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SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q



| | x                                                                  |  | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 
| | ------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------
|
| | For the quarterly period ended                      April 30, 2002
|
| | o                                                                  |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
| | For the transition period from      to                            

Commission File Number 001-15167

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

|                                                                                    |  |                                                
|----------------------------------------------------------------------------------- |  | -----------------------------------------------
|Delaware
(State of Incorporation)                                                   |  | 04-2836871
(IRS Employer Identification Number)
|                                                                                    |  |                                                
|11 Hurley Street, Cambridge, Massachusetts
(Address of principal executive offices) |  | 02141
(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. Yesx
               No o

The number of shares outstanding of each of the issuers classes of common
stock as of May 31, 2002 was:

|                                                                           |  |  |                  | 
|-------------------------------------------------------------------------- |  |  | ---------------- | 
|Class A Common Stock, $.01 par value
Class B Common Stock, $1.00 par value |  |  | 29,197,269
117.7 | 



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TABLE OF CONTENTS



|                                                                                                      |                                                                                       |  |  |  |  |  |  | 
|----------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
|                                                                                                      | Condensed Consolidated Balance Sheets                                                
|                                                                                                      | Condensed Consolidated Statements of Operations                                      
|                                                                                                      | Condensed Consolidated Statements of Cash Flows                                      
|                                                                                                      | Notes to Condensed Consolidated Financial Statements                                 
|                                                                                                      | Independent Accountants Review Report                                               
|                                                                                                      | Managements Discussion and Analysis of
Financial Condition and Results of Operations
|Part I - Item 2 Managements Discussion and Analysis of Financial Condition and Results of Operations
|Part II  Other InformationApril 30, 2002                                                            
|                                                                                                      | Item 1. Legal Proceedings                                                            
|                                                                                                      | Item 2. Changes in Securities and Use of Proceeds                                    
|                                                                                                      | Item 4. Submission of Matters to a Vote of Security Holders                          
|                                                                                                      | Item 6.  Exhibits and Reports on Form 8-K                                            
|                                                                                                      | SIGNATURES                                                                           
|                                                                                                      | EXHIBIT INDEX                                                                        
|Ex-10.1 2002 Omnibus Securities and Incentive Plan                                                   
|Ex-10.2 Placement Agency Agreement                                                                   
|Ex-10.3 Placement Agent's Warrant                                                                    
|Ex-15 Acknowledgement Letter                                                                         
|Ex-99 Risk Factors                                                                                   



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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
April 30, 2002 and October 31, 2001                                                                                            |    |      | 1   | 
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                |                                                                                                | Condensed Consolidated Statements of Operations for the quarters ended
April 30, 2002 and April 30, 2001 and for the six months ended April 30, 2002
and April 30, 2001 |    |      | 2   | 
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                |                                                                                                | Condensed Consolidated Statements of Cash Flows
for the six months ended April 30, 2002 and April 30, 2001                                                              |    |      | 3   | 
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                |                                                                                                | Notes to Condensed Consolidated Financial
Statements                                                                                                                    |    |      | 4-6 | 
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                |                                                                                                | Independent Accountants Review Report                                                                                                                                  |    |      | 7   | 
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                | Item 2 - Managements Discussion and Analysis of
Financial Condition and Results of Operations |                                                                                                                                                                         |    | 8-13 |    
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                | Item 3 - Quantitative and Qualitative Disclosure of Market Risk                                |                                                                                                                                                                         |    | 13   |    
|                                |                                                                                                |                                                                                                                                                                         |    |     
|Part II  Other Information:    |                                                                                                |                                                                                                                                                                         |    |     
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                | Item 1 Legal Proceedings                                                                      |                                                                                                                                                                         |    | 14   |    
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                | Item 2 Changes in Securities and Use of Proceeds                                              |                                                                                                                                                                         |    | 14   |    
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                | Item 4 Submission of Matters to a Vote of Security Holders                                    |                                                                                                                                                                         |    | 14   |    
|                                |                                                                                                |                                                                                                                                                                         |    |     
|                                | Item 6  Exhibits and Reports on Form 8-K                                                      |                                                                                                                                                                         |    | 14   |    
|                                |                                                                                                |                                                                                                                                                                         |    |     
|Signatures                      |                                                                                                |                                                                                                                                                                         | 15 |     
|                                |                                                                                                |                                                                                                                                                                         |    |     
|Exhibit Index                   |                                                                                                |                                                                                                                                                                         |    |     

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





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| | FORM 10-Q
PART 1
ITEM 1
PAGE 1
| | ------------------------------




