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 June 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 August 1, 1998:

Common Stock, $.0075 par value                               14,856,181
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

              Statement of Cash Flow                                        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         13


Part II       Other Information

         Legal Proceedings                                                  14

         Changes in Securities                                              14

         Defaults Upon Senior Securities                                    14

         Submission of Matters to a Vote of Security Holders                15

         Other Information                                                  15

         Exhibits and Reports on Form 8-K                                   15


Signatures                                                                  16


                                                         2

<PAGE>

<TABLE>
<CAPTION>


                          Part I. Financial Information

Item 1.       Consolidated Financial Statements


                                            NaPro BioTherapeutics, Inc.
                                                   Balance Sheet
                                                       Assets




                                                                              June 30,                    December 31,
                                                                                1998                          1997
                                                                            (unaudited)


<S>                                                                            <C>                         <C>

Current assets:
         Cash and cash equivalents                                             $   9,580,000               $ 8,102,000
         Accounts receivable                                                         930,000                 1,508,000
         Inventory                                                                 2,291,000                 3,122,000
           Restricted cash                                                         2,000,000                       ---
         Prepaid expense and other                                                   318,000                   481,000
                                                                             ---------------              ------------
Total current assets                                                              15,119,000                13,213,000

Property and equipment, net                                                       14,506,000                15,187,000
Restricted cash                                                                      195,000                   246,000
Inventory                                                                          1,861,000                 1,176,000
Other assets                                                                         535,000                   536,000
                                                                             ---------------            --------------
Total assets                                                                   $  32,216,000              $ 30,358,000
                                                                               =============              ============


</TABLE>













                                               See accompanying notes

                                                         3

<PAGE>

<TABLE>
<CAPTION>


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


                                                                              June 30,                   December 31,
                                                                                1998                         1997
                                                                            (unaudited)


<S>                                                                           <C>                      <C>

Current liabilities:
         Accounts payable                                                     $    2,493,000           $     4,361,000
         Accrued payroll and payroll taxes                                           569,000                   570,000
         Notes payable--current portion                                              737,000                   743,000
         Senior convertible debt                                                         ---                 8,134,000
         Deferred revenue                                                          4,059,000                 1,890,000
                                                                             ---------------           --------------
Total current liabilities                                                          7,858,000                15,698,000

Notes payable--long term                                                             223,000                   480,000
Senior convertible debt                                                            6,304,000                       ---
                                                                             ---------------        ------------------

Total liabilities                                                                 14,385,000                16,178,000

Minority interest                                                                    623,000                 2,574,000

Senior convertible redeemable preferred stock, Series C                            4,240,000                 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  authorized at June 30, 1998,  19,000,000 authorized in 1997
         15,752,264 shares issued in 1998 (unaudited),
         and 13,134,021 in 1997                                                      118,000                    98,000
     Additional paid-in capital                                                   56,562,000                50,833,000
     Deficit                                                                     (39,273,000)              (40,998,000)
     Treasury stock--1,345,236 shares                                             (4,442,000)               (2,674,000)
                                                                              ---------------            --------------
Total stockholders' equity                                                        12,968,000                 7,262,000
                                                                              --------------             -------------
Total liabilities and stockholders' equity                                     $  32,216,000               $30,358,000
                                                                               =============               ===========

</TABLE>

                                               See accompanying notes

                                                         4

<PAGE>
<TABLE>
<CAPTION>



                                            NaPro BioTherapeutics, Inc.

                                              Statement of Operations
                                                    (Unaudited)


                                                        Three Months Ended                     Six Months Ended
                                                             June 30,                              June 30,
                                                      1998               1997               1998               1997
                                                     ------             ------             ------             -----


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

Sales                                               $     574,000      $      91,000        $ 2,989,000        $ 1,099,000

Expense:
         Research, development and
            cost of products sold                       2,041,000          2,622,000          4,686,000          5,027,000
         General and administrative                     2,211,000          1,759,000          4,087,000          3,272,000
(Gain) Loss on retirement of assets                         1,000           (218,000)             1,000           (218,000)
                                                  ---------------      -------------     --------------      -------------
                                                        4,253,000          4,163,000          8,774,000          8,081,000
                                                     ------------       ------------       ------------        -----------

