Use these links to rapidly review the documentRIBOZYME PHARMACEUTICALS, INC. INDEX TO FORM 10-Q

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U.S. SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

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

For the quarterly period ended March 31, 2002

or

|o | TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
|- | ------------------------------------------------------------------------

For the transition period from  to

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Commission file number 0-27914

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

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Delaware

34-1697351(State of incorporation)

(I.R.S. Employer Identification No.)


2950 Wilderness Place
Boulder, Colorado 80301(Address of principal executive offices)

Registrant's
telephone number: (303) 449-6500

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

The
number of shares of the registrant's common stock, par value $0.01 per share, outstanding as of May 13, 2002 was 20,160,181.

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RIBOZYME PHARMACEUTICALS, INC.  INDEX TO FORM 10-Q



|                             |  |                                                                                          
|---------------------------- |  | -----------------------------------------------------------------------------------------
|PART 1FINANCIAL INFORMATION
|Item 1.                      |  | Financial Statements                                                                     
|                             |  | Condensed Balance Sheets as of March 31, 2002 (unaudited) and December 31, 2001          
|                             |  | Condensed Statements of OperationsThree Months Ended March 31, 2002 and 2001 (unaudited)
|                             |  | Condensed Statements of Cash FlowsThree Months Ended March 31, 2002 and 2001 (unaudited)
|                             |  | Notes to Condensed Financial Statements (unaudited)                                      
|Item 2.                      |  | Management's Discussion and Analysis of Financial Condition and Results of Operations    
|Item 3.                      |  | Quantitative and Qualitative Disclosures About Market Risk                               
|PART IIOTHER INFORMATION   
|Item 5.                      |  | Other Information                                                                        
|Item 6.                      |  | Exhibits and Reports on Form 8-K                                                         
|SIGNATURES                  
|Exhibit Index               

2

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PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

RIBOZYME PHARMACEUTICALS, INC.        CONDENSED BALANCE SHEETS

|                                                    |                                                   | March 31,
2002 |            | December 31,
2001 |  
|--------------------------------------------------- | ------------------------------------------------- | -------------- | ---------- | ----------------- | -
|
|ASSETS                                              |                                                   |                |            |                   |  
|Current assets                                      |                                                   |                |            |                   |  
|                                                    | Cash and cash equivalents                         |                | $          | 28,747,716        |  
|                                                    | Securities available-for-sale                     |                |            |                  |  
|                                                    | Accounts receivable                               |                |            | 568,625           |  
|                                                    | Accounts receivable-joint venture                 |                |            | 1,040,143         |  
|                                                    | Accounts receivable-related parties               |                |            | 144,348           |  
|                                                    | Prepaid expenses and other current assets         |                |            | 315,150           |  
|                                                    |                                                   |                |            |                   |  
|Total current assets                                |                                                   |                | 30,815,982 |                   |  
|Property, plant and equipment, net                  |                                                   |                | 4,815,228  |                   |  
|Notes receivable-related parties                    |                                                   |                | 606,000    |                   |  
|Deferred patent costs, net                          |                                                   |                | 5,652,096  |                   |  
|Investment in joint venture                         |                                                   |                | 2,121,864  |                   |  
|Other assets                                        |                                                   |                | 736,208    |                   |  
|                                                    |                                                   |                |            |                   |  
|Total assets                                        |                                                   | $              | 44,747,378 |                   | $
|                                                    |                                                   |                |            |                   |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                |                                                   |                |            |                   |  
|Current liabilities                                 |                                                   |                |            |                   |  
|                                                    | Accounts payable-trade                            |                | $          | 2,598,649         |  
|                                                    | Accrued expenses                                  |                |            | 2,156,146         |  
|                                                    | Deferred revenue, current portion                 |                |            | 566,667           |  
|                                                    | Deferred revenue, current portion-related parties |                |            | 400,000           |  
|                                                    | Current portion of long-term debt                 |                |            | 169,117           |  
|                                                    |                                                   |                |            |                   |  
|Total current liabilities                           |                                                   |                | 5,890,579  |                   |  
|Deferred revenue, long-term portion                 |                                                   |                | 84,375     |                   |  
|Deferred revenue, long-term portion-related parties |                                                   |                | 300,011    |                   |  
|Long term debt                                      |                                                   |                | 433,198    |                   |  
|Convertible debt-joint venture                      |                                                   |                | 9,158,757  |                   |  
|Convertible debt                                    |                                                   |                | 3,280,000  |                   |  
|Stockholders' equity                                |                                                   |                |            |                   |  
|                                                    | Preferred stock                                   |                |            | 120               |  
|                                                    | Accreted preferred stock dividend                 |                |            | 1,694,717         |  
|                                                    | Common stock                                      |                |            | 200,168           |  
|                                                    | Additional paid-in capital                        |                |            | 191,802,906       |  
|                                                    | Unrealized gain on securities available-for-sale  |                |            |                  |  
|                                                    | Accumulated deficit                               |                |            | (168,097,453      | )
|                                                    |                                                   |                |            |                   |  
|Total stockholders' equity                          |                                                   |                | 25,600,458 |                   |  
|                                                    |                                                   |                |            |                   |  
|Total liabilities and stockholders' equity          |                                                   | $              | 44,747,378 |                   | $
|                                                    |                                                   |                |            |                   |  

