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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 July 31, 2003

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

For the transition period from                      to

Commission File Number 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 o

The number of shares outstanding of each of the issuers classes of common
stock as of September 12, 2003 was:

|                                      |  |  |            | 
|------------------------------------- |  |  | ---------- | 
|Class A Common Stock, $.01 par value  |  |  | 44,378,466 | 
|Class B Common Stock, $1.00 par value |  |  | 117.7      | 



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TABLE OF CONTENTS



|                                                                                                    |                                                           |                                                      |  |  |  |  |  | 
|--------------------------------------------------------------------------------------------------- | --------------------------------------------------------- | ---------------------------------------------------- |  |  |  |  |  | 
|                                                                                                    |                                                           | Condensed Consolidated Balance Sheets               
|                                                                                                    |                                                           | Condensed Consolidated Statements of Operations     
|                                                                                                    |                                                           | Condensed Consolidated Statements of Cash Flows     
|                                                                                                    |                                                           | Notes to Condensed Consolidated Financial Statements
|Managements Discussion and Analysis of Financial Condition and Results of Operations July 31, 2003
|                                                                                                    | Quantitative and Qualitative Disclosure About Market Risk
|                                                                                                    | Controls and Procedures                                  
|Part II  Other Information                                                                        
|                                                                                                    | Item 1. Legal Proceedings                                
|                                                                                                    | Item 5. Other Information                                
|                                                                                                    | Item 6. Exhibits and Reports on Form 8-K                 
|SIGNATURES                                                                                         
|EX-10.1 AGREEMENT CONCERNING SALE CARL W RAUSCH                                                    
|EX-10.2 LOCK-UP AGREEMENT THOMAS A MOORE                                                           
|EX-10.2 LOCK AGREEMENT DAVID N JUDESON                                                             
|EX-10.4 LOCK-UP AGREEMENT CHARLES A SANDERS MD                                                     
|EX-10.5 LOCK-UP AGREEMENT C EVERETT KOOP MD                                                        
|EX-31.1 CERTIFICATION OF THOMAS A. MOORE                                                           
|EX-31.2 CERTIFICATION OF RONALD F. RICHARDS                                                        
|EX-32.1 SECT. 906 CERTIFICATION (MOORE)                                                            
|EX-32.2 SECT. 906 CERTIFICATION (RICHARDS)                                                         



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BIOPURE CORPORATION

INDEX TO FORM 10-Q

|                                |                                                                                                |                                                                                                                     |    |      |   | 
|------------------------------- | ---------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------- | -- | ---- | - | 
|                                |                                                                                                |                                                                                                                     |    | Page
|                                |                                                                                                |                                                                                                                     |    |     
|Part I  Financial Information: |                                                                                                |                                                                                                                     |    |     
|                                | Item 1 - Financial Statements (Unaudited)                                                      |                                                                                                                     |    |      |  
|                                |                                                                                                | Condensed Consolidated Balance Sheets at July 31, 2003 and October 31, 2002                                         |    |      | 3 | 
|                                |                                                                                                | Condensed Consolidated Statements of Operations for the three and nine months ended July 31, 2003 and July 31,
2002 |    |      | 4 | 
|                                |                                                                                                | Condensed Consolidated Statements of Cash Flows for the nine months ended July 31, 2003 and July 31, 2002           |    |      | 5 | 
|                                |                                                                                                | Notes to Condensed Consolidated Financial Statements                                                                |    |      | 6 | 
|                                | Item 2 - Managements Discussion and Analysis of Financial Condition and Results of Operations |                                                                                                                     |    | 11   |  
|                                | Item 3 - Quantitative and Qualitative Disclosure of Market Risk                                |                                                                                                                     |    | 18   |  
|                                | Item 4 - Controls and Procedures                                                               |                                                                                                                     |    | 19   |  
|Part II  Other Information:    |                                                                                                |                                                                                                                     |    |     
|                                | Item 1 - Legal Proceedings                                                                     |                                                                                                                     |    | 20   |  
|                                | Item 2 - Changes in Securities and Use of Proceeds                                             |                                                                                                                     |    | 20   |  
|                                | Item 3 - Defaults Upon Senior Securities                                                       |                                                                                                                     |    | 20   |  
|                                | Item 4 - Submission of Matters to a Vote of Security Holders                                   |                                                                                                                     |    | 20   |  
|                                | Item 5 - Other Information                                                                     |                                                                                                                     |    | 21   |  
|                                | Item 6
- Exhibits and Reports on Form 8-K                                                      |                                                                                                                     | 28 |     
|Signatures                      |                                                                                                |                                                                                                                     | 29 |     

Biopure®, Hemopure® and Oxyglobin® are registered trademarks of Biopure
Corporation.

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BIOPURE CORPORATION

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

|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                  |        |     |        | 
|------------------------------------- | ------------------------------------------------------------------------------------- | --------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------ | ------------- | ------ | ---------------- | ------ | --- | ------ | 
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        | July 31, 2003 |        | October 31, 2002
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|Assets:                               |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|Current assets:                       |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|                                      | Cash and cash equivalents                                                             |                             | $                                                                                                                                          | 29,841                                     |        |               | $      | 19,710           |       
|                                      | Accounts receivable, net                                                              |                             |                                                                                                                                            | 549                                        |        |               |        | 89               |       
|                                      | Inventories, net                                                                      |                             |                                                                                                                                            | 9,173                                      |        |               |        | 8,028            |       
|                                      | Other current assets                                                                  |                             |                                                                                                                                            | 658                                        |        |               |        | 709              |       
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|                                      |                                                                                       | Total current assets        |                                                                                                                                            |                                            | 40,221 |               |        |                  | 28,536 |    
|Property, plant and equipment, net    |                                                                                       |                             | 36,911                                                                                                                                     |                                            |        |               | 38,769 |                 
|Other assets                          |                                                                                       |                             | 10,955                                                                                                                                     |                                            |        |               | 10,972 |                 
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|                                      |                                                                                       | Total assets                |                                                                                                                                            | $                                          | 88,087 |               |        | $                | 78,277 |    
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|Liabilities and stockholders equity: |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|Current liabilities:                  |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|                                      | Accounts payable                                                                      |                             | $                                                                                                                                          | 954                                        |        |               | $      | 2,163            |       
|                                      | Accrued expenses                                                                      |                             |                                                                                                                                            | 4,576                                      |        |               |        | 4,026            |       
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|                                      |                                                                                       | Total current liabilities   |                                                                                                                                            |                                            | 5,530  |               |        |                  | 6,189  |    
|Long-term debt                        |                                                                                       |                             | 9,847                                                                                                                                      |                                            |        |               | 9,847  |                 
|Deferred compensation                 |                                                                                       |                             | 142                                                                                                                                        |                                            |        |               | 184    |                 
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|                                      |                                                                                       | Total long-term liabilities |                                                                                                                                            |                                            | 9,989  |               |        |                  | 10,031 |    
|Stockholders equity:                 |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|                                      | 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, 43,053,710 shares
outstanding at July 31, 2003 and 30,353,370 at October 31, 2002 |                                            |        | 431           |        |                  |        | 304 |       
|                                      |                                                                                       |                             | Class B, $1.00 par value, 179 shares authorized, 117.7 shares outstanding                                                                  |                                            |        |              |        |                  |        |    |       
|                                      | Capital in excess of par value                                                        |                             |                                                                                                                                            | 463,490                                    |        |               |        | 419,065          |       
|                                      | Contributed capital                                                                   |                             |                                                                                                                                            | 24,574                                     |        |               |        | 24,574           |       
|                                      | Notes receivable                                                                      |                             |                                                                                                                                            | (256                                       | )      |               |        | (255             | )     
|                                      | Accumulated deficit                                                                   |                             |                                                                                                                                            | (415,671                                   | )      |               |        | (381,631         | )     
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|Total stockholders equity            |                                                                                       |                             | 72,568                                                                                                                                     |                                            |        |               | 62,057 |                 
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 
|                                      |                                                                                       |                             |                                                                                                                                            | Total liabilities and stockholders equity |        | $             | 88,087 |                  |        | $   | 78,277 | 
|                                      |                                                                                       |                             |                                                                                                                                            |                                            |        |               |        |                 

Note: The balance sheet at October 31, 2002 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.

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BIOPURE CORPORATION

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

|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |        |        | 
|-------------------- | ------------------------------------------------------------------------------------- | ------------------------ | ------- | ------------------ | ----- | ----------------- | ------- | ------------- | ------ | ------------- | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                     |                                                                                       |                          |         | Three Months Ended |       | Nine Months Ended
|                     |                                                                                       |                          |         |                    |       |                  
|                     |                                                                                       |                          |         | July 31, 2003      |       | July 31, 2002     |         | July 31, 2003 |        | July 31, 2002
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |              
|Revenues:            |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|                     | Oxyglobin                                                                             |                          | $       | 885                |       |                   | $       | 260           |        |               | $       | 2,867  |        |   | $       | 1,916  |       
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|                     |                                                                                       | Total revenues           |         |                    | 885   |                   |         |               | 260    |               |         |        | 2,867  |   |         |        | 1,916  | 
|Cost of revenues     |                                                                                       |                          | 4,608   |                    |       |                   | 2,570   |               |        |               | 15,429  |        |        |   | 4,390   |       
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|Gross loss           |                                                                                       |                          | (3,723  | )                  |       |                   | (2,310  | )             |        |               | (12,562 | )      |        |   | (2,474  | )     
|Operating expenses:  |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|                     | Research and development                                                              |                          |         | 2,380              |       |                   |         | 7,063         |        |               |         | 7,462  |        |   |         | 22,188 |       
|                     | Sales and marketing                                                                   |                          |         | 1,969              |       |                   |         | 864           |        |               |         | 4,591  |        |   |         | 3,938  |       
|                     | General and administrative                                                            |                          |         | 3,342              |       |                   |         | 2,569         |        |               |         | 9,595  |        |   |         | 7,233  |       
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|                     |                                                                                       | Total operating expenses |         |                    | 7,691 |                   |         |               | 10,496 |               |         |        | 21,648 |   |         |        | 33,359 | 
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|Loss from operations |                                                                                       |                          | (11,414 | )                  |       |                   | (12,806 | )             |        |               | (34,210 | )      |        |   | (35,833 | )     
|Other income, net    |                                                                                       |                          | 108     |                    |       |                   | 210     |               |        |               | 170     |        |        |   | 821     |       
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|Net loss             |                                                                                       | $                        | (11,306 | )                  |       | $                 | (12,596 | )             |        | $             | (34,040 | )      |        | $ | (35,012 | )     
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|Per share data:      |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|                     | Basic and diluted net loss per common share                                           |                          | $       | (0.28              | )     |                   | $       | (0.43         | )      |               | $       | (0.98  | )      |   | $       | (1.30  | )     
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       
|                     | Weighted-average shares used in computing
basic and diluted net
loss per common share |                          |         | 39,887             |       |                   |         | 29,141        |        |               |         | 34,605 |        |   |         | 26,854 |       
|                     |                                                                                       |                          |         |                    |       |                   |         |               |        |               |         |        |        |   |         |       

See accompanying notes.

