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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549





FORM 10-Q





(Mark One)

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

For the quarterly period ended January 31, 2009

or



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

For the transition period from              to

Commission File Number 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.  x  Yes     ̈  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |                                                  |  |                           |  |  
|----------------------- |  | ------------------------------------------------ |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈                                                |  | Accelerated filer         |  |  ̈
|                        |  |                                                  | 
|Non-accelerated filer   |  |  ̈  (Do not check if a smaller reporting company) |  | Smaller reporting company |  | x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).   ̈  Yes    x  No

The number
of shares outstanding of each of the issuers classes of common stock as of March 17, 2009 was:



|                                                
|------------------------------------------------
|Class A Common Stock, $.01 par value: 39,709,015
|Class B Common Stock, $1.00 par value: 117.7    









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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 January 31, 2009 and October 31, 2008                                    |  | 3 
|                                        |  | Condensed Consolidated Statements of Operations for the three months ended January 31, 2009 and January 
31, 2008 |  | 4 
|                                        |  | Condensed Consolidated Statements of Cash Flows for the three months ended January 31, 2009 and January 
31, 2008 |  | 5 
|                                        |  | Notes to Condensed Consolidated Financial Statements                                                              |  | 6 
|                                        |  | Item 2Managements Discussion and Analysis of Financial Condition and Results of Operations                      |  | 12
|                                        |  | Item 3Quantitative and Qualitative Disclosure about Market Risk                                                  |  | 14
|                                        |  | Item 4Controls and Procedures                                                                                    |  | 14
|Part IIOther Information:              |  |                                                                                                                  
|                                        |  | Item 1Legal Proceedings                                                                                          |  | 16
|                                        |  | Item 1ARisk Factors                                                                                              |  | 16
|                                        |  | Item 2Unregistered Sales of Equity Securities and Use of Proceeds                                                |  | 21
|                                        |  | Item 3Defaults Upon Senior Securities                                                                            |  | 21
|                                        |  | Item 4Submission of Matters to a Vote of Security Holders                                                        |  | 21
|                                        |  | Item 5Other Information                                                                                          |  | 21
|                                        |  | Item 6Exhibits                                                                                                   |  | 21
|Signatures                              |  | 22                                                                                                               
|Exhibit Index                           |  | 23                                                                                                               

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



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##### Table of Contents

BIOPURE CORPORATION

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)



|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------- | -------- | - | --------------- | - | -------- | -
|                                                                                                                                           |  | January 31,2009 |          |   | October 31,2008 |  
|Assets:                                                                                                                                    |  |                 |          |   |                 |   |          |  
|Current assets:                                                                                                                            |  |                 |          |   |                 |   |          |  
|Cash and cash equivalents                                                                                                                  |  | $               | 256      |   |                 | $ | 1,095    |  
|Accounts receivable, net                                                                                                                   |  |                 | 593      |   |                 |   | 426      |  
|Inventories                                                                                                                                |  |                 | 990      |   |                 |   | 1,995    |  
|Prepaid expenses and other current assets                                                                                                  |  |                 | 499      |   |                 |   | 740      |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|                                                                                                                                           |  |                
|Total current assets                                                                                                                       |  |                 | 2,338    |   |                 |   | 4,256    |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|Property, plant and equipment, net                                                                                                         |  |                 | 4,465    |   |                 |   | 5,129    |  
|Other assets                                                                                                                               |  |                 | 457      |   |                 |   | 592      |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|                                                                                                                                           |  |                
|Total assets                                                                                                                               |  | $               | 7,260    |   |                 | $ | 9,977    |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|Liabilities and stockholders equity:                                                                                                      |  |                 |          |   |                 |   |          |  
|Current liabilities:                                                                                                                       |  |                 |          |   |                 |   |          |  
|Accounts payable                                                                                                                           |  | $               | 866      |   |                 | $ | 591      |  
|Accrued expenses                                                                                                                           |  |                 | 1,092    |   |                 |   | 1,786    |  
|Deferred revenue                                                                                                                           |  |                 | 1,212    |   |                 |   | 35       |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|Total current liabilities                                                                                                                  |  |                 | 1,993    |   |                 |   | 2,412    |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|Deferred revenue, net of current portion                                                                                                   |  |                 |         |   |                 |   | 1,177    |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|Total long-term liabilities                                                                                                                |  |                 |         |   |                 |   | 1,177    |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|Commitments and contingencies, Note 6                                                                                                      |  |                 |          |   |                 |   |          |  
|Stockholders equity:                                                                                                                      |  |                 |          |   |                 |   |          |  
|Preferred stock, $0.01 par value, 30,000,000 shares authorized, no shares outstanding                                                      |  |                 |         |   |                 |   |         |  
|Common stock:                                                                                                                              |  |                 |          |   |                 |   |          |  
|Class A, $0.01 par value, 200,000,000 shares authorized, 39,709,015 shares issued and outstanding at January 31, 2009 and
October 31, 2008 |  |                 | 397      |   |                 |   | 397      |  
|Class B, $1.00 par value, 179 shares authorized, 117.7 shares outstanding at January 31, 2009 and October 31, 2008                         |  |                 |         |   |                 |   |         |  
|Capital in excess of par value                                                                                                             |  |                 | 563,683  |   |                 |   | 563,613  |  
|Contributed capital                                                                                                                        |  |                 | 24,574   |   |                 |   | 24,574   |  
|Accumulated other comprehensive income                                                                                                     |  |                 | (180     | ) |                 |   | (169     | )
|Accumulated deficit                                                                                                                        |  |                 | (584,384 | ) |                 |   | (582,027 | )
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|Total stockholders equity                                                                                                                 |  |                 | 4,090    |   |                 |   | 6,388    |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  
|Total liabilities and stockholders equity                                                                                                 |  | $               | 7,260    |   |                 | $ | 9,977    |  
|                                                                                                                                           |  |                 |          |   |                 |   |          |  

See accompanying notes



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BIOPURE CORPORATION

Condensed Consolidated Statements of Operations

(In thousands, except share and per
share data)

(Unaudited)



|                                                                                      |  |                    |            |   |                  |   |            |  
|------------------------------------------------------------------------------------- |  | ------------------ | ---------- | - | ---------------- | - | ---------- | -
|                                                                                      |  | Three Months Ended |           
|                                                                                      |  | January 31, 2009   |            |   | January 31, 2008 |  
|Revenues:                                                                             |  |                    |            |   |                  |   |            |  
|Product revenue                                                                       |  | $                  | 865        |   |                  | $ | 477        |  
|Research and development revenue                                                      |  |                    | 293        |   |                  |   | 96         |  
|                                                                                      |  |                    |            |   |                  |   |            |  
|Total revenues                                                                        |  |                    | 1,158      |   |                  |   | 573        |  
|Cost of product revenues                                                              |  |                    | 1,000      |   |                  |   | 2,788      |  
|                                                                                      |  |                    |            |   |                  |   |            |  
|Gross profit (loss)                                                                   |  |                    | 158        |   |                  |   | (2,215     | )
|Operating expenses:                                                                   |  |                    |            |   |                  |   |            |  
|Research and development                                                              |  |                    | 1,120      |   |                  |   | 1,487      |  
|Sales and marketing                                                                   |  |                    | 96         |   |                  |   | 280        |  
|General and administrative                                                            |  |                    | 1,328      |   |                  |   | 1,996      |  
|                                                                                      |  |                    |            |   |                  |   |            |  
|Total operating expenses                                                              |  |                    | 2,544      |   |                  |   | 3,763      |  
|                                                                                      |  |                    |            |   |                  |   |            |  
|Loss from operations                                                                  |  |                    | (2,386     | ) |                  |   | (5,978     | )
|Other income, net                                                                     |  |                    | 29         |   |                  |   | 176        |  
|                                                                                      |  |                    |            |   |                  |   |            |  
|Net loss                                                                              |  | $                  | (2,357     | ) |                  | $ | (5,802     | )
|                                                                                      |  |                    |            |   |                  |   |            |  
|Per share data:                                                                       |  |                    |            |   |                  |   |            |  
|Basic and diluted net loss per common share                                           |  | $                  | (0.06      | ) |                  | $ | (0.17      | )
|                                                                                      |  |                    |            |   |                  |   |            |  
|Weighted-average shares used in computing basic and diluted net loss per common share |  |                    | 39,709,015 |   |                  |   | 33,971,087 |  
|                                                                                      |  |                    |            |   |                  |   |            |  

