,000)
Treasury stock (1,378 common shares at
cost)..................................... -- -- -- --
Deferred compensation....................... -- (1,682,000) (1,955,000) (1,955,000)
Accumulated foreign currency translation
adjustment................................ 30,000 (141,000) (71,000) (71,000)
------------ ------------ ------------ ------------
Total stockholders' equity......... 9,321,000 6,263,000 5,446,000 5,446,000
------------ ------------ ------------ ------------
Total liabilities and stockholders'
equity........................... $ 12,236,000 $ 10,532,000 $ 10,021,000 $ 10,021,000
============ ============ ============ ============
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-3
<PAGE> 72

DYAX CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEARS ENDED DECEMBER 31, MARCH 31,
----------------------------------------- -------------------------
1995 1996 1997 1997 1998
------------ ----------- ------------ ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenues:
Product sales.................. $ 3,592,000 $ 4,478,000 $ 7,625,000 $ 1,336,000 $ 2,208,000
Product development............ 428,000 1,060,000 1,440,000 301,000 904,000
License fees................... -- 1,499,000 711,000 242,000 492,000
------------ ----------- ------------ ----------- -----------
Total revenues................... 4,020,000 7,037,000 9,776,000 1,879,000 3,604,000
Operating expenses:
Cost of products sold.......... 1,952,000 2,046,000 3,174,000 557,000 927,000
Research and development....... 1,343,000 3,140,000 5,575,000 1,222,000 1,631,000
Selling, general and
administrative.............. 2,710,000 4,170,000 6,827,000 1,620,000 2,232,000
Write-off of intangible
asset....................... 456,000 -- -- -- --
Write-off of incomplete
technology.................. 4,098,000 -- -- -- --
------------ ----------- ------------ ----------- -----------
Total operating expenses......... 10,559,000 9,356,000 15,576,000 3,399,000 4,790,000
------------ ----------- ------------ ----------- -----------
Loss from operations............. (6,539,000) (2,319,000) (5,800,000) (1,520,000) (1,186,000)
------------ ----------- ------------ ----------- -----------
Interest income................ 123,000 108,000 339,000 104,000 42,000
Interest expense............... (169,000) (186,000) (74,000) (24,000) (27,000)
------------ ----------- ------------ ----------- -----------
Net loss......................... $ (6,585,000) $(2,397,000) $ (5,535,000) (1,440,000) (1,171,000)
============ =========== ============
Other comprehensive income
(loss):
Foreign currency translation
adjustments................. (19,000) 70,000
----------- -----------
Other comprehensive income
(loss) before tax........... (19,000) 70,000
Income tax benefit (expense)
related to other
comprehensive income........ -- --
Other comprehensive income
(loss), net of tax.......... (19,000) 70,000
----------- -----------
Comprehensive loss............... $(1,459,000) $(1,101,000)
=========== ===========
Net loss per common share -- Note
2:
Historical:
Basic and diluted........... $ (27.53) $ (2.38) $ (5.14) $ (1.41) $ (0.86)
Weighted average number of
shares -- basic and
diluted................... 239,212 1,006,730 1,076,469 1,022,948 1,362,587
Pro forma (unaudited):
Basic and diluted........... $ (0.83) $ (0.16)
Weighted average number of
shares -- basic and
diluted................... 6,706,680 7,194,103
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-4
<PAGE> 73

DYAX CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997 AND THE THREE MONTHS ENDED
MARCH 31, 1998 (UNAUDITED)

<TABLE>
<CAPTION>
CONVERTIBLE PREFERRED STOCK
------------------------------------------------------------------------
CLASS A CLASS C
--------------------------------------------- ----------
SERIES 1 SERIES 2 SERIES 3 SERIES 4
SHARES SHARES SHARES SHARES SHARES AMOUNT
--------- -------- --------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994................... -- -- -- 5,530,569 $ 8,574,000
Conversion of Common Stock per 1995 Plan of
Recapitalization..............................
Conversion of Preferred Stock per 1995 Plan of
Recapitalization.............................. 1,942,936 (5,530,569)
Issuance of Common Stock in exchange for
Protein Engineering Corporation Common
Stock.........................................
Issuance of Preferred Stock in exchange for
Protein Engineering Corporation Preferred
Stock......................................... 703,970 1,408,000
Issuance of Preferred Stock.................... 2,000,000 3,900,000
Purchase of 209 Shares of Treasury Stock at
Cost..........................................
Foreign Currency Translation Adjustment........
Net Loss.......................................
--------- ------- --------- ---------- ---------- -----------
Balance at December 31, 1995................... 1,942,936 703,970... 2,000,000 -- -- $13,882,000
========= ======= ========= ========== ========== ===========
Issuance of Preferred Stock.................... 3,514,377 10,939,000
Exercise of Stock Options under the 1989
plan..........................................
Exercise of Stock Options under the 1995
plan..........................................
Purchase of 1,169 Shares of Treasury Stock at
Cost..........................................
Foreign currency translation adjustment........
Net Loss.......................................
--------- ------- --------- ---------- ---------- -----------
Balance at December 31, 1996................... 1,942,936 703,970 2,000,000 3,514,377 -- $24,821,000
========= ======= ========= ========== ========== ===========
Issuance of Preferred Stock.................... 782,760 2,437,000
Exercise of Stock Options under the 1989
plan..........................................
Exercise of Stock Options under the 1995
plan..........................................
Issuance of Restricted Stock under the 1995
plan..........................................
Deferred compensation..........................
Compensation expense associated with stock
options.......................................
Foreign currency translation adjustment........
Net Loss.......................................
--------- ------- --------- ---------- ---------- -----------
Balance at December 31, 1997................... 1,942,936 703,970 2,000,000 4,297,137 -- 27,258,000
========= ======= ========= ========== ========== ===========
Exercise of Stock Options under the 1995
plan..........................................
Issuance of Restricted Stock under the 1995
plan..........................................
Deferred compensation..........................
Compensation expense associated with stock
options.......................................
Loan to purchase common stock..................
Cancellation of shares.........................
Foreign currency translation adjustment........
Net Loss.......................................
--------- ------- --------- ---------- ---------- -----------
Balance at March 31, 1998...................... 1,942,936 703,970 2,000,000 4,297,137 -- 27,258,000
========= ======= ========= ========== ========== ===========

<CAPTION>
COMMON STOCK
----------------------

ADDITIONAL RECEIVABLE
TREASURY PAID-IN FOR COMMON ACCUMULATED
SHARES PAR VALUE STOCK CAPITAL STOCK PURCHASE DEFICIT
---------- --------- ---------- ----------- -------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1994................... 742,543 7,000 $ -- $ 9,336,000 $(16,187,000)
Conversion of Common Stock per 1995 Plan of
Recapitalization.............................. (641,973) (6,000) 6,000
Conversion of Preferred Stock per 1995 Plan of
Recapitalization..............................
Issuance of Common Stock in exchange for
Protein Engineering Corporation Common
Stock......................................... 899,443 9,000 275,000
Issuance of Preferred Stock in exchange for
Protein Engineering Corporation Preferred
Stock.........................................
Issuance of Preferred Stock....................
Purchase of 209 Shares of Treasury Stock at
Cost.......................................... --
Foreign Currency Translation Adjustment........
Net Loss....................................... (6,585,000)
---------- ------- ---------- ----------- --------- ------------
Balance at December 31, 1995................... 1,000,013 10,000 -- $ 9,617,000 $(22,772,000)
========== ======= ========== =========== ========= ============
Issuance of Preferred Stock....................
Exercise of Stock Options under the 1989
plan.......................................... 5,264 -- 6,000
Exercise of Stock Options under the 1995
plan.......................................... 16,178 -- 6,000
Purchase of 1,169 Shares of Treasury Stock at
Cost.......................................... --
Foreign currency translation adjustment........
Net Loss....................................... (2,397,000)
---------- ------- ---------- ----------- --------- ------------
Balance at December 31, 1996................... 1,021,455 $10,000 -- $ 9,629,000 $(25,169,000)
========== ======= ========== =========== ========= ============
Issuance of Preferred Stock....................
Exercise of Stock Options under the 1989
plan.......................................... 93 -- --
Exercise of Stock Options under the 1995
plan.......................................... 142,466 2,000 46,000
Issuance of Restricted Stock under the 1995
plan.......................................... 114,100 1,000 87,000
Deferred compensation.......................... 1,750,000
Compensation expense associated with stock
options....................................... 7,000
Foreign currency translation adjustment........
Net Loss....................................... (5,535,000)
---------- ------- ---------- ----------- --------- ------------
Balance at December 31, 1997................... 1,278,114 13,000 -- 11,519,000 (30,704,000)
========== ======= ========== =========== ========= ============
Exercise of Stock Options under the 1995
plan.......................................... 79,071 -- 78,000
Issuance of Restricted Stock under the 1995
plan.......................................... 78,240 1,000 360,000
Deferred compensation.......................... 536,000
Compensation expense associated with stock
options.......................................
Loan to purchase common stock.................. (418,000)
Cancellation of shares......................... (155)
Foreign currency translation adjustment........
Net Loss....................................... (1,171,000)
---------- ------- ---------- ----------- --------- ------------
Balance at March 31, 1998...................... 1,435,270 $14,000 -- $12,493,000 $(418,000) $(31,875,000)
========== ======= ========== =========== ========= ============

ACCUMULATED
FOREIGN
CURRENCY
TRANSLATION DEFERRED
ADJUSTMENT COMPENSATION TOTAL
----------- ------------ -----------
<S> <C> <C> <C>
Balance at December 31, 1994................... $ (65,000) $ 1,665,000
Conversion of Common Stock per 1995 Plan of
Recapitalization.............................. --
Conversion of Preferred Stock per 1995 Plan of
Recapitalization.............................. --
Issuance of Common Stock in exchange for
Protein Engineering Corporation Common
Stock......................................... 284,000
Issuance of Preferred Stock in exchange for
Protein Engineering Corporation Preferred
Stock......................................... 1,408,000
Issuance of Preferred Stock.................... 3,900,000
Purchase of 209 Shares of Treasury Stock at
Cost.......................................... --
Foreign Currency Translation Adjustment........ 31,000 31,000
Net Loss....................................... (6,585,000)
--------- ----------- -----------
Balance at December 31, 1995................... $ (34,000) $ -- $ 703,000
========= =========== ===========
Issuance of Preferred Stock.................... 10,939,000
Exercise of Stock Options under the 1989
plan.......................................... 6,000
Exercise of Stock Options under the 1995
plan.......................................... 6,000
Purchase of 1,169 Shares of Treasury Stock at
Cost.......................................... --
Foreign currency translation adjustment........ 64,000 64,000
Net Loss....................................... (2,397,000)
--------- ----------- -----------
Balance at December 31, 1996................... $ 30,000 $ -- $ 9,321,000
========= =========== ===========
Issuance of Preferred Stock.................... 2,437,000
Exercise of Stock Options under the 1989
plan.......................................... --
Exercise of Stock Options under the 1995
plan.......................................... 48,000
Issuance of Restricted Stock under the 1995
plan.......................................... 88,000
Deferred compensation.......................... (1,750,000)
Compensation expense associated with stock
options....................................... 68,000 75,000
Foreign currency translation adjustment........ (171,000) (171,000)
Net Loss....................................... (5,535,000)
--------- ----------- -----------
Balance at December 31, 1997................... (141,000) (1,682,000) 6,263,000
========= =========== ===========
Exercise of Stock Options under the 1995
plan.......................................... 78,000
Issuance of Restricted Stock under the 1995
plan.......................................... 361,000
Deferred compensation.......................... (536,000)
Compensation expense associated with stock
options....................................... 263,000 263,000
Loan to purchase common stock.................. (418,000)
Cancellation of shares.........................
Foreign currency translation adjustment........ 70,000 70,000
Net Loss....................................... (1,171,000)
--------- ----------- -----------
Balance at March 31, 1998...................... $ (71,000) $(1,955,000) $ 5,446,000
========= =========== ===========
</TABLE>

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

F-5
<PAGE> 74

DYAX CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------- --------------------------
1995 1996 1997 1997 1998
----------- ----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net loss.................................. $(6,585,000) $(2,397,000) $(5,535,000) $(1,440,000) $(1,171,000)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization........... 411,000 310,000 333,000 93,000 114,000
Loss on disposal of fixed assets........ -- 17,000 39,000 -- --
Compensation expense associated with
stock options......................... -- -- 75,000 -- 263,000
Write-off of intangible asset........... 456,000 -- -- -- --
Purchase of incomplete technology....... 3,942,000 -- -- -- --
Changes in operating assets and
liabilities:
Accounts receivable, net................ (426,000) (183,000) (939,000) (552,000) (18,000)
Inventories............................. 82,000 (708,000) (591,000) (284,000) 261,000
Other assets............................ 1,000 (95,000) (128,000) 21,000 (544,000)
Accounts payable and accrued expenses... 123,000 571,000 518,000 189,000 983,000
Deferred revenue........................ (295,000) (402,000) 508,000 151,000 (589,000)
----------- ----------- ----------- ----------- -----------
Net cash used in operating activities....... (2,291,000) (2,887,000) (5,720,000) (1,822,000) (701,000)
----------- ----------- ----------- ----------- -----------
Cash flows from investing activities:
Purchase of fixed assets.................. (116,000) (220,000) (961,000) (84,000) (259,000)
----------- ----------- ----------- ----------- -----------
Cash flows from financing activities:
Net proceeds from issuance of preferred
stock................................... 2,712,000 10,343,000 2,437,000 2,437,000 --
Cash acquired with PEC acquisition........ 928,000 -- -- -- --
Proceeds from the exercise of stock
options................................. -- 11,000 136,000 1,000 21,000
Proceeds from sale-leaseback of
equipment............................... -- -- 445,000 -- --
Purchase of treasury stock................ -- -- -- -- --
Increase in debt.......................... 470,000 103,000 -- -- --
Repayment of debt......................... -- (759,000) (121,000) -- (46,000)
----------- ----------- ----------- ----------- -----------
Net cash provided (used) by financing
activities................................ 4,110,000 9,698,000 2,897,000 2,438,000 (25,000)
Effect of foreign currency translation on
cash balances............................. 29,000 41,000 (143,000) (24,000) 9,000
----------- ----------- ----------- ----------- -----------
Net increase (decrease) in cash and cash
equivalents............................... 1,732,000 6,632,000 (3,927,000) 508,000 (976,000)
Cash and cash equivalents at beginning of
the period................................ 227,000 1,959,000 8,591,000 8,591,000 4,664,000
----------- ----------- ----------- ----------- -----------
Cash and cash equivalents at end of the
period.................................... $ 1,959,000 $ 8,591,000 $ 4,664,000 $ 9,099,000 $ 3,688,000
=========== =========== =========== =========== ===========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-6
<PAGE> 75

DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

1. NATURE OF BUSINESS:

Dyax's phage display technology has broad potential commercial applications
in the fields of therapeutic, diagnostic and separations products. Dyax's
patented and proprietary phage display technology is a versatile, high
throughput technology platform which the Company believes can reduce costs,
shorten development times and lead to the commercialization of more effective
products in these fields. The Company also develops, manufactures and sells
fully-integrated chromatography separations systems under the Biotage trade
name.

2. ACCOUNTING POLICIES:

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries, Protein Engineering Corporation,
P.E.C. Technology Corp. and Biotage, Ltd., a United Kingdom sales subsidiary.
All intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the amounts of assets and liabilities reported and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenue and expenses during the reporting
periods. The significant estimates and assumptions in these financial statements
include contract revenue recognition, receivable collectibility, inventory
valuation and tax valuation reserves. Actual results could differ from those
estimates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of cash, cash equivalents and
trade accounts receivable. At December 31, 1997, approximately 71% of the
Company's cash and cash equivalents were invested in a single money market
account held by one financial institution.

The Company provides most of its products and services to pharmaceutical
and biomedical companies worldwide. Concentrations of credit risk with respect
to trade receivable balances are limited due to the diverse number of customers
comprising the Company's customer base. The Company performs ongoing credit
evaluations of its customers' financial conditions and maintains reserves for
potential credit loss. Activity for fiscal 1995, 1996 and 1997 included
provisions of $90,000, $9,000 and $40,000, respectively, and $10,000 and none
for the three months ended March 31, 1997 and 1998, respectively.

Cash and Cash Equivalents

Cash and cash equivalents consist principally of cash and a money market
account. The Company currently invests its excess cash in a single money market
account held by a financial institution.

F-7
<PAGE> 76
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

Inventories

Inventories are stated at the lower of cost or market. Cost is determined
using the first-in, first-out (FIFO) method.

Fixed Assets

Property and equipment are recorded at cost and depreciated over the
estimated useful lives of the related assets using the straight-line method.
Laboratory and production equipment and furniture and office equipment are
depreciated over a three to seven year period. Leasehold improvements are stated
at cost and are amortized over the lesser of the noncancelable term of the
related lease or their estimated useful lives. Leased equipment is depreciated
over the life of the lease. Maintenance and repairs are charged to expense as
incurred. When assets are retired or otherwise disposed of, the assets and
related accumulated depreciation and amortization are eliminated from the
accounts and any resulting gains and losses are included in operations in the
period of disposal.

