<PAGE>

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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                -----------------

                                    FORM 10-Q

                                -----------------

(MARK ONE)
     X       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----------   EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30,
             1996
             OR

----------   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM  ____________
             TO ____________________.


                         COMMISSION FILE NUMBER 0-20726


                                  CORTECH, INC.
             (Exact name of registrant as specified in its charter) 

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

      6850 N. BROADWAY, SUITE G                             80221
          DENVER, COLORADO                                (Zip Code)
(Address of principal executive offices)



                                 (303) 650-1200
              (Registrant's telephone number, including area code)

                             --------------------


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

Indicate the number of shares outstanding of each of the issuer's classes of 
common stock, as of the latest practicable date.

     COMMON STOCK $0.002 PAR VALUE                      18,512,794            
     -----------------------------           -------------------------------- 
              (Class)                        (Outstanding at October 31, 1996)


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<PAGE>

                                  CORTECH, INC.

                                      INDEX



PART I.   FINANCIAL INFORMATION                                         PAGE NO.
 
Item  1.  Financial Statements and Notes

          Balance Sheets -- September 30, 1996
            and December 31, 1995. . . . . . . . . . . . . . . . . . . . . 3    

          Statements of Operations --
            for the three and nine months ended
            September 30, 1996 and 1995. . . . . . . . . . . . . . . . . . 4    

          Statements of Cash Flows --
            for the nine months ended 
            September 30, 1996 and 1995. . . . . . . . . . . . . . . . . . 5    

          Notes to Financial Statements. . . . . . . . . . . . . . . . . . 6    

Item  2.  Management's Discussion and 
            Analysis of Financial Condition
            and Results of Operations. . . . . . . . . . . . . . . . . . . 8    


PART II.  OTHER INFORMATION

Item  1.  Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . .11    

Item  2.  Changes in Securities. . . . . . . . . . . . . . . . . . . . . .11    

Item  3.  Default upon Senior Securities . . . . . . . . . . . . . . . . .11    

Item  4.  Submission of Matters to a Vote
            of Security Holders. . . . . . . . . . . . . . . . . . . . . .11    

Item  5.  Other Information. . . . . . . . . . . . . . . . . . . . . . . .11    

Item  6.  Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . .11    

SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12    



                                      2 
<PAGE>

                                     PART I    

ITEM 1.  FINANCIAL STATEMENTS AND NOTES.

                                  CORTECH, INC.

                                 BALANCE SHEETS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

                                     ASSETS


<TABLE>
                                                                              SEPTEMBER 30,  DECEMBER 31, 
                                                                                  1996           1995     
                                                                              ------------   -----------  
<S>                                                                           <C>             <C>         
CURRENT ASSETS
  Cash and cash equivalents..................................................  $   8,974      $   6,194 
  Short-term investments.....................................................     13,239         16,953 
  Prepaid expenses and other.................................................        668            410 
                                                                               ---------      --------- 
      Total current assets...................................................     22,881         23,557 
                                                                               ---------      --------- 

PROPERTY AND EQUIPMENT, at cost
  Laboratory and pilot production equipment..................................      6,925          6,643 
  Leasehold improvements.....................................................      8,019          7,880 
  Office furniture and equipment.............................................      2,442          2,462 
                                                                               ---------      --------- 
                                                                                  17,386         16,985                          
  Less -- Accumulated depreciation and amortization..........................    (13,489)       (11,899)
                                                                               ---------      --------- 
                                                                                   3,897          5,086 
                                                                               ---------      --------- 
                                                                               $  26,778      $  28,643 
                                                                               ---------      ---------
                                                                               ---------      ---------


                      LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
  Accounts payable...........................................................  $     466      $     605 
  Accrued compensation, payroll taxes and other..............................        195            218 
  Unearned income............................................................      1,260            573 
  Advances from corporate partners...........................................      1,194             -- 
  Other                                                                              163            270 
                                                                               ---------      --------- 
      Total current liabilities..............................................      3,278          1,666 
                                                                               ---------      --------- 
STOCKHOLDERS' EQUITY 
  Preferred stock, $.002 par value, 
    2,000,000 shares authorized, none issued.................................         --             -- 
  Common stock, $.002 par value, 50,000,000 shares authorized 
    18,505,994 and 17,823,456 shares issued and outstanding, respectively ...         37             36 
  Warrants...................................................................      3,407          3,407 
  Additional paid-in capital.................................................     96,533         95,153 
  Deferred compensation......................................................        (55)           (97)
  Accumulated deficit........................................................    (76,422)       (71,522)
                                                                               ---------      --------- 
      Total stockholders' equity.............................................     23,500         26,977 
                                                                               ---------      --------- 
                                                                               $  26,778      $  28,643 
                                                                               ---------      --------- 
                                                                               ---------      --------- 
</TABLE>

              The accompanying notes to financial statements are an
                       integral part of these statements.





