<PAGE>

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

                                    FORM 10-Q
(Mark One)

/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: 0-21130


                        ENCHIRA BIOTECHNOLOGY CORPORATION
             (Exact name of registrant as specified in its charter)

       Delaware                                          04-3078857
(State or other jurisdiction of                          (IRS Employer
incorporation or organization)                           Identification No.)

4200 Research Forest Drive
The Woodlands, Texas                                     77381
(address of principal executive offices)                 (zip code)

                                  281-419-7000
              (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
                                                                  ---     ---

         As of November 1, 2000, there were outstanding 9,055,285 shares of
Common Stock, par value $.01 per share, of the registrant.

<PAGE>

                        ENCHIRA BIOTECHNOLOGY CORPORATION


               FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            ----
<S>                     <C>                                                                                 <C>
Factors Affecting Forward-Looking Statements                                                                  3

PART I.                 FINANCIAL INFORMATION

Item 1.                 Financial Statements                                                                  4

                        Balance Sheets as of September 30, 2000 (Unaudited)
                        and December 31, 1999                                                                 5

                        Statements of Operations for the Three and Nine Months
                        Ended September 30, 2000 and 1999 (Unaudited)                                         6

                        Statements of Cash Flows for the Nine Months Ended
                        September 30, 2000 and 1999 (Unaudited)                                               7

                        Notes to Financial Statements                                                         8

Item 2.                 Management's Discussion and Analysis of Financial                                    11
                        Condition and Results of Operations

PART II.                OTHER INFORMATION

Item 1.                 Legal Proceedings                                                                    15

Item 2.                 Changes in Securities and Uses of Proceeds                                           15

Item 6.                 Exhibits and Reports on Form 8-K                                                     16

SIGNATURES                                                                                                   17
</TABLE>



                                       2

<PAGE>

                  FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

         This Quarterly Report on Form 10-Q includes "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. The words "anticipate", "believe", "expect", "estimate", "project"
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to certain risks, uncertainties and assumptions.
Should one or more of these risks or uncertainties materialize, or should
underlying assumptions prove incorrect, actual results may vary materially
from those anticipated, believed, expected, estimated or projected. These
risks and uncertainties include technological uncertainty and risks
associated with the commercialization of the Company's technology, the
pending dispute and arbitration with Maxygen relating to the Company's rights
to its RACHITT-TM- technology, the Company's history of operating losses and
uncertainty of future profitability, manufacturing risks and uncertainties,
uncertainty of market acceptance of the Company's technology, uncertainties
as to the protection offered by the Company's patents and proprietary
technology, the Company's dependence on collaborations, the Company's need
for additional funds, limited marketing experience and dependence on key
personnel, government regulation, competition and other risks and
uncertainties described in the Company's filings with the Securities and
Exchange Commission. For additional discussion of such risks, uncertainties
and assumptions ("Cautionary Statements"), see "Item 2. Management's
Discussion and Analysis of Financial Condition and Results of Operations -
Liquidity and Capital Resources" included elsewhere in this report and "Item
1. Business - Risk Factors" in the Company's Annual Report on Form 10-K
(filed as Energy BioSystems Corporation) for the year ended December 31, 1999
(the "1999 Form 10-K"). All subsequent written and oral forward-looking
statements attributable to the Company or persons acting on its behalf are
expressly qualified in their entirety by the Cautionary Statements.










                                       3

<PAGE>

                          PART I. FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

         The following unaudited financial statements have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and note disclosures normally included in
annual financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted pursuant to those rules
and regulations, although the Company believes that the disclosures made
herein are adequate to make the information presented not misleading. These
financial statements should be read in conjunction with the 1999 Form 10-K.

         The information presented in the accompanying financial statements
is unaudited, but in the opinion of management, reflects all adjustments
(which include only normal recurring adjustments) necessary to present fairly
such information.
