BIOPURE CORPORATION

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

|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |          |     |        | 
|------------------------------------- | ------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | -------- | -------------- | ------ | ---------------- | -------- | --- | ------ | 
|                                      |                                                                                       |                                                                                                                                             |                                            |          | April 30, 2002 |        | October 31, 2001
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                 
|Assets:                               |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|Current assets:                       |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|                                      | Cash and cash equivalents                                                             |                                                                                                                                             | $                                          | 40,943   |                |        | $                | 36,089   |    
|                                      | Accounts receivable, net                                                              |                                                                                                                                             |                                            | 636      |                |        |                  | 724      |    
|                                      | Inventories, net                                                                      |                                                                                                                                             |                                            | 2,859    |                |        |                  | 4,665    |    
|                                      | Other current assets                                                                  |                                                                                                                                             |                                            | 731      |                |        |                  | 771      |    
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|                                      |                                                                                       |                                                                                                                                             | Total current assets                       |          |                | 45,169 |                  |          |     | 42,249 | 
|Property, plant and equipment, net    |                                                                                       |                                                                                                                                             | 36,291                                     |          |                |        | 30,162           |         
|Other assets                          |                                                                                       |                                                                                                                                             | 11,795                                     |          |                |        | 11,776           |         
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|                                      |                                                                                       |                                                                                                                                             | Total assets                               |          | $              | 93,255 |                  |          | $   | 84,187 | 
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|Liabilities and stockholders equity: |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|Current liabilities:                  |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|                                      | Accounts payable                                                                      |                                                                                                                                             | $                                          | 1,622    |                |        | $                | 1,348    |    
|                                      | Accrued expenses                                                                      |                                                                                                                                             |                                            | 5,138    |                |        |                  | 4,949    |    
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|                                      |                                                                                       |                                                                                                                                             | Total current liabilities                  |          |                | 6,760  |                  |          |     | 6,297  | 
|Long-term debt                        |                                                                                       |                                                                                                                                             | 9,425                                      |          |                |        | 5,205            |         
|Deferred compensation                 |                                                                                       |                                                                                                                                             | 1,773                                      |          |                |        | 1,792            |         
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|                                      |                                                                                       |                                                                                                                                             | Total long-term liabilities                |          |                | 11,198 |                  |          |     | 6,997  | 
|Stockholders equity:                 |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|                                      | Preferred stock, $0.01 par value,
30,000,000 shares authorized, no shares outstanding |                                                                                                                                             |                                            |         |                |        |                  |         |    
|                                      | Common stock:                                                                         |                                                                                                                                             |                                            |          |                |        |                  |          |    
|                                      |                                                                                       | Class A, $0.01 par value, 100,000,000 shares
authorized, 28,507,269 shares
outstanding at April 30, 2002 and 25,225,083
at October 31, 2001 |                                            |          | 285            |        |                  |          | 252 |       
|                                      |                                                                                       | Class B, $1.00 par value, 179 shares
authorized, 117.7 shares outstanding                                                                   |                                            |          |               |        |                  |          |    |       
|                                      | Capital in excess of par value                                                        |                                                                                                                                             |                                            | 410,313  |                |        |                  | 383,570  |    
|                                      | Contributed capital                                                                   |                                                                                                                                             |                                            | 24,574   |                |        |                  | 24,574   |    
|                                      | Notes receivable                                                                      |                                                                                                                                             |                                            | (1,611   | )              |        |                  | (1,655   | )  
|                                      | Accumulated deficit                                                                   |                                                                                                                                             |                                            | (358,264 | )              |        |                  | (335,848 | )  
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|Total stockholders equity            |                                                                                       |                                                                                                                                             | 75,297                                     |          |                |        | 70,893           |         
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         
|                                      |                                                                                       |                                                                                                                                             | Total liabilities and stockholders
equity |          | $              | 93,255 |                  |          | $   | 84,187 | 
|                                      |                                                                                       |                                                                                                                                             |                                            |          |                |        |                  |         

Note: The balance sheet at October 31, 2001 has been derived from the audited
financial statements at that date, but does not include all of the information
and footnotes required by accounting principles generally accepted in the
United States for complete financial statements.

See accompanying notes.





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| | FORM 10-Q
PART I
ITEM 1
PAGE 2
| | ------------------------------




BIOPURE CORPORATION

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

|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |        |        | 
|-------------------- | ------------------------------------------------------------------------- | ------------------------ | ------- | ------------------ | ------ | ---------------- | ------- | -------------- | ------ | -------------- | ------- | ------ | ------ | - | ------- | ------ | ------ | 
|                     |                                                                           |                          |         | Three Months Ended |        | Six Months Ended
|                     |                                                                           |                          |         |                    |        |                 
|                     |                                                                           |                          |         | April 30, 2002     |        | April 30, 2001   |         | April 30, 2002 |        | April 30, 2001
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |               
|Revenues:            |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|                     | Oxyglobin                                                                 |                          | $       | 928                |        |                  | $       | 837            |        |                | $       | 1,656  |        |   | $       | 1,568  |       
|                     | Other                                                                     |                          |         |                   |        |                  |         | 1              |        |                |         |       |        |   |         | 5      |       
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|                     |                                                                           | Total revenues           |         |                    | 928    |                  |         |                | 838    |                |         |        | 1,656  |   |         |        | 1,573  | 
|Cost of revenues     |                                                                           |                          | 919     |                    |        |                  | 914     |                |        |                | 1,746   |        |        |   | 1,684   |       
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|Gross profit (loss)  |                                                                           |                          | 9       |                    |        |                  | (76     | )              |        |                | (90     | )      |        |   | (111    | )     
|Operating expenses:  |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|                     | Research and development                                                  |                          |         | 8,153              |        |                  |         | 9,002          |        |                |         | 15,125 |        |   |         | 17,189 |       
|                     | Sales and marketing                                                       |                          |         | 615                |        |                  |         | 664            |        |                |         | 1,078  |        |   |         | 1,286  |       
|                     | General and administrative                                                |                          |         | 4,129              |        |                  |         | 8,753          |        |                |         | 6,734  |        |   |         | 11,826 |       
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|                     |                                                                           | Total operating expenses |         |                    | 12,897 |                  |         |                | 18,419 |                |         |        | 22,937 |   |         |        | 30,301 | 
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|Loss from operations |                                                                           |                          | (12,888 | )                  |        |                  | (18,495 | )              |        |                | (23,027 | )      |        |   | (30,412 | )     
|Other income, net    |                                                                           |                          | 161     |                    |        |                  | 990     |                |        |                | 611     |        |        |   | 2,306   |       
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|Net loss             |                                                                           | $                        | (12,727 | )                  |        | $                | (17,505 | )              |        | $              | (22,416 | )      |        | $ | (28,106 | )     
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|Per share data:      |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|                     | Basic net loss per common share                                           |                          | $       | (0.49              | )      |                  | $       | (0.70          | )      |                | $       | (0.87  | )      |   | $       | (1.13  | )     
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       
|                     | Weighted-average shares used in
computing basic net loss
per common share |                          |         | 25,993             |        |                  |         | 24,958         |        |                |         | 25,692 |        |   |         | 24,959 |       
|                     |                                                                           |                          |         |                    |        |                  |         |                |        |                |         |        |        |   |         |       

See accompanying notes.





