##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

Washington, DC 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    April 30, 2001

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | 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 001-15167

|                                                      
|------------------------------------------------------
|BIOPURE CORPORATION                                   
|                                                      
|(Exact name of registrant as specified in its charter)

|                         |  |                                     
|------------------------ |  | ------------------------------------
|Delaware                 |  | 04-2836871                          
|                         |  |                                     
|(State of Incorporation) |  | (IRS Employer Identification Number)

|                                           |  |           
|------------------------------------------ |  | ----------
|11 Hurley Street, Cambridge, Massachusetts |  | 02141     
|                                           |  |           
|(Address of principal executive offices)   |  | (Zip Code)

|                               
|-------------------------------
|(617) 234-6500                 
|                               
|(Registrants telephone number)

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

The number of shares outstanding of each of the issuers classes of common
stock as of May 31, 2001 was:

|                                      |  |  |            | 
|------------------------------------- |  |  | ---------- | 
|Class A Common Stock, $.01 par value  |  |  | 25,121,944 | 
|                                     
|                                     
|                                     
|                                     
|Class B Common Stock, $1.00 par value |  |  | 117.7      | 



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TABLE OF CONTENTS



|                                                                                      |                                                      |  |  |  |  |  |  | 
|------------------------------------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  |  | 
|PART I                                                                               
|ITEM 1                                                                               
|                                                                                      | Condensed Consolidated Balance Sheets               
|                                                                                      | Condensed Consolidated Statements of Operations     
|                                                                                      | Condensed Consolidated Statement of Cash Flows      
|                                                                                      | Notes to Condensed Consolidated Financial Statements
|Managements Discussion and Analysis of Financial Condition and Results of Operations
|Part II  Other Information                                                          
|Item 2  Changes in Securities and Use of Proceeds                                   
|Item 4  Submission of Matters to a Vote of Security Holders                         
|Item 6  Exhibits and Reports on Form 8-K                                            
|Distribution Agreement                                                               
|Amendment to Distribution Agreement                                                  
|Letter Agreement                                                                     
|Letter Agreement with Scanix Six (Pty) Ltd                                           



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##### Table of Contents



BIOPURE CORPORATION

INDEX TO FORM 10-Q

|                                |                                                                                                |                                                                                                                                                                         |    |      |     | 
|------------------------------- | ---------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -- | ---- | --- | 
|                                |                                                                                                |                                                                                                                                                                         |    | Page
|Part I  Financial Information:
|                               
|                               
|                               
|                               
|                                | Item 1 - Financial Statements (Unaudited)                                                     
|                               
|                               
|                               
|                               
|                                |                                                                                                | Condensed Consolidated Balance Sheets at April 30, 2001 and October 31, 2000                                                                                            |    |      | 3   | 
|                               
|                               
|                               
|                               
|                                |                                                                                                | Condensed Consolidated Statements of Operations for the quarters ended April 30, 2001 and April 29, 2000 and for the six months ended April 30, 2001 and April 29, 2000 |    |      | 4   | 
|                               
|                               
|                               
|                               
|                                |                                                                                                | Condensed Consolidated Statements of Cash Flows for the six months ended April 30, 2001 and April 29, 2000                                                              |    |      | 5   | 
|                               
|                               
|                               
|                               
|                                |                                                                                                | Notes to Condensed Consolidated Financial Statements                                                                                                                    |    |      | 6-8 | 
|                               
|                               
|                               
|                               
|                                | Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                                                                         |    | 9-12 |    
|                               
|                               
|                               
|                               
|                                | Item 3 - Quantitative and Qualitative Disclosure of Market Risk                                |                                                                                                                                                                         |    | 12   |    
|                               
|                               
|                               
|                               
|Part II  Other Information:   
|                               
|                               
|                               
|                               
|                                | Item 2 - Changes in Securities and Use of Proceeds                                             |                                                                                                                                                                         |    | 13   |    
|                               
|                               
|                               
|                               
|                                | Item 4 - Submission of Matters to a Vote of Security Holders                                   |                                                                                                                                                                         |    | 13   |    
|                               
|                               
|                               
|                               
|                                | Item 6 - Exhibits and Reports on Form 8-K                                                      |                                                                                                                                                                         |    | 13   |    
|                               
|                               
|                               
|                               
|Signatures                      |                                                                                                |                                                                                                                                                                         | 14 |     
|                               
|                               
|                               
|                               
|Exhibit Index                  