                                       4

<PAGE>

                        ENCHIRA BIOTECHNOLOGY CORPORATION


                                 BALANCE SHEETS

<TABLE>
<CAPTION>

                                                                        September 30,         December 31,
                                                                            2000                 1999
                                                                      -----------------    -----------------
                                                                        (Unaudited)
<S>                                                                   <C>                  <C>
     ASSETS
Current assets:
     Cash and cash equivalents                                        $     10,408,434     $      2,510,274
     Short-term investments                                                  3,518,496            3,445,199
     Prepaid expenses and other current assets                                 445,340              143,014
                                                                      ----------------     ----------------
         Total current assets                                               14,372,270            6,098,487

Long-term investments                                                        1,278,898                   -
Furniture, equipment and leasehold improvements, net                           783,843              926,684
Intangible and other assets, net                                             1,199,821            1,038,927
                                                                      ----------------     ----------------
         Total assets                                                 $     17,634,832     $      8,064,098
                                                                      ================     ================

     LIABILITIES & STOCKHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued liabilities                         $        572,950     $        327,150
     Short-term capital lease                                                   11,990                   -
     Deferred revenue                                                          855,000              180,000
                                                                      ----------------     ----------------
         Total current liabilities                                           1,439,940              507,150

Long-term capital lease                                                         61,463                   -

Stockholders' equity:
     Series B Convertible Preferred Stock, $0.01 par value
        (liquidation value $23,640,918; 760,000 shares
         authorized, 387,700 and 519,400 shares,
         respectively, issued and outstanding)                              22,962,211           28,100,250
     Common Stock, $0.01 par value (30,000,000 shares
         authorized, 9,054,860 and 6,572,135 shares,
         respectively, issued and outstanding)                                  90,549               65,721
     Additional paid-in capital                                             73,687,928           54,470,252
     Accumulated deficit                                                   (80,607,259)         (75,079,275)
                                                                      ----------------     ----------------
        Total stockholders' equity                                          16,133,429            7,556,948
                                                                      ----------------     ----------------
        Total liabilities and stockholders' equity                    $     17,634,832     $      8,064,098
                                                                      ================     ================
</TABLE>

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


                                       5

<PAGE>

                        ENCHIRA BIOTECHNOLOGY CORPORATION


                            STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                     Three Months Ended                   Nine Months Ended
                                                        September 30,                       September 30,
                                                   2000              1999              2000              1999
                                             ---------------   ---------------   ---------------    ---------------
<S>                                          <C>               <C>               <C>                <C>
REVENUES:
    Sponsored research revenues              $       135,157   $       390,241   $       493,322    $     1,415,177
    Interest and investment income                    68,440            89,837           193,879            131,180
                                             ---------------   ---------------   ---------------    ---------------

          Total revenues                             203,597           480,078           687,201          1,546,357

COSTS AND EXPENSES:
    Research and development                         964,327         1,008,510         2,949,998          3,677,615
    General and administrative                       816,334           428,784         1,831,455          1,441,380
                                             ---------------   ---------------   ---------------    ---------------

          Total costs and expenses                 1,780,661         1,437,294         4,781,453          5,118,995
                                             ---------------   ---------------   ---------------    ---------------

NET LOSS                                     $   (1,577,064)   $      (957,216)  $    (4,094,252)   $    (3,572,638)
                                             ==============    ===============   ===============    ===============

NET LOSS PER COMMON SHARE -
    BASIC AND DILUTED                        $        (0.28)   $        (0.25)   $        (0.83)    $         (1.49)
                                             ==============    ===============   ===============    ===============

SHARES USED IN COMPUTING
    NET LOSS PER COMMON SHARE
                                                   7,551,257         6,569,557         7,077,747          3,983,820
                                             ==============    ===============   ===============    ===============
</TABLE>








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

                                       6

<PAGE>

                        ENCHIRA BIOTECHNOLOGY CORPORATION


                            STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                  Nine Months Ended
                                                                                     September 30,
                                                                            ------------------------------
                                                                                 2000            1999
                                                                            --------------  --------------
<S>                                                                         <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
      Net loss                                                              $   (4,094,252) $   (3,572,638)
      Adjustments to reconcile net loss to net cash
         used in operating activities:
            Depreciation and amortization                                          350,361         608,435
            Issuance of common stock for services                                   25,000               -
      Changes in assets and liabilities:
            Decrease (increase) in prepaid expenses and other
               current assets                                                     (240,733)         78,674
            Increase in deferred revenue                                           675,000               -
            Increase (decrease) in accounts payable and accrued
               liabilities                                                         245,800        (389,506)
                                                                            --------------  --------------
      Net cash used in operating activities                                     (3,038,824)     (3,275,035)
                                                                            --------------  --------------

