U.S. SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

                                   (Mark One)

[X]   QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

      For the quarterly period ended: September 30, 1999
                                      ------------------

                                       OR

[ ]   TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
      OF 1934

                          Commission File No.: 0-20726
                                               -------

                                 Cortech, Inc.
           ----------------------------------------------------------
        (Exact name of small business issuer as specified in its charter)

          Delaware                                             84-0894091
 ------------------------------                            ------------------
(State or other jurisdiction of                             (I.R.S. Employer
incorporation or organization)                             Identification No.)


                376 Main Street, PO Box 74, Bedminster, NJ 07921
                ------------------------------------------------
                    (Address of principal executive offices)


                                 (908) 234-1881
                            -------------------------
                           (Issuer's telephone number)

                                      N/A
               --------------------------------------------------
              (Former name, former address and former fiscal year,
                          if changed since last report)

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

     State the number of shares  outstanding of each of the issuer's  classes of
common equity:  As of October 31, 1999,  the issuer had 1,852,209  shares of its
common stock, par value $.002 per share, outstanding.

     Transitional Small Business Disclosure Format (check one):
                                 Yes     No  X
                                     ---    ---



<PAGE>



PART I.  FINANCIAL INFORMATION
------   ---------------------
ITEM 1.  Financial Statements
------   ---------------------


                                  CORTECH, INC.
                                  BALANCE SHEET
                                 ($000 Omitted)
                                   (UNAUDITED)

                                                              September 30,
                                                                   1999
                                                              -------------
ASSETS

Current assets:
   Cash and cash equivalents                                     $ 13,446
   Prepaid expenses and other                                           9
                                                                 --------
        Total assets                                             $ 13,455
                                                                 ========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                              $     18
   Accrued severance and other compensation                            93
   Other accrued liabilities                                          498
                                                                 --------
        Total liabilities                                             609
                                                                 --------
Stockholders' equity:
   Preferred stock, $.002 par value,
     2,000,000 shares authorized,
     none issued                                                        -
   Common stock, $.002 par value, 5,000,000
     shares authorized, 1,852,209 shares
     issued and outstanding                                             4
   Additional paid-in capital                                      99,830
   Accumulated deficit                                          (  86,988)
                                                                 --------

        Total stockholders' equity                                 12,846
                                                                 --------
        Total liabilities and
          stockholders' equity                                   $ 13,455
                                                                 ========




                 See accompanying notes to financial statements.

<PAGE>



                                  CORTECH, INC.
                            STATEMENTS OF OPERATIONS
                      ($000 Omitted, except per share data)
                                   (UNAUDITED)


                                                      Three Months Ended
                                                         September 30,
                                                      -------------------
                                                       1999         1998
                                                      ------       ------

Revenues:
  Interest income                                    $   157      $   171
  Gain on disposition
    of property and equipment                            125            -
  Other income                                            92            -
                                                     -------      -------
    Total revenues                                       374          171
                                                     -------      -------

Expenses:
  General and administrative                             101        1,452
                                                     -------       ------
    Total expenses                                       101        1,452
                                                     -------       ------


Income (loss) before income taxes                        273     (  1,281)
Provision for income taxes                                10            -
                                                     -------      -------
Net income (loss)                                    $   263     ($ 1,281)
                                                     =======      =======
Basic and fully diluted net
 income (loss) per share                             $   .14     ($   .69)
                                                     =======      =======

Weighted average common
   shares outstanding (in 000's)                       1,852        1,852
                                                     =======      =======





                 See accompanying notes to financial statements.


<PAGE>



                                  CORTECH, INC.
                            STATEMENTS OF OPERATIONS
                      ($000 Omitted, except per share data)
                                   (UNAUDITED)


                                                        Nine Months Ended
                                                           September 30,
                                                        ------------------
                                                        1999         1998
                                                        ----         ----

Revenues:
  Interest income                                     $   408      $   550
  Gain on disposition
   of property and equipment                              435          228
  Gain on sale of licensing
   rights (Note 2)                                      2,000            -
  Other income                                            152           22
                                                      -------      -------
     Total revenues                                     2,995          800
                                                      -------      -------

Expenses:
  General and administrative                              462        4,475
  Research and development                                  -          436
                                                      -------      -------
     Total expenses                                       462        4,911
                                                      -------      -------


Income (loss) before income taxes                       2,533     (  4,111)
Provision for income taxes                                228            -
                                                      -------      -------
Net income (loss)                                     $ 2,305     ($ 4,111)
                                                      =======      =======

Basic and fully diluted net
  income (loss) per share                             $  1.24     ($  2.22)
                                                      =======      =======

Weighted average common
  shares outstanding (in 000's)                         1,852        1,852
                                                      =======      =======




                 See accompanying notes to financial statements.


