FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                    Quarterly Report under Section 13 of the
                         Securities Exchange Act of 1934

                        Quarter ended September 30, 1998


                         Commission File Number 0-24320


                           NaPRO BIOTHERAPEUTICS, INC.


Incorporated in Delaware                                   IRS ID No. 84-1187753

                             6304 Spine Road, Unit A
                                Boulder, CO 80301
                                 (303) 530-3891


NaPro BioTherapeutics, Inc. ("NaPro" or "the Company") (1) has filed all reports
required to be filed by Section 13 of the Securities Exchange Act of 1934 during
the  preceding 12 months,  and (2) has been subject to such filing  requirements
for the past 90 days.

The number of shares outstanding of each of the issuer's classes of common stock
as of November 2, 1998:

Common Stock, $.0075 par value                               16,114,444
Non-voting Common Stock, $.0075 par value                       395,000


Total number of pages in document--17

                                       1

<PAGE>



                           NaPro BioTherapeutics, Inc.

                                Table of Contents

                                                                            Page
Part I   Financial Information

         Consolidated Financial Statements

              Balance Sheet                                                    3

              Statement of Operations                                          5

              Cash Flow Statement                                              6

              Notes to Consolidated Financial Statements                       7

         Management's Discussion and Analysis of Financial 
         Condition and Results of Operations                                   9

         Quantitative and Qualitative Disclosures about Market Risk           15


Part II  Other Information

         Legal Proceedings                                                    15

         Changes in Securities                                                16

         Defaults upon Senior Securities                                      16

         Submission of Matters to a Vote of Security Holders                  16

         Other Information                                                    16

         Exhibits and Reports on Form 8-K                                     17

Signatures                                                                    17


                                        2

<PAGE>



                          Part I. Financial Information

Item 1.  Consolidated Financial Statements
<TABLE>
<CAPTION>


                           NaPro BioTherapeutics, Inc.
                                  Balance Sheet
                                     Assets




                                                                               September 30,             December 31,
                                                                                   1998                     1997
                                                                                (unaudited)


Current assets:
         <S>                                                                   <C>                       <C> 

         Cash and cash equivalents                                             $   9,135,000             $   8,102,000
         Accounts receivable                                                         429,000                 1,508,000
         Inventory                                                                 4,171,000                 3,122,000
           Restricted cash                                                         1,660,000                       ---
         Prepaid expense and other                                                  415,000                   481,000
                                                                             ---------------           --------------
Total current assets                                                              15,810,000                13,213,000

Property and equipment, net                                                       13,221,000                15,187,000
Restricted cash                                                                      195,000                   246,000
Inventory                                                                            908,000                 1,176,000
Other assets                                                                        493,000                   536,000
                                                                             ---------------           --------------
Total assets                                                                   $ 30,627,000              $ 30,358,000 
                                                                               =============             =============
</TABLE>















                             See accompanying notes

                                        3

<PAGE>

<TABLE>
<CAPTION>


                           NaPro BioTherapeutics, Inc.
                                  Balance Sheet
                      Liabilities and Stockholders' Equity


                                                                              September 30,            December 31,
                                                                                   1998                    1997
                                                                                (unaudited)


Current liabilities:
         <S>                                                                  <C>                      <C>

         Accounts payable                                                     $    1,462,000           $     4,361,000
         Accrued payroll and payroll taxes                                           592,000                   570,000
         Notes payable--current portion                                              450,000                   743,000
         Senior Convertible debt                                                         ---                 8,134,000
         Deferred revenue                                                          3,669,000                 1,890,000
                                                                             ---------------            --------------
Total current liabilities                                                          6,173,000                15,698,000

Notes payable--long term                                                             223,000                   480,000
Senior convertible debt                                                            5,799,000                   ---
                                                                             ---------------             --------------

Total liabilities                                                                 12,195,000                16,178,000

Minority interest                                                                    622,000                 2,574,000

Senior convertible redeemable preferred stock, Series C                            4,025,000                 4,344,000

Stockholders' equity Preferred stock, $.001 par value:
         Authorized shares--2,000,000
         Issued--none (unaudited in 1998)                                                ---                       ---
     Non-voting common stock, convertible on disposition
         into voting common stock, $.0075 par value:                     
         Authorized shares--1,000,000 shares                             
         Issued and outstanding shares--395,000 (unaudited
              in 1998)                                                                 3,000                     3,000
     Common stock, $.0075 par value:
         30,000,000  shares  authorized at September 30, 1998 19,000,000  shares
         authorized in 1997; 16,688,632 shares issued in 1998 (unaudited);
         13,134,021 in 1997                                                          125,000                    98,000
     Additional paid-in capital                                                   57,502,000                50,833,000
     Deficit                                                                    (39,403,000)              (40,998,000)
     Treasury stock--1,345,236 shares in 1998 (unaudited);
         218,838 shares in 1997                                                  (4,442,000)               (2,674,000)
                                                                             ---------------            --------------
Total stockholders' equity                                                       13,785,000                 7,262,000
                                                                              --------------            -------------
Total liabilities and stockholders' equity                                     $ 30,627,000               $30,358,000 
                                                                               =============              ============

</TABLE>

                             See accompanying notes

                                        4

<PAGE>


<TABLE>
<CAPTION>

                           NaPro BioTherapeutics, Inc.