See
notes to condensed financial statements

3

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RIBOZYME PHARMACEUTICALS, INC.        CONDENSED STATEMENTS OF OPERATIONS        (Unaudited)

|                                            |                                            | Three months ended
March 31, |           
|------------------------------------------- | ------------------------------------------ | ---------------------------- | ----------
|
|Revenues:                                   |                                            |                              |           
|                                            | Collaborative agreements                   |                              | $         
|                                            | Collaborative agreements-joint venture     |                              |           
|                                            | Collaborative agreements-related parties   |                              |           
|                                            |                                            |                              |           
|                                            | Total revenues                             |                              |           
|Expenses:                                   |                                            |                              |           
|                                            | Research and development                   |                              |           
|                                            | General and administrative                 |                              |           
|                                            |                                            |                              |           
|Total expenses                              |                                            |                              | 8,223,224 
|Operating loss                              |                                            |                              | (6,644,588
|Other income (expense):                     |                                            |                              |           
|                                            | Interest income                            |                              |           
|                                            | Interest expense                           |                              |           
|                                            | Other                                      |                              |           
|                                            | Equity in loss of unconsolidated affiliate |                              |           
|                                            |                                            |                              |           
|Total other expense                         |                                            |                              | (1,650,075
|                                            |                                            |                              |           
|Net loss                                    |                                            |                              | (8,294,663
|Accretion of dividends on preferred stock   |                                            |                              | 202,916   
|                                            |                                            |                              |           
|Net loss applicable to common stock         |                                            | $                            | (8,497,579
|                                            |                                            |                              |           
|Net loss per share (basic and diluted)      |                                            | $                            | (0.42     
|                                            |                                            |                              |           
|Shares used in computing net loss per share |                                            |                              | 20,015,039
|                                            |                                            |                              |           

See
notes to condensed financial statements

4

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RIBOZYME PHARMACEUTICALS, INC.        CONDENSED STATEMENTS OF CASH FLOWS        (Unaudited)

