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SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

FORM 10-Q

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

For the quarterly period ended                      July 31, 2001

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

For the transition period from _______________to________________

Commission File Number 001-15167

|                                                      
|------------------------------------------------------
|Biopure Corporation                                   
|                                                      
|(Exact name of registrant as specified in its
charter)

|                                           |  |                                     
|------------------------------------------ |  | ------------------------------------
|Delaware                                   |  | 04-2836871                          
|                                           |  |                                     
|
|(State of Incorporation)                   |  | (IRS Employer Identification Number)
|                                          
|                                          
|                                          
|                                          
|                                          
|11 Hurley
Street, Cambridge, Massachusetts |  | 02141                               
|                                           |  |                                     
|
|(Address of principal executive offices)   |  | (Zip Code)                          

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

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.      Yes    X            
No __

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

|                                      |  |  |            | 
|------------------------------------- |  |  | ---------- | 
|Class A Common Stock, $.01 par value  |  |  | 25,206,775 | 
|                                     
|                                     
|                                     
|                                     
|Class B Common Stock, $1.00 par value |  |  | 117.7      | 



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TABLE OF CONTENTS



|                                              |                                                                                                  |  |  |  |  |  |  | 
|--------------------------------------------- | ------------------------------------------------------------------------------------------------ |  |  |  |  |  |  | 
|PART 1                                       
|ITEM 1                                       
|                                              | Condensed Consolidated Balance Sheets                                                           
|                                              | Condensed Consolidated Statements of Operations                                                 
|                                              | Condensed Consolidated Statements of Cash Flows                                                 
|                                              | Notes to Condensed Consolidated Financial Statements                                            
|                                              | Item 2.    Managements Discussion and Analysis of Financial Condition and Results of Operations
|Part II  Other Information                  
|                                              | Item 2  Changes in Securities and Use of Proceeds                                              
|SIGNATURES                                   
|EXHIBIT INDEX                                
|License Agreement for Waste Disposal System  
|License Agreement for Spur Facility          
|Assignment and Assumption of Deed of Easement
|Sublease between Cendant Operations, Inc.    
|Risk Factors                                 



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##### Table of Contents



BIOPURE CORPORATION

INDEX TO FORM 10-Q

|                                |                                                                                                |                                                                                                                                                                      |     
|------------------------------- | ---------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                |                                                                                                |                                                                                                                                                                      | Page
|Part I  FINANCIAL INFORMATION: |                                                                                                |                                                                                                                                                                      |     
|                               
|                                | Item 1  Financial Statements (Unaudited)                                                      |                                                                                                                                                                      |     
|                               
|                                |                                                                                                | Condensed Consolidated Balance Sheets at
July 31, 2001 and October 31, 2000                                                                                          | 1   
|                               
|                                |                                                                                                | Condensed Consolidated Statements of Operations
for the quarters ended July 31, 2001 and July 29, 2000
and for the nine months ended July 31, 2001 and July 29, 2000 | 2   
|                               
|                                |                                                                                                | Condensed Consolidated Statements of Cash Flows
for the nine months ended July 31, 2001 and July 29, 2000                                                            | 3   
|                               
|                                |                                                                                                | Notes to Condensed Consolidated Financial
Statements                                                                                                                 | 4-6 
|                               
|                                | Item 2  Managements Discussion and Analysis of
Financial Condition and Results of Operations | 7-11                                                                                                                                                                
|                               
|Part II  Other Information:    |                                                                                                |                                                                                                                                                                     
|                               
|                               
|                               
|                               
|                               
|                                | Item 2  Changes in Securities and Use of Proceeds                                             | 12                                                                                                                                                                  
|                               
|                                | Item 6  Exhibits and Reports on Form 8-K                                                      | 12                                                                                                                                                                  
|                               
|Signatures                      | 13                                                                                            
|                               
|Exhibit Index                   |                                                                                                |                                                                                                                                                                     

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

2



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##### Table of Contents






PART 1




ITEM 1

BIOPURE CORPORATION




CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)