                             Statement of Operations
                                   (Unaudited)


                                                        Three Months Ended                     Nine Months Ended
                                                           September 30,                         September 30,
                                                      1998               1997               1998               1997
                                                     ------             ------             ------             -----

<S>                                                 <C>                <C>                  <C>                 <C>

Product sales                                       $     732,000      $     879,000        $ 3,721,000         $ 1,978,000

Expense:
     Research, development and cost
         of products sold                               2,089,000          2,602,000          6,775,000           7,629,000
     General and administrative                         1,044,000          1,382,000          5,131,000           4,654,000
     (Gain) Loss on retirement
         of assets                                        581,000            ---                582,000            (218,000)
                                                    -------------  -----------------     --------------       -------------
                                                        3,714,000          3,984,000         12,488,000          12,065,000
                                                     ------------       ------------       ------------        -----------

Operating loss                                         (2,982,000)        (3,105,000)        (8,767,000)        (10,087,000)

Other income (expense):
     License fee                                        2,950,000                ---         10,770,000                 ---
     Interest income                                      150,000            119,000            413,000             407,000
     Interest and other expense                          (248,000)          (935,000)          (821,000)         (1,309,000)
                                                    -------------      -------------      -------------       -------------
Net income (loss)                                   $    (130,000)       $(3,921,000)        $1,595,000        $(10,989,000)
                                                    =============       ============        ===========       =============

Earnings (loss) per share                         $        (0.01)     $       (0.33)     $        0.10      $        (0.92)
                                                  ===============     ==============     ==============     ===============

Earnings (loss) per common share,
     assuming dilution                            $        (0.01)     $       (0.33)     $        0.09      $        (0.92)
                                                  ===============     ==============     ==============     ===============
Weighted average shares outstanding                   14,949,422         12,055,344         14,196,179          11,994,855
                                                     ============       ============       ============        ===========
Weighted average shares outstanding,
     assuming dilution                                14,949,422         12,055,344         16,807,660          11,994,855 
                                                     ============       ============       ============        ============


</TABLE>





                             See accompanying notes.

                                        5

<PAGE>


<TABLE>
<CAPTION>

                           NaPro BioTherapeutics, Inc.

                               Cash Flow Statement
                                   (Unaudited)

                                                                                          Nine Months Ended
                                                                                            September 30,
                                                                                        1998               1997
                                                                                       ------              -----
<S>                                                                                    <C>                 <C>
Operating activities
Net income (loss)                                                                      $1,595,000          $(10,989,000)
Adjustments to reconcile net income (loss) to net cash
     provided (used) by operating activities:
     Depreciation                                                                       1,894,000               559,000
     Accretion of debt issue cost, warrant allocation
         and conversion rights allocation                                                 331,000               845,000
     Compensation paid with warrants                                                      139,000                   ---
     Interest paid in stock                                                               290,000                   ---
     (Gain) loss on sale or retirement of assets                                          582,000              (218,000)
     Loss on early retirement of debt                                                     127,000                   ---
     Changes in operating assets and liabilities:
         Accounts receivable                                                            1,079,000               207,000
         Inventory                                                                       (781,000)           (2,744,000)
         Prepaid expense and other assets                                                 109,000               (10,000)
         Accounts payable                                                              (2,897,000)            3,097,000
         Accrued liabilities                                                               61,000               240,000
         Deferred revenue                                                               1,779,000               525,000
                                                                                      -----------       ---------------
Net cash provided (used) by operating activities                                        4,307,000            (8,488,000)
Investing activities
     Transfers to restricted cash                                                      (2,000,000)           (7,299,000)
     Transfers from restricted cash                                                       391,000             4,888,000
     Additions to property and equipment                                                 (550,000)           (9,431,000)
     Proceeds from the sale of property and equipment                                      40,000               361,000
     Purchase of securities held to maturity                                                  ---            (3,827,000)
     Proceeds from securities available for sale                                              ---             2,650,000
     Proceeds from securities held to maturity                                            ---                 6,476,000
                                                                              --------------------         ------------
Net cash used by investing activities                                                  (2,119,000)           (6,182,000)
Financing activities
     Proceeds from notes payable                                                          188,000            11,045,000
     Debt issue cost                                                                          ---              (745,000)
     Payments under notes payable                                                      (1,385,000)           (1,786,000)
     Proceeds from the sale of common stock,
         and exercise of common stock warrants                                             42,000             1,172,000
                                                                                   --------------         -------------
Net cash provided (used) by financing activities                                       (1,155,000)            9,686,000
                                                                                     ------------         -------------
Net increase (decrease) in cash and cash equivalents                                    1,033,000            (4,984,000)
Cash and cash equivalents at beginning of period                                        8,102,000             9,531,000
                                                                                    -------------         ------------
Cash and cash equivalents at end of period                                            $ 9,135,000           $ 4,547,000 
                                                                                     ============          ============
</TABLE>

                             See accompanying notes.

                                        6

<PAGE>



                                            NaPro BioTherapeutics, Inc.