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| | FORM 10-Q
PART I
ITEM 1
PAGE 3
| | ------------------------------




BIOPURE CORPORATION

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

|                                                     |                                                                                         |                                                    |                                           |         |                  |         |                |         |       |         |  
|---------------------------------------------------- | --------------------------------------------------------------------------------------- | -------------------------------------------------- | ----------------------------------------- | ------- | ---------------- | ------- | -------------- | ------- | ----- | ------- | -
|                                                     |                                                                                         |                                                    |                                           |         | Six Months Ended
|                                                     |                                                                                         |                                                    |                                           |         |                 
|                                                     |                                                                                         |                                                    |                                           |         | April 30, 2002   |         | April 30, 2001
|                                                     |                                                                                         |                                                    |                                           |         |                  |         |               
|Operating activities:                                |                                                                                         |                                                    |                                           |         |                  |         |                |        
|                                                     | Net loss                                                                                |                                                    | $                                         | (22,416 | )                |         | $              | (28,106 | )    
|                                                     | Adjustments to reconcile net loss to net
cash used in operating activities:             |                                                    |                                           |         |                  |         |                |         |      
|                                                     |                                                                                         | Depreciation and amortization                      |                                           |         | 2,095            |         |                |         | 2,103 |        
|                                                     |                                                                                         | Equity compensation                                |                                           |         | (132             | )       |                |         | 7,717 |        
|                                                     |                                                                                         | Deferred compensation                              |                                           |         | (19              | )       |                |         | (29   | )      
|                                                     |                                                                                         | Accrued interest on stockholders notes receivable |                                           |         | (36              | )       |                |         | (50   | )      
|                                                     |                                                                                         | Changes in assets and liabilities:                 |                                           |         |                  |         |                |         |       |        
|                                                     |                                                                                         |                                                    | Accounts receivable                       |         |                  | 88      |                |         |       | (3      | )
|                                                     |                                                                                         |                                                    | Inventories                               |         |                  | 1,806   |                |         |       | (557    | )
|                                                     |                                                                                         |                                                    | Other current assets                      |         |                  | 40      |                |         |       | (64     | )
|                                                     |                                                                                         |                                                    | Accounts payable                          |         |                  | 274     |                |         |       | (501    | )
|                                                     |                                                                                         |                                                    | Accrued expenses                          |         |                  | 189     |                |         |       | 1,657   |  
|                                                     |                                                                                         |                                                    |                                           |         |                  |         |                |        
|                                                     |                                                                                         |                                                    | Net cash used in operating activities     |         |                  | (18,111 | )              |         |       | (17,833 | )
|Investing activities:                                |                                                                                         |                                                    |                                           |         |                  |         |                |        
|                                                     | Purchase of property, plant and equipment                                               |                                                    |                                           | (3,976  | )                |         |                | (1,666  | )    
|                                                     | Other assets                                                                            |                                                    |                                           | (115    | )                |         |                | (10     | )    
|                                                     |                                                                                         |                                                    |                                           |         |                  |         |                |        
|                                                     |                                                                                         |                                                    | Net cash used in investing activities     |         |                  | (4,091  | )              |         |       | (1,676  | )
|Financing activities:                                |                                                                                         |                                                    |                                           |         |                  |         |                |        
|                                                     | Net proceeds from sale of common stock                                                  |                                                    |                                           | 26,935  |                  |         |                |        |      
|                                                     | Payment of notes receivable from stockholders                                           |                                                    |                                           | 80      |                  |         |                | 337     |      
|                                                     | Proceeds from exercise of options and warrants                                          |                                                    |                                           | 41      |                  |         |                | 1,532   |      
|                                                     | Proceeds from exercise of non lapse restricted stock                                    |                                                    |                                           |        |                  |         |                | 132     |      
|                                                     |                                                                                         |                                                    |                                           |         |                  |         |                |        
|                                                     |                                                                                         |                                                    | Net cash provided by financing activities |         |                  | 27,056  |                |         |       | 2,001   |  
|Net increase (decrease) in cash and cash equivalents |                                                                                         |                                                    | 4,854                                     |         |                  |         | (17,508        | )      
|Cash and cash equivalents at beginning of period     |                                                                                         |                                                    | 36,089                                    |         |                  |         | 88,828         |        
|                                                     |                                                                                         |                                                    |                                           |         |                  |         |                |        
|Cash and cash equivalents at end of period           |                                                                                         | $                                                  | 40,943                                    |         |                  | $       | 71,320         |        
|                                                     |                                                                                         |                                                    |                                           |         |                  |         |                |        
|Non-cash transactions:                               |                                                                                         |                                                    |                                           |         |                  |         |                |        
|                                                     | New facility construction financed through
capital lease (classified as long-term debt) |                                                    | $                                         | 4,220   |                  |         | $              |        |      
|                                                     |                                                                                         |                                                    |                                           |         |                  |         |                |        

See accompanying notes.