Operating loss                                         (3,679,000)        (4,072,000)        (5,785,000)        (6,982,000)

Other income (expense):
           License fee                                  3,750,000                ---          7,820,000                ---
         Interest income                                  170,000            122,000            263,000            288,000
         Interest and other expense                      (280,000)          (292,000)          (573,000)          (374,000)
                                                    -------------       ------------      -------------       -------------
Net income (loss)                                   $     (39,000)       $(4,242,000)        $1,725,000        $(7,068,000)
                                                    =============       ============        ===========        ============

Earnings (loss) per share                          $        (0.01)     $       (0.35)    $          .12     $        (0.59)
                                                   ==============     ==============    ===============     ===============
Earnings per common share,
    assuming dilution                                                                   $           .11
                                                                                        ===============
Weighted average shares outstanding                   14,074,373         11,978,530         13,813,316          11,964,109
                                                      ===========       ============        ===========        ===========
Weighted average shares outstanding,
   assuming dilution                                                                        15,795,390

</TABLE>






                                              See accompanying notes.

                                                         5

<PAGE>

<TABLE>
<CAPTION>


                                            NaPro BioTherapeutics, Inc.

                                                Cash Flow Statement
                                                    (Unaudited)



                                                                                          Six Months Ended
                                                                                              June 30,
                                                                                     1998                  1997
                                                                                    ------                -----
<S>                                                                                    <C>                 <C>   

Operating activities
Net income (loss)                                                                      $1,725,000           $(7,068,000)
Adjustments to reconcile net income (loss) to net cash
         provided (used) by operating activities:
         Depreciation                                                                     946,000               437,000
         Accretion of debt issue cost, warrant allocation
              and conversion rights allocation                                            222,000               186,000
         Compensation paid with warrants                                                  139,000                   ---
         Interest paid in stock                                                           204,000                   ---
         (Gain) loss on sale or retirement of assets                                        1,000             (218,000)
         Loss on early retirement of debt                                                  96,000                   ---
         Changes in operating assets and liabilities:
              Accounts receivable                                                         578,000               461,000
              Inventory                                                                   146,000              (882,000)
              Prepaid expense and other assets                                            164,000            (1,158,000)
              Accounts payable                                                         (1,868,000)            1,724,000
              Accrued liabilities                                                          39,000               (34,000)
              Deferred revenue                                                          2,169,000               ---
                                                                                     ------------          -------------
Net cash provided (used) by operating activities                                        4,561,000            (6,552,000)
Investing activities
         Transfer of restricted cash                                                   (1,949,000)           (7,210,000)
         Additions to property and equipment                                             (306,000)           (7,235,000)
         Purchase of securities held to maturity                                              ---            (3,500,000)
         Proceeds from securities available for sale                                          ---             1,462,000
         Proceeds from securities held to maturity                                            ---             5,076,000
         Proceeds from sale of property and equipment                                      40,000               ---
                                                                                     ------------         -------------
Net cash used by investing activities                                                  (2,215,000)          (11,407,000)
Financing activities
         Proceeds from notes payable                                                      188,000            10,879,000
         Payments of notes payable                                                     (1,098,000)             (344,000)
         Proceeds from the sale of common stock                                            42,000                43,000
                                                                                   --------------       ---------------
Net cash provided (used) by financing activities                                         (868,000)           10,578,000
                                                                                    -------------          ------------
Net increase (decrease) in cash and cash equivalents                                    1,478,000           (7,381,000)
Cash and cash equivalents at beginning of period                                        8,102,000            9,531,000
                                                                                     ------------         ------------
Cash and cash equivalents at end of period                                            $ 9,580,000          $ 2,150,000
                                                                                      ===========          ===========

</TABLE>

                                              See accompanying notes.

                                                         6

<PAGE>



                                            NaPro BioTherapeutics, Inc.

