ENTREMED INC (Form: 10-Q, Received: 05/10/2005 06:07:24)

FORM 10-Q

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20459

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

For the quarterly period ended March 31, 2005

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

For the transition period from ___________ to _____________.

Commission file number 0-20713

ENTREMED, INC.

(Exact name of registrant as specified in its charter)


Delaware		58-1959440

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


9640 Medical Center Drive
Rockville, Maryland

(Address of principal executive offices)


20850

(Zip code)


(240) 864-2600

(Registrant’s telephone number, including area code)

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes o No þ

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes þ No o

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


Class		Outstanding at May 3, 2005

Common Stock $.01 Par Value		49,819,284

ENTREMED, INC.
Table of Contents


	PAGE
PART I. FINANCIAL INFORMATION

Item 1 — Financial Statements

Consolidated Balance Sheets as of March 31, 2005 and December 31, 2004		3

Consolidated Statements of Operations for the Three Months Ended March 31, 2005 and 2004		4

Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2005 and 2004		5

Notes to Consolidated Financial Statements		6

Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		9

Item 3 — Quantitative and Qualitative Disclosures About Market Risk		16

Item 4 — Controls and Procedures		17

Part II. OTHER INFORMATION

Item 1 — Legal Proceedings		18

Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		18

Item 3 — Defaults upon Senior Securities		18

Item 4 — Submission of Matters to Vote of Security Holders		18

Item 5 — Other Information		18

Item 6 — Exhibits		18

SIGNATURES		19

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This report contains and incorporates by reference certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be identified by forward-looking words such as “may,” “will,” “expect,” “anticipate” or similar words. These forward-looking statements include, among others, statements regarding the timing of our clinical trials and the expected increases in our expenses.

Our forward-looking statements are based on information available to us today, and we will not update these statements. Our actual results may differ significantly from those discussed in our forward-looking statements due to, among other factors, operating losses and anticipation of future losses; the value of our common stock; uncertainties relating to our technological approach; uncertainty of our product candidate development; our need for additional capital and uncertainty of additional funding; our dependence on collaborators and licensees; intense competition and rapid technological change in the biopharmaceutical industry; uncertainties relating to our patent and proprietary rights; uncertainties relating to clinical trials, government regulation and uncertainties of obtaining regulatory approval on a timely basis or at all; our dependence on key personnel, research collaborators and scientific advisors; uncertainties relating to health care reform measures and third-party reimbursement; risks associated with product liability; and other factors discussed in our other filings with the Securities and Exchange Commission.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

EntreMed, Inc.
Consolidated Balance Sheets


	March 31, 2005			December 31, 2004
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	21,068,790		$	20,425,495
Short-term investments		22,521,099			14,114,021
Accounts receivable		313,314			3,250,783
Interest receivable		129,191			85,089
Prepaid expenses and other		259,722			367,222

Total current assets		44,292,116			38,242,610

Property and equipment, net		1,026,719			1,150,087
Other assets		15,306			11,305

Total assets	$	45,334,141		$	39,404,002


LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	2,294,952		$	1,550,413
Payable to related parties		1,777,000			200,321
Accrued liabilities		532,235			1,416,444
Current portion of deferred revenue		167,118			95,496

Total current liabilities		4,771,305			3,262,674

Deferred revenue, less current portion		—			95,496
Deferred rent		319,293			324,106

Minority interest		16,982			16,972

Stockholders’ equity:

Convertible preferred stock, $1.00 par and $1.50 liquidation value:
5,000,000 shares authorized, 3,350,000 issued and outstanding at March 31, 2005 and December 31, 2004, respectively		3,350,000			3,350,000
Common stock, $.01 par value:
90,000,000 shares authorized, 50,694,283 and 43,628,173 shares issued and outstanding at March 31, 2005 and December 31, 2004, Respectively		506,943			436,282
Additional paid-in capital		295,294,901			285,387,288
Treasury stock, at cost: 874,999 shares held at March 31, 2005 and December 31, 2004, respectively		(8,034,244	)		(8,034,244	)
Accumulated deficit		(250,891,039	)		(245,434,572	)

Total stockholders’ equity		40,226,561			35,704,754

Total liabilities and stockholders’ equity	$	45,334,141		$	39,404,002

See accompanying notes.

EntreMed, Inc.
Consolidated Statements of Operations
(Unaudited)


	Three Months Ended
	March 31, 2005			March 31, 2004
Revenues:
Licensing	$	23,874		$	96,602
Royalties		1,375			1,365

		25,249			97,967

Costs and expenses:
Research and development		4,379,356			3,056,970
General and administrative		1,260,822			2,092,939

		5,640,178			5,149,909

Investment income		158,461			84,594


Net loss	$	(5,456,468	)	$	(4,967,348	)

Dividends on Series A convertible preferred stock		(251,250	)		(251,250	)


Net loss attributable to common shareholders	$	(5,707,718	)	$	(5,218,598	)


Net loss per share (basic and diluted)	$	(0.13	)	$	(0.14	)

Weighted average number of common shares outstanding (basic and diluted)		43,345,118			36,973,012

See accompanying notes.

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


	THREE MONTH PERIOD ENDED
	MARCH 31,
	2005			2004
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(5,456,468	)	$	(4,967,348	)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		127,825			248,817
Minority interest		10			(43	)
Changes in operating assets and liabilities:
Accounts receivable		2,937,469			276,193
Interest receivable		(44,102	)		195,309
Prepaid expenses and other		103,500			179,807
Deferred rent		(4,813	)		1,893
Accounts payable		744,539			(2,227,215	)
Payable to related parties		1,576,679			—
Accrued liabilities		(884,209	)		(158,074	)
Deferred revenue		(23,874	)		301,398

Net cash used in operating activities		(923,444	)		(6,149,263	)


CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of short term investments		(8,407,078	)		(2,270,348	)
Purchases of furniture and equipment		(4,457	)		(93,377	)

Net cash used in investing activities		(8,411,535	)		(2,363,725	)


CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from sale of common stock		9,978,274			—

Net cash provided by financing activities		9,978,274			—


Net increase (decrease) in cash and cash equivalents		643,295			(8,512,988	)
Cash and cash equivalents at beginning of period		20,425,495			34,811,847

Cash and cash equivalents at end of period	$	21,068,790		$	26,298,859

See accompanying notes.

ENTREMED, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2005 (unaudited)

1. Basis of Presentation

Our accompanying 2005 unaudited consolidated financial information includes the accounts of our controlled subsidiary, Cytokine Sciences, Inc. All intercompany balances and transactions have been eliminated in consolidation.

The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, such consolidated financial statements do not include all of the information and disclosures required by generally accepted accounting principles for complete financial statements. In the opinion of our management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three-month period ended March 31, 2005 are not necessarily indicative of the results that may be expected for the year ending December 31, 2005. For further information, refer to our audited consolidated financial statements and footnotes thereto included in our Form 10-K for the year ended December 31, 2004 .

2. Recent Accounting Standards

In October 2004, the FASB concluded that SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS 123R”), which would require all companies to measure compensation cost for all share-based payments (including employee stock options) at fair value, would be effective for interim or annual periods beginning after June 15, 2005. SFAS 123R provides two tentative adoption methods. The first method is a modified prospective transition method whereby a company would recognize share-based employee costs from the beginning of the fiscal period in which the recognition provisions are first applied as if the fair-value-based accounting method had been used to account for all employee awards granted, modified, or settled after the effective date and to any awards that were not fully vested as of the effective date. Measurement and attribution of compensation cost for awards that are unvested as of the effective date of SFAS 123R would be based on the same estimate of the grant-date fair value and the same attribution method used previously under SFAS 123. The second adoption method is a modified retrospective transition method whereby a company would recognize employee compensation cost for periods presented prior to the adoption of SFAS 123R in accordance with the original provisions of SFAS 123; that is, an entity would recognize employee compensation costs in the amounts reported in the pro forma disclosures provided in accordance with SFAS 123. A company would not be permitted to make any changes to those amounts upon adoption of SFAS 123R unless those changes represent a correction of an error. For periods after the date of adoption of SFAS 123R, the modified prospective transition method described above would be applied.

In April 2005, the SEC announced that it would provide for a phased-in implementation process for FASB Statement No. 123(R); therefore, the Company currently expects to adopt SFAS 123R in the quarter ended March 31, 2006, using the modified prospective method, although the Company continues to review its options for adoption under this new pronouncement. The adoption of Statement 123R is expected to have a material impact on the Company’s results of operations.

3. Short-Term Investments

Short-term investments consist primarily of corporate debt securities, all of which mature within one year. The Company has classified these investments as available for sale. Such securities are carried at aggregate cost which approximates market. The cost of securities sold is calculated using the specific identification method. Unrealized gains and losses on these securities, if any, are reported as accumulated other comprehensive income (loss), which is a separate component of stockholders’ equity. There were no unrealized gains or losses as of March 31, 2005. Realized gains and losses and declines in value judged to be other than temporary on securities available for sale, if any, are included in operations. Short-term investments are principally uninsured and subject to normal credit risk.

4. Stock-Based Compensation

The Company recognizes expense for stock-based compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. Accordingly, compensation cost is recognized for the excess of the estimated fair value of the stock at the grant date over the exercise price, if any. The Company accounts for equity instruments issued to non-employees in accordance with EITF 96-18, Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring Or in Conjunction with Selling, Goods, or Services.

Disclosures regarding alternative fair values of measurement and recognition methods prescribed by Statement of Accounting Standards No. 148, Accounting for Stock-Based Compensation-Transition and Disclosure and Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation (SFAS No. 123) are presented in the table below.

The following table illustrates the effect on net loss if the Company had applied the fair value recognition provisions of SFAS No. 123, to stock-based compensation:


	Three months ended March 31,
	2005			2004

Actual net loss	$	(5,456,468	)	$	(4,967,348	)
Deduct: Stock-based employee compensation expense if SFAS No 123 had been applied to all awards		(692,891	)		(1,295,913	)
Add: Stock-based employee compensation included in reported net loss		—			—


Proforma net loss	$	(6,149,359	)	$	(6,263,261	)

Dividend on Series A convertible preferred stock		(251,250	)		(251,250	)

Proforma net loss per share available to common shareholders	$	(6,400,609	)	$	(6,514,511	)

Basic and diluted – as reported	$	(0.13	)	$	(0.14	)
Basic and diluted – pro forma	$	(0.15	)	$	(0.18	)

The effect of applying SFAS No. 123 on a pro forma net loss as stated above is not necessarily representative of the effect on reported net loss for future years due to, among other things, the vesting period of the stock options and the fair value of additional options to be granted in future years.

5. License Agreements

In March 2005, we entered into an exclusive worldwide license agreement with Celgene Corporation for the development and commercialization of Celgene’s small molecule tubulin inhibitor compounds for the treatment of cancer. Under the terms of the agreement, Celgene received an upfront licensing fee and may receive additional payments upon successful completion of certain clinical, regulatory and sales milestones. EntreMed will assume responsibility for preclinical and clinical development of the tubulin inhibitors for oncology applications. Tubulin inhibitors comprise a broad family of compounds that bind to tubulin and disrupt microtubules, resulting in programmed cell death (apoptosis). In in vitro and in vivo studies, Celgene’s tubulin inhibitors have been shown to inhibit tumor cell proliferation in a dose-dependent manner and, in in vitro studies, to inhibit angiogenesis. Celgene’s tubulin inhibitors are covered by issued and pending patents. We believe that tubulin inhibition and angiogenesis inhibition are two of the principal mechanisms by which our lead product candidate, 2-methoxyestradiol or 2ME2, exerts its anticancer effects. The Celgene tubulin inhibitor compounds provide an opportunity for us to expand our pipeline of dual-mechanism anticancer drugs. The upfront license fee of $1,000,000 was recorded as a component of research and development expense in the Consolidated Statement of Operations for the three months ended March 31, 2005.