|                                                 |                                                                             | Three months ended
March 31,                                     |           
|------------------------------------------------ | --------------------------------------------------------------------------- | ---------------------------------------------------------------- | ----------
|
|Operating Activities                             |                                                                             |                                                                  |           
|Net loss                                         |                                                                             | $                                                                | (8,294,663
|                                                 | Adjustments to reconcile net loss to net cash used in operating activities: |                                                                  |           
|                                                 |                                                                             | Depreciation and amortization                                    |           
|                                                 |                                                                             | Equity in loss of unconsolidated affiliate                       |           
|                                                 |                                                                             | Compensation for forgiveness of notes receivable-related parties |           
|                                                 |                                                                             | Accrued interest included in convertible debt                    |           
|                                                 |                                                                             | Expense related to issuance of warrants                          |           
|                                                 |                                                                             | Expense related to issuance of common stock                      |           
|                                                 |                                                                             | Loss on disposal of equipment                                    |           
|                                                 |                                                                             | Gain on disposal of equipment                                    |           
|                                                 | Changes in operating assets and liabilities:                                |                                                                  |           
|                                                 |                                                                             | Accounts receivable                                              |           
|                                                 |                                                                             | Prepaid expenses and other current assets                        |           
|                                                 |                                                                             | Other assets                                                     |           
|                                                 |                                                                             | Accounts payable-trade                                           |           
|                                                 |                                                                             | Accrued expenses                                                 |           
|                                                 |                                                                             | Deferred revenue                                                 |           
|                                                 |                                                                             | Deferred revenue-related parties                                 |           
|                                                 |                                                                             |                                                                  |           
|                                                 | Net cash used in operating activities                                       |                                                                  |           
|Investing activities                             |                                                                             |                                                                  |           
|                                                 | Additions to property, plant and equipment                                  |                                                                  |           
|                                                 | Additions to deferred patent costs                                          |                                                                  |           
|                                                 | Net sales of securities available-for-sale                                  |                                                                  |           
|                                                 | Investment in unconsolidated affiliate                                      |                                                                  |           
|                                                 | Loan repayments-related parties                                             |                                                                  |           
|                                                 | Loan advances-related parties                                               |                                                                  |           
|                                                 |                                                                             |                                                                  |           
|                                                 | Net cash provided by in investing activities                                |                                                                  |           
|Financing activities                             |                                                                             |                                                                  |           
|                                                 | Net proceeds from issuance of common and preferred stock                    |                                                                  |           
|                                                 | Payments under loan facilities                                              |                                                                  |           
|                                                 | Borrowings under loan facilities                                            |                                                                  |           
|                                                 |                                                                             |                                                                  |           
|                                                 | Net cash (used in) provided by financing activities                         |                                                                  |           
|Net increase in cash and cash equivalents        |                                                                             |                                                                  | 5,249,730 
|Cash and cash equivalents at beginning of period |                                                                             |                                                                  | 23,497,986
|                                                 |                                                                             |                                                                  |           
|Cash and cash equivalents at end of period       |                                                                             | $                                                                | 28,747,716
|                                                 |                                                                             |                                                                  |           

See
notes to condensed financial statements.

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RIBOZYME PHARMACEUTICALS, INC.        NOTES TO CONDENSED FINANCIAL STATEMENTS        March 31, 2002        (Unaudited)

Note 1:Basis of Presentation

The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States for
interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. Operating results for the three month period ending March 31, 2002 are not necessarily indicative of the results that
may be expected for the year ended December 31, 2002. For further information, refer to the financial statements and footnotes thereto included in our annual report on
Form 10-K for the year ended December 31, 2001.

Note 2:Medizyme

In January 2000, the Company formed a joint venture with Elan Corporation (Elan) for the development and commercialization of HERZYME, the
Company's product to treat breast and other cancers. As part of this arrangement, the Company licensed HERZYME and Elan licensed its MEDIPAD® drug delivery technology to the joint venture,
Medizyme Pharmaceuticals, Ltd. (Medizyme). The MEDIPAD® system is a disposable continuous subcutaneous drug delivery system that allows a patient to administer the drug at home. We
filed an IND for HERZYME in Canada in February 2001, which was approved in April 2001.

Initial
funding of Medizyme included $12.0 million from the Company and $3.0 million from Elan. Estimated funding for Medizyme will require approximately
$15.0 million in additional operating and development costs and, therefore, Elan has provided the Company with a $12.0 million credit facility on a draw-down basis for the
Company to use, if desired, to fund the Company's portion of Medizyme operating costs over a 42-month period. The debt carries a 12% rate and may ultimately be converted into the Company's
common stock at a 50% premium to the average price of the common stock for the 60 trading days prior to the time of the applicable draw down on the credit facility.

While
the Company owns 80.1% of the outstanding stock of Medizyme, Elan and its subsidiaries have retained significant minority investor rights that are considered "participating
rights", therefore the Company accounts for its investment in Medizyme under the equity method of accounting. During the three-month period ended March 31, 2002, the Company recognized $426,000
in contract revenues for research and development activities performed for Medizyme. This amount is included in the Company's revenues as "Collaborative agreements-joint venture" for the three month
period ended March 31, 2002.