See accompanying notes



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BIOPURE CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)



|                                                                            |  |                    |        |   |                  |   |        |  
|--------------------------------------------------------------------------- |  | ------------------ | ------ | - | ---------------- | - | ------ | -
|                                                                            |  | Three Months Ended |       
|                                                                            |  | January 31, 2009   |        |   | January 31, 2008 |  
|Operating activities:                                                       |  |                    |        |   |                  |   |        |  
|Net loss                                                                    |  | $                  | (2,357 | ) |                  | $ | (5,802 | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                    |        |   |                  |   |        |  
|Depreciation and amortization                                               |  |                    | 678    |   |                  |   | 456    |  
|Stock-based compensation                                                    |  |                    | 70     |   |                  |   | 159    |  
|Accretion of restructuring charges                                          |  |                    |       |   |                  |   | 1      |  
|Changes in assets and liabilities:                                          |  |                    |        |   |                  |   |        |  
|Accounts receivable                                                         |  |                    | (167   | ) |                  |   | (91    | )
|Inventories                                                                 |  |                    | 1,005  |   |                  |   | 37     |  
|Prepaid expenses and other current assets                                   |  |                    | 241    |   |                  |   | 132    |  
|Other assets                                                                |  |                    | 121    |   |                  |   |       |  
|Accounts payable                                                            |  |                    | 275    |   |                  |   | 11     |  
|Accrued expenses                                                            |  |                    | (694   | ) |                  |   | (449   | )
|Restructuring charges                                                       |  |                    |       |   |                  |   | (45    | )
|                                                                            |  |                    |        |   |                  |   |        |  
|Net cash used in operating activities                                       |  |                    | (828   | ) |                  |   | (5,591 | )
|                                                                            |  |                    |        |   |                  |   |        |  
|Investing activities:                                                       |  |                    |        |   |                  |   |        |  
|Purchases of property, plant and equipment                                  |  |                    |       |   |                  |   | (51    | )
|                                                                            |  |                    |        |   |                  |   |        |  
|Net cash used in investing activities                                       |  |                    |       |   |                  |   | (51    | )
|                                                                            |  |                    |        |   |                  |   |        |  
|Financing activities:                                                       |  |                    |        |   |                  |   |        |  
|Net proceeds from sale of common stock and warrants                         |  |                    |       |   |                  |   | 14,937 |  
|                                                                            |  |                    |        |   |                  |   |        |  
|Net cash provided by financing activities                                   |  |                    |       |   |                  |   | 14,937 |  
|                                                                            |  |                    |        |   |                  |   |        |  
|Net (decrease) increase in cash and cash equivalents                        |  |                    | (828   | ) |                  |   | 9,295  |  
|Effect of exchange rate changes on cash and cash equivalents                |  |                    | (11    | ) |                  |   | (27    | )
|Cash and cash equivalents at beginning of period                            |  |                    | 1,095  |   |                  |   | 1,910  |  
|                                                                            |  |                    |        |   |                  |   |        |  
|Cash and cash equivalents at end of period                                  |  | $                  | 256    |   |                  | $ | 11,178 |  
|                                                                            |  |                    |        |   |                  |   |        |  
|                                                                            |  |                   
|Supplementary information:                                                  |  |                    |        |   |                  |   |        |  
|Interest paid                                                               |  | $                  |       |   |                  | $ |       |  
|                                                                            |  |                    |        |   |                  |   |        |  
|Income taxes paid                                                           |  | $                  |       |   |                  | $ |       |  
|                                                                            |  |                    |        |   |                  |   |        |  

See accompanying notes



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BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements

January 31, 2009

(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 month period ended January 31, 2009 are not necessarily indicative of the results that may
be expected for any other period or for the year ending October 31, 2009.

The accompanying consolidated financial statements include
the accounts of the Company and its wholly-owned subsidiaries, Biopure Netherlands, BV, Biopure South Africa, Pty, Ltd., Reperfusion Systems Incorporated, DeNovo Technologies Corporation and Biopure Overseas Holding Company, and NeuroBlok
Incorporated, a 60% owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

These financial
statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Companys Annual Report on Form 10-K/A for the fiscal year ended October 31, 2008, filed with the SEC on
March 3, 2009.

The Company has financed operations from inception primarily through sales of equity securities and development and
license agreement payments. The Company has not been profitable since inception and had an accumulated deficit of $584 million at January 31, 2009. In June 2008, the Company signed an agreement with purchasers for a private placement of its
class A common stock and warrants for up to $2.3 million assuming no exercise of the warrants. Under the terms of the agreement the Company sold to accredited investors in monthly tranches 4,737,928 shares of its common stock and warrants to
acquire an additional 4,737,928 shares. The price for one share and one warrant was $0.3377, and the exercise price of each warrant is $0.45. The warrants have terms of five years, become exercisable six months after the closing date, and are
callable by Biopure after the initial exercise date provided that the weighted average price of Biopures common stock for ten consecutive days is over $0.675. Under this agreement, the Company raised a total of $1.5 million.

The Company expects current assets and product sales to be sufficient to fund operations through April 2009 under the current operating plan. The Company
will require significant additional funding to remain a going concern and to fund operations until such time, if ever, as it becomes profitable. There can be no assurance that adequate additional financing will be available to the Company on terms
that it deems acceptable, if at all. In order to continue operations in the near term, the Company is actively seeking to raise additional capital or a strategic alliance transaction. In March 2009, the Company sold its manufacturing facility and
land in Pennsylvania and entered into a lease for that facility for consideration of $1.4 million, of which $1.2 million was in the form of cash and the balance as rent abatements. The Company expects that its resources available at January 31,
2009, plus the cash proceeds from the facility sale-leaseback should be sufficient to fund operations through April 2009.

The Company may
not continue to qualify for continued listing on the Nasdaq Capital Market. The NASDAQ Market Place Rules require listed companies to maintain, among other things, a minimum daily closing bid price per share of $1.00. The Company is out of
compliance with the $1.00 minimum bid price requirement for continued inclusion of its class A common stock in the Nasdaq Stock Market. The Company would have received a delisting notice in December 2008, had Nasdaq not suspended enforcement of this
requirement because of turmoil in the marketplace. The Company may be unable to meet the listing requirements of the Nasdaq Capital Market in the future. The Company has been out of compliance since December 14, 2007 and estimates, based on the
most recent notice it has received from Nasdaq, that it now has until September 12, 2009 to regain compliance by having the bid price of its Class A common stock close at $1.00 per share or more for at least 10 consecutive business days.
If the Company does not regain compliance with the minimum bid price rule, Nasdaq will provide written notification that the Companys Class A common stock will be delisted. If that occurs, the Companys ability to raise funds will be
adversely affected. These conditions raise substantial doubt about the Companys ability to continue as a going concern.

Without
sufficient capital to fund its operations the Company will be unable to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or
the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.



