<PAGE>
                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q


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


                  For the Quarterly Period Ended March 31, 2001


                           Commission File No. 0-24972



                       INKINE PHARMACEUTICAL COMPANY, INC.
             (Exact name of Registrant as specified in its charter)


            New York                                 13-3754005
(State or other jurisdiction of            (I.R.S. Employer Identification  No.)
 incorporation or organization)


                            1787 Sentry Parkway West
                             Building 18, Suite 440
                               Blue Bell, PA 19422
                    (Address of principal executive offices)

                                  215-283-6850
                         (Registrant's telephone number)


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

       At May 7, 2001, the registrant had outstanding 34,108,203 shares of
                    common stock, par value $.0001 per share.





<PAGE>
                       INKINE PHARMACEUTICAL COMPANY, INC.

                                      INDEX
<TABLE>
<CAPTION>
                                                                                                            Page
                                                                                                            ----
<S>                                                                                                         <C>
PART I - FINANCIAL INFORMATION

         Item 1.  Financial Statements

                  BALANCE SHEETS - as of March 31, 2001 (unaudited)
                  and December 31, 2000........................................................................3

                  STATEMENTS OF OPERATIONS (unaudited) - for the Three-Months Ended March 31, 2001 and 2000....4

                  STATEMENTS OF CASH FLOWS (unaudited) - for the Three-Months
                  Ended March 31, 2001 and 2000................................................................5

                  NOTES TO UNAUDITED FINANCIAL STATEMENTS......................................................6

         Item 2.  Management's Discussion and Analysis of Financial
                  Condition and Results of Operations..........................................................7


PART II - OTHER INFORMATION....................................................................................9


SIGNATURES.....................................................................................................10
</TABLE>



                                       2

<PAGE>
PART I -- FINANCIAL INFORMATION

Item 1.  Financial Statements

                       INKINE PHARMACEUTICAL COMPANY, INC.

                                 BALANCE SHEETS

                      (in thousands, except share amounts)
<TABLE>
<CAPTION>
                                                                                 March 31, 2001        December 31, 2000
                                                                                 --------------        -----------------
         ASSETS                                                                    (Unaudited)
<S>                                                                               <C>                     <C>
Current assets:
     Cash and cash equivalents........................................            $      2,524            $      2,240
     Short-term investments...........................................                   6,523                   9,280
     Accounts receivable, net.........................................                   1,475                       -
     Inventory........................................................                   1,344                     686
     Prepaid expenses and other current assets........................                     751                      34
                                                                                  ------------            ------------
         Total current assets.........................................                  12,617                  12,240

Deposits .............................................................                     709                     709
Fixed assets, net.....................................................                     463                     451
                                                                                  ------------            ------------

         Total assets.................................................            $     13,789            $     13,400
                                                                                  ============            ============

         LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
     Accounts payable and accrued expenses............................            $      2,680            $        623
       Line of credit.................................................                   2,293                   1,752
                                                                                  ------------            ------------
              Total current liabilities...............................                   4,973                   2,375

Commitments, contingencies and other matters..........................                       -                       -

Shareholders' equity:
     Preferred stock, $.0001 par value; authorized 5,000,000
       shares; none issued and outstanding                                                   -                       -
     Common stock, $.0001 par value; authorized 50,000,000
       shares; issued 34,026,403 and 33,740,802 shares, respectively..                       3                       3
     Less common stock held in treasury (16,515 shares)...............                     (37)                    (37)

     Additional paid-in capital.......................................                  57,290                  56,692
     Deferred compensation............................................                    (784)                   (851)
     Unrealized gain on investments...................................                       5                       -
     Accumulated deficit..............................................                 (47,661)                (44,782)
                                                                                  ------------            ------------

         Total shareholders' equity...................................                   8,816                  11,025
                                                                                  ------------            ------------

         Total liabilities and shareholders' equity...................            $     13,789            $     13,400
                                                                                  ============            ============
</TABLE>
See accompanying notes to unaudited financial statements.

                                       3
<PAGE>
                       INKINE PHARMACEUTICAL COMPANY, INC.

