<PAGE>

================================================================================
                    U.S. SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                 _____________

                                   FORM 10-Q



[X]  QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT
                                    OF 1934
               For the quarterly period ended September 30, 2001

                                      or

[ ]  TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE EXCHANGE ACT OF 1934
                    For the transition period from       to
                                 _____________

                        Commission file number  0-27914


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

                                 _____________


             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
                                 _____________

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  X      No
    ---        ---

The number of shares of the registrant's common stock, par value $0.01 per
share, outstanding as of November 12, 2001 was 16,927,984.
<PAGE>

                        RIBOZYME PHARMACEUTICALS, INC.
                              INDEX TO FORM 10-Q

PART 1 - FINANCIAL INFORMATION                                             PAGE
                                                                           ----
Item 1.  Financial Statements

         Condensed Balance Sheets as of September 30, 2001 (unaudited) and
         December 31, 2000................................................   3

         Condensed Statements of Operations - Three and Nine Months Ended
         September 30, 2001 and 2000 (unaudited)..........................   4

         Condensed Statements of Cash Flows - Nine Months Ended
         September 30, 2001 and 2000 (unaudited)..........................   5

         Notes to Condensed Financial Statements (unaudited)..............   6

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

Item 3.  Quantitative and Qualitative Disclosures About Market Risk.......  14

PART II - OTHER INFORMATION

Item 2.  Changes in Securities and Use of Proceeds........................  14

Item 6.  Exhibits and Reports on Form 8-K.................................  14

SIGNATURES................................................................  15

Exhibit Index.............................................................  16

                                       2
<PAGE>

PART I. FINANCIAL INFORMATION
ITEM I. FINANCIAL STATEMENTS

                        RIBOZYME PHARMACEUTICALS, INC.
                           CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
                                     ASSETS
                                     ------
                                               September 30,    December 31,
                                                   2001             2000
                                               -------------    ------------
                                                (unaudited)
<S>                                            <C>              <C>
Current assets
 Cash and cash equivalents                     $  11,012,650    $ 32,170,518
 Securities available-for-sale                    28,182,394      32,304,162
 Accounts receivable                               5,165,333       1,278,161
 Accounts receivable-joint venture                 2,288,907       1,972,788
 Accounts receivable-related parties                 432,745         344,934
 Prepaid expenses and other current assets         1,486,642         277,623
                                               -------------    ------------
Total current assets                              48,568,671      68,348,186

Property, plant and equipment, net                 3,565,390       3,566,366

Notes receivable-related parties                     553,000         214,750
Deferred patent costs, net                         5,328,217       4,858,036
Investment in joint venture                        2,994,200       6,373,545
Other assets                                         736,208         536,110
                                               -------------    ------------

Total assets                                   $  61,745,686    $ 83,896,993
                                               =============    ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY
                    ------------------------------------

Current liabilities
-------------------
 Accounts payable-trade                        $   1,993,779    $  1,085,197
 Accrued expenses                                  7,337,169       1,860,813
 Deferred revenue, current portion-related
  parties                                            400,000         400,000
                                               -------------    ------------
Total current liabilities                          9,730,948       3,346,010

Deferred revenue, long-term portion-related
 parties                                             500,009         800,006
Convertible debt-joint venture                     6,415,592       2,743,213
Convertible debt                                   3,160,000       1,013,333

Stockholders' equity
--------------------
 Preferred stock                                         120             120
 Accreted preferred stock dividend                 1,295,405         716,456
 Common stock                                        168,858         162,615
 Additional paid-in capital                      180,060,617     175,099,769
 Deferred compensation and other                      22,541         (19,900)
 Accumulated deficit                            (139,608,404)    (99,964,629)
                                               -------------    ------------
Total stockholders' equity                        41,939,137      75,994,431
                                               -------------    ------------

Total liabilities and stockholders' equity     $  61,745,686    $ 83,896,993
                                               =============    ============
</TABLE>

See notes to condensed financial statements

                                       3
<PAGE>

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

<TABLE>
<CAPTION>
                                    Three months ended            Nine months ended
                                       September 30,                September 30,
                                ---------------------------  ----------------------------
                                     2001          2000           2001           2000
                                ------------   -----------   ------------   ------------
<S>                             <C>            <C>           <C>            <C>
Revenue
 Collaborative agreements       $    889,584   $ 1,989,864      2,440,121   $  7,195,472
 Collaborative
  agreements-joint venture           818,394     2,147,637      3,227,467      4,079,641
 Collaborative
  agreements-related parties         321,203       293,916        869,286        907,139
                                ------------   -----------   ------------   ------------
Total revenues                     2,029,181     4,431,417      6,536,874     12,182,252