6. Related Party Transactions

The Company receives legal services from a law firm with which one of the Company’s officers is associated. During the three months ended March 31, 2005 these services totaled $238,000, the majority of the costs representing patent work and related diligence, which is reflected as research and development expense. During the three months ended March 31, 2005 we entered into a licensing agreement with Celgene Corporation, our largest shareholder. Pursuant to our license of Celgene’s tubulin inhibitor program, our research and development expenses for the quarter reflect a $1 million upfront licensing fee, which was paid to Celgene in April 2005. Our first quarter research and development expenses also reflect a $200,000 success fee relating to the licensing transaction. The fee is payable to Ferghana Partners, Inc., a provider of corporate financial advice to firms in the Life Sciences field. The Company’s chairman also serves as non-executive chairman of Ferghana Partners, Inc. The Company’s chairman and CEO both hold a de minimis ownership interest in Ferghana Partners, Inc. Additionally, pursuant to the exercise of warrants purchased in 2002 by Celgene, we received gross proceeds of $10,500,000 and incurred a success fee payable to Ferghana Partners, Inc. in the amount of $525,000. This fee results from a 2002 agreement under which we made payments to Ferghana relating to Celgene’s purchase of Preferred Stock and our Thalidomide Analog program in December 2002. The fee was recorded as an offset against gross equity transaction proceeds and, as such, is not reflected as expense in the current period. At March 31, 2005 amounts payable to these parties are reflected on our balance sheet as payable to related parties in the amount of $1,777,000.

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

OVERVIEW

EntreMed, Inc. (“EntreMed” or “the Company”) (Nasdaq: EMND) is a clinical-stage pharmaceutical company focused on developing the next generation of multi-mechanism oncology and antiinflammatory drugs that target disease cells directly and the blood vessels that nourish them. We are focused on developing drugs that are safe and convenient, and provide the potential for improved patient outcomes. Panzem ^® (2-methoxyestradiol or 2ME2), our lead drug candidate, is currently in clinical trials for cancer, as well as in preclinical development for non-oncology indications.

EntreMed’s goal is to develop and commercialize new compounds based on our expertise in the science of angiogenesis, cell cycle regulation and inflammation — processes vital to the treatment of cancer and other diseases. Our expertise has led to the identification of new molecules, including analogs of 2ME2, modulators of fibroblast growth factor-2 (FGF-2) activity, tissue factor pathway inhibitor (TFPI) peptides, and proteinase activated receptor-2 (PAR-2) antagonists. We are developing these potential drug candidates for either in-house advancement or external partnering. In order to advance EntreMed’s commercial objectives, we intend to seek strategic alliances, licensing relationships and co-development partnerships with other companies to develop compounds for both oncology and non-oncology therapeutic areas.

CRITICAL ACCOUNTING POLICIES AND THE USE OF ESTIMATES

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

-   Licensing Revenue – The Company has recognized licensing revenues resulting from the January 2002 five-year strategic alliance with Allergan, to develop and commercialize small molecule angiogenic inhibitors for treatment and prevention of diseases and conditions of the eye. The initial net fee has been amortized to revenue over the five-year license term. In April 2005, Allergan terminated the license in accordance with its terms, which will result in the acceleration of deferred revenue in the reporting period ending June 30, 2005. In February 2004 the Company transferred rights to the proteins, endostatin and angiostatin, in an agreement with Children’s Medical Center Corporation and Alchemgen Therapeutics. Under the agreement, Alchemgen received rights to market endostatin and angiostatin in Asia. In exchange, the Company receives upfront and future cash payments and royalties. The upfront cash payment was fully amortized in 2004, as the Company had completed its obligations to transfer data and material. Future cash payments received under this agreement, if any, will be recorded as revenue when received, and/or when collectibility is reasonably assured.

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

-   Stock-Based Compensation – We have stock option plans under which options to purchase shares of our common stock may be granted to employees, consultants and directors at a price no less than the fair market value on the date of grant. We account for our stock-based compensation in accordance with the provisions of APB No. 25, Accounting for Stock Issued to Employees (“APB No. 25”). Under APB No. 25, compensation expense is based on the difference, if any, on the date of the grant between the fair value of the Company’s stock and the exercise price of the option and is recognized ratably over the vesting period of the option. Because our options must be granted at fair market value, we recognize no compensation expense in accordance with APB No. 25. If we were to adopt SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), we would recognize compensation expense based upon the fair value at the grant date for awards under the plans using the fair value method. The Company currently expects to adopt SFAS No. 123R in the quarter ended March 31, 2006, using the modified prospective method, although the Company continues to review its options for adoption under this new pronouncement. We expense equity instruments issued to nonemployees in accordance with SFAS No. 123 and EITF 96-18, Accounting for Equity Instruments that are issued to other than employees for acquiring, or in conjunction with selling goods or services .

RESULTS OF OPERATIONS

For the Three Months Ended March 31, 2005 and March 31, 2004.

- Revenues. Revenues decreased to $25,000 in the three month period ending March 31, 2005 compared to $98,000 in the corresponding 2004 period. Licensing revenues during the quarter ended March 31, 2005 decreased to $24,000 from $97,000 in the corresponding 2004 period. This decrease results from the absence of licensing revenues from the February 2004 agreement with Alchemgen. The upfront cash payment was fully amortized in 2004, as the Company had completed its obligations to transfer data and material. Future cash payments received under this agreement, if any, will be recorded as revenue when received and/or when collectibility is reasonably assured. Effective during April 2005, Allergan terminated our January 2002 license agreement granting Allergan the right to develop and commercialize the local delivery of our small molecule angiogenic inhibitors for treatment and prevention of diseases and conditions of the eye. As a result, we will recognize the deferred portion of the upfront licensing fee of approximately $167,000 in the reporting period ending June 30, 2005. As previously reported, we did not control Allergan’s development program or the receipt of milestone payments under it. We do not believe that the termination of this license will have a material effect on our business or strategies. At a future date, we may seek other licensees to develop local or systemic treatments using our small molecule angiogenesis inhibitors for ophthalmic indications, based on prior preclinical data and our continuing understanding of the mechanisms-of-action for these drug candidates. At the present time, however, we intend to focus our resources on the cancer and anti-inflammatory indications for our angiogenesis inhibitors.

- Research and Development Expenses . From inception through March 31, 2005, we have incurred research and development expenses of $225,534,000. At March 31, 2005, accumulated direct project expenses for Panzem Ò , our lead drug candidate, totaled $29,080,000. Reflected in our R&D expenses totaling $4,379,000 for the three-month period ended March 31, 2005 are direct project expenses for Panzem Ò of $1,380,000 and $810,000 related to our 2ME2 analog program. Research and development expenses for the corresponding 2004 period were $3,057,000, which included $1,209,000 direct project expenses for Panzem Ò and $306,000 related to the Endostatin and Angiostatin compounds, programs that have been discontinued. Our 2005 R&D expenses for the period ended March 31, 2005 also include a $1,000,000 upfront fee pursuant to the March 2005 license of Celgene’s small molecule tubulin inhibitor compounds for the treatment of cancer.

The balance of our R&D expenditures includes facilities costs and other departmental overhead, and expenditures related to the advancement of our pre-clinical pipeline. Those costs totaled $1,189,000 and $1,542,000 for the three-month period ended March 31, 2005 and 2004, respectively.

The expenditures that will be necessary to execute our business plan are subject to numerous uncertainties, which may adversely affect our liquidity and capital resources. As of March 31, 2005, our proprietary product candidate, Panzem Ò , is in Phase I and Phase II clinical trials. Completion of clinical trials may take several years or more, but the length of time generally varies substantially according to the type, complexity, novelty and intended use of a product candidate.

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



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

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

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

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

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

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

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

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

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

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

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

Research and development expenses consist primarily of compensation and other expenses related to research and development personnel, research collaborations, costs associated with internal and contract pre-clinical testing and clinical trials of our product candidates, including the costs of manufacturing the product candidates, and facilities expenses. Research and development expenses increased to $4,379,000 in the quarter ended March 31, 2004 from $3,057,000 for the corresponding period in 2003. The increase in 2005 reflects continuing preclinical costs and the January 2005 initiation of two Phase Ib clinical trials for reformulated Panzem ^Ò NCD. The 2005 amount also includes increased costs associated with further development of various drug candidates, including analogs of 2ME2 and a $1 million upfront fee associated with the license of Celgene’s small molecule tubulin inhibitor compounds for the treatment of cancer. The overall increase in R&D expenses during the quarter ended March 31, 2005 was specifically impacted by the following:

- Outside Services – We utilize outsourcing to conduct our product development activities. Larger-scale small molecule synthesis, in vivo testing and data analysis are examples of the services that we outsource. In the three-month period ending March 31, 2005, we expended $482,000 on these activities versus $365,000 in the same 2004 period. The increase results from continued preclinical work on our 2ME2 analog program and our other preclinical pipeline programs.

-   Collaborative Research Agreements – We made payments to our collaborators of $105,000 and $265,000 for the three months ended March 31, 2005 and 2004 respectively. Sponsored research payments to academic collaborators include payments to Children’s Hospital, Boston of $75,000 in 2005 and 2004. Our collaborative efforts are primarily directed towards further exploration of Panzem ^Ò mechanism-of-action (MOA) and non-oncology applications.

-   Clinical Trial Costs – Clinical costs decreased to $201,000 in the three months ended March 31, 2005, from $454,000 in the three-month period ending March 31, 2004. The 2005 amount reflects the initiation of two Phase Ib clinical trials for reformulated Panzem ^Ò NCD. The prior year amount resulted from a Phase Ia clinical trial to test various dosing approaches for reformulated Panzem® conducted in the first quarter of 2004. Costs of such trials include the clinical site fees, monitoring costs and data management costs. In addition, we contribute Panzem Ò clinical material in tablet form under our Collaborative Research and Development Agreement (CRADA) to the NCI, which is conducting trials collaboratively with EntreMed.

-   Contract Manufacturing Costs – The costs of manufacturing the material used in clinical trials for our product candidates is reflected in contract manufacturing. These costs include bulk manufacturing, encapsulation and fill finish services, and product release costs. Contract manufacturing costs for the three months ended March 31 increased to $879,000 in 2005 from $295,000 in 2004. The increase reflects the scale-up of manufacturing of the 2ME2 analog, ENMD-1198, for pre-IND tox studies and the purchase of additional bulk 2ME2 to support future Panzem ^Ò NCD trials.

Also included in our 2005 research and development expenses is an upfront payment of $1,000,000 to Celgene Corporation for the license of tubulin inhibitor compounds. In connection with this license agreement, we paid a $200,000 success fee to Ferghana Partners, Inc.

Also reflected in our 2005 research and development expenses are personnel costs of $751,000, patent costs of $121,000 and facility and related expenses of $336,000. In the corresponding 2004 period, these expenses totaled $819,000, $112,000 and $382,000, respectively.

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

General and administrative expenses decreased to $1,260,000 in the three-month period ended March 31, 2005 from $2,093,000 in the corresponding 2004 period. The 2005 decrease is primarily due to reduced professional fees, personnel costs and insurance expense. Included in our 2004 G&A expenses were the costs of settling certain disputes and severance and relocation costs associated with management changes.

