Item 1.01 Entry into a Material Definitive Agreement

On December 27, 2004, Emisphere Technologies, Inc. (the “Company”) entered into a Security Purchase Agreement (the “Security Purchase Agreement”) with Elan International Services, Ltd. (“Elan”), providing for the Company’s purchase of its indebtedness to Elan under its outstanding zero coupon note held by Elan (the “Security”).

The Company had entered into a joint venture with Elan to develop oral heparin in 1996.   In connection with the re-purchase of Elan’s joint venture interest in 1999, the Company issued the Security to Elan on July 2, 1999.  The Security had an issue price of $20 million and an original issue discount at maturity of $35,048,881.  The accrued value of the Security on December 27, 2004 was approximately $44 million.

Under the terms of the Security Purchase Agreement, the Company will purchase the Security from Elan for a total of $26 million in cash and, depending on the timing of the installment payments, up to 1.2 million shares of common stock of the Company or 600,000 shares of common stock of the Company and warrants to purchase 600,000 shares of common stock of the Company.  On December 27, 2004 the Company paid Elan $13 million and issued to Elan 600,000 shares of Company common stock; a payment of $7 million and the issuance of 323,077 shares of common stock is due April 29, 2005; and a final cash payment of $6 million and the issuance of 276,923 shares of common stock is due June 30, 2005.  If the Company, at its election, pays the entire balance of $13 million prior to March 31, 2005, then the Company shall issue a warrant to purchase 600,000 shares of common stock (with an exercise price equal to the volume weighted average price for Company common stock for the period of twenty consecutive trading days ending on the trading day immediately preceding the date of issuance of such warrant) in lieu of issuing an aggregate 600,000 shares of common stock. 

Attached hereto and incorporated by reference herein as Exhibit 99.1 is a copy of the press release concerning the agreement with Elan.

On December 27, 2004, the Company also entered into a Common Stock Purchase Agreement (the “Common Stock Purchase Agreement”) with Kingsbridge Capital Limited (“Kingsbridge”), providing for the commitment of Kingsbridge to purchase up to $20 million of the Company’s common stock until December 27, 2006.  In return for the commitment, the Company issued to Kingsbridge a warrant to purchase 250,000 shares of common stock of the Company at an exercise price of $3.811 (representing a premium to the market price of shares of common stock of the Company on the date of issuance of the warrant).  Under the terms of the Common Stock Purchase Agreement, the Company may, at its election, draw funds from Kingsbridge in amounts up to 3% of the Company’s market capitalization at the time of the draw.  In exchange for each draw, the Company will sell to Kingsbridge newly issued shares of the Company’s common stock priced at a discount of between 8-12% of the average trading price of the Company’s common stock during the financing period, with the reduced discount applying if the price of the common stock is equal or greater than $8.50 per share.  The Company will set the minimum acceptable purchase price of any shares to be issued to Kingsbridge during the term of the Common Stock Purchase Agreement.  The Company’s right to begin drawing funds will commence upon the Securities and Exchange Commission declaring effective a registration statement to be filed by the Company.

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