<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 10-Q


   {X}            Quarterly report pursuant to Section 13 or 15 (d) of the
                  Securities Exchange Act of 1934

                  FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000

                                      or

   {  }           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 0-29993

                       INTRABIOTICS PHARMACEUTICALS, INC.
             (Exact name of Registrant as specified in its charter)

              DELAWARE                                       94-3200380
     (State or other jurisdiction of                      (I.R.S. Employer
     incorporation or organization)                    Identification Number)

       1255 TERRA BELLA, MT. VIEW, CA                          94043
     (Address of principal executive offices)               (zip code)

                                 (650) 526-6800
             (Registrant's telephone number including area code)


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

                       Yes [X]          No [ ]


There were 29,094,072 shares of the Company's Common Stock, par value
$.001, outstanding on October 31, 2000.

<PAGE>


                       INTRABIOTICS PHARMACEUTICALS, INC.

                                    FORM 10-Q
                        QUARTER ENDED SEPTEMBER 30, 2000

                                TABLE OF CONTENTS


<TABLE>
<CAPTION>

PART I.                          FINANCIAL INFORMATION                                          PAGE NO.
                                                                                               --------
<S>      <C>                                                                                   <C>
Item 1.  Financial Statements:

         Condensed Balance Sheets as of September 30, 2000 and December 31, 1999...................3

         Condensed Statements of Operations for the Three and Nine Month Periods
          Ended September 30, 2000 and September 30, 1999..........................................4

         Statements of Cash Flows for the Nine Months Ended
         September 30, 2000 and September 30, 1999.................................................5

         Notes to Condensed 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...............................17

PART II                         OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds................................................18

Item 6.  Exhibits and Reports on Form 8-K.........................................................18

SIGNATURES........................................................................................19

</TABLE>


                                       2

<PAGE>

                         INTRABIOTICS PHARMACEUTICALS, INC.
                             CONDENSED BALANCE SHEETS
                                   (IN THOUSANDS)

                                    (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  SEPTEMBER 30,              DECEMBER 31,
                                                                                      2000                       1999
                                                                               --------------------       --------------------
<S>                                                                            <C>                        <C>
  ASSETS                                                                                                        (Note 1)
  Current assets:
     Cash and cash equivalents, including restricted deposits                            $  47,422                   $ 18,862
     Short-term investments                                                                 54,600                     12,567
     Other current assets, including prepayments and deposits                                8,831                        633

                                                                               --------------------       --------------------
        Total current assets                                                               110,853                     32,062


  Property, plant, and equipment, net                                                        6,764                      3,828

  Other assets                                                                                  67                         68

                                                                               --------------------       --------------------
        Total assets                                                                     $ 117,684                   $ 35,958
                                                                               ====================       ====================

  LIABILITIES AND STOCKHOLDERS' EQUITY
  Current liabilities:
     Accounts payable                                                                    $   2,483                   $  2,295
     Accrued clinical costs                                                                  2,248                        916
     Other accrued liabilities                                                               1,568                        535
     Amount payable to contract partner                                                          -                      1,677
     Current financing obligations                                                           2,320                        896

                                                                               --------------------       --------------------
         Total current liabilities                                                           8,619                      6,319

  Long-term financing obligations                                                            5,630                      1,725

  STOCKHOLDERS EQUITY:
  Preferred stock                                                                                -                     79,609
  Common stock                                                                                  29                          1
  Additional paid-in capital                                                               199,738                     13,828
  Deferred stock compensation                                                              (12,913)                   (12,650)
  Accumulated deficit                                                                      (83,419)                   (52,874)

                                                                               --------------------       --------------------
        Total stockholders' equity                                                         103,435                     27,914

                                                                               --------------------       --------------------
        Total liabilities and stockholders' equity                                       $ 117,684                   $ 35,958
                                                                               ====================       ====================

</TABLE>

                              See accompanying notes.


                                       3
<PAGE>



                       INTRABIOTICS PHARMACEUTICALS, INC
                       CONDENSED STATEMENTS OF OPERATIONS
                   (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                  (UNAUDITED)

<TABLE>
<CAPTION>

                                                              THREE MONTHS ENDED           NINE MONTHS ENDED
                                                                 SEPTEMBER 30,                SEPTEMBER 30,
                                                       ------------------------------     ------------------------

                                                           2000             1999          2000           1999
                                                       ----------        ----------     ---------      ---------
<S>                                                    <C>               <C>            <C>            <C>
 Contract revenue                                      $      -       $    1,726        $     -        $   5,222

 Operating expenses:
    Research and development                             10,357            5,733         26,389           17,953
    General and administrative                            3,153            1,460          7,937            3,702
                                                       ----------        ----------     ---------      ---------
       Total operating expenses                          13,510            7,193         34,326           21,655
                                                       ----------        ----------     ---------      ---------
       Operating loss                                   (13,510)          (5,467)       (34,326)         (16,433)

    Interest income                                       1,805              264          4,139              894
    Interest expense                                       (120)             (75)          (358)            (155)

                                                       ----------        ----------     ---------      ---------
       Net loss                                       $ (11,825)        $ (5,278)     $ (30,545)       $ (15,694)
                                                       ==========        ==========     =========      =========

 Basic and diluted net loss per share                   $ (0.41)         $ (5.01)       $ (1.15)        $ (15.16)
                                                       ==========        ==========     =========      =========
 Shares used to compute basic and diluted net
     loss per share                                      29,051            1,053         26,582            1,035
                                                       ==========        ==========     =========      =========
 Pro forma basic and diluted net loss per share                          $ (0.30)                        $ (0.89)
                                                                         ==========                    =========
 Shares used to compute pro forma basic and diluted net
      loss per share                                                      17,670                          17,605
                                                                         ==========                    =========

</TABLE>
                            See accompanying notes.