|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |          |     |         | 
|------------------------------------- | ------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | -------- | ------------- | ------ | ---------------- | -------- | --- | ------- | 
|                                      |                                                                                                   |                                                                                                                                            |                                            |          | July 31, 2001 |        | October 31,
2000
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                 
|Assets:                               |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                     
|                                     
|                                     
|                                     
|Current assets:                       |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                     
|                                     
|                                     
|                                     
|                                      | Cash and cash equivalents                                                                         |                                                                                                                                            | $                                          | 48,532   |               |        | $                | 88,828   |    
|                                     
|                                     
|                                     
|                                     
|                                      | Accounts receivable, net                                                                          |                                                                                                                                            |                                            | 644      |               |        |                  | 478      |    
|                                     
|                                     
|                                     
|                                     
|                                      | Inventories, net                                                                                  |                                                                                                                                            |                                            | 4,755    |               |        |                  | 2,726    |    
|                                     
|                                     
|                                     
|                                     
|                                      | Current portion of restricted cash                                                                |                                                                                                                                            |                                            |         |               |        |                  | 3,508    |    
|                                     
|                                     
|                                     
|                                     
|                                      | Other current assets                                                                              |                                                                                                                                            |                                            | 319      |               |        |                  | 380      |    
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                      |                                                                                                   |                                                                                                                                            | Total current assets                       |          |               | 54,250 |                  |          |     | 95,920  | 
|                                     
|                                     
|                                     
|                                     
|Property, plant and equipment, net    |                                                                                                   |                                                                                                                                            | 27,308                                     |          |               |        | 25,061           |         
|                                     
|                                     
|                                     
|                                     
|Other assets                          |                                                                                                   |                                                                                                                                            | 11,769                                     |          |               |        | 306              |         
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                      |                                                                                                   |                                                                                                                                            | Total assets                               |          | $             | 93,327 |                  |          | $   | 121,287 | 
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|Liabilities and stockholders equity: |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                     
|                                     
|                                     
|                                     
|Current liabilities:                  |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                     
|                                     
|                                     
|                                     
|                                      | Accounts payable                                                                                  |                                                                                                                                            | $                                          | 1,567    |               |        | $                | 1,764    |    
|                                     
|                                     
|                                     
|                                     
|                                      | Accrued expenses                                                                                  |                                                                                                                                            |                                            | 7,168    |               |        |                  | 9,228    |    
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                      |                                                                                                   |                                                                                                                                            | Total current liabilities                  |          |               | 8,735  |                  |          |     | 10,992  | 
|                                     
|                                     
|                                     
|                                     
|Long-term debt                        |                                                                                                   |                                                                                                                                            | 2,693                                      |          |               |        |                 |         
|                                     
|                                     
|                                     
|                                     
|Deferred compensation                 |                                                                                                   |                                                                                                                                            | 1,774                                      |          |               |        | 1,785            |         
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                      |                                                                                                   |                                                                                                                                            | Total long-term liabilities                |          |               | 4,467  |                  |          |     | 1,785   | 
|                                     
|                                     
|                                     
|                                     
|Stockholders equity:                 |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                     
|                                     
|                                     
|                                     
|                                      | Convertible preferred stock, $0.01 par value,
30,000,000 shares authorized, no shares outstanding |                                                                                                                                            |                                            |         |               |        |                  |         |    
|                                     
|                                     
|                                     
|                                     
|                                      | Common stock:                                                                                     |                                                                                                                                            |                                            |          |               |        |                  |          |    
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                   | Class A, $0.01 par value, 100,000,000 shares
authorized, 25,186,599 shares
outstanding at July 31, 2001 and 24,937,995
at October 31, 2000 |                                            |          | 252           |        |                  |          | 249 |        
|                                     
|                                     
|                                     
|                                     
|                                      |                                                                                                   | Class B, $1.00 par value, 179 shares
authorized, 117.7 shares outstanding                                                                  |                                            |          |              |        |                  |          |    |        
|                                     
|                                     
|                                     
|                                     
|                                      | Capital in excess of par value                                                                    |                                                                                                                                            |                                            | 383,408  |               |        |                  | 372,149  |    
|                                     
|                                     
|                                     
|                                     
|                                      | Contributed capital                                                                               |                                                                                                                                            |                                            | 24,574   |               |        |                  | 24,574   |    
|                                     
|                                     
|                                     
|                                     
|                                      | Notes receivable                                                                                  |                                                                                                                                            |                                            | (1,652   | )             |        |                  | (2,033   | )  
|                                     
|                                     
|                                     
|                                     
|                                      | Accumulated deficit                                                                               |                                                                                                                                            |                                            | (326,457 | )             |        |                  | (286,429 | )  
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|Total stockholders equity            |                                                                                                   |                                                                                                                                            | 80,125                                     |          |               |        | 108,510          |         
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         
|                                      |                                                                                                   |                                                                                                                                            | Total liabilities and stockholders
equity |          | $             | 93,327 |                  |          | $   | 121,287 | 
|                                      |                                                                                                   |                                                                                                                                            |                                            |          |               |        |                  |         

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

See accompanying notes.