Investment income . Investment income increased by 86% in the period ending March 31, 2005 to $158,000 from $85,000 in the corresponding 2004 period as a result of higher yields on higher invested balances in interest bearing cash accounts and investments during the 2005 period.

Dividends on Series A convertible preferred stock . The Consolidated Statement of Operations for the periods ended March 31, 2005 and 2004 reflect a dividend of $251,250 relating to Series A Convertible Preferred Stock held by Celgene pursuant to a Securities Purchase Agreement dated December 31, 2002. The holders of Series A Preferred Stock will accumulate dividends at a rate of 6% and will participate in dividends declared and paid on the common stock, if any. All accumulated dividends must be paid before any dividends may be declared or paid on the Common Stock. The Company has no plans to pay any dividends in the foreseeable future.

LIQUIDITY AND CAPITAL RESOURCES

To date, we have been engaged primarily in research and development activities. As a result, we have incurred and expect to continue to incur operating losses for 2005 and the foreseeable future before we commercialize any products. In addition, under the terms of the license agreement for 2ME2 and our recent license of Celgene’s tubulin inhibitor program, we must be diligent in bringing potential products to market and may be required to make future milestone payments. If we fail to comply with the milestones or fail to make any required sponsored research or milestone payment, we could face the termination of the relevant sponsored research or license agreements.

At March 31, 2005, we had cash and short term investments of approximately $43,590,000 with working capital of approximately $39,592,000. These balances reflect Celgene Corporation’s March 2005 purchase of 7,000,000 shares of common stock through the exercise of warrants acquired in December 2002. As a result of the warrant exercise, we received gross proceeds of $10,500,000 and paid Ferghana Partners, Inc. a fee of $525,000, pursuant to a prior agreement in connection with the sale of warrants to Celgene in December 2002.

We invest our capital resources with the primary objective of capital preservation. As a result of trends in interest rates in 2005, we have invested in some securities with maturity dates of more than 90 days to enhance our investment yields. As such, some of our invested balances are classified as short-term investments rather than cash equivalents in our consolidated financial statements at March 31, 2005.

To accomplish our business plans, we will be required to continue to conduct substantial development activities for all of our proposed products. Under our current operating plans, results of operations are expected to reflect a net loss of approximately $20,000,000 in 2005. We expect that the majority of our 2005 revenues will be from royalties on the sale of Thalomid®. As a result of the satisfaction of certain provisions of a purchase agreement dated June 14, 2001 by and between Bioventure Investments kft (“Bioventure”) and the Company, beginning in 2005 we are entitled to share in the royalty payments received by Royalty Pharma Finance Trust, successor to Bioventure, on annual Thalomid® sales above a certain threshold. Based on the licensing agreement royalty formula, annual royalty sharing commences with Thalomid® annual sales of approximately $235 million. Pursuant to public guidance provided by Celgene for Thalomid® sales in 2005, we expect to record royalty sharing revenues in excess of $4.0 million in 2005. Under our licensing agreement with Oxford Biomedica, PLC and Oxford Biomedica (UK) Limited Oxford, we are entitled to receive payments upon the achievement of certain milestones. We do not control the drug development efforts of Oxford and have no control over when or whether such milestones will be reached. We do not believe that we will receive any such milestone payments under these agreements in 2005.

Based on our assessment of our current capital resources coupled with anticipated inflows, in the absence of additional financing, we believe that we will have adequate resources to fund operations into 2007. Our estimate may change, however, based on our decisions with respect to future clinical trials related to Panzem ^® , the timing of receipt of milestone payments, developments in our business including the acquisition of additional intellectual property, other investments in new or complimentary technology, and our success in executing our current business plan.

To address our long-term capital needs, we intend to continue to pursue strategic relationships that would provide resources for the further development of our product candidates. There can be no assurance, however, that these discussions will result in relationships or additional funding. In addition, we may continue to seek capital through the public or private sale of securities, if market conditions are favorable for doing so. If we are successful in raising additional funds through the issuance of equity securities, stockholders will likely experience substantial dilution, or the equity securities may have rights, preferences or privileges senior to those of the holders of our common stock. If we raise funds through the issuance of debt securities, those securities would have rights, preferences and privileges senior to those of our common stock. There can be no assurance that we will be successful in seeking additional capital.

INFLATION AND INTEREST RATE CHANGES

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The primary objective of our investment activities is to preserve our capital until it is required to fund operations while at the same time maximizing the income we receive from our investments without incurring investment market volatility risk. Our investment income is sensitive to the general level of U.S. interest rates. In this regard, changes in the U.S. interest rates affect the interest earned on our cash and cash equivalents. Due to the short term nature of our cash and cash equivalent holdings, a 10% movement in market interest rates would not materially impact on the total fair market value of our portfolio as of March 31, 2005.

ITEM 4. CONTROLS AND PROCEDURES

The Company carried out an evaluation, under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act of 1934 as of the end of the first quarter of 2005. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures are effective in timely alerting them to material information required to be included in the periodic SEC filings for the Company (including its consolidated subsidiary).

There was no change in internal control over financial reporting that occurred during the first quarter of 2005 that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

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

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

Not applicable.

ITEM 5. OTHER INFORMATION

Not applicable

ITEM 6. EXHIBITS

Exhibits


10.25		License Agreement By and Between EntreMed, Inc. and Celgene Corporation effective March 23, 2005 *

31.1		Rule 13a-14(a) Certification of President and Chief Executive Officer

31.2		Rule 13a-14(a) Certification of Chief Financial Officer

32.1		Rule 13a-14(b) Certification by President and Chief Executive Officer

32.2		Rule 13a-14(b) Certification by Chief Financial Officer

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

Through its website at www.entremed.com, the Company makes available, free of charge, its annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K, and all amendments thereto, as soon as reasonably practicable after such reports are filed with or furnished to the Securities and Exchange Commission.

SIGNATURES

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


		ENTREMED, INC.
		(Registrant)

Date: May 5, 2005		/s/ James S. Burns

		James S. Burns
		President and Chief Executive Officer

Date: May 5, 2005		/s/ Dane R. Saglio

		Dane R. Saglio
		Chief Financial Officer

Exhibit 10.25

License Agreement

By and between

EntreMed , Inc.

and

Celgene Corporation.

[*]=CERTAIN INFORMATION IN THIS EXHIBIT HAS BEEN OMITTED AND FILED SEPARATELY WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE OMITTED PORTIONS.

This Agreement effective as of the 23rd day of March, 2005, by and between EntreMed , Inc., a Delaware corporation having a place of business at 9640 Medical Center Drive, Rockville, MD 20850 (hereinafter “ EntreMed ”), and Celgene Corporation, a Delaware corporation having a place of business at 86 Morris Avenue, Summit NJ 07901 (together with its Affiliates , hereinafter “ Celgene ”).

WITNESSETH

WHEREAS, EntreMed is engaged in the business of discovering and developing chemical and biological substances for therapeutic uses;

WHEREAS , Celgene is a company that develops, manufactures, markets and sells pharmaceutical products for healthcare;

WHEREAS , Celgene owns or Control s certain Patent Rights and Know-How related to Tubulin Binding Agents listed in Appendix B, and it has the right to grant certain rights and licenses thereunder as set forth herein; and

WHEREAS , EntreMed desires to obtain a worldwide exclusive license from Celgene under the Patent Rights and KNOW-HOW to develop, make, manufacture, market, distribute, promote and sell and have sold the Licensed Product embodying the Tubulin Binding Agents in the Field in the Territory , and Celgene desires to grant such a license to EntreMed , on the terms and conditions contained in this Agreement .

NOW, THEREFORE , in consideration of the premises and the mutual promises herein contained, Celgene and EntreMed have agreed as follows:

ARTICLE 1 - DEFINITIONS

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

1.1 “ Affiliate ” as applied to either party shall mean any company or other legal entity other than the party in question in whatever country organized, controlled by or under common control with that party. The term “control or controlled” with respect to an Affiliate means ownership or control, directly or indirectly, of at least fifty percent (50%) of the outstanding stock or voting rights entitled to elect directors.

1.2 “ Agreement ” shall mean this Agreement including the Appendices attached hereto, each of which constitutes an integral part of the understandings and Agreement s set forth herein.

1.3 “ Commercially Reasonable Efforts ” shall mean the reasonable efforts and resources that an experienced pharmaceutical or biotechnology company would use to reasonably diligently develop and commercialize a compound owned by it or to

which it has rights and which is of similar market potential at a similar stage in development as the Licensed Product .

1.4 “ Confidential Information ” shall mean (i) the terms of this Agreement including all Appendices and (ii) with respect to any Party (“Disclosing Party”), any information relating to the Disclosing Party, the products or the Disclosing Party’s business (including but not limited to Know-How , technical information, research, personnel, marketing, strategic or other information) that is disclosed in writing, visually, orally or in electronic medium to the other Party (“Receiving Party”), whether prior to or after the Effective Date , in the course of the Parties’ evaluation, negotiation of or performance under this Agreement which in written or other tangible form shall be clearly marked as being confidential and if not in written or tangible form when disclosed, will be indicated upon disclosure as being confidential and then summarized electronically or in writing and marked as being confidential within thirty (30) days after disclosure, but shall not include information that:

1.4.1   the Receiving Party or an Affiliate owned or controlled prior to receipt from the Disclosing Party, or

1.4.2   is or becomes public through no fault of the Receiving Party or any Affiliate thereof, or

1.4.3   is hereafter developed by the Receiving Party or an Affiliate independent of any disclosure from the Disclosing Party as evidenced by competent written evidence, or

1.4.4   the Receiving Party or an Affiliate obtains from a Third Party lawfully and not under a confidentiality obligation to the Disclosing Party, or

1.4.5   is required to be disclosed by law or regulation, provided that Receiving Party shall notify providing party forthwith of any such required disclosure.

1.5 “ Control ” shall mean, with respect to any Patent Right or Know-How that the Party controlling such right owns a transferable interest or has a license to practice such Patent Right or Know-How and has the ability to grant the other Party access, a license or a sublicense (as applicable) to practice such Patent Right or Know-How .

1.6 “ Effective Date ” shall mean the date first written above.

1.7 “ Field ” shall mean all oncology indications in humans or animals.

1.8 “ First Commercial Sale ” shall mean the first sale of Licensed PRODUCT in any country by EntreMed or any of its Sublicensee or Affiliate S to any Third Party for consideration.

1.9 “ Know-How ” shall mean the information listed in Appendix B and any and all unpatented proprietary information and know how, processes, techniques, designs, data and results in whatsoever form including, without limitation, all biological, toxicological, chemical information, biochemical information, metabolic, non-clinical, pre-clinical, clinical, pharmacological, pharmacokinetic data, assay, formulation, quality control, synthetic process, manufacturing methods, data and specifications, all of which specifically relate to the development, synthesis, manufacture, use or sale of Licensed Product s embodying the Tubulin Binding Agents which is under the Control of Celgene and/or any of its Affiliates as of the Effective Date of this Agreement .

1.10 “ Licensed Product ” shall mean any pharmaceutical product that is comprised of, or derived at least in part from, the Tubulin Binding Agents .

1.11 “ License Year ” shall mean the period beginning on the Effective Date and ending on December 31 of that year and each subsequent calendar year during the term of the Agreement thereafter.

1.12 “ Marketing Authorization ” shall mean any and all marketing authorizations, regulatory approvals or registrations, including amendments and supplements thereto, granted by a Regulatory Authority , which are required for marketing, promotion, pricing, reimbursement and selling of Licensed Product s.

1.13 “NDA” shall mean any new drug application filed with any Regulatory Authority , which is necessary for approval to use, market, sell and offer for sale of a Licensed Product .