                                       4

<PAGE>


                       INTRABIOTICS PHARMACEUTICALS, INC.
                         STATEMENTS OF CASH FLOWS
                              (IN THOUSANDS)

                                (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                        NINE MONTHS ENDED SEPTEMBER 30,
                                                                               ---------------------------------------------
                                                                                              2000                      1999
                                                                               -------------------        ------------------
<S>                                                                             <C>                       <C>
OPERATING ACTIVITIES
Net loss                                                                                 $(30,545)                 $(15,694)

Adjustments to reconcile net loss to net cash
     used in operating activities:
     Depreciation and amortization                                                          1,120                       583
     Amortization of deferred stock compensation                                            2,381                       483

     Change in assets and liabilities
          Other current assets                                                             (8,198)                     (745)
          Accounts payable                                                                    188                    (1,072)
          Accrued clinical costs                                                            1,332                      (126)
          Other accrued liabilities                                                         1,033                    (2,135)
          Amount payable to contract partner                                               (1,677)                        -
          Deferred revenue                                                                      -                     4,024
                                                                               -------------------        ------------------
Net cash used in operating activities                                                     (34,366)                  (14,682)

INVESTING ACTIVITIES
    Capital expenditures                                                                   (4,055)                   (1,870)
    Purchase of long-term investments                                                           -                    (4,281)
    Purchase of short-term investments                                                    (51,098)                        -
    Maturities of short-term investments                                                    9,065                         -
                                                                               -------------------        ------------------
Net cash used for investing activities                                                    (46,088)                   (6,151)

FINANCING ACTIVITIES
     Proceeds from issuance of preferred stock                                                  -                     2,580
     Proceeds from issuance of common stock                                               103,685                        23
     Proceeds from financing obligations                                                    6,083                     2,011
     Payments on financing obligations                                                       (754)                     (525)
                                                                               -------------------        ------------------
Net cash provided by financing activities                                                 109,014                     4,089

                                                                               -------------------        ------------------
Net increase (decrease) in cash and cash equivalents                                       28,560                   (16,744)

Cash and cash equivalents at beginning of period                                           18,862                    29,869
                                                                               -------------------        ------------------
Cash and cash equivalents at end of period                                               $ 47,422                  $ 13,125
                                                                               ===================        ==================

Supplemental disclosure of cash flow information
     Interest Paid                                                                          $ 302                     $ 155
                                                                               ===================        ==================

Supplemental disclosure of non-cash information
     Conversion of preferred stock to common stock                                       $ 79,609                  $      -
                                                                               ===================        ==================
     Deferred Compensation                                                               $  2,644                  $  8,461
                                                                               ===================        ==================

</TABLE>

                              See accompanying notes.

                                       5

<PAGE>


                          INTRABIOTICS PHARMACEUTICALS, INC.
                       NOTES TO CONDENSED FINANCIAL STATEMENTS
                                     (Unaudited)

Note 1. Basis of Presentation

         The accompanying condensed financial statements are unaudited and
have been prepared by the Company in accordance with the rules and
regulations of the Securities and Exchange Commission for interim financial
information, and in accordance with the instructions to Form 10-Q and Article
10 of Regulation S-X.

         Certain information and footnote disclosures normally included in
the Company's annual audited financial statements (as required by generally
accepted accounting principles) have been condensed or omitted. The interim
financial statements, in the opinion of management, reflect all adjustments
(consisting of normal recurring accruals) necessary for a fair statement of
the financial position at September 30, 2000 and the results for the interim
periods ended September 30, 2000 and 1999.

         The results of operations of the interim periods are not necessarily
indicative of the results of operations to be expected for the fiscal year.
These interim financial statements should be read in conjunction with the
audited financial statements for the year ended December 31, 1999, which are
contained in the Company's Registration Statement on Form S-1 (NO.
333-95461), as amended and filed with the Securities and Exchange Commission.
The accompanying condensed Balance Sheet as of December 31, 1999 is derived
from such audited financial statements.

         Comprehensive loss is primarily comprised of net unrealized gains or
losses on available-for-sale securities. There is no material difference
between the reported net loss and the comprehensive loss for all periods
presented.

         In March 2000, the FASB issued No. 44 ("FIN 44"), "Accounting for
Certain Transactions Involving Stock Compensation - an Interpretation of APB
25," which contains rules to clarify the applications of APB 25. The
Interpretation is effective July 1, 2000, but certain conclusions in this
Interpretation cover specific events that occur after either December 15,
1998, or January 12, 2000. The adoption of FIN 44 did not have a material
impact on the Company's operation results or financial position.

Note 2. Lease Commitments and Equipment Financing Arrangements

         On February 7, 2000, the Company entered into an operating lease
agreement for two new facilities commencing on May 1, 2000 and expiring on
April 30, 2011. Under this agreement, the Company took possession of the
first facility on May 1, 2000 and will take possession of the second facility
on May 1, 2001. The Company has made available a letter of credit of
$1,000,000 and will make available an additional letter of credit of $600,000
prior to May 2001 in connection with this lease agreement.

         On March 1, 2000, the Company entered into an $861,000
equipment-financing agreement secured by the related assets purchased. The
interest rate for this obligation is 10.99% and the principal and interest
payments are $22,000 per month for 42 months with a final payment of $129,000
on September 1, 2003.