3



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BIOPURE CORPORATION




CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |        |       | 
|-------------------- | ------------------------------------------------------------------------- | -------------- | ------- | ------------------ | --- | ----------------- | ------ | ------------- | --- | ------------- | ------- | ------ | ----- | - | ------- | ------ | ----- | 
|                     |                                                                           |                |         | Three Months Ended |     | Nine Months Ended
|                     |                                                                           |                |         |                    |     |                  
|                     |                                                                           |                |         | July 31, 2001      |     | July 29, 2000     |        | July 31, 2001 |     | July 29, 2000
|                     |                                                                           |                |         |                    |     |                   |        |               |     |              
|Revenues:            |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|                    
|                    
|                    
|                    
|                     | Oxyglobin                                                                 |                | $       | 945                |     |                   | $      | 836           |     |               | $       | 2,513  |       |   | $       | 2,140  |      
|                    
|                    
|                    
|                    
|                     | Other                                                                     |                |         | 1                  |     |                   |        |              |     |               |         | 6      |       |   |         | 3      |      
|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|                     |                                                                           | Total revenues |         |                    | 946 |                   |        |               | 836 |               |         |        | 2,519 |   |         |        | 2,143 | 
|                    
|                    
|                    
|                    
|Cost of revenues     |                                                                           |                | 903     |                    |     |                   | 1,215  |               |     |               | 2,587   |        |       |   | 3,506   |       
|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|Gross profit (loss)  |                                                                           |                | 43      |                    |     |                   | (379   | )             |     |               | (68     | )      |       |   | (1,363  | )     
|                    
|                    
|                    
|                    
|Operating expenses:  |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|                    
|                    
|                    
|                    
|                     | Research and development                                                  |                |         | 10,297             |     |                   |        | 6,229         |     |               |         | 27,486 |       |   |         | 22,631 |      
|                    
|                    
|                    
|                    
|                     | Sales and marketing                                                       |                |         | 784                |     |                   |        | 617           |     |               |         | 2,070  |       |   |         | 1,765  |      
|                    
|                    
|                    
|                    
|                     | General and administrative                                                |                |         | 1,538              |     |                   |        | 1,529         |     |               |         | 13,364 |       |   |         | 6,377  |      
|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|                     | Total operating expenses                                                  |                |         | 12,619             |     |                   |        | 8,375         |     |               |         | 42,920 |       |   |         | 30,773 |      
|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|Loss from operations |                                                                           |                | (12,576 | )                  |     |                   | (8,754 | )             |     |               | (42,988 | )      |       |   | (32,136 | )     
|                    
|                    
|                    
|                    
|Other income, net    |                                                                           |                | 654     |                    |     |                   | 1,563  |               |     |               | 2,960   |        |       |   | 2,854   |       
|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|Net loss             |                                                                           | $              | (11,922 | )                  |     | $                 | (7,191 | )             |     | $             | (40,028 | )      |       | $ | (29,282 | )     
|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|Per share data:      |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|                    
|                    
|                    
|                    
|                     | Basic and diluted net loss
per common share                               |                | $       | (0.47              | )   |                   | $      | (0.29         | )   |               | $       | (1.60  | )     |   | $       | (1.24  | )    
|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       
|                     | Weighted average shares used in
computing basic net loss
per common share |                |         | 25,134             |     |                   |        | 24,933        |     |               |         | 25,018 |       |   |         | 23,605 |      
|                     |                                                                           |                |         |                    |     |                   |        |               |     |               |         |        |       |   |         |       

See accompanying notes.