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BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements

January 31, 2009

(Unaudited)



Comprehensive Loss

The Companys comprehensive loss includes accumulated foreign currency translation adjustments. The comprehensive loss was as follows (in thousands):



|                                                   |  |                           |        |   |                  |   |        |  
|-------------------------------------------------- |  | ------------------------- | ------ | - | ---------------- | - | ------ | -
|                                                   |  | Three Month Periods Ended |       
|                                                   |  | January 31, 2009          |        |   | January 31, 2008 |  
|Net loss                                           |  | $                         | (2,357 | ) |                  | $ | (5,802 | )
|Changes in foreign currency translation adjustment |  |                           | (11    | ) |                  |   | (27    | )
|                                                   |  |                           |        |   |                  |   |        |  
|Comprehensive loss                                 |  | $                         | (2,368 | ) |                  | $ | (5,829 | )
|                                                   |  |                           |        |   |                  |   |        |  



|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 on 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 maximum number of shares issuable upon the conversion of class B common stock outstanding and the exercise of class A common stock options and warrants. The dilutive
effect of stock options and warrants is determined based on the treasury stock method using the average market price of the class A common stock for the period. However, basic and diluted net loss per common share are presented as the same for all
periods presented, as the Company had losses for all periods presented, so the effect of class B common stock, options and warrants for class A common stock is anti-dilutive. Consequently, dilutive weighted average shares outstanding do not include
37,232,016 common-equivalent shares for the three months ended January 31, 2009 and 32,227,646 common-equivalent shares for the three months ended January 31, 2008, as their effect would have been anti-dilutive.



|3. | Stock Based Compensation
|-- | ------------------------

As of January 31, 2009, the
Company had two share-based compensation plans, the Biopure Corporation 2008 Incentive Plan (the 2008 Plan) and the 2002 Biopure Corporation Omnibus Securities and Incentive Plan (the 2002 Plan). The Plans, as amended, which
are both shareholder approved, permit the grant of options to the Companys employees, consultants and directors for up to 8,343,328 shares of common stock. Option awards are generally granted with an exercise price equal to the market
price of the Companys stock at the date of grant. Typically, granted options vest in annual increments over four years and may be exercised within seven or ten years of the date of grant. Options to the non-employee members of the board of
directors generally vest monthly over one year. Shares issued upon exercise of options are generally issued from new shares of the Company.

The Company accounts for stock based compensation according to the provisions of Statement of Financial Accounting Standards 123 (R), Share Based Payment(SFAS No. 123(R)). The fair value of each stock option is estimated on the
date of grant using the Black-Scholes Option Pricing Model. The risk-free interest rate is based on a treasury instrument, the term of which is consistent with the expected life of the stock options. Expected volatility is based exclusively on
historical volatility data of the Companys stock. The Company was unable to use historical information to estimate the expected term due to a lack of historical exercise activity and therefore used the simplified method as
permitted by the Securities and Exchange Commission Staff Accounting Bulletin No. 107. The Company estimated the stock option forfeitures based on historical experience and adjusted this assumption to reflect expected forfeitures
over the remaining vesting period. This estimate is evaluated quarterly and the forfeiture rate is adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those shares that vest. The Company has
elected to recognize compensation cost for awards with pro rata vesting using the straight-line method.



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BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements

January 31, 2009

(Unaudited)



During the first three months of fiscal 2009 and 2008, no options were granted. As a consequence of
staff reductions in November 2008, options to purchase 886,087 shares of common stock were forfeited or cancelled. Stock based compensation for the first quarter of fiscal 2009 was $70,000, which is included in general and administrative expenses in
the accompanying statement of operations.

As of January 31, 2009, there was approximately $77,000 of unrecognized compensation
expense, net of forfeitures, related to non-vested market-based share awards, which is expected to be recognized over a weighted-average period of .75 years.

No options were exercised during the first three months of fiscal 2009 or fiscal 2008. The total fair values of shares vested during the first three months of fiscal 2009 and 2008 were $199,000 and $72,000,
respectively.

A summary of option activity under the plans as of January 31, 2009 and changes during the year the ended is presented below
(in thousands, except weighted average data):



|                                                |  |                       |   |  |                               |       |                                        |      |                         |   |  
|----------------------------------------------- |  | --------------------- | - |  | ----------------------------- | ----- | -------------------------------------- | ---- | ----------------------- | - | -
|                                                |  | Number ofStockOptions |   |  | Weighted-AverageExercisePrice |       | Weighted-AverageRemainingLife in Years |      | AggregateIntrinsicValue
|Outstanding at October 31, 2008                 |  | 2,819,584             |   |  | $                             | 6.23  |                                        |      |                         |   |  
|Granted                                         |  |                      |   |  |                               |      |                                        |     |                         |   |  
|Exercised                                       |  |                      |   |  |                               |      |                                        |     |                         |   |  
|Forfeited/Cancelled/Expired                     |  | (886,087              | ) |  |                               | 0.71  |                                        |     |                         |   |  
|                                                |  |                       |   |  |                               |       |                                        |      |                         |   |  
|Outstanding at January 31, 2009                 |  | 1,933,497             |   |  |                               | 8.69  |                                        | 5.12 |                         | $ | 
|                                                |  |                       |   |  |                               |       |                                        |      |                         |   |  
|Exercisable at January 31, 2009                 |  | 1,643,406             |   |  |                               | 10.09 |                                        | 5.10 |                         | $ | 
|                                                |  |                       |   |  |                               |       |                                        |      |                         |   |  
|Vested and expected to vest at January 31, 2009 |  | 1,933,497             |   |  |                               | 8.69  |                                        | 5.12 |                         | $ | 
|                                                |  |                       |   |  |                               |       |                                        |      |                         |   |  



|4. | Inventories
|-- | -----------

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



|                         |  |                  |     |                  |   |      
|------------------------ |  | ---------------- | --- | ---------------- | - | -----
|In thousands             |  | January 31, 2009 |     | October 31, 2008
|Raw materials            |  | $                | 377 |                  | $ | 375  
|Work-in-process          |  |                  | 13  |                  |   | 12   
|Finished goods-Oxyglobin |  |                  | 2   |                  |   | 720  
|Finished goods-Hemopure  |  |                  | 598 |                  |   | 888  
|                         |  |                  |     |                  |   |      
|                         |  | $                | 990 |                  | $ | 1,995
|                         |  |                  |     |                  |   |      

The inventory of Hemopure finished goods represents units the Company expects to sell in South
Africa or use in preclinical or clinical studies where payment is received for the trial material. Each reporting period the Company reviews the inventory of Hemopure finished goods and, if necessary, writes off any units beyond those forecasted for
these purposes, resulting in a charge to operations through cost of revenue or research and development. There was no write-off of inventory in the first fiscal quarter of 2009 or 2008. If the Company continues to experience extremely limited sales
in South Africa or further delays in the use of Hemopure by the Naval Medical Research Center (NMRC), it could expect to write off additional units in the future.



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|5. | Accrued Expenses
|-- | ----------------

Accrued expenses were as follows at the
following dates:



|                                              |  |                  |       |                  |   |      
|--------------------------------------------- |  | ---------------- | ----- | ---------------- | - | -----
|In thousands                                  |  | January 31, 2009 |       | October 31, 2008
|Accrued payroll and related employee expenses |  | $                | 25    |                  | $ | 175  
|Financing fees                                |  |                  | 537   |                  |   | 537  
|Accrued legal and audit fees                  |  |                  | 196   |                  |   | 312  
|Accrued severance                             |  |                  |      |                  |   | 11   
|Accrued vacation                              |  |                  | 18    |                  |   | 189  
|Accrued utilities                             |  |                  | 24    |                  |   | 49   
|Other                                         |  |                  | 292   |                  |   | 513  
|                                              |  |                  |       |                  |   |      
|                                              |  | $                | 1,092 |                  | $ | 1,786
|                                              |  |                  |       |                  |   |      



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BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements

January 31, 2009

(Unaudited)



|6. | Commitments and Contingencies
|-- | -----------------------------

In 2003, the Company
entered into a Cooperative Research and Development Agreement (CRADA) with the NMRC. As part of CRADA, the NMRC paid approximately $1.2 million for inventory purchases to be delivered in the future, recorded in the accompanying consolidated
financial statements as deferred revenue. If the NMRC were to decide not to continue to pursue a trauma indication, as described in the CRADA, the Company could be required to return the $1.2 million.(1)



|7. | Litigation
|-- | ----------

The seven members of the Companys Board
of Directors during the period March through December 2003 and certain officers during that period were named as defendants in two stockholder derivative actions filed on January 26, 2004 and January 29, 2004 in the U.S. District Court for
the District of Massachusetts. A consolidated, amended complaint was filed in regard to Biopure Corporation Derivative Litigation. Biopure is named as a defendant, even though in a derivative action, any award is for the benefit of the Company, not
individual stockholders. The consolidated, amended complaint alleges that the individual directors and officers breached fiduciary duties in connection with disclosures concerning regulatory and clinical events. The complaint does not specify an
amount of alleged damages. The Company appointed two disinterested directors as a special litigation committee to determine whether or not the Company should pursue this action. The special litigation committee conducted its investigation and
determined the Company should not pursue the action. The special litigation committee accordingly has filed a motion to dismiss the action. No amounts have been accrued to date with regard to this litigation or a similar claim in the Trial Court of
Middlesex County in Massachusetts. The Company believes this case is without merit.