                                    Notes to Consolidated Financial Statements
                                                September 30, 1998
                                                    (Unaudited)

1.       Basis of Presentation

The accompanying financial statements are unaudited.  However, in the opinion of
management, the financial statements reflect all adjustments, consisting of only
normal recurring adjustments,  necessary for fair presentation.  Interim results
of operations are not indicative of results for the full year.  These  financial
statements  should be read in  conjunction  with the NaPro Annual Report on Form
10-K for the year ended December 31, 1997.

2.       Inventory                      September 30,              December 31,
                                          1998                      1997      

         Raw materials                    $   120,000               $   412,000
         Work-in-process                    1,472,000                 1,408,000
         Finished goods                     2,579,000                 1,302,000
                                           ----------               -----------
                                           $4,171,000                $3,122,000
                                           ==========                ==========

         Non-current inventory

         Raw materials                    $   468,000               $   347,000
         Work-in-process                      440,000                   288,000
         Finished goods                      ---                        541,000
                                          -----------               -----------
                                             $908,000                $1,176,000
                                             ========                ==========

3.       Cash Flow Supplemental Disclosures
                                                            Nine Months Ended
                                                            September 30,
                                                    1998               1997   
                                                -----------       ------------

Interest paid                                   $    380,000       $    469,000

Noncash transactions:
Receipt of common stock into treasury:
     Note 4                                        1,768,000              ---
Repayment of notes receivable from stockholder
     through transfer of stock into treasury            ---             990,000
Issuance of common stock--compensation                40,000             40,000
     Exchange of preferred shares of subsidiary
     for common stock of parent                    1,951,000              ---
Conversion of senior convertible debt to  
     common stock                                  2,141,000              ---



                                        7

<PAGE>



Cash Flow Supplemental Disclosures
     (Continued)                                            Nine Months Ended
                                                            September 30,
                                                    1998               1997     
                                                --------------    --------------

Conversion of convertible preferred shares
     to common stock                                 639,000             ---
Accretion of convertible preferred stock
     conversion rights valuation, offering
     cost and warrant valuation                      323,000             ---
Issuance of common stock for dividends payable       182,000             ---
Note taken as partial proceeds on sale of asset         ---             578,000

4.       Common Stock

In the  September  1998 quarter NaPro issued  596,073  shares of common stock in
conversion of NaPro's senior convertible debt, and 66,314 shares of common stock
in payment of  interest on the senior  convertible  debt.  In the quarter  NaPro
issued   220,538  shares  of  common  stock  in  conversion  of  NaPro's  senior
convertible  preferred  stock and  48,322  shares of common  stock in payment of
dividends on the senior convertible preferred stock.

5.       Asset realization; loss on retirement of assets

NaPro focuses on the development,  manufacture and  commercialization of natural
product   pharmaceuticals,   particularly   paclitaxel,  a  naturally  occurring
cancer-fighting  compound  found in certain  species of yew (Taxus)  trees.  The
nature of  pharmaceutical  development  work includes the acquisition of assets,
the  realization  of which may be  dependent  on approval by various  regulatory
agencies,  such as the United States Food and Drug Administration,  of developed
products for sale. NaPro currently sells commercial  paclitaxel to F.H. Faulding
& Co.,  Ltd., an Australian  corporation,  which has approvals for paclitaxel in
Australia and 11 other countries.  The full realization of NaPro's assets may be
dependent  on  approval  of NaPro  paclitaxel  in  either  the U.S.  or  Europe.
Management believes that its assets bear no impairment at this time.

 NaPro  temporarily  suspended  construction  of  its  commercial  manufacturing
facility in Boulder, Colorado. As a result of this suspension NaPro has incurred
cost on certain  elements of  construction  in progress.  Accordingly  NaPro has
disposed  or will  dispose of such  assets  and has  expensed  the cost,  net of
estimated  salvage.  Development  continues on the  manufacturing  process to be
installed in this  facility.  Improvements in the manufacturing  process arising
from such  development  may result in  disposal of  additional  assets at future
dates.  No  determination  can  presently  be made of the amount of such  future
disposals, if any.

6.       Earnings (loss) per Share

The following  table sets forth the  computation  of basic and diluted  earnings
(loss) per share. In calculating diluted earnings (loss) per share for the three
periods  in which a loss is  reported,  the impact of all  additional  shares is
antidilutive, and thus not included in the calculation:

                                        8

<PAGE>

<TABLE>
<CAPTION>




                                                              Quarter Ended                     Nine Months Ended
                                                              September 30,                       September 30,
                                                          1998             1997              1998               1997
                                                         ------           ------            ------             -----
Numerator:
   <S>                                                   <C>              <C>                <C>              <C>

   Net income (loss)                                     $ (130,000)      $(3,921,000)       $ 1,595,000      $(10,989,000)
   Preferred stock dividends                                (56,000)          ---               (182,000)            ---
                                                          ----------  ----------------      ------------    --------------
   Numerator for earnings (loss) per
      share - income (loss) available to
      common stockholders                                $ (186,000)      $(3,921,000)         1,413,000      $(10,989,000)

Effect of dilutive securities:
   Senior convertible debt                                  ---               ---                50,000            ---
   Preferred stock dividends                                ---               ---                27,000            ---
                                                    ----------------  ----------------     -------------       -----------
   Numerator for earnings (loss) per share, assuming dilution - income available
      to common stockholders after assumed
     conversions                                       $   (186,000)      $(3,921,000)      $ 1,490,000       $(10,989,000)
                                                         ===========      ============      ============      =============