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BIOPURE CORPORATION

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

|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |         |       |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------------- | -------------------------------------------------- | ----------------------------------------- | ------- | ----------------- | ------- | ------------- | ------- | ----- | ------- | -
|                                                     |                                                                                         |                                                    |                                           |         | Nine Months Ended
|                                                     |                                                                                         |                                                    |                                           |         |                  
|                                                     |                                                                                         |                                                    |                                           |         | July 31, 2003     |         | July 31, 2002
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |              
|Operating activities:                                |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     | Net loss                                                                                |                                                    | $                                         | (34,040 | )                 |         | $             | (35,012 | )    
|                                                     | Adjustments to reconcile net loss to net cash used in operating activities:             |                                                    |                                           |         |                   |         |               |         |      
|                                                     |                                                                                         | Depreciation and amortization                      |                                           |         | 3,992             |         |               |         | 3,231 |        
|                                                     |                                                                                         | Equity compensation                                |                                           |         | 244               |         |               |         | (76   | )      
|                                                     |                                                                                         | Deferred compensation                              |                                           |         | (42               | )       |               |         | (54   | )      
|                                                     |                                                                                         | Accrued interest on stockholders notes receivable |                                           |         | (1                | )       |               |         | (1    | )      
|                                                     |                                                                                         | Changes in assets and liabilities:                 |                                           |         |                   |         |               |         |       |        
|                                                     |                                                                                         |                                                    | Accounts receivable                       |         |                   | (460    | )             |         |       | 585     |  
|                                                     |                                                                                         |                                                    | Inventories                               |         |                   | (1,145  | )             |         |       | (254    | )
|                                                     |                                                                                         |                                                    | Other current assets                      |         |                   | 51      |               |         |       | (937    | )
|                                                     |                                                                                         |                                                    | Accounts payable                          |         |                   | (1,209  | )             |         |       | (457    | )
|                                                     |                                                                                         |                                                    | Accrued expenses                          |         |                   | 550     |               |         |       | 1,779   |  
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     |                                                                                         |                                                    | Net cash used in operating activities     |         |                   | (32,060 | )             |         |       | (31,196 | )
|Investing activities:                                |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     | Purchase of property, plant and equipment                                               |                                                    |                                           | (2,092  | )                 |         |               | (6,340  | )    
|                                                     | Long term debt                                                                          |                                                    |                                           |        |                   |         |               | (85     | )    
|                                                     | Other assets                                                                            |                                                    |                                           | (25     | )                 |         |               | 60      |      
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     |                                                                                         |                                                    | Net cash used in investing activities     |         |                   | (2,117  | )             |         |       | (6,365  | )
|Financing activities:                                |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     | Net proceeds from sales of common stock                                                 |                                                    |                                           | 43,858  |                   |         |               | 31,766  |      
|                                                     | Payment of notes receivable from stockholders                                           |                                                    |                                           |        |                   |         |               | 80      |      
|                                                     | Amendment of note receivable from stockholder                                           |                                                    |                                           |        |                   |         |               | (233    | )    
|                                                     | Proceeds from exercise of options and warrants                                          |                                                    |                                           | 450     |                   |         |               | 41      |      
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     |                                                                                         |                                                    | Net cash provided by financing activities |         |                   | 44,308  |               |         |       | 31,654  |  
|Net increase (decrease) in cash and cash equivalents |                                                                                         |                                                    | 10,131                                    |         |                   |         | (5,907        | )      
|Cash and cash equivalents at beginning of period     |                                                                                         |                                                    | 19,710                                    |         |                   |         | 36,089        |        
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        
|Cash and cash equivalents at end of period           |                                                                                         | $                                                  | 29,841                                    |         |                   | $       | 30,182        |        
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        
|Non-cash transactions:                               |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     | New facility construction financed through capital lease (classified as long-term debt) |                                                    | $                                         |        |                   |         | $             | 4,642   |      
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     | Land and license rights acquired upon conversion of stock option                        |                                                    | $                                         |        |                   |         | $             | 139     |      
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     | Settlement of deferred compensation and accrued interest                                |                                                    | $                                         |        |                   |         | $             | (1,601  | )    
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        
|                                                     | Settlement of note receivable and accrued interest                                      |                                                    | $                                         |        |                   |         | $             | 1,601   |      
|                                                     |                                                                                         |                                                    |                                           |         |                   |         |               |        

See accompanying notes.

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BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
July 31, 2003
(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
accounting principles generally accepted in the United States 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 nine month periods ended July 31, 2003
are not necessarily indicative of the results that may be expected for the
year ending October 31, 2003; however the Company expects to incur a
substantial loss for the year ended October 31, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | Reclassifications have been made to the prior period financial statements
presented to conform to the current periods presentations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | These financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in our Annual
Report on Form 10-K for the fiscal year ended October 31, 2002 filed with the
SEC on January 29, 2003.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | The Company has financed operations from inception primarily through sales of
equity securities, development and license agreement payments, interest
income and debt. The Company has not been profitable since inception and had
an accumulated deficit of $415,671,000 as of July 31, 2003. For us to remain
a going concern we will require significant funding. Management expects that
the Company will continue to generate losses from operations for the next
several years. The Company is exploring opportunities to raise capital
through sales of securities and joint venture, leasing or licensing
arrangements, but the Company cannot assure that sufficient funds will be
available to it on terms that the Company deems acceptable, if they are
available at all. At July 31, 2003, the Company had $29,841,000 in cash and
cash equivalents. Since July 31, 2003, the Company has raised approximately
$6,003,000 in additional funding and received $2,527,000 from the
exercise of certain warrants to purchase its Class A
Common Stock (See Note 8 Subsequent Events). The Company
expects this funding, in addition to the cash and cash equivalents at July
31, 2003, will be sufficient to fund operations until approximately May 2004
under the Companys current operating plan.
|  
|2. |  | Net Loss per Share                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|  
|   |  | Basic net loss per common share is computed based on the weighted-average
number of common shares outstanding during the period. Diluted net loss per
common share is computed based upon the weighted-average number of common
shares outstanding during the period, adjusted for the dilutive effect of the
Companys common stock equivalents, including the shares issuable upon the
conversion of Class B Common Stock outstanding and the exercise of common
stock options and warrants determined based upon the average market price of
common stock for the period. Basic and diluted net loss per common share is
computed the same for all periods presented as the Company had losses for all
periods presented and, consequently, the effect of Class B Common Stock,
options and warrants is anti-dilutive. Dilutive weighted average shares
outstanding do not include 9,489,138 common-equivalent shares for the three
and nine months ended July 31, 2003 and 5,639,901 common-equivalent shares
for the three and nine months ended July 31, 2002 as their effect would have
been anti-dilutive.                                                                                                                                                                                             
|  
|3. |  | Stock Based Compensation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  
|   |  | The Company applies Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees,and related interpretations, in accounting
for its stock-based compensation plans. Accordingly, no compensation expense
has been recognized for stock-based compensation plans. The Company has
adopted the disclosure-only provisions of Statement of Financial Accounting
Standards No. 148, Accounting for Stock-Based Compensation-Transition and
Disclosure, an amendment of FASB Statement No. 123(SFAS No. 148). Had
compensation expense for the Companys stock option plans been determined
based on the fair value at the grant date for awards under these plans,
consistent with the methodology prescribed under SFAS No. 148, the Companys
net loss and net loss per share would have approximated the pro forma amounts
indicated below:                                                                                                                                                                                                                                                                                                                                                                                                                                         

6



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BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
July 31, 2003
(Unaudited)
(Continued)

|                                                                                                                |  |                    |         |                   |  |          |         |          |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | -------- | ------- | -------- |  | - | ------- | - |  | - | ------- | -
|                                                                                                                |  | Three Months Ended |         | Nine Months Ended
|                                                                                                                |  |                    |         |                  
|                                                                                                                |  | July 31,           |         | July 31,          |  | July 31, |         | July 31,
|In thousands (except per share data)                                                                            |  | 2003               |         | 2002              |  | 2003     |         | 2002    
|                                                                                                                |  |                    |         |                   |  |          |         |         
|Net loss, as reported                                                                                           |  | $                  | (11,306 | )                 |  | $        | (12,596 | )        |  | $ | (34,040 | ) |  | $ | (35,012 | )
|Deduct: Total stock-based
employee compensation expense
determined under fair value
based method for all awards |  |                    | (1,121  | )                 |  |          | (2,245  | )        |  |   | (3,296  | ) |  |   | (3,945  | )
|                                                                                                                |  |                    |         |                   |  |          |         |          |  |   |         |   |  |   |         |  
|Pro forma net loss                                                                                              |  | $                  | (12,427 | )                 |  | $        | (14,841 | )        |  | $ | (37,336 | ) |  | $ | (38,957 | )
|                                                                                                                |  |                    |         |                   |  |          |         |          |  |   |         |   |  |   |         |  
|Net loss per share:                                                                                             |  |                    |         |                   |  |          |         |          |  |   |         |   |  |   |         |  
|Basic and diluted  as reported                                                                                 |  | $                  | (0.28   | )                 |  | $        | (0.43   | )        |  | $ | (0.98   | ) |  | $ | (1.30   | )
|                                                                                                                |  |                    |         |                   |  |          |         |          |  |   |         |   |  |   |         |  
|Basic and diluted  pro forma                                                                                   |  | $                  | (0.31   | )                 |  | $        | (0.51   | )        |  | $ | (1.08   | ) |  | $ | (1.45   | )
|                                                                                                                |  |                    |         |                   |  |          |         |          |  |   |         |   |  |   |         |  



| |  | The weighted average fair value of each stock option included in the preceding
pro forma amounts was estimated using the Black-Scholes option-pricing model
and is amortized over the vesting period of the underlying options. The
assumptions used to calculate the SFAS No. 148 pro forma disclosure and the
weighted average information are as follows:
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|                        |  |                    |         |                   |  |               |         |               |  |  |         |   |  |  |         |  
|----------------------- |  | ------------------ | ------- | ----------------- |  | ------------- | ------- | ------------- |  |  | ------- | - |  |  | ------- | -
|                        |  | Three Months Ended |         | Nine Months Ended
|                        |  |                    |         |                  
|                        |  | July 31, 2003      |         | July 31, 2002     |  | July 31, 2003 |         | July 31, 2002
|                        |  |                    |         |                   |  |               |         |              
|Risk-free interest rate |  |                    | 4.70    | %                 |  |               | 5.07    | %             |  |  | 4.68    | % |  |  | 5.19    | %
|Expected dividend yield |  |                    |        |                   |  |               |        |               |  |  |        |   |  |  |        |  
|Expected lives          |  |                    | 7 years |                   |  |               | 7 years |               |  |  | 7 years |   |  |  | 7 years |  
|Expected volatility     |  |                    | 80      | %                 |  |               | 80      | %             |  |  | 80      | % |  |  | 68      | %



|4. |  | Inventories                                                                                                                          
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Inventories are valued at the lower of cost (determined using the first-in,
first-out method) or market. Inventories were as follows:

|                         |  |               |       |                  |  |   |       | 
|------------------------ |  | ------------- | ----- | ---------------- |  | - | ----- | 
|In thousands             |  | July 31, 2003 |       | October 31, 2002
|                         |  |               |       |                 
|Raw materials            |  | $             | 1,384 |                  |  | $ | 2,122 | 
|Work-in-process          |  |               | 1,322 |                  |  |   | 676   | 
|Finished goods-Oxyglobin |  |               | 2,199 |                  |  |   | 1,992 | 
|Finished goods-Hemopure  |  |               | 4,268 |                  |  |   | 3,238 | 
|                         |  |               |       |                  |  |   |       | 
|                         |  | $             | 9,173 |                  |  | $ | 8,028 | 
|                         |  |               |       |                  |  |   |       | 



|5. |  | Accrued Expenses                            
|-- |  | --------------------------------------------
|  
|   |  | Accrued expenses consisted of the following:

|                                              |  |               |       |                  |  |   |       | 
|--------------------------------------------- |  | ------------- | ----- | ---------------- |  | - | ----- | 
|In thousands                                  |  | July 31, 2003 |       | October 31, 2002
|                                              |  |               |       |                 
|Accrued payroll and related employee expenses |  | $             | 759   |                  |  | $ | 562   | 
|Accrued vacation                              |  |               | 758   |                  |  |   | 651   | 
|Accrued legal and audit fees                  |  |               | 303   |                  |  |   | 301   | 
|Accrued health and dental premiums            |  |               | 601   |                  |  |   | 190   | 
|Financing fees                                |  |               | 537   |                  |  |   |      | 
|South Carolina Project                        |  |               |      |                  |  |   | 551   | 
|Other                                         |  |               | 1,618 |                  |  |   | 1,771 | 
|                                              |  |               |       |                  |  |   |       | 
|                                              |  | $             | 4,576 |                  |  | $ | 4,026 | 
|                                              |  |               |       |                  |  |   |       | 