         On March 30, 2000, the Company entered into a $221,000
equipment-financing agreement secured by the related assets. The interest
rate for this obligation is 9.98% and the principal and interest payment is
$6,000 per month for 36 months with a final payment of $22,000 on April 1,
2003.

         In August 1999, the Company entered into a term loan agreement with
Silicon Valley Bank for $5,000,000. The loan agreement has a revolving draw
period expiring in August 2000, and bears interest at 9.55%. Interest-only
payments are due until August 2000, and thereafter principal and interest is
payable over four years. The term loan also includes various financial
covenants and a restriction on paying dividends. In August 2000, $5,000,000
was drawn under this financing arrangement.

                                       6

<PAGE>


Note 3. Cash, Cash Equivalents and Short-term Investments

         The Company invests its excess cash in short-term money market funds
and commercial paper. The following is a summary of the Company's cash, cash
equivalents and investments by major security type at amortized cost, which
approximates fair value:

<TABLE>
<CAPTION>
                                                           SEPTEMBER 30,       DECEMBER 31,
                                                             2000                  1999
                                                       ------------------     ----------------
                                                                     (IN THOUSANDS)

                                                                      (UNAUDITED)
<S>                                                      <C>                   <C>
Operating cash                                                  $  1,239              $   235
Money market                                                      44,818               18,266
Certificates of deposit                                            1,365                  361
Commercial paper                                                  54,600               12,567
                                                       ------------------     ----------------
                                                                $102,022              $31,429
                                                       ==================     ================



Amounts included in cash and cash equivalents                   $ 47,422              $18,862
Amounts included in short-term investments                        54,600               12,567
                                                       ------------------     ----------------
                                                                $102,022              $31,429
                                                       ==================     ================

</TABLE>


The Company classifies all securities as either cash and cash equivalents or
available for sale.


                                       7

<PAGE>



Note 4. Net Loss Per Common Share

         Net loss per share has been computed according to Financial
Accounting Standards Board Statement No. 128, "Earnings Per Share" ("SFAS
128"), which requires disclosure of basic and diluted earnings per share.
Basic and diluted earnings per share is calculated using the weighted-average
number of shares of common stock outstanding during the period, less shares
subject to repurchase. Diluted earnings per share include the impact of
potentially dilutive securities. As the Company's potentially dilutive
securities (convertible preferred stock, stock options, and warrants) were
antidilutive for all periods, they were not included in the computation of
weighted-average shares used in computing diluted net loss per share.

         Pro forma net loss per share has been computed as described above
and also gives effect to the conversion of convertible preferred shares not
included above that automatically converted into common stock upon completion
of the Company's initial public offering of common stock from the original
date of issuance.

         The following is a reconciliation of the numerator and denominator
of basic and diluted net loss per share (in thousands, except per share
amounts):

<TABLE>
<CAPTION>

                                                                            THREE MONTHS ENDED          NINE MONTHS ENDED
                                                                              SEPTEMBER 30,               SEPTEMBER 30,
                                                                     ---------------------------    ---------------------------
                                                                         2000            1999          2000            1999
                                                                     -----------      ----------    ----------      -----------
                                                                              (UNAUDITED)                  (UNAUDITED)
<S>                                                                   <C>             <C>           <C>             <C>
Basic and diluted:
     Net loss                                                          $ (11,825)      $ (5,278)     $ (30,545)       $ (15,694)
                                                                     ============     ==========    ===========     ============
     Weighted-average shares used in computing basic and
         diluted net loss per share                                       29,051          1,053         26,582            1,035
                                                                     ============     ==========    ===========     ============
Basic and diluted net loss per share                                     $ (0.41)       $ (5.01)       $ (1.15)        $ (15.16)
                                                                     ============     ==========    ===========     ============
Pro forma basic and diluted:
     Shares used above                                                    29,051          1,053         26,582            1,035
     Pro forma adjustment to reflect weighted-average effect
         of conversion of preferred stock from the date of
         issuance                                                              -         16,617              -           16,570
                                                                     ============     ==========    ===========     ============
Total weighted-average shares of common stock outstanding                 29,051         17,670         26,582           17,605
                                                                     ============     ==========    ===========     ============
Pro forma basic and diluted net loss per share                           $ (0.41)       $ (0.30)       $ (1.15)         $ (0.89)
                                                                     ============     ==========    ===========     ============

</TABLE>


Note 5. Public Offering of Common Stock

         On March 27, 2000, the Company completed an initial public offering of
7,500,000 shares of its common stock at $15.00 per share with net proceeds to
the Company of approximately $103.6 million.

                                       8

<PAGE>

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

         The following Management's Discussion and Analysis of Financial
Condition and Results of Operations contains forward-looking statements,
which involve risks and uncertainties. The Company's actual results could
differ materially from those anticipated in these forward-looking statements
as a result of certain factors, including those set forth under "RISKS
RELATED TO OUR BUSINESS" below. The following discussion should be read in
conjunction with the financial statements and notes included elsewhere
herein. IntraBiotics disclaims any obligation to update any of the
forward-looking statements contained in this report to reflect any future
events or developments.