Long-Lived Assets

The Company regularly reviews long-lived assets for impairment by comparing
the cumulative undiscounted cash flow from the assets with their carrying
amount. Any write-downs are treated as permanent reductions in the carrying
amount of the assets. Management's policy regarding long-lived assets is to
evaluate the recoverability of its assets when the facts and circumstances
suggest that these assets may be impaired. This analysis relies on a number of
factors, including operating results, business plans, budgets, economic
projections and changes in management's strategic direction or market emphasis.
The test of recoverability is a comparison of the asset value to its expected
cumulative net operating cash flow over the remaining life of the asset. During
1995, the Company determined technology acquired in 1989, which related to a
product line no longer being pursued by the Company, had no future value.
Accordingly, the Company recorded a charge to operations of $456,000 to write
off the net amortized book value of patents, trademarks and licenses related to
this product line and its technology.

Revenue Recognition

Product revenue, which is derived from sales of Biotage chromatography
separations systems and products, is recognized upon shipment to the customer.
Significant future obligations such as satisfaction of more than perfunctory
customer-mandated performance criteria may defer revenue recognition until the
obligation is satisfied. Costs of insignificant obligations are accrued when
revenue is recognized. One customer accounted for approximately 13%, 5% and 12%
of product revenue in 1995, 1996 and 1997, respectively, although the largest
customer was different in each of the three years. The Company is not dependent
on any single customer for a significant portion of its ongoing revenues.

The Company enters into product development agreements with collaborative
partners for the development of therapeutic, diagnostic and separations
products. The terms of the agreements may include non-refundable signing fees
and may provide funding for research and development, payments based on the
achievement of certain milestones and royalties on any product sales derived
from the collaboration. Signing fees for which the Company has no future
obligations are recognized at the inception of the agreements. Collaborative
research, product development and government grant revenues, where the amounts
recorded are not refundable if research efforts are unsuccessful, are recorded
as the related expenses are incurred. Milestones are recognized when achieved
and sales royalties will be recognized when earned. Substantially all of the
product development revenues during 1995 and 1996 were earned under an agreement
with one collaborator.

F-8
<PAGE> 77
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

The Company licenses its patent rights covering Phage Display on a
non-exclusive basis in the fields of therapeutics, antibody-based in vitro
diagnostics and research products. Standard terms of the license agreements,
which require no further active performance by the Company, generally include
non-refundable signing fees, non-refundable annual maintenance fees, milestone
payments and royalties on product sales. Signing fees are recorded as revenue at
the signing date, annual maintenance fees are recorded at the due date and
milestones payments are recognized at the time the milestone is achieved. Sales
royalties will be recognized when earned. Under one license agreement, a
licensee received a license to the Company's phage display patent rights in a
defined field of use, for a one time non-refundable payment of $1,000,000, which
is included in license revenue for the year ended December 31, 1996.

Payments received which have not met the appropriate criteria for revenue
recognition are recorded as deferred revenue.

Product Warranty

The Company provides customers with up to a twelve-month warranty on its
chromatography products from the date of customer startup or up to a fourteen
month warranty from the date of shipment, whichever is less. Estimated warranty
obligations, which are included in the results of operations, are evaluated and
provided for at the time of sale. Product warranty costs were not significant
for any period presented.

Research and Development

Research and development costs are expensed as incurred.

Patents

The Company owns or is in the process of applying for patents in the United
States and other countries. All costs associated with these filings are expensed
as incurred.

Income Taxes

The Company utilizes the asset and liability method of accounting for
income taxes as set forth in Statement of Financial Accounting Standards No.
109, ("SFAS 109"), "Accounting for Income Taxes". Under this method, deferred
tax assets and liabilities are recognized for the expected future tax
consequences of temporary differences between the carrying amounts and the tax
basis of assets and liabilities using the current statutory tax rates.

Translation of Foreign Currencies

Assets and liabilities of the Company's foreign subsidiary are translated
at year end exchange rates. Amounts included in the statements of operations are
translated at the average exchange rate for the year. The resulting currency
translation adjustments are made directly to a separate component of
stockholders' equity. Gains and losses that result from transactions in foreign
currencies, which are included in the statement of operations, have not been
material.

Reclassifications

Certain reclassifications have been made to the 1995 and 1996 financial
statements to conform with 1997 presentation.

F-9
<PAGE> 78
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

New Accounting Standards

In September 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income" and SFAS No. 131, "Disclosures about Segments of an Enterprise and
Related Information." The Company will implement SFAS No. 130 and SFAS No. 131,
which require the Company to report and display certain information related to
comprehensive income and operating segments, respectively, as required in fiscal
year 1998. Adoption of SFAS No. 130 and SFAS No. 131 will not impact the
Company's financial position or results of operations.

Interim Financial Information

The financial statements for the three months ended March 31, 1997 and 1998
are unaudited but include all adjustments (consisting only of normal recurring
adjustments) which the Company considers necessary for a fair statement of the
operating results and cash flows for such period.

Historical Net Loss per Share

Effective December 31, 1997, the Company adopted Statement of Financial
Accounting No. 128 (SFAS 128) "Earnings per Share". This statement specifies the
computation, presentation and disclosure requirements for earnings per share
("EPS") to simplify the existing computational guidelines and increase
comparability on an international basis. This statement replaces primary EPS
with basic EPS, the principal difference being the exclusion of common stock
equivalents in the computation of basic EPS. In addition, this statement
requires the dual presentation of basic and diluted EPS on the face of statement
of operations.

Under SFAS 128, the Company is required to present two EPS amounts, basic
and diluted. Basic EPS is calculated based on income available to common
stockholders and the weighted-average number of shares outstanding during the
reporting period. Diluted EPS may include additional dilution from potential
common stock, such as stock issuable pursuant to the exercise of stock options
and warrants outstanding, the conversion of preferred stock and conversion of
debt.

For the years ended December 31, 1995, 1996 and 1997 and the three months
ended March 31, 1997 and 1998, the Company had convertible preferred stock,
convertible debt, stock options and stock warrants outstanding (see note 9).
These securities could potentially dilute basic EPS in the future and were not
included in the computation of diluted EPS because to do so would have been
anti-dilutive for the periods presented. Consequently there were no differences
between basic and diluted EPS for these periods.

Basic and diluted net loss per common share on a historical basis is
computed in the same manner as pro forma basic and diluted net loss per common
share, except that preferred stock is not assumed to be converted.

Pro Forma Net Loss per Share (unaudited)

The pro forma basic and diluted net loss per common share is computed based
upon the weighted average number of common shares outstanding in accordance with
SFAS 128. In addition, all outstanding shares of convertible preferred stock,
which convert to common stock upon the closing of an initial public offering on
or before October 31, 1998 where the price per share is at least $6.00 and net
proceeds are at least $10,000,000, are treated as if converted to common stock.

Pro Forma Balance Sheet

In January 1998, the Board of Directors authorized management of the
Company to file a Registration Statement with the Securities and Exchange
Commission for the Company to sell shares of its common stock in an initial
public offering. If the initial public offering contemplated by this Prospectus
is consummated

F-10
<PAGE> 79
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

under the terms presently anticipated, all outstanding shares of convertible
preferred stock at March 31, 1998 will convert into 5,831,516 shares of common
stock.

3. INVENTORIES:

Inventories consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------ MARCH 31,
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
Raw materials.......................... $ 707,000 $1,162,000 $1,301,000
Work in process........................ 518,000 281,000 78,000
Finished products...................... 57,000 430,000 282,000
---------- ---------- ----------
$1,282,000 $1,873,000 $1,661,000
========== ========== ==========
</TABLE>

4. FIXED ASSETS:

Fixed assets consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------------
1996 1997
----------- -----------
<S> <C> <C>
Laboratory and production equipment............... $ 1,048,000 $ 1,470,000
Furniture and office equipment.................... 705,000 873,000
Leasehold improvements............................ 334,000 664,000
----------- -----------
Total............................................. 2,087,000 3,007,000
Less: accumulated depreciation.................... (1,582,000) (1,856,000)
----------- -----------
$ 505,000 $ 1,151,000
=========== ===========
</TABLE>

Depreciation expense and amortization of leasehold improvements was
$279,000, $260,000 and $283,000 for the years ended December 31, 1995, 1996 and
1997, respectively, and $81,000 and $102,000 for the three months ended March
31, 1997 and 1998, respectively. Assets held under capital leases at December
31, 1997 consisted of $304,000 of laboratory and production equipment and
$141,000 of furniture and office equipment. The net book value of leased
equipment was $445,000 at December 31, 1997, the inception date of the lease.
There was no accumulated amortization of leased assets at December 31, 1997.

5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
------------------------
1996 1997
---------- ----------
<S> <C> <C>
Accounts payable.................................... $ 929,000 $1,193,000
Accrued wages and related taxes..................... 310,000 372,000
Accrued warranty and installation costs............. 67,000 234,000
Other accrued liabilities........................... 327,000 346,000
---------- ----------
Total............................................... $1,633,000 $2,145,000
========== ==========
</TABLE>

F-11
<PAGE> 80
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

6. LONG-TERM DEBT:

Long-term debt consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1997
--------- --------
<S> <C> <C>
Shareholder collateralized term note.................. $ 500,000 $500,000
Shareholder term note................................. 195,000 195,000
Shareholder installment note.......................... 189,000 68,000
--------- --------
884,000 763,000
Less current portion of long-term obligations......... (121,000) (68,000)
--------- --------
$ 763,000 $695,000
========= ========
</TABLE>

On August 11, 1995, in exchange for extinguishing an equal amount of its
bank debt, for which there was no gain or loss, the Company issued an interest
bearing collateralized term note to a shareholder, in a non-cash transaction, in
the amount of $500,000, payable at the earlier of five years or upon the
Company's closing of an initial public offering resulting in net proceeds of not
less than $10,000,000 and a per share of common stock sales price of not less
than $9.20 per share or an event of default. The noteholder has the option, but
not the obligation, to participate in future equity financings of the Company to
the extent of, and in exchange for, the balance of the note then due, and under
terms no more favorable than those offered to other participants in such sale of
equity. The note is collateralized with certain assets of the Company, including
certain intellectual property and is convertible in whole or in part into
equity, during any Company financing. Since August 1995, the Company has paid
the interest on the note monthly at a rate equal to prime plus one percent, as
established by the lending institution (approximately 8% at December 31, 1997).
The principal balance of $500,000 was outstanding at December 31, 1996 and 1997.

On August 11, 1995 the Company issued a term note to the same shareholder,
in the amount of $195,000, in exchange for a previously issued note and other
amounts owed to the shareholder, in a non-cash transaction. The term note is
payable and convertible under the same conditions as is the collateralized term
note described above. The annual interest rate of 8% has been paid quarterly
since August 1995. The principal balance of $195,000 was outstanding at December
31, 1996 and 1997.

On August 11, 1995, the Company issued an installment note to a shareholder
and previous officer of Protein Engineering Corporation in the amount of
$170,000 at 8% per annum, payable monthly for twenty months, commencing January
1, 1997. Principal and accrued interest of $189,000 was outstanding at December
31, 1996. The principal balance outstanding at December 31, 1997 was $68,000.

Interest paid on long-term debt was $223,000, $115,000 and $93,000 in 1995,
1996 and 1997, respectively and $41,000 and $16,000 for the three months ended
March 31, 1997 and 1998, respectively.

7. CAPITAL LEASES:

During 1997, the Company entered into a capital lease agreement providing
the Company with a $3,000,000 lease facility for furniture and equipment. In
1997, the Company sold to the lessor $445,000 of laboratory and production
equipment and furniture and office equipment under this lease facility and
leased $456,000 of laboratory and production equipment and furniture and office
equipment under this and other lease agreements, in non-cash transactions. At
December 31, 1997, $2,555,000 of the lease facility remained available.

F-12
<PAGE> 81
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

Minimum future payments under the Company's capital leases as of December
31, 1997 were as follows:

<TABLE>
<S> <C>
1998........................................................ $ 129,000
1999........................................................ 121,000
2000........................................................ 121,000
2001........................................................ 112,000
2002........................................................ 111,000
---------
Total future minimum lease payments......................... 594,000
Less: amount representing interest.......................... (124,000)
---------
Present value of future minimum lease payments.............. 470,000
Less: current portion....................................... (87,000)
---------
Capital leases-long term.................................... $ 383,000
=========
</TABLE>

8. COMMITMENTS:

The Company has an operating lease for laboratory and office facilities in
Cambridge, Massachusetts through December 1999 and an operating lease for
production, laboratory and office facilities in Charlottesville, Virginia
through April 2002. The Charlottesville lease has a renewal option with an
escalation clause. The Company also leases office space in the United Kingdom
under an operating lease which permits the Company to renew after each five-year
period; however, should the Company elect not to renew, there is a termination
fee equal to one year's rent, which has been included in the following
commitment schedule as part of the last year's payment under the current
five-year term. In addition, the Company leases various laboratory and office
equipment under operating leases with one to five year terms.

The future minimum lease payments under non-cancelable operating leases as
of December 31, 1997 are as follows:

Rent expense for the years ended December 31, 1995, 1996 and 1997 was
approximately $290,000, $588,000 and $925,000, respectively and $219,000 and
$269,000 for the three months ended March 31, 1997 and 1998, respectively.

9. STOCKHOLDERS' EQUITY:

Common Stock

Effective as of March 23, 1998, the Company implemented a reverse stock
split for all common stock outstanding whereby each stockholder received 0.652
share for each share of common stock, $0.01 par value. All periods presented
have been retroactively restated to reflect the reverse stock split.

On August 11, 1995, subsequent to the effect of the Company's 1995 Plan of
Recapitalization (which included a 0.1352-for-1 reverse stock split), the
Company issued 899,443 shares, valued at $284,000 in a non-cash transaction, and
reserved for issuance upon exercise of certain warrants 27,022 shares of common
stock, $0.01 par value, in exchange for 100% of the common shares outstanding of
Protein Engineering Corporation.

F-13
<PAGE> 82
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

Preferred Stock

On August 11, 1995, the Company implemented the 1995 Plan of
Recapitalization which included a reverse stock split for all Class C Preferred
Stock outstanding where each of the outstanding shares of Class C Series 1
Preferred Stock, par value $0.01 per share, of the company was converted into
0.216064 of a share of Class A Series 1 Preferred Stock; $0.01 par value per
share, of the Company; each of the outstanding shares of Class C Series 2
Preferred Stock, par value $0.01 per share, of the Company was converted into
0.549613 of a share of Class A Series 1 Preferred Stock; and each of the
outstanding shares of Class C Series 3 Preferred Stock, par value $0.01 per
share, of the Company was converted into 0.356744 of a share of Class A Series 1
Preferred Stock of the Company. There were 1,944,500 shares of Class A Series 1
Preferred Stock authorized as of December 31, 1996 and 1997.

On August 11, 1995, subsequent to the effect of the Company's 1995 Plan of
Recapitalization, the Company authorized 704,000 shares and issued 703,970
shares of Class A, Series 2 Preferred Stock, $0.01 par value per share, valued
at $1,408,000, in exchange for 100% of the preferred stock outstanding of
Protein Engineering Corporation in a non-cash transaction. (see note 13)

On August 11, 1995, subsequent to the 1995 Plan of Recapitalization and the
merger with Protein Engineering Corporation, the Company issued 992,132 shares
of Class A Series 3 Preferred Stock and on October 27, 1995 the Company issued
1,007,868 shares of Class A Series 3 Preferred Stock, $0.01 par value per share,
at $2.00 per share. Net proceeds from the sale of Class A Series 3 Preferred
Stock were $3,900,000 after deducting related expenses of $100,000 under which
413,868 shares were sold for cash and $1,188,000 of notes payable were converted
into 594,000 shares of Class A Series 3 Preferred Stock at a conversion rate of
$2 of debt per share. There were 2,000,000 shares of Class A Series 3 Preferred
Stock authorized at December 31, 1996 and 1997.

On October 30, 1996, the Company issued 3,514,377 shares of Class A Series
4 Preferred Stock, $0.01 par value per share, at $3.13 per share. Net proceeds
were $10,939,000 after deducting associated expenses of $61,000 and including
$596,000 of non-cash debt conversion.

On March 20, 1997 and March 27, 1997, the Company issued 472,825 and
309,935 shares, respectively, of Class A Series 4 Preferred Stock, $0.01 par
value per share, at $3.13 per share. Net proceeds were approximately $2,437,000
after deducting related expenses of $13,000. There were 4,792,332 shares of
Class A Series 4 Preferred Stock authorized at December 31, 1996 and 1997.

All Class A preferred shares are convertible at the option of the holder,
at any time, into an equal number of common shares. The conversion ratio may be
adjusted to provide protection against future dilution. Also, Class A preferred
shares are automatically convertible into common shares, on a 0.652 share of
common stock for one share basis of Preferred Stock, upon the closing of a
public offering of common stock by the Company on or before October 31, 1998,
where the price per share is at least $6.00 with net proceeds to the Company of
at least $10,000,000. Holders of Class A Preferred Stock are entitled to receive
non-cumulative dividends at the same rate as common stock holders. Holders of
Class A Preferred Stock are entitled to one vote per share and, for certain
events such as certain preferred stock transactions, modifying rights,
preferences, privileges or limitations of Class A Preferred Stock, amending the
Certificate of Incorporation or certain significant corporate transactions, a
majority vote of Class A Preferred Stock holders is required. In addition, Class
A Series 3 and Series 4 Preferred Stock holders are each entitled to vote as a
separate class for the election of one Director by Series 3 and one Director by
Series 4. Holders of Class A Series 1, Series 2, Series 3 and Series 4 Preferred
Stock have liquidation preferences in the aggregate amounts of $4,247,000,
$4,250,000, $4,000,000 and $13,450,000, respectively. At December 31, 1997 the
Company had reserved 5,831,516 shares of common stock for conversion of
outstanding shares of all series of Class A Preferred Stock.