7



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BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
July 31, 2003
(Unaudited)
(Continued)



|6. |  | Commitments                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|   |  | Guarantee                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | In July 1994, the Company acquired a 50% general partnership interest in
Eleven Hurley Street Associates (EHSA), a real estate partnership, which owns
the Companys principal office and research and development facility. The
Company accounts for its investment in EHSA under the equity method of
accounting. In the event EHSA became insolvent or was unable to pay its
obligations, the Company, as a general partner, would be liable for all
partnership obligations. EHSAs liabilities as of July 31, 2003 consist of a
promissory note to a bank with a balance of $1,123,000. The note accrues
interest at 8.63% and matures on January 30, 2006. As of July 31, 2003, the
maximum potential amount of future payments the Company would be required to
make under its guarantee would be $1,352,000. The note is secured by the
office and research and development facility which the Company believes would
satisfy the current promissory note balance. Biopure currently leases this
facility from EHSA for $262,000 annually under an operating lease expiring in
December 2007 that is included as an operating lease commitment in our Annual
Report on Form 10-K for the fiscal year ended October 31, 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|  
|   |  | Sumter Realty                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|   |  | In December 2001, the Company signed an amended letter of intent with Sumter
Realty Group, LLC for the construction and financing of a manufacturing plant
in South Carolina, which is designed to produce 500,000 Hemopure units per
year and expected to cost approximately $120,000,000. Sumter Realty Group,
LLC accepted a letter of commitment from a potential investor for the full
$120,000,000 required to finance construction of the new manufacturing
facility in South Carolina, and in December 2002 Biopure signed a lease
agreement with Sumter Realty Group, LLC, which was amended in March 2003 (as
amended, the Lease). The terms of the Lease were subject to financial closing
and construction by April 1, 2003. The Lease expired because the financing
was not completed. Sumter Realty Group remains in discussions with investors,
but a closing schedule has not been determined. Terms of any new lease are
expected to be similar to those of the Lease, as follows: lease payments
would start at substantial completion of the facility, expected to be in
fiscal 2005. The annual lease payments would be $13,750,000 per year for the
first two years and $17,158,000 per year for the balance of the 25-year term.
At the conclusion of the 25-year term, the Company would own the facility. In
addition, the Company would expect to issue to the potential investor a
warrant to purchase up to 2,500,000 shares of Class A Common Stock at $0.01
per share. The Company is committed to pay a finders fee, of approximately 2
percent of the net amount financed, to CB Richard Ellis, a real estate
consulting firm, when financing for the facility is completed.
|  
|   |  | As of July 31, 2003, $13,698,000 has been included in property, plant and
equipment and $9,847,000 in long-term debt reflecting expenses to date for
the engineering and design costs of the planned manufacturing facility in
Sumter, S.C. as well as for permits and acquisition of land. Through the
third fiscal quarter of 2003, the Company incurred an additional $941,000 of
costs for detailed engineering work, including shop drawings for major
equipment and steel fabrication, to maintain the timeline for a validated,
FDA-approved plant in fiscal 2006. The total $13,698,000 of expenditures by
the Company would be returned as described below. During fiscal 2001 and
2002, Biopure funded $10,000,000 in project costs for the new facility.
Following execution of a final lease agreement, if any, Biopure expects this
amount to be refunded within twelve months of FDA approval for Hemopure. The
$10,000,000 has been accounted for as a deposit in long-term assets as of
July 31, 2003. If FDA approval is not received, the $10,000,000 expenditure
will not be returned to the Company and will be treated as a capital
expenditure, and as a capital expenditure will be subject to immediate
impairment review pursuant to SFAS No. 144. Under the terms of the expired
Lease, Sumter Realty Group, LLC would refund the $3,698,000 of additional
investment by the Company within six months after financing is completed.                                                                                                                                                                                                                                              
|  
|   |  | Research Agreement                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | On March 4, 2003, the Company entered into a Cooperative Research and
Development Agreement (CRADA) with the United States Naval Medical Research
Center (NMRC). The CRADA will support a pivotal, randomized, standard therapy
controlled clinical trial of Hemopure in pre-hospital resuscitation of
patients with severe hemorrhagic shock (acute blood loss). Under the terms of
the CRADA, the NMRC will contribute $4,000,000 and the Company is committed
to contribute $8,753,000, exclusive of                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

8



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##### Table of Contents



BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
July 31, 2003
(Unaudited)
(Continued)



|   |  | internal costs, through 2006. These amounts are estimates based upon a
preliminary assessment of the current trial protocol. The Company will
provide at least $643,000 during the first year of the arrangement.
Completion of this pivotal trauma trial is contingent upon both parties
securing the required funding. The Company has not yet commenced this trial.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|7. |  | Financing Activities                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | On April 16, 2003 the Company entered into a Standby Equity Distribution
Agreement with BNY Capital Markets, Inc. (CMI) under which the Company may
issue and sell up to $10,000,000 of its Class A Common Stock from time to
time through CMI. During the third fiscal quarter of 2003, the Company
received $3,839,000 in net proceeds from the sale of 707,060 shares of its
Class A Common Stock at an average price of $5.56 per share under this
arrangement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|   |  | On May 2, 2003, the Company raised $3,134,000 in net proceeds from the sale
of 882,353 shares of its Class A Common Stock at a price of $3.57 per share.
The Company also issued, to these same investors, warrants to acquire 176,471
shares of its Class A Common Stock at an exercise price of $3.93 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | On May 6, 2003, the Company raised $2,935,000 in net proceeds from the sale
of 833,334 shares of its Class A Common Stock at a price of $3.60 per share.
The Company also issued, to these same investors, warrants to acquire 166,667
shares of its Class A Common Stock at an exercise price of $3.96 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|  
|   |  | During the third fiscal quarter of
2003, the Company received $450,000 in net proceeds from the exercise
of warrants to purchase 123,920 shares of its Class A
Common Stock at a price of $3.63 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|   |  | On June 16, 2003, the Company filed a $50,000,000 common stock shelf
registration statement with the SEC to facilitate future financings. On July
23, 2003, the Company raised $16,193,000 in net proceeds from the sale of
3,083,000 shares of its Class A Common Stock at a price of $5.58
per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|8. |  | Subsequent Events                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  
|   |  | Since July 31, 2003, the Company raised $6,003,000 in net proceeds from the sale
of 802,188 shares of its Class A Common Stock at an average price of $7.55
per share in connection with the CMI agreement.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|   |  | In September 2003, the
Company received $2,527,000 in net proceeds from the exercise of
warrants to purchase 522,193 shares of its Class A Common
Stock at a price of $4.84 per share.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|  
|9. |  | Recently Issued Accounting Standards                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |  | FASB Interpretation No. 45, Guarantor Accounting,has significantly changed
current practice in the accounting for, and disclosure of, guarantees. Most
guarantees are to be recognized and initially measured at fair value, which
is a change from previous practice. In addition, guarantors are required to
make significant new disclosures, even when the likelihood of the guarantor
making payments under the guarantee is remote. In general, the Interpretation
applies to contracts or indemnification agreements that contingently require
the guarantor to make payments to the guaranteed party based on changes in an
underlying that is related to an asset, liability, or an equity security of
the guaranteed party. The Interpretations disclosure requirements are
effective for financial statements for interim or annual periods ending after
December 15, 2002, while the initial recognition and initial measurement
provisions are applicable on a prospective basis to guarantees issued or
modified after December 31, 2002. The Companys adoption of this statement
has not had a material impact on its results of operations or financial
position.
|  
|   |  | In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, (FIN 46) to clarify the conditions under which
assets, liabilities, and activities of another entity should be consolidated
into the financial statements of a company. FIN 46 requires the consolidation
of a variable-interest entity by a company that bears the majority of the
risk of loss from the variable interest entitys activities, is entitled to
receive a majority of the variable-interest entitys residual returns or
both. The provisions of FIN 46 are required to be adopted by the Company in
fiscal 2003. The Company believes its interest in EHSA (see Note 6) is a
variable interest entity under FIN 46 and expects to consolidate its interest
beginning in the fourth fiscal quarter of 2003. The Company believes the
adoption of FIN 46 will not have a material adverse impact on its overall
financial position or results of operations.                                                                                                                                                                                                   
|  
|   |  | On May 15, 2003, the FASB issued Statement of Financial Accounting Standards
No. 150 (SFAS 150), Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. SFAS 150 requires certain
financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity to be classified as
liabilities. Many of these                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

9



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##### Table of Contents



BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
July 31, 2003
(Unaudited)
(Continued)



|    |  | instruments previously were classified as equity or temporary equity and as
such, SFAS 150 represents a significant change in practice in the accounting
for a number of financial instruments, including mandatorily redeemable equity
instruments and certain equity derivatives that frequently are used in
connection with share repurchase programs. SFAS 150 is effective for public
companies for all financial instruments created or modified after May 31, 2003,
and to other instruments at the beginning of the first interim period beginning
after June 15, 2003. The Company has no financial instruments under SFAS 150.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|10. |  | Litigation                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   
|    |  | The Company is the defendant in a case filed on or about June 16, 2003 by
plaintiff Steelhead Investments, Ltd. The complaint alleges that the Company breached a contract with the plaintiff
by giving insufficient notice and failing to give notice of offerings of common
stock and warrants by the Company in March and April, 2003. The complaint
states that the plaintiff has suffered monetary damages in an amount to be
determined, but not less than $15.5 million. On
September 5, 2003, the Company filed an Amended Answer,
Counterclaims, and Third Party Complaint that denied the material
allegations of the complaint, asserted defenses, and brought
counterclaims against the plaintiff and an affiliate for fraud and
other misconduct in connection with execution and performance of the
contract described in the complaint. The Company intends to defend
this case vigorously. At this time, the Company cannot estimate what impact
this case may have on it. However, the Company believes resolution of this case
will not have a material adverse impact on its overall financial
position or results of operations.