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| | FORM 10-Q
PART I
ITEM 1
PAGE 4
| | ------------------------------




BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
April 30, 2002
(Unaudited)

1.  Basis of Presentation



| |  | The accompanying unaudited condensed consolidated financial statements
have been prepared in accordance with accounting principles generally
accepted in the United States for interim financial information and
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC). Accordingly, they do not include all of the
information and footnotes required by accounting principles generally
accepted in the United States for complete financial statements.                                                                                                                     
| |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have
been included. Operating results for the three and six month periods
ended April 30, 2002 are not necessarily indicative of the results that
may be expected for the year ending October 31, 2002.                                                                                                                                                                                                                                                                
|
| |  | 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 $358,264,000 as of April 30,
2002. Management expects that the Company will continue to generate
losses from operations for the foreseeable future. The Company will
explore opportunities to raise capital through sales of equity and debt
securities, potential joint venture or licensing agreements, bank
borrowings or leasing arrangements.
|
| |  | 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, 2001.                                                                                                                                                                                                                                                                                                                                                                                                                        

2.  Net Loss per Share



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

3.  Inventories



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

|                         |  |                |       |                  |  |   |       | 
|------------------------ |  | -------------- | ----- | ---------------- |  | - | ----- | 
|                         |  | April 30, 2002 |       | October 31, 2001
|                         |  |                |       |                 
|In thousands             |  |                |       |                  |  |   |       | 
|Raw materials            |  | $              | 1,903 |                  |  | $ | 771   | 
|Work-in-process          |  |                | 132   |                  |  |   | 243   | 
|Finished goods-Oxyglobin |  |                | 436   |                  |  |   | 1,886 | 
|Finished goods-Hemopure  |  |                | 388   |                  |  |   | 1,765 | 
|                         |  |                |       |                  |  |   |       | 
|                         |  | $              | 2,859 |                  |  | $ | 4,665 | 
|                         |  |                |       |                  |  |   |       | 





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| | FORM 10-Q
PART I
ITEM 1
PAGE 5
| | ------------------------------

BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
April 30, 2002
(Unaudited)
(Continued)

4.  Accrued Expenses

Accrued expenses consisted of the following:

|                                              |  |                |       |                  |  |   |       | 
|--------------------------------------------- |  | -------------- | ----- | ---------------- |  | - | ----- | 
|                                              |  | April 30, 2002 |       | October 31, 2001
|                                              |  |                |       |                 
|In thousands                                  |  |                |       |                  |  |   |       | 
|Clinical trials                               |  |                | 736   |                  |  |   | 662   | 
|Preparation of biologic license application   |  |                | 828   |                  |  |   | 306   | 
|Capacity upgrade                              |  |                | 317   |                  |  |   | 375   | 
|Accrued payroll and related employee expenses |  |                | 1,451 |                  |  |   | 1,365 | 
|Accrued vacation                              |  |                | 486   |                  |  |   | 398   | 
|Other                                         |  |                | 1,320 |                  |  |   | 1,843 | 
|                                              |  |                |       |                  |  |   |       | 
|                                              |  | $              | 5,138 |                  |  | $ | 4,949 | 
|                                              |  |                |       |                  |  |   |       | 

5.  Commitment



| |  | In December 2001, Sumter Realty Group, LLC signed an amended letter of
intent for the construction and financing of a new 500,000 unit Hemopure
plant in South Carolina. The new plant is expected to cost
approximately $120,000,000 and is expected to be financed through a
capital lease. As such, the financial statements include property,
plant and equipment and offsetting debt. During 2001, Biopure deposited
$10,000,000 into an escrow account, which has been recorded as a deposit
in long-term assets. These escrow funds, constituting the Companys
cash contribution during the construction phase of the new facility, are
being used to fund initial expenditures for the new facility. Under the
agreement, the $10,000,000 in project cost funded by Biopure is expected
to be refunded upon receipt of approval of Hemopure by the United States
Food and Drug Administration (FDA) and if a formal lease agreement has
been executed. 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, and as a capital expenditure will be subject to an
immediate impairment review pursuant to SFAS No. 121, Accounting for
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of. As of
April 30, 2002, $9,425,000 has been included in property, plant and
equipment and long term debt reflecting expenditures to date for the
engineering and design costs of the facility. A lease for the South
Carolina facility has not yet been signed.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | The Company expects to spend up to an additional $2,100,000 for detailed
engineering work, including shop drawings for major equipment and steel
fabrication.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    





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| | FORM 10-Q
PART I
ITEM 1
PAGE 6
| | ------------------------------

BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements
April 30, 2002
(Unaudited)
(Continued)

6.  Financing Activities



| |  | On March 11, 2002, the Company filed a $30,000,000 common stock shelf
registration statement with the SEC to facilitate future financings. On
April 23, 2002, the Company raised net proceeds of $19,685,000 from the
sale of 2,766,665 shares of its common stock in connection with an
offering of these registered shares. The Company issued 65,000 warrants
to the placement agent for these shares with an exercise price equal to
the closing price on April 23, 2002. An additional $4,800,000 in net
proceeds was raised on May 9, 2002 from the sale of 690,000 shares of
its common stock in connection with another offering of these registered
shares. The Company issued 20,700 warrants to the placement agent for
these shares with an exercise price equal to the closing price on May 9,
2002.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  | Biopure is a party to a $75,000,000 equity line stock purchase agreement
with Société Générale. Under this agreement, Biopure has the option of
drawing up to a balance (as of April 30, 2002) of $67,750,000 until June
2003, subject to certain limitations, in exchange for the issuance of
Biopure common stock. The primary limitation on use of the line is a
minimum trading price for our common stock of $13 per share, unless
waived. The Company is under no obligation to draw down additional
funds, and as of April 30, 2002 had drawn $7,250,000. The Company is
currently unable to raise funds through this agreement because its
recent stock prices have been below the minimum price specified in the
agreement.                                                                             