F-14
<PAGE> 83
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

Stock Options

The Company's 1995 Equity Incentive Plan (the "Plan") is an equity plan
under which equity awards, including awards of incentive and nonqualified stock
options to purchase shares of common stock and restricted shares to employees
and consultants of the Company may be granted by action of the Board of
Directors. Options are granted at fair market value on the date of grant,
generally vest ratably over a 48 month period, and expire within ten years from
date of grant. During 1997, the Board increased the common stock options
available for grant under the Plan to 2,184,200. At March 31, 1998, there were
1,754,145 shares of common stock reserved for issuance under outstanding and
future grants under the Plan of which 639,299 shares remained available for
future grant. In 1996 and 1995, the Company granted options for 32,600 and
89,368 shares respectively, (net of cancellations) to consultants; no
compensation charge for these options was recorded since management deemed their
value to be immaterial to the financial statements.

All employees, directors, officers and consultants of the Company with
outstanding options granted under the Biotage, Inc. 1989 Stock Option Plan or
the Protein Engineering Corporation Stock Option Plan, were granted options
under the 1995 Equity Incentive Plan subject to the surrender of all options
granted prior to August 11, 1995, under the predecessor plan.

Stock option activity for the 1995 Equity Incentive Plan is summarized as
follows:

<TABLE>
<CAPTION>
WEIGHTED
AVG. EXERCISE
OPTION SHARES PRICE
-------------- -------------
<S> <C> <C>
Granted................................................... 395,531 $0.31
Canceled.................................................. (9,780) 0.31
--------
Outstanding at December 31, 1995.......................... 385,751 0.31
Granted................................................... 136,170 0.31
Exercised................................................. (16,178) 0.31
Canceled.................................................. (4,981) 0.31
--------
Outstanding at December 31, 1996.......................... 500,762 0.31
Granted................................................... 629,067 1.29
Exercised................................................. (142,466) 0.34
Canceled.................................................. (16,624) 0.35
--------
Outstanding at December 31, 1997.......................... 970,739 0.94
Granted................................................... 230,916 4.57
Exercised................................................. (79,071) 0.99
Canceled.................................................. (4,738) 1.47
--------
Outstanding at March 31, 1998 (unaudited)................. 1,117,846 1.69
========
</TABLE>

Summarized information about stock options outstanding at December 31, 1997
is as follows:

<TABLE>
<CAPTION>
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------------------------- -----------------------
WEIGHTED- WEIGHTED-
REMAINING AVERAGE AVERAGE
NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
RANGE OF EXERCISE PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
------------------------ ----------- ----------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C>
$.31 to $.49............................... 394,525 8.1 $0.32 194,561 $0.31
.77 to 1.00................................ 143,106 9.4 $0.81 23,582 $0.80
1.53....................................... 433,108 9.8 $1.53 15,022 $1.53
</TABLE>

F-15
<PAGE> 84
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

The weighted average fair value of options granted under the Plan during
1995, 1996 and 1997, as determined under the minimum value method, was $0.09,
$0.09 and $0.40. Total options exercisable at December 31, 1995, 1996 and 1997
and March 31, 1998, were 185,585, 250,347, 233,165 and 278,833, respectively.

During 1996 and 1997, the Company issued 5,264 and 93 shares, respectively,
of $.01 par value common stock upon the exercise of employee stock options
granted under the Biotage, Inc. 1989 Stock Option Plan as extended by the Board
of Directors during 1995. The shares were purchased at $1.13 and $2.84 per share
in 1996 and 1997, respectively.

SFAS 123, "Accounting for Stock-Based Compensation" requires that companies
either recognize compensation expense for grants of stock, stock options, and
other equity instruments based on fair value, or provide pro forma disclosure of
net income in the notes to the financial statements. The Company adopted the
disclosure provisions of SFAS 123 in 1996 and applied APB Opinion 25 and related
interpretations in accounting for its plan. Had compensation costs for the
Company's employee and director stock-based compensation plan been determined
based on the fair value at the grant dates as calculated in accordance with SFAS
123, the Company's net loss for the years ended December 31, 1995, 1996 and 1997
the Company's net loss and net loss per share would have increased to the pro
forma amounts shown below.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------------------
1995 1996 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net loss as reported........................ $(6,585,000) $(2,397,000) $(5,535,000)
Pro forma................................... $(6,601,000) $(2,403,000) $(5,555,000)
Historical net loss per share -- basic and
diluted as reported....................... $ (27.53) $ (2.38) $ (5.14)
Pro forma................................... $ (27.59) $ (2.39) $ (5.16)
</TABLE>

The fair value of each stock option granted is estimated on the grant date
using the minimum value method with the following weighted average assumptions:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1995 1996 1997
----- ----- -----
<S> <C> <C> <C>
Expected option term.................................. 6.0 6.0 6.0
Risk-free interest rate............................... 5.72% 6.55% 6.31%
Expected dividend yield............................... none none none
</TABLE>

The effects of applying SFAS 123 in this pro forma disclosure are not
likely to be representative of the effects on reported net income for future
years.

In connection with certain stock option grants and sales of shares of
common stock in 1997 and during the three months ended March 31, 1998, the
Company recorded $1,750,000 and $536,000 (including $285,000 related to the sale
of shares of common stock to an officer of the Company), respectively of
deferred compensation expense which is being amortized and charged to operations
over the vesting period of the related options. Total option-related
compensation expense for 1997 and for the three months ended March 31, 1998 was
$75,000 and $263,000, respectively.

Restricted Stock Purchase Agreements

In March 1997, the Company granted a right to purchase 114,100 shares of
common stock at a purchase price of $0.77 per share to an officer under its 1995
Equity Incentive Plan, subject to a stock restriction agreement whereby the
Company has the right, but not the obligation, to repurchase the unvested
portion of the shares of common stock at the original purchase price per share
in the event of termination of the officer's

F-16
<PAGE> 85
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

employment with the Company. Shares subject to this agreement vest monthly over
a 48 month period. At March 31, 1998, there were 85,575 unvested common shares
at a weighted average fair value, as determined under the minimum value method,
of $0.24 per share. The restriction agreement may be terminated at any time at
the Company's election.

On February 18, 1998, the Company sold to an officer 78,240 shares of its
common stock at a purchase price of $4.60 per share under its 1995 Equity
Incentive Plan subject to a stock restriction agreement whereby the Company has
the right, but not the obligation, to repurchase the unvested portion of the
shares of common stock at the original purchase price per share upon termination
of the officer's employment. Shares subject to this agreement vest monthly over
a 24-month period beginning in February 2000 except that unvested shares will
vest in full upon the closing of an initial public offering of the Company's
common stock or upon the sale of the Company during the officer's employment
with the Company or within 180 days after termination without cause. The Company
recorded $285,000 of deferred compensation in the three months ended March 31,
1998 in connection with the sale of shares of common stock to the officer based
upon an estimated fair value at the date of issuance of $8.25 per share. The
deferred compensation amount will be charged to operations either over a
24-month period beginning in February 2000 or in its entirety upon the closing
of an initial public offering of the Company's common stock.

Notes Receivable for Sale of Common Stock

In connection with the sale of 78,240 shares of restricted common stock and
the exercise of options to purchase 37,490 shares of common stock, the Company
agreed to loan to the officer an aggregate of $454,000 in a non-cash transaction
pursuant to promissory notes, of which $418,000 was used to purchase the related
common stock and is included in stockholders' equity. The notes, which bear
interest of 5.69% per annum and which are each secured by a corresponding pledge
of the shares of common stock purchased under the restricted stock award and
received upon exercise of the stock option, are payable in February 2002,
subject to acceleration, and become due immediately if the officers employment
is terminated other than by the Company without cause or in February 2000 if the
Company closes an initial public offering or is sold. As long as the officer
remains employed by the Company, the Company will forgive all interest accrued
on the notes annually or through the date of any earlier termination of
employment.

Warrants

At December 31, 1995, 1996 and 1997 and March 31, 1998, the Company had
outstanding warrants for the purchase of 45,932, 45,932 and 27,022 shares of
common stock at prices ranging from $3.97 to $165.58 per share for warrants in
1995 and 1996 and at $3.97 per share in 1997. In 1997, warrants for 18,910
shares expired and the remaining warrants expire on August 10, 2000. An equal
number of shares of common stock have been reserved for the exercise of
outstanding warrants at March 31, 1998.

1998 Employee Stock Purchase Plan. In January 1998, the Company adopted
the Company's 1998 Employee Stock Purchase Plan (the "Purchase Plan") under
which employees may purchase shares of Common Stock at a discount from fair
market value. There are 97,800 shares of Common Stock reserved for issuance
under the Purchase Plan. To date, no shares of Common Stock have been issued
under the Purchase Plan. Rights to purchase Common Stock under the Purchase Plan
are granted at the discretion of the Compensation Committee, which determines
the frequency and duration of individual offerings under the Purchase Plan and
the dates when stock may be purchased. Eligible employees participate
voluntarily and may withdraw from any offering at any time before stock is
purchased. The purchase price per share of Common Stock in an offering is 85% of
the lesser of its fair market value at the beginning of the offering period or
on the applicable exercise date and may be paid through payroll deductions,
periodic lump sum payments or a combination of both.

F-17
<PAGE> 86
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

10. EMPLOYEE SAVINGS AND RETIREMENT PLAN:

The Company has an employee savings and retirement plan (the "Plan"),
qualified under section 401(k) of the Internal Revenue Code, covering
substantially all of the Company's employees. Employees may elect to contribute
a portion of their pretax compensation to the Plan up to the annual maximum
allowed under the Plan. The Plan does not provide for a fixed matching
contribution by the Company, however, for each plan year the Company may
contribute to the Plan at its discretion. No contributions to the Plan were made
by the Company in 1995, 1996 or 1997 or the three months ended March 31, 1998.

11. INCOME TAXES:

For the years ended December 31, 1995, 1996 and 1997, the Company had no
income tax provisions.

Temporary differences that give rise to significant deferred tax assets as
of December 31, 1995, 1996 and 1997 are as follows:

<TABLE>
<CAPTION>
1995 1996 1997
------------ ------------ ------------
<S> <C> <C> <C>
Deferred Tax asset:
Inventory costs.......................... $ 84,000 $ 126,000 $ 86,000
Accelerated book depreciation............ 124,000 126,000 84,000
Accelerated book amortization............ 14,000 16,000 13,000
Allowance for doubtful accounts.......... 16,000 18,000 32,000
Accrued expenses......................... 48,000 60,000 116,000
Net operating loss carryforwards......... 10,902,000 9,722,000 12,890,000
Research credit carryforwards............ 665,000 635,000 742,000
Valuation allowance...................... (11,853,000) (10,703,000) (13,963,000)
------------ ------------ ------------
Net deferred tax asset................... -- -- --
============ ============ ============
</TABLE>

The Company has net operating loss carryforwards available to offset future
federal and state taxable income of approximately $31,376,000 as of December 31,
1997 and research credits of approximately $740,000, available to offset future
federal tax. These net operating loss and credit carryforwards expire in years
2005 through 2012. As a result of the acquisition of PEC and P.E.C. Technologies
Corp. (Note 13) and stock issued over the past five years, utilization of the
net operating loss and credit carryforwards will be subject to limitation under
section 382 of the Internal Revenue Code. In addition, at December 31, 1997, the
Company also had United Kingdom operating loss carryforwards for income tax
purposes of approximately $1,306,000 which are indefinitely available to offset
future taxable income in the United Kingdom.

12. RELATED PARTY TRANSACTIONS:

The President, Chief Executive Officer and Chairman of the Board of the
Company also serves as an outside director of and consultant to Genzyme
Corporation ("Genzyme") and outside director of Genzyme Transgenics Corporation.
In 1996, the Company entered into a sublease agreement with Genzyme for
laboratory and office facilities in Cambridge, Massachusetts which extends to
December 1999. The total commitment for the sublease is $1,230,000 at December
31, 1997. A total of $143,000 and $590,000 was recorded as rent expense during
1996 and 1997, respectively, and $129,000 and $154,000 was recorded as rent
expense during the three months ended March 31, 1997 and 1998, respectively.
During 1996, the Company signed two patent license agreements with Genzyme under
the Company's standard license terms. The Company recorded license revenues of
$54,000 and $50,000 in 1996 and 1997, respectively, in connection with the
signing and maintenance fees on these two agreements. The Company has entered
into two funded

F-18
<PAGE> 87
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

discovery projects with Genzyme Transgenic Corporation resulting in recorded
revenues of $45,000 and $145,000 in 1996 and 1997. Revenues earned by the
Company under product development and license agreements with Genzyme and its
subsidiaries and affiliates during the three months ended March 31, 1997 and
1998 were $50,000 and $107,000, respectively. (see note 9)

In June 1998, the Company and Genzyme entered into a non-binding letter of
intent for the joint development and commercialization of one of the Company's
proprietary therapeutic compounds for the treatment of chronic inflammatory
diseases, with initial development to be focused on the treatment of hereditary
angioedema. Subject to the negotiation of a definitive agreement, Dyax will
initially fund up to $6.0 million dollars of development costs and thereafter
the parties will fund equally all development costs. Upon signing the definitive
collaboration agreement, Genzyme will extend to the Company a $3.0 million line
of credit which the Company may use to fund a portion of such development costs
or for any of the Company's other research and development programs. In
addition, the Company will be entitled to receive significant milestone payments
and up to 50% of the profits from sales of products developed under this
collaboration. The Company believes that the proposed collaboration with Genzyme
will provide Dyax with significant financial and other resources to continue
preclinical and clinical development of this proprietary compound, although
there can be no assurance that such an agreement will be consummated. In
addition, Genzyme has committed to purchase $3.0 million of the Company's Common
Stock at the initial public offering price in a private placement concurrent
with this Offering.

13. MERGER WITH PROTEIN ENGINEERING CORPORATION:

On August 11, 1995, the Company completed a transaction to acquire Protein
Engineering Corporation ("PEC") through one of the Company's wholly-owned
subsidiaries (see Note 9). PEC was formed in 1987 with an emphasis in the field
of phage display technology. The financial results of PEC are included in the
Company's consolidated financial results of operations with effect from the date
of the merger. Each outstanding common share of PEC stock was converted into
25.16 shares of the Company's common stock and each preferred share of PEC stock
was converted into 48.24 shares of the Company's Class A Series 2 Preferred
Stock. The acquisition was accounted for using the purchase method of
accounting. The excess of the purchase price over the fair value of the net
assets acquired was written off and recorded as a purchase of incomplete
technology, resulting in a non-cash charge to results of operations of
$3,942,000, which represents the value of acquired technologies which had not
reached commercialization at the time of acquisition.

<TABLE>
<S> <C>
Details of the merger are as follows:
Total non-cash consideration:
Common stock........................................... $ 284,000
Preferred stock........................................ 1,408,000
Convertible term notes assumed......................... 1,764,000
Installment notes assumed.............................. 170,000
Liabilities assumed.................................... 1,309,000
----------
4,935,000
Less: Fair value of assets acquired including cash..... 993,000
----------
Write off of incomplete technology before acquisition
costs................................................. 3,942,000
Costs directly associated with the merger
transaction........................................... 156,000
----------
Write off of incomplete technology.......................... $4,098,000
==========
</TABLE>

Preferred shares issued in the acquisition were valued at the $2.00 price
used for the sale of other Series A preferred stock on August 11, 1995. Common
shares were valued by the Board of Directors at a price

F-19
<PAGE> 88
DYAX CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

INFORMATION AS OF MARCH 31, 1998 AND FOR THE THREE MONTHS ENDED MARCH 31, 1997
AND 1998 IS UNAUDITED

equivalent to 10% of the preferred stock on August 11, 1995, the same price
being used to value common shares issued in connection with employee stock
options. The notes and liabilities assumed were recorded at the face (book)
value.

The following unaudited pro forma data reflects the Company's results of
operations as if the Protein Engineering acquisition occurred on January 1,
1995.

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
-----------------
<S> <C>
Revenues............................................. $ 4,280,000
Net loss............................................. (6,924,000)
</TABLE>

During the period ended August 11, 1995, Protein Engineering Corporation
earned approximately $210,000 of product development revenues under its
agreement with Dyax Corp. Intercompany revenue and related expenses have been
eliminated in the above pro forma data.

14. FINANCIAL INFORMATION BY GEOGRAPHIC AREA

The Company operates in one business segment and in the geographic segments
of the United States ("U.S.") and the United Kingdom ("U.K.") as indicated in
the table below.