10



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##### Table of Contents



BIOPURE CORPORATION




Managements Discussion and Analysis of
Financial Condition and Results of Operations
July 31, 2003

Cautionary Statement Regarding Forward-Looking Information

The following discussion of our financial condition and results of operations
should be read in conjunction with the Condensed Consolidated Financial
Statements and the related Notes included elsewhere in this report. Except for
strictly historical information contained herein, matters discussed in this
report constitute forward-looking statements. When used herein, the words
expects, estimates, intends, plans, should, anticipates and similar
expressions are intended to identify such forward-looking statements. Actual
results could differ materially from those set forth in the forward-looking
statements. There can be no assurance that Biopure will be able to commercially
develop Hemopure, that necessary regulatory approvals will be obtained, that
anticipated milestones will be met in the expected timetable, that any clinical
trials will be successful, or that any approved product will attain market
acceptance and be manufactured and sold in the quantities anticipated. Actual
results may differ from those projected in forward-looking statements due to
risks and uncertainties that exist in the Companys operations and business
environment. These risks include, without limitation, the availability of
sufficient financing to support operations, the Companys stage of product
development, history of operating losses, accumulated deficit, and
uncertainties and possible delays related to clinical trials and regulatory
approvals, possible healthcare reform, manufacturing capability, market
acceptance and competition. 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. The Company undertakes
no obligation to release publicly the results of revisions to these
forward-looking statements to reflect events or circumstances after the date
hereof. Reference is made in particular to the risk factors and the discussions
set forth below in this report under Managements Discussion and Analysis of
Financial Condition and Results of Operations.

Overview

Biopure is a leading developer, manufacturer and supplier of pharmaceuticals
called oxygen therapeutics. Using our patented and proprietary technology, we
have developed and manufacture two products. Hemopure is a first-in-class
product for human use that is approved in South Africa for the
treatment of acutely anemic surgical patients and to eliminate, delay or reduce
red blood cell transfusions in these patients. On July 31, 2002, we submitted a
biologic license application (BLA) to the U.S. Food and Drug Administration
(FDA) seeking regulatory approval to market Hemopure in the United States for a
similar indication in patients undergoing orthopedic surgery. On
July 30, 2003,
the FDA sent Biopure a letter stating that the agency had completed its review
of the Companys BLA and requesting additional information. Biopure is
currently preparing its response. The Company has not determined when it will
submit its response, as more guidance from the FDA may be required. Once we
have submitted our response, the FDA will review our response and
take further action on our BLA, but at the present time, we do
not know how long it will take to complete this process. We also plan to develop Hemopure for potential use in trauma and other
medical applications. Our veterinary product, Oxyglobin, is the only product of
its kind approved in the United States and the European Union, where it is
indicated for the treatment of anemia in dogs.

Since inception, we have devoted substantially all of our resources to our
research and development programs and manufacturing. We have been dependent
upon funding from debt and equity financings, strategic alliances and interest
income. We have not been profitable since inception and had an accumulated
deficit of $415,671,000 as of July 31, 2003. We expect to incur additional
operating losses over the next several years in connection with clinical
trials, preparation of a marketing application for Hemopure in Europe and other
markets and pre-marketing expenditures for Hemopure. We began generating
revenue from the sale of Oxyglobin in fiscal 1998.

We believe our cash and cash equivalents, as of July 31, 2003, in addition to
amounts raised from financing transactions since that time, are sufficient to
fund the Companys planned operations until approximately May 2004. For the
balance of fiscal 2003, our objectives are to complete our response to the
letter we received from the FDA on July 30, 2003, produce Hemopure and
Oxyglobin at greater efficiency/capacity levels in our manufacturing facility
in Cambridge, Massachusetts, expand marketing and sales activities for
Hemopure, support sales and marketing expenses for Oxyglobin in the United
States and Europe and continue clinical development of
additional Hemopure indications. Because the Companys funds on hand at
January 27, 2003 and forecasted sales were not sufficient to fund our plan into
fiscal 2004, the audit report of Ernst & Young LLP, the Companys independent
auditor, on our fiscal 2002 financial statements includes a going concern
modification. In order for us to remain a going concern, we will require
significant funding. We are exploring opportunities to raise capital through
equity offerings, strategic alliances and other financing vehicles. However,
additional financing or strategic alliances may not be available when needed,
or, if available, may not be on favorable terms.

11



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BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
July 31, 2003
(Continued)

Critical Accounting Policies

The Companys significant accounting policies are described in the Notes to the
Consolidated Financial Statements, as disclosed in our Form 10-K for the fiscal
year ended October 31, 2002. The application of our critical accounting
policies is particularly important to the accurate portrayal of the Companys
financial position and results of operations. These critical accounting
policies require the Company to make subjective judgements in determining
estimates about the effect of matters that are inherently uncertain. The
following critical accounting policies are considered most significant:

Inventories

Inventories are stated at the lower of cost (determined using the first-in,
first-out method) or market. Inventories consist of raw material,
work-in-process and Hemopure and Oxyglobin finished goods and are reviewed
periodically for potential obsolescence or expiration based on sales
activity, both projected and historical. Inventories are also reviewed
periodically to determine items that are under quality compliance
investigations. Reserves are established for inventory that falls into these
categories. In the event the FDA does not approve our BLA or actual sales are
lower than currently projected, there could be significant write-offs to our
Hemopure finished goods inventories.

Long-Lived Assets

SFAS 144 requires that long-lived assets be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an
asset may not be recoverable. Our investments in property and equipment,
including construction in progress and the new facility construction; real
property license rights related to the source, supply and initial processing of
our major raw material; and the asset related to the planned South Carolina
manufacturing facility costs are the principal long-lived assets that could be
subject to such a review. The events or changes in circumstances, among others,
that may result in an impairment of these assets are a significant delay in
U.S. regulatory approval for our human product, a change in the source of
supply of the major raw material, the inability to obtain financing for the
South Carolina facility, or lack of adequate demand for our products. In the
event of an impairment, the Company would write down the asset to the fair
market value, thereby incurring a charge to the statement of operations.
Management believes that no such indicators of impairment of its long-lived
assets existed at July 31, 2003.

Revenue Recognition

The Company recognizes revenue from sales of Oxyglobin upon shipment provided
that there is evidence of an agreement, there are no uncertainties surrounding
acceptance, collectibility is probable, the price is fixed and only perfunctory
Company obligations, if any, included in the arrangement remain to be
completed. The Company sells Oxyglobin to veterinarians in the United States
through veterinary product distributors, who purchase product for immediate and
direct resale to veterinary practices. The Company sells Oxyglobin to a
distributor in the United Kingdom that sells product in selected European
countries through local veterinary distributors in Germany, France and the UK.
Collectibility is reasonably assured once pricing arrangements are established,
as these
agreements establish the distributors intent to pay. The Companys customers
do not have a right to return product. The Company and its distributors have an
ongoing business relationship, and the Company monitors creditworthiness on a
regular basis. The Company believes collectibility of product revenues is
reasonably assured at the time of sale.

Research and Development

Since its founding in 1984, Biopure has been primarily a research and
development company focused on developing Hemopure, our oxygen therapeutic for
human use, and obtaining regulatory approval in the United States. Our research
and development expenses have been devoted to basic research, product
development, process development, pre-clinical studies, clinical trials and
filing a BLA with the FDA. In addition, our development expenses historically
have included the design, construction, validation and maintenance of a
large-scale pilot manufacturing plant in Cambridge, Massachusetts. The existing
pilot plant was completed in 1995, expanded in 1998 and expanded again in 2002.

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BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
July 31, 2003
(Continued)

Such a facility is a necessary part of developing a product like Hemopure.
Hemopure is classified by the FDA as a biologic, because it is derived from
animal-source material. Unlike drugs that are chemical compounds, biologics are
defined by their manufacturing process and composition. Any change in the
manufacturing process could be considered, under FDA regulations, to produce an
altered, possibly different product. Therefore, demonstration of manufacturing
capability at greater than laboratory scale is necessary for an application for
regulatory approval of a biologic to be accepted for review. This requirement
results in high manufacturing research and development costs in the development
of a biologic relative to other types of drugs.

The only product made in our plant prior to 1998 was product for use in
pre-clinical and clinical trials. As an offshoot of the research and
development for Hemopure, Oxyglobin, a similar product, gained approval for
veterinary use in 1998. This product was then produced for sale in the pilot
manufacturing plant built and maintained for the development of Hemopure.
Consequently, costs of production of Oxyglobin for sale and an allocation of
overhead based on capacity used for Oxyglobin are charged to inventory and to
cost of revenues. The remaining costs of the pilot plant continued to be
included in research and development expenses through May 2002.

Beginning in May 2002, when we began to make Hemopure for sale under our
regulatory approval in South Africa, the primary function of the pilot plant
changed from support of the development of Hemopure to production of goods for
sale. Since then, all costs of maintaining and operating the pilot plant have
been charged to inventory and cost of revenues. Any actual future use of the
facility for research and development activities will be expensed. In
addition, clinical trial materials taken from inventory for use in research and
development are charged to research and development.

Results of Operations

Three months ended July 31, 2003 compared to three months ended July 31, 2002

Total revenues, consisting entirely of Oxyglobin sales, were $885,000 for the
third quarter of fiscal 2003, compared with $260,000 for the corresponding
period in 2002. During the third quarter of fiscal 2002, Oxyglobin sales were
constrained by limited product availability resulting from a temporary shutdown
of production during the expansion of the Companys manufacturing facilities.
The increase in revenues compared to the third fiscal quarter of last year also
resulted from the July 14, 2003 introduction of a new 60 milliliter (mL) bag of
Oxyglobin in the United States to provide veterinarians more dosing flexibility
when treating smaller dogs or those requiring less oxygen-carrying support.
The 125 mL bag continues to be available for use in larger dogs.

Cost of revenues was $4,608,000 for the third quarter of fiscal 2003, compared
to $2,570,000 for the corresponding period in 2002. Cost of revenues includes
costs of both Oxyglobin and Hemopure, although Hemopure is not currently being
sold. Oxyglobin cost of revenues was $1,692,000 for the third quarter of fiscal
2003 compared to $671,000 for the same period in 2002. This increase was
primarily attributable to the increased Oxyglobin revenues mentioned above.
Because of fixed manufacturing costs, the Company expects that costs to produce
Oxyglobin will exceed Oxyglobin revenues until the Company more fully utilizes
its manufacturing capacity. Cost of revenues for Hemopure was basically
unchanged at $2,916,000 for the third quarter of fiscal 2003 compared to the
same period in 2002 when $1,899,000 was charged to cost of revenues and
$1,005,000 was charged to research and development and not to cost of revenues.
In May 2002, the Company started manufacturing Hemopure for future sale and
began charging unabsorbed fixed manufacturing costs to cost of revenues or
inventory rather than to research and development.