1.14 “ Net Sales ” means the gross amount received by EntreMed or its Affiliates or Sublicensee for sale of Licensed Product to Third Parties , less:

1.14.1   sales taxes, value added taxes, excise taxes, and customs duties;

1.14.2   cost of export licenses and any taxes, fees or other charges associated with the exportation or importation of Licensed Products ;

1.14.3   rebates accrued, incurred or paid to Federal Medicaid and State Medicare and any other price reductions required by a governmental agency;

1.14.4   rejected shipments, returns, and retroactive deductions;

1.14.5   the amount received for sales which become the subject of a subsequent temporary or partial recall by a regulatory agency for safety or efficacy reasons outside the control of EntreMed ; and

1.14.6   customary cash, quantity, and trade discounts; provided, however, that a sale or transfer to Affiliates or Sublicensees for re-sale by such Affiliates or Sublicensees shall not be considered a sale for the purpose of this provision but the resale by such Affiliates or Sublicensees shall be a sale for such purposes.

    A “sale” shall also include a transfer or other disposition for consideration, but not such transfers or dispositions, without consideration, for pre-clinical, clinical, regulatory or governmental purposes prior to receiving marketing approval for the specific indication for which such transfer is made. In the event that consideration in addition to or in lieu of money is received for Licensed Product , such consideration shall be added to the Net Sales as valued on the day of receipt thereof by EntreMed . To the extent that a Licensed Product is sold in other than an arms length transaction, Net Sales shall be the fair market value of such Licensed Product if sold in an arms length transaction, less the costs identified in this Article 1.14, Licensed Product shall be considered “sold” at the earlier of (a) the transfer of title in such Licensed Product to a person other than an Affiliate or Sublicensee of EntreMed or (b) the shipment of such Licensed Product from the manufacturing or warehouse facilities of EntreMed or its Affiliates or Sublicensees to a Third Party .

1.15 “ Patent Right(s) ” shall mean the Tubulin Binding Agents that are described in the following:

1.15.1   the United States patent applications and patents listed in Appendix A;

1.15.2   the United States and foreign patents issued from applications listed in Appendix A and from divisionals and continuations of such applications;

1.15.3   claims of United States continuation-in-part applications and of equivalent foreign applications, and of the resulting patent(s), that are directed to subject matter specifically described in and claim the benefit of the priority of the aforementioned United States and foreign applications listed in Appendix A;

1.15.4   claims of all later-filed foreign patent applications, and of the resulting patents, that are directed to subject matter described in the United States patents and/or patent applications described in the foregoing subsections of this Article 1.15; and

1.15.5 any reissues, re-examinations or extension of United States patents described in the foregoing subsections of this Article 1.15.

1.16 “ Payment Period ” shall have the meaning as set forth in Article 5.3.1.

1.17 “ Agents ” shall mean any Third Party engaged by EntreMed and/or its Affiliates in the normal course of their business to market and/or distribute their product range in finished form under EntreMed ’s trademarks in a particular country.

1.18 “ Regulatory Authority ” shall mean any regulatory agency, ministry, department or other governmental body having authority in any country to control the development, manufacture, marketing and sale of products.

1.19 “ Sublicensee ” shall mean with respect to a Party any person, company, corporation or other business entity, other than a Party’s Affiliates , that is granted a sublicense by EntreMed to develop, make, have made, use, offer for sale and sell Licensed Product .

1.20 “ Territory ” shall mean each and every country throughout the world.

1.21 “ Third Party ” shall mean any person, entity or corporation other than the Parties and their Affiliates .

1.22 “ Valid Claim ” shall mean with respect to any country of the Territory a claim of an issued and unexpired patent or a supplementary protection certificate included within the Patent Rights in such country which (i) has not been held unenforceable, unpatentable or invalid by a decision of a court or other governmental agency of competent jurisdiction, unappealable or unappealed within the time allowed for appeal, (ii) has not been admitted to be invalid or unenforceable through reissue or disclaimer or otherwise and (iii) absent a license, would be infringed by the use, making or selling of the Licensed Product .

1.23 “ Tubulin Binding Agents ” shall mean any compound described in the Patent Rights.

ARTICLE 2 – GRANT OF RIGHTS

2.1. Exclusive License

Celgene hereby grants to EntreMed an exclusive license, with the full right to grant sublicenses, under the Patent Rights and the Know-How , to make, have made, manufacture, have manufactured, use, develop, clinically test, import and sell Licensed Product in the Field in the Territory . In addition of any rights reserved by Celgene under this Agreement , Celgene shall retain a non-

exclusive license under the Patent Rights to continue its internal research studies and non-commercial outside research studies with respect to the Tubulin Binding Agents .

2.2. Sublicenses and other Co-operations

Any sublicense granted by EntreMed shall be subject to the terms and conditions of this Agreement .

2.2.1   EntreMed may use and grant respective sublicenses to contractors in the drug development, non-clinical and clinical testing, clinical diagnostic formulation manufacture and registration of Licensed Product . In the event that EntreMed intends to grant a sublicense for the distribution, sale and/or marketing rights of Licensed Product to any Third Party in the Territory, entremed agrees that Celgene shall have a first right to negotiate an exclusive or non-exclusive license to the rights offered under the proposed transaction (“ Right of First Discussion ”). Celgene shall have a sixty (60) day period following the date of EntreMed ’s written disclosure of the proposed transaction to exercise its Right of First Discussion by providing written notice to EntreMed of its desire to negotiate a license agreement. In the event a license agreement is not executed within ninety (90) days following the date that Celgene exercises its Right of First Discussion , EntreMed shall be free to sublicense such rights to any Third Party , provided, however, that EntreMed may only offer such sublicense on terms and conditions that are not more favourable than the last offer made by Celgene to EntreMed .

2.2.2    EntreMed shall not grant any rights which are inconsistent with the rights granted to and obligations imposed on EntreMed hereunder. Each sublicense granted by EntreMed shall include an audit right by Celgene of the same scope as provided in Article 5.7.

2.2.3   Any sublicense granted by EntreMed shall provide for the sublicense termination upon the termination of this Agreement .

ARTICLE 3 – TRADEMARKS

3.1 EntreMed shall be free to select and to register trademarks at its sole discretion for sale of Licensed Product s in the Territory . Such trademarks shall be prepared and owned by EntreMed at EntreMed ’s expense.

ARTICLE 4 – DEVELOPMENT

4.1   Disclosure of Know-How

    Celgene undertakes to disclose within sixty (60) days following the Effective Date of this Agreement all Know-How Controlled by or in the possession of Celgene or its Affiliates existing as of the Effective Date of this Agreement to EntreMed .

4.2   Commercially Reasonable Efforts

    EntreMed shall use Commercially Reasonable Efforts to develop and commercialize Licensed Products on a schedule that is consistent with sound and reasonable business practices and judgment.

4.3 Diligence

EntreMed shall use Commercially Reasonable Efforts to bring one or more Licensed Products to market through a diligent program for exploitation of the Tubulin Binding Agents, Patent Rights and Know How . Celgene agrees that EntreMed shall have complete control of all regulatory submissions of Licensed Products to the appropriate regulatory agencies worldwide. Only one payment will be made for each of the milestones recited under 4.3.1, 4.3.2, 4.3.3 and 4.3.4. Diligence shall be demonstrated by attaining the following milestones:

4.3.1 within * years of the Effective Date , the * by EntreMed ;

4.3.2 within * years of the Effective Date , the * a Licensed Product ;

4.3.3 within * years of the Effective Date , the * a Licensed Product ; and

4.3.4 within * years of the Effective Date , the * or * to * a Licensed Product .

4.4 Failure to Achieve Milestones.

If EntreMed is unable to meet any of the milestone events set forth in Article 4.3 EntreMed , EntreMed shall be entitled to a * extension of the required milestone event. If after the extension, EntreMed fails to achieve the milestone, Celgene shall have the option, in its sole discretion, to modify the milestone event or to terminate this Agreement .

4.5 Development Costs

For the time of this Agreement , EntreMed bears all costs incurred by it in all future non-clinical and clinical development activities necessary for the development of Licensed Product s.

4.6 Exchange of Information and Supply of Compounds

The parties, from time to time, but no more that twice a year, may meet to exchange information on the compounds that are being developed. In addition, to the extent that Celgene has any of the Tubulin Binding Agents in its possession, Celgene shall make these Tubulin Binding Agents available to EntreMed for testing, but it shall not be obligated to synthesize any new Tubulin Binding Agents for EntreMed. Neither party shall be obligated to engage in collaborative research or development activities regarding the Tubulin Binding Agents, but may do so to the extent that the parties agree in a separate written arrangement.

ARTICLE 5 – FINANCIAL CONSIDERATION

5.1.   Upfront Fee

    In consideration of the rights granted by Celgene to EntreMed hereunder, EntreMed will pay Celgene the non-refundable, non-creditable sum of one million US Dollars ($1,000,000.00) to an account designated by Celgene to be paid within ten (10) business days following the Effective Date of this Agreement .

5.2.   Milestone Payments

5.2.1. In further consideration of the rights granted by Celgene to EntreMed hereunder, in particular the licenses set forth in Article 2 above, EntreMed will pay Celgene milestone payments as follows:

Event

Milestone Payment

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(vii)

5.2.2. EntreMed shall pay Celgene the milestone payments set forth in Article 5.2.1 within thirty (30) days of the occurrence of the respective milestone event. For the avoidance of doubt, such milestone payments shall not be due more than once. The milestone payments are non-refundable, non-cancellable and not creditable against earned royalties to be paid on the sale of Licensed Products under this Agreement . The upfront-fee pursuant to Article 5.1. and all milestone payments shall be paid in US Dollars. As used in Articles 4 and 5, initiation of a clinical trial means the enrollment of the first patient in such a trial.

5.3. Royalty Payments

5.3.1.   In further consideration of the rights granted by Celgene to EntreMed hereunder, in particular the licenses set forth in Article 2 above, EntreMed will, within sixty (60) days after the first day of January, April, July and October of each License Year , commencing upon the First Commercial Sale , pay Celgene a royalty on Net Sales of Licensed Product s generated in the preceding calendar quarter (“Payment Period”) as a percentage as set forth below.

5.3.2.   In countries where Licensed Products are covered by a Valid Claim under an unexpired Patent Right , the royalty rate shall be * percent (*%) of Net Sales of Licensed Products up to * dollars ($*) calculated on an annual basis for the European countries, Japan and the United States combined. For all sales over $* in the respective territories the royalty rate shall be * percent (*%) of Net Sales of Licensed Products on an annual basis for the European countries, Japan and the United States combined. In those countries where there is no patent coverage, the royalty rate shall be * percent (*%) of Net Sales of Licensed Products for the * (*) year period following the First Commercial Sale of such Licensed Products in such country.

5.3.3.   The above royalty rates shall be payable on a country-by-country basis on the Net Sales of each Licensed Product from its First Commercial Sale until the expiration of the royalty term as provided in Articles 5.3.2 and 5.3.6.

5.3.4   In the event that EntreMed , its Affiliates , Sublicensees or Agents , in order to exploit the licenses granted to it by Celgene hereunder in any country, are required to make royalty payments to one or more Third Parties to obtain a license under their patent rights in the absence of which the Licensed Product could not legally be developed, manufactured, clinically tested, registered, marketed or sold in such country, then EntreMed may deduct * percent (*%) of the royalties paid to such Third Parties from the royalties due to Celgene with regard to

    the respective countries up to a total of * percent (*%) reduction in the royalty rate due Celgene .