<PAGE>



                                  CORTECH, INC.
                             STATEMENTS OF CASH FLOWS
                                  ($000 Omitted)
                                   (UNAUDITED)



                                                          Nine Months Ended
                                                            September 30,
                                                        ---------------------
                                                         1999           1998
                                                        ------         ------
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income (loss)                                   $  2,305     ($  4,111)
   Adjustments:
     Depreciation and amortization                            -           527
     Gain on sale of licensing rights                 (   2,000)            -
     Gain on disposition of equipment                 (     435)    (     228)
     Decrease in prepaid expenses and other                  69           177
     Decrease in accounts payable                     (     133)    (     455)
     Decrease in accrued liabilities,
       accrued severance and other                    (     392)    (      20)
                                                       --------      --------
      Net cash used in operating activities           (     586)    (   4,110)
                                                       --------      --------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Proceeds from sales of property and equipment            435           339
   Gain on sale of licensing rights                       2,000             -
   Purchases of short-term investments                        -     (       9)
   Sales of short-term investments                            -         3,850
                                                       --------      --------
      Net cash provided by investing activities           2,435         4,180
                                                       --------      --------

Net increase in cash and cash equivalents                 1,849            70
Cash and cash equivalents, beginning of period           11,597        11,562
                                                       --------      --------
Cash and cash equivalents, end of period               $ 13,446      $ 11,632
                                                       ========      ========


SUPPLEMENTAL DISCLOSURE OF CASH FLOW
   INFORMATION:
       Cash paid for taxes                             $    200      $      -
                                                       ========      ========




                 See accompanying notes to financial statements.

<PAGE>



                                  CORTECH, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           SEPTEMBER 30, 1999 AND 1998
                                  (UNAUDITED)


1.  General
    -------

     The accompanying unaudited financial statements of Cortech, Inc. ("Cortech"
or the  "Company")  as of  September  30,  1999 and for the three and nine month
periods  ended  September  30, 1999 and 1998  reflect all  material  adjustments
consisting  of only  normal  recurring  adjustments,  which,  in the  opinion of
management,  are  necessary for a fair  presentation  of results for the interim
periods.  Certain information and footnote  disclosures required under generally
accepted  accounting  principles have been condensed or omitted  pursuant to the
rules and regulations of the U.S. Securities and Exchange  Commission,  although
the Company  believes that the  disclosures are adequate to make the information
presented  not  misleading.   These  financial  statements  should  be  read  in
conjunction  with the financial  statements  and notes  thereto  included in the
Company's  Annual Report on Form 10-KSB for the year ended  December 31, 1998 as
filed with the U.S. Securities and Exchange Commission.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period. Actual results could differ from those estimates. Prior years'
financial  statements  have been  reclassified  to conform to the current year's
presentation.

     The results of operations for the three and nine months ended September 30,
1999 and 1998 are not  necessarily  indicative of the results to be expected for
the entire year or for any other period.

2.  Gain on Sale of Licensing Rights
    --------------------------------

     In June  1999,  the  Company  finalized  an  Agreement  to  license  to Ono
Pharmaceutical Co., Ltd. of Osaka Japan ("Ono") the worldwide rights to the oral
elastase  inhibitor program on which the two companies have been  collaborating.
Prior to this  Agreement,  Ono's rights to this  technology  were limited to the
territories of Korea,  Japan, China and Taiwan. In connection with the expansion
of Ono's rights to the technology,  Cortech  received a $2,000,000  payment less
applicable taxes both in the United States and Japan. Ono withheld at the source
$200,000 of  withholding  taxes  which they  remitted  directly to the  Japanese
taxing  authorities.  This  withholding  tax was  expensed  in the  accompanying
financial  statements.   The  Company  believed  it  was  not  liable  for  this
withholding  and  appealed  the  withholding,  seeking  reimbursement  from  the
Japanese  taxing  authorities.  The Company was informed by the Japanese  taxing
authorities that its appeal was denied.


<PAGE>



     If Ono's  studies  of the  technology  are  favorable,  Cortech  could also
receive milestone payments of up to $9.5 million. Ono also agreed to pay Cortech
a royalty on sales generated outside the original  territories on products using
Cortech's technology. Milestone payments or royalties are not assured and in any
event could be expected only after several more years of continued evaluation of
the technology by Ono.

     Elastase is a  protein-degrading  enzyme  released from  neutrophil  and is
considered  to play a major role in tissue  damage  and organ  failure in severe
inflammatory  conditions.  Development of an orally active elastase inhibitor is
expected to bring a new therapy for patients with chronic inflammatory diseases.
Ono plans to conduct clinical studies  targeting chronic  obstructive  pulmonary
disease and rheumatoid arthritis.