Research and development expenses include product and process development and
engineering, pre-clinical studies, clinical trials, clinical trial materials
and, through May 2002, an allocation of unabsorbed fixed costs of
manufacturing. Our research and development expenses have continued to be
primarily for our one major project Hemopure development for use in patients
undergoing surgery.

The completed Phase III orthopedic surgery trial and BLA for Hemopure cost
approximately $37,000,000 over the four years from protocol development to
final report. These trial costs include costs incurred at nearly 50 hospitals,
trial site monitoring, data management, regulatory consulting, statistical
analysis, medical writing and clinical materials and supplies as well as
Company personnel engaged in these activities. Costs incurred in filing the BLA
include Company personnel and payments to third parties for manufacturing
process documentation, medical consultants, regulatory consultants, integrating
the safety and efficacy databases for all

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BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
July 31, 2003
(Continued)

clinical trials and pre-clinical studies. Research and development expenses
continue to include amounts for support of the BLA review process. These BLA
support costs were $2,170,000 for the third fiscal quarter of 2003 and are
expected to continue at approximately the same level until the Company
completes its response to the letter received from the FDA on July 30, 2003.
The next FDA action, following our response, could consist of a product
approval or requests for additional information, including a requirement to
conduct additional pre-clinical or clinical trials. Moreover, an approval
could be conditioned on the Companys agreement to conduct a Phase IV, or
post-marketing, trial to collect additional data. Consequently, the amount of
further expenditures on this major project after an FDA action cannot be
estimated until we receive the response.

We anticipate material revenues from this project within one year if the FDA
grants marketing approval for Hemopure. We do not anticipate that we will
attain profitability, however, until we are able to increase our manufacturing
capacity. There are substantial risks and uncertainties relating to whether and
when we will obtain FDA approval for Hemopure, the timing of the construction
of additional capacity and other factors that may affect our ability to
generate a profit from our research and development of Hemopure.

Research and development expenses were $2,380,000 for the third quarter of
fiscal 2003, compared to $7,063,000 for the same period in fiscal 2002. Of the
expenses for the third quarter of fiscal 2003, $2,170,000 were for BLA support
costs and the balance for various expenditures not allocable to any major
project. In the corresponding quarter of fiscal 2002, expenditures included
$5,003,000 for BLA filing preparation, $854,000 for data organization and
analyses for the Phase III orthopedic surgery trial of Hemopure and $1,006,000
in unabsorbed fixed manufacturing costs.

Sales and marketing expenses were $1,969,000 for the third quarter of fiscal
2003, compared to $864,000 for the same period in fiscal 2002. Hemopure-related
sales and marketing expenses were $1,337,000 for the third quarter of fiscal
2003, compared to $418,000 for the same period in fiscal 2002. This increase is
primarily attributable to increased medical education and market research
activities. Oxyglobin-related sales and marketing expenses were $632,000 for the third
quarter of fiscal 2003 compared to $446,000 for the same period in fiscal 2002.
This increase is due to higher veterinary advertising expenses in support of
the new 60 mL bag of Oxyglobin and professional education expenditures.

General and administrative expenses were $3,342,000 for the third quarter of
fiscal 2003, compared to $2,569,000 for the same period in fiscal 2002. This
increase is primarily due to higher insurance premiums, the absence in fiscal
2003 of a credit realized in fiscal 2002 as an adjustment to previously accrued
performance-based incentives, and financing fees.

Other income, net, was $108,000 for the third quarter of fiscal 2003, compared
to $210,000 for the third quarter of fiscal 2002. This decrease reflects the
Companys reduced cash balance and lower interest rates earned on such
balances.

Nine months ended July 31, 2003 compared to nine months ended July 31, 2002

Total revenues increased 50% to $2,867,000 for the first nine months of fiscal
2003, compared with the corresponding period in fiscal 2002. Domestic sales
increased 57% to $2,700,000 for the first nine months of fiscal 2003 compared
to the same period last year due to the resumption of shipments of Oxyglobin
from our expanded manufacturing facilities this year. During the first nine
months of fiscal 2002, Oxyglobin sales were constrained by limited product
availability resulting from a temporary shutdown of production during the
expansion of the Companys manufacturing facilities. The Company shipped over
25,000 Oxyglobin units in the United States during the first nine months of
fiscal 2003, including more than 2,300 units of the new 60 mL bag during the
first three weeks of shipments. Oxyglobin sales in Europe were $167,000 for the
first nine months of fiscal 2003, down slightly compared to the same period in
2002.

Cost of revenues was $15,429,000 in the first nine months of fiscal 2003
compared to $4,390,000 for the corresponding period in fiscal 2002. Cost of
revenues includes costs of both Oxyglobin and Hemopure, although Hemopure is
not currently being sold. Oxyglobin cost of revenues was $5,133,000 for the
first nine months of fiscal 2003 compared to $2,491,000 in 2002. This increase
was primarily attributable to increased Oxyglobin sales. Because of fixed
manufacturing costs, the Company expects that costs to produce Oxyglobin will
exceed Oxyglobin revenues until the Company more fully utilizes its
manufacturing capacity. Cost of revenues for Hemopure was $106,000 lower in the first nine months of fiscal
2003 than the comparable $10,402,000, including the $8,503,000 that was charged
to research and development (not cost of revenues), during the same period in
2002. This decrease in cost

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BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
July 31, 2003
(Continued)

of revenues for Hemopure is primarily attributable
to capitalizing a portion of the unabsorbed fixed manufacturing costs to
inventory in 2003, since it is anticipated that the units produced in this
period will be sold.

Research and development expenses include product and process development and
engineering, pre-clinical studies, clinical trials, clinical trial materials
and, through May 2002, an allocation of unabsorbed fixed costs of
manufacturing. Our research and development expenses have continued to be
primarily for our one major project Hemopure development for use in patients
undergoing surgery.

The completed Phase III orthopedic surgery trial and BLA for Hemopure cost
approximately $37,000,000 over the four years from protocol development to
final report. These trial costs include costs incurred at nearly 50 hospitals,
trial site monitoring, data management, regulatory consulting, statistical
analysis, medical writing and clinical materials and supplies as well as
Company personnel engaged in these activities. Costs incurred in filing the BLA
include Company personnel and payments to third parties for
manufacturing process documentation, medical consultants, regulatory
consultants, integrating the safety and efficacy data bases for all clinical
trials and pre-clinical studies. Research and development expenses continue to
include amounts for support of the BLA review process. These BLA support costs
were $6,436,000 for the first nine months of fiscal 2003 and are expected to
continue at approximately the same level until the Company completes its
response to the letter received from the FDA on July 30, 2003. FDA action
could consist of a product approval or requests for additional information,
including a requirement to conduct additional pre-clinical or clinical trials.
Moreover, an approval could be conditioned on the Companys agreement to
conduct a Phase IV, or post-marketing, trial to collect additional data.
Consequently, the amount of further expenditures on this major project after an
FDA action cannot be estimated until we receive the response.

We anticipate material revenues from
this project within one year if the FDA grants marketing approval for
Hemopure. We do not
anticipate that we will attain profitability, however, until we are able to
increase our manufacturing capacity. There are substantial risks and
uncertainties relating to whether and when we will obtain FDA approval for
Hemopure, the timing of the construction of additional capacity and other
factors that may affect our ability to generate a profit from our research and
development of Hemopure.

Research and development expenses were $7,462,000 for the first nine months of
fiscal 2003 compared to $22,188,000 for the same period in fiscal 2002. Of the
first nine months of fiscal 2003 expenses, $6,436,000 were for BLA support
costs and the balance for various expenditures not allocable to any major
project. In the corresponding period of fiscal 2002, expenditures included
$10,778,000 for BLA preparation filing, $2,233,000 for data organization and
analyses for the Phase III orthopedic surgery trial of Hemopure and $8,504,000
in unabsorbed fixed manufacturing costs.

Sales and marketing expenses were $4,591,000 for the first nine months of
fiscal 2003, compared to $3,938,000 for the same period in fiscal 2002.
Hemopure-related sales and marketing expenses were $2,750,000 for the first
nine months of fiscal 2003, compared to $2,488,000 for the same period in
fiscal 2002. This increase is primarily attributable to increased medical
education and market research activities partially offset by a reduction in
expenses related to the shipment of $1,252,000 of product to South Africa in
fiscal 2002 for use in a pre-launch medical education program, which did not
recur in 2003. Oxyglobin-related sales and marketing expenses were $1,841,000
for the first nine months of fiscal 2003 compared to $1,450,000 for the same
period in fiscal 2002. This increase was due to the increased volume of
Oxyglobin sales associated with the resumption of shipments of Oxyglobin during
the first nine months of fiscal 2003, including commissions and increased
planning-related activities in Europe.

General and administrative expenses were $9,595,000 for the first nine months
of fiscal 2003, compared to $7,233,000 for the same period in 2002. This
increase is due to higher insurance premiums, financing fees, a non-cash charge
associated with the purchase of common stock by directors and the absence in
2003 of a credit realized in 2002 as an adjustment to previously accrued
performance-based incentives. Recruiting and occupancy costs also increased
during the first nine months of fiscal 2003 compared to the corresponding
period in fiscal 2002.

Other income, net, was $170,000 for the first nine months of fiscal 2003,
compared to $821,000 for the first nine months of fiscal 2002. This decrease
reflects the Companys reduced cash balance and lower interest rates. Also
included in other income for the first

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BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
July 31, 2003
(Continued)

nine months of 2002 was $238,000 received as a contingent payment for a 1998
intellectual property transfer not related to Hemopure or Oxyglobin.

Liquidity and Capital Resources

At July 31, 2003, we had $29,841,000 in cash and cash equivalents. We believe
our cash and cash equivalents at July 31, 2003, and the amounts raised since
that time are sufficient to fund operations until approximately May 2004 under
the Companys current operating plan. To fund our planned operations through
approximately July 31, 2004, the end of the third quarter of our 2004 fiscal
year, we estimate that we will need to raise approximately $10,000,000.
Because the Companys funds on hand at October 31, 2002 and forecast sales were
not sufficient to fund our operations into fiscal 2004, the audit report of
Ernst & Young LLP, the Companys independent auditor, on our fiscal 2002
financial statements includes a going concern modification. For us to remain a
going concern we will require significant funding. We continually explore
opportunities to raise capital through equity offerings, strategic alliances
and other financing vehicles. However, additional financing or strategic
alliances may not be available when needed, or, if available, may not be on
favorable terms.

We raised $44,308,000 in net proceeds through the sales of equity securities in
the first nine months of fiscal 2003. On December 31, 2002, we raised $1,855,000 in net proceeds from
the sale of our Class A Common Stock in a private placement. On March 25, 2003,
we raised net proceeds of $12,946,000 from a sale of shares and
warrants. We realized $3,036,000 in net proceeds from another sale of
shares and warrants on April 16, 2003. We realized $3,134,000 and
$2,935,000 in net proceeds from sales of shares and warrants on May
2, 2003 and May 6, 2003, respectively. On July 23, 2003, we
realized $16,193,000 in net proceeds from the sale of 3,083,000
shares of common stock.