OVERVIEW

         IntraBiotics Pharmaceuticals, Inc. develops and intends to
commercialize new antibacterial and antifungal drugs for the prevention or
treatment of serious infectious diseases. We have initiated expanded human
clinical trials to test for efficacy and safety, known as phase III trials,
for our two lead product candidates. These are Protegrin IB-367 Rinse for the
treatment of oral mucositis, a side effect of anti-cancer therapies, and
Ramoplanin Oral for the prevention of infections due to Vancomycin-Resistant
Enterococci, or VRE. We are currently enrolling patients in two phase III
trials for Protegrin IB-367 Rinse for patients undergoing chemotherapy or
radiotherapy and one phase III trial for Ramoplanin Oral. We previously
obtained statistically significant data from human clinical trials that test
for preliminary safety and efficacy, known as phase II trials, that indicate
each of these products was well tolerated and support further efficacy
trials. We completed human clinical trials that test for preliminary safety,
known as phase I trials, for Protegrin IB-367 Aerosol in cystic fibrosis
patients that support further efficacy trials. We are enrolling patients in a
phase I trial to study the safety of Protegrin IB-367 Rinse in patients on
mechanical ventilators. Finally, we have three ongoing research projects and
are in the process of evaluating the in-licensing of additional research
projects.

         We have incurred significant losses since inception and expect to
incur substantial losses for the foreseeable future, primarily due to the
expansion of our research and development programs. We expect that operating
results will fluctuate from quarter to quarter and that such fluctuations may
be substantial. As of September 30, 2000, the Company's accumulated deficit
was approximately $83.4 million.

RESULTS OF OPERATIONS

THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999

         IntraBiotics had no product sales or contract revenue for the three
and nine month periods ended September 30, 2000 compared to $1.7 million and
$5.2 million of contract revenue for the same periods of 1999. Revenue in
1999 was generated under a prior agreement with Pharmacia and Upjohn S.p.A.,
which terminated in July 1999. We will not recognize any additional revenue
under this agreement. The Company does not anticipate any product revenue in
the near future.

         Research and development expenses increased to $10.4 million and
$26.4 million in the three and nine month periods ended September 30, 2000
from $5.7 million and $18.0 million for the same periods in 1999. The
increase was attributable to higher personnel and payroll expenses,
development milestone fees, clinical trial activity and consulting expenses.
We expect research and development expenses to increase as we continue to
expand our research and development programs.

         General and administrative expenses increased to $3.2 million and
$7.9 million in the three and nine month periods ended September 30, 2000
from $1.5 million and $3.7 million for the same periods in 1999. The increase
was primarily attributed to increased personnel and payroll expenses,
consulting, legal, professional, travel and other expenses associated with
increased business development activities. We expect general and
administrative expenses to increase due to growth in business activities.

                                       9

<PAGE>

         In connection with the grant of certain stock options to employees,
the Company recorded no deferred compensation in the three months ended
September 30, 2000 and deferred compensation of $2.6 million in the nine
month period ended September 30, 2000 compared to $5.1 million and $8.5
million for the same periods in 1999. Deferred compensation represents the
difference between the deemed fair value of the common stock for financial
reporting purposes and the exercise price of these options at the date of
grant. Deferred compensation is presented as a reduction of stockholders'
equity and is amortized over the vesting period of the applicable options.

         We expensed $794,000 and $2.4 million of deferred compensation
during the three and nine month periods ended September 30, 2000,
respectively, compared to $258,000 and $483,000 of deferred compensation for
the same periods in 1999. The research and development deferred compensation
amortization expense in the three and nine month periods ended September 30,
2000 was $460,000 and $1.4 million, up from $166,000 and $331,000 for the
same periods in 1999. The general and administrative deferred compensation
amortization expense in the three and nine month periods ended September 30,
2000 was $334,000 and $1.0 million, up from $92,000 and $153,000 for the same
periods in 1999.

         Interest income increased to $1.8 million and $4.1 million in the
three and nine month periods ended September 30, 2000 from $264,000 and
$894,000 for the same periods in 1999. The increase in interest income
resulted from the increase in average cash and investment balances primarily
due to the Company's prior financing activities. Interest expense increased
to $120,000 and $358,000 for the three and nine month periods ended September
30, 2000, from $75,000 and $155,000 for the same periods in 1999. The
increase was primarily attributed to additional equipment financing.

LIQUIDITY AND CAPITAL RESOURCES

         Prior to the initial public offering, IntraBiotics financed its
operations primarily through the private placement of convertible preferred
stock and capital leases. On March 27, 2000, we completed our initial public
offering of common stock in which we sold 7,500,000 shares of common stock at
a price of $15.00 per share. Net proceeds to the Company were approximately
$103.6 million.

         At September 30, 2000, we had cash, cash equivalents and short term
investments of $102.0 million including restricted deposits of approximately
$1.4 million in connection with standby letters of credit for leased
facilities and short-term investments of $54.6 million. The Company regularly
invests excess funds in short-term money market funds and commercial paper.

         Net cash used in operating activities for the nine month period
ended September 30, 2000 and 1999 was $34.4 million and $14.7 million,
respectively. Cash used in operating activities in each period was primarily
the result of net losses, increased prepaid expenses primarily for clinical
trials and changes to accounts payable, accrued liabilities, clinical costs,
amount payable to contract partner and deferred revenue.

         Net cash used by investing activities for the nine month period
ended September 30, 2000 and 1999 was $46.1 million and $6.2 million,
respectively. Cash used by investing activities in the nine month period
ended September 30, 2000 was primarily due to the increase of short term
investments of $51.1 million. During the nine months ended September 30,
2000, the Company used cash to purchase equipment of $1.8 million and
leasehold improvements for new facilities of $2.3 million. Cash used in
investing activities in the nine month period ended September 30, 1999 was
due to the purchase of equipment of $1.9 million.

         Net cash provided by financing activities for the nine month period
ended September 30, 2000 and 1999 was $109.0 million and $4.1 million,
respectively. Cash provided by financing activities for the nine month period
ended September 30, 2000 was due to proceeds from the issuance of common
stock, including net proceeds of $103.6 million from the initial public
offering, and proceeds of $6.1 million from equipment lease financing
arrangements, partially offset by payments on these obligations.