On March 17, 2009, the Company was served with a
complaint captioned Americas Growth Capital, L.L.C. v. Biopure Corporation. The case was filed in the Superior Court, Commonwealth of Massachusetts (Civil action no. 09  0956). The complaint seeks damages in an unspecified amount,
alleged to be owed by the Company under an agreement dated April 22, 2008, in which the Company engaged the plaintiff to act as its exclusive placement agent in connection with the private placement of approximately $1015 million of
Company convertible debentures or any other securities. The complaint asks for relief in the form of a declaratory judgment and compensation on the bases of breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment and
violation of Massachusetts law (M.G.L. c. 93A). The Company believes that it has meritorious defenses, but it is too early in the litigation for it to have assessed the matter fully. It intends to defend itself against the litigation.



|8. | Recently Issued Accounting Standards
|-- | ------------------------------------

In March 2008, the
Financial Accounting Standards Board (FASB) issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133, which requires enhanced disclosures about (i) how and why
an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,as amended and its related
interpretations, and (iii) how derivative instruments and related hedged items affect an entitys financial position, financial performance, and cash flows. SFAS No. 161 also requires that objectives for using derivative instruments
be disclosed in terms of underlying risk and accounting designation and requires cross-referencing within the footnotes. This statement also suggests disclosing the fair values of derivative instruments and their gains and losses in a tabular
format. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and therefore is effective for our second quarter in fiscal 2009. The Companys has not evaluated
the impact, if any, that the adoption of SFAS No. 161 is not expected to have an impact on its consolidated financial statements.

In
December 2007, the FASB issued SFAS No. 160,Non-controlling Interests in Consolidated Financial Statements. SFAS No. 160 establishes accounting and reporting standards that require the ownership interests in subsidiaries
non-parent owners be



|(1) | The content of this document does not necessarily reflect the position or the policy of the U.S. Government or the Department of Defense, and no official endorsement should be
inferred of the Navy. Biopure collaborative clinical development program for Hemopure in trauma is contingent upon funding.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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clearly presented in the equity section of the balance sheet; requires the amount of consolidated net income attributable to the parent and to the
non-controlling interest be clearly identified and presented on the face of the consolidated statement of income; requires that changes in a parents ownership interest while the parent retains its controlling financial interest in its
subsidiary be accounted for consistently; requires that when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary be initially measured at fair value and the gain or loss on the deconsolidation of
the subsidiary be measured using the fair value of any non-controlling equity; requires that entities provide disclosures that clearly identify the interests of the parent and the interests of the non-controlling owners. SFAS No. 160 is
effective as of the beginning of an entitys first fiscal year that begins after December 15, 2008. The Company has not determined the impact, if any, SFAS No. 160 will have on its financial statements

In December 2007, the FASB issued SFAS No. 141 (revised 2007),Business Combinations (SFAS 141(R)). In SFAS 141(R),
the FASB retained the fundamental requirements of Statement No. 141 to account for all business combinations using the acquisition method (formerly the purchase method) and for an acquiring entity to be identified in all business combinations.
However, the new standard requires the acquiring entity in a business combination to recognize all (and only) the assets acquired and liabilities assumed in the transaction; establishes the acquisition-date fair value as the measurement objective
for all assets acquired and liabilities assumed; and requires the acquirer to disclose to investors and other users all of the information they need to evaluate and understand the nature and financial effect of the business combination.
SFAS 141(R) is effective for annual periods beginning on or after December 15, 2008 (beginning with the Companys 2010 fiscal year) and will change the accounting for business combinations on a prospective basis.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements(SFAS157). SFAS 157 defines fair value, establishes a
framework for measuring fair value under other accounting pronouncements that permit or require fair value measurements, changes the methods used to measure fair value and expands disclosures about fair value measurements. In particular, disclosures
are required to provide information on the extent to which fair value is used to measure assets and liabilities; the inputs used to develop measurements; and the effects of certain of the measurements on earnings (or changes in net assets). SFAS 157
eliminates the use of a blockage factor for fair value measurements of financial instruments trading in an active market. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years.
The application of SFAS 157 has not had a material impact on the Companys results of operations or financial position since its adoption as of November 1, 2008.

In February 2008, the FASB issued FASB Staff Position (FSP) FAS 157-2, Effective Date of FASB Statement No. 157, which defers the effective date of SFAS No. 157 to fiscal years beginning
after November 15, 2008 for nonfinancial assets and nonfinancial liabilities except those recognized or disclosed at fair value on an annual or more frequently recurring basis. The Company will apply the fair value measurement and disclose
provisions of SFAS No. 157 to nonfinancial assets and liabilities effective November 1, 2009. The application of such is not expected to be material to the Companys results of operations or financial position results of operations or
financial position.

In October 2008, the FASB issued FSP No. FAS 157-3, Determining the Factor Value of a Financial Asset When the
Market for that Asset is Not Active(FSP 157-3), which applies to financial assets that are required or permitted to be measured at fair value in accordance with SFAS 157. FSP 157-3 clarifies the application of SFAS 157 and provides an example
to illustrate key considerations in determining the fair value of a financial asset when the market for the asset is not active. This guidance has not had a material effect on the results of operations or financial position of the Company since its
adoption on November 1, 2008.



|9. | Subsequent Event
|-- | ----------------

In January 2009 the Company sold its
plant in Pennsylvania and entered into a lease as lessee of the plant. The consideration included $1.2 million in cash and approximately $200,000 in rent abatements. The initial term of the lease is three years, and it can be renewed at the
Companys option for five additional terms of five years each.



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BIOPURE CORPORATION

Managements Discussion and Analysis of

Financial Condition and Results of Operations

January 31, 2009



|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

Cautionary Statement Regarding Forward-Looking Information

The following discussion of the Companys financial
condition and results of operations includes forward-looking statements. These forward-looking statements include, without limitation, statements about the viability of the Company, the prospects for further clinical development of its products,
other expected activities, and finding cash resources. Forward-looking statements include those that imply that the Company will be able to manage its expenses effectively and raise the funds needed to continue its business, that the Company will be
able to stabilize and enhance its financial position, that the Company will be able to commercially develop Hemopure, that in pursuing clinical development the Company will be able to address safety and efficacy questions of regulatory agencies,
that the U.S. Naval Medical Research Center (NMRC) may conduct a clinical trial in trauma patients, and that anticipated milestones will be met in the expected timetable or at all, that any preclinical or clinical trials will be successful,
that Hemopure, if it receives regulatory approval, will attain market acceptance and be manufactured and sold in amounts to attain profitability and that the Company will be able to successfully increase its manufacturing capacity for Hemopure if it
receives regulatory approval. Forward-looking statements are usually accompanied by words such as believe, anticipate, plan, seek, expect, intend and similar expressions. The
forward-looking information is based on various factors and was derived using numerous assumptions and judgments.

Actual results may differ materially
from those set forth in the forward-looking statements due to risks and uncertainties that exist in the Companys operations and business environment. These risks include the factors identified under Risk Factors in this report. All
forward-looking statements included or incorporated by reference in this report are based on information available to the Company on the date such statements were made. 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 us that the Companys objectives or plans will be achieved. The Company undertakes no obligation to publicly update any
forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures the Company makes in its reports to the SEC on Forms 10-Q, 8-K, 10-K and 10-K/A.

The content of this document does not necessarily reflect the position or the policy of the U.S. Government or the Department of Defense, and no official
endorsement should be inferred.