The
unaudited results of operations of Medizyme for the three-month period ended March 31, 2002 are as follows (in thousands):

Revenue

$
Research and development


581License fee


1,250Net loss

$
(1,831
)


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

Forward-looking Statements

Statements in this Form 10-Q, which are not strictly historical are "forward-looking" statements which should be considered as subject to the
many uncertainties that exist in our operations and business environment. These uncertainties, which include, among other things, the following: general economic and business conditions; competition;
technological advances; ability to obtain rights to technology; ability to obtain and enforce patents; ability to commercialize and manufacture products; ability to obtain collaborators; ability to
manufacture ribozymes in adequate amounts for its collaborations and clinical trials; results of clinical studies; results of research and development activities; business abilities and judgment of
personnel; availability of qualified personnel; changes in, or failure to comply with, governmental regulations; ability to obtain adequate financing in the future; and the like, are set forth in the
section titled "Risk Factors" in our Form S-3 registration statement filed with the U.S. Securities and Exchange Commission on December 26, 2001 (File
No. 333-75976), a copy of which is available from us upon request.

Overview of our Business

We are developing a new class of therapeutics based on engineered molecules called ribozymes. A ribozyme is a sequence of nucleotides that has binding sequences
along with a catalytic core capable of cleaving a specific RNA molecule, including mRNA and viral RNA. mRNA and viral RNA are essential to the synthesis of proteins or viral replication responsible
for disease. Ribozymes act as "molecular scissors" by cutting RNA molecules into two ineffective strands, which prevents abnormal protein production or viral replication. Because many diseases result
from abnormal protein production or viral replication, ribozymes are expected to be applicable in a broad range of pharmaceutical therapies. In principle, ribozymes can be applied to any RNA, so we
have the potential to develop ribozymes into an entirely new class of therapeutic agents. Currently, we are in clinical development and preclinical testing for four product candidates.

We
are developing ANGIOZYME®, our lead product candidate to treat solid tumor cancers, in collaboration with Chiron Corporation. During 2001, we initiated Phase II clinical
trials in metastatic breast and colorectal cancer. Also, we initiated a Phase II clinical trial in 2001 for HEPTAZYME, our product candidate to treat chronic Hepatitis C. In
April 2002, we recently stopped dosing the Phase II Heptazyme trial because of an animal toxicity issue. We issued a press release discussing this development on April 30, 2002 which is
attached hereto as Exhibit 99.1. In addition, in 2000 we formed a joint venture with Elan Corporation to develop HERZYME, a treatment for breast and other cancers. During 2001, we filed an
Investigational New Drug application, or IND, for HERZYME in Canada and began a Phase I clinical trial during the third quarter of 2001. Our fourth product candidate, HepBzyme, for the
treatment of Hepatitis B, is in pre-clinical testing.

Critical Accounting Policies

Revenue Recognition.To date, we have committed substantially all our resources to our research and product development
programs. We have not generated any revenues from product sales, nor do we anticipate generating any revenues in the foreseeable future. Revenue recorded from our collaborative agreements consists of:



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Our
revenue has consisted primarily of research revenue payments from our collaborators. All revenues are either deferred as a liability or recognized upon satisfying revenue criteria.
As of March 31, 2002, all revenues that have been recognized are earned, and no further obligation exists for recognized revenue. We depend upon funding from external financing and corporate
collaborations for our research and product development programs and expect to depend upon this funding for the foreseeable future.

We
have not been profitable since inception and have an accumulated deficit of $168.1 million as of March 31, 2002. Losses have resulted primarily from expenses associated
with our research and development programs. We expect to incur additional losses as ANGIOZYME, HEPTAZYME, HERZYME and HepBzyme and other potential product candidates advance through development and
commercialization. In addition, future milestone payments under some of our collaborations are contingent upon our meeting particular research or development goals. The amount and timing of future
milestone payments are contingent upon the terms of each collaboration agreement. In some instances, we may forfeit milestone payments if we fail to accomplish a predetermined goal within a certain
time frame. Therefore, we are subject to significant variation in the timing and amount of our revenues and results of operations from period to period.

Our
revenues are denominated in U.S. dollars. Therefore, we have not been exposed to foreign currency translation risks and have not engaged in any hedging instruments.

Deferred Patent Costs.We capitalize legal costs directly incurred in pursuing patent applications as deferred patent costs.
When such applications result in an issued patent, the related costs are amortized over the remaining legal life of the patents, which is assumed to be 17 years, using the
straight-line method. On a quarterly basis, we review our issued patents and pending patent applications and if we determine to abandon a patent application, or an issued patent no longer
has economic value, the unamortized balance in deferred patent costs relating to that patent is immediately expensed.