2



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##### Table of Contents






PART I




ITEM 1

BIOPURE CORPORATION




Condensed Consolidated Balance Sheets
(In thousands, except share and per share data)
(Unaudited)

|                                      |                                                                                                   |                                                                                                                                             |                      |                                            |     |         |         |          |     |         |         | 
|------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | -------------------- | ------------------------------------------ | --- | ------- | ------- | -------- | --- | ------- | ------- | 
|                                      | April 30, 2001                                                                                    |                                                                                                                                             | October 31, 2000    
|                                      |                                                                                                   |                                                                                                                                             |                     
|Assets:                              
|                                     
|                                     
|                                     
|                                     
|Current assets:                      
|                                     
|                                     
|                                     
|                                     
|                                      | Cash and cash equivalents                                                                         |                                                                                                                                             | $                    | 71,320                                     |     |         | $       | 88,828   |    
|                                     
|                                     
|                                     
|                                     
|                                      | Accounts receivable, net                                                                          |                                                                                                                                             |                      | 481                                        |     |         |         | 478      |    
|                                     
|                                     
|                                     
|                                     
|                                      | Inventories, net                                                                                  |                                                                                                                                             |                      | 3,283                                      |     |         |         | 2,726    |    
|                                     
|                                     
|                                     
|                                     
|                                      | Current portion of restricted cash                                                                |                                                                                                                                             |                      |                                           |     |         |         | 3,508    |    
|                                     
|                                     
|                                     
|                                     
|                                      | Other current assets                                                                              |                                                                                                                                             |                      | 444                                        |     |         |         | 380      |    
|                                      |                                                                                                   |                                                                                                                                             |                      |                                            |     |         |         |         
|                                      |                                                                                                   |                                                                                                                                             | Total current assets |                                            |     | 75,528  |         |          |     | 95,920  |        
|                                     
|                                     
|                                     
|                                     
|Property, plant and equipment, net    |                                                                                                   |                                                                                                                                             | 24,624               |                                            |     |         | 25,061  |         
|                                     
|                                     
|                                     
|                                     
|Investment in affiliate               |                                                                                                   |                                                                                                                                             | 66                   |                                            |     |         | 66      |         
|                                     
|                                     
|                                     
|                                     
|Other assets                          |                                                                                                   |                                                                                                                                             | 250                  |                                            |     |         | 240     |         
|                                      |                                                                                                   |                                                                                                                                             |                      |                                            |     |         |         |         
|                                      |                                                                                                   |                                                                                                                                             | Total assets         |                                            | $   | 100,468 |         |          | $   | 121,287 |        
|                                      |                                                                                                   |                                                                                                                                             |                      |                                            |     |         |         |         
|Liabilities and stockholders equity:
|                                     
|                                     
|                                     
|                                     
|Current liabilities:                 
|                                     
|                                     
|                                     
|                                     
|                                      | Accounts payable                                                                                  |                                                                                                                                             | $                    | 1,263                                      |     |         | $       | 1,764    |    
|                                     
|                                     
|                                     
|                                     
|                                      | Accrued expenses                                                                                  |                                                                                                                                             |                      | 7,377                                      |     |         |         | 9,228    |    
|                                      |                                                                                                   |                                                                                                                                             |                      |                                            |     |         |         |         
|                                      | Total current liabilities                                                                         |                                                                                                                                             |                      | 8,640                                      |     |         |         | 10,992   |    
|                                     
|                                     
|                                     
|                                     
|Deferred compensation                 |                                                                                                   |                                                                                                                                             | 1,756                |                                            |     |         | 1,785   |         
|                                     
|                                     
|                                     
|                                     
|Stockholders equity:                
|                                     
|                                     
|                                     
|                                     
|                                      | Convertible preferred stock, $0.01 par value, 30,000,000 shares authorized, no shares outstanding |                                                                                                                                             |                      |                                           |     |         |         |         |    
|                                     
|                                     
|                                     
|                                     
|                                      | Common stock:                                                                                    
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                   | Class A, $0.01 par value, 100,000,000 shares authorized, 25,078,130 shares outstanding at April 30, 2001 and 24,937,995 at October 31, 2000 |                      |                                            | 251 |         |         |          | 249 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                   | Class B, $1.00 par value, 179 shares authorized, 117.7 shares outstanding                                                                   |                      |                                            |    |         |         |          |    |        
|                                     
|                                     
|                                     
|                                     
|                                      | Capital in excess of par value                                                                    |                                                                                                                                             |                      | 381,528                                    |     |         |         | 372,149  |    
|                                     
|                                     
|                                     
|                                     
|                                      | Contributed capital                                                                               |                                                                                                                                             |                      | 24,574                                     |     |         |         | 24,574   |    
|                                     
|                                     
|                                     
|                                     
|                                      | Notes receivable                                                                                  |                                                                                                                                             |                      | (1,746                                     | )   |         |         | (2,033   | )  
|                                     
|                                     
|                                     
|                                     
|                                      | Accumulated deficit                                                                               |                                                                                                                                             |                      | (314,535                                   | )   |         |         | (286,429 | )  
|                                      |                                                                                                   |                                                                                                                                             |                      |                                            |     |         |         |         
|Total stockholders equity            |                                                                                                   |                                                                                                                                             | 90,072               |                                            |     |         | 108,510 |         
|                                      |                                                                                                   |                                                                                                                                             |                      |                                            |     |         |         |         
|                                      |                                                                                                   |                                                                                                                                             |                      | Total liabilities and stockholders equity |     | $       | 100,468 |          |     | $       | 121,287 | 
|                                      |                                                                                                   |                                                                                                                                             |                      |                                            |     |         |         |         

Note: The balance sheet at October 31, 2000 has been derived from the audited
financial statements at that date but does not include all of the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements.