Overview

Since its
founding in 1984, Biopure has been primarily a research and development company focused on developing Hemopure, the Companys oxygen therapeutic for human use, and obtaining regulatory approval in the United States and other markets. The
Companys research and development expenses have been devoted to basic research, product development, process development, preclinical studies, clinical trials and regulatory activity. In addition, the Companys development expenses in the
past included the design, construction, validation and maintenance of a large-scale pilot manufacturing plant in Cambridge, Massachusetts.

Prior to 1998,
the Company manufactured products solely for use in preclinical and clinical trials, and production costs were charged wholly to research and development. As an offshoot of the research and development for Hemopure, Oxyglobin, a similar product,
gained marketing approval for veterinary use in the United States in 1998 and in the European Union in 1999. Following the U.S. approval, Oxyglobin was produced for sale in the same pilot manufacturing plant that was built and maintained primarily
for the development of Hemopure. Because of this marketing approval, costs of production of Oxyglobin for sale and an allocation of manufacturing overhead based on capacity used for Oxyglobin are charged to inventory and to cost of revenues. Since
marketing approval of Hemopure for human use was granted in South Africa in 2002, costs of production of Hemopure for sale and an allocation of manufacturing overhead based on capacity used for Hemopure have been charged to inventory and to cost of
revenues.

A substantial majority of our costs have comprised research and development and cost of revenues. The revenues from products we have marketed
defrayed some of the manufacturing costs we have incurred to manufacture Hemopure. The Company suspended manufacturing operations beginning in the third quarter of fiscal 2008 to conserve cash.

Our research and development activities in 2009 and 2008 are described below. We do not currently have any trials enrolling patients.



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Cost Cutting Measures

During fiscal 2008 and 2009, the Company took measures to reduce its ongoing cash burn. In November 2008, it effected reductions in force and shut down its manufacturing facility in Cambridge and its processing facility in Pennsylvania. By
November 2008, nearly all of its employees had been laid off. The Company has continued limited operations since then. Notwithstanding the cost reductions, significant additional capital will be required to fund the Companys operations.

Liquidity and Capital Resources

At January 31,
2009, the Company had $256,000 in cash and cash equivalents. During the first fiscal quarter of 2009, the Company drastically reduced operations, a process that began in the second quarter of fiscal 2008. In January 2009, the Company sold
substantially all of its existing inventory of Oxyglobin to the Companys U.S. distributor, an affiliate of the Companys European distributor, for sale in Europe and the United States. The proceeds of that sale were $796,000. In March
2009, the Company also sold its manufacturing facility in Pennsylvania and entered into a lease of the facility from the purchaser. The consideration was for $1.2 million in cash and approximately $200,000 in rent abatements. The Company has leased
the facility, and, as additional consideration from the purchaser, the initial term of the lease is at a rent the Company believes to be below market. The initial term of the lease is three years; during this term the rental is $6,100 per month. The
Company has the option to renew for five additional terms of five years each at increasing rates.

The Company expects that its current cash, accounts
receivable and the sale of its Pennsylvania facility will fund operations until April 2009. The Company will require significant additional funding to remain a going concern and to fund operations until such time, if ever, as it becomes profitable.
If the Company does not raise capital or have commitments to raise capital or complete another transaction by approximately the end of April 2009, it may be required to cease operations and sell the Company or its assets. The Company is now engaged
in discussions concerning its course of action. There can be no assurance that ongoing discussions will lead to an investment of capital or other transaction. The Companys primary commitments for future expenditures are its commitments under
real property leases.

Net cash used in operating activities decreased $4,763,000 in the first three months of fiscal 2009 compared to the corresponding
period in fiscal 2008 because of the work force reductions described above and other measures to control costs. Cash used in operating activities was $828,000 for the first three months of fiscal 2009.

Results of Operations

As the Company generates net losses, the key
drivers of the losses have been cost of revenues, research and development and general and administrative expenses. Inflation and changing prices have not had a significant impact on the revenues or loss from operations in the periods presented
below. The key drivers of losses in the first quarter of 2009 have changed because of the suspension of Company activity in 2008 and the first quarter of fiscal 2009. For the three-month periods ended January 31, 2009 and 2008, these items were
as follows (dollars in thousands):



|                                  |  |                    |       |                       |                  |   |        |   |                       |  |    |  
|--------------------------------- |  | ------------------ | ----- | --------------------- | ---------------- | - | ------ | - | --------------------- |  | -- | -
|                                  |  | Three Months Ended |      
|                                  |  | January 31, 2009   |       |                       | January 31, 2008 |  
|                                  |  | Amount             |       | Percent ofTotal Costs |                  |   | Amount |   | Percent ofTotal Costs | 
|Oxyglobin Product Sales           |  | $                  | 797   |                       |                  |   |        | $ | 419                   |  |    |  
|Hemopure Product Sales            |  |                    | 68    |                       |                  |   |        |   | 58                    |  |    |  
|Research and Development Revenues |  |                    | 293   |                       |                  |   |        |   | 96                    |  |    |  
|                                  |  |                    |       |                       |                  |   |        |   |                       |  |    |  
|Total Revenues                    |  | $                  | 1,158 |                       |                  |   |        | $ | 573                   |  |    |  
|                                  |  |                    |       |                       |                  |   |        |   |                       |  |    |  
|                                  |  |                    |       |                      
|Cost of Revenues                  |  |                    |       |                       |                  |   |        |   |                       |  |    |  
|Oxyglobin                         |  |                    | 706   |                       | 20               | % |        |   | 569                   |  | 9  | %
|Hemopure                          |  |                    | 294   |                       | 8                | % |        |   | 2,219                 |  | 34 | %
|                                  |  |                    |       |                       |                  |   |        |   |                       |  |    |  
|                                  |  |                    |       |                      
|Total Cost of Revenues            |  |                    | 1,000 |                       | 28               | % |        |   | 2,788                 |  | 43 | %
|                                  |  |                    |       |                      
|Research and Development          |  |                    | 1,120 |                       | 32               | % |        |   | 1,487                 |  | 23 | %
|                                  |  |                    |       |                      
|Sales and Marketing               |  |                    |       |                       |                  |   |        |   |                       |  |    |  
|Oxyglobin                         |  |                    | 12    |                       | 0                | % |        |   | 25                    |  | 0  | %
|Hemopure                          |  |                    | 84    |                       | 2                | % |        |   | 255                   |  | 4  | %
|                                  |  |                    |       |                       |                  |   |        |   |                       |  |    |  



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|                           |  |                    |       |                       |                  |   |        |   |                       |  |     |  
|-------------------------- |  | ------------------ | ----- | --------------------- | ---------------- | - | ------ | - | --------------------- |  | --- | -
|                           |  | Three Months Ended |      
|                           |  | January 31, 2009   |       |                       | January 31, 2008 |  
|                           |  | Amount             |       | Percent ofTotal Costs |                  |   | Amount |   | Percent ofTotal Costs | 
|Total Sales and Marketing  |  |                    | 96    |                       | 2                | % |        |   | 280                   |  | 4   | %
|                           |  |                    |       |                      
|General and Administrative |  |                    | 1,328 |                       | 38               | % |        |   | 1,966                 |  | 30  | %
|                           |  |                    |       |                       |                  |   |        |   |                       |  |     |  
|Total Costs                |  | $                  | 3,544 |                       | 100              | % |        | $ | 6,551                 |  | 100 | %
|                           |  |                    |       |                       |                  |   |        |   |                       |  |     |  

Three months ended January 31, 2009 compared to three months ended January 31, 2008

Total revenues for the first fiscal quarter of 2009 were $1.2 million, or 102% higher than revenues of $573,000 for the same period in fiscal 2008.
The increase is attributable to the Company selling substantially all of its inventory of Oxyglobin to distributors. The Company does not expect additional revenue from sales of Oxyglobin for the balance of fiscal 2009 and until such later time as
it resumes manufacturing.