                                      3


<PAGE>

                                  CORTECH, INC.

                            STATEMENTS OF OPERATIONS
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)


<TABLE>
                                            FOR THE THREE MONTHS ENDED              FOR THE NINE MONTHS ENDED
                                      --------------------------------------  --------------------------------------
                                      SEPTEMBER 30, 1996  SEPTEMBER 30, 1995  SEPTEMBER 30, 1996  SEPTEMBER 30, 1995
                                      ------------------  ------------------  ------------------  ------------------
<S>                                     <C>                  <C>               <C>                  <C>

REVENUES
  Sponsored research and development
    Corporate partners.................. $       688            $      175          $     4,613         $       804
    Related parties.....................         340                   687                1,014               1,990
  Interest income.......................         293                   393                  904               1,351
                                         -----------            ----------          -----------         -----------
                                               1,321                 1,255                6,531               4,145
                                         -----------            ----------          -----------         -----------

EXPENSES
  Research and development..............       2,795                 3,921                8,808              15,123
  General and administrative............         756                   979                2,623               3,452
                                         -----------            ----------          -----------         -----------
                                               3,551                 4,900               11,431              18,575
                                         -----------            ----------          -----------         -----------

NET LOSS................................ $    (2,230)           $   (3,645)         $    (4,900)        $   (14,430)
                                         -----------            ----------          -----------         -----------
                                         -----------            ----------          -----------         -----------

  Net loss per share.................... $     (0.12)           $    (0.21)         $     (0.27)        $     (0.81)
                                         -----------            ----------          -----------         -----------
                                         -----------            ----------          -----------         -----------

  Weighted average common shares
   outstanding..........................  18,127,000            17,779,115           18,289,344          17,744,650
                                         -----------            ----------          -----------         -----------
                                         -----------            ----------          -----------         -----------
</TABLE>



            The accompanying notes to financial statements are an
                    integral part of these statements.




                                       4

<PAGE>

                                  CORTECH, INC.

                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)



<TABLE>
                                                                  FOR THE NINE MONTHS ENDED
                                                          ----------------------------------------
                                                          SEPTEMBER 30, 1996    SEPTEMBER 30, 1995
                                                          ------------------    ------------------
<S>                                                              <C>                   <C>
CASH FLOWS USED IN OPERATING ACTIVITIES
  Net loss...................................................  $ (4,900)             $(14,430)
  Adjustments to reconcile net loss 
   to net cash used in (used in) operations --
    Depreciation and amortization............................     1,590                 3,142
    Issuance of common stock in exchange for
     termination of right of first offer.....................       486                    --
    Issuance of common stock for services....................        --                    25
    Research and compensation expense related to grant
     of options, including amortization 
     of deferred compensation................................        92                   121
    (Increase) in prepaid expenses and other.................      (258)                  (79)
    (Decrease) in accounts payable...........................      (139)               (1,567)
    Increase in unearned income..............................       687                 1,573
    Increase in advances from corporate partners.............     1,194                    --
    (Decrease) increase in accrued compensation,
     payroll taxes and other.................................      (130)                  373
                                                               --------               --------
       Net cash provided (used in) operating activities...    (1,378)               (10,842)
                                                               --------               --------

CASH FLOWS PROVIDED BY INVESTING ACTIVITIES
  Purchases of property and equipment........................      (401)                  (369)
  Purchases of short-term investments........................   (16,037)               (27,000)
  Sales of short-term investments............................    19,751                 33,990
                                                               --------               --------
    Net cash provided by investing activities................     3,313                  6,621
                                                               --------               --------

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES
  Proceeds from the issuance of common stock.................        29                     57
  Proceeds from exercise of options..........................       816                     28
                                                               --------               --------
    Net cash provided by financing activities................       845                     85
                                                               --------               --------


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.........     2,780                 (4,136)
CASH AND CASH EQUIVALENTS, beginning of period...............     6,194                 12,327
                                                               --------               --------
CASH AND CASH EQUIVALENTS, end of period.....................  $  8,974               $  8,191
                                                               --------               --------
                                                               --------               --------
</TABLE>


             The accompanying notes to financial statements are an
                      integral part of these statements.