Denominator:
   Denominator for earnings (loss) per share -
        weighted average shares outstanding              14,949,422        12,055,344        14,196,179          11,994,855
                                                         -----------      ------------      ------------         ----------
   Senior convertible debt                                  ---               ---             1,371,339            ---
   Convertible preferred stock                              ---               ---               796,996            ---
   Non-voting common stock                                  ---               ---               395,000            ---
   Stock options and warrants                               ---               ---                48,146            ---
                                                    ----------------  ----------------     -------------        -----------
Dilutive potential common shares                            ---               ---             2,611,480            ---
                                                    ----------------  ----------------       -----------        -----------
   Denominator  for  earnings  (loss) per  share,  assuming  dilution - adjusted
        weighted average shares outstanding and assumed
        conversions                                      14,949,422        12,055,344        16,807,660          11,994,855
                                                         -----------      ------------       ===========         ==========
Earnings (loss) per common share                      $       (0.01)    $       (0.33)    $        0.10       $      (0.92)
                                                      ==============    ==============    ==============      =============
Earnings (loss) per common share, assuming
    dilution                                          $       (0.01)    $       (0.33)    $        0.09       $      (0.92)
                                                      ==============    ==============    ==============      =============
</TABLE>

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

The  following   discussion  and  analysis  provide   information  that  NaPro's
management  believes is  relevant  to an  assessment  and  understanding  of the
Company's results of operations and financial condition.  This discussion should
be read in  conjunction  with the  consolidated  financial  statements and notes
thereto  appearing  elsewhere herein as well as with the consolidated  financial
statements,  notes thereto and the related management's  discussion and analysis
of financial  condition  and results of  operations  included in NaPro's  Annual
Report on Form 10-K for the year ended December 31, 1997.

General

NaPro is a natural product  pharmaceutical company that is focusing primarily on
the   development,   manufacture   and   commercialization   of  paclitaxel,   a
naturally-occurring  anti-cancer  agent found in certain  species of yew (Taxus)
trees.


                                        9

<PAGE>



NaPro has devoted its efforts primarily to the development and implementation of
its proprietary  extraction,  isolation and purification  (EIPTM) technology and
the  development of its proprietary  semi- synthetic  method for producing NaPro
paclitaxel.   To  advance  the  development  and   commercialization   of  NaPro
paclitaxel,  NaPro entered into a 20-year,  geographically  exclusive  agreement
with F.H. Faulding & Co., Ltd. ("Faulding") for the clinical development, sales,
marketing and distribution of NaPro  paclitaxel.  NaPro is in discussions with a
number of pharmaceutical  companies,  both domestically and internationally,  to
assist NaPro in developing  and marketing  NaPro  paclitaxel in various parts of
the world.  NaPro is currently  dependent  for revenue  exclusively  on sales of
NaPro paclitaxel, and on fee income from licensed technology.

NaPro  has  initiated  clinical  studies  exploring  the  use  of  its  patented
formulation of paclitaxel  using its patented  method of  administration.  NaPro
anticipates that information gained in such studies will be useful in the filing
of a New Drug Application with the U. S. Food and Drug  Administration for NaPro
paclitaxel.  The cost of such  studies is and will  continue to be  significant.
NaPro  anticipates  that  should  it enter  into an  agreement  with one or more
pharmaceutical  companies as  discussed  above,  such  agreement  would  include
funding for all or a significant  portion of the related  clinical studies cost.
Absent such an agreement or other  financing of these  studies,  the cost of the
clinical studies may significantly reduce NaPro's working capital.

Through September 30, 1998,  NaPro's  production of NaPro paclitaxel was limited
primarily to research and  pilot-scale  production,  and much of NaPro's product
sales were for use in clinical trials and for research and development purposes.
Accordingly,  NaPro has generated only limited  revenue from such activities and
has incurred significant losses, including losses of approximately $4.1 million,
$6.8 million and $15.5 million for the years ended  December 31, 1995,  1996 and
1997,  respectively.  For the nine months ended September 30, 1998, largely as a
result of a nonrecurring  license fee received from IVAX Corporation (IVAX) (see
below), NaPro recorded net income of approximately $1.6 million, resulting in an
accumulated  deficit of $39.4  million as of September  30, 1998.  NaPro expects
that it will  continue  to have a high level of  operating  expense  and will be
required  to make  significant  up-front  expenditures  in  connection  with its
biomass  procurement,   product   development,   and  research  and  development
activities.  NaPro anticipates that annual losses will continue until such time,
if  ever,  as  NaPro is able to  generate  sufficient  revenue  to  support  its
operations.  NaPro  believes that its ability to generate  such revenue  depends
primarily on its ability to obtain  regulatory  approval in the U. S. or another
major market for the commercial sale of NaPro paclitaxel,  on NaPro's ability to
obtain one or more  partners  to  replace  IVAX,  on  NaPro's  ability to obtain
regulatory  approval for its manufacturing  facilities and on NaPro's ability to
construct  manufacturing  facilities that produce quantities of NaPro paclitaxel
sufficient to supply NaPro's  strategic  partners'  requirements  for commercial
sales.  Moreover,  NaPro's  future growth and  profitability  will depend on the
success of its strategic  partners in fostering  acceptance  in the  oncological
market for NaPro paclitaxel as a preferred dosing regimen of taxane chemotherapy
to be used alone or in combination with other chemotherapeutic agents.