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##### Table of Contents



BIOPURE CORPORATION




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |         |       |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------------------- | -------------------------------------------------- | ----------------------------------------- | ------- | ----------------- | ------- | ------------- | ------- | ----- | ------- | -
|                                                     |                                                                                               |                                                    |                                           |         | Nine Months Ended
|                                                     |                                                                                               |                                                    |                                           |         |                  
|                                                     |                                                                                               |                                                    |                                           |         | July 31, 2001     |         | July 29, 2000
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |              
|Operating activities:                                |                                                                                               |                                                    |                                           |         |                   |         |               |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net loss                                                                                      |                                                    | $                                         | (40,028 | )                 |         | $             | (29,282 | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Adjustments to reconcile net loss to net
cash used in operating activities:                   |                                                    |                                           |         |                   |         |               |         |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               | Depreciation                                       |                                           |         | 2,955             |         |               |         | 3,108 |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               | Disposition of obsolete fixed assets               |                                           |         |                  |         |               |         | 331   |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               | Equity compensation                                |                                           |         | 6,924             |         |               |         | 1,785 |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               | Deferred compensation                              |                                           |         | (11               | )       |               |         | (20   | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               | Accrued interest on stockholders notes receivable |                                           |         | (71               | )       |               |         | (118  | )      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               | Acquired research and development information      |                                           |         | 1,511             |         |               |         |      |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               | Changes in operating assets and liabilities:       |                                           |         |                   |         |               |         |       |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               |                                                    | Accounts receivable                       |         |                   | (166    | )             |         |       | (60     | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               |                                                    | Inventories                               |         |                   | (2,029  | )             |         |       | 93      |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               |                                                    | Other current assets                      |         |                   | 61      |               |         |       | (67     | )
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               |                                                    | Accounts payable                          |         |                   | (197    | )             |         |       | 419     |  
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                                                               |                                                    | Accrued expenses                          |         |                   | 1,448   |               |         |       | 1,893   |  
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |        
|                                                     |                                                                                               |                                                    | Net cash used in operating activities     |         |                   | (29,603 | )             |         |       | (21,918 | )
|                                                    
|                                                    
|                                                    
|                                                    
|Investing activities:                                |                                                                                               |                                                    |                                           |         |                   |         |               |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Purchase of property, plant and equipment                                                     |                                                    |                                           | (2,254  | )                 |         |               | (390    | )    
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Escrow for South Carolina plant                                                               |                                                    |                                           | (10,000 | )                 |         |               |        |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Other assets                                                                                  |                                                    |                                           | (63     | )                 |         |               | 173     |      
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |        
|                                                     |                                                                                               |                                                    | Net cash used in investing activities     |         |                   | (12,317 | )             |         |       | (217    | )
|                                                    
|                                                    
|                                                    
|                                                    
|Financing activities:                                |                                                                                               |                                                    |                                           |         |                   |         |               |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Net proceeds from sales of common stock                                                       |                                                    |                                           | (648    | )                 |         |               | 83,745  |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Payment of notes receivable from stockholders                                                 |                                                    |                                           | 451     |                   |         |               | 556     |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from exercise of options and warrants                                                |                                                    |                                           | 1,689   |                   |         |               | 560     |      
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Proceeds from exercise of non lapse restricted stock                                          |                                                    |                                           | 132     |                   |         |               | 2,112   |      
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |        
|                                                     |                                                                                               |                                                    | Net cash provided by financing activities |         |                   | 1,624   |               |         |       | 86,973  |  
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |        
|Net increase (decrease) in cash and cash equivalents |                                                                                               |                                                    | (40,296                                   | )       |                   |         | 64,838        |        
|                                                    
|                                                    
|                                                    
|                                                    
|Cash and cash equivalents at beginning of period     |                                                                                               |                                                    | 88,828                                    |         |                   |         | 30,778        |        
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |        
|Cash and cash equivalents at end of period           |                                                                                               | $                                                  | 48,532                                    |         |                   | $       | 95,616        |        
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |        
|Non-cash transactions:                               |                                                                                               |                                                    |                                           |         |                   |         |               |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Land and license rights acquired upon conversion of
stock option                              |                                                    | $                                         | 1,005   |                   |         | $             |        |      
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |        
|                                                     | South Carolina facility construction financed through
capital lease (shown as long-term debt) |                                                    | $                                         | 2,693   |                   |         | $             |        |      
|                                                     |                                                                                               |                                                    |                                           |         |                   |         |               |        

See accompanying notes.

5



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##### Table of Contents



BIOPURE CORPORATION




NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
July 31, 2001
(Unaudited)

1. Basis of Presentation

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

In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three and nine month periods
ended July 31, 2001 are not necessarily indicative of the results that
may be expected for the year ending October 31, 2001. Certain
reclassifications have been made to the 2000 balances to conform to the
current presentation.

The Company has financed operations from inception
primarily through sales of equity securities, development and license
agreement payments, interest income and debt. The Company has not
been profitable since inception and had an accumulated deficit of
$326,457,000 as of July 31, 2001. Management expects that the Company
will continue to generate losses from operations for the foreseeable
future. The Company will explore and is pursuing opportunities to
raise capital through sales of equity and debt securities, potential
partnerships, bank borrowings or leasing arrangements.

The Company believes its current cash and cash
equivalents, which do not include the $10,000,000 placed in escrow
for the construction of the new manufacturing facility in South
Carolina, should be sufficient to meet the Companys projected
operating requirements through the first half of fiscal 2002. The
cash reserves also do not reflect our $75,000,000 equity line stock
purchase agreement with Société Générale (the
equity line agreement). Biopures cash reserves plus the
Société Générale financing, if drawn on to the level required based
on our projections, should be sufficient to fund operations through
fiscal 2002. However, should Biopure be unable to draw sufficient
funds under the equity line agreement, the Company believes it has the
ability to alter its planned spending, while continuing to execute
its core business plan, in order to fund operations through fiscal
2002.