Expenses
 Research and development         16,685,290     5,963,985     37,828,121     14,750,892
 General and administrative        1,008,365       679,410      3,110,127      2,776,586
                                ------------   -----------   ------------   ------------
Total expenses                    17,693,655     6,643,395     40,938,248     17,527,478

                                ------------   -----------   ------------   ------------
Operating loss                   (15,664,474)   (2,211,978)   (34,401,374)    (5,345,226)

Other income (expense)
 Interest income                     435,436     1,034,183      1,909,199      2,195,607
 Interest expense                   (244,147)       (2,954)      (539,594)       (94,062)
 Other income                          4,500         4,000         50,950          4,000
 Equity in loss of
    unconsolidated affiliates     (1,916,088)   (2,783,119)    (6,662,956)    (6,366,978)
                                ------------   -----------   ------------   ------------
 Total other income (expense)     (1,720,299)   (1,747,890)    (5,242,401)    (4,261,433)

                                ------------   -----------   ------------   ------------
Net loss                         (17,384,773)   (3,959,868)   (39,643,775)    (9,606,659)

Accretion of dividends on
 preferred stock                     197,005       180,225        578,949        540,675

                                ------------   -----------   ------------   ------------
Net loss applicable to common
 stock                          $(17,581,778)  $(4,140,093)  $(40,222,724)  $(10,174,334)
                                ============   ===========   ============   ============
Net loss per share (basic and
 diluted)                             $(1.04)       $(0.27)        $(2.43)        $(0.72)

Shares used in computing
net loss per share                16,882,772    15,289,023     16,571,334     14,062,472
                                ============   ===========   ============   ============
</TABLE>
See notes to condensed financial statements

                                       4
<PAGE>

                        RIBOZYME PHARMACEUTICALS, INC.
                      CONDENSED STATEMENTS OF CASH FLOWS
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                   Nine months ended
                                                                      September 30,
                                                               ----------------------------
                                                                   2001           2000
                                                               ------------   ------------
<S>                                                            <C>            <C>
Operating Activities
Net loss                                                        $(39,643,775)  $ (9,606,659)
 Adjustments to reconcile net loss to
   net cash used in operating activities:
 Depreciation and amortization                                     1,426,525      1,305,065
 Equity in loss of unconsolidated affiliate                        6,662,956      6,366,978
 Compensation for forgiveness of notes
   receivable-related parties                                        189,187        124,466
 Compensation related common  stock and options                           --      1,398,638
 Expense related to issuance of warrants                             103,050             --
 Expense related to issuance of common stock                         275,000             --
 Revenue recognized for stock received
  in licensing agreement                                            (205,442)            --
 Gain on disposal of equipment                                       (40,987)            --
 Accrued interest included in convertible debt                       539,593         86,667
 Changes in operating assets and liabilities:
   Accounts receivable                                            (4,291,102)    (2,405,201)
   Prepaid expenses and other                                       (148,307)      (196,573)
   Other assets                                                        5,345        (79,619)
   Accounts payable                                                  908,582        438,135
   Accrued expenses                                                5,476,356        188,478
   Deferred license revenue                                         (299,997)      (299,997)
                                                                ------------   ------------
 Net cash used in operating activities                           (29,043,016)    (2,679,622)

Investing activities
 Additions to property, plant and equipment                       (1,255,888)      (647,395)
 Additions to deferred patent costs                                 (598,858)      (403,855)
 Net sales (purchases) of securities available-for-sale            4,164,208    (21,437,193)
 Investment in unconsolidated affiliate                           (3,283,610)   (13,625,667)
 Loan repayments-related parties                                          --             --
 Loan advances-related parties                                    (1,588,148)            --
                                                                ------------   ------------
 Net cash used in investing activities                            (2,562,296)   (36,114,110)

Financing activities
 Net proceeds from sale of common and preferred stock              5,167,991     70,456,692
 Payments under loan facilities                                           --     (7,043,977)
 Borrowings under loan facilities                                  5,279,453      2,171,740
                                                                ------------   ------------
 Net cash provided by financing activities                        10,447,444     65,584,455

Net (decrease) increase in cash and cash equivalents             (21,157,868)    26,790,723
Cash and cash equivalents at beginning of period                  32,170,518      9,749,822
                                                                ------------   ------------
Cash and cash equivalents at end of period                      $ 11,012,650   $ 36,540,545
                                                                ============   ============
</TABLE>
See notes to condensed financial statements.