                                     Notes to Consolidated Financial Statements
                                                   June 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                     June 30,                December 31,
                                         1998                   1997

         Raw materials                  $ 132,000                $  412,000
         Work-in-process                  582,000                 1,408,000
         Finished goods                 1,577,000                 1,302,000
                                       ----------               -----------
                                       $2,291,000                $3,122,000
                                       ==========                ==========

         Non-current inventory

         Raw materials                $   296,000               $   347,000
         Work-in-process                1,565,000                   288,000
         Finished goods                  ---                        541,000
                                 ----------------               -----------
                                       $1,861,000                $1,176,000
                                       ==========                ==========

3.       Cash Flow Supplemental Disclosures          
                                                            Six Months Ended
                                                                 June 30,
                                                         1998             1997
                                                     -----------       ---------

         Interest paid                                $    71,000      $ 149,000

         Noncash transactions:
         Receipt of common stock into treasury:
              Note 4                                    1,768,000            ---
         Repurchase of common stock into treasury        ---             990,000
         Issuance of common stock--compensation            40,000         40,000
         Exchange of preferred shares of subsidiary
              for common shares of parent               1,951,000            ---
         Issuance of common stock for
              interest payable                            204,000            ---
         Conversion of senior convertible debt to
              common stock                              1,497,000            ---

                                                         7

<PAGE>



         Cash Flow Supplemental Disclosures
              (Continued)                                       Six Months Ended
                                                                     June 30,
                                                            1998            1997
                                                        ------------  ----------

         Conversion of convertible preferred shares
              to common stock                              385,000           ---
         Accretion of convertible preferred stock
              conversion rights valuation, offering
              cost and warrant valuation                   277,000           ---
         Issuance of common stock for dividends payable    126,000           ---

4.       Common Stock

In the June  1998  quarter  NaPro  issued  738,438  shares  of  common  stock in
conversion of NaPro's senior  convertible debt. In June 1998 NaPro issued 94,433
shares of common stock in payment of interest on the senior convertible debt. In
the June 1998 quarter NaPro issued  149,437 shares of common stock in conversion
of NaPro's senior convertible  preferred stock. In June 1998 NaPro issued 56,697
shares of  common  stock in  payment  of  dividends  on the  senior  convertible
preferred stock.

In April 1998 IVAX Corporation  (IVAX) returned 1,126,398 shares of NaPro common
stock into the NaPro  treasury  in  accordance  with the March 1998  Termination
Agreement between NaPro and IVAX.

5.       Earnings per Share

The following table sets forth the computation of basic and diluted earnings per
share.  Diluted earnings per share is not calculated for periods in which a loss
is reported as the impact of additional shares is antidilutive:
<TABLE>
<CAPTION>


                                                              Quarter Ended                     Six Months Ended
                                                                 June 30,                           June 30,
                                                          1998             1997              1998              1997
                                                         ------           ------            ------            -----
<S>                                                     <C>               <C>                <C>              <C>

Numerator:
   Net income (loss)                                    $   (39,000)      $(4,242,000)       $ 1,725,000      $(7,068,000)
   Preferred stock dividends                                (61,000)              ---          (118, 000)             ---
                                                          ----------      ------------       -----------      ------------
   Numerator for basic earnings per share -
        income available (loss) allocated to com-
       mon stockholders                                    (100,000)       (4,242,000)         1,607,000       (7,068,000)

Effect of dilutive securities:
   Senior convertible debt                                       ---               ---            34,000          ---
   Preferred stock dividends                                     ---               ---            19,000          ---
                                                         -----------      ------------       -----------      -----------
   Numerator for diluted earnings per share -
        income available to common stock-
        holders after assumed conversions                $ (100,000)      $(4,242,000)       $ 1,660,000      $(7,068,000)
                                                         ===========      ============       ===========      ============


                                                         8
</TABLE>

<PAGE>


<TABLE>
<CAPTION>


Earnings per Share (continued)                                Quarter Ended                     Six Months Ended
                                                                 June 30,                            June 30,
                                                          1998             1997              1998              1997
                                                         ------           ------            ------            -----
<S>                                                      <C>               <C>               <C>               <C>

Denominator:
   Denominator for basic earnings per share -
        weighted average shares outstanding              14,074,373        11,978,530        13,813,316        11,964,109
                                                         -----------      ------------      ------------       ----------
   Senior convertible debt                                                                       915,541
   Convertible preferred stock                                                                   592,752
   Non-voting common stock                                                                       395,000
   Stock options and warrants                                                                     48,781
                                                                                            ------------
Dilutive potential common shares                                                               1,952,074
   Denominator for diluted earnings per share-
        adjusted weighted average shares out-
        standing and assumed conversions                                                      15,765,390
                                                                                              ==========
Earnings (loss) per common share                       $      (0.01)    $       (0.35)    $         0.12      $      (0.59)
                                                       =============    ==============    ==============     =============
Earnings per common share, assuming dilution                                              $         0.11
                                                                                           =============
</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.