<PAGE>



ITEM 2.  Management's Discussion and Analysis of Financial Condition and
-------  Results of Operations
         ---------------------

     The following  discussion and analysis  should be read in conjunction  with
Cortech,  Inc.'s  ("Cortech" or the "Company") 1998 Annual Report on Form 10-KSB
as well  as the  Company's  financial  statements  and  notes  thereto  included
elsewhere in this Quarterly Report on Form 10-QSB. When used in this discussion,
the word  "expects" and similar  expressions  are intended to identify  forward-
looking statements.  Such statements are subject to risks and uncertainties that
could  cause  actual  results to differ  materially  from those  projected.  The
forward-looking  statements  contained  herein speak only as of the date hereof.
The  Company  expressly  disclaims  any  obligation  or  undertaking  to release
publicly any updates or revisions to any  forward-looking  statements  contained
herein to reflect any change in the Company's  expectations  with regard thereto
or any change in events, conditions or circumstances on which any such statement
is based.

General
-------

     Cortech  operated  as  a  biopharmaceutical   company  whose  research  and
development  efforts  focused  primarily on bradykinin  antagonists and protease
inhibitors.  Those  efforts  produced  a  technology  portfolio  which  may have
potential  therapeutic  application across a broad range of medical  conditions.
Cortech's strategy is to seek collaborative  partners to conduct and fund future
research and development on the components of its portfolio,  although there can
be no assurance  that any particular  agreement  will be completed.  At the same
time, the Company is seeking to redeploy its assets into an operating business.

Results of Operations
---------------------

     Cortech had net income of $263,000 or $.14 basic and fully diluted earnings
per share and $2,305,000 or $1.24 basic and fully diluted earnings per share for
the three and nine months ended  September 30, 1999,  respectively,  compared to
net  losses of  $1,281,000  or $.69 basic and fully  diluted  loss per share and
$4,111,000  or $2.22 basic and fully diluted loss per share for the same periods
in 1998, respectively.

     Interest  income was  $157,000  and  $408,000  in the three and nine months
ended  September 30, 1999,  respectively,  compared to $171,000 and $550,000 for
the same  periods in 1998,  a decrease of $14,000 and  $142,000 in the three and
nine month  periods,  respectively.  Lower  yields on cash  equivalents  was the
primary reason for this decrease.

     Gains on  disposition  of property and equipment were $125,000 and $435,000
in the three and nine months ended September 30, 1999, respectively, compared to
zero and  $228,000  for the same  periods  in 1998.  During  1998 and 1999,  the
Company sold property and equipment  previously used in research and development
and for administrative purposes.


<PAGE>



     Gain on sale of  licensing  rights of  $2,000,000  in the nine months ended
September 30, 1999 relates to an agreement to license to Ono Pharmaceutical Co.,
Ltd. of Osaka,  Japan ("Ono") the worldwide rights to an oral elastase inhibitor
program. (See Note 2 of Notes to Financial Statements.)

     Other  income of $92,000 and  $152,000  in the three and nine months  ended
September 30, 1999,  respectively,  primarily relate to the reimbursement by one
of the Company's  insurance  carriers of legal fees previously  expensed for the
Biostar  Litigation,  (see Part II, Item 1.),  and the  reversal  of  previously
accrued   expenses  in  connection  to  the  closing  of  the  Company's  Denver
facilities.

     General and administrative expenses were $101,000 and $462,000 in the three
and nine months ended  September  30, 1999,  respectively,  and  $1,452,000  and
$4,475,000 in the same periods in 1998,  respectively,  a decrease of $1,351,000
and $4,013,000.  During 1998, the Company was in the process of winding down its
operations. In 1999, management instituted strict cost controls with the goal of
preserving  cash.  For the nine months ended  September  30,  1999,  general and
administrative expenses consisted principally of patent related costs of $75,000
and legal  expenses  relating to patent and  licensing  agreements  of $225,000,
which are being expensed.

     Expenses  for  research and  development  were  $436,000 in the nine months
ended  September  30, 1998.  Due to the  cessation  of research and  development
activities by the Company in late 1997,  there were no research and  development
expenses  in the three  months  ended  September  30, 1998 or the three and nine
months ended September 30, 1999.

Liquidity and Capital Resources
-------------------------------

     At  September  30,  1999,  the  Company  had cash and cash  equivalents  of
approximately  $13,446,000.  Cash  equivalents of $13,275,000  consisted of U.S.
Treasury  Bills with an original  maturity  of three  months or less with yields
ranging  between  4.70%  and  4.856%.  Management  believes  its  cash  and cash
equivalents  are  sufficient for its remaining  business  activities and for the
costs of seeking an acquisition of an operating business.

