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                                                                    EXHIBIT 99.1

                                  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

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. Even if we succeed in developing
Hemopure commercially, a number of factors may affect future sales of our
product. These factors include:

      -   whether physicians, patients and clinicians accept Hemopure as a
          cost_effective and therapeutic alternative to other products,
          including donated human blood;

      -   whether reimbursement for the cost of Hemopure is available; and

      -   whether the public accepts the use of a natural protein product
          extracted from bovine red blood cells in transfusions, particularly in
          light of public perceptions in Europe and elsewhere about the risk of
          "mad cow disease".

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 until we
receive FDA approval. Obtaining FDA approval generally takes years and consumes
substantial capital resources with no assurance of ultimate success.

     Even though we have completed patient enrollment in our pivotal trial, we
are not certain that we will be able to obtain FDA approval of Hemopure. We
believe that our ongoing U.S. pivotal Phase III clinical trial is consistent
with the FDA's most recent guidance on the design and efficacy and safety
endpoints required for approval of products such as Hemopure as a replacement
for red blood cells in surgical indications. However, the FDA could change its
view or require a change in study design, additional data or even further
clinical trials, including trials for indications other than those for which we
intend to seek approval in the near term, prior to approval of Hemopure.

OUR FAILURE TO OBTAIN REGULATORY APPROVALS IN FOREIGN JURISDICTIONS WILL PREVENT
US FROM MARKETING HEMOPURE ABROAD

     We also intend to market our products in international markets, including
the European Union and South Africa. We must obtain separate regulatory
approvals in order to market our products in the European Union, South Africa
and many other foreign jurisdictions. The regulatory approval processes differ
among these jurisdictions. While we recently received approval from the South
Africa Medicines Control Council for the use of Hemopure for certain
indications, approval in any one jurisdiction does not ensure approvals 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


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     The FDA requires a separate approval for each proposed indication for the
use of Hemopure. We expect that our first indication for Hemopure will only
involve its use in elective 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 for indications which
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 cause. 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 past, we entered into agreements with two
established pharmaceutical companies to market our products upon successful
completion of clinical development. These arrangements ended in 1996 and 1997.
In the event that we obtain FDA approval of Hemopure, we may require the
assistance of one or more experienced pharmaceutical companies to market and
distribute Hemopure effectively.

     If we seek an alliance with an experienced pharmaceutical company:

     -    we may be unable to find a collaborative partner, enter into an
          alliance on favorable terms, or enter into an alliance that will be
          successful;

     -    any partner to an alliance might, at its discretion, limit the amount
          and timing of resources it devotes to marketing Hemopure; and

     -    any marketing partner or licensee may terminate its agreement with us
          and abandon our products at any time for any reason without
          significant payments.

     If we do not enter into an alliance with a pharmaceutical company to market
and distribute our products, we may not be successful in entering into
alternative arrangements, whether engaging independent distributors, or
recruiting, training and retaining a marketing staff and sales force of our own.

FAILURE TO INCREASE MANUFACTURING CAPACITY MAY IMPAIR HEMOPURE'S MARKET
ACCEPTANCE

     We will need to construct additional manufacturing facilities to meet
annual demand in excess of 100,000 units of Hemopure. If Hemopure receives rapid
market acceptance, we may experience difficulty manufacturing enough of the
product to meet demand. If we cannot fill orders for Hemopure, customers might
turn to alternative products and choose not to use Hemopure even after we have
addressed our capacity shortage.

FAILURE TO RAISE ADDITIONAL FUNDS IN THE FUTURE MAY AFFECT THE DEVELOPMENT,
MANUFACTURE AND SALE OF OUR PRODUCTS

     We require substantial working capital to properly develop, manufacture and
sell our products. If such financing is not available when needed or is not
available on acceptable terms, we may experience a delay in developing products,
building manufacturing capacity or fulfilling other important goals.



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OUR LACK OF OPERATING HISTORY MAKES EVALUATING OUR BUSINESS DIFFICULT

     Licensing fees, payments to us from investors and payments to fund our
research and development activities comprise almost all of our funding to date.
We have no operating history upon which to base an evaluation of our business
and our prospects. We must successfully develop our products and product
enhancements, achieve market acceptance of our products and respond to
competition. We cannot guarantee that we will be successful in doing so, that we
will ever be profitable or, if we are, that we will remain profitable on a
quarterly or annual basis.

WE HAVE A HISTORY OF LOSSES AND EXPECT FUTURE LOSSES

     We have had annual losses from operations since our inception in 1984. We
expect to continue to incur losses from operations until we are able to develop
Hemopure commercially and generate a profit. As of April 30, 2001, we had an
accumulated deficit of $314.5 million.

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. Oppositions
to one of our European patents have already led to a narrowing of this patent in
Europe and, because some oppositions are still pending, may lead to further
narrowing or even a loss of this European patent.

     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 countries other than the United
States and in regions other than Europe may be harder to enforce than, and may
not provide the same protection as, patents obtained in the United States and
Europe.

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 $20.0 million. Our
profitability will be affected 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 EXPENSES

     We obtain some key materials, including membranes and chemicals, from sole
source suppliers. If such materials were no longer available at a reasonable
cost from our existing suppliers, we would need to obtain supply contracts with
new suppliers for substitute materials. If we need to locate a new supplier, the
substitute or replacement materials will most likely be tested for equivalency.
Such evaluations could delay development of a product, limit commercial sales of
an FDA-approved product

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and cause us to incur additional expense. In addition, the time expended for
such tests could delay the marketing of an FDA_approved product.