                                       5
<PAGE>

                        RIBOZYME PHARMACEUTICALS, INC.
                    NOTES TO CONDENSED FINANCIAL STATEMENTS
                              September 30, 2001
                                  (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 and nine
month periods ending September 30, 2001 are not necessarily indicative of the
results that may be expected for the year ended December 31, 2001. 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, 2000.

     Certain amounts in the 2000 financial statements have been reclassified in
order to conform with the 2001 presentation.

Note 2:  Medizyme Pharmaceuticals, Ltd.

     In January 2000, the Company formed a joint venture with Elan Corporation
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(R) drug delivery technology to
the joint venture, Medizyme Pharmaceuticals, Ltd. The MEDIPAD(R) system is a
disposable continuous subcutaneous drug delivery system that allows a patient to
administer the drug at home. We filed an Investigational New Drug (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 30-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
and nine-month periods ended September 30, 2001, the Company recognized $818,000
and $3.2 million, respectively, 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 related
periods.

                                       6
<PAGE>

     The unaudited results of operations of Medizyme for the nine-month period
ended September 30, 2001 are as follows (in thousands):


          Revenue                      $   --

          Research and development      4,568
          License fee                   3,750
                                       ------
          Net loss                     $8,318
                                       ======

Note 3:  Changes in Equity.

     Since December 31, 2000, the following changes have occurred in equity:

     .    Pursuant to an amendment to a Chiron Corporation collaborative
          research, development and commercialization agreement dated March 20,
          2001, we issued 38,920 shares of our common stock to Chiron
          Corporation in exchange to reacquire all rights to develop any product
          containing or utilizing an HIV target.

     .    Pursuant to an agreement dated January 2000, between the Company and
          Elan Corporation, plc, Elan purchased 500,500 shares of the Company's
          common stock for $5.0 million in May 2001. The shares were purchased
          at a 30% premium to the average closing price for a 45-day period
          prior to April 4, 2001.

     .    On April 30, 2001, employees of the Company purchased 40,928 shares of
          the Company's common stock through the Company's Employee Stock
          Purchase Plan.

     .    As of September 30, 2001, a total of 43,929 shares have been purchased
          through the Company's Stock Option Plan.

                                       7
<PAGE>

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 and retain
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 our Form S-3 registration statement which
was filed with the U.S. Securities and Exchange Commission on July 27, 2001
(File No. 333-66092), a copy of which is available from us upon request.


Overview of our Business

     We are developing a new class of drugs based on engineered molecules called
"ribozymes." Ribozymes are a form of ribonucleic acid which have the ability to
cleave RNA, including mRNA and viral RNA, thereby selectively inhibit protein
production and viral replication. Because many human diseases result from
abnormal protein production, ribozymes are expected to be useful in developing
pharmaceutical candidates for a broad range of human diseases. We are currently
in clinical development and preclinical testing for four product candidates.

  We are developing ANGIOZYME, our lead product candidate for the treatment of
solid tumor cancers, in collaboration with Chiron Corporation.  During the first
three quarters of 2001, we initiated Phase II clinical trials with ANGIOZYME in
metastatic breast and colorectal cancer, as well as a pharmacokinetic trial in
combination with chemotherapy.  We have also initiated a Phase II clinical trial
with HEPTAZYME, our product candidate for the treatment of chronic Hepatitis C.
In addition, in 2000 we formed a joint venture with Elan to develop HERZYME, a
treatment for breast and other cancers. We recently filed an Investigational New
Drug application, an IND, for HERZYME in Canada and we have begun a Phase I
clinical trial in breast cancer patients.  HepBzyme, for the treatment of
Hepatitis B, is in pre-clinical testing.