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

2. Net Loss per Share

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

3. Inventories

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

|                           |                |   |               |       |                  |   |       |       | 
|-------------------------- | -------------- | - | ------------- | ----- | ---------------- | - | ----- | ----- | 
|                           |                |   | July 31, 2001 |       | October 31, 2000
|                           |                |   |               |       |                 
|In
thousands
Raw materials |                | $ | 1,047         |       |                  | $ | 980   |      
|                          
|                          
|                          
|                          
|Work-in-process            |                |   | 938           |       |                  |   | 476   |      
|                          
|                          
|                          
|                          
|                           | Finished goods |   |               | 2,770 |                  |   |       | 1,270 | 
|                           |                |   |               |       |                  |   |       |      
|                           |                | $ | 4,755         |       |                  | $ | 2,726 |      
|                           |                |   |               |       |                  |   |       |      

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##### Table of Contents



BIOPURE CORPORATION

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
July 31, 2001
(Unaudited)

4. Accrued Expenses

Accrued expenses consisted of the following:

|                                            |  |               |       |                  |  |   |       | 
|------------------------------------------- |  | ------------- | ----- | ---------------- |  | - | ----- | 
|In thousands                                |  | July 31, 2001 |       | October 31, 2000
|                                            |  |               |       |                 
|Settlement                                  |  | $             |      |                  |  | $ | 3,508 | 
|                                           
|                                           
|                                           
|                                           
|Phase III clinical trial                    |  |               | 1,967 |                  |  |   | 2,897 | 
|                                           
|                                           
|                                           
|                                           
|Preparation of Biologic License Application |  |               | 596   |                  |  |   |      | 
|                                           
|                                           
|                                           
|                                           
|Phase II clinical trial                     |  |               | 480   |                  |  |   | 259   | 
|                                           
|                                           
|                                           
|                                           
|Performance incentive for employees         |  |               | 1,002 |                  |  |   | 65    | 
|                                           
|                                           
|                                           
|                                           
|Other                                       |  |               | 3,123 |                  |  |   | 2,499 | 
|                                            |  |               |       |                  |  |   |       | 
|                                            |  | $             | 7,168 |                  |  | $ | 9,228 | 
|                                            |  |               |       |                  |  |   |       | 

5. Stock Compensation

In August 1999, Biopure granted 386,680 options to two directors which
are assumed to be for services in addition to board activities and must
be accounted for at fair value, pursuant to Financial Accounting
Standards Board Statement No. 123, Accounting for Stock-Based
Compensation (SFAS 123) and EITF 96-18, Accounting for Equity
Instruments That Are Issued to Other Than Employees for Acquiring, or in
Conjunction with Selling Goods or Services. The Company records
compensation expense based on a service period adjusted for the fair
value of the stock until these options have been earned, as discussed
below. In October 2000 and April 2001, Biopure granted 30,000 options to
each of two consultants, for a total of 60,000 options, which must be
accounted for at fair value.

With respect to these 446,680 options, 115,000 have been earned as of
April 30, 2001. With respect to the remaining 331,680 options, the
Company recorded a reduction to non-cash compensation expense of
$793,000 for the quarter ended July 31, 2001 because the closing price
of Biopure common stock on July 31, 2001 was lower than on April 30,
2001.

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##### Table of Contents



BIOPURE CORPORATION

NOTES TO CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS (Continued)
July 31, 2001
(Unaudited)

6. Commitment

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

Under the proposed agreement the $10,000,000 placed in escrow will be
returned when Biopure receives FDA approval for Hemopure. The
$10,000,000 has been accounted for as a deposit in long term other
assets. If FDA approval is not received, the $10,000,000 deposit
will not be returned to the Company and will be treated as a capital
expenditure, subject to an impairment review pursuant to SFAS No. 121
along with the Companys other long-lived assets. As presently
structured, the new plant is expected to be accounted for under the rules for a capital
lease and as such, the financial statements will include property, plant
and equipment and offsetting debt for the new plant. As of July 31,
2001 $2,693,000 has been included in property, plant and equipment and
long term debt reflecting expenses to date for the engineering of the
facility.

7. Financing Activities

On June 21, 2001, Biopure entered into a $75,000,000 equity line stock
purchase agreement with Société Générale. Under this agreement, Biopure
has the option of drawing funds as needed over a two-year period,
subject to certain limitations, in exchange for the issuance of Biopure
common stock. The maximum size of each draw down may be up to
$3,000,000 in a five-day draw down period or up to $4,500,000 if the
dollar trading volume of the companys common stock increases above
recent levels. The company is under no obligation to draw down funds and
has not done so as of July 31, 2001. As of July 31, 2001, the Company
incurred direct costs of $647,500 associated with this agreement.