                                       5

<PAGE>

                                 CORTECH, INC.

                        NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1996


(1)  SIGNIFICANT ACCOUNTING POLICIES

     The balance sheet at September 30, 1996, the related statements of 
operations and statements of cash flows for the three and nine-month periods 
ended September 30, 1996 and 1995 are unaudited, but in management's opinion 
include all adjustments, consisting only of normal recurring adjustments, 
necessary for a fair presentation of such financial statements.  Interim 
results are not necessarily indicative of results for a full year.  The 
accompanying financial statements should be read in conjunction with the 
financial statements as of, and for the year ended, December 31, 1995.

(2)  SHORT-TERM INVESTMENTS 

     Under Statement of Financial Accounting Standards No. 115, "Accounting 
for Certain Investments in Debt and Equity Securities," Cortech, Inc.'s (the 
"Company's") short-term investments, which consisted entirely of government 
securities, were classified as available-for-sale.  These securities mature 
on various dates through May 1997.  As of September 30, 1996, these 
securities had an amortized cost of $13.2 million, which approximated fair 
market value.

(3)  RESEARCH AND DEVELOPMENT AGREEMENTS

     In the first nine months of 1996, the Company has received $4.0 million 
in milestone payments under an agreement with SmithKline Beecham plc ("SB") 
for the development of Bradycor.  On October 23, 1996 the Company announced 
that SB had elected to suspend the trials of Bradycor in response to 
anomalous results from pharmacokinetic studies in rats in which unexplained 
mortality was seen in the test animals.  The suspension of the trials was not 
based on any adverse findings in the human clinical studies.  SB is 
conducting additional animal studies, and until the effect is more fully 
understood, the clinical trials will remain suspended.  There can be no 
assurance that the trials will resume.

     Under an agreement signed in March 1995 to develop an oral elastase 
inhibitor, Cortech received $1.4 million from Ono Pharmaceutical Co., Ltd. 
("Ono") in the third quarter of 1996. Of the $1.4 million,  $115,000 has been 
recognized as revenue for work performed in the third quarter and $688,000 
will be recognized in the fourth quarter.  The remainder will be recognized 
as revenue in the first quarter of 1997. 

     In October 1996, Cortech received an additional $1.5 million of funding 
from Ono to be applied to the second year of the collaboration, bringing 
total funding received in 1996 to $4.3 million as compared to the $2.8 
million originally planned for the calendar year.  To balance this 
accelerated payment schedule, Ono's projected funding for the third year of 
the collaboration will decrease from $3.5 million to $3.0 million, and 
Cortech has agreed to waive a $1.0 million milestone payment scheduled to be 
made at the end of the three year research collaboration in the event Ono 
selects a lead compound for continued preclinical development.

                                      6


<PAGE>

     In August, the Company purchased the "right of first offer" it had 
previously granted to Marion Laboratories, a predecessor to Hoechst Marion 
Roussel Incorporated ("HMRI").  The right of first offer, granted as part of 
a transaction between the parties entered into in February 1988, covered all 
new technologies developed by the Company.  Cortech bought back the right in 
exchange for 200,000 shares of unregistered common stock.

     In the third quarter of 1996, Cortech received $50,000 and has 
recognized $290,000 as revenue from HMRI for work completed in the third 
quarter of 1996 under the December 1995 extension of a research and 
development contract dated June 30, 1987.


                                     7

<PAGE>

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND 
          RESULTS OF OPERATIONS.

          THE FOLLOWING DISCUSSION CONTAINS, IN ADDITION TO HISTORICAL 
INFORMATION, FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. 
 CORTECH, INC.'S (THE "COMPANY'S") ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY 
FROM THE RESULTS DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.  FACTORS THAT 
COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED 
TO, THOSE DISCUSSED BELOW AND IN THE COMPANY'S 1995 ANNUAL REPORT ON FORM 
10-K.

GENERAL

     Since its inception in 1982, Cortech has devoted a substantial portion 
of its resources to the discovery and development of novel compounds for the 
treatment of inflammatory disorders. The Company currently has research and 
development programs focused primarily on two types of compounds, bradykinin 
antagonists and proteinase inhibitors, each of which has generated a lead 
compound that is in early stage clinical trials.

     Because the Company's products are in an early stage of development, by 
their nature they face a high degree of technological, regulatory and 
competitive risk. The regulatory approval process for any new drug is 
arduous.  Commencement of any trial or any phase of development does not 
provide assurance that such trial or phase will be successfully completed, 
and successful completion of any trial or any phase of development does not 
provide assurance that future phases will also be successfully completed or 
that marketing approval will ultimately be obtained.  There can be no 
assurance that any of the Company's compounds will successfully lead to 
products that can be commercialized.