                                       10

<PAGE>

         We expect to continue to incur substantial operating losses. We
believe that existing capital resources and interest income will be
sufficient to fund our operations for at least the next 12 months.

         Our future capital requirements will depend on many factors, including:

                - the timing, cost, extent and results of clinical trials;

                - payments to third parties for manufacturing scale up;

                - the costs and timing of regulatory approvals;

                - the costs of acquiring technologies or assets that compliment
                  our business;

                - the costs of establishing sales, marketing and distribution
                  capabilities;

                - the progress of our research and development activities;

                - availability of technology in-licensing opportunities; and

                - future opportunities for raising capital.

         Until we can generate sufficient cash from our operations, which we
do not anticipate in the foreseeable future, we expect to finance future cash
needs through private and public financings, including equity financings. We
cannot be certain that additional funding will be available when needed or on
favorable terms. If funding is not available, we may need to delay or curtail
our development and commercialization activities to a significant extent.

RISKS RELATED TO OUR BUSINESS

WE EXPECT TO CONTINUE TO INCUR FUTURE OPERATING LOSSES AND MAY NEVER ACHIEVE
PROFITABILITY.

         We have never generated revenue from product sales and have incurred
significant net losses in each year since inception. We incurred net losses
of $4.1 million in 1997, $17.4 million in 1998, $23.1 million in 1999 and
$30.5 million for the nine month period ended September 30, 2000. As of
September 30, 2000, our accumulated deficit was approximately $83.4 million.
We expect to continue to incur substantial additional losses for the
foreseeable future primarily as a result of increases in clinical trial
expense costs, and we may never become profitable. In addition, we expect
increases in pre-clinical research to identify new product candidates and
manufacturing and development costs to commercialize Ramoplanin and Protegrin
IB-367 Rinse, our lead product candidates. To date, we have financed our
operations primarily through the private sale of equity securities, funds
received from a terminated collaboration agreement, the proceeds of equipment
financing arrangements and our initial public offering of common stock on
March 27, 2000. We will receive product revenues only if we complete clinical
trials with respect to one or more products, receive regulatory approvals and
successfully commercialize such products.

WE MAY BE FORCED TO RAISE CAPITAL SOONER THAN CURRENTLY ANTICIPATED AND IF WE
FAIL TO OBTAIN THE CAPITAL NECESSARY TO FUND OUR OPERATIONS, WE WILL BE
UNABLE TO DEVELOP OUR DRUG CANDIDATES AND MAY HAVE TO CEASE OPERATIONS.

         We believe that our current cash balances and cash equivalents of
approximately $47.4 million, short-term investments of approximately $54.6
million and interest income will be sufficient to meet our operating and
capital requirements for at least the next 12 months. However, we have based
this estimate on assumptions that may prove to be wrong. For the years ended
December 31, 1999 and 1998, net cash used for operating activities was $24.7
million and $9.3 million, respectively. For the nine months ended September
30, 2000, net cash used for operating activities was $34.4 million. Our
future liquidity and capital requirements will depend on many factors,
including the timing, cost, extent and results of clinical

                                       11

<PAGE>

trials, payments associated with manufacturing scale-up, the costs and timing
of regulatory approvals, costs associated with researching drug candidates,
securing in-licensing opportunities and conducting pre-clinical research.

         Any additional equity financing may be dilutive to stockholders, and
debt financing, if available, may involve restrictive covenants.
Collaborative arrangements may require us to relinquish our rights to certain
of our technologies, drug candidates or marketing territories. We believe
that additional financing may be required in the future to fund our
operations. We do not know whether additional financing will be available
when needed or on acceptable terms, if at all. If we are unable to raise
additional financing when necessary, we may have to delay some or all of our
product development efforts or be forced to cease operations.

WE DEPEND ON THE OUTCOME OF OUR CLINICAL TRIALS AND IF THEY ARE UNSUCCESSFUL,
WE MAY NOT BE ABLE TO COMMERCIALIZE OUR PRODUCTS AND GENERATE PRODUCT REVENUE.

         Before obtaining regulatory approvals for the commercial sale of any
products, we must demonstrate through preclinical research and clinical
trials that our drug candidates are safe and effective for use in humans. We
currently have two drug candidates in phase III clinical trials, Ramoplanin
Oral and Protegrin IB-367 Rinse. If either drug candidate fails to establish
safety and efficacy in phase III clinical trials, we would be unable to
obtain regulatory approval from the FDA or to commercialize the drug
candidate, and we will be unable to generate product revenue from that
candidate. Clinical trials are expensive and time-consuming to conduct, and
the outcome of these trials is uncertain. A number of new drugs have shown
promising results in clinical trials, but subsequently failed to establish
sufficient safety and efficacy data to obtain necessary regulatory approvals.
A number of companies have suffered significant setbacks in advanced clinical
trials, even after promising results in earlier trials.

         In addition, if we have delays in clinical trials or the FDA
approval process or if we need to perform more or larger clinical trials, our
product development costs will increase and our ability to generate product
revenue will be delayed.

         Our commencement and completion of clinical trials may be delayed by
many factors, including:

                  - slower than expected rate of patient recruitment;

                  - inability to adequately obtain data about patients after
                    their treatment;

                  - additional regulatory requests;

                  - inability to manufacture sufficient quantities of materials
                    used for clinical trials; or

                  - unforeseen safety issues.

         If the delays are substantial, the increase in product development
expenses could cause our losses to increase and diminish the commercial
potential for our drug products.