5.3.5.   No multiple royalties shall be payable because the Licensed Product , their development, manufacture, use or sale is or shall be covered by more than one Valid Claim of a patent included in the Patent Rights or more than one patent under the Patent Rights .

5.3.6.   With regard to countries where Licensed Product s are covered by a Valid Claim under a Patent Right , EntreMed shall pay royalties on a country-by-country basis until the expiration of the last to expire of the Patent Rights .

5.3.7   If EntreMed grants a sublicense of its rights under this Agreement pursuant to Article 2.2 of this Agreement in any of the countries in the Territory , EntreMed shall pay to Celgene a portion of the upfront payments, milestone payments and other sublicensing fees received from the sublicense *

EntreMed shall pay to Celgene its portion of any sublicensing fee within thirty (30) days of EntreMed’s receipt of any sublicensing fee. Sublicensing payments to Celgene are non-refundable, non-cancellable and not creditable against earned royalties to be paid on the sale of Licensed Products under this Agreement .

5.3.8 In establishing a lower royalty payment in those countries in which there is no patent coverage, as described in Article 5.3.2, the parties recognize, and EntreMed acknowledges, the substantial value of the technology being provided to EntreMed under this Agreement , in addition to the grant of Patent Rights and Tubulin Binding Agents , Celgene has agreed to transfer to EntreMed the Know-How .

5.4. Royalty Payment and Progress Reports

Each royalty payment shall be accompanied by a written report describing the Net Sales of the Licensed Product sold by or on behalf of EntreMed , its Affiliates and Sublicensees during a Payment Period in each country in the Territory in which such Net Sales of Licensed Product occurred during the Payment Period , specifying: the gross sales (if available) and Net Sales in each country’s currency; the applicable royalty rate under this Agreement ; the royalties payable in each country’s currency, including an accounting of deductions taken in the calculation of Net Sales ; the applicable exchange rate to convert from each country’s currency to US Dollars, under this Article 5.4.; the royalties payable in US Dollars and the minimum royalties pursuant to Article 5.3.4. EntreMed shall provide to Celgene no less than semi-annually, on July 1

and January 1 of each year, written progress reports regarding the status of the development and commercialization of the Patent Rights , Tubulin Binding Agents and K now-How . Such report shall include progress on research and development, regulatory approvals, manufacturing, sublicensing, marketing and sales during the preceding six (6) months.

5.5. Method and Manner of Royalty Payment

5.5.1. EntreMed shall deliver to Celgene within sixty (60) days following the end of each Payment Period a royalty report as set forth in Article 5.4. along with EntreMed ‘s payment to Celgene of any royalty due and payable to Celgene for such Payment Period .

5.5.2. All royalty payments shall be computed and paid in US Dollars at exchange rates as published by the Wall Street Journal on the last day of the Payment Period .

5.6.   Withholding Tax

    If laws or regulations require withholding by EntreMed of any taxes imposed upon Celgene on account of any royalties and advance payments, paid under this Agreement , such taxes shall be deducted by EntreMed as required by law from such remittable royalty and advance payment and shall be paid by EntreMed to the proper tax authorities. Official receipts of payment of any withholding tax shall be secured and sent to Celgene as evidence of such payment. The Parties shall exercise their best efforts to ensure that any withholding taxes imposed are reduced as far as possible under the provisions of any relevant tax treaty.

5.7.   Records

    EntreMed, its Affiliates and Sublicensee , shall keep and maintain records of sales of Licensed Product so that the royalties payable and the royalty statements may be verified. Such records shall be open to inspection no more than twice in any one calendar year during normal business hours for a five (5) year period after the royalty period to which such records relate, by a nationally independent certified public accountant selected by Celgene to whom EntreMed has no reasonable objections and retained at Celgene ’s expense. Said accountant shall sign a confidentiality agreement prepared by EntreMed and reasonably acceptable to Celgene and shall then have the right to examine the records kept pursuant to this Agreement and report to Celgene the findings (but not the underlying data) of said examination of records as are necessary to evidence that the records were or were not maintained and used in accordance with this Agreement . A copy of any report provided to Celgene by the accountant shall be given concurrently to EntreMed . If said examination of records reveals any underpayment(s) of the royalty payable, then EntreMed shall promptly pay the balance due to Celgene , and if the underpayment(s) is/are more than five percent

(5%), then EntreMed shall also bear the expenses of said accountant. If said examination of records reveals any overpayment(s) of royalty payable, then Celgene shall credit the amount overpaid against EntreMed ’s future royalty payment(s).

5.8. Overdue Payments

Payments not paid within the time period set forth in this Articles 5 shall bear interest at a rate of *% above the London Interbank Offered Rate (LIBOR) compounded on a quarterly basis from the due date until paid in full.

ARTICLE 6 – CONFIDENTIALITY AND PUBLICATION

6.1   Confidentiality

    Subject to Article 6.2. below, neither Party shall use or disclose any Confidential Information received by it pursuant to this Agreement without the prior written consent of the other.

6.2   Permitted Disclosure

    Nothing contained in this Article shall be construed to restrict the Parties from disclosing Confidential Information as required: (i) for legal, regulatory, tax, or customs reasons, (ii) for audit purposes, (iii) by court or other government order, or, (iv) from using such Confidential Information as is reasonably necessary to perform acts permitted by, or to exploit rights granted under this Agreement , provided that the disclosing Party shall, in the event of disclosure under Articles (i), (ii) or (iii) above, provide the other Party copies of any such Confidential Information at least five (5) business days prior to such disclosure so that the other Party may make any objections and/or secure any protective provisions it deems reasonably necessary.

6.3   Publication

    If either Party wishes to publish any information, data or results regarding the Licensed Product in written, oral, slide show or other form, a manuscript or copy of the proposed publication shall first be sent to the other Party at least sixty (60) days in advance of such publication for review. Unless the reviewing Party informs the other in writing during this sixty (60) day period that the proposed publication must be delayed in order to protect a patentable invention or prevented to avoid disclosure of Confidential Information , the other Party shall be free to publish such results without restriction. In the event that a delay of the proposed publication is required, the other Party shall withhold such submission for publication for an additional period, up to ninety (90) days, or such other period as

    the Parties may mutually agree. In the event that the proposed publication contains Confidential Information , Articles 6.1 and 6.2 shall apply.

    In any event, any reference to either Party in any proposed publication shall only be allowed upon prior written approval of that Party.

6.4   Press Release

    Any publication or press release regarding the co-operation between the Parties under this Agreement requires both Parties’ prior consent with such consent not to be unreasonably withheld or delayed.

ARTICLE 7 – WARRANTIES AND LIMITATION OF LIABILITIES

7.1   By Both Parties

    Each party hereby represents and warrants that each has the full right and authority to enter into this Agreement and that the entry into this Agreement does not require the consent of a Third Party whose consent has not been obtained.

7.2   By Celgene

    Celgene represents and warrants as follows:

7.2.1   that Celgene has not received any notice of infringement of Third Party patents or notice of interfering subject matter; that, without having made any special investigation, Celgene is not aware of any Third Party patents or patent applications that contain any interfering subject matter, or any issued Third Party patents that would be infringed by the making, using, selling, offering for sale, or importing by EntreMed of Tubulin Binding Agents covered by the Patent Rights in any country in the territory .

7.2.2   that the Patent Rights and the Know-How transferred to EntreMed under this Agreement , constitute the entirety of Patent Rights and Know-How embodying the Tubulin Binding Agents ;

7.2.3   that, with regard to the Tubulin Binding Agents , Celgene has no applications filed or pending with the FDA as of the Effective Date , including without limitation any Investigational New Drug or Orphan Drug Status applications.

7.3 Warranty Disclaimer

EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, Celgene MAKES NO REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR VALIDITY OF ANY Celgene PATENT, KNOW HOW, Tubulin Binding Agents OR OTHER INTELLECTUAL PROPERTY RIGHTS.

ARTICLE 8 – INDEMNIFICATION

8.1 By Entremed

EntreMed will defend, indemnify and hold harmless Celgene , its successors, Affiliates and licensors and their employees, agents, officers, trustees, shareholders and directors and each of them (the “ Celgene Indemnified Parties”) from and against any and all Third Party claims, causes of action and costs (including reasonable attorney’s fees) of any nature made or lawsuits or other proceedings filed or otherwise instituted against the Celgene Indemnified Parties in connection with any claims, suits or judgments arising out of any theory of product liability concerning the development, testing, manufacture, sale or use of any Licensed Product by EntreMed , its Affiliates or its Sublicensees .

8.1.1 EntreMed’s indemnification under this Article 8.1 shall not apply to any liability, damage, loss or expense to the extent that it is directly attributable to the gross negligence, reckless misconduct or intentional misconduct of Celgene .

8.1.2 Commencing not later than the date of first use of a Licensed Product in a clinical trial, EntreMed shall obtain and carry in full force and effect product liability insurance against any claims, judgments, liabilities and expenses for which it is obligated to indemnify Celgene and others under Article 8.1 of this Agreement , in such amounts and with such deductibles as are customary at the time for companies engaged in a similar business, and shall provide Celgene with written evidence of such insurance within thirty (30) days of the first use of a Licensed Product in a clinical trial. The insurance policy relating to such coverage shall name Celgene as an additional insured.

8.2 By Celgene

Celgene will defend, indemnify and hold harmless EntreMed , its successors, Affiliates and licensors and their employees, agents, officers, trustees, shareholders and directors and each of them (the “ EntreMed Indemnified Parties”)

from and against any and all Third Party claims, causes of action and costs (including reasonable attorney’s fees) of any nature made or lawsuits or other proceedings filed or otherwise instituted against the EntreMed Indemnified Parties in connection with any claims, suits or judgments arising out of any theory of product liability concerning the development, testing, manufacture or use of any Celgene TUBULIN BINDING AGENT by Celgene , its Affiliates or its Sublicensees prior to the Effective Date .

8.2.1 Celgene ’s indemnification under this Article 9.2 shall not apply to any liability, damage, loss or expense to the extent that it is directly attributable to the gross negligence, reckless misconduct or intentional misconduct of EntreMed .

8.3 Conditions to Indemnification . A person or entity that intends to claim indemnification under this Article 8 (the “Indemnitee”) shall promptly notify the party from whom indemnification is sought (the “Indemnitor”), of any loss, claim, damage, liability or action in respect of which the Indemnitee intends to claim such indemnification, and the Indemnitor shall assume the defense thereof with counsel mutually satisfactory to the Indemnitee whether or not such claim is rightfully brought; provided, however, that an Indemnitee shall have the right to retain its own counsel, with the fees and expenses to be paid by the Indemnitor if Indemnitor does not assume the defense, or if representation of such Indemnitee by the counsel retained by the Indemnitor would be inappropriate due to actual or potential differing interests between such Indemnitee and any other person represented by such counsel in such proceedings. The failure to deliver notice to the Indemnitor within a reasonable time after the commencement of any such action, only if prejudicial to its ability to defend such action, shall relieve such Indemnitor of any liability to the Indemnitee under this Article 8, but the omission so to deliver notice to the Indemnitor will not relieve it of any liability that it may have to any Indemnitee otherwise than under this Article 8. The Indemnitor may not settle or otherwise consent to an adverse judgement in any such loss, claim, damage or other proceeding, that diminshes the rights or interests of the Indemnitee without the prior express written consent of the Indemnitee, its consent not to be unreasonably witheld or delayed. The Indemnitee under this Article 8, its employees and agents, shall cooperate fully with the Indemnitor and its legal representatives in the investigations of any action, claim or liability covered by this indemnification.