     In the first nine months of 1996, the Company has received $4.0 million 
in milestone payments under an agreement with SmithKline Beecham plc ("SB") 
for the development of Bradycor.  On October 23, 1996 the Company announced 
that SB had elected to suspend the trials of Bradycor in response to 
anomalous results from pharmacokinetic studies in rats in which unexplained 
mortality was seen in the test animals.  The suspension of the trials was not 
based on any adverse findings in the human clinical studies.  SB is 
conducting additional animal studies and until the effect is more fully 
understood, the clinical trials will remain suspended.  There can be no 
assurance that the trials will resume.

     Drug discovery and drug development programs are capital intensive.  
Management believes that raising funds in the public capital markets may 
remain unattractive for the Company at least for the near term.  Therefore, 
the Company will likely be dependent in large part upon maintaining existing 
relationships and upon entering into new arrangements with collaborative 
partners for necessary future funding and product development support.  There 
can be no assurance that success in any phase of development will result in 
an enhanced ability to raise capital nor that the Company will be successful 
in establishing and maintaining any additional collaborative arrangements.

                                      8

<PAGE>

     Also inherent in the Company's early stage of development is a range of 
additional risks, including the Company's history of losses and the 
uncertainty of future financing.  The Company also faces risks stemming from 
the nature of the biopharmaceutical industry including, among others, the 
risk of competition; the risk of regulatory change including potential 
changes in health care coverage; and uncertainties associated with obtaining 
and enforcing patents and proprietary technology.  In addition, the Company's 
stock price, like that of many publicly-traded biotechnology companies, has 
in the past been highly volatile and may in the future experience significant 
volatility.

RESULTS OF OPERATIONS

REVENUES

     Revenues from research and development increased from $862,000 in the 
third quarter of 1995 to $1.0 million in the third quarter of 1996 and 
increased from $2.8 million to $5.6 million in the nine month periods ending 
September 30, 1995 and 1996, respectively.  The increase in revenues for the 
nine-month period resulted primarily from milestone payments in accordance 
with the SB contract dated November 1, 1995 of which $2.6 million has been 
recorded as revenue.

     The agreements between the Company and each of its corporate partners 
provide for payments to the Company based upon the achievement of 
predetermined milestones.  The agreements currently are in their research and 
development phases, during which payments generally are tied to specific 
milestones of a non-recurring nature.  Thus, the payments received during the 
first nine months of 1996 are not predictive of future revenue levels.  These 
agreements provide for early termination under certain circumstances.  There 
can be no assurance that any of these collaborations will not be discontinued 
in accordance with their terms. 

RESEARCH AND DEVELOPMENT EXPENSES

     Expenses for research and development decreased from $3.9 million in the 
third quarter of 1995 to $2.8 million in the third quarter of 1996 and 
decreased from $15.1 million in the nine months ended September 30, 1995 to 
$8.8 million in the nine months ended September 30, 1996. This decrease is 
due primarily to restructurings announced in March and August 1995.

     Management expects that the Company's near term rate of research and 
development expenses will level off at or below the rate experienced for the 
first nine months of 1996.  Expenditures will continue to depend upon numerous 
factors, including the progress of research and development programs.  The 
Company continues to review carefully all of its planned and current 
expenditures on these programs.  Such review can lead to either increases or 
decreases in project-related spending. 


GENERAL AND ADMINISTRATIVE EXPENSES

     General and administrative expenses decreased from $979,000 in the third 
quarter of 1995 to $756,000 in the third quarter of 1996 and decreased from 
$3.5 million in the nine months ended September 30, 1995 to $2.6 million in 
the nine months ended September 30, 1996.  This decline resulted from 
decreases in staffing, office space and business activity.  In general, the 
Company expects its general and administrative expenses to follow a trend 
similar to that noted above for research and development.  



                                      9

<PAGE>

NET LOSS

     The net loss decreased from $3.7 million in the third quarter of 1995 to 
$2.2 million in the third quarter of 1996 and from $14.4 million in the nine 
months ended September 30, 1995 to $4.9 million in the nine months ended 
September 30, 1996.  This decrease was due principally to the decreased 
expenses and increased revenues described above. 
               