See accompanying notes.

3



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##### Table of Contents



BIOPURE CORPORATION




Condensed Consolidated Statements of Operations
(In thousands, except per share data)
(Unaudited)

|                     |                                                                           |                |         |                    |     |                  |         |           |     |           |         |        |       |   |         |        |       | 
|-------------------- | ------------------------------------------------------------------------- | -------------- | ------- | ------------------ | --- | ---------------- | ------- | --------- | --- | --------- | ------- | ------ | ----- | - | ------- | ------ | ----- | 
|                     |                                                                           |                |         | Three Months Ended |     | Six Months Ended
|                     |                                                                           |                |         |                    |     |                 
|                     |                                                                           |                |         | April 30,          |     | April 29,        |         | April 30, |     | April 29,
|                     |                                                                           |                |         |                    |     |                  |         |           |     |          
|                     |                                                                           |                |         | 2001               |     | 2000             |         | 2001      |     | 2000     
|                     |                                                                           |                |         |                    |     |                  |         |           |     |          
|Revenues:           
|                    
|                    
|                    
|                    
|                     | Oxyglobin                                                                 |                | $       | 837                |     |                  | $       | 710       |     |           | $       | 1,568  |       |   | $       | 1,304  |      
|                    
|                    
|                    
|                    
|                     | Other                                                                     |                |         | 1                  |     |                  |         |          |     |           |         | 5      |       |   |         | 3      |      
|                     |                                                                           |                |         |                    |     |                  |         |           |     |           |         |        |       |   |         |       
|                     |                                                                           | Total revenues |         |                    | 838 |                  |         |           | 710 |           |         |        | 1,573 |   |         |        | 1,307 | 
|                    
|                    
|                    
|                    
|Cost of revenues     |                                                                           |                | 914     |                    |     |                  | 1,102   |           |     |           | 1,684   |        |       |   | 2,291   |       
|                     |                                                                           |                |         |                    |     |                  |         |           |     |           |         |        |       |   |         |       
|Gross profit (loss)  |                                                                           |                | (76     | )                  |     |                  | (392    | )         |     |           | (111    | )      |       |   | (984    | )     
|                    
|                    
|                    
|                    
|Operating expenses: 
|                    
|                    
|                    
|                    
|                     | Research and development                                                  |                |         | 9,002              |     |                  |         | 8,143     |     |           |         | 17,189 |       |   |         | 16,402 |      
|                    
|                    
|                    
|                    
|                     | Sales and marketing                                                       |                |         | 664                |     |                  |         | 569       |     |           |         | 1,286  |       |   |         | 1,148  |      
|                    
|                    
|                    
|                    
|                     | General and administrative                                                |                |         | 8,753              |     |                  |         | 1,736     |     |           |         | 11,826 |       |   |         | 4,848  |      
|                     |                                                                           |                |         |                    |     |                  |         |           |     |           |         |        |       |   |         |       
|                     | Total operating expenses                                                  |                |         | 18,419             |     |                  |         | 10,448    |     |           |         | 30,301 |       |   |         | 22,398 |      
|                     |                                                                           |                |         |                    |     |                  |         |           |     |           |         |        |       |   |         |       
|Loss from operations |                                                                           |                | (18,495 | )                  |     |                  | (10,840 | )         |     |           | (30,412 | )      |       |   | (23,382 | )     
|                    
|                    
|                    
|                    
|Other income         |                                                                           |                | 990     |                    |     |                  | 933     |           |     |           | 2,306   |        |       |   | 1,291   |       
|                     |                                                                           |                |         |                    |     |                  |         |           |     |           |         |        |       |   |         |       
|Net loss             |                                                                           | $              | (17,505 | )                  |     | $                | (9,907  | )         |     | $         | (28,106 | )      |       | $ | (22,091 | )     
|                     |                                                                           |                |         |                    |     |                  |         |           |     |           |         |        |       |   |         |       
|Per share data:     
|                    
|                    
|                    
|                    
|                     | Basic and diluted net loss per common share                               |                | $       | (0.70              | )   |                  | $       | (0.42     | )   |           | $       | (1.13  | )     |   | $       | (0.96  | )    
|                    
|                    
|                    
|                    
|                     | Weighted average shares used in computing basic net loss per common share |                |         | 24,958             |     |                  |         | 23,580    |     |           |         | 24,959 |       |   |         | 22,938 |      

See accompanying notes.