8. Capital Transactions

67,270 shares of Biopure common stock were issued related to the
acquisition of Reperfusion Systems, Inc., an inactive company 26% owned
by Biopure. A one-time expense of $1,604,000, of which $1,511,000 is
non-cash, was recorded for intellectual property and pre-clinical
studies.

80,000 shares of Biopure common stock were issued upon exercise of an
option for consideration consisting of land and real property lease and
license rights, valued at $1,004,500.

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##### Table of Contents






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

Except for historical information contained herein, some matters discussed in
this report constitute forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Actual results could differ
materially from those projected in the forward-looking statements. In light of
the substantial risks and uncertainties inherent in all future projections,
the inclusion of forward-looking statements in this report should not be
regarded as representations by the Company that the objectives or plans of the
Company will be achieved. Many factors could cause the Companys actual
results, performance or achievements to differ materially from those in the
forward-looking statements. Reference is made in particular to the risk
factors set forth in Exhibit 99.1 to this report and the discussions set forth
below in this Report under Managements Discussion and Analysis of Financial
Condition and Results of Operations.

Business Outlook

We anticipate our sales of Oxyglobin, our veterinary product, will be between
$3,400,000 and $3,500,000 in fiscal 2001. Operating expenses are anticipated to
be between $47,000,000 and $48,000,000 excluding actual non-cash compensation
expenses of $6,900,000 in the first nine months. No significant non-cash
compensation expenses are expected for the fourth quarter of fiscal 2001.
Interest income is expected to decrease for the fourth quarter of fiscal 2001
because of current lower interest rates and reduced invested cash balances.

Research and development expenses for the fourth quarter are expected to
decrease by approximately 20% from actual expenses for the third quarter of
fiscal 2001. This estimate is lower than prior estimates because the shutdown
of our manufacturing facility in Cambridge, for its capacity upgrade, will now
occur in the first and second quarters of fiscal 2002 instead of in the fourth
quarter of fiscal 2001 and first quarter of fiscal 2002 as previously planned.
Expenses related to our anticipated electronic BLA filing should decrease from
the third quarter to the fourth quarter.

Selling, general and administrative expenses for the fourth quarter are
anticipated to increase by 15% compared to the SG&A expenses for the third
quarter of fiscal 2001, excluding all non-cash compensation charges. Marketing
activities for the 2002 launch of Hemopure, our product for humans, in South
Africa should increase and the cost of the product we will ship to South
Africa, in the fourth quarter of fiscal 2001, will be charged to selling
expenses.

For the first quarter of fiscal 2002 sales of Oxyglobin are expected to
increase 15 to 20% from sales in the first quarter of fiscal 2001. Sales of
Hemopure to South Africa will not start until later in the first half of 2002.
Research and development expenses are expected to increase by 20 to 25% over
estimated expenses for the fourth quarter of fiscal 2001 since our Cambridge
manufacturing facility will be shut down for its capacity upgrade.
Manufacturing expenses allocated to research and development will increase
since, during the shutdown, there will be no production to absorb any of these
expenses. Sales, general and administrative expenses should increase by 20%
from estimated expenses for the fourth quarter of fiscal 2001 as marketing
activities for the launch of Hemopure in South Africa continue to increase and
additional units are shipped with costs charged to selling expenses.

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

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##### Table of Contents



Results of Operations

Three months ended July 31, 2001 compared to three months ended July 29, 2000

Total revenues increased 13.2% to $946,000 in the third quarter of fiscal 2001
from $836,000 in the third quarter of fiscal 2000. The increase in revenue
reflects shipments of Oxyglobin, the Companys veterinary drug for the
treatment of canine anemia, to customers in Europe and a 5.0% growth in
domestic sales.

Cost of revenues decreased 25.7% to $903,000 in the third quarter of fiscal
2001 from $1,215,000 in the third quarter of fiscal 2000. This decline is due
to increased manufacturing activity associated with the development of
Hemopure, the Companys advanced stage Oxygen Therapeutic for human use, and
the resulting decrease in manufacturing expenses allocated to Oxyglobin.

Research and development expenses increased 65.3% to $10,297,000 in the third
quarter of fiscal 2001 from $6,229,000 in the third quarter of fiscal 2000.
This increase is partially due to a one-time expense of $1,604,000, of which
$1,511,000 is non-cash, for intellectual property and pre-clinical studies
related to the acquisition of Reperfusion Systems, Inc., an inactive company
26% owned by Biopure, for approximately 67,000 shares of Biopure common stock.
The remainder of the increase is due to the activities associated with data
organization and analyses for the pivotal Phase III trial of Hemopure,
preparation for the filing of an electronic U.S. marketing application this
year and ongoing research and development. These increases were offset, in
part, by a reduction in manufacturing expenses allocated to research and
development, as production of Hemopure units for South Africa absorbed some of
these expenses in inventory.