CASH FLOWS FROM INVESTING ACTIVITIES:
      Capital expenditures                                                         (97,109)        (41,202)
      Patent expenditures                                                         (187,894)       (127,297
      Net purchase of short-term investments                                    (1,352,195)     (2,451,140)
                                                                            --------------  --------------
         Net cash used in investing activities                                  (1,637,198)     (2,619,639)
                                                                            --------------  --------------

CASH FLOWS FROM FINANCING ACTIVITIES:
      Payments on notes payable                                                    (61,594)       (112,545)
      Payments on capital lease                                                     (9,957)              -
      Dividends paid                                                              (115,522)              -
      Proceeds from exercise of stock options and warrants                         304,168           5,366
      Issuance of common stock                                                  12,457,087       7,503,198
                                                                            --------------  --------------
         Net cash provided by financing activities                              12,574,182       7,396,019
                                                                            --------------  --------------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                        7,898,160       1,501,345
CASH AND CASH EQUIVALENTS AT BEGINNING OF
      PERIOD                                                                     2,510,274       2,795,429
                                                                            --------------  --------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD                                  $   10,408,434  $    4,296,774
                                                                            ==============  ==============
</TABLE>







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

                                       7

<PAGE>

                        ENCHIRA BIOTECHNOLOGY CORPORATION


                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 2000

NOTE 1.  BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

     Enchira Biotechnology Corporation ("EBC" or the "Company"), formerly
Energy BioSystems Corporation, was incorporated in the State of Delaware on
December 20, 1989, and commenced operations in January 1990. EBC is a
biotechnology company incorporating genetic recombination, high throughput
screening and bioprocessing in an integrated, directed evolution technology
platform. The Company believes that this proprietary platform technology can
be used to generate libraries of novel genes for the creation of improved
enzymes for a broad range of applications, such as protein-based
pharmaceuticals, agricultural crop enhancement and protection products, and
industrial enzymes for the manufacture of specialty chemicals, fine chemicals
and pharmaceutical intermediates. EBC believes that the proprietary platform
technology will greatly accelerate the development of a commercial
biocatalyst for its biocatalytic desulfurization ("BDS"), a proprietary
process involving the use of enzymes in bacteria to remove sulfur from
petroleum.

     EBC has discovered that its proprietary biocatalytic technology may also
provide an economic basis for production of a broad family of industrial
organosulfur chemicals with potential uses in detergent, surfactant, polymer
and adhesive markets. Joint development and testing agreements were executed
with several major chemical companies for detailed evaluation of these
products in specific commercial applications, and EBC is pursuing strategic
business alliances for commercialization of this technology.

     On April 27, 2000, the Company received notice from Maxygen Inc. that
they had elected to seek arbitration under the License and Development
Agreement dated May 19, 1997 between the Company and Maxygen. Maxygen claims
that the Company used Maxygen's confidential information, which they allege
was provided to the Company under the Agreement, to develop its own
RACHITT-TM- directed evolution technology. The Company denies all allegations
of Maxygen and believes that its technology was independently developed after
the collaboration with Maxygen ceased. Arbitration is set to begin November
13, 2000. The Company believes that there is no merit to the allegations
brought against it by Maxygen and believes the action will not have a
material adverse affect on the financial statements. However, the Company
cannot assure that its defense will be successful. If the Company is not
successful, its business could be materially and adversely affected, and the
Company could be required to enter into cross license agreements, pay a
substantial amount in damages or otherwise have its proprietary rights in
directed evolution technology adversely affected. The outcome of the
arbitration cannot currently be determined or estimated. However, the Company
has recorded accrued expenses of approximately $210,000 as of September 30,
2000 to cover estimated future legal costs for the arbitration.

     The accompanying unaudited interim financial statements reflect all
adjustments which, in the opinion of management, are necessary for a fair
presentation of the results for the interim periods presented. These
financial statements should be read in conjunction with the 1999 Form 10-K.


                                       8

<PAGE>

                        ENCHIRA BIOTECHNOLOGY CORPORATION


                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

Revenue Recognition

         In August 2000, the Company entered into a collaboration agreement
with Genencor International, Inc. ("Genencor") for research and development
work on improved industrial  proteins. Under the agreement, Genencor will
provide $1 million of funding over the next two years. In May 2000, the
Company entered into a licensing agreement with Genencor involving EBC's
proprietary gene shuffling technology for directed evolution. Under the
agreement, Genencor will use the Company's proprietary RACHITT-TM- technology
to develop gene-based products for the cleaning, textiles, grain processing,
animal feed and food ingredients industries. An initial licensing fee and an
additional fee for an option to expand the licensing field were paid by
Genencor in June 2000. In the event that Genencor's rights to the RACHITT-TM-
technology are materially and adversely affected as a result of the
arbitration with Maxygen, the payments received from Genencor are refundable.
Payments received under the licensing and collaboration agreements during
2000 have been recorded as deferred revenue on the balance sheet.