7.  Litigation



| |  | Biopure and its Chairman and Chief Executive Officer were named as
defendants in five related cases, purporting to be class actions, filed
on February 5, 2002, February 22, 2002, March 15, 2002 and two on March
12, 2002, respectively (the complaints), in the U.S. District Court
for the District of Massachusetts (the Court) by alleged purchasers of
Biopures common stock. The complaints claim that Biopure violated the
federal securities laws by publicly disseminating materially false and
misleading statements regarding the anticipated time of a biologic
license application Biopure expected to make to the U.S. Food and Drug
Administration, resulting in the artificial inflation of Biopures
common stock price during the purported class period. The complaints do not specify the amount of
alleged damages plaintiffs seek to recover. On May 15, 2002, the Court
held a hearing on the defendants pending motions to dismiss the
complaints. By order dated May 16, 2002, the Court declined to rule on
the motions to dismiss at the present time. Instead, the Court
consolidated the complaints, granted the plaintiffs leave to file a
consolidated, amended complaint (the amended complaint) and granted
the defendants leave to file a renewed motion to dismiss within fourteen
(14) days after the filing of any amended complaint. The
plaintiffs filed the amended complaint, which sets forth a class
period of May 8, 2001 through March 21, 2002. Oral argument on
the renewed motion to dismiss will be heard by the Court on June 20,
2002. The defendants believe that the complaints are without merit and
intend to defend the actions vigorously. At this time, the Company
cannot estimate what impact, if any, these cases may have on the
financial statements.
| |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





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| | FORM 10-Q
PART I
ITEM 1
PAGE 7
| | ------------------------------

BIOPURE CORPORATION

Independent Accountants Review Report

The Board of Directors
Biopure Corporation

We have reviewed the accompanying condensed consolidated balance sheet of
Biopure Corporation (the Company) as of April 30, 2002, and
the related condensed consolidated statements of operations for the
three-month and six-month periods ended
April 30, 2002 and 2001  and the condensed
consolidated statements of cash flows for the six-month periods ended
April 30, 2002 and 2001. These financial statements are the responsibility of
the Companys management.

We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data, and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with auditing standards generally accepted in the United States,
which will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.

Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial statements
referred to above for them to be in conformity with accounting principles
generally accepted in the United States.

We have previously audited, in accordance with auditing standards generally
accepted in the United States, the consolidated balance sheet of the Company as
of October 31, 2001, and the related consolidated statements of operations,
stockholders equity, and cash flows for the year then ended (not presented
herein) and in our report dated December 10, 2001 (except for Note 14, as to
which the date is January 22, 2002), we expressed an unqualified opinion on
those consolidated financial statements. In our opinion, the information set
forth in the accompanying condensed consolidated balance sheet as of October
31, 2001, is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.



| | /s/ Ernst & Young LLP
| | ---------------------

Boston, Massachusetts
June 10, 2002





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| | FORM 10-Q
PART I
ITEM 2
PAGE 8
| | ------------------------------

BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
April 30, 2002

Cautionary Statement Regarding Forward-Looking Information

The following discussion of our financial condition and results of operations
should be read in conjunction with the Condensed Consolidated Financial
Statements and the related Notes included elsewhere in this report. Except for
strictly historical information contained herein, matters discussed in this
report constitute forward-looking statements. When used herein, the words
expects, estimates, intends, plans, should, anticipates and similar
expressions are intended to identify such forward-looking statements. Actual
results could differ materially from those set forth in the forward-looking
statements. There can be no assurance that Biopure will be able to
commercially develop its oxygen therapeutic products, that necessary regulatory
approvals will be obtained, that anticipated milestones will be met in the
expected timetable, that any clinical trials will be successful, or that any
approved product will attain market acceptance and be sold in the quantities
anticipated. Actual results may differ from those projected in forward-looking
statements due to risks and uncertainties that exist in the Companys
operations and business environment. These risks include, without limitation,
the Companys stage of product development, history of operating losses,
accumulating deficits, and uncertainties and possible delays related to
clinical trials, regulatory approvals, possible healthcare reform,
manufacturing capacity, market acceptance, competition and the availability of
sufficient financing to support operations. In light of the substantial risks
and uncertainties inherent in all future projections, the inclusion of
forward-looking statements in this report should not be regarded as
representations by the Company that the objectives or plans of the Company will
be achieved. The Company undertakes no obligation to release publicly the
results of revisions to these forward-looking statements to reflect events or
circumstances after the date hereof. Reference is made in particular to the
risk factors set forth in Exhibit 99 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.

Overview

We are a leading developer, manufacturer and supplier of a new class of
pharmaceuticals, called oxygen therapeutics. Our oxygen therapeutics are
administered intravenously into the circulatory system to increase oxygen
delivery to the bodys tissues. We have developed and manufacture, using a
proprietary process and patented technology, two hemoglobin-based oxygen
carriers. Two Phase III clinical trials have been completed for Hemopure and
are expected to be a major component of our application to the FDA for
marketing approval in the United States. In fiscal 2001, Hemopure was approved
in South Africa for the treatment of adult surgical patients who are acutely
anemic and for the purpose of eliminating, delaying or reducing the need for
allogenic red blood cells in these patients. Oxyglobin, for veterinary use, is
the only hemoglobin-based oxygen carrier approved by the FDA and the European
Medicines Evaluation Agency.

Since inception, we have devoted substantially all of our resources to our
research and development programs and manufacturing. We have been dependent
upon funding from debt and equity financings, strategic alliances and interest
income. We have not been profitable since inception and had an accumulated
deficit of $358,264,000 as of April 30, 2002. We expect to incur additional
operating losses over the next several years in connection with clinical
trials, preparation of a marketing application for Hemopure and pre-marketing
expenditures for Hemopure. We began generating revenue from the sale of
Oxyglobin in fiscal 1998.





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| | FORM 10-Q
PART I
ITEM 2
PAGE 9
| | ------------------------------

BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
April 30, 2002
(continued)

We believe our cash and cash equivalents, as of April 30, 2002, and the $4.8
million realized from a public offering under our shelf registration on May 9,
2002 are sufficient to fund our current plan into the third quarter of fiscal
2003. Under this plan our operations for the balance of fiscal 2002 will be in
support of our applications to the FDA and the European regulatory authorities
for marketing approval of Hemopure, the startup and ramp up of production of
Hemopure and Oxyglobin at our upgraded Cambridge manufacturing facility, the
sales of Hemopure to South Africa and the sales of Oxyglobin. Expenditures,
including additional personnel and other costs for research and clinical
development of additional indications for Hemopure and most expenditures in
preparation for marketing and sales of Hemopure in the United States, will be
deferred until sufficient funds, in addition to those on hand, are available.