In February  1998,  due to the delay in receiving  marketing  approval for NaPro
paclitaxel,  NaPro underwent a restructuring to decrease overall cost, resulting
in a  one-time  charge  of  approximately  $250,000.  NaPro's  total  number  of
employees was reduced by 53, a 43% reduction in full time  positions,  resulting
in an expected annual savings of $2.8 million in payroll  expense.  This payroll
expense is  reflected  in  research  and  development,  as well as  general  and
administrative  expense.  In addition,  nonpayroll  expense is also  expected to
decrease as the result of the restructuring.  As part of the restructuring NaPro
temporarily  closed its British  Columbia  manufacturing  facility and suspended
construction  of  its  commercial  scale  manufacturing   facility  in  Boulder,
Colorado. Completion of the

                                        10

<PAGE>



Boulder facility will require additional financing,  which NaPro intends to seek
at such time, if ever, as NaPro anticipates sufficient product demand to warrant
completion of the facility.

In March  1998,  NaPro  and  IVAX  entered  into an  agreement  terminating  the
development and marketing  activity between the two companies (the  "Termination
Agreement").  Under the terms of the  Termination  Agreement,  IVAX  received  a
royalty-free, limited, nonexclusive license to one of NaPro's pending patents in
the U. S., Europe, and certain other world markets. In return,  NaPro received a
cash  payment  of $6  million,  $2  million  of which was placed in escrow to be
released as remaining product is delivered  through March 1999.  Revenue related
to the  escrow  funds has been  deferred  and is to be  recognized  as funds are
released from the escrow. In addition, IVAX returned in April 1998 approximately
1.1 million  shares of NaPro common stock and made  additional  payments of $3.8
million  in April  1998 and $2.6  million  in  August  1998.  Of the $2  million
escrowed  funds,  $340,000 was released in August 1998.  NaPro will  continue to
manufacture a fixed amount of NaPro paclitaxel for IVAX to be delivered and paid
for through March 1999.

The Termination  Agreement  leaves NaPro free to seek  regulatory  approvals and
market NaPro  paclitaxel  itself or to seek a new partner or partners with which
to pursue regulatory approvals and marketing of NaPro paclitaxel, in either case
outside  the  territory  contractually  allocated  to  Faulding.   However,  the
Termination  Agreement currently leaves NaPro without such a partner.  There can
be no  assurance  that NaPro will be able to secure such  approvals  or form new
long-term relationships for the approval,  marketing,  and distribution of NaPro
paclitaxel in these areas,  or that NaPro or such a partner,  if found,  will be
able to effectively market NaPro paclitaxel.

Year 2000 issue

Until recently many computer  programs used only the last two digits to refer to
a year.  Such  programs do not  properly  recognize a year that begins with "20"
instead of the familiar "19". If not corrected, many computer applications could
fail or create  erroneous  results.  This matter is commonly  referred to as the
Year 2000 issue or Y2K.

Two years ago NaPro  implemented  an  assessment of its systems and other assets
which could be subject to Y2K. NaPro has completed the assessment of its primary
systems  and has  brought  all but one of the  systems  into Y2K  compliance.  A
compliant  upgrade currently exists for the noncompliant  system,  which will be
brought  into  compliance  no later  than April  1999.  NaPro is  assessing  its
secondary  systems and other assets and expects to complete  that  assessment no
later than April 1999.

NaPro is assessing its secondary  systems,  including  microprocessor-controlled
equipment.  The potential for significant  interruption  from secondary  systems
exists,  although NaPro believes that the likelihood of  interruption  caused by
Y2K failures in secondary systems is quite small.

In addition to its internal  systems  NaPro is  evaluating  potential  impact on
NaPro of Y2K issues  with its  vendors  and  customers.  NaPro  cannot  directly
control Y2K compliance by its vendors and customers. NaPro is communicating with
its key vendors and customers regarding this matter. NaPro knows of no vendor or
customer  that has Y2K issues that have a potential of  interrupting  NaPro in a
manner that could significantly affect NaPro's operations. However, NaPro uses a
number of  vendors  that  NaPro  believes  to be the best or the only  qualified
source of a particular good or service.  Sales to NaPro's customers  potentially
could be  interrupted  by  customers'  Y2K issues.  For example,  NaPro's  sales
process  involves  sample  testing by customers  prior to customers'  release to
NaPro for product shipment. Should a

                                       11

<PAGE>



significant  customer  incur Y2K  problems  with its  testing,  release or other
systems,  NaPro's  sales could be  materially  affected.  NaPro will continue to
monitor  the  level  of Y2K  compliance  with  respect  to its key  vendors  and
customers and will further develop  contingency  plans to cover the failure of a
key vendor, including identification and qualification of alternative suppliers.
Management  believes that  exposure to vendor or customer Y2K issues  creates no
material risk to NaPro.  However,  no assurance can be given with certainty that
Y2K issues with vendors or customers will not significantly affect NaPro.

NaPro's  Y2K effort  has caused no  significant  deferral  of other  information
technology projects.