LIQUIDITY AND CAPITAL RESOURCES

     At September 30, 1996, the Company had cash, cash equivalents and 
short-term investments totaling $22.2 million, compared to $23.1 million at 
December 31, 1995.  The Company's net cash used in operating activities, 
including purchases of property, plant and equipment, totaled $1.8 million 
and $1.5 million for the three and nine months ended September 30, 1996, 
respectively. The Company's expenditures, net of depreciation and non-cash 
charges, decreased from $3.9 million in the third quarter of 1995 to $2.6 
million in the third quarter of 1996 and decreased from $15.7 million in the 
nine months ended September 30, 1995 to $9.7 million in the nine months ended 
September 30, 1996.  This reduction reflects the Company's continued 
monitoring of expenditures and its efforts to focus resources on the projects 
with the greatest expected value.

     From its inception through September 30, 1996, the Company raised cash 
totaling $97.8 million from the sale of equity securities, including $33.6 
million in net proceeds from its November 1992 initial public offering and 
$37.7 million in net proceeds from its November 1993 follow-on public 
offering.  

     Under an agreement signed in March 1995 to develop an oral elastase 
inhibitor, Cortech received $1.4 million from Ono in the third quarter of 
1996.  Of the $1.4 million,  $115,000 has been recognized as revenue for work 
performed in the third quarter and $688,000 will be recognized in the fourth 
quarter.  The remainder will be recognized in the first quarter of 1997. 

     In October 1996, Cortech received an additional $1.5 million of funding 
from Ono to be applied to the second year of the collaboration, bringing 
total funding received in 1996 to $4.3 million as compared to the $2.8 
million originally planned for the calendar year.  To balance this 
accelerated payment schedule, Ono's projected funding for the third year of 
the collaboration will decrease from $3.5 million to $3.0 million, and 
Cortech has agreed to waive a $1.0 million milestone payment scheduled to be 
made at the end of the three year research collaboration in the event Ono 
selects a lead compound for continued preclinical development.

     In the third quarter of 1996, Cortech received $50,000 and has recognized 
$290,000 as revenue from Hoechst Marion Roussel Incorporated ("HMRI") for 
work completed in the third quarter of 1996 under the December 1995 extension 
of a research and development contract dated June 30, 1997.

     In August, the Company purchased the "right of first offer" it had 
previously granted to Marion Laboratories, a predecessor to Hoechst Marion 
Roussel Incorporated ("HMRI").  The right of first offer, granted as part 
of a transaction between the parties entered into in February 1988, covered 
all new technologies developed by the Company.  Cortech bought back the right 
in exchange for 200,000 shares of unregistered common stock.

     The Company has experienced net losses and negative cash flows from 
operations each year since inception and has incurred an accumulated deficit 
of $76.4 million through September 30, 1996.  The Company expects to incur 
substantial additional expenses in the pursuit of its research and product 
development programs, either alone or in collaboration with partners.  The 
expenses may include costs of expanded research and development, clinical 
trials, construction of manufacturing facilities, establishment of a 
marketing and sales organization and additional administrative activities.  
In order to 


                                      10

<PAGE>

fund such expenses, the Company anticipates that it will have to seek 
additional research, development and marketing arrangements with 
collaborative partners and/or additional private or public financing.  There 
can be no assurance that such agreements will be concluded or that the 
Company will be able to raise additional capital when required or that such 
capital would be available under favorable terms.













                                     11


<PAGE>
                                      
                                  PART II

ITEM 1.  LEGAL PROCEEDINGS.

     The Company is not party to any material legal proceedings.


ITEM 2.  CHANGES IN SECURITIES.

     Not applicable.


ITEM 3.  DEFAULT UPON SENIOR SECURITIES.

     Not applicable.


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not applicable

ITEM 5.  OTHER INFORMATION.

     Not applicable.


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

     a.   Exhibits

          ITEM     DESCRIPTION 
          ----     ----------- 
          10.54    Buy-Out Agreement, dated September 9, 1996 between the 
                   Company and Hoechst Marion Roussel, Inc.        

          27.1     Financial Data Schedule

     b.   Reports on Form 8-K

          Not applicable.



                                      11 
<PAGE>


                                   SIGNATURES


     Pursuant to the requirements of Section 13 or 15(d) 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, on this 13th day 
of November, 1996.

                                           CORTECH, INC.

                                           (Registrant)


Date:   November 13, 1996                  By:      /s/  JOSEPH L. TURNER     
     --------------------------               --------------------------------
                                                       Joseph L. Turner 
                                                VICE PRESIDENT OF FINANCE AND 
                                                ADMINISTRATION AND PRINCIPAL 
                                                      ACCOUNTING OFFICER 














                                      12