It
is possible the estimates of future economic life of our commercialization revenues, the amount of anticipated future commercialization revenues, or both, will be reduced
significantly in the near term due to alternative technologies developed by other biotechnology or pharmaceutical companies. As a result, the carrying amount of deferred patent costs may be reduced in
the future.

Equity in loss of unconsolidated affiliates.In January 2000, we formed a joint venture with Elan for the development
and commercialization of HERZYME. As part of the joint venture, we licensed HERZYME and Elan licensed its MEDIPAD® drug delivery technology to the joint venture, Medizyme
Pharmaceuticals, Ltd. While we own 80.1% of the outstanding common stock of Medizyme, Elan has retained significant minority investor rights that are considered "participating rights" as
defined in EITF 96-16Investors Accounting for an Investee When the Investor Owns a Majority of the Voting Stock but the Minority Shareholder or Shareholders Have
Certain Approval or Veto Rights.

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Therefore, we do not consolidate the operations of Medizyme, but instead account for our investment in Medizyme under the equity method.

In
1998, we invested $2.0 million and transferred our gene identification and target validation technology to Atugen AG, a German privately-owned biotechnology company. While we
own a majority of common stock outstanding in Atugen, similar to the above discussion on "participating rights", minority investors of Atugen retained significant investor rights and therefore we did
not consolidate operations but instead accounted for our investment in Atugen under the equity method. In 1999, we completely expensed our investment in Atugen. We currently own 31.6% of Atugen and
will record our share of any future profits.

Results of Operations

Three Months Ended March 31, 2002 and 2001

Revenues.Generally, revenue fluctuations result from changes in the number of funded research projects as well as the timing
and completion of contract milestones. Our revenues are split into three categories: (i) Collaborative agreements, (ii) Collaborative agreements-joint venture, and
(iii) Collaborative agreements-related parties. Collaborative agreement revenues primarily includes revenues recorded from Chiron, Fujirebio and Geron. Chiron revenues are related to our joint
collaboration on ANGIOZYME. Collaborative agreements-joint venture includes revenues from Medizyme, our joint venture with Elan. Collaborative agreements-related parties, includes revenues recorded
from Atugen.

Collectively,
collaborative revenues decreased to $1.6 million for the three months ended March 31, 2002, from $2.1 million for the corresponding period in 2001. The
decrease is primarily due to lower research revenues associated with Medizyme, our joint venture on the development of HERZYME with Elan. As HERZYME moves forward in clinical trials, less time is
required of our researchers and more third party expenses are incurred. Reimbursements from our collaborators for third party expenses are credited against expenses and not recognized as revenue.
Medizyme revenues were $426,000 for the period ended March 31, 2002, compared to $1.3 million for the same period in 2001. Also, revenues recorded for Atugen decreased to $226,000
compared to $278,000 for the period ended March 31, 2002 and 2001, respectively, due to a reduction in services provided. However, while our joint venture and related parties revenue decreased
for the reporting period, our revenue from other sources increased for the same period. During the first quarter, we signed an agreement with Fujirebio, a Japanese diagnostic company, for the use of
allosteric ribozymes that resulted in revenues of $74,000. In addition, for the quarter ended March 31, 2002, we recognized $113,000 in revenues from Geron for our consultation in the
development of the manufacturing technology of one of their drugs. Also,
revenues recognized for our collaboration with Chiron were $725,000 for the quarter ended March 31, 2002 compared to $536,000 for the same period last year. The increase is due to a higher
number of researchers working on ANGIOZYME, compared to the prior year first quarter period. Generally, revenue fluctuations result from changes in the number of funded research projects as well as
the timing and completion of contract milestones.

Expenses.Research and development expenses decreased to $6.7 million for the
three months ended March 31, 2002, compared to $11.1 million for the corresponding period in 2001. The decrease in research and development expenses is primarily due to the
decrease in contract services utilized to support our clinical trials. During the first quarter of 2001, we incurred $4.7 million, net of partner reimbursements, in third party contract
manufacturing costs and to manufacture and distribute ANGIOZYME and HEPTAZYME to support our current and planned clinical trials. During the first quarter of 2002, we incurred approximately
$1.4 million in clinical trial expenses. We expect research and development expenses, including pre-clinical studies and clinical trials, to continue to increase as we expand our
development programs for ANGIOZYME, HEPTAZYME and HERZYME.