NaPro's  Y2K  contingency  plan  includes   completion  of  the  evaluation  and
remediation  process  discussed  above,  including  communication  with  its key
vendors and customers regarding potential for Y2K issues;  identification of the
best  alternative  vendor for  sensitive  goods and services;  coordination  and
planning with such alternative vendors.

Management  believes  that Y2K issues  related  to both  internal  and  external
systems will have no material effect on NaPro's business,  results of operations
or financial condition,  and that NaPro's Y2K risk is not material.  However, no
such assurance can be given with  certainty.  The cost of addressing Y2K has not
been  material;  management  believes that the cost of completing Y2K compliance
will not be material.

Results of Operations

Quarter ended  September 30, 1998,  compared to the quarter ended  September 30,
1997 Sales for the 1998  quarter  were  $700,000,  representing  a  decrease  of
$200,000 from the 1997 quarter.  The decrease related primarily to the timing of
product shipments. Shipments to the strategic partners may vary significantly on
a quarter to quarter basis depending on a number of factors including the timing
and size of any clinical trials conducted by the strategic  partners,  the level
of inventory  carried by the strategic  partners,  NaPro's obtaining one or more
partners   to  replace   IVAX,   and   changes   in   approved   markets.   This
quarter-to-quarter  variability  will continue  until such time,  if ever,  that
stable commercial demand has been established for the product in a major market.

Research and  development and cost of products sold expense for the 1998 quarter
was $2.1 million, representing a decrease of $500,000 from the 1997 quarter. The
decrease  resulted  from a  decrease  in the level of  process  development  and
research  expense  as well as  lower  production  cost.  At  this  time  NaPro's
production process is not distinct from its research and development  processes.
Accordingly,  the cost of products  sold is included  with NaPro's  research and
development expense.

General  and  administrative  expense for the 1998  quarter  was $1  million,  a
decrease  of  $400,000  from  the  1997  quarter.   The  decrease  is  primarily
attributable  to an overall  decrease  in the level of  resources  committed  to
general  and  administrative  activity  as a result  of  NaPro's  February  1998
restructuring.

Loss on retirement of assets for the 1998 quarter was $600,000,  with no loss in
the 1997 quarter.  NaPro  temporarily  suspended  construction of its commercial
manufacturing  facility in  Boulder,  Colorado.  As a result of this  suspension
NaPro has  incurred  cost on  certain  elements  of  construction  in  progress.
Accordingly  NaPro has  disposed or will dispose of such assets and has expensed
the cost, net of estimated salvage.  Development  continues on the manufacturing
process to be installed in this  facility.  Improvements in the  manufacturing
process  arising  from such  development  may result in disposal  of  additional
assets at future dates. No determination  can presently be made of the amount of
such future disposals, if any.

                                       12

<PAGE>



License fee income for the 1998  quarter was $3 million.  There was no analogous
income for the 1997 quarter.  This revenue related to a license fee paid by IVAX
in conjunction with the Termination Agreement.  Under the Termination Agreement,
NaPro expects to record up to an  additional  $1.7 million in license fee income
through  March  1999 (all of which has been  received  but is  escrowed  pending
future  product  deliveries).   NaPro  is  actively  seeking  one  or  more  new
pharmaceutical  partners to replace IVAX.  There can be no  assurance,  however,
that NaPro will  succeed in  obtaining  any new  pharmaceutical  partners  or in
earning  any  license  fees  other  than the  license  fee being  paid under the
Termination Agreement.

Interest income for the 1998 quarter was $200,000,  virtually unchanged from the
1997 quarter.

Interest  and other  expense for the 1998  quarter was  $200,000,  a decrease of
$700,000 from the 1997 quarter. This decrease is primarily due to the absence of
significant amortization of discount related to the conversion rights of NaPro's
senior convertible debt.

Nine  months  ended  September  30,  1998,  compared  to the nine  months  ended
September 30, 1997 Sales for the 1998 period were $3.7 million , representing an
increase of $1.7 million from the 1997 period. The increase related primarily to
the timing of product shipments.

Research and  development  and cost of products sold expense for the 1998 period
was $6.8 million,  representing a decrease of $800,000 from the 1997 period. The
decrease  resulted  from a  decrease  in the level of  process  development  and
research expense as well as lower production cost.

General and  administrative  expense for the 1998  period was $5.1  million,  an
increase  of  $400,000   from  the  1997  period.   The  increase  is  primarily
attributable to the cost associated with the IVAX termination, the February 1998
restructuring, and depreciation.

Loss on retirement of assets for the 1998 period was  $600,000,  representing  a
change of $800,000 from the $200,000 gain in the 1997 period.  NaPro temporarily
suspended  construction  of its  commercial  manufacturing  facility in Boulder,
Colorado.  As a result of this  suspension  NaPro has  incurred  cost on certain
elements of  construction  in progress.  Accordingly  NaPro has disposed or will
dispose of such assets and has  expensed  the cost,  net of  estimated  salvage.
Development  continues  on the  manufacturing  process to be  installed  in this
facility; such development may result in disposal of additional assets at future
dates.  No  determination  can  presently  be made of the amount of such  future
disposals, if any.

License  fee  income  for the 1998  period was $10.8  million.  NaPro  earned no
analogous income for the 1997 period. This revenue related to a license fee paid
by IVAX in conjunction with the Termination Agreement.