Critical Accounting Policies

SFAS 121 (and SFAS 144, when applicable) require that long-lived assets be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying amount of an asset may not be recoverable. Our investments
in property and equipment, including construction in progress and the new
facility construction; license agreements related to the source of supply of
our major raw material and a production process; and the asset related to the
initial new facility project costs are the principal long-lived assets that
could be subject to such a review. The events or changes in circumstances,
among others, that may result in an impairment of these assets are a
significant delay in expected regulatory approvals for our human product, a
change in the source of supply of the major raw material, or a significant
reduction in the demand for our products.

Results of Operations

Three months ended April 30, 2002 compared to three months ended April 30, 2001

Total revenues increased 10.7% to $928,000 for the second quarter of fiscal
2002, compared with the corresponding period in fiscal 2001. European sales
were $62,000 for the second quarter of fiscal 2002 compared to $37,000 for the
same period last year. Oxyglobin was first sold into Europe in April of 2001.
Domestic sales increased 8.3%, to $866,000, compared to the same period last
year. This increase reflects an 8.4% increase in units shipped.

Cost of revenues increased slightly in the second quarter of fiscal 2002, to
$919,000, compared to the corresponding period last year. Even though unit
sales increased compared to last year, costs remained relatively unchanged due
to an increase in the unabsorbed fixed manufacturing costs, incurred during the
Cambridge facility expansion, allocated to cost of revenues for Oxyglobin,
offset by a credit for Oxyglobin units reserved for in a prior period. Cost of
revenues includes the direct costs associated with the production of Oxyglobin
plus an allocation of a portion of the unabsorbed fixed costs of manufacturing.
The remainder of these unabsorbed fixed costs, incurred during the Cambridge
facility expansion, was allocated to research and development. The above
allocations are based on current and expected production levels and annual
production capacities and require the judgment of Biopures management.





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| | FORM 10-Q
PART I
ITEM 2
PAGE 10
| | -------------------------------

BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
April 30, 2002
(Continued)

Research and development expenses include product and process development and
engineering, pre-clinical studies, clinical trials, clinical trial materials
and an allocation of unabsorbed fixed costs of manufacturing. Our
research and development efforts have been focused on developing and gaining
regulatory approval of
Hemopure, our product for use in humans. These efforts are now focused on the
preparation of our biologic license application to be filed with the FDA. The
development and approval of Oxyglobin, our veterinary product, was a result of
the development of Hemopure. Hemopure is approved for use in South Africa.
Failure to gain one or more additional regulatory approvals during the next
several years would make it difficult for the Company to continue its
development efforts.

Research and development expenses decreased 9.4% to $8,153,000 for the second
quarter of fiscal 2002, compared to the second quarter of fiscal 2001. The
decrease is primarily due to a $2,087,000 reduction in expenses for activities
associated with data organization and analysis for the U.S. Phase III clinical
trial of Hemopure in patients undergoing elective orthopedic surgery. This
decrease in expenses during the second quarter of fiscal 2002 was partially
offset by increased expenses of $929,000 in preparation for the filing of a
biologic license application with the FDA, in mid-2002 (end of July), and the
unabsorbed fixed manufacturing costs of $367,000, incurred during the Cambridge
facility expansion, allocated to research and development.

Sales and marketing expenses, consisting of Oxyglobin expenses, decreased 7.4%
to $615,000 for the second quarter of fiscal 2002. The decrease was primarily
due to reductions in veterinarian educational programs designed to manage
demand and ensure sufficient supply during the Cambridge manufacturing facility
shutdown partially offset by increased Oxyglobin marketing expenses in Europe.
Marketing expenses for Hemopure, currently classified as general and
administrative expenses because there are no Hemopure revenues, are expected to
be included as sales and marketing expenses when sales to South Africa begin.

General and administrative expenses decreased 52.8% to $4,129,000 for the
second quarter of fiscal 2002 compared to the same period in 2001. This
decrease is due primarily to non-cash charges for stock options and warrants
issued to non-employees that vested fully in fiscal 2001 and for which no
further charges are required. The second quarter of fiscal 2001 included an
expense of $6,370,000 compared to an expense of $13,000 for the corresponding
period in fiscal 2002. Before the non-cash compensation charges, expenses for
the second quarter of fiscal 2002 increased $1,733,000 primarily due to
increased Hemopure marketing expenses, including $1,252,000 for product shipped
to South Africa for use in a pre-launch medical education program, and
increased consulting expenses compared to last year.

Other income was $161,000 in the second quarter of fiscal 2002, compared to
$990,000 in the second quarter of fiscal 2001. This decrease reflects the
Companys reduced cash balance and lower interest rates.

Six months ended April 30, 2002 compared to six months ended April 30, 2001

Total revenues increased 5.3% to $1,656,000 for the first six months of fiscal
2002, compared with the corresponding period in 2001. Oxyglobin sales in
Europe were $127,000 for the first six months of fiscal 2002 compared to
$37,000 in fiscal 2001. Oxyglobin was first sold into Europe in April of 2001.
Domestic sales remained relatively unchanged for the first six months of
fiscal 2002 compared to last year because the Company





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| | FORM 10-Q
PART I
ITEM 2
PAGE 11
| | -------------------------------

BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
April 30, 2002
(Continued)

managed its unit sales volume and product inventory during the capacity
expansion and revalidation of its manufacturing facilities.