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General
and administrative expenses increased to $1.5 million compared to $1.0 million for the three months ended March 31, 2002 and 2001, respectively.
Increases in general and administrative expenses during the first quarter of 2002 are the result of increased staffing and expenses necessary to manage and support our expanding product and business
development efforts. We expect general and administrative expenses to continue to increase as a result of increasing legal and other professional fees in connection with the overall
scale-up of our operations, business development efforts and patent protection.

Interest income.Interest income decreased to $154,000 for the three months ended March 31, 2002 compared to
$877,000 for the corresponding period in 2001. The decrease is due to lower average balances in our cash and cash equivalents and securities available-for-sale during the first
quarter of 2002, as compared to the same quarter in 2001. Cash balances were lower as a result of high expenses incurred over the past year for the manufacturing costs associated with the development
of our clinical trial drugs, as well ongoing operational expenses. Interest income generally fluctuates as a result of the average amount of cash available for investment and prevailing interest
rates.

Interest expense.Interest expense increased to $337,000 for the three months ended March 31, 2002, compared to
$107,000 for the corresponding period in 2001. The increase is due to additional borrowings to fund capital equipment purchases and additional draw downs on our line of credit with Elan to fund our
portion of Medizyme expenses. Interest expense is expected to increase in the future as we borrow additional funds from our partners and arrange for additional financing for operations.

Equity in loss of unconsolidated affiliate.Equity in loss of unconsolidated affiliate was $1.5 million for the three
month period ending March 31, 2002, compared to $2.6 million for the corresponding period in
2001. The expense is our 80.1% share of Medizyme's first quarter expenses. While we own 80.1% of the outstanding common stock of Medizyme, Elan has retained significant minority investor rights that
are considered "participating rights" as defined in EITF 96-16Investors Accounting for an Investee When the Investor Owns a Majority of the Voting Stock but the
Minority Shareholder or Shareholders Have Certain Approval or Veto Rights. Therefore, we do not consolidate the operations of Medizyme, but instead account for our investment
in Medizyme under the equity method. The decrease in the losses recognized for the quarter ended March 31, 2002 are due to the decreases in Medizyme's expenses related to the development of
HERZYME. The decrease for the quarter is the result of the transition of HERZYME from research to clinical trials. Medizyme's 2002 expenses include $1.25 million amortized expense for the
quarter for payment of a $15.0 million license fee paid to Elan in January 2000, as well as $549,000 we invoiced as of March 31, 2002 for research we conducted and clinical trial
expenses we incurred with HERZYME.

Liquidity and Capital Resources

Since our inception, we have financed our operations through sales of equity securities in public offerings, private placements of preferred and common stock,
funds received under our collaborative agreements and financing under equipment and tenant improvement loans. From inception through March 31, 2002, we have received approximately:



We
had cash, cash equivalents and securities available-for-sale of $28.7 million at March 31, 2002 compared with $35.0 million at
December 31, 2001. The $6.3 million decrease in cash, cash equivalents and securities available-for-sale is primarily the result of $5.3 million used for
operations, net of

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revenues of $1.6 million; $841,000 used for investments in equipment, leasehold improvements and patents; net $50,000 in loans to executives; and, $41,000 paid for debt obligations.

We
invest our cash, cash equivalents and securities available-for-sale in interest-bearing, investment-grade securities.

Accounts
receivable at March 31, 2002 were $1.8 million compared to $1.5 million at December 31, 2001. Accounts receivable at March 31, 2002 included
$144,000 due from Atugen for administrative services and patent expenses, $1.0 million due from Medizyme for research support for HERZYME and $479,000 due from Chiron for reimbursement of
ANGIOZYME expenses, as well as $130,000 due from miscellaneous other sources.

Total
additions for property, plant and equipment for the three months ended March 31, 2002 were $688,000. As of March 31, 2002, $3.4 million was available
for funding our equipment purchases with a loan facility through a credit institution. The loan facility through the credit institution is available for draw downs through November 2002,
currently averages an interest rate of 9.5%, and matures in 36 or 48 months depending on the type of equipment collateralized. We anticipate future property, plant and equipment needs to be
financed through the existing loan facility and additional credit facilities yet to be determined.