     We maintain our presence in the genomics field through a spinout company,
Atugen Biotechnology AG located in Berlin, Germany, which is focused on target
validation and discovery.  We currently own approximately 30% of Atugen.  Also,
we recently granted a license to Archemix, a private company engaged in drug
optimization, to utilize allosteric ribozymes.  We were given an equity position
in exchange for the license.  In addition, we recently announced our efforts in
developing allosteric ribozymes in the areas of diagnostics and
pharmacogenomics.  During 2001, we determined that significant and relatively
near-term market opportunities may exist to commercialize products predicated on
our broad-based allosteric ribozyme technology to identify and measure levels of
proteins and other analytes.  Consequently, we intend to expand our focus and
efforts in this promising area of product development by seeking collaborative
opportunities and/or joint ventures with other pharmaceutical and diagnostics
companies.


                                       8
<PAGE>

     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:

     .    Up-front revenue. Up-front non-refundable fees are fully recognized
          upon signing an agreement and are related to the value of the research
          at that point in time. Up-front revenue may also include a
          reimbursement to us of recent expenses related to product development
          which we incurred.

     .    Research revenue. Typically research revenue is based on the fully
          burdened cost of a researcher working on a collaboration. Rates are
          billed per employee, per year, pro-rated for time worked on a project.
          This revenue is typically invoiced on a quarterly basis, either up
          front or in arrears. Revenue is recognized ratably over the period,
          with the balance reflected as deferred revenue until earned. The
          revenue is typically recurring over the term of a collaboration.

     .    License revenue. License revenue is recognized ratably over the term
          of the license. Payments received in advance are recorded as deferred
          revenue until earned.

     .    Milestone revenue. Milestone revenue is recognized in full when the
          related milestone performance goal is achieved. Milestone revenue is
          typically not consistent or recurring in nature.

     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 September 30, 2001, 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
do so for the foreseeable future.

     We have not been profitable since inception and have an accumulated deficit
of $139.6 million as of September 30, 2001. Losses have resulted primarily from
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.


Results of Operations

Three and Nine Months Ended September 30, 2001 and 2000

     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 currently includes
revenues

                                       9
<PAGE>

recorded from Chiron. 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 $2.0 million and $6.5
million for the three and nine months ended September 30, 2001, from $4.4
million and $12.2 million for the corresponding periods in 2000. The decrease of
$2.4 million for the quarter ending September 30, 2001 was primarily due to $1.3
million reduction in revenues recorded from Medizyme for work related to
HERZYME.  The reduction is because HERZYME has moved into clinical trials and
therefore requires fewer researchers working on the project which in turn has
resulted in lower research revenues. For the same reason, Chiron revenues
declined approximately $300,000 for the quarter ended September 30, 2001
compared to the same period last year because ANGIOZYME has also progressed in
clinical trials and therefore requires fewer researchers. In addition, revenues
have declined because our Hepatitis C collaboration with Eli Lilly and Company
was terminated in the third quarter of 2000 when we repurchased the rights to
HEPTAZYME from Lilly.  Lilly revenues for the quarter ended September 30, 2000
were approximately $791,000, which due to the termination of the collaboration
last year, Lilly revenues are not included in the period ending September 30,
2001.

     The decrease of $5.7 million for the nine-month period ending September 30,
2001 compared to the same period in 2000, was primarily due to $3.8 million
recorded from Lilly in 2000 for the Hepatitis C collaboration which terminated
last year.  The 2000 Lilly revenues included $1.5 million in milestone payments
and $2.3 million in research revenues.  In addition, revenues recorded from
Chiron decreased $1.0 million for the nine-month period ending September 30,
2001 from the corresponding period ended in 2000.  The decrease is due to the
progression of ANGIOZYME in clinical trials and the subsequent reduction in
research as referenced above.  Also because of the progression of HERZYME in
clinical trials, revenues from Medizyme have decreased year to date in 2001
compared to the same period in 2000 by $852,000.

     However, while revenues have decreased, reimbursements that offset
manufacturing and clinical trial expenses in connection with Chiron and Medizyme
have increased.  For the quarter ended September 30, 2001, reimbursements from
Chiron and Medizyme were $1.0 million and $224,000, respectively, compared to
$530,000 and $202,000 for the corresponding period in 2000. Reimbursement of
expenses from Chiron and Medizyme for the nine-month period ending September 30,
2001 were $5.8 million and $1.0 million, respectively, compared to $1.5 million
and $987,000 for the corresponding period in 2000.  Revenues and reimbursement
of expenses are expected to fluctuate due to timing of research and the progress
of our drugs in clinical trials.