Cost of revenues increased 3.7% to $1,746,000 in the first six months of fiscal
2002 compared to the corresponding period last year due to the increased unit
sales of Oxyglobin into Europe. Cost of revenues includes the direct costs
associated with the production of Oxyglobin plus an allocation of a portion of
the unabsorbed fixed costs of manufacturing. The remainder of these unabsorbed
fixed costs was allocated to research and development. The above allocations
are based on current and expected production levels and annual production
capacities and require the judgment of Biopures management.

Research and development expenses decreased 12.0% to $15,125,000 for the first
six months of fiscal 2002 compared to the corresponding period last year. The
decrease is primarily due to a $3,928,000 reduction in expenses for the U.S.
pivotal Phase III clinical trial of Hemopure. During the first six months of
fiscal 2001, there were significant expenses for the monitoring and closing of
clinical sites, for the Safety Endpoint Evaluation Committee (SEEC) and for
data organization and analysis. In the first six months of fiscal 2002,
expenses for other clinical trials and pre-clinical work for additional
Hemopure applications also decreased by $651,000. This decrease in spending
was partially offset by increased expenses of $1,311,000 in preparation for the
expected filing of a biologic license application with the FDA, in mid-2002
(end of July), and the unabsorbed fixed manufacturing costs of $1,203,000,
incurred during the Cambridge facility expansion, allocated to research and
development.

Sales and marketing expenses decreased 16.2% to $1,078,000 for the first six
months of fiscal 2002. This decrease was primarily due to reductions in
veterinarian educational programs designed to manage demand and ensure
sufficient supply during the Cambridge manufacturing facility expansion.
Marketing expenses for Hemopure, currently classified as general and
administrative expenses because there are no Hemopure revenues, are expected to
be included as sales and marketing expenses when sales to South Africa begin.

General and administrative expenses were $6,734,000 for the first six months of
fiscal 2002, a reduction of 43.1% compared to the same period last year. This
decrease is due primarily to non-cash charges for stock options and warrants
issued to non-employees that vested fully in fiscal 2001 and for which no
further charges are required. The first six months of fiscal 2001 included an
expense of $7,717,000 compared to a credit of $132,000 for the corresponding
period in fiscal 2002. Before the non-cash compensation charges, expenses for
the first six months of fiscal 2002 increased $2,757,000 primarily due to
increased Hemopure marketing expenses, including $1,252,000 for product shipped
to South Africa for use in a pre-launch medical education program, and
increased information technology, consulting and occupancy expenses compared to
last year.

Other income was $611,000 in the first six months of fiscal 2002, compared to
$2,306,000 in the first six months of fiscal 2001. This decrease reflects the
Companys reduced cash balance and lower interest rates. Included in other
income for the first six months of 2002 is $238,000 received as a contingent
payment for a 1998 intellectual property transfer not related to Hemopure or
Oxyglobin.

Liquidity and Capital Resources

At April 30, 2002, we had $40,943,000 in cash and cash equivalents including
$26,935,000 raised through the sales of equity in the first six months of
fiscal 2002. On May 9, 2002, we realized an additional $4,800,000 in





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| | FORM 10-Q
PART I
ITEM 2
PAGE 12
| | -------------------------------

BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
April 30, 2002
(Continued)

net proceeds from sales of common stock. Based on our current operating plan
we require approximately $19,500,000 for the last six months of fiscal 2002 to
support our applications to the FDA and the
European regulatory authorities for marketing approval of Hemopure, the startup
and ramp up of production of Hemopure and Oxyglobin at our expanded Cambridge
manufacturing facility, the additional spending for detailed engineering for
the South Carolina manufacturing facility discussed below, sales of Hemopure to
South Africa and sales of Oxyglobin. The cash on hand on April 30, 2002 and
the additional funds raised in May are expected to fund operations into the
third quarter of fiscal 2003 per the Companys current operating plan.

Expenditures, including additional personnel and other costs for research and
clinical development of additional indications for Hemopure and most
expenditures in preparation for marketing and sales of Hemopure in the United
States, will be deferred until sufficient funds, in addition to those on hand,
are available. Should managements plans not develop as anticipated, the
Company will restrict certain of its planned activities and operations, as
necessary, to sustain operations and conserve cash resources. Our cash
requirements and our forecast of the period of time through which our financial
resources would be adequate to support our operations may vary significantly
from current projections and actual results may vary.

In December 2001, the Company signed an amended letter of intent for the
construction and financing of a new 500,000 unit Hemopure plant in South
Carolina expected to cost $120,000,000. During fiscal 2001, we paid
$10,000,000, Biopures contribution to the cost of the facility, into an escrow
account to fund certain initial expenditures related to the construction of the
new facility. Under the proposed agreement for the construction and financing
of the new plant, the $10,000,000 in project cost funded by Biopure is expected
to be refunded upon receipt of FDA approval for Hemopure. The $10,000,000 has
been accounted for as a deposit in long-term 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, and as a capital expenditure will be
subject to immediate impairment review pursuant to SFAS No. 121 (and SFAS 144,
when applicable). As of April 30, 2002, $9,425,000 has been included in
property, plant and equipment and long term debt reflecting expenses to date
for the engineering of the facility paid from the escrow. The Company expects
to spend up to an additional $2,100,000 for detailed engineering work,
including shop drawings for major equipment and steel fabrication, to maintain
the timeline for a validated, FDA-approved plant and profitability in fiscal
2005.

Biopure is a party to a $75,000,000 equity line stock purchase agreement with
Société Générale. Under this agreement, Biopure has the option of drawing up
to a balance of $67,750,000 until June 2003, subject to certain limitations, in
exchange for the issuance of Biopure common stock. The primary limitation on
use of the line is a minimum trading price for our common stock of $13 per
share, unless waived. The Company is under no obligation to draw down funds,
and as of May 31, 2002, had drawn $7,250,000, all in fiscal 2002, under this
agreement. The Company is currently unable to raise funds through this
agreement because its recent stock prices have been below the minimum price
specified in the agreement.