     In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin 101, "Revenue Recognition in Financial Statements"
("SAB 101") which provides guidance related to revenue recognition. EBC is
required to adopt SAB 101 by the fourth quarter of 2000. Upon its adoption,
SAB 101 will be effective as of January 1, 2000, at which time EBC will
report any changes in revenue recognition as a cumulative change in
accounting principle. EBC is currently evaluating the impact of SAB 101 on
its financial position and results of operations.

Net Loss Per Common Share

     Net loss per share has been computed by dividing the net loss, which has
been increased for periodic accretion and accrued dividends on the Series B
Convertible Preferred Stock issued in February and March 1997, by the
weighted average number of shares of common stock outstanding during the
period.

NOTE 2.  COMMON STOCK OFFERING

         The Company completed a private placement of its common stock during
September 2000. The Company offered and sold 2,000,000 shares of its common
stock at $6.4325 per share. Net proceeds from the offering were approximately
$12.5 million. In connection with the closing, warrants to purchase 600,000
shares of the Company's common stock were issued at an exercise price of
$7.44. In addition, warrants to purchase 31, 375 shares of the Company's
common stock at an exercise price of $7.44 per share were issued to The Trout
Group, LLC, one of the Company's placement agents, in partial payment of
their placement fees. The warrants expire in two years and have been recorded
at an aggregate estimated fair value of $2,522,094, which was computed using
the Black-Scholes option pricing model and the following assumptions: risk
free rate of 6.19 percent; expected dividend yield of zero; expected life of
two years; and an expected volatility at an average weight of 125 percent.



                                       9

<PAGE>

                        ENCHIRA BIOTECHNOLOGY CORPORATION


                   NOTES TO FINANCIAL STATEMENTS - (CONTINUED)

NOTE 3.  SERIES B CONVERTIBLE PREFERRED STOCK

     Shares of Series B Preferred Stock are convertible into shares of common
stock at an adjusted conversion price currently equal to $16.76 per share,
subject to certain adjustments. The Series B Preferred Stock may be redeemed
by the Company under certain circumstances after February 26, 1999 and is
required to be redeemed, subject to certain limitations, on February 26, 2002
at a redemption price of $50.00 per share, plus accrued and unpaid dividends.
It is the Company's present intent, however, to redeem the Series B Preferred
Stock for common stock, subject to certain requirements. Accordingly, the
Series B Preferred Stock is included in stockholders' equity. During the
first nine months of 2000, 131,700 shares of Series B Preferred Stock were
converted to 328,261 shares of common stock. As of September 30, 2000,
314,400 aggregate shares of Series B Preferred Stock had been converted to
541,950 shares of common stock.

         Dividends on the Series B Preferred Stock are cumulative from the
date of the initial closing, February 27, 1997, and are payable, at the
Company's election, in cash or common stock of the Company, or a combination
thereof, at an annual rate equal to (i) $4.00 per share to the extent the
dividend is paid in cash and (ii) $4.50 per share to the extent the dividend
is paid in common stock. The Company has not declared a dividend payment
since November 1998, and since that date, has not paid dividends on Series B
Preferred Stock except on conversion of Series B Preferred Stock to common
stock.












                                       10

<PAGE>

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

OVERVIEW

         Since its inception in December 1989, the Company has devoted
substantially all of its resources to its research and development. To date,
all of the Company's revenues have resulted from interest and investment
income and sponsored research payments from collaborative agreements. The
Company has incurred cumulative net losses since inception and expects to
incur substantial losses for at least the next several years, due primarily
to its research and development activities and the development of its
directed evolution technology, organosulfur compounds and biocatalyst
development. The Company expects that losses will fluctuate from quarter to
quarter and that such fluctuations may be substantial. As of September 30,
2000, the Company's accumulated deficit was $80,607,259.