<TABLE>
<CAPTION>
1995 1996 1997
--------------- ----------------- -----------------
U.S. U.K. U.S. U.K. U.S. U.K.
------- ---- ------- ------ ------- ------
<S> <C> <C> <C> <C> <C> <C>
Revenues........................... $ 3,026 $994 $ 5,914 $1,123 $ 7,610 $2,166
Net income (loss).................. (6,705) 120 (2,656) 259 (5,620) 85
Total assets....................... 4,288 404 11,612 624 9,136 1,396
</TABLE>

15. COMPREHENSIVE INCOME

The Company adopted SFAS No. 130 in 1998. Accumulated other comprehensive
income (loss) is calculated as follows:

<TABLE>
<S> <C> <C>
Accumulated other comprehensive income (loss):
Foreign currency translation adjustment:
Balance at December 31, 1996 and 1997............ $ 30,000 $(141,000)
Change during the three months ended March 31,
1997 and 1998, respectively.................... (19,000) 70,000
-------- ---------
Balance at March 31, 1997 and 1998............... $ 11,000 $ (71,000)
======== =========
</TABLE>

F-20
<PAGE> 89

REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of
Dyax Corp.:

We have audited the accompanying consolidated statements of operations and
accumulated deficit and cash flows of Protein Engineering Corporation for the
period from January 1, 1995 to August 11, 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated results of operations and cash flows
for Protein Engineering Corporation for the period from January 1, 1995 to
August 11, 1995 in conformity with generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Boston, Massachusetts
February 17, 1998

F-21
<PAGE> 90

PROTEIN ENGINEERING CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS AND ACCUMULATED DEFICIT
FOR THE PERIOD FROM JANUARY 1, 1995 TO AUGUST 11, 1995

<TABLE>
<CAPTION>
1995
------------
<S> <C>
Revenues:
Product development....................................... $ 470,000
------------
Operating expenses:
Research and development.................................. 395,000
General and administrative................................ 338,000
------------
Total operating expenses.................................... 733,000
------------
Loss from operations........................................ (263,000)
------------
Interest income........................................... 3,000
Interest expense.......................................... (79,000)
------------
Net loss.................................................... $ (339,000)
Accumulated deficit at January 1, 1995...................... (10,157,000)
------------
Accumulated deficit at August 11, 1995...................... (10,496,000)
============

Basic and diluted net loss per common share................. $ (24.70)

Weighted average number of basic and diluted common
shares.................................................... 13,722
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-22
<PAGE> 91

PROTEIN ENGINEERING CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM JANUARY 1, 1995 TO AUGUST 11, 1995

<TABLE>
<S> <C>
Cash flows from operating activities:
Net loss.................................................. $ (339,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization.......................... 10,000
Changes in operating assets and liabilities:
Other current assets................................... (5,000)
Accounts payable and accrued expenses.................. 111,000
Deferred revenue....................................... 1,043,000
----------
Net cash provided by operating activities................... 820,000
----------
Cash flows from financing activities:
Proceeds from convertible notes........................... 78,000
Repayment of capital leases............................... (3,000)
----------
Net cash provided by financing activities................... 75,000
----------
Net increase in cash and cash equivalents................... 895,000
Cash and cash equivalents at December 31, 1994.............. 33,000
----------
Cash and cash equivalents at August 11, 1995................ $ 928,000
==========
</TABLE>

The accompanying notes are an integral part of the consolidated financial
statements.
F-23
<PAGE> 92

PROTEIN ENGINEERING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS:

Protein Engineering Corporation, (the "Company") commenced operations in
March 1987 to perform scientific research in Phage Display for human therapeutic
applications. Since its formation, it devoted substantially all of its efforts
to establishing the business, conducting research and development and obtaining
financing. The Company was acquired by Dyax Corp. on August 11, 1995. See Note
6.

The Company was subject to risks common to companies in the biotechnology
industry including, but not limited to, development by the Company or its
competitors of new technological innovations, dependence on key personnel,
protection of proprietary technology and compliance with FDA government
regulations and approval requirements.

2. ACCOUNTING POLICIES:

Basis of Consolidation

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiary, P.E.C. Technology Corp. All
intercompany accounts and transactions have been eliminated.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that effect the reported amounts of revenue and expenses during the
reporting period. The significant estimates and assumptions in these financial
statements include contract revenue recognition. Actual results could differ
from those estimates.

Cash and cash equivalents

Cash and cash equivalents consist principally of cash and money market
accounts. The Company invests its excess cash in U.S. treasury funds and a money
market account held by a financial institution.

Fixed Assets

Property and equipment are depreciated over the estimated useful lives of
the related assets using the straight-line method. Laboratory equipment and
office equipment are depreciated over five-to-seven year periods. Leasehold
improvements are amortized over the lesser of the noncancelable term of the
related lease or their estimated useful lives. Maintenance and repairs are
charged to expense as incurred.

Revenue Recognition

The Company entered into research agreements with various biotechnology
companies. During the period from January 1, 1995 to August 11, 1995, the terms
of these agreements included non-refundable fees, which were recognized when the
agreement was signed, and research revenues, which were deferred and recognized
as expenses were incurred. During the period from January 1, 1995 to August 11,
1995, three customers accounted for substantially all of the revenues.

Research and Development

Research and development costs are expensed as incurred.

F-24
<PAGE> 93
PROTEIN ENGINEERING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Patents

The Company owns or was in the process of applying for patents in the
United States and other countries. All costs associated with these filings are
expensed as incurred.

Income Taxes

The Company utilizes the asset and liability method of accounting for
income taxes as set forth in Statement of Financial Accounting Standards No.
109, ("SFAS 109"), Accounting for Income Taxes. For the period from January 1,
1995 to August 11, 1995, the Company had no income tax provision.

Earnings per share

The Company adopted Statement of Financial Accounting No. 128 (SFAS 128)
"Earnings per Share" retroactive to the period from January 1, 1995 to August
11, 1995. This statement specifies the computation, presentation and disclosure
requirements for earnings per share ("EPS") to simplify the existing
computational guidelines and increase comparability on an international basis.
This statement replaces primary EPS with basic EPS, the principal difference
being the exclusion of common stock equivalents in the computation of basic EPS.
In addition, this statement requires the dual presentation of basic and diluted
EPS on the face of statement of operations.

Under SFAS 128, the Company is required to present two EPS amounts, basic
and diluted. Basic EPS is calculated based on income available to common
stockholders and the weighted-average number of shares outstanding during the
reported period. Diluted EPS may include additional dilution from potential
common stock, such as stock issuable pursuant to the exercise of stock options
and warrants outstanding, the conversion of preferred stock and conversion of
debt.

For the period from January 1, 1995 to August 11, 1995 the Company had
convertible preferred stock, convertible debt, stock options and stock warrants
outstanding. These securities were not included in the computation of diluted
EPS because to do so would have been anti-dilutive for the periods presented.
Consequently there were no differences between basic and diluted EPS.

3. FIXED ASSETS:

Depreciation expense and amortization of leasehold improvements was $10,000
for the period from January 1, 1995 to August 11, 1995.

4. LONG-TERM DEBT:

At August 11, 1995, the Company had convertible term notes in the amount of
$1,764,000, with interest at 8% payable to stockholders and their affiliates.

At August 11, 1995, the Company had an installment note outstanding in the
amount of $170,000, with interest at 8%, payable to an officer who is a
stockholder, which was issued in a non-cash transaction in exchange for $94,000
of accrued compensation and $76,000 of accrued lease payments, of which $44,000
and $22,000, respectively, related to the period from January 1, 1995 to August
11, 1995.

There was no interest paid on long-term debt in the period from January 1,
1995 to August 11, 1995.

5. COMMITMENTS:

The Company rented its facilities in Cambridge, Massachusetts under a
tenant-at-will arrangement. In addition, the Company leased certain laboratory
and office equipment under operating leases. Rent expense for the period from
January 1, 1995 to August 11, 1995 was $80,000.

F-25
<PAGE> 94
PROTEIN ENGINEERING CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. TRANSACTION WITH DYAX CORP.:

On August 11, 1995, the Company completed a transaction to be acquired by
Dyax Corp. Each outstanding common share of Protein Engineering Corporation
stock was converted into 25.16 shares of Dyax Corp. common stock and each
preferred share of Protein Engineering Corporation stock was converted into
48.24 shares of Dyax Corp. Class A, Series 2 preferred stock. All assets and
liabilities of Protein Engineering Corporation were assumed by Dyax Corp. upon
the acquisition.

Details of the merger are as follows:

<TABLE>
<S> <C>
Total consideration:
Common stock........................................... $ 284,000
Preferred stock........................................ 1,408,000
Convertible term notes assumed......................... 1,764,000
Installment note assumed............................... 170,000
Liabilities assumed.................................... 1,309,000
----------
$4,935,000
==========
</TABLE>

During the period from January 1, 1995 to August 11, 1995, Protein
Engineering Corporation earned approximately $210,000 of product development
revenues under its agreement with Dyax Corp.

F-26
<PAGE> 95

Description of image appearing on the Inside Back Cover of the Prospectus:

[Photographs of the Company's Flash 400(TM), Flash(TM) Chromatography
Cartridges, and Parallex(TM) Automated HPLC systems. Dyax develops,
manufactures and sells chromatography separations systems and cartridge
chromatography products under the Biotage trade name.]
<PAGE> 96

================================================================================

NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR THE UNDERWRITERS.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY ANY OTHER THAN THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO
SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES
IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY OFFER OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE
COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION HEREIN IS CURRENT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.......................................................... 3
Risk Factors................................................................ 7
Use of Proceeds............................................................. 18
Dividend Policy............................................................. 18
Capitalization.............................................................. 19
Dilution.................................................................... 20
Selected Consolidated Financial Data........................................ 21
Management's Discussion and Analysis of Financial Condition and Results
of Operations............................................................. 22
Business.................................................................... 28
Management.................................................................. 51
Certain Transactions........................................................ 57
Principal Stockholders...................................................... 59
Description of Capital Stock................................................ 61
Shares Eligible for Future Sale............................................. 63
Underwriting................................................................ 65
Legal Matters............................................................... 66
Experts..................................................................... 66
Additional Information...................................................... 67
Index to Financial Statements............................................... F-1
</TABLE>

UNTIL , 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPATING
IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS IS IN
ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN ACTING AS
UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS.

================================================================================

2,250,000 SHARES

[DYAX CORPORATE LOGO]

COMMON STOCK

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

PROSPECTUS

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

ING BARING FURMAN SELZ LLC

PACIFIC GROWTH EQUITIES, INC.

, 1998

================================================================================

<PAGE> 97

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

The estimated expenses to be paid by the Registrant in connection with this
Offering are as follows:

<TABLE>
<S> <C>
SEC registration fee........................................ $ 10,178
Nasdaq National Market fee.................................. 75,625
NASD filing fee and expenses................................ 3,950
Blue Sky fees and expenses.................................. 15,000
Printing and engraving expenses............................. 150,000
Legal fees and expenses..................................... 400,000
Accounting fees and expenses................................ 300,000
Transfer Agent and Registrar fees........................... 10,000
Miscellaneous expenses...................................... 135,247
----------
Total....................................................... $1,100,000
==========
</TABLE>

All of the above figures, except the SEC registration fee and NASD filing
fee, are estimates.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 145 of the Delaware General Corporation Law permits the Registrant
to indemnify directors, officers, employees and agents of the Registrant against
actual and reasonable expenses (including attorneys' fees) incurred by them in
connection with any action, suit or proceeding brought against them by reason of
their status or service as a director, officer, employee or agent by or on
behalf of the Registrant, and against expenses (including attorneys' fees),
judgments, fines and settlements actually and reasonably incurred by him in
connection with any such action, suit or proceeding, if (i) he acted in good
faith and in a manner he reasonably believed to be in or not opposed to the best
interests of the Registrant, and (ii) in the case of a criminal proceeding, he
had no reasonable cause to believe his conduct was unlawful. Except as ordered
by a court, no indemnification shall be made in connection with any proceeding
brought by or in the right of the corporation where the person involved is
adjudged to be liable to the Registrant.

Article Eighth of the Registrant's Restated Certificate of Incorporation
provides that the Registrant shall, to the fullest extent permitted by Section
145 of the Delaware General Corporation Law, as that section may be amended and
supplemented from time to time, indemnify any and all persons whom it shall have
power under that section to indemnify against any expenses, liabilities or other
matters referred to in or covered by that section. The indemnification proved
for in Article Eighth is expressly not exclusive of any other rights to which
those seeking indemnification may be entitled under any by-law, agreement, vote
of stockholders or disinterested directors or otherwise, both as to action in
their official capacities and as to action in another capacity while holding
such office, and shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of heirs, executors
and administrators of such a person.

Article Ninth of the Registrant's Restated Certificate of Incorporation
provides that no director shall be personally liable to the Registrant or its
stockholders for monetary damages for any breach of fiduciary duty by such
director as a director. Notwithstanding that provision, Article Ninth provides
that a director shall be liable to the extent provided by applicable law (i) for
breach of the director's duty of loyalty to the Registrant or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
Delaware General Corporation Law or (iv) for any transaction from which the
director derived improper personal benefit. Article Ninth further states that if
the Delaware General Corporation Law is hereafter amended to authorize a further
limitation or elimination of the liability of directors or officers, then the
liability of a director or officer of the Registrant shall, in addition to the
limitation on personal liability provided in Article Ninth, be limited or
eliminated to the fullest extent permitted by the Delaware General Corporation
Law, as from time to time amended. Article Ninth

II-1
<PAGE> 98

also stipulates that no amendment to or repeal of Article Ninth shall apply to
or have any effect on the liability or alleged liability of any director or
officer of the Registrant for or with respect to any acts or omissions of such
director or officer occurring prior to such amendment or repeal.

The Registrant expects to obtain Directors' and Officers' insurance to
cover its directors and officers against certain liabilities they may incur when
acting in their capacity as directors or officers of the Registrant.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

Since March 1, 1995, the Registrant has issued and sold the following
unregistered securities:

(a) Issuances of Stock

On August 11, 1995 the Registrant issued an aggregate of 703,970 shares of
Class A Series 2 Preferred Stock and 899,443 shares of Common Stock (after
giving effect to the 0.652-for-1 reverse stock split) to certain former
stockholders of Protein Engineering Corporation in exchange for their
outstanding shares of Protein Engineering Corporation stock in connection with
the Registrant's acquisition of Protein Engineering Corporation.

On August 11, 1995 the Registrant issued an aggregate of (i) 1,847,936
shares of Class A Series 1 Preferred Stock and 100,570 shares of Common Stock
(after giving effect to the 0.652-for-1 reverse stock split) to existing
stockholders of the Registrant in exchange for 5,530,569 shares of all series of
Class C Preferred Stock and 1,141,120 shares of Common Stock then outstanding in
a recapitalization; and (ii) 95,000 shares of Class A Series 1 Preferred Stock
to Gateway Venture Partners III, L.P. (35,000 shares), Oak Investment Partners
IV, Limited Partnership (33,474 shares), Oak IV Affiliates Fund, Limited
Partnership (1,526 shares), Henry E. Blair (20,000 shares) and Robert Dishman
(5,000 shares), each of whom held a promissory note issued by the Company, in
exchange for the release of a lien on the Registrant's license of Protein
Engineering Corporation technology in the field of separations.

On August 11 and October 27, 1995 the Registrant sold an aggregate of
2,000,000 shares of Class A Series 3 Preferred Stock to Prince Venture Partners
IV, Loeb Investment Co. 106B, Gateway Venture Partners III, L.P., Oak IV
Investment Partners, Oak IV Affiliates Fund, Zinsmeyer Trusts Partnership, Aetna
Casualty and Surety Co., The Standard Fire Ins. Co., New York Life Insurance
Co., H&Q Health Care Investors and H&Q Life Sciences Investors and individual
investors including Henry E. Blair, Henry R. Lewis, Robert C. Ladner and certain
other non-affiliates of the Company at a purchase price of $2.00 per share for
an aggregate purchase price of $4,000,000.

On October 30, 1996, March 20, 1997 and March 27, 1997, the Registrant sold
an aggregate of 4,297,137 shares of Class A Series 4 Preferred Stock to Prince
Venture Partners IV, Limited Partnership, Loeb Investors Co. 106C, Oak IV
Investment Partners, Oak IV Affiliates Fund, Zinsmeyer Trusts Partnership, H&Q
Heath Care Investors, H&Q Life Sciences Investors, Gateway Venture Partners III,
L.P., Forty- Niner Partnership, BancBoston Ventures, Inc., New York Life
Insurance Company, Berwick Partners II, GMMI SBIC, Inc. and GMM I SBIC, L.P. and
individual investors including Henry E. Blair, Henry R. Lewis and certain other
non-affiliates of the Company at a purchase price of $3.13 per share for an
aggregate purchase price of $13,450,038.

From August 11, 1995 to March 17, 1998, the Registrant sold an aggregate of
192,340 shares of Common Stock to certain of the Registrant's employees at
prices ranging from $0.77 to $4.60 per share for an aggregate purchase price of
$447,500. These shares were issued pursuant to Awards of Restricted Stock under
the 1995 Equity Plan.

(b) Grants and Exercises of Stock Options and Warrants.

As of June 15, 1998, 1,606,893 options to purchase shares of the
Registrant's Common Stock had been granted under the Registrant's 1995 Equity
Plan, 1,130,623 of which are outstanding, 439,079 of which have been exercised
and 37,191 of which have been cancelled, and options to purchase 614,131 shares
of Common Stock remain available for future grant under the 1995 Equity Plan.

II-2
<PAGE> 99

On August 11, 1995, the Company issued warrants to purchase an aggregate of
27,022 shares of Common Stock at a purchase price of $3.97 per share to a former
stockholder at Protein Engineering Corporation. The warrants expire on August
10, 2000.