ARTICLE 9 – PATENT PROSECUTION, INFRINGEMENT AND MARKING

9.1 Patent Prosecution

9.1.1 Celgene shall use reasonable efforts to prepare, file, prosecute and maintain patent applications and patents directed to licensed Products covered by the Patent Rights through patent counsel selected by Celgene and reasonably acceptable to EntreMed , who shall consult with and keep EntreMed advised with respect thereto in a timely manner.

9.1.2 EntreMed shall reimburse Celgene for * percent (*%) of reasonable patent expenses in the Territory for the filing, prosecution and maintenance of the Patent Rights . EntreMed shall reimburse Celgene , within sixty (60) days after EntreMed receives an itemized invoice for all patent expenses that are incurred and paid by Celgene after the Effective Date .

9.2 Cooperation In Prosecution

9.2.1 With respect to any Patent Right, each patent application, office action, response to office action, request for terminal disclaimer, petition, and request for reissue or reexamination of any patent issuing from such application shall be provided to EntreMed sufficently prior to the filing of such application response, petition, or request to allow for review and comment by EntreMed . Celgene shall have the right to take any action that, in its judgement, is necessary to preserve such Patent Right . EntreMed shall have the right to comment on substantive official actions and shall have the right to suggest reasonable changes to prosecution strategy as it relates to EntreMed ’s compound development .

9.5 Infringement and Declaratory Judgment Actions

9.5.1 Notification . In the event that either party learns of the infringement of any Patent Right , or the filing of a Declaratory Judgment action alleging the invalidity, unenforceability, or noninfringement of any Patent Right (“ DJ Action ”), that party must promptly notify the other party of the infringement or DJ Action , as the case may be, in writing, and must provide reasonable evidence of the infringement. Neither party will notify a Third Party of the infringement of any Patent Right or of the filing of a DJ Action directed to any Patent Right without first obtaining consent of the other party, which consent shall not be unreasonably withheld.

9.5.2 Entremed’s Right To File Infringement Actions . To the extent Celgene has the right to bring a suit or action to compel the termination of infringement of the Patent Right , Celgene hereby grants EntreMed the right and option, but not the obligation, to bring an action for infringement or to defend against a DJ action, at its sole expense, in the name of EntreMed . If EntreMed fails to take a suit or action to compel the termination of infringement within one hundred and eighty (180) days of learning of such infringement, Celgene shall have the sole right, but not the obligation, to bring a suit or action against the infringing entity. No settlement, consent judgment or other voluntary final disposition of a suit that adversely affects Patent Right may be entered into without the consent of Celgene , which consent shall not be unreasonably withheld.

9.5.3   EntreMed’s Right To Defend Declaratory Judgement (DJ) Action s . In the event that a DJ Action is brought naming EntreMed as a defendant, EntreMed shall have the right to proceed with the litigation or settle such action provided, however, that no settlement, consent judgment or other voluntary final disposition of a suit that adversely affects Patent Right may be entered into without the consent of Celgene .

9.5.4   Celgene ’s Recovery . In the event that Celgene shall undertake the enforcement and/or defense of the Patent Right by litigation, any recovery of damages by Celgene for any such litigation shall be applied first in satisfaction of any unreimbursed expenses and legal fees of Celgene relating to the suit. The balance remaining from any such recovery shall be used to compensate EntreMed for its lost sales, on the same basis as if they were Net Sales and the relvant royalty payments to Celgene under this Agreement shall be made. Any remaining damages shall belong to Celgene .

9.5.5   EntreMed ’s Right To Litigate . In the event that Celgene elects not to pursue an action for infringement or to defend against a DJ action , as the case may be, Celgene shall notify EntreMed in writing of such election and EntreMed shall have the right and option, but not the obligation, at its cost and expense, to initiate infringement litigation. Any recovery of damages by EntreMed for any such litigation shall be applied first in satisfaction of any unreimbursed expenses and legal fees of EntreMed relating to the suit. The balance remaining from any such recovery shall be used to compensate EntreMed for its lost sales, on the same basis as if they were Net Sales and the relevant royalty payments to Celgene under this Agreement shall be made. Any remaining damages shall belong to EntreMed .

9.5.6   Cooperation . In any infringement suit either party may institute to enforce or defend the Patent Right pursuant to this Agreement , the other party hereto shall, at the request of the party initiating such suit, cooperate in all respects and, to the extent possible, have its employees testify when requested and make available relevant records, papers, information, samples, specimens, and the like. All reasonable out-of-pocket costs incurred in connection with rendering cooperation requested hereunder shall be paid by the party requesting cooperation.

9.5.7   Third Party Royalty Reduction . In the event that an infringement action is brought by a Third Party against EntreMed alleging that EntreMed’s making, using, offering to sell, selling, or importing of Licensed Products under the Patent Right infringes a Third Party patent, and results in a judgment or settlement requiring royalties to be paid by EntreMed to such Third Party , the royalties owed by EntreMed to Celgene under Article 5 of this Agreement shall be reduced by an amount equal to * percent ( * %) of the royalties owed to such Third Party , provided

that the royalties owed to Celgene shall not be reduced by an amount greater than * percent ( * %) of Net Sales .

9.6 Patent Marking. EntreMed shall mark all Licensed Products or their containers that are made, used, or sold under the terms of this Agreement , in accordance with applicable patent marking laws.

ARTICLE 10 – TERM AND TERMINATION

10.1 This Agreement shall become effective on the Effective Date . Unless sooner terminated by any other provision of this Agreement , the term of the Agreement shall expire with respect to each Licensed Product on a country-by-country basis upon date of expiration of all royalty obligations in the countries in the Territory pursuant to Article 5.3.2 and 5.3.7 herein.

10.2 Notwithstanding the stipulation in Article 10.1. hereof, either Party shall be entitled at any time, by giving written notice to the other Party, to terminate this Agreement with immediate effect in the following itemized events:

10.2.1   Except as otherwise provided in Article 10.2.2 below, if either Party notifies the other Party of the fact of major default or material breach of any provision in this Agreement by the notified Party, and the notified Party fails to take corrective measures to mitigate or cure such default or breach within ninety (90) days from the date of notification, provided that notice of termination is given within six (6) months of the default or breach and prior to correction of the default or breach;

10.2.2   If EntreMed at any time defaults in the payment of any sum when due and fails to make such payment within sixty (60) days after receipt of a written notice by Celgene ; or

10.2.3.   The other Party files in any court or agency pursuant to any statute or regulation pertaining to bankruptcy, solvency, or payment of debts, of any state or country, a petition in bankruptcy or insolvency or for reorganization or for an arrangement or for the appointment of a receiver or trustee of the Party or of its assets, or if the other Party proposes a written Agreement of composition or extension of its debts, or if the other Party shall be served with an involuntary petition against it, filed in any insolvency proceeding, and such petition shall not be dismissed within sixty (60) days after the filing thereof, or if the other Party shall propose or be a Party to any dissolution or liquidation, or if the other Party shall make an assignment for the benefit of creditors.

10.3 EntreMed may, at its discretion, terminate this Agreement at any time for any reason, upon six (6) months prior written notice to Celgene .

ARTICLE 11 – EFFECTS OF TERMINATION

11.1 In the event of a termination of this Agreement pursuant to Articles 10.2 or 10.3, the following shall apply:

11.1.1. EntreMed shall cease use of the Patent Right, Tubulin Binding Agents and the Know-How . In addition, EntreMed shall return at Celgene ’s reasonably incurred expense to Celgene any and all Know-How and Tubulin Binding Agents without delay, including copies and excerpts as disclosed by Celgene under this Agreement .

11.1.2. EntreMed shall notify Celgene of the amount of Licensed Product EntreMed and its Affiliates and Sublicensees then have on hand, the sale of which would, with regard to Licensed Product , but for the termination, be subject to royalty, and, if they so wish, EntreMed and its Affiliate and its Sublicensees and Agents shall thereupon be permitted to sell that amount of Licensed Product , provided that EntreMed shall pay the royalty due thereon to Celgene.

11.2 In the event of the termination of this Agreement under Articles 10.2 or 10.3, EntreMed shall transfer to Celgene all of EntreMed ’S regulatory filings for Licensed P roducts and grant Celgene an exclusive, royalty free license to use any of EntreMed ’s patents, know how, trademarks, data and Market Authorization for Celgene to make, have made, manufacture, have manufactured, use, develop, clinically test, import and sell the Licensed Product in the Territory .

11.3 Expiration or termination of this Agreement for any reason shall be without prejudice to the survival of the following provisions:

11.3.1.   the obligation of confidentiality provided for in Article 6 hereof;

11.3.2.   Celgene ’s right to receive milestone payments due and accrued up to the moment of expiration or termination pursuant to Article 5.2;

11.3.3.   Celgene ’s right to receive all payments of the royalties accrued under Article 5.3. hereof;

11.3.4.   the rights and ownership in any intellectual property right the respective Party has obtained prior to expiration or termination;

11.3.5.   any other rights or remedies which either Party may then or thereafter have hereunder or at law or in equity or otherwise;

11.3.6   the obligation of record keeping provided for in Article 5.7; and

11.3.7 Articles 1, 8, 10, 11, 12 and 13.

ARTICLE 12 – GOVERNING LAW

12.1 This Agreement shall be governed by and interpreted in accordance with the laws of Delaware, without giving effect to any choice of law rules.

ARTICLE 13 – MISCELLANEOUS

13.1   Celgene shall be entitled to assign or otherwise transfer its rights and obligations under this Agreement in whole or in part to any Third Party. EntreMed shall not be entitled to assign or otherwise transfer its rights and obligations under this Agreement in whole or in part to any Third Party without the prior written consent of Celgene which consent shall not be unreasonably withheld except that EntreMed may, without the consent of Celgene , assign this Agreement to a legal successor of all or substantially all of its business or assets.

13.2   Any and all rights acquired by EntreMed under this Agreement shall extend to its Affiliates .

13.3   This Agreement sets forth the entire Agreement between the Parties and supersedes all previous Agreement s, written or oral regarding the subject matter hereof. This Agreement may be amended only by an instrument in writing duly executed on behalf of the Parties.

13.4   Neither Party shall be liable for delay or failure to perform hereunder due to any contingency beyond its control, including, but not limited to acts of God, fires, floods, wars, civil wars, sabotage, strikes, governmental laws, ordinances, rules or regulations, provided, such Party promptly gives to the other Party hereto written notice claiming force Majeure and uses its best efforts to eliminate the effect of such force Majeure, insofar as is possible and with all reasonable dispatch.

13.5   Any waiver shall be made in writing for it to be effective and unless expressly stated shall not be a continuing waiver nor shall it prevent the waiving Party from acting upon that or any subsequent breach or from enforcing any term or condition of this Agreement .

13.6   The invalidity of any provision of this Agreement or any loophole in this Agreement shall not affect the validity of any other provision hereof. The Parties undertake to replace the invalid provision or close the loophole in the Agreement with another provision which reflects legally the originally intended commercial objectives of the Parties as closely as possible.

13.7   In the performance of this Agreement each Party shall be an independent contractor, and therefore, no Party shall be entitled to any benefits applicable to any employee of the other Party. No Party is authorized to act as an agent for the other

Party for any purpose, and no Party shall enter into any contract, warranty or representation as to any matter on behalf of the other Party.