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, exclusive agreement with each of F.H.
Faulding & Co., Ltd.  ("Faulding")  and IVAX  Corporation  (dba IVX  BioScience)
(including  its  subsidiaries,  "IVAX")  for the  clinical  development,  sales,
marketing and distribution of NaPro  Paclitaxel.  NaPro and IVAX entered into an
agreement on March 20, 1998, (the  "Termination  Agreement")  terminating  their
development and marketing relationship. 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,  on royalties  from  licensed  technology  and amounts due under the
Termination Agreement.

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 will be significant. NaPro anticipates that
should it enter into an agreement with

                                                         9

<PAGE>



one or more  pharmaceutical  companies as discussed above,  such agreement would
include payment 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  June 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 six months ended June 30, 1998, largely as a result
of a nonrecurring  license fee received from IVAX,  NaPro recorded net income of
approximately $1.7 million, resulting in an accumulated deficit of $39.3 million
as of June 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 the 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 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 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, IVAX made an additional payment of $3,750,000 in April 1998 and is
to make a payment of $2,610,000 in the quarter ended September 1998.  NaPro will
continue  to  manufacture  a fixed  amount  of NaPro  Paclitaxel  for IVAX to be
delivered and paid for through March 1999.


                                                         10

<PAGE>



The  termination  of the IVAX  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 of the IVAX 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.
NaPro's  future growth and  profitability  will depend on the success of NaPro's
strategic  partners in fostering  acceptance  in the  oncology  market for NaPro
Paclitaxel as a preferred dosing regimen of taxane chemotherapy to be used alone
or in combination with other chemotherapeutic agents.

Results of Operations

Quarter  ended June 30, 1998,  compared to the quarter ended June 30, 1997 Sales
for the 1998 quarter were  $600,000,  representing  an increase of $500,000 from
the 1997  quarter.  The  increase  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 million  representing  a decrease of $600,000 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 $2.2  million,  an
increase  of  $500,000  from  the  1997  quarter.   The  increase  is  primarily
attributable to one-time cost associated with the IVAX termination and increased
legal fees.

License fee income for the 1998 quarter was $3.8 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 Agree ment.  Associated with the Termination
Agreement,  NaPro expects to record up to an additional  $4.6 million in license
fee income  through  March 1999 ($2  million 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 Termination Agreement license fee.

Interest  income for the 1998 quarter was $200,000,  representing an increase of
$100,000 from the 1997 quarter.  This increase is primarily due to the increased
cash balances available for investment.

Interest and other expense for the 1998 quarter was $300,000, unchanged from the
1997 quarter.


                                                         11

<PAGE>



Six months ended June 30,  1998,  compared to the six months ended June 30, 1997
Sales for the 1998  period  were $3  million,  representing  an increase of $1.9
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 $4.7 million,  representing a decrease of $300,000 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 $4.1  million,  an
increase  of  $800,000   from  the  1997  period.   The  increase  is  primarily
attributable to the cost associated with the IVAX termination, the February 1998
restructuring and increased legal fees.

License  fee  income  for the 1998  period  was $7.8  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 Agree ment.

Interest  income  for the 1998  period  was  $300,000,  unchanged  from the 1997
period.

Interest and other  expense for the 1998 period was  $600,000,  representing  an
increase of $200,000 from the 1997 period. The increase is attributable  largely
to interest on the senior convertible debt.

Liquidity and Capital Resources

NaPro's capital  requirements have been and will continue to be significant.  At
June 30,  1998,  NaPro had working  capital of $7.3  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.  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 June 30, 1998, $3.6 million of the Convertible Securities have
been converted into 2,197,056 shares of common stock.  After June 30, 1998, over
7 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.