No underwriter was engaged in connection with the foregoing sales of
securities. Sales of Common Stock to employees have been made in reliance upon
the exemption for the registration requirements afforded by Section 4(2) of the
Securities Act and Rule 701 thereunder as sales of an issuer's securities
pursuant to a written contract relating to the compensation of such individuals.
Sales of shares of Preferred Stock and issuances of warrants to purchase shares
of Common Stock were made in reliance upon Section 4(2) of the Act as
transactions not involving any public offering. The Registrant has reason to
believe that all of the foregoing purchasers were familiar with or had access to
information concerning the operations and financial condition of the Registrant,
and all of those individuals acquired shares for investment and not with a view
to the distribution thereof. At the time of issuance, all of the foregoing
shares of Common Stock and Preferred Stock, or warrants to purchase shares, were
deemed to be restricted securities for the purposes of the Securities Act, and
the certificates representing such securities bore legends to that effect.

II-3
<PAGE> 100

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a) List of Exhibits

The following Exhibits are filed herewith:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<C> <S>
1.1 Form of Underwriting Agreement.
3.1 Certificate of Incorporation of the Registrant as amended
and restated through March 23, 1998.
3.2 Form of Restated Certificate of Incorporation of Registrant,
as proposed to be amended and restated.
3.3 By-laws of the Registrant.
3.4 Form of Restated By-laws of Registrant, as proposed to be
amended and restated.
4.1 Specimen Common Stock Certificate.
5.1 Opinion of Palmer & Dodge LLP with respect to the legality
of the securities being registered.
10.1 Amended and Restated 1995 Equity Incentive Plan.
10.2 1998 Employee Stock Purchase Plan.
10.3 Executive Employment Agreement, dated February 18, 1998,
between Robert Dishman and the Registrant.
10.4 Executive Employment, Non-Compete and Confidentiality
Agreement, dated August 1995, between Robert Ladner and the
Registrant.
10.5 Consulting Agreement, dated October 15, 1997, between James
W. Fordyce and the Registrant.
10.6 Employment Letter and Employee Confidentiality Agreement,
dated January 6, 1998, between Keith S. Ehrlich and the
Registrant.
10.7 Restricted Stockholder Agreement, dated March 30, 1997,
between Henry E. Blair and the Registrant.
10.8 Secured Convertible Term Note, dated August 11, 1995,
between Sheridan G. Snyder and the Registrant; Security
Agreement, dated May 11, 1993, between Sheridan G. Snyder
and the Registrant; and Assignment Agreement, dated May 11,
1993, between Sheridan G. Snyder and Crestar Bank, N.A. as
amended by the Amendment to Security Agreement and to
Assignment Agreement, dated August 10, 1995, between
Sheridan G. Snyder, Crestar Bank, N.A. and the Registrant.
10.9 Sublease Agreement, dated September 21, 1996, as amended on
December 31, 1997 between Genzyme Corporation and the
Registrant.
10.10 Lease Agreement, dated as of February 12, 1998, between
AStec Partnership and the Registrant.
10.11 Lease Agreement, dated as of February 11, 1997, between
AStec Partnership and the Registrant.
10.12 Lease Agreement, dated April 8, 1991, between Bridge Gate
Real Estates Limited, Harforde Court Management Limited and
the Registrant.
10.13 Lease Agreement, dated February 20, 1998, between Old
Kendall Property LLC and the Registrant.
10.14 Master Lease Agreement, dated December 30, 1997, between
Transamerica Business Credit Corporation and the Registrant.
10.15 Form of Sale and Leaseback Agreement, dated December 30,
1997, between Transamerica Business Credit Corporation and
the Registrant.
10.16 Form of License Agreement (Therapeutic Field) between the
Licensee and the Registrant.
10.17 Form of License Agreement (Antibody Diagnostic Field)
between the Licensee and the Registrant.
10.18 Collaboration Agreement, dated June 20, 1997, between EPIX
Medical, Inc. and the Registrant.
10.19 + Patent License Agreement, dated June 19, 1997, between
Massachusetts Institute of Technology ("M.I.T."), Whitehead
Institute for Biomedical Research ("Whitehead") and the
Registrant as amended by the First Amendment thereto dated
November 10, 1997, by and among M.I.T., Whitehead, The
Massachusetts General Hospital and the Registrant.
</TABLE>

II-4
<PAGE> 101

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
10.20 + Research and Development Agreement, dated March 10, 1997,
between Debiopharm S.A. and the Registrant.

10.21 + Joint Collaboration Agreement, dated October 1, 1997,
between CropTech Development Corporation and the Registrant.

10.22 + Cooperation Agreement, dated January 16, 1997, between Novo
Nordisk A/S and the Registrant.

10.23 Form of Indemnification Agreement by and between certain
directors and executive officers of the Registrant and the
Registrant.

10.24 * Form of Stock Purchase Agreement, dated as of
, 1998, by and between Genzyme Corporation and the
Registrant.

10.25 * Form of Registration Rights Agreement, dated as of
, 1998, by and between Genzyme Corporation and
the Registrant.

21 Subsidiaries of the Registrant.

23.1 * Consent of PricewaterhouseCoopers LLP., independent
accountants.

23.2 Consent of Palmer & Dodge LLP (included in Exhibit 5.1).

23.3 Consent of Yankwich & Associates, special patent counsel to
the Company.

24.1 Powers of Attorney.

27.1 Financial Data Schedule.
</TABLE>

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

* Filed herewith. All other exhibits previously filed.

+ Certain confidential material contained in the document has been omitted and
filed separately with the Securities and Exchange Commission pursuant to Rule
406 of the Securities Act of 1933, as amended.

(b) Financial Statement Schedules

None.

ITEM 17. UNDERTAKINGS

(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under "Item
14 -- Indemnification of Directors and Officers" above, or otherwise, the
Registrant has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

(b) The undersigned Registrant hereby undertakes:

(1) to provide to the underwriters at the closing specified in the
underwriting agreement, certificates in such denominations and registered
in such names as required by the underwriter to permit prompt delivery to
each purchaser;

(2) that, for purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus filed
as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be
part of this registration statement as of the time it was declared
effective; and

(3) that, for purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-5
<PAGE> 102

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant has duly caused this Amendment No. 5 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized in the
city of Cambridge, Commonwealth of Massachusetts, on the 30th day of July, 1998.

DYAX CORP.

By: /s/ HENRY E. BLAIR
--------------------------------------
Henry E. Blair
President, and Chief Executive Officer

Pursuant to the requirements of the Securities Act, this Amendment No. 5 to
the Registration Statement has been signed by the following persons in the
capacities indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ HENRY E. BLAIR President, Chief Executive Officer July 30, 1998
- --------------------------------------------------- and Chairman of the Board of
Henry E. Blair Directors (Principal Executive
Officer)

* Vice President, Finance and July 30, 1998
- --------------------------------------------------- Administration and Chief
Keith S. Ehrlich Financial Officer (Principal
Financial and Accounting Officer)

* Executive Vice President, July 30, 1998
- --------------------------------------------------- President, Therapeutic and
L. Edward Cannon Diagnostic Division, and Director

* Executive Vice President, July 30, 1998
- --------------------------------------------------- President, Separations Division,
Robert A. Dishman and Director

* Director July 30, 1998
- ---------------------------------------------------
Constantine E. Anagnostopoulos

* Director July 30, 1998
- ---------------------------------------------------
James W. Fordyce

* Director July 30, 1998
- ---------------------------------------------------
Thomas L. Kempner

* Director July 30, 1998
- ---------------------------------------------------
Henry R. Lewis

*By: /s/ HENRY E. BLAIR
-----------------------------------------------
Henry E. Blair
Attorney-in-fact
</TABLE>

II-6
<PAGE> 103

EXHIBIT INDEX

<PAGE> 104

<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
- ------- -------
<S> <C>
10.23 Form of Indemnification Agreement by and between certain
directors and executive officers of the Registrant and the
Registrant.

10.24 * Form of Stock Purchase Agreement, dated as of
, 1998, by and between Genzyme Corporation and the
Registrant.

10.25 * Form of Registration Rights Agreement, dated as of
, 1998, by and between Genzyme Corporation and
the Registrant.

21 Subsidiaries of the Registrant.

23.1 * Consent of PricewaterhouseCoopers LLP., independent
accountants.

23.2 Consent of Palmer & Dodge LLP (included in Exhibit 5.1).

23.3 Consent of Yankwich & Associates, special patent counsel to
the Company.

24.1 Powers of Attorney.

27.1 Financial Data Schedule.
</TABLE>

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

* Filed herewith. All other exhibits previously filed.

<PAGE> 1

EXHIBIT 10.24

DYAX CORP.

STOCK PURCHASE AGREEMENT

THIS AGREEMENT is dated as of _____ __, 1998 by and between DYAX CORP. (the
"Company"), a Delaware corporation with principal offices at One Kendall Square,
Building 600, 5th Floor, Cambridge, Massachusetts 02139 and GENZYME CORPORATION
(the "Purchaser"), a Massachusetts corporation with principal offices at One
Kendall Square, Building 1400, Cambridge, Massachusetts 02139.

WHEREAS, the Company wishes to obtain equity financing and the Purchaser is
willing, on the terms and conditions contained in this Agreement, to purchase
Shares of the Company.

IN CONSIDERATION of the mutual covenants contained in this Agreement, the
parties agree as follows:

SECTION 1. AUTHORIZATION OF SALE OF THE SHARES. The Company has authorized
the sale to the Purchaser of that number of shares (the "Shares") of the Common
Stock, $.01 par value per share (the "Common Stock"), of the Company, as is
equal to the quotient obtained by dividing $3,000,000 by the Offering Price (as
defined below).

SECTION 2. AGREEMENT TO SELL AND PURCHASE SHARES. Except as provided in
Section 3., in the event that there is not a Public Offering Closing, at the
Closing (as defined in Section 3), the Company will sell to the Purchaser, and
the Purchaser will buy from the Company, upon the terms and conditions
hereinafter set forth, the Shares, at a purchase price per Share equal to the
Offering Price for an aggregate purchase price of $3,000,000 (the "Purchase
Price"). As used herein, the term "Offering Price" shall mean the price per
share of the shares of Common Stock sold to the public in connection with the
closing (the "Public Offering Closing") by the Company of its initial public
offering of Common Stock pursuant to an effective registration statement under
the Securities Act of 1933, as amended (the "Securities Act"), resulting in net
proceeds to the Company (after deducting underwriting discounts and commissions)
of at least $10,000,000; PROVIDED, HOWEVER, that such Offering Price shall equal
or exceed the price per share paid by investors in the Company's last round of
private financing (subject to appropriate adjustment for stock splits, stock
dividends, combinations and other similar recapitalizations affecting such
shares).

SECTION 3. CLOSINGS.

3.1 DELIVERY OF THE SHARES AT THE PUBLIC OFFERING CLOSING. The
completion of the purchase and sale of the Shares being purchased and sold
pursuant to this Agreement (the "Closing") shall occur at the offices of Palmer
& Dodge LLP, One Beacon Street, Boston, Massachusetts 02108 contemporaneously
with the Public Offering Closing (the "Closing Date"), or such other time and
place as shall be agreed to by the Company and the Purchaser. At the Closing,
the Purchaser shall pay to the Company an amount in cash or by wire transfer
equal to the Purchase Price and the Company shall deliver to the Purchaser one
or more stock certificates representing the Shares purchased by the Purchaser,
each such certificate to be registered in the name of the Purchaser. The
Company's obligation to close the transaction shall be subject to the following
conditions, any of which may be waived by the Company: (a) receipt by the
Company

<PAGE> 2

of a certified or official bank check or checks or wire transfer of funds in the
full amount of the Purchase Price for the Shares being purchased hereunder; (b)
execution and delivery by the Purchaser of the 1998 Registration Rights
Agreement substantially in the form attached as EXHIBIT 1 (the "1998
Registration Rights Agreement"); and (c) the accuracy of the representations and
warranties made by the Purchaser and the fulfillment of those undertakings of
the Purchaser to be fulfilled prior to the Closing. The Purchaser's obligation
to close the transaction shall be subject to the fulfillment of the following
conditions: (a) the simultaneous occurrence of the Public Offering Closing; (b)
the execution and delivery by the Company of the 1998 Registration Rights
Agreement; (c) the receipt by the Purchaser of an opinion of Palmer & Dodge LLP,
counsel to the Company, in form and substance reasonably satisfactory to the
Purchaser; (d) the receipt by the Purchaser of a certificate, signed by the
Secretary of the Company, as to the charter, by-laws, incumbency of officers and
authorizing resolutions; (e) the receipt by the Purchaser, of certificates,
dated as of the Closing Date, as to the legal existence and good standing of the
Company in the State of Delaware and the Commonwealth of Massachusetts; (f) the
receipt by the Purchaser of a stock certificate, representing the Shares; (g)
the accuracy of the representations and warranties made by the Company herein as
of the Closing as though such representations and warranties had been made on
and as of Closing and the fulfillment of those undertakings of the Company to be
fulfilled prior to Closing, and Purchaser's receipt of a certificate executed by
the President of the Company in the form attached hereto as EXHIBIT 2 certifying
as to the same; and (h) the certificate of incorporation of the Company,
certified by the Secretary of State of Delaware as of the most recent
practicable date. This Agreement and the 1998 Registration Rights Agreement are
collectively referred to herein as the "Transaction Documents."

3.2. DELIVERY OF PREFERRED SHARES AT ALTERNATIVE CLOSING. In the event
that the Public Offering Closing does not occur prior to the completion of the
closing of a private equity financing in which proceeds of at least $10,000,000
are raised and in which the price per share will have been determined through
negotiation with a substantial new investor with a recognized reputation for
investing in the biotechnology industry and who is reasonably acceptable to the
Purchaser (the "Private Placement"), then the Company may, at its option, sell
to the Purchaser, and the Purchaser will buy from the Company, in lieu of the
Purchaser's obligation to purchase the Shares pursuant to Section 3.1, on a date
to be mutually agreed upon (the "Alternative Closing Date"), upon the terms and
conditions hereinafter set forth, that number of Preferred Shares (as defined
below) of the Company equal to the quotient obtained by dividing $3,000,000 by
the Private Placement Price (as defined below). As used herein: (i) the term
"Preferred Shares" shall mean the shares of the same series of Preferred Stock,
$.01 par value per share (the "Preferred Stock"), as are issued in the Private
Placement and (ii) the term "Private Placement Price" shall mean a price per
share based upon the price per share at which the Company sold shares of
Preferred Stock in the Private Placement. At the Alternative Closing, the
Purchaser shall pay to the Company an amount in cash or by wire transfer equal
to $3,000,000 and the Company shall deliver to the Purchaser one or more stock
certificates representing the Preferred Shares purchased by the Purchaser, each
such certificate to be registered in the name of the Purchaser. The Company's
obligation to close the transaction shall be subject to the following
conditions, any of which may be waived by the Company: (a) receipt by the
Company of a certified or official bank check or checks or wire transfer of
funds in the amount of $3,000,000; (b) execution and delivery by the Purchaser
of the 1998 Registration Rights Agreement; and (c) the accuracy of the
representations and warranties made by the Purchaser as of the Alternative

<PAGE> 3

Closing Date and the fulfillment of those undertakings of the Purchaser to be
fulfilled prior to the Alternative Closing. The Purchaser's obligation to close
the transaction shall be subject to the fulfillment of the following conditions:
(a) the execution of a definitive EPI-KAL2 collaboration agreement with the
Company; (b) the closing of the Private Placement; (c) the execution and
delivery by the Company of the 1998 Registration Rights Agreement; (d) the
receipt by the Purchaser of an opinion of Palmer & Dodge LLP, counsel to the
Company, in form and substance reasonably satisfactory to the Purchaser; (e) the
receipt by the Purchaser of a certificate, signed by the Secretary of the
Company, as to the charter, by-laws, incumbency of officers and authorizing
resolutions; (f) the receipt by the Purchaser, of certificates, dated as of the
Alternative Closing Date, as to the legal existence and good standing of the
Company in the State of Delaware and the Commonwealth of Massachusetts; (g) the
receipt by the Purchaser of a stock certificate, representing the Preferred
Shares; (h) the accuracy of the representations and warranties made by the
Company herein as of the Alternative Closing as though such representations and
warranties had been made on and as of Alternative Closing and the fulfillment of
those undertakings of the Company to be fulfilled prior to the Alternative
Closing, and Purchaser's receipt of a certificate executed by the President of
the Company in the form attached hereto as EXHIBIT 2 certifying as to the same
and (i) the Certificate of Incorporation of the Company, certified by the
Secretary of State of Delaware as of the most recent practicable date. Except as
otherwise provided herein, any such sale of Preferred Shares shall be upon the
same terms and conditions as those contained herein for the Shares; provided
that all references in this Agreement to the "Closing" and the "Closing Date"
shall mean and refer to the "Alternative Closing" and the "Alternative Closing
Date"; all references in this Agreement (other than in Sections 1, 2 and 3) to
the "Shares" shall mean and refer to the "Preferred Shares" and all references
to the "Transaction Documents" in this Agreement shall mean and refer to this
Agreement and the 1998 Registration Rights Agreement. The parties acknowledge
that the execution of a definitive EPI-KAL2 collaboration agreement is subject
to the completion of due diligence inquiries by the parties and that neither
party has a duty or obligation to execute such a collaboration agreement.