PROVISIONS OF OUR RESTATED CERTIFICATE OF INCORPORATION COULD DISCOURAGE
TAKEOVER TRANSACTIONS THAT A STOCKHOLDER MIGHT CONSIDER TO BE IN ITS BEST
INTEREST

     Certain provisions of our Restated Certificate of Incorporation and
by-laws, as well as our stockholders rights plan, 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.

INDUSTRY RISKS

INTENSE COMPETITION COULD HARM OUR FINANCIAL PERFORMANCE

     The 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
Hemopure. Increased competition could diminish our ability to become profitable
or affect our profitability in the future. Our existing and potential
competitors:

     -    are also conducting clinical trials of their products;

     -    may have substantially greater resources than we do and may be better
          equipped to develop, manufacture and market their products;

     -    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 PRODUCTS

     The 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 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 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.


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HEALTH CARE REFORM AND CONTROLS ON HEALTH CARE SPENDING MAY LIMIT THE PRICE WE
CHARGE FOR HEMOPURE AND THE AMOUNT WE CAN SELL

     The 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 impact our ability to sell Hemopure in large
quantities at profitable pricing.

UNCERTAINTY OF THIRD_PARTY REIMBURSEMENT COULD AFFECT OUR PROFITABILITY

     Sales 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 products at high enough prices to generate a profit.

RISKS RELATING TO EQUITY LINE FACILITY OFFERING

POTENTIAL FOR DILUTION AND DECLINE OF THE PRICE OF OUR SHARES

     On June 21, 2001, we entered into the equity line facility pursuant to
which we may, subject to certain conditions, sell to Societe Generale up to
$75,000,000 of our common stock from time to time over a period of two years;
the number of shares and price per share will depend on the market price and
trading volume of the shares on the five trading days prior to any sale. The
sale of shares pursuant to the equity line facility will have a dilutive effect
on our existing stockholders. Subsequent sales of these shares in the open
market by Societe Generale may also have the effect of lowering our stock price,
thereby increasing the number of shares issuable under the equity line facility
(should we choose to sell additional shares to Societe Generale) and
consequently further diluting our outstanding shares. These sales could have an
immediate adverse effect on the market price of the shares and could result in
dilution to the holders of our shares.

     In the event that we were able, in spite of the various restrictions
contained in the equity line facility, to draw down the maximum amount of
5,000,000 shares under the facility, these would represent 16.56% of our shares
outstanding, when added to the 25,186,599 common shares outstanding as of July
23, 2001.

     The perceived risk associated with the possible sale of a large number of
shares issued under the equity line facility at prices as low as $12.61 per
share, which is 97% of the $13 floor share price at which Societe Generale has
agreed to purchase our shares, or at even lower prices, to the extent that we
and Societe Generale waive such requirement, 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 under the equity line facility 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.

POTENTIAL INABILITY TO IMPLEMENT EXISTING FINANCING PLANS


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     Under the equity line facility Societe Generale is not obligated to
purchase shares of our common stock unless a number of conditions have been
satisfied. First, it generally has no obligation to purchase shares to the
extent that the volume weighted average price of our common stock on the five
trading days following the exercise of our right to sell shares to Societe
Generale pursuant to the equity line facility is below $13 per share. There can
be no assurance that the price of our common stock will meet this minimum
trading price condition to our ability to draw down funds under the equity line
facility. Second, Societe Generale is only obligated at any given request to
purchase shares at a minimum aggregate amount of $500,000 and at a maximum
aggregate amount that depends on the daily trading volume, but cannot be more
than $4,500,000. We may make a new request six days after the prior request.
Furthermore, Societe Generale has no obligation to purchase shares on a given
day if our daily trading volume falls below a specified minimum. Also, the
equity line facility provides that Societe Generale may not purchase a number of
shares during 61 consecutive days that would exceed 9.9% of the number of shares
of our common stock issued and outstanding on the first day of this period.
Finally, on trading days where the common stock is not listed and approved for
trading on the principal trading exchange of our common stock or where trading
is restricted, we might not have the right to sell any shares to Societe
Generale.

SHARES ELIGIBLE FOR FUTURE SALE MAY CAUSE THE MARKET PRICE FOR OUR COMMON STOCK
TO DROP SIGNIFICANTLY, EVEN IF OUR BUSINESS IS DOING WELL

     We 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. As of July 23, 2001, we had outstanding
25,186,599 shares of our common stock. Of these shares, all but 1,006,781 shares
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. Approximately 810,343 shares of common stock underlying stock
options outstanding as of July 23, 2001 under our stock option plans are
available for immediate sale in the public market. There were also 1,253,762
shares of our common stock underlying certain warrants outstanding as of July
23, 2001. Other shares of our common stock issued in the future 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 CAPITAL

     The trading price of our common stock has been and is likely to continue to
be extremely volatile. 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;

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

     -    developments or disputes concerning patents or proprietary rights;

     -    regulatory developments in both 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


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     -    publicity regarding actual or potential medical results relating to
          products under development by us or our competitors.




TRANSACTIONS BY SOCIETE GENERALE MAY AFFECT THE PRICE OF OUR COMMON STOCK

     From time to time, within limitations specified in the equity line
facility, Societe Generale may engage in short sales, short sales against the
box, puts and calls and other transactions in our common stock, and may sell and
deliver the shares in connection with these transactions or to settle securities
loans. If Societe Generale engages in such transactions, the price of our common
stock may be adversely affected.

     External factors may also adversely affect the market price for our common
stock. Our common stock currently trades on The Nasdaq National Market. The
price and liquidity of our common stock may be significantly affected by the
overall trading activity and market factors on The Nasdaq National Market.