Cash and cash  equivalents  totaled $9.6  million at June 30,  1998.  During the
first six months of 1998,  cash  provided by operating  activities  totaled $4.6
million; and cash used by investing and financing activities

                                                         12

<PAGE>



totaled $2.2 million and $900,000,  respectively.  NaPro  expended  $300,000 for
plantation cost during the first six months of 1998.

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;  the  cost of  preparing,  filing,
prosecuting,  maintaining  and enforcing  patent  claims and other  intellectual
property rights, competing technological and marketing developments,  changes in
the existing strategic  partnership;  the establishment of additional  strategic
relationships 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.

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;
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  forward-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 forward-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.



                                                         13

<PAGE>



                           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.  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. and a separate  but  related  British  patent  also owned by
Bristol. 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,  but no decision  had been
issued in this case as of August 1, 1998. Because issues regarding the scope and
validity of these  patents have yet to be resolved,  it is too early to estimate
the impact, if any, which these patents may have on NaPro's  business.  However,
in the event that NaPro were to be held liable for  infringement,  NaPro expects
no significant liability because it is not involved in any activity in the U. K.
involving paclitaxel.

Item 2.       Changes in Securities

In the June 1998  quarter,  NaPro  issued  738,438  shares  of  common  stock in
conversion  of $914,000 of the  Convertible  Notes.  In June 1998,  NaPro issued
94,433 shares of common stock in payment of $97,000  interest on the Convertible
Notes. In the June 1998 quarter,  NaPro issued 149,437 shares of common stock in
conversion of 122 shares of the Convertible Preferred Stock. In June 1998, NaPro
issued 56,697 shares of common stock in payment 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.

                                                         14

<PAGE>



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

At the  Annual  Meeting  of  Stockholders  held on May  28,  1998  (the  "Annual
Meeting"), the following proposals were adopted by the margins indicated:

1.   The election of two Class II directors to hold office until the 2001 
     annual meeting of stockholders:

                                                 Number of Shares
Nominee                                      For                  Withheld
Patricia A. Pilia                             13,597,507               123,431
Randolph C. Steer                             13,590,861               130,077

     In addition,  the terms for the following members of the Board of Directors
continued after the Annual Meeting:  Leonard P. Shaykin,  Sterling K. Ainsworth,
Ph.D., Arthur H. Hayes, Jr., M.D., and Mark B. Hacken.

2.   Approval  of the  issuance  of 20% or  more  of  NaPro's  common  stock  at
     discounts  of up to 10%  from  its  market  value  as of  certain  dates in
     connection with each of NaPro's currently  outstanding  Senior  Convertible
     Notes and Series C Convertible Preferred Stock:

                                                 Number of Shares
For                                                     6,854,725
Against                                                   393,424
Abstain                                                    29,077

3.   Approval of  amendments  to NaPro's  Amended and  Restated  Certificate  of
     Incorporation  increasing  the number of authorized  shares of common stock
     from 19 million shares to 30 million shares:

                                                 Number of Shares
For                                                    13,414,373
Against                                                   273,147
Abstain                                                    33,428

4.   Approval of an amendment to NaPro's 1994  Long-Term  performance  Incentive
     Plan increasing the number of shares of common stock issuable thereunder:

                                                 Number of Shares
For                                                    11,653,080
Against                                                 2,027,388
Abstain                                                    40,483

5.   The  ratification  of the  selection  by the Board of  Directors of Ernst &
     Young LLP as NaPro's independ ent auditors for the year ending December 31,
     1997.

                                                 Number of Shares
For                                                    13,691,736
Against                                                    16,189
Abstain                                                    13,029

Item 5.       Other Information.  None.

Item 6.       Exhibits and Reports on Form 8-K

NaPro filed no Current Reports on Form 8-K during the quarter.

Exhibit
Number   Description of Exhibit

27.1        Financial Data Schedule




                                                         15

<PAGE>



                                                     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.




August 14, 1998                      /s/ Sterling K. Ainsworth

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



August 14, 1998                      /s/ Gordon Link

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



August 14, 1998                      /s/ Robert L. Poley

                                     Robert L. Poley
                                     Controller
                                     (Principal Accounting Officer)

                                                         16