Interest  income  for the 1998  period  was  $400,000,  unchanged  from the 1997
period.

Interest  and other  expense for the 1998 period was  $800,000,  representing  a
decrease of $500,000 from the 1997 period. This decrease is primarily due to the
absence of significant amortization of discount related to the conversion rights
of NaPro's senior convertible debt.

Liquidity and Capital Resources


                                       13

<PAGE>



NaPro's capital  requirements have been and will continue to be significant.  At
September 30, 1998, NaPro had working capital of $9.6 million.  This compared to
negative  working  capital of $2.5 million at December 31,  1997.  To date,  the
funding of NaPro's capital  requirements has been dependent primarily on the net
proceeds of public offerings of its common stock of approximately $21.1 million,
on private  placements of its equity securities of approximately  $27.8 million,
on the exercise of warrants and options of $5.6  million,  on net  borrowings of
$11.8  million,  and on loans and advances from its  stockholders  and strategic
partners.

In June and December 1997, NaPro issued its Senior Convertible Notes due in 2000
(the "Convertible Notes") and Series C Senior Convertible  Preferred Stock (the"
Convertible  Preferred  Stock"),  respectively.  The Convertible  Notes and the
Convertible Preferred Stock are referred to as the "Convertible Securities."

The Convertible Securities can be converted into NaPro common stock at discounts
(ranging  from 5% to 10%)  from the  market  price of the  common  stock  during
specified periods prior to the conversion,  subject to a maximum of $1.92385 per
share of common stock. Such conversions may be made at the rate of up to 450,000
shares of common stock per month through  December 31, 1998,  and up to the full
amount of the outstanding Convertible Securities thereafter. As of September 30,
1998,  $3.8  million of the  Convertible  Securities  have been  converted  into
2,965,666  shares of common stock.  After  September 30, 1998,  over 5.6 million
shares  of  common  stock  could be  issued  by  NaPro  upon  conversion  of the
Convertible  Securities  subject to certain  limitations  under the terms of the
Convertible  Securities.  The issuance of shares of common stock upon conversion
of the  Convertible  Securities  would  result in  substantial  dilution  of the
interest of the current  stockholders of NaPro.  NaPro is evaluating  options to
refinance or redeem the Convertible Securities in circumstances where the number
of shares of common stock issued in connection therewith would be limited to the
extent practicable. NaPro is considering various sources of capital to fund such
a transaction,  including  possible funding from a potential  strategic partner.
NaPro can give no  assurance  that any such  transaction  or  transactions  will
occur.

Cash and cash equivalents totaled $9.1 million at September 30, 1998. During the
first nine months of 1998,  cash provided by operating  activities  totaled $4.3
million;  and cash used by  investing  and  financing  activities  totaled  $2.1
million and $1.2 million, respectively.

The amount and timing of future capital  expenditures  will depend upon numerous
factors including the progress of NaPro's research and development  program, the
magnitude and scope of these activities;  competing  technological and marketing
developments;  changes in the existing strategic partnership;  the establishment
of  additional  strategic  relationships;  the cost of further  development  and
maintenance of Yew tree  plantations;  and the cost of  manufacturing  scale-up.
NaPro may seek  additional  long-term  financing  to fund  capital  expenditures
should such financing become available on terms acceptable to NaPro.

                                       14

<PAGE>



Special Note Regarding Forward-looking Statements.

Certain statements in this report constitute "forward-looking statements" within
the meaning of the federal securities laws. In addition, NaPro or persons acting
on its behalf  sometimes  make  forward-looking  statements in other written and
oral communications.  Such forward-looking  statements may include,  among other
things,  statements  concerning  NaPro's plans,  objectives and future  economic
prospects,  such as matters relative to seeking and obtaining strategic partners
and the consequences  thereof; the refinancing or redemption of the Convertible
Securities; the availability of patent and other protection for its intellectual
property;  the  completion  of  clinical  trials  and  regulatory  filings;  the
prospects for and timing of regulatory approvals;  the need for and availability
of additional capital; the amount and timing of capital expenditures;  timing of
products introductions and revenue; the availability of raw materials; prospects
for future  operations;  and other statements of expectations,  beliefs,  future
plans and  strategies,  anticipated  events or trends  and  similar  expressions
concerning  matters  that  are  not  historical  facts.  Such  for  ward-looking
statements  involve  known and unknown  risks,  uncertainties  and other factors
which may cause the actual  results,  performance or  achievements  of NaPro, or
industry  results,   to  be  materially   different  from  any  future  results,
performance  or  achievements  expressed  or  implied  by such for  ward-looking
statements.  Included,  among other things, are the following  factors:  adverse
economic and general business conditions,  competition from Bristol-Myers Squibb
Company  (Bristol) and other  existing and new producers of paclitaxel and other
drugs,  technological  advances in cancer  treatment and drug  development,  the
ability to obtain  rights to  technology,  the  ability  to obtain  and  enforce
patents,  the ability to obtain raw  materials and  commercialize  manufacturing
processes,  the  effectiveness  of NaPro  paclitaxel  and other  pharmaceuticals
developed by NaPro in treating  disease,  the results of clinical  studies,  the
results of research  and  development  activities,  the business  abilities  and
judgment  of  NaPro's  management  and  other  personnel,  the  availability  of
qualified  personnel  generally,  changes in and  compliance  with  governmental
regulations,  the  effect of  capital  market  conditions  and other  factors on
capital  availability  for  NaPro  and other  biopharmaceutical  companies,  the
ability of Faulding to perform its obligations under its existing agreement with
NaPro, the ability of NaPro to establish  relationships  with capable  strategic
partners to develop and market NaPro  paclitaxel in the  territories not covered
by the Faulding Agreement, and other factors referenced in this Report.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.  