We plan to spend approximately $2,000,000 in the balance of fiscal 2002 and
approximately $5,000,000 in fiscal 2003 on capital projects for our existing
facilities. The fiscal 2002 planned expenditures are included in the cash
requirements for fiscal 2002 identified above.





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| | FORM 10-Q
PART I
ITEM 2
PAGE 13
| | -------------------------------

BIOPURE CORPORATION

Managements Discussion and Analysis of
Financial Condition and Results of Operations
April 30, 2002
(Continued)

We plan to continue financing our operations, until we are profitable, through
sales of securities, bank borrowings and leasing arrangements. On March 11,
2002, we filed a $30,000,000 common stock shelf
registration statement with the SEC to facilitate future financings. On April
23, 2002, the Company raised net proceeds of $19,685,000 from an offering of
these registered shares. We realized an additional $4,800,000 in net proceeds
from another offering of these registered shares on May 9, 2002. The Company
may sell additional shares under this shelf registration. We will also explore
licensing and partnering arrangements where appropriate. We have not been
profitable since inception and had an accumulated deficit of $358,264,000 as of
April 30, 2002. We will continue to generate losses for the next several
years.

As of October 31, 2001, we had net operating loss carryforwards of
approximately $195,100,000 to offset future federal and state taxable income
through 2021. Due to the degree of uncertainty related to the ultimate
realization of such prior losses, no benefit has been recognized in our
financial statements as of April 30, 2002. Utilization of such losses in
future years may be limited under the change of stock ownership rules of the
Internal Revenue Service.

Quantitative and Qualitative Disclosure About Market Risk

The Company currently does not have any foreign currency exchange risks, with
the exception of negligible exchange fluctuations associated with expenses for
regulatory activities outside of the United States. Biopure sells Oxyglobin to
its European distributors and plans to sell Hemopure to its South African
distributor in 2002 in U.S. dollars. The customers bear the risk of foreign
currency exchange fluctuation. Dramatic fluctuations in exchange rates could
result in either increases or decreases in unit sales as the effective unit
price to the customer varies. The Company invests its cash and cash
equivalents in high-grade commercial paper and money market funds. These
investments are subject to interest rate risk. However, due to the nature of
the Companys short-term investments, it believes that the financial market
risk exposure is not material.





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| | FORM 10-Q
PART II
ITEM 1-6
PAGE 14
| | ----------------------------------

BIOPURE CORPORATION
Part II  Other Information
April 30, 2002




Item 1.  Legal Proceedings

The description of legal proceedings set forth in note 7 to the financial
statements in this report is incorporated herein by reference.




Item 2.  Changes in Securities and Use of Proceeds

On April 23, 2002, the Company issued warrants to purchase 65,000 shares of
class A common stock to Shoreline Pacific, LLC. On May 9, 2002 the Company
issued warrants to purchase 20,700 shares of class A common stock to DP
Securities, Inc. The warrants were issued in consideration of services
rendered in the public sale by the Company of 3,456,665 shares of class A
common stock. The warrants are exercisable for three years beginning
on the first anniversary of their issuance. The Company relied on the
exemption in Section 4(2) of the Securities Act of 1933.




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



|(a) |  | The Company held its 2002 annual meeting on April 3, 2002.                                                                                                                                                                                                                 
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | David N. Judelson, Carl W. Rausch and Charles A. Sanders, M.D., were
elected as directors at the meeting. The other directors whose terms of
office continued after the meeting are J. Richard Crout, M.D., Daniel P.
Harrington, C. Everett Koop, M.D. and Paul A. Looney.
|   
|(c) |  | The shares voted were:                                                                                                                                                                                                                                                     

|                         |  |     |            |          |  |  |         | 
|------------------------ |  | --- | ---------- | -------- |  |  | ------- | 
|                         |  | For |            | Withheld
|                         |  |     |            |         
|David N. Judelson        |  |     | 22,754,682 |          |  |  | 224,190 | 
|Carl W. Rausch           |  |     | 22,748,067 |          |  |  | 230,805 | 
|Charles A. Sanders, M.D. |  |     | 22,803,300 |          |  |  | 175,572 | 



|(d) |  | The 2002 Omnibus Securities and Incentive Plan was approved and the
shares voted were as follows:
|--- |  | -------------------------------------------------------------------------------------------------

|           |  |         |         |         |  |  |         | 
|---------- |  | ------- | ------- | ------- |  |  | ------- | 
|For        |  | Against |         | Abstain
|           |  |         |         |        
|21,056,071 |  |         | 980,378 |         |  |  | 942,423 | 

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




Item 6.  Exhibits and Reports on Form 8-K



|(a) |  | The exhibits are listed in the accompanying Exhibit Index.                           
|--- |  | -------------------------------------------------------------------------------------
|   
|(b) |  | A report on Form 8-K, amended by a report on Form 8-K/A, was filed on
March 13, 2002.
|   
|(c) |  | A report on Form 8-K was filed on April 26, 2002.                                    





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| | FORM 10-Q
PART II
PAGE 15
| | -------------------------

SIGNATURES

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

|                    |  |                     |  |                                                                                                             
|------------------- |  | ------------------- |  | ------------------------------------------------------------------------------------------------------------
|                    |  | BIOPURE CORPORATION
|                   
|Date: June 14, 2002 |  | 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   |  | 2002 Omnibus Securities and Incentive Plan                                                             
|10.2   |  | Placement agency agreement dated as of May 1, 2002, between Biopure
Corporation and DP Securities, Inc.
|10.3   |  | Placement Agents Warrant, dated May 9, 2002, delivered to DP Securities, Inc.                         
|15     |  | Acknowledgement Letter of Ernst & Young LLP                                                            
|99     |  | Risk Factors