4



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##### Table of Contents



BIOPURE CORPORATION




Condensed Consolidated Statement of Cash Flows
(In thousands)
(Unaudited)

|                                                                            |  |                                                      |                                           |   |                  |         |                |   |         |         |  
|--------------------------------------------------------------------------- |  | ---------------------------------------------------- | ----------------------------------------- | - | ---------------- | ------- | -------------- | - | ------- | ------- | -
|                                                                            |  |                                                      |                                           |   | Six Months Ended
|                                                                            |  |                                                      |                                           |   |                 
|                                                                            |  |                                                      |                                           |   | April 30, 2001   |         | April 29, 2000
|                                                                            |  |                                                      |                                           |   |                  |         |               
|Operating activities:                                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Net loss                                             |                                           | $ | (28,106          | )       |                | $ | (22,091 | )      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Adjustments to reconcile net loss to net
cash used in operating activities:
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Depreciation                                         |                                           |   | 2,103            |         |                |   | 2,049   |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Equity compensation                                  |                                           |   | 7,717            |         |                |   | 1,820   |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Deferred compensation                                |                                           |   | (29              | )       |                |   | (37     | )      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Accrued interest on stockholders notes receivable   |                                           |   | (50              | )       |                |   | (86     | )      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Accounts receivable                                  |                                           |   | (3               | )       |                |   | (118    | )      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Inventories                                          |                                           |   | (557             | )       |                |   | 594     |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Other current assets                                 |                                           |   | (64              | )       |                |   | (223    | )      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Accounts payable                                     |                                           |   | (501             | )       |                |   | 234     |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Accrued expenses                                     |                                           |   | 1,657            |         |                |   | 1,307   |        
|                                                                            |  |                                                      |                                           |   |                  |         |                |  
|                                                                            |  |                                                      | Net cash used in operating activities     |   |                  | (17,833 | )              |   |         | (16,551 | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Investing activities:                                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Purchase of property, plant and equipment            |                                           |   | (1,666           | )       |                |   | (222    | )      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Other assets                                         |                                           |   | (10              | )       |                |   | (36     | )      
|                                                                            |  |                                                      |                                           |   |                  |         |                |  
|                                                                            |  |                                                      | Net cash used in investing activities     |   |                  | (1,676  | )              |   |         | (258    | )
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Financing activities:                                                      
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Net proceeds from sale of common stock               |                                           |   |                 |         |                |   | 83,739  |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Payment of notes receivable from stockholders        |                                           |   | 337              |         |                |   | 556     |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Proceeds from exercise of options and warrants       |                                           |   | 1,532            |         |                |   | 472     |        
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|                                                                            |  | Proceeds from exercise of non lapse restricted stock |                                           |   | 132              |         |                |   | 2,112   |        
|                                                                            |  |                                                      |                                           |   |                  |         |                |  
|                                                                            |  |                                                      | Net cash provided by financing activities |   |                  | 2,001   |                |   |         | 86,879  |  
|                                                                            |  |                                                      |                                           |   |                  |         |                |  
|Net increase (decrease) in cash and cash equivalents                        |  |                                                      | (17,508                                   | ) |                  |         | 70,070         |  
|                                                                           
|                                                                           
|                                                                           
|                                                                           
|Cash and cash equivalents at beginning of period                            |  |                                                      | 88,828                                    |   |                  |         | 30,778         |  
|                                                                            |  |                                                      |                                           |   |                  |         |                |  
|Cash and cash equivalents at end of period                                  |  | $                                                    | 71,320                                    |   |                  | $       | 100,848        |  
|                                                                            |  |                                                      |                                           |   |                  |         |                |  

See accompanying notes.

5



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##### Table of Contents



BIOPURE CORPORATION




Notes to Condensed Consolidated Financial Statements
April 30, 2001
(Unaudited)

1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements.

In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three and six months periods
ended April 30, 2001 are not necessarily indicative of the results that
may be expected for the year ended October 31, 2001.

For further information, refer to the consolidated financial statements
and footnotes thereto for the year ended October 31, 2000, included in
the Companys Annual Report on Form 10-K for the year ended October 31,
2000.

2. Net Loss per Share

Basic net loss per share is computed based on the weighted-average number
of common shares outstanding during the period. Diluted net loss per
share is computed based upon the weighted-average number of common shares
outstanding during the year, adjusted for the dilutive effect of shares
issuable upon the
exercise of common stock options and warrants determined based upon the
average market price of common stock for the period. Since the Company
has a net loss for all periods presented, the effect of all potentially
dilutive securities is antidilutive. Accordingly, basic and diluted net
loss per share are the same.