         Not applicable.


                           Part II--Other Information

Item 1.  Legal Proceedings

Australian Petty Patents

In September 1993 and August 1994, Bristol received two Australian petty patents
claiming certain methods of administering  paclitaxel.  Australian petty patents
have a maximum term of six years. Such patents are allowed to contain only three
claims (one  independent  and two  dependent)  and are granted on the basis of a
prior art search, which is significantly more limited in scope than the searches
done prior to issuance  of  standard  patents.  Following  publication  of these
patents, Faulding instituted legal action to revoke these patents on the grounds
that the patent  claims are invalid and that the subject  matter  claimed in the
patents was already  known prior to the claimed date of  invention.  In February
1995,  Bristol  brought legal action  against  Faulding  based upon these patent
claims,  seeking  an  injunction  against  Faulding  to  prevent  Faulding  from
marketing NaPro paclitaxel pursuant to Faulding's generic approval.

                                       15

<PAGE>



In July 1998,  Faulding  received a favorable  ruling from the Federal  Court in
Australia that  invalidated  the patents.  In addition,  the court ruled against
Bristol in the countersuit which alleged infringement of those patents.

European Patent Litigation

On May 14,  1997,  Bristol  was issued a  European  patent  relating  to certain
methods  of  treatment  with  paclitaxel.  On the  same  day,  NaPro  instituted
revocation  proceedings  in the United Kingdom  against this European  patent as
issued in the U. K. The revocation  action was not in response to any lawsuit or
allegations of infringement  against NaPro relating to the patents,  but Bristol
has subsequently  instituted a countersuit against NaPro alleging  infringement.
The court heard each of the party's  claims in July 1998. On August 25, 1998 the
court ruled in favor of NaPro that the patent was invalid in the United Kingdom.
Bristol has filed notice that it intends to appeal the decision.

Item 2.  Changes in Securities

In the September  1998 quarter,  NaPro issued  596,073 shares of common stock in
conversion  of $644,000  of the  Convertible  Notes and 66,314  shares of common
stock in payment of $82,000  interest on the Convertible  Notes. In the quarter,
NaPro issued  220,538  shares of common stock in conversion of 254 shares of the
Convertible  Preferred  Stock and  48,322  shares of common  stock in payment of
$55,000 of dividends on the Convertible  Preferred Stock. The issuance of shares
of common stock upon  conversion of the  Convertible  Securities was exempt from
registration  under section  3(a)(9) of the  Securities  Act of 1933, as amended
(the "Securities Act"). The issuance of shares of common stock in the payment of
interest  and  dividends  was  exempt as a private  placement  to  sophisticated
investors under section 4(2) of the Securities Act and Regulation D thereunder.



Certain  provisions of the Convertible  Preferred Stock may limit the ability of
NaPro to pay  dividends  on its  common  stock and to  repurchase  shares of its
common stock.

Item 3.  Defaults upon Senior Securities.     None.

Item 4.  Submission of Matters to a Vote of Securities Holders.   None.

Item 5.  Other Information.  None.



                                       16

<PAGE>



Item 6.  Exhibits and Reports on Form 8-K

NaPro filed no Current Reports on Form 8-K during the quarter.
<TABLE>
<CAPTION>

Exhibit
Number        Description of Exhibit
<S>           <C>

10.1          Employment Agreement effective October 5, 1998 between NaPro and Leonard P. Shaykin
10.2          Employment Agreement effective October 5, 1998 between NaPro and Sterling K. Ainsworth
10.3          Employment Agreement effective October 5, 1998 between NaPro and Patricia A. Pilia
10.4          Employment Agreement effective October 5, 1998 between NaPro and Gordon Link
10.5          Employment Agreement effective October 5, 1998 between NaPro and David L. Denny
10.6          Employment Agreement effective October 5, 1998 between NaPro and William D. Fairbairn
10.7          Employment Agreement effective October 5, 1998 between NaPro and James D. McChesney
27.1          Financial Data Schedule
</TABLE>

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

Signatures

Pursuant to the  requirements of the Securities  Exchange Act of 1934, NaPro has
duly caused this report to be signed on its behalf.

                                      NaPro BioTherapeutics, Inc.


November 11, 1998                     /s/ Sterling K. Ainsworth

                                      Sterling K. Ainsworth
                                      President and Chief Executive Officer
                                      (Principal Executive Officer)


November 11, 1998                     /s/ Gordon Link

                                      Gordon Link
                                      Vice President and Chief Financial Officer
                                      (Principal Financial Officer)


November 11, 1998                     /s/ Robert L. Poley

                                      Robert L. Poley
                                      Controller
                                      (Principal Accounting Officer)


                                       17

<PAGE>