In
July 1994, we entered into an agreement with Chiron to collaborate exclusively on up to five specific targets selected by Chiron. ANGIOZYME is being developed in collaboration
with Chiron and we share equally all development costs and future profits with Chiron. In March 2001, we issued 38,920 shares of our common stock to Chiron in exchange to reacquire all rights
to develop any product containing or utilizing an HIV target. We recorded an expense of $275,000 in March 2001 in connection with the issuance of the stock. For the period ended
March 31, 2002, we recorded $725,000 and $101,000 in revenues and reimbursement of expenses, respectively, from Chiron for costs incurred for the clinical development of ANGIOZYME.

In
April 1997, we entered into a purchase agreement, subsequently amended, with Schering AG and Schering Berlin Venture Corporation, or SBVC, an affiliate of Schering AG as part
of our target discovery and validation program. SBVC made a $2.5 million equity investment in us in April 1997 in exchange for 212,766 shares of our common stock and made an additional
equity investment of $2.5 million for 465,117 shares of our common stock in April 1998. Separately, Schering AG provided loans of $2.0 million in each of 1997, 1998, 1999, 2000
and 2001. We received our final draw-down of $1.0 million from Schering AG in April 2001. The loans, which carry an interest rate of 8.0% per annum, are immediately
convertible into equity at the option of Schering AG. Additionally, 50.0% of any borrowings we make on the line of credit must be collateralized by equipment purchases. In April 2000, after the
completion of our public offering, we repaid $6.9 million of our outstanding borrowings to Schering AG. In June 2000, Schering AG converted $997,000 of the loan balance into 42,435
shares of our common stock at a conversion price of $23.50. At March 31, 2002, we had $3.3 million in outstanding loans and accrued interest from Schering AG, which was convertible into
approximately 1.1 million shares of our common stock. Principal and interest payments are deferred until maturity of the loans in April 2004. As a result of the Atugen formation in 1998,
we now subcontract all of our existing target discovery and validation programs to Atugen, which does not effect the terms of our loan agreement with Schering AG.

In
January 2000, we completed a joint venture with Elan for the development and commercialization of HERZYME, our potential product to treat breast and other cancers. In
accordance with the collaboration, we sold to Elan our Series A Convertible Preferred Stock for $12.0 million and, in turn, used those funds for initial funding of Medizyme. As of
December 31, 2001, the Series A preferred stock and accrued dividends were convertible into 1,125,567 shares of our common stock. Also, as part of the collaboration, Elan purchased
641,026 shares of our common stock for a purchase price of $5.0 million. In addition, Elan purchased 500,500 shares of common stock for

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$5.0 million in May 2001, which was at a premium to the market price. We have estimated that the development of HERZYME will require additional funds of up to $15 million and,
therefore, Elan has made available to us a $12.0 million credit facility to fund our portion of Medizyme operating costs over a 42-month period. At the end of March 2002, we
utilized the credit facility and had borrowed $8.2 million. The note carries an interest rate of 12% compounded on a semi-annual basis. Elan may convert this debt into shares of our
Series B Convertible Preferred Stock at any time. In lieu of conversion, principal and interest payments on the note are deferred until the note matures in 2006. At March 31, 2002, the
outstanding borrowings would be convertible into 663,115 shares of our common stock. In addition, Elan purchased 750,000 shares of our common stock and a five-year warrant to purchase
75,000 shares of our common stock at $5.00 per share in December 2001 for $3.0 million.

On
July 27, 2001, we filed a Form S-3 Registration Statement to register 3,000,000 shares and an aggregate of $10,000,000 in proceeds from the sale of our
common stock, preferred stock and warrants for our common or preferred stock. In November 2001, we utilized the registration statement and sold 2,261,905 shares of our common stock and a
five-year warrant to purchase 226,191 shares of our common stock at $5.00 per share, for gross proceeds of $9.5 million.

We
anticipate that our existing financial resources and expected revenues from collaborations, should be sufficient to meet our anticipated operating and capital requirements through
2002. We expect to incur substantial additional costs, including, costs related to:



In
the future we may raise additional capital through public or private financing, as well as from new collaborative relationships, new credit facilities and other sources.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to changes in interest rates primarily from our investments in certain short-term investments. We invest our excess cash in highly
liquid short-term investments that are typically held for the duration of the term of the respective instrument. We do not utilize derivative financial instruments, derivative commodity
instruments or other market risk sensitive instruments to manage exposure to interest rate changes. Accordingly, we believe that, while the securities we hold are subject to changes in the financial
standing of the issuer of such securities, we are not subject to any material risks arising from changes in interest rates, foreign currency exchange rates, commodity prices, equity prices or other
market changes that affect market risk sensitive instruments.