3. Inventories

Inventories are valued at the lower of cost (determined using the
first-in, first-out method) or market. Inventories were as follows:

|                |  |   |       |                |  |                  |       |  |  | 
|--------------- |  | - | ----- | -------------- |  | ---------------- | ----- |  |  | 
|                |  |   |       | April 30, 2001 |  | October 31, 2000
|                |  |   |       |                |  |                 
|In thousands   
|               
|               
|               
|               
|Raw materials   |  | $ | 1,160 |                |  | $                | 980   | 
|               
|               
|               
|               
|Work-in-process |  |   | 1,167 |                |  |                  | 476   | 
|               
|               
|               
|               
|Finished goods  |  |   | 956   |                |  |                  | 1,270 | 
|                |  |   |       |                |  |                  |       | 
|                |  | $ | 3,283 |                |  | $                | 2,726 | 
|                |  |   |       |                |  |                  |       | 

6



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##### Table of Contents



BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
April 30, 2001
(Unaudited)
(Continued)

4. Accrued Expenses

Accrued expenses consisted of the following:

|                         |  |                |       |                  |  |   |       | 
|------------------------ |  | -------------- | ----- | ---------------- |  | - | ----- | 
|                         |  | April 30, 2001 |       | October 31, 2000
|                         |  |                |       |                 
|In thousands            
|                        
|                        
|                        
|                        
|Settlement               |  | $              |      |                  |  | $ | 3,508 | 
|                        
|                        
|                        
|                        
|Phase III clinical trial |  |                | 3,116 |                  |  |   | 2,897 | 
|                        
|                        
|                        
|                        
|BLA                      |  |                | 717   |                  |  |   |      | 
|                        
|                        
|                        
|                        
|Accrued Payroll          |  |                | 481   |                  |  |   | 482   | 
|                        
|                        
|                        
|                        
|Performance Incentive    |  |                | 501   |                  |  |   | 65    | 
|                        
|                        
|                        
|                        
|Other                    |  |                | 2,562 |                  |  |   | 2,276 | 
|                         |  |                |       |                  |  |   |       | 
|                         |  | $              | 7,377 |                  |  | $ | 9,228 | 
|                         |  |                |       |                  |  |   |       | 

5. Stock Option Compensation

In August 1999, Biopure granted 386,680 options to two directors which
are assumed to be for services in addition to board activities and must
be accounted for at fair value, pursuant to Financial Accounting
Standards Board Statement No. 123, Accounting for Stock-Based
Compensation (SFAS 123) and EITF 96-18, Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling Goods or Services. The Company records
compensation expense based on a service period adjusted for the fair
value of the stock until these options have been earned, as discussed
below. In October 2000, January 2001 and April 2001, Biopure granted
30,000, 7,503 and 30,000 options, respectively, to three consultants,
which must be accounted for at fair value.

Because the options are assumed to be earned over the service period,
the final value of the options (i.e. the compensation expense), will not
be determined until the service period is complete. Therefore, at each
time interval (i.e. quarterly), the options must be marked to fair value
(based on a valuation model such as the Black Scholes option pricing
model). Compensation expense based on fair value will continue to be
amortized to general and administrative expense on a straight-line basis
over the service period. However, the amount charged to expense will be
increased or decreased at each point in time based on the then current
fair value of the Companys stock. Therefore, during each time interval
the Company will be required to record two amounts, the first relating
to the current period compensation charge and the second, a
cumulative catch-up adjustment for the period based on the fair value of
the options at the end of that period.

In April 2001, Biopure granted 750,000 warrants to two contract parties,
which also must be accounted for at fair value. The warrants were issued
for services completed and as such the non-cash compensation expenses
related to these warrants was a one-time charge in the quarter ended
April 30, 2001. With respect to these 1,204,183 options and warrants,
$6,370,000 was charged to non-cash compensation expense for the quarter
ended April 30, 2001.

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BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
April 30, 2001
(Unaudited)
(Continued)

6. Commitment

On January 31, 2001 the Company signed a letter of intent for the
construction and financing of an $85,000,000 state-of-the-art
biopharmaceutical facility in Sumter, South Carolina. On May 8, 2001
Biopure placed $10,000,000 in escrow as its contribution to equity in
the project. The Company will enter into a 20-year lease with optional
buyout provisions and a bargain purchase option at the end of the term.
Lease payments are expected to start in the beginning of fiscal 2004.
Financing for the new plant will consist of asset-backed mortgage
financing, tax exempt bonds, equipment lease financing, and state and
local incentives.

7. Litigation

The Company was a party to litigation initially filed in 1990 arising
from certain joint venture agreements for development and distribution
of product in Central and South America. Summary judgments were entered
against the two plaintiffs in 1994. The plaintiffs each appealed the
judgments; one of the appeals was voluntarily dismissed. The other
appeal was remanded to the trial court for further findings based on
lack of jurisdiction. The trial court made the requisite findings in
favor of the Company. The matter was appealed again. By judgment
entered March 6, 2001, the U.S. Court of Appeals for the First Circuit
affirmed the summary judgments in favor of the Company. In connection
with the summary judgments, the Company had agreed to a settlement with
a third-party intervenor with claims against one of the plaintiffs.
Final payment of the settlement was subject to the outcome of the
pending appeal; however, the Company had provided for such settlement in
its financial statements. On April 2, 2001, the Company paid out
$3,508,000 from an escrow account in connection with this settlement.
This amount had been included in the financial statements as current
portion of restricted cash. The related obligation had previously been
recorded in accrued liabilities.