Revenues from sales of Hemopure were $68,000 in the first quarter of fiscal 2009 compared to $58,000 in fiscal 2008 following
increasing customer acceptance of the product during 2008. However, in November 2008, the Companys sales personnel in South Africa were laid off. Sales are continuing, but the Company is not actively marketing to customers and does not expect
sales to increase in the balance of fiscal 2009 over comparable quarters of 2008. In addition, the South Africa regulatory authority notified the Company in October 2008 that it had decided to revoke its marketing authorization for Hemopure. The
Company is appealing that decision. The appeal may take until approximately October 2009 to complete, but in the meantime the Company is permitted to market product.

Cost of revenues includes costs of both Oxyglobin and Hemopure. Cost of revenues was $1.0 million for the first quarter of fiscal 2009, compared to $2.8 million for the same period in 2008. Hemopure cost of revenues
were $1.9 million lower for the first fiscal quarter of 2009 than the first fiscal quarter of 2008 because of the suspension of manufacturing and reduction of manufacturing personnel described above in Overview  Cost Cutting
Measures. This suspension in operations caused are classification of the underlying costs, yielding a reduction in cost of goods sold with an increase in research and development expense. Oxyglobin cost of revenues increased due to the sale of
substantially all remaining inventory in the first quarter of 2009.

Research and development costs decreased 25% from $1,487,000 in the first fiscal
quarter of 2008 to $1,120,000 in the first quarter of fiscal 2009. The decrease in research and development costs is expected to continue to decrease going forward due to the Companys reduced operations.

Sales and marketing expenses decreased from $280,000 in fiscal 2008 to $96,000 in the first fiscal quarter of 2009 due to the reduced activity.

General and administrative expenses were $1.3 million for the first fiscal quarter of 2009 compared to $2.0 million for the same period in 2008 because of staff
reductions and related reductions in expenses.



|Item 3. | Quantitative and Qualitative Disclosure About Market Risk
|------- | ---------------------------------------------------------

Not
applicable.



|Item 4T. | Controls and Procedures
|-------- | -----------------------

(a) Evaluation of Disclosure Controls and
Procedures.

The Companys management, under the supervision of and with the participation of the Chief Executive Officer, performed an evaluation of
the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the Exchange Act) as of the end of the period covered by this report, January 31, 2009. Based on
this evaluation, the Chief Executive Officer concluded that the Companys disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in
its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.



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(b) Changes in Internal Control Over Financial Reporting

There have been no change in the Companys internal control over financial reporting (as defined under Rules 13a-(f) or 15d-15(f) of the Exchange Act) during the quarter ended January 31, 2009, that
have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting. As previously reported in the Companys annual report on Form 10-K/A, as filed with the SEC on March 3,
2009, management identified material weaknesses in the internal control over financial reporting in the last quarter of fiscal 2008.



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BIOPURE CORPORATION

Part IIOther Information

January 31, 2009



|Item 1. | Legal Proceedings
|------- | -----------------

The information in Note 7 to the Condensed
Consolidated Financial Statements is incorporated herein by reference.



|Item 1A. | Risk Factors
|-------- | ------------

Company Risks

Failure to raise sufficient additional funds will cause the Company to cease the development of its products and its ability to operate.

The Companys cash on hand and anticipated revenue are only sufficient to last into April 2009. Unless the Company obtains financing imminently, it
will be forced to cease operations, liquidate its assets, and possibly seek bankruptcy protection. Given this need for capital, the Company is seeking new funding and minimizing cash outflow. It has taken steps to reduce administrative, sales,
marketing and clinical spending, including reducing headcount. Additionally, it is exploring strategic alternatives, including monetizing selected assets and a sale of all assets to protect the interests of its stockholders, creditors and other
stakeholders, and in the first quarter of fiscal 2009 entered into a sale-leaseback of its Pennsylvania manufacturing facility. The development and regulatory processes for seeking and obtaining regulatory approval to market Hemopure has been and
will continue to be costly. Substantial working capital will be needed to develop, manufacture and sell Hemopure and to finance operations until such time, if ever, as it can generate positive cash flow. If additional financing is not available when
needed, the Company will be unable to successfully develop or commercialize Hemopure or to continue to operate. A sustained period in which financing is not available could force the Company to go out of business and liquidate its assets. If the
U.S. Navy does not continue its development of Hemopure for a trauma indication, the Company will likely cease development of Hemopure for that indication because of limited resources.

The Company has a history of losses and expects future losses.

Annual losses have existed
from operations since inception. In the fiscal years ended October 31, 2008 and 2007, the Company had losses from operations of $20.3 million and $36.3 million, respectively. It had an accumulated deficit of $584 million as of
January 31, 2009. It anticipates that it will continue to generate losses for the next several years. Even if Hemopure were to be approved by the FDA or the Company obtains marketing authorization in another major market, it might not be
able to achieve profitable operations. Cash on hand and expected cash inflows are expected to only last into April 2009. Without sufficient additional cash, the Company will be forced to cease operations and liquidate its assets.

The Company could fail to remain a going concern.

The Company has not had adequate cash to fund operations since late in fiscal 2008. Sufficient funds may not be available to it hereafter. Its independent registered public accounting firm has modified their report for fiscal year ended
October 31, 2008 with respect to the Companys ability to continue as a going concern.

This type of modification typically would
indicate that the Companys recurring losses from operations and current lack of sufficient funds to sustain operations through the end of the following fiscal year raise substantial doubt about its ability to continue as a going concern. Its
unaudited condensed consolidated 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. If the Company became unable
to continue as a going concern, it would have to liquidate its assets and might receive significantly less than the values at which they are carried on its consolidated financial statements. Any shortfall in the proceeds from the liquidation of its
assets would directly reduce the amounts, if any, that holders of our common stock could receive in liquidation.

To remain a going
concern, significant funding would be required. The inclusion of a going concern modification in the audit report of the Companys registered public accounting firm for fiscal 2008 may materially and adversely affect the Companys ability
to raise new capital.

The Company could fail in financing efforts if it fails to receive stockholder approval when needed.

The Company is required under the Nasdaq Marketplace Rules to obtain stockholder approval for any issuance of additional equity securities that would
comprise more than 20% of our total shares of common stock outstanding before the issuance of the securities at a discount to the greater of book or market value in an offering that is not deemed to be a public offering by Nasdaq. The
Company is also required to obtain stockholder approval for the issuance of shares that would cause a change in control of Biopure. If it remains listed on Nasdaq, funding of its operations in the future may require stockholder approval for purposes
of



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complying with the Nasdaq Marketplace Rules. The Company could require such approval to raise additional funds, but might not be successful in obtaining any
such required stockholder approval. If the Company remains listed on Nasdaq and fails to obtain approval prior to a financing for which the Nasdaq believes it needs stockholder approval, it may be delisted.

The Company could fail to maintain adequate controls to ensure accurate financial reporting.

In the fourth quarter of 2008 and 2007, material weaknesses in financial reporting were identified. If the Company continues to operate with minimal
staff, there could be inadequacies in financial statements for future periods.

If the Company fails to obtain FDA approval to market Hemopure, the
Company will be highly adversely affected.

The Company will not be able to market Hemopure in the United States unless and until it
receives FDA approval. The FDA to date has found inadequate the Companys responses and the responses of the U.S. Naval Medical Research Center (NMRC) to questions it has raised. Given the persistence of clinical holds on all proposals
submitted by the U.S. Navy and the Company, it appears that the Company will be unable to pursue development of Hemopure in the United States, a very large, key market, in the near term.

If the Company fails to obtain regulatory approvals in foreign jurisdictions, it will not be able to market Hemopure abroad.

The Company intends to seek to market Hemopure in international markets. Separate regulatory approvals must be obtained in order to market products in foreign jurisdictions. The regulatory approval processes differ
from one jurisdiction to another, and the time needed to secure marketing approvals may be very long. Marketing 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. The Company can give no assurance that it will obtain marketing approval for Hemopure in any foreign jurisdiction other than that already obtained in South Africa. The Company is not
currently pursuing any such approvals.

Clinical trials are extremely costly and subject to numerous risks and uncertainties.