RESULTS OF OPERATIONS

         The Company had total revenues for the three months ended September
30, 2000 and 1999 of $203,597 and $480,078, respectively. The decrease in
total revenues of $276,481 was attributable to decreases in sponsored
research revenues and in interest and investment income. The Company had
sponsored research revenues of $135,157 during the third quarter of 2000 as
compared to $390,241 during the third quarter of 1999. The decrease of
$255,084 in sponsored research revenues resulted primarily from the decrease
in sponsored research revenues from a Department of Energy ("DOE") grant.

         The Company had total revenues for the nine months ended September
30, 2000 and 1999 of $687,201 and $1,546,357, respectively. The decrease of
$859,156 in total revenues was attributable to decreases in sponsored
research revenues offset in part by increases in interest and investment
income. The Company had sponsored research revenues of $493,322 during the
first nine months of 2000 as compared to $1,415,177 during the first nine
months of 1999. The decrease of $921,855 in sponsored research revenues
resulted primarily from the decrease in sponsored research revenues from a
DOE grant.

         Payments received under the licensing and collaboration agreements
during 2000 have been recorded as deferred revenue on the balance sheet.

         The Company had interest and investment income of $68,440 in the
third quarter of 2000 as compared to $89,837 in the third quarter of 1999.
The decrease of $21,397 in interest and investment income resulted primarily
because the Company's average balances of cash, cash equivalents and
short-term investments during the third quarter of 2000 were less than those
during the corresponding period of 1999.

         The Company had interest and investment income of $193,879 for the
first nine months of 2000 compared to $131,180 for the first nine months of
1999. The increase of $62,699 in interest and investment income resulted
primarily from a increase in the available cash from which interest and other
investment income are generated.

          The Company had research and development expenses for the three
months ended September 30, 2000 and 1999 of $964,327 and $1,008,510,
respectively, and for the nine months ended September 30, 2000 and 1999 of
$2,949,998 and $3,677,615, respectively. The decrease in research and
development expenses of $44,183 and $727,617, respectively, for the three and

                                       11

<PAGE>

nine months ended September 30, 2000 as compared to the corresponding prior
year periods resulted primarily from a reduction in research and development
personnel and the charge to research and development expense in the first
quarter of 1999 for warrants issued to Petro Star Inc. ("Petro Star") in the
amount of $404,500. The Company expects its research and development expenses
to remain below 1999 levels for the remainder of 2000, reflecting a decrease
in the number of research and development personnel due to attrition and a
change in the primary focus of the Company's research and development efforts
to directed evolution technology.

         The Company had general and administrative expenses for the three
months ended September 30, 2000 and 1999 of $816,334 and $428,784,
respectively, and for the nine months ended September 30, 2000 and 1999 of
$1,831,445 and $1,441,380, respectively. The increase of $387,550 and
$390,065 for the three and nine months ended September 30, 2000,
respectively, as compared to the corresponding periods of 1999 resulted from
increases in legal expenses as a result of the Maxygen arbitration offset in
part by the reduction of the administrative personnel at the end of the first
quarter of 1999 and the sublease of approximately 5,700 square feet of space
at the end of the second quarter of 1999. The Company expects a slight
increase from 1999 levels in its general and administrative expenses during
the remainder of 2000, reflecting increased business development activities.

LIQUIDITY AND CAPITAL RESOURCES

         The Company completed a private placement of its common stock during
September 2000. The Company offered and sold 2,000,000 shares of its common
stock at $6.4325 per share. Net proceeds from the offering were approximately
$12.5 million. In connection with the closing, warrants to purchase 600,000
shares of the Company's common stock were issued at an exercise price of
$7.44. In addition, warrants to purchase 31,375 shares of the Company's stock
at an exercise price of $7.44 per share were issued to The Trout Group, LLC,
one of the Company's placement agents, in partial payment of their placement
fees. The warrants expire in two years and have been recorded at an aggregate
estimated fair value of $2,522,094, which was computed using the
Black-Scholes option pricing model and the following assumptions: risk free
rate of 6.19 percent; expected dividend yield of zero; expected life of two
years; and an expected volatility at an average weight of 125 percent.

         For the nine months ended September 30, 2000, the Company used
$3,038,824 of net cash in operating activities, incurred $285,003 in capital
expenditures and provided $12,574,182 in net financing activities. At
September 30, 2000, the Company had cash, cash equivalents and marketable
securities totaling $15,205,828 and working capital of $12,932,330.