Sales and marketing expenses increased 27.1% to $784,000 in the third quarter
of fiscal 2001 from $617,000 in the third quarter of fiscal 2000. This increase
was primarily attributable to marketing and selling expenses associated with
the launch of Oxyglobin in Europe and an increase in marketing and selling
expenses in the United States.

General and administrative expenses were $1,538,000 in the third quarter of
fiscal 2001, up slightly from $1,529,000 in the third quarter of fiscal 2000.
Hemopure marketing expenses, including product shipped to South Africa for use
in a pre-launch medical training program, and consulting fees increased in the
third quarter of fiscal 2001 compared to the same period in 2000. The third
quarter of fiscal 2001 includes a credit of $793,000 for non-cash compensation
for stock options and warrants issued to consultants and certain directors
versus a credit of $34,000 for non-employee options and warrants in the third
quarter of fiscal 2000. Non-cash compensation expense for stock options and
warrants issued to certain consultants and directors must be accounted for at
fair value, per SFAS 123 and EITF 96-18, and be amortized over the service
period and revalued each quarter based on the closing stock price or, if issued
for services completed, are a one-time charge.

Total other income, net, was $654,000 in the third quarter of fiscal 2001
compared to $1,563,000 in the third quarter of fiscal 2000. The decrease
reflects less interest earned on a lower average cash balance in the third
quarter of fiscal 2001.

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##### Table of Contents



Nine months ended July 31, 2001 compared to nine months ended July 29, 2000

Total revenues increased 17.6% to $2,519,000 in the first nine months of fiscal
2001 from $2,143,000 in the first nine months of fiscal 2000. The first nine
months of fiscal 2001 included our first shipments of Oxyglobin to our
customers in Europe and a 12.6% growth in sales to our domestic customers.

Cost of revenues decreased 26.2% to $2,587,000 in the first nine months of
fiscal 2001 from $3,506,000 in the first nine months of fiscal 2000. This
decline is due to increased manufacturing activity associated with the
development of Hemopure and the resulting decrease in manufacturing expenses
allocated to Oxyglobin.

Research and development expenses increased 21.5% to $27,486,000 in the first
nine months of fiscal 2001 from $22,631,000 in the first nine months of fiscal
2000. This increase is due to a one-time expense of $1,604,000, of which
$1,511,000 is non-cash, for intellectual property and pre-clinical studies
related to the acquisition of Reperfusion Systems, Inc., an inactive company
26% owned by Biopure, for approximately 67,000 shares of Biopure common stock.
The remainder of the increase is due to activities associated with the data
organization and analyses for the pivotal Phase III trial of Hemopure,
preparation for the filing of an electronic U.S. marketing application and
ongoing research and development.

Sales and marketing expenses increased 17.3% to $2,070,000 in the first nine
months of fiscal 2001 from $1,765,000 in the first nine months of fiscal 2000.
The increase was primarily due to sales and marketing efforts of introducing
Oxyglobin in selected European countries in 2001.

General and administrative expenses increased 109.6% to $13,364,000 in the
first nine months of fiscal 2001 from $6,377,000 in the first nine months of
fiscal 2000. The increase is primarily due to an increase of $5,138,000 in
non-cash compensation expense for stock options and warrants issued to certain
consultants, directors and contract parties that must be accounted for at fair
value, per SFAS 123 and EITF 96-18, and be amortized over the service period
and revalued each quarter based on the closing stock price or, if issued for
services completed, are a one-time charge. For the first nine months of fiscal
2001, we recorded $6,924,000 as compensation expense under these options and
warrants versus $1,785,000 in the first nine months of fiscal 2000. Hemopure
marketing expenses, including product shipped to South Africa for use in a
pre-launch medical training program, and consulting fees increased in the first
nine months of fiscal 2001 compared to the same period in 2000.

Total other income was $2,960,000 in the first nine months of fiscal 2001
compared to $2,854,000 in the first nine months of fiscal 2000. The increase
reflects additional interest earned on a higher average cash balance in fiscal
2001.

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Liquidity and Capital Resources

At July 31, 2001, we had current assets of $54,250,000, consisting primarily of
$48,532,000 in cash and cash equivalents and $4,755,000 in inventory. At July
31, 2001, current liabilities were $8,735,000. During the first nine months of
fiscal 2001, our cash and cash equivalents decreased $40,296,000 from
$88,828,000 at October 31, 2000 to $48,532,000 at July 31, 2001. This decrease
is primarily due to cash outflows of $29,603,000 for operating activities and
$10,000,000 placed in escrow as Biopures contribution to the construction of a
new manufacturing facility in South Carolina.