                            STATEMENTS OF OPERATIONS
                                   (unaudited)

                    (in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                                  Three-Months Ended
                                                                                       March 31,
                                                                                 2001             2000
                                                                                 ----             ----
<S>                                                                           <C>              <C>
Revenue, net....................................................               $ 1,601          $      -
Cost of goods sold..............................................                  (767)                -
                                                                               -------          --------
      Gross profit..............................................                   834                 -

Research and development........................................                   894             1,100
Sales and marketing.............................................                 1,917                 -
General and administrative......................................                 1,015               722
                                                                               -------          --------

      Operating expenses........................................                 3,826             1,822

                                                                               -------          --------
      Loss from operations......................................                (2,992)           (1,822)

Interest income.................................................                   157                85
Interest expense................................................                   (38)              (23)
Other                                                                               (6)                -
                                                                               -------          --------
      Other income and expenses.................................                   113                62

                                                                               -------          --------
      Net loss..................................................               $(2,879)         $ (1,760)
                                                                               =======          ========

      Net loss per share - basic and diluted....................               $ (0.08)         $  (0.06)

      Weighted average shares outstanding - basic and diluted...                33,881            28,275
</TABLE>
See accompanying notes to unaudited financial statements.

                                       4
<PAGE>
                       INKINE PHARMACEUTICAL COMPANY, INC.

                            STATEMENTS OF CASH FLOWS
                                   (unaudited)

                                 (in thousands)
<TABLE>
<CAPTION>
                                                                         Three-Months Ended
                                                                               March 31,
                                                                       2001               2000
                                                                       ----               ----
<S>                                                                <C>                <C>
Operating activities:
   Net loss...............................................          $   (2,879)        $   (1,760)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
       Depreciation and amortization......................                  36                 28
       Amortization of deferred compensation..............                 290                280
       Loss on sale of fixed asset........................                   6                  -
       Changes in operating assets and liabilities:
         (Increase) in accounts receivable................              (1,475)                 -
         (Increase) in inventory..........................                (658)                 -
         (Increase) in prepaid expenses and other assets..                (717)               (89)
         Increase (decrease) in accounts payable
           and accrued expenses...........................               2,057               (242)
                                                                    ----------         ----------
     Net cash used in operating activities................              (3,340)            (1,783)

Investing activities:
   Purchases of investments...............................                (493)            (2,854)
   Proceeds from maturities and sales of investments......               3,255              2,754
   Proceeds from sale of fixed asset......................                  12                  -
   Capital expenditures...................................                 (66)               (21)
                                                                    ----------         ----------
      Net cash provided by (used in) investing activities.               2,708               (121)

Financing activities:
    Proceeds from exercise of options and warrants........                 375              3,244
    Borrowings, net of repayments on line of credit.......                 541                102
                                                                    ----------         ----------
     Net cash provided by financing activities............                 916              3,346
                                                                    ----------         ----------

Net increase in cash and cash equivalents.................                 284              1,442

Cash and cash equivalents - beginning of period...........               2,240              1,870
                                                                    ----------         ----------

Cash and cash equivalents - end of period.................          $    2,524         $    3,312
                                                                    ==========         ==========
</TABLE>
See accompanying notes to unaudited financial statements.

                                       5
<PAGE>
                       INKINE PHARMACEUTICAL COMPANY, INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (unaudited)

1.       Basis of Presentation

         The accompanying financial statements are unaudited and have been
prepared by InKine Pharmaceutical Company, Inc. (the "Company") in accordance
with accounting principles generally accepted in the United States.

         Certain information and footnote disclosures normally included in the
Company's audited annual financial statements have been condensed or omitted in
the Company's interim financial statements. In the opinion of management, the
interim financial statements reflect all adjustments (consisting of normal
recurring adjustments) necessary for a fair representation of the results for
the interim periods presented.

         The results of operations for the interim periods may not necessarily
be indicative of the results of operations expected for the full year, although
the Company expects to incur a loss for the year ending December 31, 2001. These
interim financial statements should be read in conjunction with the audited
financial statements for the six-months ended December 31, 2000, which are
contained in the Company's most recent Transition Report on Form 10-K.

2.       Use of Estimates

         The preparation of the 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(s) of the financial
statements and the reported amounts of revenues and expenses during the
reporting period(s). Actual results could differ from those estimates.