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BIOPURE CORPORATION




Managements Discussion and Analysis of Financial Condition and Results of Operations
April 30, 2001

Except for historical information contained herein, some matters discussed in
this report constitute 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. Actual results could differ
materially from those projected in the forward-looking statements as a result
of the risk factors set forth in this report and in Exhibit 99.0 to the
Companys Annual Report on Form 10-K for the year ended October 31, 2000. In
light of the substantial risks and uncertainties inherent in all future
projections, the inclusion of forward-looking statements in this report should
not be regarded as representations by the Company that the objectives or plans
of the Company will be achieved. Many factors could cause the Companys
actual results, performance or achievements to differ materially from those in
the forward-looking statements. Reference is made in particular to the
discussions set forth below in this Report under Managements Discussion and
Analysis of Financial Condition and Results of Operations.

Business Outlook

We anticipate our sales of Oxyglobin, our veterinary product, will be between
$3,400,000 and $3,600,000 in fiscal 2001. Operating expenses are anticipated to
be between $49,000,000 and $50,000,000 excluding actual non-cash compensation
expenses of $7,700,000 in the first six months and an estimate of $800,000 for
the third quarter. No material non-cash compensation expenses are anticipated
for the fourth quarter of fiscal 2001. The third quarter non-cash compensation
expense can vary widely and will depend on the actual closing share price on
July 31, 2001. Interest income is expected to decrease for the second six months
of fiscal 2001 because of current lower interest rates and reduced invested cash
balances.

Research and development expenses for the third
quarter are expected to be approximately 10% higher than for the
second quarter of fiscal 2001. This increase is attributable to a
one-time expense for research and pre-clinical studies related to the
acquisition, in May, of Reperfusion Systems Incorporated, an inactive
company 26% owned by Biopure, for approximately 63,000
shares of Biopure Common Stock. We anticipate
that the fourth quarter research and development expenses will increase 5%
over the levels of the second quarter. Our manufacturing facility in
Cambridge is scheduled to be shut down for its capacity upgrade during the
fourth quarter and the first quarter of 2002. During this six month shutdown,
all costs of our manufacturing facilities will be charged to research and
development expenses instead of only a portion of unabsorbed costs as has been
done historically. Expenses related to our anticipated electronic BLA filing
should decrease from the third quarter to the fourth quarter. We will highlight
these shutdown costs when we report on our results of operations.

Selling, general and administrative expenses for the third and fourth quarters,
excluding all non-cash compensation expenses, are anticipated to increase by 10%
and 40% respectively compared to the actual SG&A expenses, excluding all
non-cash compensation charges, for the second quarter of 2001. Marketing
activities for the 2002 launch of Hemopure, our product for humans, in South
Africa should increase and the cost of the product we will ship to South Africa,
in these quarters, will be charged to selling expenses.

This Business Outlook discussion contains, in addition to historical
information, forward-looking statements that involve risks and uncertainties.
When used herein, the words expects, anticipates, estimates, intends,
plans and similar expressions are intended to identify such forward-looking
statements. Our actual results could differ materially from the results
discussed in these forward-looking statements for the reasons referenced in the
first paragraph, above, of this discussion and analysis.

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BIOPURE CORPORATION

Managements Discussion and Analysis of Financial Condition and Results of Operations
April 30, 2001
(Continued)

Results of Operations

Three months ended April 30, 2001 compared to three months ended April 29, 2000

Total revenues increased 18.0% to $838,000 in the second quarter of fiscal 2001
from $710,000 in the second quarter of fiscal 2000. The increase in revenue
reflects the first shipments of Oxyglobin, the Companys veterinary drug for
the treatment of canine anemia, to customers in Europe and a 12.7% growth in
domestic sales.

Cost of revenues decreased 17.1% to $914,000 in the second quarter of fiscal
2001 from $1,102,000 in the second quarter of fiscal 2000. This decline is due
to increased manufacturing activity associated with the development of
Hemopure, the Companys advanced stage Oxygen
TherapeuticTM for human use, and
the resulting decrease in manufacturing expenses allocated to Oxyglobin.

Research and development expenses increased 10.5% to $9,002,000 in the second
quarter of fiscal 2001 from $8,143,000 in the second quarter of fiscal 2000.
This increase was primarily due to the activities associated with data
organization and analyses for the pivotal Phase III trial of Hemopure,
preparation for the filing of an electronic U.S. marketing application this
year and ongoing research and development. Additionally, the increased
manufacturing activity associated with Hemopure and the resulting increase in
manufacturing expenses allocated to research and development contributed to the
increase.