On April 16, 2003 the Company entered into a Standby Equity Distribution
Agreement with BNY Capital Markets, Inc. (CMI) providing for the
issuance and sale of up to $10,000,000 of the Companys Class A Common Stock
from time to time through CMI. As of July 31, 2003 the Company had received
$3,839,000 in net proceeds under the CMI agreement. Since July 31, 2003, we
have raised an additional $6,003,000 in net proceeds from sales under the CMI
agreement.

During the third fiscal quarter of 2003, the Company received $450,000 in net
proceeds from the exercise of warrants to purchase
123,920 shares of its Class A Common Stock at a price of $3.63 per share. In September 2003, the Company
received $2,527,000 in net proceeds from the exercise of warrants to purchase 522,193 shares of our Class A Common Stock.

In December 2001, the Company signed an amended letter of intent with Sumter
Realty Group, LLC for the construction and financing of a manufacturing plant
in South Carolina, which is designed to produce 500,000 Hemopure units per year
and expected to cost approximately $120,000,000. Sumter Realty Group, LLC
accepted a letter of commitment from a potential investor for the full
$120,000,000 required to finance construction of the new manufacturing facility
in South Carolina and in December 2002, Biopure signed a lease agreement with
Sumter Realty Group, LLC, which was amended in March 2003 (as amended, the
Lease). The terms of the Lease were subject to financial closing and
construction by April 1, 2003. The lease expired because the financing was not
completed. Sumter Realty Group remains in discussions with investors, but a
closing schedule has not been determined. Terms of any new lease are expected
to be similar to those of the Lease, as follows: lease payments would start at
substantial completion of the facility, expected to be in fiscal 2005. The
annual lease payments would be $13,750,000 per year for the first two years and
$17,158,000 per year for the balance of the 25-year term. At the conclusion of
the 25-year term, the Company would own the facility. In addition, the Company
would expect to issue to the potential investor a warrant to purchase up to
2,500,000 shares of Class A Common Stock at $0.01 per share. The Company is
committed to pay a finders fee, of approximately 2 percent of the net amount
financed, to CB Richard Ellis, a real estate consulting firm, when financing
for the facility is completed.

As of July 31, 2003, $13,698,000 has been included in property, plant and
equipment and $9,847,000 in long-term debt reflecting expenses to date for the
engineering and design costs of the planned manufacturing facility in Sumter,
S.C. as well as for permits and acquisition of land. Through the third quarter
of fiscal 2003, the Company incurred an additional $941,000 of costs for
detailed engineering work, including shop drawings for major equipment and
steel fabrication, to maintain the timeline for a validated, FDA-approved plant
in fiscal 2006. The total $13,851,000 of total expenditures by the Company would be
returned as described below.

During fiscal 2001 and 2002, Biopure funded $10,000,000 in project costs for
the new facility. Following execution of a final lease agreement, if
any, Biopure
expects this amount to be refunded within twelve months of FDA approval for
Hemopure. The $10,000,000 has been accounted for as a deposit in long-term
assets as of July 31, 2003. If FDA approval is not received, the $10,000,000
expenditure will not be returned to the Company and will be treated as a
capital expenditure, and as a capital expenditure will be subject to

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BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
July 31, 2003
(Continued)

immediate impairment review pursuant to SFAS No. 144. Under the terms of the
expired Lease, Sumter Realty Group, LLC would refund the $3,851,000 of additional
spending by the Company within six months after financing is completed.

We expect to continue financing our operations, until we are profitable,
through sales of securities and joint venture, leasing or licensing
arrangements. We will also explore partnering arrangements where appropriate.
We have not been profitable since inception and had an accumulated deficit of
$415,671,000 as of July 31, 2003. We will continue to generate losses for the
next several years.

We plan to spend approximately $3,867,000 for the remainder of fiscal 2003 and
fiscal 2004 on capital projects for our existing facilities. The fiscal 2003
planned expenditures of $1,521,000 are included in the cash requirements
identified above.

As of October 31, 2002, we had net operating loss carryforwards of
approximately $225,600,000 to offset future federal and state taxable income
through 2022. 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 July 31, 2003. Utilization of such losses in future
years may be limited under the change of stock ownership rules of the Internal
Revenue Service.

Recently Issued Accounting Standards

FASB Interpretation No. 45, Guarantor Accounting,has significantly changed
current practice in the accounting for, and disclosure of, guarantees. Most
guarantees are to be recognized and initially measured at fair value, which is
a change from previous practice. In addition, guarantors are required to make
significant new disclosures, even when the likelihood of the guarantor making
payments under the guarantee is remote. In general, the Interpretation applies
to contracts or indemnification agreements that contingently require the
guarantor to make payments to the guaranteed party based on changes in an
underlying that is related to an asset, liability, or an equity security of the
guaranteed party. The Interpretations disclosure requirements are effective
for financial statements of interim or annual periods ending after December 15,
2002, while the initial recognition and initial measurement provisions are
applicable on a prospective basis to guarantees issued or modified after
December 31, 2002. The Companys adoption of this statement has not had a
material impact on its results of operations or financial position.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities, (FIN 46) to clarify the conditions under which
assets, liabilities, and activities of another entity should be consolidated
into the financial statements of a company. FIN 46 requires the consolidation
of a variable-interest entity by a company that bears the majority of the risk
of loss from the variable interest entitys activities, is entitled to receive
a majority of the variable-interest entitys residual returns or both. The
provisions of FIN 46 are required to be adopted by the Company in fiscal 2003.
The Company believes its interest in EHSA (see Note 6) is a variable interest
entity under FIN 46 and expects to consolidate its interest beginning in the
fourth fiscal quarter of 2003. However, the Company believes the adoption of FIN
46 will not have a material adverse impact on its overall financial position or
results of operations.

On May 15, 2003, the FASB issued Statement of Financial Accounting Standards
No. 150 (SFAS 150), Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity. SFAS 150 requires certain
financial instruments that embody obligations of the issuer and have
characteristics of both liabilities and equity to be classified as liabilities.
Many of these instruments previously were classified as equity or temporary
equity and as such, SFAS 150 represents a significant change in practice in the
accounting for a number of financial instruments, including mandatorily
redeemable equity instruments and certain equity derivatives that frequently
are used in connection with share repurchase programs. SFAS 150 is effective
for public companies for all
financial instruments created or modified after May 31, 2003, and to other
instruments at the beginning of the first interim period beginning after June
15, 2003. The Company has no financial instruments under SFAS 150.

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BIOPURE CORPORATION

July 31, 2003




Quantitative and Qualitative Disclosure About Market Risk

The Company currently does not have any foreign currency exchange risks, with
the exception of negligible exchange fluctuations associated with expenses for
marketing and regulatory activities outside of the United States. Biopure sells
Oxyglobin to its European distributors and plans to sell Hemopure to a South
African distributor in U.S. dollars. The customers bear the risk of foreign
currency exchange fluctuation. Dramatic fluctuations in exchange rates could
result in either increases or decreases in unit sales as the effective unit
price to the customer varies. 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

July 31, 2003




Controls and Procedures

(a)  Evaluation of Disclosure Controls and Procedures. Under the supervision
and with the participation of our management, including our Chief Executive
Officer and Chief Financial Officer, we conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e)under the Securities
Exchange Act of 1934, as amended (the Exchange Act)) as of July 31, 2003.
Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer concluded as of the Evaluation Date that our disclosure controls and
procedures were effective to ensure that information required to be disclosed
by us in our Exchange Act reports is recorded, processed, summarized and
reported within the time periods specified in Securities and Exchange
Commission rules and forms.

(b)  Changes in Internal Control Over Financial Reporting. There have been no
changes in our internal control over financial reporting (as defined under
Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during our most recently
completed fiscal quarter that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.

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BIOPURE CORPORATION




Part II  Other Information

July 31, 2003





Item 1. Legal Proceedings

The Company is the defendant in a case filed on or about June 16, 2003 by
plaintiff Steelhead Investments, Ltd. The complaint alleges that the Company breached a contract with the plaintiff
by giving insufficient notice and failing to give notice of offerings of common
stock and warrants by the Company in March and April, 2003. The complaint
states that the plaintiff  has suffered monetary damages in an amount to be
determined, but not less than $15.5 million. On
September 5, 2003, the Company filed an Amended Answer,
Counterclaims, and Third Party Complaint that denied the material
allegations of the complaint, asserted defenses, and brought
counterclaims against the plaintiff and an affiliate for fraud and
other misconduct in connection with execution and performance described in the complaint.
The Company intends to defend
this case vigorously. At this time, the Company cannot estimate what impact
this case may have on it.

Item 2. Changes in Securities and Use of Proceeds

None

Item 3. Defaults Upon Senior Securities

None

Item 4. Submission of Matters to a vote of Security Holders

None

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BIOPURE CORPORATION
Part II  Other Information
July 31, 2003
(Continued)




Item 5. Other Information

Risk Factors

These risks and uncertainties are not the only ones we face. Others that we do
not know about now, or that we do not now think are important, may impair our
business or the trading price of our securities.

Company Risks

We May Not Be Able to Continue as a Going Concern, as Our Funds Are Sufficient
to Fund Operations Only Until Approximately May 2004

Ernst & Young LLP, our independent auditors, have included a going concern
modification in their audit opinion on our consolidated financial statements
for the fiscal year ended October 31, 2002, which states that the Companys
recurring losses from operations and the current lack of sufficient funds to
sustain its operations through the second quarter of fiscal 2003 raise
substantial doubt about its ability to continue as a going concern.

We expect our cash position to fund operations until approximately May 2004 per
our current operating plan. We are exploring opportunities to raise additional
capital through equity offerings, strategic alliances and other financing
vehicles, but we cannot assure you that sufficient funds will be available to
us on terms that we deem acceptable, if they are available at all. The
inclusion of a going concern modification in Ernst & Young LLPs audit opinion
may materially and adversely affect our ability to raise new capital.

Our financial statements have been prepared on the basis of a going concern,
which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. We have not made any adjustments
to our financial statements as a result of the going concern opinion. If we
cannot continue as a going concern, we may have to liquidate our assets and we
may receive significantly less than the values at which they are carried on our
financial statements. Any shortfall in the proceeds from the liquidation of our
assets would directly reduce the amounts that holders of our common
stock could
receive in liquidation.

Failure to Raise Additional Funds May Affect the Development, Manufacture and
Sale of Our Products

We require substantial working capital to develop, manufacture and sell our
products and to finance our operations until such time, if ever, as we are able
to generate positive operating cash flow. We will need additional funding for,
among other things, additional pre-clinical and clinical studies to support
expanded indications for Hemopure, the commercial launch of Hemopure, which is
subject to approval by the FDA in the United States and other regulatory
authorities elsewhere, and manufacturing capacity. We expect our cash position
to fund operations until approximately May 2004 per our current operating plan.

If additional financing is not available when needed or is not available on
acceptable terms, we may be unable to develop products, build manufacturing
capacity or fulfill other important goals. A sustained period in which
financing is not available could force us to go out of business.