To gain regulatory approval for the commercial sale of any product, including Hemopure, the safety and efficacy of the product must be demonstrated in
clinical trials. Clinical trials are expensive and time-consuming. Clinical trials are also subject to numerous risks and uncertainties not within our control. For example, data obtained from preclinical and clinical studies are susceptible to
varying interpretations that could impede regulatory approval.

In addition, many factors can delay or result in termination of ongoing or
future clinical trials. Results from ongoing or completed preclinical or clinical studies or analyses could raise concerns, real or perceived, over the safety or efficacy of a product candidate. The Company cannot assure investors that the FDA will
not delay the development of Hemopure by further continuing its current holds or placing other clinical trials on hold in the future. A clinical trial may be delayed by slow patient enrollment. There may be limited availability of patients who meet
the criteria for certain clinical trials. Delays in planned patient enrollment can result in increased development costs and delays in regulatory approvals. Further, we rely on investigating physicians and the hospital trial sites to enroll
patients. In addition, patients may experience adverse medical events or side effects resulting in delays, whether or not the events or the side effects relate to the Companys product.

If the Company does not have the financial resources to fund trials required to develop Hemopure for multiple potential indications, its success will be adversely
affected.

In general, the Company cannot sell Hemopure for any indication unless it receives regulatory approval for that
indication. Regulatory authorities generally require a separate marketing approval for each proposed indication for the use of Hemopure. In order to market Hemopure for more than one indication, the Company will have to design additional clinical
trials, submit the trial designs to applicable regulatory authorities for review and complete those trials successfully. If any applicable regulatory authority approves Hemopure for an indication, it may require a label cautioning against the
products use for indications or classes of patients for which it has not been approved. The Company may not have funds available to try to exploit Hemopure for all of its potential indications. Potential revenues will be impaired by
limitations on the use of Hemopure.

If the Navy were to abandon its attempt to develop Hemopure for a trauma indication, it would have a serious
adverse effect on the Companys prospects.

The Companys current clinical development activity is supporting the pursuit
by the Navy of a trauma indication. The NMRC has agreed to be responsible for virtually all aspects of an advanced trauma trial. The FDA has prevented the start of the proposed NMRC trials. If the Navy were to decide not to continue to pursue this
project, the Company would not have the benefit of this alliance and would be required to delay indefinitely work on this indication.



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If the Company cannot hire or retain highly qualified people, its operations will suffer.

The Company has experienced the loss of personnel through cost containment. It expects that in the future it will need to recruit and retain personnel for
important positions. The Company may be unable to do so, in particular if it is unable to improve its financial ability to offer secure employment.

If the Company cannot generate adequate, profitable sales of Hemopure, it will not be successful.

To succeed,
Hemopure must be developed commercially and adequate quantities of Hemopure sold at a profit. The Company may not accomplish either of these objectives. To date, efforts have been focused on developing Hemopure, establishing its safety and efficacy.
Uncertainty exists regarding the potential size of any geographic market for Hemopure and the price that can be charged for it. Additionally, the size of the market will be affected by the indication(s) for which Hemopure is approved and will be
greatly reduced if reimbursement for the cost of Hemopure is not available from health insurance companies or government programs.

If the Company
cannot obtain market acceptance of Hemopure, it will not be able to generate adequate, profitable sales.

Even if marketing approval
for Hemopure is obtained, a number of factors may affect future sales of the product. These factors include:



| |  |  | whether and how quickly physicians and third-party payors accept Hemopure as a cost-effective therapeutic;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | whether medical care providers or the public accept the use of a bovine-derived protein as a therapeutic in ischemia or any other indication, particularly in light
of public perceptions in the United States, Europe and elsewhere about the risk of mad cow disease; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | product price, which the company believes has been an important factor in South Africa and may be elsewhere.
| | - |  | ------------------------------------------------------------------------------------------------------------

If the Company fails to comply with good manufacturing practices, it may not be able to sell its products.

The Company must demonstrate to regulatory authorities that it can manufacture Hemopure in compliance with applicable good manufacturing practices,
commonly known as GMPs. GMPs are stringent requirements that apply to all aspects of the manufacturing process. The Company is subject to inspections by the FDA and European regulatory authorities at any time to determine whether it is in compliance
with GMP requirements. If the Company fails to manufacture in compliance with GMPs, these regulatory authorities could revoke approval of Oxyglobin or take other enforcement actions.

The manufacturing process for Hemopure is complicated and time-consuming, and may experience problems that would limit the Companys ability to manufacture and sell Hemopure.

The Companys products are biologic drugs and require product manufacturing steps that are more complicated, time consuming and costly than those
required for most chemical drugs. Minor deviations in the manufacturing processes or other problems could result in unacceptable changes in the products that result in lot failures, increased production scrap, shipment delays, regulatory problems,
product recalls or product liability, all of which could negatively affect the results of the Companys operations.

If the Company were unable
to restart its manufacturing facilities without undue delay or expense, it would not be able to manufacture for an extended period of time.

Manufacturing has been suspended as part of cost containment measures described elsewhere in this report and manufacturing personnel have been laid-off. The Company may not be able to rehire the personnel who have expertise in the
Companys complex manufacturing processes. Consequently, the Company may experience extended and costly delays if it attempts to resume manufacturing.

If the Company were unable to use its manufacturing facilities in Massachusetts or Pennsylvania, it would not be able to manufacture for an extended period of time.

The Company has a single manufacturing location in Massachusetts with raw material sourcing and initial processing in Pennsylvania. Damage to either of
these manufacturing facilities due to fire, contamination, natural disaster, power loss or other events could cause the Company to cease manufacturing. For example, if the Massachusetts manufacturing facility were destroyed, it would take
approximately two years or more to rebuild and qualify it. In the reconstruction period, the Company would not be able to manufacture product and thus would have no supply of Hemopure for research and development, clinical trials or sales after all
finished goods in our inventory were used up. A new manufacturing facility would take longer to construct.



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The Companys lack of operating history makes evaluating its business difficult.

Proceeds from the sales of equity securities, payments to fund the Companys research and development activities, licensing fees, and interest income
have provided almost all of our funding to date. The Company has no operating history of selling Hemopure upon which to base an evaluation of its business and prospects.

If the Company is not able to protect its intellectual property, it will suffer economic loss.

The Company believes that its patents and other intellectual property rights, including its proprietary knowledge, are important to its success. Accordingly, the success of its business will depend, in part, upon its ability to defend its
intellectual property against infringement by third parties. The Company cannot guarantee that its intellectual property rights will protect it adequately from competition from similar products. Some of its important patents have relatively short
remaining terms. Nor can it guarantee that additional products or processes it discovers or seeks to commercialize will receive adequate intellectual property protection.

In addition, third parties may successfully challenge the Companys intellectual property. It has not filed patent applications in every country. In certain countries, obtaining patents for the Companys
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 the Companys ability to manufacture and market
its products.

The Company cannot guarantee that its products and manufacturing process will be free of claims by third parties
alleging that it has infringed their intellectual property rights. Several third parties hold patents with claims to compositions comprising polymerized hemoglobin and their methods of manufacture and use. One or more of these third parties may
assert that the Company activities infringe claims under an existing patent. Any such claim could be expensive and time-consuming to defend, and an adverse litigation result or a settlement of litigation could require the Company to pay damages,
obtain a license from the complaining party or a third party, develop non-infringing alternatives or cease using the challenged intellectual property. Any such result could be expensive or result in a protracted plant shutdown, in turn adversely
affecting the Companys ability to operate profitably.

There can be no assurance that the Company would prevail in any intellectual
property infringement action, or be able to obtain a license to any third-party intellectual property on commercially reasonable terms, to successfully develop non-infringing alternatives on a timely basis, or to license alternative non-infringing
intellectual property, if any exists, on commercially reasonable terms. Any significant intellectual property impediment to the Companys ability to develop and commercialize Hemopure would seriously harm its business and prospects.

The Companys operating results will be adversely affected if it incurs product liability claims in excess of its insurance coverage.