Sales and marketing expenses increased 16.7% to $664,000 in the second quarter
of fiscal 2001 from $569,000 in the second quarter of fiscal 2000. This
increase was primarily attributable to marketing and selling expenses
associated with the launch of Oxyglobin in Europe.

General and administrative expenses were $8,753,000 in the second quarter of
fiscal 2001, up from $1,736,000 in the second quarter of fiscal 2000. This
increase is mostly due to non-cash compensation expense for stock options and
warrants issued to certain consultants, directors and contract parties that
must be accounted for at fair value, per SFAS 123 and EITF 96-18, and be
amortized over the service period and revalued each quarter based on the
closing stock price or, if issued for services completed, are
recorded as a one-time charge. For the second quarter of fiscal 2001, we recorded $6,370,000 as
compensation expense under these options and warrants versus $131,000 for the same period last year.
Pre-approval marketing expenses for Hemopure and consulting expenses related to
our facility to be built in South Carolina increased in the second quarter of
fiscal 2001 compared to the same period in 2000.

Total other income was $990,000 in the second quarter of fiscal 2001 compared
to $933,000 in the second quarter of fiscal 2000. The increase reflects
additional interest earned on a higher average cash balance in the
second quarter of fiscal 2001.

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BIOPURE CORPORATION

Managements Discussion and Analysis of Financial Condition and Results of Operations
April 30, 2001
(Continued)

Six months ended April 30, 2001 compared to six months ended April 29, 2000

Total revenues increased 20.4% to $1,573,000 in the first six months of fiscal
2001 from $1,307,000 in the first six months of fiscal 2000. The first six
months of fiscal 2001 included our first shipments of Oxyglobin to our
customers in Europe and a 17.4% growth in sales to our domestic customers.

Cost of revenues decreased 26.5% to $1,684,000 in the first six months of
fiscal 2001 from $2,291,000 in the first six months of fiscal 2000. This
decline is due to increased manufacturing activity associated with the
development of Hemopure and the resulting decrease in manufacturing expenses
allocated to Oxyglobin.

Research and development expenses increased 4.8% to $17,189,000 in the first
six months of fiscal 2001 from $16,402,000 in the first six months of fiscal
2000. This increase was primarily due to the activities associated with the
data organization and analyses for the pivotal Phase III trial of Hemopure,
preparation for the filing of an electronic U.S. marketing application this
year and ongoing research and development. Additionally, the increased
manufacturing activity associated with Hemopure and the resulting increase in
manufacturing expenses allocated to research and development contributed to the
increase.

Sales and marketing expenses increased 12.0% to $1,286,000 in the first six
months of fiscal 2001 from $1,148,000 in the first six months of fiscal 2000.
The increase was primarily due to sales and marketing efforts of introducing
Oxyglobin in selected European countries in 2001.

General and administrative expenses increased 143.9% to $11,826,000 in the first
six months of fiscal 2001 from $4,848,000 in the first six months of fiscal
2000. The increase is primarily due to non-cash compensation expense for stock
options and warrants issued to certain consultants, directors and contract
parties that must be accounted for at fair value, per SFAS 123 and EITF 96-18,
and be amortized over the service period and revalued each quarter based on the
closing stock price or, if issued for services completed, are a one-time charge.
For the first six months of fiscal 2001, we recorded $7,717,000 as compensation
expense under these options and warrants versus $1,820,000 in the first six months of fiscal 2000. Increased
spending in public and investor relations, pre-approval marketing expenses for
Hemopure and consulting expenses related to our facility to be built in South
Carolina also contributed to the increase.

Total other income was $2,306,000 in the first six months of fiscal 2001
compared to $1,291,000 in the first six months of fiscal 2000. The increase
reflects additional interest earned on a higher average cash balance
in fiscal 2001.

Liquidity and Capital Resources

At April 30, 2001, we had current assets of $75,528,000, consisting primarily
of $71,320,000 in cash and cash equivalents and $3,283,000 in net inventory. At
April 30, 2001, current liabilities were $8,640,000. On April 2, 2001, we paid
out $3,508,000 from an escrow account that had been included in current portion
of restricted cash in connection with the settlement described in note 7 to the
financial statements included in this report.

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BIOPURE CORPORATION

Managements Discussion and Analysis of Financial Condition and Results of Operations
April 30, 2001
(Continued)

During the first six months of fiscal 2001, our cash and cash equivalents
decreased $17,508,000 from $88,828,000 at October 31, 2000 to $71,320,000 at
April 30, 2001. This decrease is primarily due to cash outflows of $17,833,000
for operating activities.

On January 31, 2001, we signed a letter of intent for the construction and
financing of an $85,000,000 state-of-the-art biopharmaceutical facility in
Sumter, South Carolina. On May 8, 2001 Biopure placed $10,000,000 in escrow
as its contribution to equity in the project and will enter into a 20-year
lease with optional buyout provisions and a bargain purchase option at the end
of the term. Lease payments are expected to start in the beginning of fiscal
2004. Financing for the new plant will consist of asset-backed mortgage
financing, tax exempt bonds, equipment lease financing, and state and local
incentives.