     Net cash of $586,000 was used in operating  activities  for the nine months
ended September 30, 1999 compared to a net use of $4,110,000 for the same period
in 1998. In 1999,  cash flows from net income of  $2,305,000  were offset by the
gain on  disposition  of  equipment  of $435,000  and gain on sale of  licensing
rights of $2,000,000 (both classified as investing  activities) and decreases in
accounts  payable of $133,000 and accrued  liabilities,  accrued  severance  and
other  liabilities  of $392,000.  In 1998,  the net loss of  $4,111,000  and the
decreases  in accounts  payable of $455,000  and  accrued  liabilities,  accrued
severance and other  liabilities of $20,000 was partially offset by depreciation
and amortization of $527,000 and a decrease in prepaid expenses of $177,000.

     Net cash of  $2,435,000  was provided by investing  activities  in the nine
months ended  September  30, 1999,  due to the sale of property and equipment of
$435,000 and the gain on sale of  licensing  rights of  $2,000,000.  In the nine
months ended September 30, 1998, $4,180,000 was provided by investing activities
with  $3,850,000  provided by the sale of  short-term  investments  and $339,000
provided by the sale of property and equipment.


<PAGE>

Impact of Year 2000
-------------------

     The Year 2000 will impact computer programs written using two digits rather
than four to define  the  applicable  year.  Any  programs  with  time-sensitive
software  may  recognize a date using "00" as the year 1900 rather than the Year
2000. This could result in system failure or miscalculations causing disruptions
of  operation,  including a temporary  inability to process  transactions,  send
invoices or engage in other ordinary  activities.  This problem  largely affects
software  programs  written  years ago,  before  the issue  came to  prominence.
Insofar as Cortech has effectively  discontinued all internal efforts to advance
its research and  development  activities,  Cortech does not believe that it has
significant risk associated with the Year 2000 problem.



<PAGE>


PART II - OTHER INFORMATION
-------   -----------------
ITEM 1.   Legal Proceedings
------    -----------------


     BIOSTAR  LITIGATION.  On February 27,  1998,  a complaint  was filed in the
Court of Chancery of the State of Delaware,  naming the Company,  the  Company's
then  current  directors  and  BioStar,  Inc.  ("BioStar")  as  defendants.  The
complaint,  filed by a stockholder  of the Company,  claims to be on behalf of a
class of all the  Company's  stockholders  and  contends  that the then  current
directors  of the  Company  breached  their  fiduciary  duties to the  Company's
stockholders  when they  unanimously  approved  the  proposed  combination  with
BioStar. The complaint originally sought to enjoin the proposed combination with
BioStar as well as the  operation of the Company's  stockholder  rights plan and
sought an order  rescinding  the  proposed  combination  with  BioStar  upon its
consummation  as well as  compensatory  damages  and costs.  The  complaint  was
amended following termination of the proposed BioStar merger to seek to force an
auction  of the  Company's  assets and other  relief.  Prior  management  of the
Company  believed that the claims are without merit.  The members of the current
Board made no independent review of the merits of the claim or whether the claim
could have a material  adverse  effect on the  Company's  financial  position or
results of operations.

     Recently,  counsel  for the  plaintiff  in the  litigation  has  agreed  in
principal  to approach  the court to seek  dismissal of the case on grounds that
the allegations of the case which sought to enjoin the proposed combination with
BioStar is moot. In addition,  such counsel are currently discussing a potential
settlement of other claims which may not be moot. Notwithstanding the foregoing,
however,  no  papers  have yet  been  submitted  to the  court  and  there is no
guarantee  that the  court,  which  would  have to approve  such  dismissal  and
potential settlement, will do so.

ITEM 2.   Submission of Matters to a Vote of Security Holders
-------   ---------------------------------------------------

     The Company held its Annual  Meeting of  Stockholders  on November 4, 1999.
All nominees to the Company's Board of Directors were elected.  The following is
a vote tabulation for all nominees:

                                              For           Withheld
                                          ----------        --------

         Leonard M. Tannenbaum             1,703,002          8,743
         Sheri Perge                       1,703,002          8,743



<PAGE>



ITEM 6.  Exhibits and Reports on Form 8-K
------   --------------------------------

      a.  Exhibits

            27.   Financial Data Schedule for the nine months ended
                  September 30, 1999

      b.  Reports on Form 8-K

            No reports on Form 8-K were filed during  the quarter for which this
            report is being filed.


<PAGE>

                                   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.

                                             CORTECH, INC.


Date: November 12, 1999                      /s/ Sue Ann Itzel
                                             ---------------------------
                                             Sue Ann Itzel
                                             Treasurer
                                             (Principal Accounting and Financial
                                             Officer)