SECTION 4. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY. As
used herein, "best knowledge" shall mean and include (a) actual knowledge of any
officers or directors of the Company and (b) that knowledge which a prudent
businessperson would have obtained in the management of his or her business
using due inquiry. The Company represents and warrants to the Purchaser that,
except as set forth in the disclosure schedule previously provided to the
Purchaser (the "DISCLOSURE SCHEDULE"), which DISCLOSURE SCHEDULE shall be
arranged in paragraphs corresponding to the numbered and lettered paragraphs
contained in this Section 4:

4.1 ORGANIZATION. The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the State
of Delaware with full corporate power and authority to own or lease, as the case
may be, and to operate its properties and conduct its business as presently
conducted and is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction which requires such
qualification, except where the failure so to register or qualify would not have
a Material Adverse Effect. For purposes of this Agreement "Material Adverse
Effect" means, when used in connection with the Company or its Subsidiaries (as
defined in subsection 4.2 below), any development, change or effect that could
have a materially adverse effect on the business,

<PAGE> 4

financial condition or results of operations of the Company and its
Subsidiaries, taken as a whole.

4.2 SUBSIDIARIES. Schedule 4.2 to this Agreement sets forth all of the
Subsidiaries of the Company and the jurisdiction in which each is incorporated
or organized. Except for the Subsidiaries, the Company does not directly or
indirectly own or have any investment in the capital stock of and is not a party
to a partnership or joint venture with, any other person. Each Subsidiary is a
corporation duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and to conduct its business as described
as presently conducted and is duly registered and qualified to conduct its
business and is in good standing in each jurisdiction or place where the nature
of its properties or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify would not have
a Material Adverse Effect; all the outstanding shares of capital stock of each
of the Subsidiaries have been duly authorized and validly issued, are fully paid
and nonassessable, and are owned by the Company directly free and clear of any
lien, adverse claim, security interest, equity or other encumbrance. As used in
this Agreement, "Subsidiary" means any corporation, partnership, limited
liability company or other legal entity of which the Company or any Subsidiary
owns, directly or indirectly, 50% or more of the stock or other equity or
membership interest entitled to vote for the election of directors.

4.3 CAPITALIZATION. The Company has the duly authorized and validly
outstanding capitalization set forth in the final prospectus (the "Prospectus"),
in the form furnished to the Company's underwriters for use in connection with
the Company's initial public offering, that forms a part of the Company's
registration statement on Form S-1 (File No. 333-48483) (the "Registration
Statement") under the Securities Act of 1933, as amended (the "Securities Act"),
filed with the Securities and Exchange Commission (the "Commission") under the
Securities Act. The Company will have the adjusted capitalization set forth
therein on the Public Offering Closing based on the assumptions set forth
therein. The securities of the Company conform to the descriptions thereof
contained in the Prospectus. The outstanding shares of Common Stock have been
duly authorized and validly issued by the Company and are fully paid and
nonassessable. Except as created hereby or referred to in the Prospectus, there
are no outstanding options, warrants, rights or other arrangements requiring the
Company or any Subsidiary to issue any capital stock. The Shares to be sold
pursuant to this Agreement have been duly authorized, and when issued and paid
for in accordance with the terms of this Agreement will be validly issued, fully
paid and non-assessable and free of restrictions on transfer, other than
restrictions on their transfer under the Transaction Documents and under
applicable state and federal securities laws.

4.4 FINANCIAL STATEMENTS. The historical financial statements and
schedules of the Company included in the Prospectus and the Registration
Statement (collectively, the "Financial Statements") present fairly in all
material respects the consolidated financial condition, results of operations
and cash flows of the Company and its Subsidiaries as of the dates and for the
periods therein indicated, comply as to form with the applicable accounting
requirements of the Securities Act and have been prepared in conformity with
U.S. generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as otherwise noted therein). With
respect to contracts and commitments for the sale of goods or the

<PAGE> 5

provision of services by the Company or any Subsidiary, the Financial Statements
contain and reflect adequate reserves at March 31, 1998, which are consistent
with previous reserves taken, for all reasonably anticipated material losses and
costs and expenses. The amounts shown as accrued for current and deferred income
and other taxes at March 31, 1998 in the Financial Statements are sufficient for
the payment of all accrued and unpaid foreign, federal, state and local income
taxes, interest, penalties, assessments or deficiencies applicable to the
Company or any Subsidiary, whether disputed or not, for the applicable period
then ended and periods prior thereto. The book value of inventory at March 31,
1998 reflected in the Financial Statements, as computed on a first-in, first-out
basis, is true and correct, and the reserve set forth in the footnotes with
respect thereto is true and correct. Except as and to the extent (a) reflected
and reserved against at March 31, 1998 in the Financial Statements or (b)
incurred in the ordinary course of business after March 31, 1998 and not
material in amount, either individually or in the aggregate, the Company and its
Subsidiaries have no liability or obligation, secured or unsecured, whether
accrued, absolute, contingent, unasserted or otherwise, which is material to
Company and its Subsidiaries, taken as a whole. The selected financial data set
forth under the caption "Selected Financial Information" in the Prospectus and
Registration Statement fairly present, on the basis stated in the Prospectus and
the Registration Statement, the information included therein.

4.5 TAX COMPLIANCE. Each of the Company and its Subsidiaries has
accurately prepared and timely filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof on a
timely basis and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as could not have a Material
Adverse Effect.

4.6 RELATED-PARTY TRANSACTIONS. Except as disclosed in the Prospectus,
no employee, officer, or director of the Company or member of his or her
immediate family is indebted to the Company, nor is the Company indebted (or
committed to make loans or extend or guarantee credit) to any of them. Except as
set forth below, to the best of the Company's knowledge, none of such persons
has any direct or indirect ownership interest in any firm or corporation with
which the Company is affiliated or with which the Company has a business
relationship, or any firm or corporation that competes with the Company, except
that employees, officers, or directors of the Company and members of their
immediate families may own stock in publicly traded companies that may compete
with the Company. To the best of the Company's knowledge, no officer or director
or any member of their immediate families is, directly or indirectly, interested
in any material contract with the Company. Henry E. Blair, the President, Chief
Executive Officer and Chairman of the Board of the Company, also serves as an
outside director of and consultant to the Purchaser and as an outside director
of Genzyme Transgenics Corporation, which is owned 43% by the Purchaser.
Constantine E. Anagnostopoulos and Henry R. Lewis, outside directors of the
Company, are also outside directors of the Purchaser. Charles L. Cooney (a
Genzyme director), Henri Termeer and Peter Wirth are also consulting to the
Company as members of the Company's Strategic Advisory Committee. In 1996, the
Company entered into a sublease agreement with the Purchaser for laboratory and
office facilities in Cambridge, Massachusetts which extends to December 1999.
The Company does not believe that it obtained rental rates any more favorable
than those available from third parties. During 1996, the Company also signed
two of its non-exclusive patent license

<PAGE> 6

agreements with the Purchaser. The Company recorded license revenues of $54,000
and $50,000 in 1996 and 1997, respectively, in connection with the signing and
maintenance fees for these two agreements. In addition, the Company has
performed two funded discovery projects with Genzyme Transgenics Corporation
resulting in recorded revenues of $45,000 and $145,000 in 1996 and 1997,
respectively.

4.7 INSURANCE. The Company and its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risk and
in such amounts as are prudent and customary in the businesses in which they are
engaged, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against; all policies of insurance and fidelity or surety bonds insuring the
Company, its Subsidiaries and their respective businesses, assets, employees,
officers and directors are in full force and effect; the Company and its
Subsidiaries are in compliance with the terms of such policies and instruments
in all material respects; and there are no claims by the Company or any
Subsidiary under any such policy or instrument as to which any insurance company
is denying liability or defending under a reservation of rights clause; neither
the Company nor any Subsidiary has ever been refused any insurance coverage
sought or applied for; and the Company has no reason to believe that the Company
and its Subsidiaries will not be able to renew their respective existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue their business at
a cost that could not have a Material Adverse Effect.

4.8 ABSENCE OF PROCEEDINGS. Except as disclosed in the Prospectus,
there is no pending or, to the best of the Company's knowledge, threatened,
action, suit, proceeding or investigation before or by any court, regulatory
body or administrative agency or any other governmental agency or body, domestic
or foreign, which (A) questions the validity of the capital stock of the Company
or the Transaction Documents or of any action taken or to be taken by the
Company pursuant to or in connection with the Transaction Documents, or (B)
could reasonably be expected to have a Material Adverse Effect.

4.9 DUE AUTHORIZATION. The Company has full legal right, power and
authority to enter into the Transaction Documents and to consummate the
transactions provided for herein or therein. The Transaction Documents have been
duly authorized, executed and delivered by the Company and, assuming such
documents are the binding obligations of the Purchaser, constitute legal, valid
and binding obligations of the Company enforceable against the Company in
accordance with their respective terms (except as such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
other laws of general application relating to or affecting the enforcement of
creditors' rights and the application of equitable principles relating to the
availability of remedies and except as rights to indemnity or contribution may
be limited by federal or state securities laws and the public policy underlying
such laws), and none of the Company's execution or delivery of the Transaction
Documents, its performance hereunder or thereunder, its consummation of the
transactions contemplated herein or therein, or the conduct of its business as
described in the Prospectus, conflicts or will conflict with or results or will
result in any breach or violation of any of the terms or provisions of, or
constitutes or will constitute a default under, or result in the creation or
imposition of any material lien, charge or encumbrance upon, any property or
assets of the Company or any of its

<PAGE> 7

Subsidiaries pursuant to the terms of (A) the charter or by-laws of the Company
or any of its Subsidiaries; (B) any indenture, shareholders' agreement, note
agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of them are or may be bound or to which
any of their respective property is or may be subject or (C) any statute,
judgment, decree, order, rule or regulation applicable to the Company or any of
its Subsidiaries of any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body, domestic or foreign, having
jurisdiction over the Company, any of its Subsidiaries or any of their
respective activities or properties.

4.10 ACCURACY AND VALIDITY OF EXHIBITS. All executed agreements or
copies of executed agreements filed as exhibits to the Registration Statement to
which the Company or any of its Subsidiaries is a party or by which any of them
are or may be bound or to which any of their assets, properties or businesses is
or may be subject have been duly and validly authorized, executed and delivered
by the Company or such Subsidiary, as the case may be, and assuming such
agreements are binding agreements of the other parties thereto, constitute the
legal, valid and binding agreements of the Company or such Subsidiary, as the
case may be, enforceable against each of them in accordance with their
respective terms (except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization or other similar laws relating to
enforcement of creditors' rights generally, and general equitable principles
relating to the availability of remedies, and except as rights to indemnity or
contribution may be limited by federal or state securities laws and the public
policy underlying such laws). The descriptions in the Registration Statement of
contracts and other documents are accurate and fairly present the information
required to be shown with respect thereto by Form S-1 and there are no contracts
or other documents which are required by the Securities Act or Form S-1 to be
described in the Registration Statement or filed as exhibits to the Registration
Statement which are not accurately described or filed as required, and the
exhibits which have been filed are complete and correct copies of the documents
of which they purport to be copies.

4.11 NO MATERIAL ADVERSE CHANGE. Subsequent to the most recent
respective dates as of which information is given in the Prospectus, and except
as expressly contemplated therein, neither the Company nor any of its
Subsidiaries has incurred, other than in the ordinary course of its business,
any material liabilities or obligations, direct or contingent, purchased any of
its outstanding common shares, paid or declared any dividends or other
distributions on its capital stock or entered into any material transactions not
in the ordinary course of business, and there has been no material change in
capital stock or debt or any material adverse change in the condition (financial
or other), net worth or results of operations of the Company and its
Subsidiaries taken as a whole. Neither the Company nor any of its Subsidiaries
is in breach or violation of, or in default under, any term or provision of (A)
its charter or by-laws; (B) any indenture, mortgage, deed of trust, voting trust
agreement, stockholders' agreement, note agreement or other agreement or
instrument to which it is a party or by which it is or may be bound or to which
any of its property is or may be subject, or any indebtedness, the effect of
which breach or default may have a Material Adverse Effect, or (C) any statute,
judgment, decree, order, rule or regulation applicable to the Company or any of
its Subsidiaries or of any arbitrator, court, regulatory body, administrative
agency or any other governmental agency or body, domestic or foreign, having
jurisdiction over the Company or any of its Subsidiaries or any of their
respective activities or properties and the effect of which breach or default
may have a Material Adverse Effect.

<PAGE> 8

4.12 EMPLOYEES: EMPLOYEE COMPENSATION. To the best of the Company's
knowledge, there is no strike, or labor dispute or union organization activities
pending or threatened between it and its employees. None of the Company's
employees belongs to any union or collective bargaining unit. To the best of its
knowledge, the Company has complied in all material respects with all applicable
state and federal equal opportunity and other laws related to employment. To the
best of the Company's knowledge, no employee of the Company is or will be in
violation of any judgment, decree, or order, or any term of any employment
contract, patent disclosure agreement, or other contract or agreement relating
to the relationship of any such employee with the Company, or any other party
because of the nature of the business conducted or to be conducted by the
Company or to the use by the employee of his best efforts with respect to such
business. Except as disclosed in the Prospectus, the Company is not a party to
or bound by any currently effective employment contract, deferred compensation
agreement, bonus plan, incentive plan, profit sharing plan, retirement
agreement, or other employee compensation agreement. The Company is not aware
that any officer or key employee, or that any group of key employees, intends to
terminate their employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing. Except as
disclosed in the Prospectus, subject to general principles related to wrongful
termination of employees, the employment of each officer and employee of the
Company is terminable at the will of the Company.

4.13 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each employee
and officer of the Company has executed an Employee Confidential Information and
Invention Agreement substantially in the form or forms which have been delivered
to counsel for the Purchaser. Each scientific consultant of the Company has
executed a confidentiality agreement with the Company.

4.14 POSSESSION OF INTELLECTUAL PROPERTY. Except as disclosed in the
Prospectus, to the best knowledge of the Company, each of the Company and its
Subsidiaries owns, possesses, licenses or has legally enforceable rights to use,
on reasonable terms, all material patents, patent applications, trade and
service marks, trade and service mark registrations, trade names, copyrights,
licenses, inventions, trade secrets, technology, know-how and other intellectual
property (collectively, the "Intellectual Property") necessary for the conduct
of its business as now conducted and as proposed to be conducted. Except as set
forth in the Prospectus under the caption "Business - Patents and Proprietary
Rights," (a) there are no rights of third parties to any such Intellectual
Property; (b) there is no infringement by third parties of any such Intellectual
Property; (c) there is no pending or, to the Company's best knowledge,
threatened action, suit, proceeding or claim by others challenging the Company's
rights in or to any such Intellectual Property, and the Company is unaware of
any facts which would form a reasonable basis for any such claim; (d) there is
no pending or threatened action, suit, proceeding or claim by others challenging
the validity or scope of any such Intellectual Property, and the Company is
unaware of any facts which would form a reasonable basis for any such claim; (e)
there is no pending or, to the Company's knowledge, threatened action, suit,
proceeding or claim by others that the Company infringes or otherwise violates
any patent, trademark, copyright, trade secret or other proprietary rights of
others, and the Company is unaware of any other fact which would form a
reasonable basis for any such claim; (f) there is no U.S. or foreign patent or
published U.S. or foreign patent application which contains claims that dominate
or may dominate any Intellectual Property described in the Prospectus as being
owned by or licensed to

<PAGE> 9

the Company or that interferes with the issue or pending claims of any such
Intellectual Property; and (g) there is no prior art of which the Company is
aware that may render any U.S. or foreign patent held by the Company invalid or
any U.S. or foreign patent application held by the Company unpatentable which
has not been disclosed to the U.S. Patent and Trademark Office or applicable
foreign regulatory body.

4.15 OFFERING. Subject in part to the truth and accuracy of the
Purchaser's representations set forth in Section 5.1 of this Agreement, the
offer, sale and issuance of the Shares as contemplated by this Agreement are
exempt from the registration requirements of the Securities Act, and neither the
Company nor any authorized agent acting on its behalf will take any action
hereafter that would cause the loss of such exemption.

4.16 DISCLOSURE. The statements contained in the Prospectus under the
captions "Risk Factors -- Uncertainties Related to Patents and Proprietary
Rights" and "Business -- Patents and Proprietary Information," insofar as such
statements summarize legal matters, agreements, documents, or proceedings
discussed therein, are complete, accurate and fair summaries of such legal
matters, agreements, documents or proceedings.

4.17 NO VIOLATION OF LAWS. Neither the Company nor any Subsidiary, the
manner in which any of them conducts its business or proposes to conduct its
business, nor the execution, delivery and performance of the Transaction
Documents is in violation of or would violate any laws, ordinances or
governmental rules or regulations to which each of them is subject, except for
such violations as would not have a Material Adverse Effect.

4.18 NO CONSENTS REQUIRED. No consent, approval, authorization or
order of any court, regulatory body, administrative agency or any other
governmental agency or body, domestic or foreign, or of any stockholder,
creditor, lessor or other person, is required for the performance of the
Transaction Documents or the consummation of the transactions contemplated
hereby or thereby, except such as have been or may be obtained under the
Securities Act or may be required under state securities or Blue Sky laws in
connection with the sale of the Shares.

4.19 REGISTRATION RIGHTS. There are no contracts, agreement or
understandings between the Company and any person granting such person the right
to require the Company to file a registration statement under the Securities Act
with respect to any securities of the Company owned or to be owned by such
person or to require the Company to include such securities under the
Registration Statement (other than those that have been disclosed in the
Prospectus).