13.8 Any notice or other communication required or permitted to be given by either Party under this Agreement shall be in writing and shall be effective when delivered, if delivered by hand or by electronic facsimile or five days after mailing if mailed by registered or certified mail, postage prepaid and return receipt requested, and shall be addressed to each Party at the following addresses or such other address as may be designated by notice pursuant to this Article:


		If to Celgene		If to EntreMed
		Celgene Corporation		EntreMed , Inc.
		86 Morris Avenue		9640 Medical Center Drive
		Summit, New Jersey 07901		Rockville, MD 20870
		Attn: President and Chief Operating		Attn: CEO
		Officer

ARTICLE 14 – LIST OF APPENDICES

14.1 The following Appendices are incorporated into and made part of this Agreement :

Appendix A: Patent Rights

Appendix B: KNOW-HOW

IN WITNESS WHEREOF , the Parties hereto have caused this Agreement to be executed in duplicate by their duly authorized representatives.


Celgene Corporation		EntreMed , Inc.

By:		By:

	Sol J. Barer		James S. Burns

Title: President & COO		Title: President & CEO

Appendix A: Patent Rights (as of Effective Date )

Type

Application No.

Filing Date

Title

Status

Patent No.

Appendix B: KNOW-HOW


Title:		Celgene ’s Tubulin Binding Agents
Dated:		November 8, 2004
From:		Celgene Drug Discovery
Comment:		As previously provided to EntreMed by Celgene .

Exhibit 31.1

CERTIFICATION OF PRESIDENT AND CHIEF EXECUTIVE OFFICER

I, James S. Burns, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: May 5, 2005


/s/ James S. Burns

James S. Burns
President and Chief Executive Officer

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I, Dane R. Saglio, certify that:

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

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

Date: May 5, 2005

/s/ Dane R. Saglio
Dane R. Saglio
Chief Financial Officer

Exhibit 32.1

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

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

(1) The Report fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company for the dates and periods covered by the Report.

This certificate is being made for the exclusive purpose of compliance by the Chief Executive Officer of the Company (or equivalent) with the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, and may not be used by any person or for any reason other than as specifically required by law.

/s/ James S. Burns

May 5, 2005 James S. Burns

President and CEO

Exhibit 32.2

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

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

This certificate is being made for the exclusive purpose of compliance by the Chief Financial Officer of the Company with the requirements of Section 906 of the Sarbanes-Oxley Act of 2002, and may not be used by any person or for any reason other than as specifically required by law.

/s/ Dane R. Saglio

May 5, 2005 Dane R. Saglio

Chief Financial Officer

	-	Licensing Revenue – The Company has recognized licensing revenues resulting from the January 2002 five-year strategic alliance with Allergan, to develop and commercialize small molecule angiogenic inhibitors for treatment and prevention of diseases and conditions of the eye. The initial net fee has been amortized to revenue over the five-year license term. In April 2005, Allergan terminated the license in accordance with its terms, which will result in the acceleration of deferred revenue in the reporting period ending June 30, 2005. In February 2004 the Company transferred rights to the proteins, endostatin and angiostatin, in an agreement with Children’s Medical Center Corporation and Alchemgen Therapeutics. Under the agreement, Alchemgen received rights to market endostatin and angiostatin in Asia. In exchange, the Company receives upfront and future cash payments and royalties. The upfront cash payment was fully amortized in 2004, as the Company had completed its obligations to transfer data and material. Future cash payments received under this agreement, if any, will be recorded as revenue when received, and/or when collectibility is reasonably assured.

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

	-	Stock-Based Compensation – We have stock option plans under which options to purchase shares of our common stock may be granted to employees, consultants and directors at a price no less than the fair market value on the date of grant. We account for our stock-based compensation in accordance with the provisions of APB No. 25, Accounting for Stock Issued to Employees (“APB No. 25”). Under APB No. 25, compensation expense is based on the difference, if any, on the date of the grant between the fair value of the Company’s stock and the exercise price of the option and is recognized ratably over the vesting period of the option. Because our options must be granted at fair market value, we recognize no compensation expense in accordance with APB No. 25. If we were to adopt SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”), we would recognize compensation expense based upon the fair value at the grant date for awards under the plans using the fair value method. The Company currently expects to adopt SFAS No. 123R in the quarter ended March 31, 2006, using the modified prospective method, although the Company continues to review its options for adoption under this new pronouncement. We expense equity instruments issued to nonemployees in accordance with SFAS No. 123 and EITF 96-18, Accounting for Equity Instruments that are issued to other than employees for acquiring, or in conjunction with selling goods or services .

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

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

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

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

	-	Collaborative Research Agreements – We made payments to our collaborators of $105,000 and $265,000 for the three months ended March 31, 2005 and 2004 respectively. Sponsored research payments to academic collaborators include payments to Children’s Hospital, Boston of $75,000 in 2005 and 2004. Our collaborative efforts are primarily directed towards further exploration of Panzem ^Ò mechanism-of-action (MOA) and non-oncology applications.

	-	Clinical Trial Costs – Clinical costs decreased to $201,000 in the three months ended March 31, 2005, from $454,000 in the three-month period ending March 31, 2004. The 2005 amount reflects the initiation of two Phase Ib clinical trials for reformulated Panzem ^Ò NCD. The prior year amount resulted from a Phase Ia clinical trial to test various dosing approaches for reformulated Panzem® conducted in the first quarter of 2004. Costs of such trials include the clinical site fees, monitoring costs and data management costs. In addition, we contribute Panzem Ò clinical material in tablet form under our Collaborative Research and Development Agreement (CRADA) to the NCI, which is conducting trials collaboratively with EntreMed.

	-	Contract Manufacturing Costs – The costs of manufacturing the material used in clinical trials for our product candidates is reflected in contract manufacturing. These costs include bulk manufacturing, encapsulation and fill finish services, and product release costs. Contract manufacturing costs for the three months ended March 31 increased to $879,000 in 2005 from $295,000 in 2004. The increase reflects the scale-up of manufacturing of the 2ME2 analog, ENMD-1198, for pre-IND tox studies and the purchase of additional bulk 2ME2 to support future Panzem ^Ò NCD trials.

	1.4.1	the Receiving Party or an Affiliate owned or controlled prior to receipt from the Disclosing Party, or

	1.4.2	is or becomes public through no fault of the Receiving Party or any Affiliate thereof, or

	1.4.3	is hereafter developed by the Receiving Party or an Affiliate independent of any disclosure from the Disclosing Party as evidenced by competent written evidence, or

	1.4.4	the Receiving Party or an Affiliate obtains from a Third Party lawfully and not under a confidentiality obligation to the Disclosing Party, or

	1.4.5	is required to be disclosed by law or regulation, provided that Receiving Party shall notify providing party forthwith of any such required disclosure.

	1.14.1	sales taxes, value added taxes, excise taxes, and customs duties;

	1.14.2	cost of export licenses and any taxes, fees or other charges associated with the exportation or importation of Licensed Products ;

	1.14.3	rebates accrued, incurred or paid to Federal Medicaid and State Medicare and any other price reductions required by a governmental agency;

	1.14.4	rejected shipments, returns, and retroactive deductions;

	1.14.5	the amount received for sales which become the subject of a subsequent temporary or partial recall by a regulatory agency for safety or efficacy reasons outside the control of EntreMed ; and

	1.14.6	customary cash, quantity, and trade discounts; provided, however, that a sale or transfer to Affiliates or Sublicensees for re-sale by such Affiliates or Sublicensees shall not be considered a sale for the purpose of this provision but the resale by such Affiliates or Sublicensees shall be a sale for such purposes.

		A “sale” shall also include a transfer or other disposition for consideration, but not such transfers or dispositions, without consideration, for pre-clinical, clinical, regulatory or governmental purposes prior to receiving marketing approval for the specific indication for which such transfer is made. In the event that consideration in addition to or in lieu of money is received for Licensed Product , such consideration shall be added to the Net Sales as valued on the day of receipt thereof by EntreMed . To the extent that a Licensed Product is sold in other than an arms length transaction, Net Sales shall be the fair market value of such Licensed Product if sold in an arms length transaction, less the costs identified in this Article 1.14, Licensed Product shall be considered “sold” at the earlier of (a) the transfer of title in such Licensed Product to a person other than an Affiliate or Sublicensee of EntreMed or (b) the shipment of such Licensed Product from the manufacturing or warehouse facilities of EntreMed or its Affiliates or Sublicensees to a Third Party .

	1.15.1	the United States patent applications and patents listed in Appendix A;

	1.15.2	the United States and foreign patents issued from applications listed in Appendix A and from divisionals and continuations of such applications;

	1.15.3	claims of United States continuation-in-part applications and of equivalent foreign applications, and of the resulting patent(s), that are directed to subject matter specifically described in and claim the benefit of the priority of the aforementioned United States and foreign applications listed in Appendix A;

	1.15.4	claims of all later-filed foreign patent applications, and of the resulting patents, that are directed to subject matter described in the United States patents and/or patent applications described in the foregoing subsections of this Article 1.15; and

1.19	“ Sublicensee ” shall mean with respect to a Party any person, company, corporation or other business entity, other than a Party’s Affiliates , that is granted a sublicense by EntreMed to develop, make, have made, use, offer for sale and sell Licensed Product .

1.20	“ Territory ” shall mean each and every country throughout the world.

	2.2.1	EntreMed may use and grant respective sublicenses to contractors in the drug development, non-clinical and clinical testing, clinical diagnostic formulation manufacture and registration of Licensed Product . In the event that EntreMed intends to grant a sublicense for the distribution, sale and/or marketing rights of Licensed Product to any Third Party in the Territory, entremed agrees that Celgene shall have a first right to negotiate an exclusive or non-exclusive license to the rights offered under the proposed transaction (“ Right of First Discussion ”). Celgene shall have a sixty (60) day period following the date of EntreMed ’s written disclosure of the proposed transaction to exercise its Right of First Discussion by providing written notice to EntreMed of its desire to negotiate a license agreement. In the event a license agreement is not executed within ninety (90) days following the date that Celgene exercises its Right of First Discussion , EntreMed shall be free to sublicense such rights to any Third Party , provided, however, that EntreMed may only offer such sublicense on terms and conditions that are not more favourable than the last offer made by Celgene to EntreMed .

	2.2.2	EntreMed shall not grant any rights which are inconsistent with the rights granted to and obligations imposed on EntreMed hereunder. Each sublicense granted by EntreMed shall include an audit right by Celgene of the same scope as provided in Article 5.7.

	2.2.3	Any sublicense granted by EntreMed shall provide for the sublicense termination upon the termination of this Agreement .

4.1	Disclosure of Know-How

	Celgene undertakes to disclose within sixty (60) days following the Effective Date of this Agreement all Know-How Controlled by or in the possession of Celgene or its Affiliates existing as of the Effective Date of this Agreement to EntreMed .

4.2	Commercially Reasonable Efforts

	EntreMed shall use Commercially Reasonable Efforts to develop and commercialize Licensed Products on a schedule that is consistent with sound and reasonable business practices and judgment.

4.3	Diligence

	EntreMed shall use Commercially Reasonable Efforts to bring one or more Licensed Products to market through a diligent program for exploitation of the Tubulin Binding Agents, Patent Rights and Know How . Celgene agrees that EntreMed shall have complete control of all regulatory submissions of Licensed Products to the appropriate regulatory agencies worldwide. Only one payment will be made for each of the milestones recited under 4.3.1, 4.3.2, 4.3.3 and 4.3.4. Diligence shall be demonstrated by attaining the following milestones:

	4.3.1 within * years of the Effective Date , the * by EntreMed ;

	4.3.2 within * years of the Effective Date , the * a Licensed Product ;

	4.3.3 within * years of the Effective Date , the * a Licensed Product ; and

	4.3.4 within * years of the Effective Date , the * or * to * a Licensed Product .