3.       Line of Credit

         The Company secured a $2,000,000 line of credit with a financial
institution in December 1999. This line was subsequently increased to $5,000,000
and $7,500,000 in December 2000 and February 2001, respectively. Under the
amended terms of this arrangement, the Company makes monthly interest-only
payments at a variable per annum rate of 2.20%, plus the 30-day Dealer
Commercial Paper Rate, with principal due on January 31, 2002. The Company
maintains investments of approximately 100% of the amount outstanding at the
institution as collateral for the line of credit. At March 31, 2001 and December
31, 2000, $2,293,000 and $1,752,000, respectively, was outstanding under this
line of credit at average interest rates of 7.71% and 8.75%, respectively.

4.       Shareholders Equity

         During the first quarter, the Company received proceeds of
approximately $375,000 from the exercise of stock options and warrants.


                                       6
<PAGE>
Item 2.  Management's Discussion And Analysis Of Financial Condition And Results
         Of Operations

         In addition to historical facts or statement of current condition, this
report may contain forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Forward-looking statements provide our
current expectations or forecasts of future events. These may include statements
regarding anticipated scientific progress on our research programs, development
of potential pharmaceutical products, interpretation of clinical results,
prospects for regulatory approval, manufacturing development and capabilities,
market prospects for our products, sales and earnings projections, and other
statements regarding matters that are not historical facts. You may identify
some of these forward-looking statements by the use of words in the statements
such as "anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe" or other words and terms of similar meaning. Our performance and
financial results could differ materially from those reflected in these
forward-looking statements due to general financial, economic, regulatory and
political conditions affecting the biotechnology and pharmaceutical industries
as well as more specific risks and uncertainties such as those set forth in our
report on Form 10-K filed with the Securities and Exchange Commission. Given
these risks and uncertainties, any or all of these forward-looking statements
may prove to be incorrect. Therefore, you should not rely on any such factors or
forward-looking statements.

General

         We are a biopharmaceutical company engaged in the research, development
and commercialization of products that may be used in the diagnosis and
treatment of cancer and autoimmune diseases. We pursue these objectives through
products and technology platforms consisting of Visicol(TM), IBStat(TM), the Fc
Receptor Technology (Colirest(TM) and Hematrol(TM)) and the Thrombospondin
Technology.

         The quarter ended March 31, 2001 is the first quarter that we have
generated sales revenue. Such revenue is the result of our recent
commercialization of our lead product, Visicol(TM), during the current quarter.
We have previously funded operations primarily from the proceeds of public and
private placements of securities. We have incurred net losses in each year since
our inception, and expect to incur additional losses in the foreseeable future.
We expect that losses will fluctuate from quarter to quarter, and that such
fluctuations may be substantial. At March 31, 2001, our accumulated deficit was
approximately $47,661,000.

Results of Operations

         We incurred losses of $2,879,000, or $(0.08) per share, and $1,760,000,
or $(0.06) per share, for the quarters ended March 31, 2001 and 2000,
respectively. Losses are expected to continue for the remainder of the year as
we continue to incur significant commercialization costs of Visicol(TM) and
develop the Thrombospondin Technology and the Fc Receptor Technology.

         Net sales of Visicol(TM), launched commercially in the fourth week of
January 2001, totaled $1,601,000 for the first quarter of 2001. Net sales
represents product sales of Visicol(TM) to pharmaceutical wholesalers and large
drug store chains, not Visicol(TM) prescriptions to consumers. These sales are
affected by a number of factors, including wholesaler inventory stocking
patterns, which may not accurately reflect underlying trends in the demand for
Visicol(TM). There were no product sales in the same period a year ago.

         Gross profit was $834,000 for the quarter ended March 31, 2001 as
compared to no gross profit for the same period a year ago. Gross profit for the
quarter ended was solely attributable to commercial sales of Visicol(TM), net of
the establishment of reserves for potential returns and sales allowances.
Included in cost of goods sold are $61,000 and $32,000 in distribution and
royalty costs, respectively. Distribution expense for the current quarter
includes costs related to contracted warehousing, tracking and shipping of
product to our Visicol(TM) customers. Royalty expense represents amounts due to
the inventor of Visicol(TM) and is based on the volume of net sales. Gross
profit is expected to increase in the future as less promotional and launch
related incentives are offered to customers and manufacturing costs per unit are
reduced.