If We Fail to Obtain FDA Approval, We Cannot Market Hemopure in the United
States

We will not be able to market Hemopure in the United States unless and until we
receive FDA approval. We have filed an application for approval with the FDA,
and the application was accepted for review on October 1, 2002. The FDA advised
that it would complete its review and take action on the application by August
29, 2003. On July 30, 2003, the FDA sent Biopure a letter stating
that the agency had completed its review of the BLA and requesting
additional information. We are working on our
responses to the FDA questions. However, the FDA could find that our responses
do not address its issues adequately and could require additional data or even
further clinical trials, including trials for indications other than those for
which the pending application seeks approval, prior to approval of Hemopure.
Trials are expensive and time-consuming, as is the continuing review
process, and
we may not have the financial resources to fund any such trials and
operations until FDA approval. Despite all of our
efforts, the FDA could refuse to grant a marketing authorization.

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BIOPURE CORPORATION
Part II  Other Information
July 31, 2003
(Continued)

If We Fail to Obtain Regulatory Approvals in Foreign Jurisdictions, We Will Not
Be Able to Market Hemopure Abroad

We also intend to market our products in international markets, including
Europe. We must obtain separate regulatory approvals in order to market our
products in Europe and many other foreign jurisdictions. The regulatory
approval processes differ among these jurisdictions. Approval in any one
jurisdiction does not ensure approval in a different jurisdiction. As a result,
obtaining foreign approvals will require additional expenditures and
significant amounts of time.

We Cannot Expand Indications for Our Products Unless We Receive FDA Approval
for Each Proposed Indication

The FDA requires a separate approval for each proposed indication for the use
of Hemopure in the United States. We have applied for an indication for
Hemopure that will only involve its perioperative use in patients undergoing
orthopedic surgery. Subsequently, we expect to expand Hemopures indications.
To do so, we will have to design additional clinical trials, submit the trial
designs to the FDA for review and complete those trials successfully. We cannot
guarantee that the FDA will approve Hemopure for any indication. We can only
promote Hemopure in the United States for indications that have been approved
by the FDA. The FDA may require a label cautioning against Hemopures use for
indications for which it has not been approved.

The FDA has approved the use of our veterinary product, Oxyglobin, for the
treatment of anemia in dogs, regardless of the cause of the anemia.
Supplemental approvals are required to market Oxyglobin for any new indications
or additional species. We cannot guarantee that we will receive such approvals.

If We Cannot Find Appropriate Marketing Partners, We May Not Be Able to Market
and Distribute Hemopure Effectively

Our success depends, in part, on our ability to market and distribute Hemopure
effectively. We have no experience in the sale or marketing of medical products
for humans. In the event that we obtain FDA approval of Hemopure, we will
require assistance to distribute Hemopure effectively.

We believe we might choose to market
Hemopure using an independent distributor initially.
Any such distributor:



| |  |  | might not be successful in marketing Hemopure;                                                                                  
| | - |  | --------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | might, at its discretion, limit the amount and timing of resources it devotes to marketing Hemopure; and                        
|
| |  |  | might terminate its agreement with us and abandon our products
at any time whether or not permitted by the applicable agreement.

If we do not enter into a satisfactory distributorship agreement, we may not be
successful in entering into alternative arrangements, whether seeking an
alliance with a pharmaceutical company, or recruiting, training and retaining a
marketing staff and sales force of our own.

If We Cannot Generate Adequate, Profitable Sales of Hemopure, We Will Not Be
Successful

To succeed as a company, we must develop Hemopure commercially and sell
adequate quantities of Hemopure at a high enough price to generate a profit. We
may not accomplish either of these objectives. To date, we have focused our
efforts on developing our products, establishing their safety and efficacy and
seeking marketing approval. Uncertainty exists regarding the potential size of
the market for Hemopure and the price that we can charge for it. Additionally,
the size of the market will be greatly reduced if reimbursement for the cost of
Hemopure is not available.

If We Cannot Obtain Market Acceptance of Hemopure, We Will Not Be Able to
Generate Adequate, Profitable Sales

22



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##### Table of Contents



BIOPURE CORPORATION
Part II  Other Information
July 31, 2003
(Continued)

Even if we succeed in obtaining marketing approval for Hemopure, a number of
factors may affect future sales of our product. These factors include:



| |  |  | whether and how quickly physicians accept Hemopure as a
cost-effective and therapeutic alternative to other products, in
particular, donated human blood. It may take longer than we anticipate
to obtain market acceptance; and                                                                                                                                                            
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | whether medical care providers or the public accept the use of
a bovine-derived protein in transfusions, particularly in light of
public perceptions in Europe and elsewhere about the risk of mad cow
disease, notwithstanding the certification of the products safety
with regard to agents causing this category of disease by the
European Directorate for the Quality of Medicines.

If We Fail to Comply with Good Manufacturing Practices, We May Not Be Able to
Sell Our Products

To obtain FDA approval to sell our products, we must demonstrate to the FDA
that we can manufacture our products in compliance with the FDAs good
manufacturing practices, commonly known as GMPs. GMPs are stringent
requirements that apply to all aspects of the manufacturing process. We are
subject to periodic FDA inspections to determine whether we are in compliance
with the GMP requirements. If we fail to manufacture in compliance with GMPs,
the FDA may refuse to approve our products or take other enforcement action
with respect to products that we are distributing commercially.

Because the Manufacturing Process for Our Products Is Complicated and
Time-Consuming, We May Experience Problems that Would Limit Our Ability to
Manufacture and Sell Our Products

As with any manufactured product, problems can occur during our production
processes. These problems can result in increased production scrap, which can
reduce operating margins. These problems could also require us to delay
shipments, recall previously shipped product or be unable to supply product for
a period of time, all of which could negatively impact our results of
operations. Contamination or defects could result in a material recall in the
future, which could adversely affect our results of operations.

We Manufacture Our Products at a Single Location and, If We Were Unable to
Utilize this Facility, We Would Not Be Able to Manufacture and Sell these
Products for an Extended Period of Time

We manufacture our products at a single location located in Massachusetts with
ancillary facilities in Pennsylvania and New Hampshire. Damage to any of these
manufacturing facilities due to fire, contamination, natural disaster, power
loss, riots, unauthorized entry or other events could cause us to cease the
manufacturing of our products. If our Massachusetts manufacturing facility were
destroyed, it could take approximately two years or more to rebuild and qualify
it. Our proposed new manufacturing facility is expected to take 30 months or
more to build, validate and obtain FDA approval to ship product from the new
facility. In the reconstruction period, we would not be able to sell our
products, exclusive of finished goods in inventory.

We Are Dependent on Third Parties to Finance Expansion of Our Manufacturing
Capacity, and Failure to Increase Manufacturing Capacity May Impair Hemopures
Market Acceptance and Prevent Us from Achieving Profitability

The construction of our proposed new manufacturing facility in Sumter,
South Carolina is dependent upon financing from third parties. Groundbreaking
for this facility has been delayed and could be delayed further as a result of
delays in obtaining such financing. We cannot assure you that sufficient
financing for this facility will be available, or if available, will be on
terms that are acceptable to us. The completion of this facility or the
addition of comparable manufacturing capacity is a key milestone in our plan
for future operations. The later the date of completion of additional
manufacturing capacity, the more financing we will need for working capital.

23



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##### Table of Contents



BIOPURE CORPORATION
Part II  Other Information
July 31, 2003
(Continued)

We Will Face Risks, Including the Risk of Scale-Up of Our Processes, in Any New
Construction, and in Turn Could Encounter Delays, Higher than Usual Rejects,
Additional Reviews and Tests of Units Produced and Other Costs Attendant to an
Inability to Manufacture Saleable Product

We will need to construct additional manufacturing facilities to meet annual
demand in excess of our current capacity. If Hemopure receives market
acceptance, we may experience difficulty manufacturing enough of the product to
meet demand. If we cannot manufacture sufficient quantities of Hemopure, we may
not be able to operate profitably. In addition, if we cannot fill orders for
Hemopure, customers might turn to alternative products and may choose not to
use Hemopure even after we have addressed our capacity shortage.

Our Lack of Operating History Makes Evaluating Our Business Difficult

Licensing fees, proceeds from the sales of equity securities and payments to
fund our research and development activities comprise almost all of our funding
to date. We have no operating history of selling our products in large
quantities upon which to base an evaluation of our business and our prospects.
Consequently, we have no experience on which to predict future commercial
success.

We Have a History of Losses and Expect Future Losses

We have had annual losses from operations since our inception in 1984. In the
fiscal years ended October 31, 2000, 2001 and 2002, we had losses from
operations of $40,434,000, $52,957,000 and $46,657,000, respectively, and we
had an accumulated deficit of $415,671,000 as of July 31, 2003. We expect to
continue to incur losses from operations until we are able to develop Hemopure
commercially and generate a profit. We cannot ensure that we will ever be able
to achieve profitable operations.

If We Are Not Able to Protect Our Intellectual Property, Competition Could
Force Us to Lower Our Prices, which Might Reduce Profitability

We believe that our patents, trademarks and other intellectual property rights,
including our proprietary know-how, will be important to our success. Our
business position will depend, in part, upon our ability to defend our existing
patents and engage in our business free of claims of infringement by third
parties. We will need to obtain additional patents for our products, the
processes utilized to make our products and our product uses. We cannot
guarantee that additional products or processes will achieve patent protection.
In addition, third parties may successfully challenge our patents.

We have not filed patent applications in every country. In certain countries,
obtaining patents for our products, processes and uses may be difficult or
impossible. Patents issued in regions other than the United States and Europe
may be harder to enforce than, and may not provide the same protection as,
patents obtained in the United States and Europe.

Failure to Avoid Infringement of Others Intellectual Property Rights Could
Impair Our Ability to Manufacture and Market Our Products

We cannot guarantee that our products and manufacturing process will be free of
claims by third parties alleging that we have infringed their patents. Any such
claim could be expensive and time-consuming to defend, and an adverse
litigation result or a settlement of litigation could require us either to
obtain a license from the complaining party or to change our manufacturing
process. Either result could be expensive or result in a protracted plant
shutdown, in turn adversely affecting our ability to make a profit.

A third party could also allege that our products are used in a manner that
violates a use patent. Such a claim, if valid, would also be expensive to
defend, and either an adverse litigation result or a settlement could limit or
preclude us from marketing our product for the patented use and, in turn,
adversely affect our sales revenues.

Our Profitability Will Be Affected If We Incur Product Liability Claims in
Excess of Our Insurance Coverage

The testing and marketing of medical products, even after FDA approval, have an
inherent risk of product liability. We maintain
limited product liability insurance coverage in the total amount of
$20,000,000. However, our profitability will be adversely affected
24Table of ContentsBIOPURE CORPORATION
Part II  Other Information
July 31, 2003
(Continued)by a
successful product liability claim in excess of our insurance coverage. We
cannot guarantee that product liability insurance will be available in the
future or be available on reasonable terms.Replacing Our Sole Source Suppliers for Key Materials Could Result in
Unexpected Delays and ExpensesWe obtain some key materials, including membranes and chemicals, and services
from sole source suppliers. All of these materials are commercially available
elsewhere. If such materials or services were no longer available at a
reasonable cost from our existing suppliers, we would need to purchase
substitute materials from new suppliers. If we need to locate a new supplier,
the substitute or replacement materials or facilities will most likely be
tested for equivalency. Such equivalency tests could significantly delay
development of a product, delay or limit commercial sales of an FDA-approved
product and cause us to incur additional expense.Provisions of Our Restated Certificate of Incorporation and By-Laws Could
Impair or Delay Shareholders Ability to Replace or Remove Our Management and
Could Discourage Takeover Transactions that a Stockholder Might Consider to Be
in Its Best InterestProvisions of our Restated Certificate of Incorporation and by-laws, as well as
our stockholders rights plan, could impede attempts by shareholders to remove
or replace our management or could discourage others from initiating a
potential merger, takeover or other change of control transaction, including a
potential transaction at a premium over market price that a stockholder might
consider to be in its best interest. In particular:
    
    Our restated Certificate of Incorporation does not permit
stockholders to take action by written consent and provides for a
classified Board of Directors, and our by-laws provide that
stockholders who wish to bring business before an annual meeting of
shareholders or to nominate candidates for election of directors at
an annual meeting of stockholders must deliver advance notice of
their proposals to us before the meeting. These provisions could make
it more difficult for a party to replace our board of directors by
requiring two annual stockholder meetings to replace a majority of
the directors, making it impossible to remove or elect directors by
written consent in lieu of a meeting and making it more difficult to
introduce business at meetings.
    