4.4	Failure to Achieve Milestones.

	If EntreMed is unable to meet any of the milestone events set forth in Article 4.3 EntreMed , EntreMed shall be entitled to a * extension of the required milestone event. If after the extension, EntreMed fails to achieve the milestone, Celgene shall have the option, in its sole discretion, to modify the milestone event or to terminate this Agreement .

4.5	Development Costs

	For the time of this Agreement , EntreMed bears all costs incurred by it in all future non-clinical and clinical development activities necessary for the development of Licensed Product s.

4.6	Exchange of Information and Supply of Compounds

	The parties, from time to time, but no more that twice a year, may meet to exchange information on the compounds that are being developed. In addition, to the extent that Celgene has any of the Tubulin Binding Agents in its possession, Celgene shall make these Tubulin Binding Agents available to EntreMed for testing, but it shall not be obligated to synthesize any new Tubulin Binding Agents for EntreMed. Neither party shall be obligated to engage in collaborative research or development activities regarding the Tubulin Binding Agents, but may do so to the extent that the parties agree in a separate written arrangement.

5.1.	Upfront Fee

	In consideration of the rights granted by Celgene to EntreMed hereunder, EntreMed will pay Celgene the non-refundable, non-creditable sum of one million US Dollars ($1,000,000.00) to an account designated by Celgene to be paid within ten (10) business days following the Effective Date of this Agreement .

5.2.	Milestone Payments

	5.3.1.	In further consideration of the rights granted by Celgene to EntreMed hereunder, in particular the licenses set forth in Article 2 above, EntreMed will, within sixty (60) days after the first day of January, April, July and October of each License Year , commencing upon the First Commercial Sale , pay Celgene a royalty on Net Sales of Licensed Product s generated in the preceding calendar quarter (“Payment Period”) as a percentage as set forth below.

	5.3.2.	In countries where Licensed Products are covered by a Valid Claim under an unexpired Patent Right , the royalty rate shall be * percent (%) of Net Sales of Licensed Products up to dollars ($) calculated on an annual basis for the European countries, Japan and the United States combined. For all sales over $ in the respective territories the royalty rate shall be * percent (%) of Net Sales of Licensed Products on an annual basis for the European countries, Japan and the United States combined. In those countries where there is no patent coverage, the royalty rate shall be percent (%) of Net Sales of Licensed Products for the (*) year period following the First Commercial Sale of such Licensed Products in such country.

	5.3.3.	The above royalty rates shall be payable on a country-by-country basis on the Net Sales of each Licensed Product from its First Commercial Sale until the expiration of the royalty term as provided in Articles 5.3.2 and 5.3.6.

	5.3.4	In the event that EntreMed , its Affiliates , Sublicensees or Agents , in order to exploit the licenses granted to it by Celgene hereunder in any country, are required to make royalty payments to one or more Third Parties to obtain a license under their patent rights in the absence of which the Licensed Product could not legally be developed, manufactured, clinically tested, registered, marketed or sold in such country, then EntreMed may deduct * percent (*%) of the royalties paid to such Third Parties from the royalties due to Celgene with regard to

		the respective countries up to a total of * percent (*%) reduction in the royalty rate due Celgene .

	5.3.5.	No multiple royalties shall be payable because the Licensed Product , their development, manufacture, use or sale is or shall be covered by more than one Valid Claim of a patent included in the Patent Rights or more than one patent under the Patent Rights .

	5.3.6.	With regard to countries where Licensed Product s are covered by a Valid Claim under a Patent Right , EntreMed shall pay royalties on a country-by-country basis until the expiration of the last to expire of the Patent Rights .

	5.3.7	If EntreMed grants a sublicense of its rights under this Agreement pursuant to Article 2.2 of this Agreement in any of the countries in the Territory , EntreMed shall pay to Celgene a portion of the upfront payments, milestone payments and other sublicensing fees received from the sublicense *

5.4.	Royalty Payment and Progress Reports

	Each royalty payment shall be accompanied by a written report describing the Net Sales of the Licensed Product sold by or on behalf of EntreMed , its Affiliates and Sublicensees during a Payment Period in each country in the Territory in which such Net Sales of Licensed Product occurred during the Payment Period , specifying: the gross sales (if available) and Net Sales in each country’s currency; the applicable royalty rate under this Agreement ; the royalties payable in each country’s currency, including an accounting of deductions taken in the calculation of Net Sales ; the applicable exchange rate to convert from each country’s currency to US Dollars, under this Article 5.4.; the royalties payable in US Dollars and the minimum royalties pursuant to Article 5.3.4. EntreMed shall provide to Celgene no less than semi-annually, on July 1

	and January 1 of each year, written progress reports regarding the status of the development and commercialization of the Patent Rights , Tubulin Binding Agents and K now-How . Such report shall include progress on research and development, regulatory approvals, manufacturing, sublicensing, marketing and sales during the preceding six (6) months.

5.5.	Method and Manner of Royalty Payment

	5.5.1.	EntreMed shall deliver to Celgene within sixty (60) days following the end of each Payment Period a royalty report as set forth in Article 5.4. along with EntreMed ‘s payment to Celgene of any royalty due and payable to Celgene for such Payment Period .

	5.5.2.	All royalty payments shall be computed and paid in US Dollars at exchange rates as published by the Wall Street Journal on the last day of the Payment Period .

5.6.	Withholding Tax

	If laws or regulations require withholding by EntreMed of any taxes imposed upon Celgene on account of any royalties and advance payments, paid under this Agreement , such taxes shall be deducted by EntreMed as required by law from such remittable royalty and advance payment and shall be paid by EntreMed to the proper tax authorities. Official receipts of payment of any withholding tax shall be secured and sent to Celgene as evidence of such payment. The Parties shall exercise their best efforts to ensure that any withholding taxes imposed are reduced as far as possible under the provisions of any relevant tax treaty.

5.7.	Records

	EntreMed, its Affiliates and Sublicensee , shall keep and maintain records of sales of Licensed Product so that the royalties payable and the royalty statements may be verified. Such records shall be open to inspection no more than twice in any one calendar year during normal business hours for a five (5) year period after the royalty period to which such records relate, by a nationally independent certified public accountant selected by Celgene to whom EntreMed has no reasonable objections and retained at Celgene ’s expense. Said accountant shall sign a confidentiality agreement prepared by EntreMed and reasonably acceptable to Celgene and shall then have the right to examine the records kept pursuant to this Agreement and report to Celgene the findings (but not the underlying data) of said examination of records as are necessary to evidence that the records were or were not maintained and used in accordance with this Agreement . A copy of any report provided to Celgene by the accountant shall be given concurrently to EntreMed . If said examination of records reveals any underpayment(s) of the royalty payable, then EntreMed shall promptly pay the balance due to Celgene , and if the underpayment(s) is/are more than five percent

5.8.	Overdue Payments

	Payments not paid within the time period set forth in this Articles 5 shall bear interest at a rate of *% above the London Interbank Offered Rate (LIBOR) compounded on a quarterly basis from the due date until paid in full.

6.1	Confidentiality

	Subject to Article 6.2. below, neither Party shall use or disclose any Confidential Information received by it pursuant to this Agreement without the prior written consent of the other.

6.2	Permitted Disclosure

	Nothing contained in this Article shall be construed to restrict the Parties from disclosing Confidential Information as required: (i) for legal, regulatory, tax, or customs reasons, (ii) for audit purposes, (iii) by court or other government order, or, (iv) from using such Confidential Information as is reasonably necessary to perform acts permitted by, or to exploit rights granted under this Agreement , provided that the disclosing Party shall, in the event of disclosure under Articles (i), (ii) or (iii) above, provide the other Party copies of any such Confidential Information at least five (5) business days prior to such disclosure so that the other Party may make any objections and/or secure any protective provisions it deems reasonably necessary.

6.3	Publication

	If either Party wishes to publish any information, data or results regarding the Licensed Product in written, oral, slide show or other form, a manuscript or copy of the proposed publication shall first be sent to the other Party at least sixty (60) days in advance of such publication for review. Unless the reviewing Party informs the other in writing during this sixty (60) day period that the proposed publication must be delayed in order to protect a patentable invention or prevented to avoid disclosure of Confidential Information , the other Party shall be free to publish such results without restriction. In the event that a delay of the proposed publication is required, the other Party shall withhold such submission for publication for an additional period, up to ninety (90) days, or such other period as

	the Parties may mutually agree. In the event that the proposed publication contains Confidential Information , Articles 6.1 and 6.2 shall apply.

	In any event, any reference to either Party in any proposed publication shall only be allowed upon prior written approval of that Party.

6.4	Press Release

	Any publication or press release regarding the co-operation between the Parties under this Agreement requires both Parties’ prior consent with such consent not to be unreasonably withheld or delayed.

7.1	By Both Parties

	Each party hereby represents and warrants that each has the full right and authority to enter into this Agreement and that the entry into this Agreement does not require the consent of a Third Party whose consent has not been obtained.

7.2	By Celgene

	Celgene represents and warrants as follows:

	7.2.1	that Celgene has not received any notice of infringement of Third Party patents or notice of interfering subject matter; that, without having made any special investigation, Celgene is not aware of any Third Party patents or patent applications that contain any interfering subject matter, or any issued Third Party patents that would be infringed by the making, using, selling, offering for sale, or importing by EntreMed of Tubulin Binding Agents covered by the Patent Rights in any country in the territory .

	7.2.2	that the Patent Rights and the Know-How transferred to EntreMed under this Agreement , constitute the entirety of Patent Rights and Know-How embodying the Tubulin Binding Agents ;

	7.2.3	that, with regard to the Tubulin Binding Agents , Celgene has no applications filed or pending with the FDA as of the Effective Date , including without limitation any Investigational New Drug or Orphan Drug Status applications.

7.3	Warranty Disclaimer

	EXCEPT AS OTHERWISE EXPRESSLY SET FORTH HEREIN, Celgene MAKES NO REPRESENTATIONS OR EXTENDS ANY WARRANTIES OF ANY KIND EITHER EXPRESS OR IMPLIED, INCLUDING, BUT NOT LIMITED TO, WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OR VALIDITY OF ANY Celgene PATENT, KNOW HOW, Tubulin Binding Agents OR OTHER INTELLECTUAL PROPERTY RIGHTS.

8.1	By Entremed

	EntreMed will defend, indemnify and hold harmless Celgene , its successors, Affiliates and licensors and their employees, agents, officers, trustees, shareholders and directors and each of them (the “ Celgene Indemnified Parties”) from and against any and all Third Party claims, causes of action and costs (including reasonable attorney’s fees) of any nature made or lawsuits or other proceedings filed or otherwise instituted against the Celgene Indemnified Parties in connection with any claims, suits or judgments arising out of any theory of product liability concerning the development, testing, manufacture, sale or use of any Licensed Product by EntreMed , its Affiliates or its Sublicensees .

	8.1.1	EntreMed’s indemnification under this Article 8.1 shall not apply to any liability, damage, loss or expense to the extent that it is directly attributable to the gross negligence, reckless misconduct or intentional misconduct of Celgene .

	8.1.2	Commencing not later than the date of first use of a Licensed Product in a clinical trial, EntreMed shall obtain and carry in full force and effect product liability insurance against any claims, judgments, liabilities and expenses for which it is obligated to indemnify Celgene and others under Article 8.1 of this Agreement , in such amounts and with such deductibles as are customary at the time for companies engaged in a similar business, and shall provide Celgene with written evidence of such insurance within thirty (30) days of the first use of a Licensed Product in a clinical trial. The insurance policy relating to such coverage shall name Celgene as an additional insured.