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PART IIOTHER INFORMATION

ITEM 5. OTHER INFORMATION

On April 30, 2002, we issued a press release on the Phase II clinical trials status for ANGIOZYME, and HEPTAZYME, and the Phase I clinical trial for
HERZYME. The press release is attached to this Form 10-Q as Exhibit 99.1.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



3.1

Amended and Restated Certificate of Incorporation(1)3.2

Restated Bylaws(2)3.3

Certificate of Correction to the Amended and Restated Certificate of Incorporation of Ribozyme Pharmaceuticals dated September 15, 1997(6)4.2

Certificate of Designation, Preferences and Rights of Series L Preferred Shares(3)4.3

Certificate of Designations, Preferences and Rights of Series A Preferred Stock and Series B Preferred Stock(4)4.4

Rights Agreement, dated November 22, 2000 between Ribozyme Pharmaceuticals, Inc., and American Stock Transfer & Trust Company, which includes the form of Certificate of Designation of Series AA Junior Participating Preferred
Stock attached as Exhibit A thereto(5)4.5

Amendment to the Certificate of Designation, Preferences and Rights of the Series L Preferred Stock of Ribozyme Pharmaceuticals dated February 18, 2000(6)4.6

Amendment to the Certificate of Designation, Preferences and Rights of the Series L Preferred Stock of Ribozyme Pharmaceuticals dated May 1, 2000(6)4.7

Amendment to the Certificate of Designations, Preferences, and Rights of Series A Preferred Stock and Series B Preferred Stock of Ribozyme Pharmaceuticals(6)99.1

Press release dated April 30, 2002 issued by the Company updating the status of clinical trials




A
report on Form 8-K was filed on January 16, 2002 announcing the sale in a private placement transaction of Common Stock and
five-year warrants to purchase additional shares of Common Stock.

A
report on Form 8-K was filed on February 25, 2002 announcing that ABN AMRO Incorporated, placement agent for the public offering conducted on
November 29, 2001, received as part of its compensation a warrant to purchase Common Stock.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.

|                    |  | RIBOZYME PHARMACEUTICALS, INC.
|------------------- |  | ------------------------------
|Dated: May 14, 2002 |  | By:                           
|Dated: May 14, 2002 |  | By:                           

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Exhibit Index

|Exhibit
No. |  | Exhibit
Description                                                                                                                                                                                                                                                    
|----------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.1         |  | Amended and Restated Certificate of Incorporation(1)                                                                                                                                                                                                                   
|3.2         |  | Restated Bylaws(2)                                                                                                                                                                                                                                                     
|3.3         |  | Certificate of Correction to the Amended and Restated Certificate of Incorporation of Ribozyme Pharmaceuticals dated September 15, 1997(6)                                                                                                                             
|4.2         |  | Certificate of Designation, Preferences and Rights of Series L Preferred Shares(3)                                                                                                                                                                                     
|4.3         |  | Certificate of Designations, Preferences and Rights of Series A Preferred Stock and Series B Preferred Stock(4)                                                                                                                                                        
|4.4         |  | Rights Agreement, dated November 22, 2000 between Ribozyme Pharmaceuticals, Inc., and American Stock Transfer & Trust Company, which includes the form of Certificate of Designation of Series AA Junior Participating Preferred
Stock attached as Exhibit A thereto(5)
|4.5         |  | Amendment to the Certificate of Designation, Preferences and Rights of the Series L Preferred Stock of Ribozyme Pharmaceuticals dated February 18, 2000(6)                                                                                                             
|4.6         |  | Amendment to the Certificate of Designation, Preferences and Rights of the Series L Preferred Stock of Ribozyme Pharmaceuticals dated May 1, 2000(6)                                                                                                                   
|4.7         |  | Amendment to the Certificate of Designations, Preferences, and Rights of Series A Preferred Stock and Series B Preferred Stock of Ribozyme Pharmaceuticals(6)                                                                                                          
|99.1        |  | Press release dated April 30, 2002 issued by the Company updating the status of clinical trials                                                                                                                                                                        

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