4.20 TITLE TO PROPERTY. Each of the Company and its Subsidiaries has
good and marketable title to, or valid and enforceable leasehold interests in,
all real and tangible properties and assets owned or leased by it free and clear
of all liens, encumbrances, security interests, restrictions, equities, claims
and defects, except (A) such as are described in the Prospectus, or such as do
not materially adversely affect the value of any of such properties or assets
taken as a whole and do not interfere with the use made and proposed to be made
of any of such properties or assets, and (B) liens for taxes not yet due and
payable as to which appropriate reserves have been established and reflected on
the Financial Statements. The Company owns or leases all

<PAGE> 10

such properties as are necessary to its operations as now conducted, and as
proposed to be conducted as set forth in the Registration Statement and the
Prospectus; and the properties and business of the Company and its Subsidiaries
conform in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. All the material leases and subleases
of the Company and its Subsidiaries, and under which the Company or any
Subsidiary holds properties or assets as lessee or sublessee, constitute valid
leasehold interests of the Company or such Subsidiary free and clear of any
lien, encumbrance, security interest, restriction, equity, claim or defect, are
in full force and effect, and neither the Company nor any Subsidiary is in
default in respect of any of the material terms or provisions of any such
material leases or subleases, and neither the Company nor any Subsidiary has
notice of any claim which has been asserted by anyone adverse to the Company's
or any of its Subsidiary's right as lessee or sublessee under either the
material lease or sublease, or affecting or questioning the Company's or any
Subsidiary's right to the continued possession of the leased or subleased
premises under any such material lease or sublease, which may have a Material
Adverse Effect.

4.21 COMPLIANCE WITH ENVIRONMENTAL, SAFETY AND HEALTH LAWS. Each of
the Company and its Subsidiaries is (i) in compliance in all material respects
with any and all applicable foreign, federal, state and local laws and
regulations related to the protection of human health and safety, the
environment and hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"); (ii) has received and is in compliance with
all permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct its business and (iii) has not received notice of
any actual or potential liability for the investigation or remediation of any
disposal or release of hazardous or toxic substances or wastes, pollutants or
contaminants. Neither the Company nor any Subsidiary has been named as a
"potentially responsible party" under the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.

4.22 ERISA COMPLIANCE. Each of the Company and its Subsidiaries has
fulfilled its respective obligations, if any, under the minimum funding
standards of Section 302 of the U.S. Employee Retirement Income Security Act of
1974 ("ERISA") and the regulations and published interpretations thereunder with
respect to each "plan" as defined in Section 3(3) of ERISA and such regulations
and published interpretations in which its employees are eligible to participate
and each such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and such regulations and published
interpretations. Neither the Company nor any Subsidiary has incurred any unpaid
liability to the Pension Benefit Guaranty Corporation (other than for the
payment of premiums in the ordinary course) or to any such plan under Title IV
of ERISA.

4.23 LICENSES AND PERMITS. Each of the Company and its Subsidiaries
possesses all licenses, certificates, permits and other authorizations issued by
the appropriate foreign, federal, state or local regulatory authorities
necessary to conduct its business, and neither the Company nor its Subsidiaries
has ever received any notice of proceedings related to the revocation or
modification of any such certificate, authorization or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
could have a Material Adverse Effect.

<PAGE> 11

4.24 SUBSIDIARY DIVIDENDS. No Subsidiary of the Company is currently
prohibited, directly or indirectly, from paying any dividends to the Company,
from making any other distribution on such Subsidiary's capital stock, from
repaying to the Company any loans or advances to such Subsidiary from the
Company or from transferring any of such Subsidiary's property or assets to the
Company or any other Subsidiary of the Company, except as described in or
contemplated by the Prospectus.

4.25 INVESTIGATION. It shall be no defense to an action for breach of
this Agreement that the Purchaser or its agents have (or have not) made
investigations into the affairs of the Company or that the Company could not
have known of the misrepresentation or breach of warranty.

4.26. COMPLIANCE WITH SECURITIES ACT. The Registration Statement in
the form in which it became effective complied in all material respects with the
provisions of the Securities Act and did not contain an 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 not misleading, and the Prospectus
complied in all material respects with the provisions of the Securities Act and
did not contain an untrue statement of material fact or omit to state a material
fact necessary in order to make the statements, in light of the circumstances
under which they were made, not misleading.

4.27. BROKERAGE. No broker, finder, agent or similar intermediary has
acted on behalf of the Company in connection with the Transaction Documents or
the transactions contemplated hereby or thereby, 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 the Company
or any action taken by the Company.

SECTION 5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PURCHASER.

5.1. The Purchaser represents and warrants to, and covenants with, the
Company, as of the date hereof and as of the Closing Date, that: (i) the
Purchaser is an "accredited investor" as defined in Regulation D under the
Securities Act of 1933, as amended (the "Securities Act"); and also is
knowledgeable and experienced in making investments in private placement
transactions such as the purchase of the Shares; (ii) the Purchaser is acquiring
the Shares set forth above for its own account for investment and with no
present intention of distributing any of such Shares except pursuant to an
effective registration statement under the Securities Act covering the sale, and
no arrangement or understanding exists with any other person regarding the
distribution of any of such Shares; (iii) the Purchaser will not, directly or
indirectly, voluntarily offer, sell, pledge, transfer or otherwise dispose of
(or solicit any offers to buy, purchase or otherwise acquire or take a pledge
of) any of the Shares except (a) in the event of an effective registration
statement under the Securities Act; (b) upon delivery of an opinion of counsel
(which shall be in form and substance reasonably satisfactory to the Company)
that such registration is not required; (c) in connection with a sale, transfer
or other disposition made pursuant to Section 144 of the Securities Act or (d)
to a wholly owned subsidiary of the Purchaser, in the case of (a), (c) and (d)
above, no opinion of counsel shall be required; and (iv) the Purchaser has had
an opportunity to ask questions and receive answers from the management of the
Company regarding the Company, its business and the offering of the Shares.

<PAGE> 12

5.2. The Purchaser further represents and warrants to, and covenants
with, the Company that (i) the Purchaser has full right, power, authority and
capacity to enter into the Transaction Documents and to consummate the
transactions contemplated hereby and has taken all necessary action to authorize
the execution, delivery and performance of the Transaction Documents, and (ii)
upon the execution and delivery of the Transaction Documents, such Transaction
Documents shall constitute valid and binding obligations of the Purchaser
enforceable in accordance with their terms, subject to applicable bankruptcy,
insolvency, moratorium and similar laws affecting the rights and remedies of
creditors generally and to general principles of equity.

5.3. The Purchaser acknowledges and understands that the Purchaser
must bear the economic risk of its investment in the Shares for an indefinite
period of time because the Shares have not been registered under the Securities
Act and, therefore, cannot be sold unless subsequently registered under the
Securities Act or an exemption from such registration is available. The
certificates representing the Shares issued to Purchaser will bear a legend in
substantially the following form:

"The shares represented by this certificate have not been registered
under the Securities Act of 1933, as amended, and may not be offered,
sold or otherwise transferred, pledged or hypothecated unless and
until such shares are registered under such Act or an opinion of
counsel satisfactory to the Company is obtained to the effect that
such registration is not required."

The Company agrees to remove such legend from the certificates
representing the Shares issued to Purchaser at such time as such Shares may be
legally sold under Rule 144 (or any successor rule) without registration under
the Securities Act, at the request of the Purchaser and upon receipt of an
opinion, which shall be in form and substance reasonably satisfactory to the
Company, that such legend may be removed.

The Purchaser agrees that any sale, transfer, pledge, hypothecation or
other disposition of the Shares shall be made in compliance with such legend.

SECTION 6. COVENANTS OF THE COMPANY.

6.1 CORPORATE EXISTENCE. The Company will do or cause to be done all
things necessary to preserve and keep in full force and effect its corporate
existence.

6.2 REPORTING STATUS. For as long as the Purchaser or any affiliates
of the Purchaser beneficially owns any of the Shares, the Company (i) shall
timely file with the Securities and Exchange Commission (the "SEC") any and all
reports required to be so filed pursuant to the Securities Exchange Act of 1934,
as amended (the "Exchange Act") and (ii) shall not terminate its status as an
issuer required by the Exchange Act to file reports thereunder even if the
Exchange Act or the rules or regulations thereunder would permit such
termination.

6.3 LISTING. For as long as the Purchaser or any affiliate of the
Purchaser beneficially owns any of the Shares, the Company shall cause the
Common Stock to be listed for trading on the Nasdaq National Market or on a
national securities exchange.

<PAGE> 13

6.4 INFORMATION TO BE FURNISHED. For as long as the Purchaser or any
affiliate of the Purchaser holds shares representing at least one percent (1%)
of the outstanding shares of Common Stock, the Company will furnish promptly to
the Purchaser copies of (i) each report and proxy statement filed by the Company
with the SEC pursuant to Section 13(a), 14 or 15(d) of the Exchange Act; (ii)
all financial statements, periodic and special reports and investor relations
materials as the Company may distribute to all holders of Common Stock generally
and (iii) all press releases issued by the Company.

SECTION 7. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
Notwithstanding any investigation made by any party to this Agreement, all
covenants, agreements, representations and warranties made by the Company and
the Purchaser herein shall survive the execution of this Agreement, the delivery
to the Purchaser of the Shares being purchased, and the payment therefor.

SECTION 8. NO FEE. The parties hereto hereby represent that there are no
brokers or finders entitled to compensation in connection with the transactions
contemplated hereby.

SECTION 9. NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing, shall be addressed to the
receiving party's address set forth below or to such other address as a party
may designate by notice hereunder, and shall be either (i) delivered by hand;
(ii) made by telex, telecopy or facsimile transmission; (iii) sent by overnight
courier, or (iv) sent by registered or certified mail, return receipt requested,
postage prepaid:

(a) if to the Company, to:

Dyax Corp.
One Kendall Square
Building 600, 5th Floor
Cambridge, MA 02139
Attention: President
with a copy to:

Nathaniel S. Gardiner, Esq.
Palmer & Dodge LLP
One Beacon Street
Boston, Massachusetts 02108

(b) if to the Purchaser, to:

Genzyme Corporation
One Kendall Square
Building 1400
Cambridge, MA 02139
Attention: Chief Legal Officer

All notices, requests, consents and other communications hereunder shall be
deemed to have been given either (i) if by hand, at the time of the delivery
thereof to the receiving party at

<PAGE> 14

the address of such party set forth above; (ii) if made by telex, telecopy or
facsimile transmission, at the time that receipt thereof has been acknowledged
by electronic confirmation or otherwise; (iii) if sent by overnight courier, on
the next business day following the day such notice is delivered to the courier
service, or (iv) if sent by registered or certified mail, on the 5th business
day following the day such mailing is made.

SECTION 10. CHANGES. Any term of this Agreement may be amended or
compliance therewith waived only with the written consent of both parties
hereto.

SECTION 11. ASSIGNMENT. The rights and obligations under this Agreement may
not be assigned by either party hereto without the prior written consent of the
other party.

SECTION 12. BENEFIT. All statements, representations, warranties, covenants
and agreements in this Agreement shall be binding on the parties hereto and
shall inure to the benefit of the respective successors and permitted assigns of
each party hereto. Nothing in this Agreement shall be construed to create any
rights or obligations except among the parties hereto, and no person or entity
shall be regarded as a third-party beneficiary of this Agreement.

SECTION 13. EXPENSES. Each of the parties hereto shall pay its own fees and
expenses (including the fees of any attorneys, accountants, appraisers or others
engaged by such party) in connection with this Agreement and the transactions
contemplated hereby whether or not the transactions contemplated hereby are
consummated.

SECTION 14. NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.

SECTION 15. HEADINGS. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be part of this Agreement.

SECTION 16. TRANSFER TAXES. The Company will reimburse the Purchaser for
any transfer taxes incurred in connection with the issuance of the Shares.

SECTION 17. SEVERABILITY. In case any provision contained in this Agreement
should be invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall
not in any way be affected or impaired thereby.

SECTION 18. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with (a) the internal laws of the Commonwealth of
Massachusetts without giving effect to principles of conflicts of law, and (b)
United States federal law.

SECTION 19. COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which, when taken
together, shall constitute but one

<PAGE> 15

instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other parties.

SECTION 20. FURTHER ASSURANCES. From and after the date of this Agreement,
upon the request of the Purchaser or the Company, the Company and the Purchaser
shall execute and deliver such instruments, documents and other writings as may
be reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement and the Shares.

SECTION 21. ENTIRE AGREEMENT. This Agreement contains the entire
understanding of the parties with respect to the subject matter hereof. All
express or implied agreements and understandings, either written or oral,
heretofore made are expressly merged into and made a part of this Agreement.

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

DYAX CORP.

By: _______________________________
Name:
Title:

GENZYME CORPORATION

By: _______________________________
Name:
Title:

<PAGE> 1

EXHIBIT 10.25

1998 REGISTRATION RIGHTS AGREEMENT

This Registration Rights Agreement (this "Agreement") dated as of _______
__, 1998 is entered into by and between DYAX CORP., a Delaware corporation (the
"Company"), and GENZYME CORPORATION, a Massachusetts corporation ("Genzyme" or
the "Stockholder").

RECITALS

A. The Company and the Stockholder deem it to be in their respective best
interests to set forth the rights of the Stockholder in connection with public
offerings and sales of the _____shares (the "Shares") of Common Stock, par value
$0.01 per share ("Common Stock"), of the Company being issued to Genzyme in a
private placement pursuant to a stock purchase agreement (the "Purchase
Agreement") of even date herewith between the parties.

B. The execution and delivery of this Agreement is a condition to closing
of the transactions contemplated by the Purchase Agreement.

NOW, THEREFORE, in consideration of the premises and mutual covenants and
obligations hereinafter set forth, the Company and the Stockholder hereby agree
as follows:

SECTION 1. CERTAIN DEFINITIONS.

As used in this Agreement, the following terms have the following
respective meanings:

"COMMISSION" means the Securities and Exchange Commission, or any other
Federal agency at the time administering the Securities Act and/or the Exchange
Act.

"EXCHANGE ACT" means the Securities Exchange Act of 1934 or any similar
Federal statute, and the rules and regulations of the Commission issued under
such Act, as they each may, from time to time, be in effect.

"INITIAL PUBLIC OFFERING" shall mean the closing of the first fully
underwritten, firm commitment public offering pursuant to an effective
Registration Statement covering the offer and sale by the Company of its Common
Stock, resulting in aggregate net proceeds to the Company (after deducting
underwriting discounts and commissions) of at least $10,000,000 and at a per
share price of at least $4.80 (such amount to be equitably adjusted upon the
occurrence of any stock split, stock dividend, combination, reclassification or
other similar event).

"OTHER REGISTRABLE SHARES" means "Registrable Shares" included within the
definition thereof in and for purposes of the Amended and Restated Registration
Rights Agreement dated as of October 30, 1996 among the Company and certain of
its stockholders, as amended to date and as the same may be amended from time to
time hereafter.

"REGISTRABLE SHARES" means the Shares and any other shares of Common Stock
of the Company issued or issuable in respect of the Shares (because of stock
splits, stock dividends, reclassifications, recapitalizations or similar
events).

"REGISTRATION EXPENSES" has the meaning ascribed thereto in Section 5.

"REGISTRATION STATEMENT" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration

<PAGE> 2

statement on Form S-8 or Form S-4, or any successor forms, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).

"SECURITIES ACT" means the Securities Act of 1933 or any similar Federal
statute, and the rules and regulations of the Commission issued under such Act,
as they each may, from time to time, be in effect.

"STOCKHOLDERS" means, individually and collectively, Genzyme, and any
persons or entities to whom the rights granted under this Agreement are
transferred by Genzyme, and their successors or assigns to the extent permitted
by Section 14 hereof.

SECTION 2. REQUIRED REGISTRATIONS.

(a) Commencing 180 days after the closing of the Initial Public Offering of
the Company, a Stockholder or Stockholders may request, in writing, that the
Company effect the registration on Form S-3 (or any successor form), of all or
such portion of the Registrable Shares as such holder or holders shall specify.
Upon receipt of any such request, the Company shall promptly give written notice
of such proposed registration to all Stockholders. Such Stockholders shall have
the right, by giving written notice to the Company within 30 days after the
Company provides its notice, to elect to have included in such registration such
of their Registrable Shares as such Stockholders may request in such notice of
election. Thereupon, the Company shall, as expeditiously as possible, use its
best efforts to effect the registration on Form S-3 (or any successor form) of
all Registrable Shares which the Company has been so requested to register.

(b) The Company shall not be required to effect more than three
registrations pursuant to paragraph (a) above. Unless otherwise requested by the
selling Stockholders, a registration pursuant to paragraph (a) above shall not
count as one of the permitted registrations until it has become effective.
Notwithstanding the foregoing, however, in any twelve-month period the Company
shall not be required to effect more than one such registration on Form S-3, and
any such registration on Form S-3 shall be separated from any previous
registration on Form S-3 by a period of at least six months, subject to the
prior receipt by such Stockholders of notice of such previous registration in
accordance with Section 3(a).

(c) If at the time of any request to register Registrable Shares pursuant
to this Section 2, the Company is engaged or has firm plans to engage within 90
days of the time of the request in a registered public offering as to which the
Stockholders may include Registrable Shares pursuant to Section 3 or is engaged
in any other activity which, in the good faith determination of the Company's
Board of Directors, would be adversely affected by the requested registration to
the material detriment of the Company, then the Company may at its option direct
that such request be delayed for a period not in excess of one hundred twenty
(120) days from the effective date of such offering or the date of commencement
of such other material activity, as the case may be, such right to delay a
request to be exercised by the Company not more than once.