         The Company intends to spend approximately $20,000 during the
remainder of 2000 for the purchase of laboratory and analytical
instrumentation. The Company also expects to incur additional research and
development expenses associated with its directed evolution technology,
organosulfur compounds and biocatalyst development. In addition, the Company
is subject to cost sharing arrangements under various collaboration
agreements.

         In August 2000, the Company entered into a collaboration agreement
with Genencor for research and development work on improved industrial
proteins. Under the agreement Genencor will provide $1 million of funding to
the Company over a two year period.

                                       12

<PAGE>

         In May 2000, the Company entered into a licensing agreement with
Genencor involving EBC's proprietary gene shuffling technology for directed
evolution. Under the agreement, Genencor will use the Company's proprietary
RACHITT-TM- technology to develop gene-based products for the cleaning,
textiles, grain processing, animal feed and food ingredients industries. An
initial licensing fee and an additional fee for an option to expand the
licensing field were paid by Genencor in June 2000. In the event that
Genencor's rights to the RACHITT-TM- technology are materially and adversely
affected as a result of the arbitration with Maxygen, the payments received
from Genencor are refundable. Payments received under the licensing and
collaboration agreements during 2000 have been recorded as deferred revenue
on the balance sheet.

     In October 1999, the DOE approved the third year of funding to the
Company of approximately $1.0 million for a program dedicated to the
development of a BDS application for gasoline. Through September 30, 2000 the
Company has recognized approximately $2.4 million in sponsored research
revenue from the grant, of which approximately $200,000 was receivable at
September 30, 2000. This receivable is included in prepaid expenses and other
current assets on the balance sheet.

     The Company has experienced negative cash flow from operations since its
inception and has funded its activities to date primarily from equity
financings and sponsored research revenues. The Company will continue to
require substantial funds to continue its research and development activities
and to market, sell and commercialize its technology. The Company believes
that its available cash, investments and interest income will be adequate to
fund its operations for at lease the next two years.

     The Company's capital requirements will depend on many factors,
including the problems, delays, expenses and complications frequently
encountered by companies developing and commercializing new technologies; the
progress of the Company's research and development activities; the rate of
technological advances; determinations as to the commercial potential of the
Company's technology under development; the status of competitive technology;
the outcome of the Maxygen dispute; the establishment of biocatalyst
manufacturing capacity or third-party manufacturing arrangements; the
establishment of collaborative relationships; the success of the Company's
sales and marketing programs; the cost of filing, prosecuting and defending
and enforcing patents and intellectual property rights and of defending the
Maxygen claims; and other changes in economic, regulatory or competitive
conditions in the Company's planned business. Estimates about the adequacy of
funding for the Company's activities are based upon certain assumptions,
including assumptions that the research and development programs relating to
the Company's technology can be conducted at projected costs and that
progress towards the commercialization of its technology will be timely and
successful. There can be no assurance that changes in the Company's research
and development plans, acquisitions or other events will not result in
accelerated or unexpected expenditures. To satisfy its capital requirements,
the Company may seek additional funding through various alternatives that
include: an equity financing, government funding, and alliances with chemical
companies and corporate partners. There can be no assurance that any such
funding will be available to the Company on favorable terms or at all. If
adequate funds are not available when needed, the Company may be required to
delay, scale back or eliminate some or all of its research and product
development programs. If the Company is successful in obtaining additional
financing, the terms of such financing may have the effect of diluting or
adversely affecting the holdings or the rights of the holders of the
Company's Common Stock.

                                       13

<PAGE>

     On April 27, 2000, the Company received notice from Maxygen Inc.
that they had elected to seek arbitration under the License and Development
Agreement dated May 19, 1997 between the Company and Maxygen. Maxygen claims
that the Company used Maxygen's confidential information which they allege
was provided to the Company under the Agreement to develop its own
RACHITT-TM- directed evolution technology. The Company denies all allegations
of Maxygen and believes that its technology was independently developed after
the collaboration with Maxygen ceased. The case is scheduled to go to
arbitration beginning November 13, 2000. The Company believes that there is
no merit to the allegations brought against it by Maxygen and believes the
action will not have a material adverse affect on the financial statements.
However, the Company cannot assure that its defense will be successful. If
the Company is not successful, its business could be materially and adversely
affected and the Company could be required to enter into cross license
agreements, pay a substantial amount in damages or otherwise have its
proprietary rights in directed evolution technology adversely affected. The
outcome of the arbitration cannot currently be determined or estimated.
However, the Company has recorded accrued expenses of approximately $210,000
as of September 30, 2000 to cover estimated future legal costs for the
arbitration.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     None
