IF OUR COLLABORATIVE PARTNERS ASSISTING IN OUR CLINICAL TRIALS FAIL TO
APPROPRIATELY MANAGE OUR CLINICAL TRIALS, THE TRIALS COULD BE DELAYED OR
COULD FAIL.

         We have limited experience in conducting and managing clinical
trials. We rely on several contract research organizations, including
PharmaNet, Inc. and Amarex Clinical Research, to assist us in managing and
monitoring our clinical trials. The FDA may inspect some of our clinical
investigational sites, our collaborative partner's records and our facility
and files to determine if the clinical trials were conducted according to
good clinical practices. If the FDA determines that the trials were not in
compliance, we may be required to repeat the clinical trials. If our contract
research organizations fail to perform under our agreements with them, we may
face delays in completing our clinical trials or failure of our clinical
program.

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<PAGE>

IF OUR SINGLE-SOURCE THIRD PARTY MANUFACTURERS FAIL TO PRODUCE CLINICAL OR
COMMERCIAL QUANTITIES OF OUR DRUG CANDIDATES, WE MAY NOT HAVE SUFFICIENT
QUANTITIES OF OUR DRUG CANDIDATES TO MEET DEMAND.

         We rely on PolyPeptide Laboratories A/S and Biosearch Italia S.p.A.
to manufacture our bulk drug substances on a commercial scale. While we
maintain a limited inventory of our drug candidates, we depend on these
single-source contract manufacturers to produce each of our products for use
in our clinical trials. Our contract manufacturers have no experience in
manufacturing Protegrin IB-367 or Ramoplanin in quantities sufficient for
commercialization and may have difficulty in scaling up production. If our
contract manufacturers are unable or fail to produce the required quantities
of our drug candidates for clinical use or commercial sale on a timely basis,
at commercially reasonable prices and with sufficient purity, we will not
have sufficient quantities of our drug candidates to complete current and
future clinical trials, or to meet commercial demand. In addition, we intend
to contract with third parties for the manufacture of the final formulation.
We cannot guarantee that we will be able to contract with a reliable
manufacturer on commercially reasonable terms.

         Our third-party manufacturers and we are required to register
manufacturing facilities with the FDA and foreign regulatory authorities. If
these facilities become unavailable for any reason or if our contract
manufacturers fail to comply with the FDA's current good manufacturing
practices or if our contract manufacturers terminate their agreements with
us, we would have to find an alternative source for manufacturing our drug
candidates. There are, on a worldwide basis, a limited number of contract
facilities in which our drug candidates can be produced according to current
good manufacturing practice regulations. In addition, the manufacturing
processes for Protegrin IB-367 and Ramoplanin are extremely complex and
proprietary. If we are unable to continue having Protegrin IB-367 or
Ramoplanin manufactured by our current contract manufacturers, we do not know
if we could engage another contract manufacturer when needed or on acceptable
terms, if at all.

IF WE FAIL TO OBTAIN FDA APPROVALS FOR OUR PRODUCTS, WE WILL BE UNABLE TO
COMMERCIALIZE OUR DRUG CANDIDATES.

         We do not have a drug candidate approved for sale in the U.S. or any
foreign market. We must obtain approval from the FDA in order to sell our
drug candidates in the U.S. and from foreign regulatory authorities in order
to sell our drug candidates in other countries. We must successfully complete
our phase III clinical trials and demonstrate manufacturing capability before
we can file with the FDA for approval to sell our products. The FDA could
require us to repeat clinical trials as part of the regulatory review
process. Delays in obtaining or failure to obtain regulatory approvals may:

         - delay or prevent the successful commercialization of any of our drug
           candidates;

         - diminish our competitive advantage; and

         - defer or decrease our receipt of revenues or royalties.

         The regulatory review and approval process is lengthy, expensive and
uncertain. Extensive preclinical and clinical data and supporting information
must be submitted to the FDA for each indication to establish safety and
effectiveness in order to secure FDA approval. We have limited experience in
obtaining such approvals, and cannot be certain when, if ever, we will
receive these regulatory approvals.

         In addition to initial regulatory approval, our drug candidates will
be subject to extensive and rigorous ongoing domestic and foreign government
regulation. Any approvals, once obtained, may be withdrawn if compliance with
regulatory requirements is not maintained or safety problems are identified.
Failure to comply with these requirements may subject us to stringent
penalties.

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<PAGE>


DEVELOPMENT AND COMMERCIALIZATION OF COMPETITIVE PRODUCTS COULD REDUCE OR
PREVENT SALES OF OUR PRODUCTS AND REDUCE REVENUE.

         We may be unable to compete successfully if other companies develop
and commercialize competitive products that are less expensive, more
effective, have fewer side effects or are easier to administer than our drug
candidates. If we are unable to compete successfully with our drug
candidates, physicians may not recommend and patients may not buy our drugs
which would cause our product revenue to decline.

         There are several drugs under development that might compete with
Ramoplanin Oral and Protegrin IB-367 Rinse. To the best of our knowledge,
there are no direct competitors approved or under development for the
prevention of VRE bloodstream infections. However, there are two approved
products for the treatment of VRE infections, Synercid-Registered Trademark-
and Zyvox-Registered Trademark-. For oral mucositis, there is one approved
device, Radiacare-Registered Trademark-, and several drugs in early stage
clinical trials. These include two growth factors, keratinocyte growth factor
and interleukin-11, as well as a chemoprotective agent, Ethyol-Registered
Trademark-. The companies sponsoring these trials have successfully
commercialized products in the past. In addition, there may be products under
development of which we are unaware for the prevention of VRE bloodstream
infections or the treatment of oral mucositis.