Under the proposed agreement for the construction and financing of the new
plant, the $10,000,000 placed in escrow will be returned when Biopure receives
FDA approval for Hemopure. The $10,000,000 has been accounted for as a deposit
in long-term other assets. The new plant will be accounted under the rules
for a capital lease and as such, the financial statements will include
property, plant and equipment and offsetting debt for the new plant. As of
July 31, 2001, $2,693,000 has been included in property, plant and equipment
and long term debt reflecting expenses to date for the engineering of the
facility.

Based on the approval of Hemopure in South Africa, during the quarter Biopure
began including Hemopure units in inventory as these units are
saleable.
Inventory levels will continue to increase as we build our inventories of
Hemopure and Oxyglobin prior to our six month capacity upgrade shutdown,
scheduled to take place in the first and second quarters of fiscal 2002.

On June 21, 2001, Biopure entered into a $75,000,000 equity line stock
purchase agreement with Société Générale. Under this agreement, Biopure has
the option of drawing funds as needed over a two-year period, subject to
certain limitations, in exchange for the issuance of Biopure common stock.
The maximum size of each draw down may be up to $3,000,000 in a five-day draw
down period or up to $4,500,000 if the dollar trading volume of the companys
common stock increases above recent levels. The company is under no obligation
to draw down funds and has not done so as of July 31, 2001.

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

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

We have not been profitable since inception and had an accumulated deficit of
$326,457,000 as of July 31, 2001. We will continue to generate losses from
operations for the foreseeable future. We will explore and are pursuing
opportunities to raise capital through sales of equity and debt securities,
potential partnerships, bank borrowings or leasing arrangements.

12



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##### Table of Contents



We believe our current cash and cash equivalents, which do not include the
$10,000,000 placed in escrow for the construction of the new manufacturing
facility in South Carolina, should be sufficient to meet our projected
operating requirements through the first half of fiscal 2002. The cash
reserves also do not reflect our $75,000,000 equity line stock purchase
agreement with Société Générale. Biopures cash reserves plus the Société
Générale financing, if fully drawn, could fund operations through fiscal 2003
under the companys current operating plan. Our cash requirements may vary
significantly from current projections.

13



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##### Table of Contents






BIOPURE CORPORATION
PART II  OTHER INFORMATION
July 31, 2001




Item 2.     Changes in Securities and Use of Proceeds

Warrants to purchase 13,394 shares of Class A Common Stock were exercised in
the third quarter of fiscal 2001 for aggregate proceeds to the Corporation of
$52,800. The Corporation relied on Section 4(2) of the Securities Act of 1933
and Regulation D under the Securities Act of 1933 in issuing shares upon the
exercise of warrants.

80,000 shares of Class A Common Stock were issued upon exercise of an option
for consideration, consisting of land and real property lease and license
rights, valued at $1,004,500. The Corporation relied on section 4(2) of the
Securities Act of 1933 in issuing these shares.

Item 6.     Exhibits and Reports on Form 8-K

(a)  The exhibits are listed in the accompanying Exhibit Index.

(b)  A report on Form 8-K was filed on July 11, 2001.

(c)  A report on Form 8-K was filed on August 29, 2001.

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##### Table of Contents






SIGNATURES

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

|      |  |                    |  |                                                                                                                 
|----- |  | ------------------ |  | ----------------------------------------------------------------------------------------------------------------
|      |  |                    |  | BIOPURE CORPORATION                                                                                             
|     
|Date: |  | September 14, 2001 |  | By: /s/ Francis H. MurphyFrancis H. Murphy
Duly authorized officer of the Registrant and
Chief Financial Officer

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##### Table of Contents






EXHIBIT INDEX

|       |  |                                                                                                                         
|------ |  | ------------------------------------------------------------------------------------------------------------------------
|Number |  | Description                                                                                                             
|       |  |                                                                                                                         
|10.1   |  | License Agreement for Waste Disposal System between Moyer Packing Company
and Biopure Corporation dated June 12, 2001.  
|      
|      
|      
|      
|10.2   |  | License Agreement for Spur Facility between Moyer Packing Company and
Biopure Corporation dated
June 12, 2001.          
|      
|      
|      
|      
|10.3   |  | Assignment and Assumption of Deed of Easement between Moyer Packing
Company and Biopure Corporation dated June 12, 2001.
|      
|      
|      
|      
|10.4   |  | Sublease between Cendant Operations, Inc. and Biopure Corporation dated
June 20, 2001.                                  
|      
|      
|      
|      
|99.1   |  | Risk Factors                                                                                                            

16