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<PAGE>

PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On April 27, 2000, the Company received notice from Maxygen Inc.
that they had elected to seek arbitration under the License and Development
Agreement dated May 19, 1997 between the Company and Maxygen. Maxygen claims
that the Company used Maxygen's confidential information which they allege
was provided to the Company under the Agreement to develop its own
RACHITT-TM- directed evolution technology. The Company denies all allegations
of Maxygen and believes that its technology was independently developed after
the collaboration with Maxygen ceased. The case is scheduled to go to
arbitration beginning November 13, 2000. The Company believes that there is
no merit to the allegations brought against it by Maxygen and believes the
action will not have a material adverse affect on the financial statements.
However, the Company cannot assure that its defense will be successful. If
the Company is not successful, its business could be materially and adversely
affected and the Company could be required to enter into cross license
agreements, pay a substantial amount in damages or otherwise have its
proprietary rights in directed evolution technology adversely affected. The
outcome of the arbitration cannot currently be determined or estimated.
However, the Company has recorded accrued expenses of approximately $210,000
as of September 30, 2000 to cover estimated future legal costs for the
arbitration.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         On September 8, 2000, the Company completed a private placement of
units consisting of its common stock and warrants to purchase shares of its
common stock. In the private placement, the Company sold an aggregate of
128.65 units which consisted of an aggregate of 2,000,000 shares of its
common stock and two year warrants to purchase 600,000 shares of the
Company's common stock at an exercise price of $7.44 per share. Each unit
consisted of approximately 15,546 shares of the Company's common stock and a
warrant to purchase approximately 4,664 shares of the Company's common stock,
and each unit sold for a purchase price of $100,000.

         The Company raised approximately $12.8 million ($12.5 million net of
placement fees and expenses). The Company intends to use the net proceeds of
the private placement for general corporate purposes.

         The Trout Group, LLC ("Trout Group") and Ten Peaks Capital Corp.
("Ten Peaks") served as placement agents for the private placement. In
consideration for such services, the Company paid Ten Peaks placement fees of
approximately $159,000, paid Trout Group placement fees of approximately
$201,000 and issued a two year warrant to Trout Group to purchase 31,375
shares of the Company's common stock at an exercise price of $7.44 per share.

         The private placement was not registered under the Securities Act of
1933, as amended (the "Securities Act"), and was made in reliance on Section
4(2) of the Securities Act and Rule 506 of Regulation D. The purchasers in
the private placement consisted only of accredited investors.

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<PAGE>

         On October 31, 2000, the Company filed a registration statement to
register both (i) the shares of common stock sold in the private placement
and (ii) the shares issuable upon exercise of the warrants issued pursuant to
the private placement.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         a.   Exhibits

              4.1   Form of Subscription Agreement (incorporated by reference
                    to Exhibit 4.1 to the Company's Current Report on Form 8-K
                    filed on September 21, 2000 (the "Form 8-K")).

              4.2   Form of Warrant (incorporated by reference to Exhibit 4.2
                    on the Form 8-K).

             10.1   +Collaboration Agreement dated August 25, 2000 between EBC
                    and Genencor International, Inc.

             10.2   Offer of Employment, dated August 30, 2000, between EBC and
                    David Carpi.

             11.1   Statement regarding Computation of Per Share Earnings.

             27.1   Financial Data Schedule.

         b.  Reports on Form 8-K

              On September 21, 2000, the Company filed a current report on
              Form 8-K reporting an event under Item 5.

              +Portions of this exhibit have been omitted based on a request
              for confidential treatment pursuant to Rule 24b-2 of the Exchange
              Act/ Such omitted portions have been filed separately with the
              Commission.









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<PAGE>

                                   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.

Enchira Biotechnology Corporation

By:   /s/ Peter P. Policastro
      -------------------------------------
      Peter P. Policastro
      Chief Executive Officer and President

Date: November 10, 2000

By:   /s/ Paul G. Brown III
      -------------------------------------
      Paul G. Brown III
      Chief Financial Officer and Vice President, Finance and Administration

Date: November 10, 2000





















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