The testing and marketing of medical products, even after regulatory approval, have an inherent risk of product liability. The Company maintains
limited product liability insurance coverage. The Companys profitability would be adversely affected by a successful product liability claim in excess of its insurance coverage. The Company cannot guarantee that product liability insurance in
adequate coverage amounts will be available in the future or be available on terms it could afford to pay.

Replacing its sole source suppliers for
key materials could result in unexpected delays and expenses.

The Company obtains some key materials, including membranes and
chemicals, and services from sole-source suppliers. All of these materials are commercially available elsewhere. If such materials were no longer available at a reasonable cost from existing suppliers, the Company would need to purchase substitute
materials from new suppliers. If a new supplier needed to be located, the substitute or replacement materials or facilities would need to be tested for equivalency. Such equivalency tests could significantly delay product development, or delay or
limit commercial sales of approved products and cause the Company to incur additional expense.

The Company obtains bovine hemoglobin from
one abattoir from animals raised in several states of the United States. The Company cannot predict the future effect, if any, on the Company of the spread of bovine spongiform encephalopathy (mad cow disease) in the United States. Any
quarantine affecting herds that supply the Company or a shutdown of the abattoir that the Company uses could have a material adverse effect on the Company, as it would have to find, validate and obtain regulatory approval of new sources of supply or
new facilities.

Provisions of the Companys restated certificate of incorporation and by-laws could impair or delay stockholders ability
to replace or remove Company management and could discourage takeover transactions that stockholders might consider to be in their best interest.

Provisions of the Companys restated certificate of incorporation and by-laws, as well as its stockholder rights plan, could impede attempts by stockholders to remove or replace 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 stockholders might consider to be in their best interest. In particular:



| |  |  | The Companys restated certificate of incorporation does not permit stockholders to take action by written consent and provides for a classified board of
directors, and the Company by-laws provide that stockholders who wish to bring business before an annual meeting of stockholders or to nominate candidates for election of directors at an annual meeting of stockholders must deliver advance notice of
their proposals to the Company before the meeting. These provisions could make it more difficult for a party to replace the 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
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | The Companys stockholder 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 the Companys agreement to redeem the rights. If the Company agreement to redeem the rights is not obtained, the acquiring person or group would suffer substantial dilution. Consequently, the possible
acquirer would likely not complete a transaction that stockholders might consider to be in their best interest.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Industry Risks

Intense competition could harm the Companys 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, or alternatives to, Hemopure for trauma or ischemia indications. The Company is aware that one public company competitor, Northfield Laboratories Inc., has completed a pivotal
trial of a hemoglobin-based oxygen carrier produced from human blood that has passed its expiration date for human transfusion and has filed with the FDA an application for marketing authorization. The Company is also aware that other companies are
conducting preclinical studies and clinical trials of hemoglobin-based or perfluorocarbon oxygen carriers. 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.

Stringent, ongoing government regulation and inspection of the Companys facilities could lead to delays in the
manufacture, marketing and sale of its products.

Generally, regulatory authorities continue to regulate products even after they
receive marketing authorization. On September 27, 2007, the Food and Drug Administration Amendments Act of 2007 was enacted, giving the FDA enhanced post-market authority. If the FDA or a foreign regulatory agency were to approve Hemopure, the
manufacture and marketing of Hemopure would be subject to ongoing regulation, including compliance with current good manufacturing practices, adverse event reporting requirements and general prohibitions against promoting products for unapproved or
off-label uses. The Company would also be subject to inspection and market surveillance for compliance with these and other requirements. The Company is subject to such regulation, inspection and surveillance in South Africa. 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 regulatory authorities could withdraw a previously approved product from the
applicable market(s) upon receipt of newly discovered information. Furthermore, the FDA or foreign regulatory authorities could require the Company to conduct additional, and potentially expensive, studies in areas outside its approved indications.
Also, unanticipated changes in existing regulations or the adoption of new regulations could affect and make more expensive the continued manufacturing and marketing of the Companys products.

Uncertainty of third-party reimbursement could affect the Companys profitability.

Sales of medical products largely depend on the reimbursement of patients medical expenses by governmental health care programs and private health
insurers. Even if Hemopure is approved for marketing, there is no guarantee that governmental health care programs or private health insurers would reimburse for purchases of Hemopure, or reimburse a sufficient amount to permit the Company to sell
Hemopure at high enough prices to generate a profit. Hemopure sales in South Africa have been adversely affected by a lack of third-party reimbursement.

Investment Risks

The Nasdaq Capital Market may cease to list the Companys Class A common stock which may cause the value
of an investment in the Company to substantially decrease.

The Company may be unable to meet the listing requirements of the Nasdaq
Capital Market in the future. To maintain its listing, the Company is required, among other things, to maintain a daily closing bid price per share of $1.00. The Company has been out of compliance since December 14, 2007. Nasdaq suspended
enforcement of this rule because of turmoil in the market place. The Company estimates that it now has until September 12, 2009 to regain compliance by having the bid price of its Class A common stock close at $1.00 per share or more for
at least 10 consecutive business days. If the Company does not regain compliance with the minimum bid price rule, Nasdaq will provide written notification that the Companys Class A common stock will be delisted.



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Delisting would adversely affect the trading price and limit the liquidity of the Companys common
stock and therefore could cause the value of an investment in the Company to decrease.

As the Company sells additional shares, the stock price may
decline as a result of the dilution that will occur to existing stockholders.

Until the Company is profitable, it will need
significant additional funds to develop its business and sustain its operations. Any additional sales of shares of its common stock are likely to have a dilutive effect on some or all of the then existing stockholders. Re-sales of newly issued
shares in the open market could also have the effect of lowering its stock price, thereby increasing the number of shares the Company may need to issue in the future to raise the same dollar amount and consequently further diluting its outstanding
shares.

The perceived risk associated with the possible sale of a large number of shares could cause some of the Company stockholders to
sell their stock, thus causing the price of the stock to decline. In addition, actual or anticipated downward pressure on the Companys stock price due to actual or anticipated sales of stock could cause some institutions or individuals to
engage in short sales of its common stock, which may itself cause the price of the stock to decline.



|Item 2. | Unregistered Sales of Equity 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.



|Item 5. | Other Information
|------- | -----------------

On June 17, 2008, the Board of Directors of
the Company approved, authorized and adopted the Amended and Restated Bylaws of the Company (the Amended Bylaws), which amended and restated the Companys prior Amended Bylaws to, among other things, change the procedures by which
stockholders may recommend nominees to the Companys Board of Directors. The Amended Bylaws took effect upon adoption by the Board.

Descriptions of
the amended provisions include:

Article 2, Section 4 (Advance Notice): This section was amended to require that any advance notice submitted by a
stockholder include additional information about the proposing stockholder and certain affiliated stockholders, including their ownership interests in the Companys capital stock and any derivative positions held or beneficially held or any
hedging transactions entered into by them, as relates to the Companys capital stock. A provision was also added to specifically require that information about a director nominees occupation, address and share ownership also be included
in the advance notice.

Article 2, Section 9 (Notice): The section was amended to add that notice may be given to a stockholder by any electronic
means to which that stockholder has consented. In addition, any notice of a meeting must include the means of remote communication, if any, by which stockholders or proxyholders may be deemed present and vote at the meeting.



|Item 6. | Exhibits
|------- | --------

The Exhibits listed in the Exhibit Index are filed with,
or incorporated by reference in, this report.



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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



|                     |  |                     |  |                                      
|-------------------- |  | ------------------- |  | -------------------------------------
|                     |  | BIOPURE CORPORATION
|                     |  |                    
|Date: March 25, 2009 |  | By:                 |  | /s/ Zafiris G. Zafirelis             
|                     |  |                     |  | Zafiris G. Zafirelis                 
|                     |  |                     |  | President and Chief Executive Officer



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EXHIBIT INDEX



|     |  |                                                                                                                                                          
|---- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                  
|     | 
|31.2 |  | Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                              
|     | 
|32.1 |  | Certification of the Chief Executive Officer 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 the Principal Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.



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