    Our shareholder rights plan may have the effect of discouraging
any person or group that wishes to acquire more than 20% of our Class
A Common Stock from doing so without obtaining our agreement to
redeem the rights; if our agreement to redeem the rights is not
obtained, the acquiring person or group would suffer substantial
dilution.Industry RisksIntense Competition Could Harm Our Financial PerformanceThe biotechnology and pharmaceutical industries are highly competitive. There
are a number of companies, universities and research organizations actively
engaged in research and development of products that may be similar to or
alternatives to Hemopure.We are aware of two competitors that
make periodic disclosures to the public;
Northfield Laboratories Inc. and Hemosol Inc. are in advanced stages of
developing hemoglobin-based oxygen carriers produced from expired human blood.
Northfields product is in advanced clinical trials. The products being
developed by these companies are intended for use in humans and as
such could compete, if approved by regulatory authorities, with Hemopure.Increased competition could diminish our ability to become profitable or affect
our profitability in the future. Our existing and potential competitors:
    
    are conducting clinical trials of their products;
    
    might have or be able to access substantially greater resources than we do and be
better equipped to develop, manufacture and market their products;25Table of ContentsBIOPURE CORPORATION
Part II  Other Information
July 31, 2003
(Continued)
    
    may have their products approved for marketing prior to Hemopure; and
    
    may develop superior technologies or products rendering our technology and products non-competitive or obsolete.Stringent, Ongoing Government Regulation and Inspection of Our Products Could
Lead to Delays in the Manufacture, Marketing and Sale of Our ProductsThe FDA continues to review products even after they receive FDA approval. If
and when the FDA approves Hemopure, its manufacture and marketing will be
subject to ongoing regulation, including compliance with current good
manufacturing practices, adverse event reporting requirements and the FDAs
general prohibitions against promoting products for unapproved or off-label
uses. We are also subject to inspection and market surveillance by the FDA for
compliance with these and other requirements. Any enforcement action resulting
from failure, even by inadvertence, to comply with these requirements could
affect the manufacture and marketing of Hemopure. In addition, the FDA could
withdraw a previously approved product from the market upon receipt of newly
discovered information. Furthermore, the FDA could require us to conduct
additional, and potentially expensive, studies in areas outside our approved
indications.We will be subject to a variety of regulations governing clinical trials and
sales of our products outside the United States. Whether or not FDA approval
has been obtained, we must secure approval of a product by the comparable
non-U.S. regulatory authorities prior to the commencement of marketing of the
product in a country. The approval process varies from country to country and
the time needed to secure additional approvals may be longer than that required
for FDA approval. These applications may require the completion of additional
preclinical and clinical studies and disclosure of information relating to
manufacturing and controls. Unanticipated changes in existing regulations or
the adoption of new regulations could affect the manufacture and marketing of
our products.Health Care Reform and Controls on Health Care Spending May Limit the Price We
Can Charge for Hemopure and the Amount We Can SellThe federal government and private insurers have considered ways to change, and
have changed, the manner in which health care services are provided in the
United States. Potential approaches and changes in recent years include
controls on health care spending and the creation of large purchasing groups.
In the future, it is possible that the government may institute price controls
and limits on Medicare and Medicaid spending. These controls and limits might
affect the payments we collect from sales of our products. Assuming we succeed
in bringing Hemopure to market, uncertainties regarding future health care
reform and private market practices could affect our ability to sell Hemopure
in large quantities at profitable pricing.Uncertainty of Third-Party Reimbursement Could Affect Our ProfitabilitySales of medical products largely depend on the reimbursement of patients
medical expenses by governmental health care programs and private health
insurers. There is no guarantee that governmental health care programs or
private health insurers will reimburse our sales of Hemopure, or permit us to
sell our product at high enough prices to generate a profit.Investment RisksPotential for Dilution and Decline of the Price of Our SharesOur cash on hand is estimated to be
sufficient to continue operations until approximately May 2004 under our current operating plan. We will need
additional funds to operate beyond this point and are exploring opportunities
to raise capital through equity offerings, licensing arrangements and strategic
alliances and other financing vehicles that could include an equity component.Any additional sale of shares may have a dilutive effect on our existing
stockholders. Subsequent sales of these shares in the open market could also
have the effect of lowering our stock price, thereby increasing the number of
shares we may need to issue in the
future to raise the same dollar amount and consequently further diluting our
outstanding shares. These future sales could also have an adverse effect on the
market price of our shares and could result in additional dilution to the
holders of our shares.26Table of ContentsBIOPURE CORPORATION
Part II  Other Information
July 31, 2003
(Continued)The perceived risk associated with the possible sale of a large number of
shares could cause some of our stockholders to sell their stock, thus causing
the price of our stock to decline. In addition, actual or anticipated downward
pressure on our stock price due to actual or anticipated sales of stock could
cause some institutions or individuals to engage in short sales of our common
stock, which may itself cause the price of our stock to decline.If our stock price declines, we may be unable to raise additional capital. A
sustained inability to raise capital could force us to go out of business.
Significant declines in the price of our common stock could also impede our
ability to attract and retain qualified employees, reduce the liquidity of our
common stock and result in the delisting of our common stock from The Nasdaq
Stock Market.Shares Eligible for Future Sale May Cause the Market Price for Our Common Stock
to Drop Significantly, Even If Our Business Is Doing WellWe cannot predict the effect, if any, that future sales of our common stock or
the availability of shares for future sale will have on the market price of our
common stock from time to time. Substantially all of our outstanding shares of
Class A Common Stock are either freely tradable in the public market, unless
acquired by our affiliates, or are restricted securities as that term is
defined in Rule 144 under the Securities Act of 1933 and eligible for immediate
sale in the public market pursuant to Rule 144, subject to certain volume and
manner of sale limitations. Other shares of our common stock issued in the
future, including shares issued upon exercise of outstanding options and
warrants, may become available for resale in the public market from time to
time, and the market price of shares of our common stock could drop
significantly if the holders of these shares sell them or are perceived by the
market as intending to sell them.Our Stock Price Has Been and May Continue to Be Highly Volatile, which May
Adversely Affect Holders of Our Stock and Our Ability to Raise CapitalThe trading price of our common stock has been and is likely to continue to be
extremely volatile. During the period from November 1, 2000 through September
12, 2003, our stock price has ranged from a low of $2.18 per share (on January
29, 2003) to a high of $32.70 per share (on May 9, 2001). Further information
regarding the trading price of our common stock is included on page 17 of our
Annual Report on Form 10-K for the fiscal year ended October 31, 2002. Our
stock price and trading volume could be subject to wide fluctuations in
response to a variety of factors, including the following:
    
    actual or potential clinical trial results relating to products under development by us or our competitors;
    
    delays in our testing and development schedules;
    
    events or announcements relating to our relationships with others, including the status of potential transactions with
investors, licensees and other parties;
    
    announcements of technological innovations or new products by our competitors;
    
    developments or disputes concerning patents or proprietary rights;
    
    regulatory developments in the United States and foreign countries;
    
    FDA approval of Hemopure or competitors products;
    
    economic and other factors, as well as period-to-period fluctuations in our financial results;
    
    market conditions for pharmaceutical and biotechnology stocks; and
    
    publicity regarding actual or potential medical results
relating to products under development by us or our competitors.27Table of ContentsBIOPURE CORPORATION
Part II  Other Information
July 31, 2003
(Continued)External factors may also adversely affect the market price for our common
stock. Our common stock currently trades on The Nasdaq Stock Market. The price
and liquidity of our common stock may be significantly affected by the overall
trading activity and market factors on The Nasdaq Stock Market.

Item 6. Exhibits and Reports on Form 8-K(a)
    
    The exhibits are listed in the accompanying Exhibit Index.(b)
    
    A report on Form 8-K was filed on July 18, 2003, reporting that the Company
had entered into an agreement for the placement of stock by ThinkEquity
Partners, L.L.C.A report on Form 8-K was filed on July 18, 2003, reporting that the Company
had entered into an agreement for the placement of stock by ThinkEquity
Partners, L.L.C.A report on Form 8-K was filed on July 16, 2003 describing the litigation
referenced in Item 1, Legal Proceedings, above.A report on Form 8-K was furnished on May 22, 2003 including the Companys
press release announcing its financial results for the quarter ended April 30, 2003.A report on Form 8-K was filed on May 14, 2003 reporting the Company had
entered into a Standby Equity Distribution Agreement with CMI.A report on Form 8-K was
furnished on September 15, 2003 including the Companys
press release announcing its financial results for the quarter ended
July 31, 2003 and a transcript of its earnings release
conference call.28Table of Contents

SIGNATURESPursuant 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: September 15, 2003 |  | By: |  | /s/ Ronald F. Richards                                                                  
|                         |  |     |  |                                                                                         
|                         |  |     |  | Ronald F. Richards
Duly authorized officer of the Registrant
and Chief Financial Officer

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##### Table of Contents



EXHIBIT INDEX

|       |  |                                                                                                                                             
|------ |  | --------------------------------------------------------------------------------------------------------------------------------------------
|Number |  | Description                                                                                                                                 
|       |  |                                                                                                                                             
|10.1   |  | Agreement concerning
sale of common stock, dated August 27, 2003 between Biopure and Carl
W. Rausch                                         
|10.2   |  | Letter from Thomas
A. Moore, dated August 4, 2003 concerning Lock-up of Securities                                                          
|10.3   |  | Letter from David N.
Judelson, dated August 4, 2003 concerning Lock-up of Securities                                                        
|10.4   |  | Letter from Charles
A. Sanders, M.D., dated August 1, 2003 concerning Lock-up of
Securities                                                 
|10.5   |  | Letter from C.
Everett Koop, M.D., dated August 1, 2003 concerning Lock-up of
Securities                                                    
|31.1   |  | Certification of Thomas A. Moore pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                  
|31.2   |  | Certification of Ronald F. Richards pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                               
|32.1   |  | Certification of Thomas A. Moore pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002   
|32.2   |  | Certification of Ronald F. Richards pursuant to 18 U.S.C. Section 1350, as adopted pursuant
to Section 906 of the Sarbanes-Oxley Act of 2002

30