SECTION 3. INCIDENTAL REGISTRATION.

(a) Whenever the Company proposes to file a Registration Statement (other
than pursuant to Section 2), it will, prior to such filing, give written notice
to all Stockholders of its intention to do so and, upon the written request of a
Stockholder or Stockholders given within 20 days after the Company provides such
notice (which request shall state the intended method of disposition of such
Registrable Shares), the Company shall use its best efforts to cause all
Registrable Shares which the Company has been requested to register to be
registered under the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of distribution
specified in the request

<PAGE> 3

of such Stockholder(s); provided that the Company shall have the right to
postpone or withdraw any registration effected pursuant to this Section 3
without obligation to any Stockholder.

(b) In connection with any offering under this Section 3 involving an
underwriting, the Company shall not be required to include any Registrable
Shares in such underwriting unless the holders thereof accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it, and then only in such quantity as will not, in the opinion of the
underwriters, jeopardize the success of the offering by the Company. If in the
opinion of the managing underwriter the registration of all, or part of, the
Registrable Shares which the holders have requested to be included would
materially and adversely affect such public offering, then the Company shall be
required to include in the underwriting only that number of Registrable Shares,
if any, which the managing underwriter believes may be sold without causing such
adverse effect. In the event of such a reduction in the number of shares to be
included in the underwriting, all shares other than Registrable Shares and Other
Registrable Shares shall be excluded from the underwriting before any
Registrable Shares are excluded from the underwriting and the holders of
Registrable Shares who have requested registration shall participate in the
underwriting pro rata based upon their total ownership of Registrable Shares and
Other Registrable Shares (or in any other proportion as agreed upon by such
holders) and if any holder would thus be entitled to include more shares than
such holder requested to be registered, the excess shall be allocated among
other requesting holders pro rata based on their total ownership of Registrable
Shares and Other Registrable Shares.

SECTION 4. REGISTRATION PROCEDURES. If and whenever the Company is required
by the provisions of this Agreement to use its best efforts to effect the
registration of any of the Registrable Shares under the Securities Act, the
Company shall:

(a) provide to the selling Stockholders drafts of the Registration
Statement and an opportunity to comment thereon and participate in the
preparation thereof prior to filing the Registration Statement with the
Commission;

(b) file with the Commission the Registration Statement and use its best
efforts to cause the Registration Statement to become and remain effective;

(c) as expeditiously as possible prepare and file with the Commission any
amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to keep the
Registration Statement effective for a period of not less than 270 days from the
effective date;

(d) as expeditiously as possible furnish to each selling Stockholder such
reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the selling Stockholders may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by the selling Stockholders;

(e) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or blue sky laws of such states as the selling Stockholders shall
reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Stockholders to consummate the
public sale or other disposition in such jurisdictions of the Registrable Shares
owned by the selling Stockholders; PROVIDED, HOWEVER, that the Company shall not
be required in connection with this paragraph (e) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.

(f) use its best efforts to secure the designation and quotation of the
Shares on the Nasdaq National Market or any national securities exchange on
which the Common Stock is then listed;

<PAGE> 4

(g) notify each Stockholder immediately at any time when a prospectus is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus, as then in effect, includes an untrue
statement of a material fact or omits to state any 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, and as promptly as
practicable thereafter, prepare, file and furnish to each Stockholder a
reasonable number of copies of a supplement or an amendment to such prospectus
as may be necessary so that such prospectus does not contain an 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; and, if requested, the
selling Stockholders shall immediately cease making offers of Registrable Shares
and shall return all prospectuses to the Company;

(h) use its best efforts to prevent the issuance of any stop order or other
order suspending the effectiveness of such Registration Statement and, if such
an order is issued, to obtain the withdrawal thereof at the earliest possible
time and to notify the Stockholders of the issuance of such order and the
resolution thereof; and

(i) furnish to the Stockholders and any underwriters of such Stockholders'
shares, on the date that such Registration Statement becomes effective, (i) an
opinion, dated such date, of outside counsel representing the Company (and
reasonably acceptable to the Stockholders) addressed to the Stockholders as to
the effectiveness of the registration statement and its compliance as to form
with the requirements of the Securities Act and such other matters as may be
reasonably requested by the Stockholders (including, if such registration
statement relates to an underwritten public offering, such additional matters as
are customarily included in opinions delivered by company counsel in
underwritten public offerings) and (ii) in the case of an underwriting, a
letter, dated such date, from the Company's independent certified public
accountants, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Stockholders.

SECTION 5. ALLOCATION OF EXPENSES. The Company shall pay the Registration
Expenses for the registrations requested by the Stockholders pursuant to Section
2 of this Agreement and of all registrations pursuant to Section 3 of this
Agreement. If a registration requested by the Stockholders pursuant to paragraph
(a) of Section 2 is withdrawn at the request of the Stockholders requesting it
(other than as a result of information concerning the business or financial
condition of the Company which is made known to the Stockholders after the date
on which such registration was requested) and if the requesting Stockholders
elect not to have such registration counted as a registration requested under
paragraph (a) of Section 2, the requesting Stockholders shall pay the
Registration Expenses of such registration pro rata in accordance with the
number of their Registrable Shares previously proposed to be included in such
registration. For purposes of this Agreement, the term "Registration Expenses"
shall mean all expenses incurred by the Company in complying with this
Agreement, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and disbursements of counsel for
the Company and one counsel for the selling Stockholders, state blue sky fees
and expenses, and the expense of any special audits incident to or required by
any such registration, but excluding underwriting discounts and selling
commissions. Such underwriting discounts and selling commissions shall be borne
pro rata by the selling Stockholders in accordance with the number of their
Registrable Shares included in such registration.

SECTION 6. INDEMNIFICATION. In the event of any registration of any of the
Registrable Shares under the Securities Act pursuant to this Agreement, the
Company will indemnify and hold harmless the seller of such Registrable Shares,
each underwriter of such Registrable Shares and each other person if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act

<PAGE> 5

against any losses, claims, damages or liabilities, joint or several, to which
such seller, underwriter or controlling person may become subject under the
Securities Act, the Exchange Act, state securities laws or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in such Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out of or are
based upon the omission or alleged omission 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, and the Company will
reimburse such seller, underwriter or controlling person for any legal or any
other expenses reasonably incurred by such seller, underwriter or controlling
person, respectively, in connection with investigating or defending any such
loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the Company
will not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus or
prospectus, or any such amendment or supplement, in reliance upon and in
conformity with information furnished to the Company, in writing, by or on
behalf of such seller, underwriter or controlling person specifically for use in
the preparation thereof.

In the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, each seller of Registrable Shares
included in such registration, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and officers and each
underwriter (if any) and each person, if any, who controls the Company or any
such underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors and officers, underwriter or controlling persons may
become under the Securities Act, Exchange Act, state securities laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission 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, if the statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of such seller, specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement; PROVIDED, HOWEVER,
that the obligations of such seller hereunder shall be limited to an amount
equal to the proceeds to such seller from Registrable Shares sold in such
registration. Indemnification of any underwriter pursuant to this Section 6
shall not be interpreted as providing relief of such underwriter from any or all
of its due diligence obligations. Further, an underwriter shall not be entitled
to indemnification pursuant to this subsection in the event that it fails to
deliver to any selling Stockholder any preliminary or final or revised
prospectus, as required by the Rules and Regulations of the Commission. Finally,
in the event that any error in a preliminary prospectus of the Company is
subsequently corrected in the final prospectus of the Company for a particular
offering, no indemnification shall be provided pursuant to this Section unless
the Company has provided the seller of Registrable Shares against whom
indemnification is sought with sufficient copies of the final prospectus and any
amendments and supplements thereto in accordance with the Company's obligations
under Section 4 of this Agreement.

Each party entitled to indemnification under this Section 6 (the
"Indemnified Party ) shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting

<PAGE> 6

therefrom; PROVIDED, that counsel for the Indemnifying Party, who shall conduct
the defense of such claim or litigation, shall be approved by the Indemnified
Party (whose approval shall not be unreasonably withheld); and, PROVIDED,
FURTHER, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Agreement. The Indemnified Party may participate in such defense at such party's
expense; PROVIDED, HOWEVER, that the Indemnifying Party shall pay such expense
if representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding. No Indemnifying Party, in the defense of any such
claim or litigation shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect of such
claim or litigation, and no Indemnified Party shall consent to entry of any
judgment or settle such claim or litigation without the prior written consent of
the Indemnifying Party.

Except to the extent otherwise provided above, if the indemnification
provided for in this Section 6 is for any reason unavailable or insufficient to
hold harmless an indemnified party then each such indemnifying party in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages,
judgments or liabilities referred to above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company, the
holders of Registrable Shares and the underwriters from the offering of the
shares or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the holders of Registrable Shares and the underwriters in
connection with the statement or omission which resulted in such losses, claims,
damages, judgments or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the holders of
Registrable Shares and the underwriters shall be deemed to be in the same
proportion as the total net proceeds from the offering of the shares (before
deducting expenses) received by the Company and the holders of Registrable
Shares and the total underwriting discounts and commissions received by the
underwriters bear to each other. The relative fault of the Company, the holders
of Registrable Shares and the underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the holder of Registrable Shares or the
underwriters and that party's relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statements or omissions.

SECTION 7. INDEMNIFICATION WITH RESPECT TO UNDERWRITTEN OFFERING. In the
event that Registrable Shares are sold pursuant to a Registration Statement in
an underwritten offering pursuant to Section 2, the Company agrees to enter into
and perform its obligations under an underwriting agreement containing customary
representations and warranties with respect to the business and operations of an
issuer of the securities being registered and customary covenants and agreements
to be performed by such issuer, including without limitation customary
provisions with respect to indemnification by the Company of the underwriters of
such offering. The Company covenants to use its best efforts to cause the
conditions to the underwriters' performance under such underwriting agreement to
be met.

SECTION 8. INFORMATION BY HOLDER. Each holder of Registrable Shares
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.

<PAGE> 7

SECTION 9. "STAND-OFF" AGREEMENT. If a Stockholder holds more than one
percent of the outstanding Common Stock, it shall agree, if requested by the
Company and an underwriter of Common Stock or other securities of the Company,
not to sell or otherwise transfer or dispose of any Registrable Shares of the
Company held by such Stockholder for a specified period of time (not to exceed
120 days) following the effective date of a Registration Statement; PROVIDED
THAT, all Stockholders holding more than one percent of the outstanding Common
Stock and all officers and directors of the Company enter into similar
agreements. Such agreement shall be in writing in a form satisfactory to the
Company and such underwriter. The Company may impose stop-transfer instructions
with respect to the Registrable Shares or other securities subject to the
foregoing restriction until the end of the stand-off period.

SECTION 10. RULE 144 REQUIREMENTS. With a view to making available to the
Stockholders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the Commission that may at any time permit a
Stockholder to sell securities of the Company to the public without
registration, the Company agrees to use its best efforts to:

(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;

(b) use its best efforts to file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements); and

(c) furnish to any holder of Registrable Shares upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144 (at any time after 90 days after the closing of the first sale of
securities by the Company pursuant to a Registration Statement), and of the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company as
such holder may reasonably request to avail itself of said Rule 144 or any
similar rule or regulation of the Commission allowing it to sell any such
securities without registration.

SECTION 11. SELECTION OF UNDERWRITER. In the case of any registration
effected pursuant to Section 2, the requesting Stockholders shall have the right
to designate the managing underwriter, subject to the approval of the Company,
which approval may not be unreasonably withheld or delayed.

SECTION 12. NO CONFLICT OF RIGHTS. The Company shall not, after the date
hereof, grant any registration rights which would adversely affect or impair the
registration rights granted hereby.

SECTION 13. SUCCESSORS AND ASSIGNS. Except as provided in Section 14
hereof, the provisions of this Agreement shall be binding upon and inure to the
benefit of, the respective successors, assigns, heirs, executors and
administrators of the parties hereto.

SECTION 14. ASSIGNMENT. (a) The rights granted to the Stockholders under
this Agreement may not be transferred except to any transferee or successor who
is (x) a general or limited partner, officer or other affiliate of such
Stockholder or any other affiliate of the Company or (y) who acquires at least
120,000 Registrable Shares (equitably adjusted to reflect stock splits,
dividends, combinations and like adjustments) (or such lesser number of shares
as may constitute such Stockholder's entire holding of Registrable Shares) and
who is not directly or indirectly a competitor of the Company or a partner,
officer, director, employee or owner of more than 1% of the outstanding
securities of any publicly traded direct or indirect competitor of the Company;
PROVIDED, HOWEVER, that the Company is given written notice by the transferee
stating the name and address of the transferee and identifying the securities
with

<PAGE> 8

respect to which such rights are being assigned. Notwithstanding the foregoing
restrictions with respect to competitors, a professional institutional investor
owning up to 20% of the outstanding securities of a direct or indirect
competitor of the Company may be a transferee of such rights provided that it
complies with the provisions of the previous sentence. For purposes hereof the
term "affiliate" shall mean, with respect to the Company, any officer, director
or holder of 5% or more of any class of the Company's stock and, with respect to
any Stockholder, any person who or which controls, is controlled by or under
common control with such Stockholder.

(b) TRANSFEREES. Any transferee to whom rights under this Agreement are
transferred shall, as a condition to such transfer, deliver to the Company a
written instrument by which such transferee agrees to be bound by the
obligations imposed upon the Stockholders hereby to the same extent as if such
transferee were a Stockholder hereunder.

(c) SUBSEQUENT TRANSFEREES. A transferee to whom rights are transferred
pursuant to this Section 14 may not again transfer such rights to any other
person or entity, other than as provided in (a) and (b) above.

SECTION 15. TERMINATION OF REGISTRATION RIGHTS. Notwithstanding any other
provision of this Agreement, the Company shall not be required pursuant to this
Agreement (i) to give notice of any proposed registration pursuant to Section 2
or Section 3 to any Stockholder if, based on record holdings, such Stockholder
could then sell pursuant to Rule 144 (or any similar rule) under any
Registration Statement in a single 90-day period all Registrable Shares
registered in the name of such holder, or (ii) to include in any Registration
Statement any Registrable Shares if as of the filing thereof such Stockholder
could then sell pursuant to Rule 144 (or any similar rule) under the Securities
Act in a single 90-day period all of such Registrable Shares requested to be
registered in such offering.

SECTION 16. NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
by hand, telecopy or telegram, overnight courier or first class certified or
registered mail, return receipt requested, postage prepaid:

If to the Company, to Dyax Corp., One Kendall Square, Building 600 - 5th
Floor, Cambridge, MA 02139, Attn: President, or such other address or addresses
as may have been furnished in writing by the Company to the Stockholders, with a
copy to Nathaniel S. Gardiner, Esq., Palmer & Dodge LLP, One Beacon Street,
Boston, Massachusetts 02108;

If to Genzyme, to its address set forth on the signature page of this
Agreement, or such other address or addresses as may have been furnished to the
Company in writing by such Stockholder.

Notices provided in accordance with this Section 16 shall be deemed
delivered on the date of personal delivery, telecopy or telegram, the next
business day after delivery by overnight courier, or 48 hours after the date of
mailing.

SECTION 17. ENTIRE AGREEMENT. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter, including without limitation the Prior Agreement.

SECTION 18. AMENDMENTS AND WAIVERS. This Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the holders of a majority of the Registrable Shares.
Any amendment or waiver effected in accordance with this Section 18 shall be

<PAGE> 9

binding upon each holder of Registrable Shares and the Company. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.

SECTION 19. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Execution of an
undertaking agreeing to be bound by the terms of this Agreement shall be deemed
to be a counterpart signature to this Agreement.

SECTION 20. HEADINGS. The headings of the sections, subsections and
paragraphs of this Agreement have been added for convenience only and shall not
be deemed to be a part of this Agreement.

SECTION 21. SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision.

SECTION 22. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.

[Remainder of Page Intentionally left blank]

[Signature Pages to follow]

<PAGE> 10

IN WITNESS WHEREOF, the undersigned have hereunto set their hand as of the
day and year first above written.

COMPANY:

DYAX CORP.

By:____________________________
Henry E. Blair
President

Notice Address:
Dyax Corp.
One Kendall Square
Cambridge, MA 02139
Attention: Chief Financial Officer
Fax: (617) 225-2501

STOCKHOLDER:

GENZYME CORP.

By:____________________________
Name:
Title:

Notice Address:
Genzyme Corp.
One Kendall Square, Building 1400
Cambridge, MA 02139
Attention: Chief Legal Officer
Fax: (617) 252-7553

<PAGE> 1

Exhibit 23.1

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Amendment No. 5 to the registration
statement of Dyax Corp. on Form S-1 (File No. 333-48483) of our report dated
March 23, 1998, on our audits of the financial statements and financial
statement schedule of Dyax Corp.

We also consent to the inclusion in this Amendment No. 5 to this
registration statement of our report dated February 17, 1998, on our audit of
the financial statements of Protein Engineering Corporation.

We also consent to the references to our firm under the caption
"Experts" and "Selected Consolidated Financial Data."

/s/ PRICEWATERHOUSECOOPERS LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts
July 30, 1998