         Research and development expenses decreased for the quarter ended March
31, 2001, as compared to the same period a year ago. This reduction was the
result of decreased development costs associated with Visicol(TM) partially
offset by costs associated with clinical trials of Colirest(TM) in inflammatory
bowel disease and Phase IV marketing studies of Visicol(TM).

                                       7
<PAGE>

         Sales and marketing costs of $1,917,000 were incurred for the quarter
ended March 31, 2001, as compared with no sales and marketing costs for the same
period a year ago. The increase is the result of new personnel and marketing
activities associated with the launch of Visicol(TM).

         General and administrative expenses increased $293,000 for the quarter
ended March 31, 2001, as compared to the same period a year ago. This increase
is the result of increased administrative personnel and other administrative
costs resulting from the expanded scale of operations associated with the launch
of Visicol(TM). Included in general and administrative expenses is amortization
of deferred compensation of $290,000 for the quarter ended March 31, 2001.

         Interest income increased $72,000 for the quarter ended March 31, 2001
as compared to the same period a year ago. The increase in interest income
reflects the earnings on an increased investment balance. Fluctuations will
continue to occur due to changes in the investment balance.

         We incurred interest expense of $38,000 and $23,000 for the quarters
ended March 31, 2001 and 2000, respectively. The increase in interest expense is
the result of increased outstanding balances on the Company's line of credit.
Fluctuations will continue to occur due to changes in the line of credit
balance.

Liquidity and Capital Resources

         At March 31, 2001, we had cash, cash equivalents and investments of
$9,047,000. The cash and investment balance at March 31, 2001 includes proceeds
from warrant and option exercises of $375,000 for the quarter ended March 31,
2001.

         We believe that our financial resources are adequate for our operations
for at least the next 12 months. Our future capital requirements will depend on
numerous factors which cannot be quantified and many of which we cannot control,
including sales of Visicol(TM), continued progress in our research and
development activities, commercialization costs of Visicol(TM), progress with
pre-clinical studies and clinical trials, prosecuting and enforcing patent
claims, technological and market developments, the ability to establish product
development arrangements, the cost of manufacturing development, effective
marketing activities and arrangements, and licensing or acquisition activity. We
may seek to obtain additional funds through equity or debt financing,
collaborative or other arrangements with corporate partners and others, and from
other sources. No assurance can be given that necessary additional financing
will be available on terms acceptable to us, if at all. If adequate additional
funds are not available when required, we may have to delay, scale-back or
eliminate certain of our research, drug discovery or development activities or
certain other aspects of our operations and our business will be materially and
adversely affected.

         We anticipate incurring additional losses in the foreseeable future as
we expand our commercialization activities relating to Visicol(TM) and research
and development activities relating to the Thrombospondin Technology and Fc
Receptor Technology. To achieve profitability, we, alone or with others, must
successfully develop and commercialize our technologies and products, conduct
pre-clinical studies and clinical trials, obtain required regulatory approvals
and successfully manufacture, introduce and market such technologies and
products. The time required to reach profitability is highly uncertain, and
there can be no assurance that we will be able to achieve profitability on a
sustained basis, if at all.

New Accounting Pronouncements

         In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and Hedging Activities
("Statement 133"). Statement 133 establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. Statement 133 requires that an
entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure the instrument at fair value. The
accounting changes in the fair value of a derivative depend on the intended use
of the derivative and the resulting designation. This Statement, as amended, is
effective for all fiscal quarters of all fiscal years beginning after June 15,
2000. The adoption of this standard did not have a material impact on our
earnings or financial position.

                                       8
<PAGE>

Item 3.  Quantitative And Qualitative Disclosures About Market Risk.

         Not applicable.

PART II -- OTHER INFORMATION

Item 1.  Legal Proceedings.

         Not applicable.

Item 2.  Changes in Securities and Use of Proceeds.

         Not applicable.

Item 3.  Defaults 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.

              None.


         (b)  Reports on Form 8-K.

              None.


                                       9

<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.





                                   INKINE PHARMACEUTICAL
                                   COMPANY, INC.



Date: May 11, 2001                 By: /s/  Robert F. Apple
                                       ---------------------------------------
                                   Robert F. Apple
                                   Chief Financial Officer, (Authorized Officer
                                   and Principal Financial Officer)



                                       10