We have financed operations from inception primarily through sales of equity
securities, development and license agreement payments, interest income and
debt.

Our primary investment objective is preservation of principal and we currently
invest in high-grade commercial paper.

We have not been profitable since inception and had an accumulated deficit of
$314,535,000 as of April 30, 2001. We will continue to generate losses from
operations for the foreseeable future. We will explore and are
pursuing opportunities to raise
capital through sales of equity and debt securities, potential partnerships,
bank borrowings or leasing arrangements.

We believe our current cash, cash equivalents and short-term investments should
be sufficient to meet our projected operating requirements through the first
half of fiscal 2002. Our cash requirements may vary significantly from current
projections.

As of October 31, 2000, we had net operating loss carryforwards of
approximately $171,000,000 to offset future federal and state taxable income
through 2020. Due to the degree of uncertainty related to the ultimate
realization of such prior losses, no benefit has been recognized in our
financial statements as of October 31, 2000. Utilization of such losses in
future years may be limited under the change of stock ownership rules of the
Internal Revenue Service.

Quantitative and Qualitative Disclosure of Market Risk

The Company currently does not have any foreign currency exchange risks with
the exception of negligible exchange fluctuations associated with expenses for
clinical trial and regulatory activities outside of the United States. The
Company invests its cash and cash equivalents in high-grade commercial paper
and money market funds. These investments are subject to interest rate risk.
However, due to the nature of the Companys short-term investments, it
believes that the financial market risk exposure is not material.

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BIOPURE CORPORATION




Part II  Other Information
April 30, 2001




Item 2  Changes in Securities and Use of Proceeds

Warrants to purchase 3,611 shares of Class A Common Stock were exercised in
the second quarter of fiscal 2001 for aggregate proceeds to the Corporation of
$7,200.00. The Corporation relied on Section 4(2) of the Securities Act of
1933 and Regulation D under the Securities Act of 1933 in issuing shares upon
the exercise of warrants.




Item 4  Submission of Matters to a Vote of Security Holders



| | (a) |  | The Corporation held its 2001 Annual Meeting on April 4, 2001.                                                                                                                                                                                                      
| | --- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) |  | Daniel P. Harrington and Stephen A. Kaplan were elected as
directors at the meeting. The other directors whose terms of office
continued after the meeting are David N. Judelson, C. Everett Koop,
M.D., Paul A. Looney, Carl W. Rausch and Charles A. Sanders, M.D.
|
| | (c) |  | The election of directors was the only matter voted upon at the
meeting. The shares voted were:                                                                                                                                                                     

|                     |  |     |            |          |  |  |        | 
|-------------------- |  | --- | ---------- | -------- |  |  | ------ | 
|                     |  | For |            | Withheld
|                     |  |     |            |         
|Daniel P. Harrington |  |     | 21,480,438 |          |  |  | 93,301 | 
|                    
|                    
|                    
|                    
|Stephen A. Kaplan    |  |     | 21,477,363 |          |  |  | 96,376 | 

There were no broker held nonvoted shares represented at the meeting.




Item 6  Exhibits and Reports on Form 8-K



| | (a) |  | The exhibits are listed in the accompanying Exhibit Index.                          
| | --- |  | ------------------------------------------------------------------------------------
|
| | (b) |  | No reports on Form 8-K were filed during the quarter for which this
report is filed.

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##### Table of Contents



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.

|                    |  |                     |                                                             
|------------------- |  | ------------------- | ------------------------------------------------------------
|                    |  | BIOPURE CORPORATION
|                   
|Date: June 14, 2001 |  | By:                 | /s/ Carl W. Rausch                                          
|                    |  |                     |                                                             
|                    |  |                     | Carl W. Rausch
Chairman of the Board
Chief Executive Officer
|                   
|Date: June 14, 2001 |  | By:                 | /s/ Francis H. Murphy                                       
|                    |  |                     |                                                             
|                    |  |                     | Francis H. Murphy
Chief Financial Officer                   

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EXHIBIT INDEX

|       |  |                                                                                                                                        
|------ |  | ---------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Description                                                                                                                            
|       |  |                                                                                                                                        
|10.1   |  | Distribution Agreement between the Company and Network Healthcare Holdings Limited                                                     
|      
|      
|      
|      
|10.2   |  | Amendment to [Distribution] Agreement between the Company, Network Healthcare Holdings Limited and Tshepo Pharmaceuticals (Pty) Limited
|      
|      
|      
|      
|10.3   |  | Letter Agreement between the Company and Network Healthcare Holdings Limited                                                           
|      
|      
|      
|      
|10.4   |  | Letter Agreement between the Company and Scanix Six (Pty) Ltd.                                                                         

15