         Many of our competitors and related private and public research and
academic institutions have substantially greater experience, financial
resources and larger research and development staffs than we do. In addition,
many of these competitors, either alone or together with their collaborative
partners, have significantly greater experience than we do in developing
drugs, obtaining regulatory approvals and manufacturing and marketing
products. We also compete with these organizations and other companies for
in-licensing opportunities for future drug candidates, and for attracting
scientific and management personnel.

IF WE ARE UNABLE TO ADEQUATELY PROTECT OUR INTELLECTUAL PROPERTY, WE MAY BE
UNABLE TO SELL OUR PRODUCTS OR TO COMPETE EFFECTIVELY.

         We rely on a combination of patents, trade secrets and contractual
provisions to protect our intellectual property. If we fail to adequately
protect our intellectual property, other companies or individuals may prevent
us from selling our products or may develop competing products based on our
technology. Our success depends in part on our ability to:

         - obtain patents;

         - protect trade secrets;

         - operate without infringing upon the proprietary rights of others; and

         - prevent others from infringing on our proprietary rights.

         We will be able to protect our proprietary rights from unauthorized
use by third parties only to the extent that our proprietary rights are
covered by valid and enforceable patents or are effectively maintained as
trade secrets.

         We try to protect our proprietary position by filing U.S. and
foreign patent applications related to our proprietary technology, inventions
and improvements that are important to the development of our business. For
example, we own or have rights to seven patents and two pending patent
applications in the U.S. However, the patent position of biopharmaceutical
companies involves complex legal and factual questions. We cannot predict the
enforceability or scope of any issued patents or those that may issue in the
future. Patents, if issued, may be challenged, invalidated or circumvented.
Consequently, if any patents that we own or license from third parties do not
provide sufficient protection, our competitive position would be weakened.
Furthermore, others may independently develop similar technologies or
duplicate any

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<PAGE>

technology that we have developed. In addition, we may not be issued patents
for our pending patent applications, those we may file in the future, or
those we may license from third parties.

         In addition to patents, we rely on trade secrets and proprietary
know-how. Our contract manufacturers perform the manufacturing processes
covered by these trade secrets. Accordingly, our contract manufacturers and
we must maintain confidentiality. We have confidentiality and proprietary
information agreements with our contract manufacturers and with our
employees. These agreements may not provide meaningful protection or adequate
remedies for our technology in the event of unauthorized use or disclosure of
confidential and proprietary information.

WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY LITIGATION THAT COULD BE COSTLY
AND TIME-CONSUMING.

         The biotechnology and pharmaceutical industries have been
characterized by extensive litigation regarding patents and other
intellectual property rights. Although we are not currently a party to any
lawsuits, third parties may assert infringement or other intellectual
property claims against us. We may have to pay substantial damages, including
treble damages, for past infringement if it is ultimately determined that our
products infringe a third party's proprietary rights. The defense and
prosecution of intellectual property suits, U.S. Patent and Trademark Office
interference proceedings and related legal and administrative proceedings in
the U.S. and internationally are costly and time-consuming to pursue and
their outcome is uncertain. If we become involved in any of these
proceedings, we will incur substantial expense and the efforts of our
technical and management personnel will be significantly diverted. An adverse
determination may result in the invalidation of our patents subject us to
significant liabilities or require us to seek licenses that may not be
available from third parties on satisfactory terms, or at all. Our stock
price could decline based on any public announcements related to litigation
or interference proceedings initiated or threatened against us.

IF PHYSICIANS AND PATIENTS DO NOT ACCEPT OUR PRODUCTS, WE MAY BE UNABLE TO
GENERATE SIGNIFICANT REVENUE, IF ANY.

         Our drug candidates may not gain market acceptance among physicians,
patients, and the medical community. If any of our drug candidates fail to
achieve market acceptance, we may be unable to successfully market and sell
the product, which would limit our ability to generate revenue. The degree of
market acceptance of any drug candidate depends on a number of factors,
including:

         - demonstration of clinical efficacy and safety;

         - cost-effectiveness;

         - convenience and ease of administration;

         - potential advantage over alternative treatment methods; and

         - marketing and distribution support.

         Currently, we have two drug candidates in phase III clinical trials
and do not have any drug candidate approved by the FDA. Physicians will not
recommend our products until such time as clinical data or other factors
demonstrate the safety and efficacy of our drugs as compared to other
treatments. In practice, competitors may be more effective in marketing their
drugs. Even if the clinical safety and efficacy of our antibiotic products is
established, physicians may elect not to recommend products. For example,
physicians may be reluctant to prescribe widespread use of our products
because of concern about developing bacterial strains that are resistant to
our drugs.

IF WE ARE UNABLE TO ESTABLISH SALES, MARKETING AND DISTRIBUTION CAPABILITIES
OR ENTER INTO AGREEMENTS WITH THIRD PARTIES TO PERFORM THESE SERVICES, WE
WILL BE UNABLE TO COMMERCIALIZE OUR DRUG PRODUCTS.

                                       15

<PAGE>

         We do not currently have marketing, sales or distribution
capabilities. For our initial products, Ramoplanin Oral and Protegrin IB-367
Rinse, we intend to establish a direct marketing and sales force in the U.S.
and Canada. If we fail to establish successful marketing and sales
capabilities or fail to enter into successful marketing arrangements with
third parties, we would be unable to commercialize these drug products. We
must develop a marketing and sales force with technical expertise and
distribution capabilities to market any of our products directly. We intend
to enter into arrangements with third parties to market and sell most of our
products outside of the U.S. and Canada. To the extent that we enter into
marketing and sales arrangements with other companies, our revenues will be
lower than if we marketed the products directly.

THE FAILURE TO RECRUIT AND RETAIN KEY PERSONNEL MAY DELAY OUR ABILITY TO
COMPLETE, DEVELOP AND COMMERCIALIZE RAMOPLANIN ORAL, PROTEGRIN IB-367 RINSE
AND OUR EARLIER STAGE PRODUCTS.

         We are highly dependent on our management and technical staff.
Competition for personnel is intense. If we lose the services of any of our
senior management, we may be delayed in our product development and
commercialization efforts. We do not maintain key person life insurance and
do not have employment agreements with our management and technical staff. In
order to pursue product development, marketing and commercialization plans,
we will need to hire additional qualified scientific personnel to perform
research and development. We will also need to hire personnel with expertise
in clinical testing, government regulation, manufacturing, marketing and
finance. We may not be able to attract and retain personnel on acceptable
terms given the competition for such personnel among biotechnology,
pharmaceutical and other companies.

         In addition, we rely on consultants to assist us in formulating our
research and clinical development strategy. All of our consultants are
employed by other entities. They may have commitments to, or relationships
with, other entities that may limit their availability to us. The loss of the
services of these personnel may delay our research and development efforts.

DIRECTORS, EXECUTIVE OFFICERS, PRINCIPAL STOCKHOLDERS AND AFFILIATED ENTITIES
OWN A SIGNIFICANT PORTION OF OUR CAPITAL STOCK AND WILL HAVE SUBSTANTIAL
CONTROL OVER OUR ACTIVITIES.

         Our directors, executive officers, principal stockholders and
affiliated entities beneficially own, in the aggregate, approximately 50% of
our outstanding common stock. These stockholders, if acting together, will be
able to significantly influence all matters requiring approval by our
stockholders, including the election of directors and the approval of mergers
or other business combination transactions.

ANTITAKEOVER PROVISIONS IN OUR CHARTER DOCUMENTS AND UNDER DELAWARE LAW MAY
MAKE AN ACQUISITION OF US MORE DIFFICULT.

         Provisions of our certificate of incorporation and bylaws could make
it more difficult for a third party to acquire us, even if doing so would be
beneficial to our stockholders.

These provisions:

         - provide for a classified board of directors of which approximately
           one third of the directors will be elected each year;

         - allow the authorized number of directors to be changed only by
           resolution of the board of  directors;

         - require that stockholder actions must be effected at a duly called
           stockholder meeting and prohibit stockholder action by written
           consent;

         - establish advance notice requirements for nominations to the board
           of directors or for proposals that can be acted on at stockholder
           meetings; and

                                       16

<PAGE>

         - limit who may call stockholder meetings.

         In addition, because we are incorporated in Delaware, we are
governed by the provisions of Section 203 of the Delaware General Corporation
Law which may prohibit large stockholders from consummating a merger with or
acquisition of us. These provisions may prevent a merger or acquisition that
would be attractive to stockholders and could limit the price that investors
would be willing to pay in the future for our common stock.

OUR STOCK PRICE MAY BE VOLATILE, AND THE VALUE OF YOUR INVESTMENT MAY DECLINE.

         The market prices for securities of biotechnology companies in
general have been highly volatile and our stock may be subject to volatility.
The following factors, in addition to the other risk factors described in
this section, may have a significant impact on the market price of our common
stock:

         - announcements of technological innovations or new commercial products
           by our competitors or us;

         - developments concerning proprietary rights;

         - publicity regarding actual or perceived adverse events in our
           clinical trials or relating to products under development by our
           competitors;

         - regulatory developments in the U.S. or foreign countries;

         - litigation;

         - significant short selling in our common stock;

         - economic and other external factors; and

         - period-to-period fluctuations in our financial results and changes
           in analysts' recommendations.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE REGARDING 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 significantly
increasing risk. We own financial instruments that are sensitive to market
risks as part of our investment portfolio. To minimize this risk, we maintain
a portfolio of cash equivalents and short-term investments in a variety of
securities, including money market funds and commercial paper.

                                       17

<PAGE>


PART II OTHER INFORMATION


ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

         The Company's Registration Statement, on Form S-1, filed under the
Securities Act of 1933 (No. 333-95461), was declared effective on March 27,
2000. The Company registered 8,625,000 shares and sold 7,500,000 shares of
Common Stock at $15.00 for aggregate proceeds of $112.5 million prior to
deducting underwriting discounts, commissions and offering expenses.

         The Company incurred related offering costs of approximately $8.9
million in the nine month periods ended September 30, 2000, respectively, of
which $7.9 million represented underwriting discounts and commissions. All
initial public offering costs were direct or indirect payments to others. The
net offering proceeds to the Company after all expenses were approximately
$103.6 million.

         We intend to use the net proceeds for funding clinical trials, the
development and scale up of manufacturing processes by our contract
manufacturers, other research and development activities, working capital and
other general corporate purposes.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

     (a)      List of Exhibits

              NUMBER            EXHIBIT DESCRIPTION
              ------            --------------------
              27.1              Financial Data Schedule

     (b)      Reports on Form 8-K

         The Company did not file a report on Form 8-K during the quarter
ended September 30, 2000.


                                       18

<PAGE>


         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.

                                             IntraBiotics Pharmaceuticals, Inc.


                                             /s/ KENNETH J. KELLEY
                 November 7, 2000            ----------------------------------
                                             Kenneth J. Kelley
                                             President and Chief Executive


                                             /s/ RUSSELL L. HUGHES
                 November 7, 2000            ----------------------------------
                                             Russell L. Hughes
                                             Controller


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