     Expenses.  Research and development expenses increased to $16.7 million and
$37.8 million for the three and nine months ended September 30, 2001, compared
to $6.0 million and $14.8 million for the corresponding periods in 2000.  The
increase of $10.7 million for the three-month period ending September 30, 2001
compared to the same period in 2000, was primarily due to  $11.3 million of
expense we incurred for third party manufacturing costs for ANGIOZYME and
HEPTAZYME to support our current and planned clinical trials.  In addition, the
increase of $23.0 million for the nine-month period ending September 30, 2001
compared to the same period in 2000, was primarily due to a total of $23.9
million incurred in third party manufacturing expenses. We expect research and
development expenses, including pre-clinical studies, clinical trials and
manufacturing expenses, to continue to increase as we expand our development
programs for ANGIOZYME, HEPTAZYME and HERZYME.

     General and administrative expenses increased to $1.0 million and $3.1
million for the three and nine-months ended September 30, 2001, respectively,
compared to $679,000 and $2.8 million for the

                                       10
<PAGE>

corresponding periods in 2000. The increases in 2001 are the result of increased
staffing and related 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 $435,000 and $1.9 million
for the three and nine-months ended September 30, 2001, compared to $1.0 million
and $2.2 million, respectively, for the corresponding periods in 2000.  The
decrease is due to lower average balances in our cash, cash equivalents and
securities available-for-sale as compared to the same periods in 2000. Cash and
equivalent balances were higher in 2000 because of our public offering completed
in April 2000 that resulted in $52.7 million net proceeds.  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 $244,000 and $540,000 for
the three and nine-month periods ending September 30, 2001, respectively,
compared to $3,000 and $94,000 for the corresponding periods in 2000. The low
interest expense in 2000 was due to our repayment of $6.9 million on a $7.9
million loan from Schering AG with proceeds from our pubic offering in 2000. At
Schering AG's option, the remaining balance of $997,000 was converted into
42,435 shares of our common stock in June 2000. Subsequently we borrowed an
additional $1.0 million from Schering AG in each of October 2000, January 2001
and April 2001, as well as $6.0 million from Elan related to our joint venture,
therefore, interest expense increased during the three and nine-month periods
ended September 30, 2001. Interest expense is expected to continue to increase
in the future as we arrange for additional financing for operations.

     Equity in loss of unconsolidated affiliate. Equity in loss of
unconsolidated affiliate was $1.9 million and $6.7 million for the three and
nine month periods ending September 30, 2001, respectively, compared to $2.8
million and $6.4 million for the corresponding periods in 2000. The expense is
our 80.1% share of Medizyme's first and second 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 96-16 Investors 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 September
30, 2001 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 2001 expenses
include $1.25 million amortized expense in each quarter for payment of a $15.0
million license fee paid to Elan in January 2000, as well as $4.2 million we
invoiced as of September 30, 2001 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 September
30, 2001, we have received approximately:

     .    $29.0 million in net proceeds from private placements;

                                       11
<PAGE>

     .    $89.2 million in net proceeds from public offerings;
     .    $119.1 million from our collaborations; and
     .    $9.8 million from equipment financing.

     We had cash, cash equivalents and securities available-for-sale of $39.2
million at September 30, 2001 compared with $64.5 million at December 31, 2000.
The $25.3 million decrease in cash, cash equivalents and securities available-
for-sale is primarily the result of $29.0 million used for operations, net of
revenues of $6.5 million; $1.9 million used for investments in equipment,
leasehold improvements and patents; $1.6 million in loans to executives; $3.3
million invested in our joint venture; $5.2 million received in proceeds from
equity transactions and $5.3 million received in proceeds from debt facilities.

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

     Accounts receivable at September 30, 2001 were $7.9 million compared to
$3.6 million at December 31, 2000. Accounts receivable at September 30, 2001
included $433,000 due from Atugen for administrative services and patent
expenses, $2.3 million due from Medizyme for research support for HERZYME and
$4.6 million due from Chiron for reimbursement of ANGIOZYME expenses, as well as
$608,000 due from miscellaneous other sources.

     Total additions for property, plant and equipment for the nine months ended
September 30, 2001 were $1.3 million, of which $1.0 million were financed
through our existing equipment loan facility with Schering AG. We anticipate
future property, plant and equipment needs to be financed through 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. Chiron has indicated its
desire not to participate in the Phase II clinical trials for renal cell cancer
and melanoma. Based upon discussions with Chiron, both parties have decided to
renegotiate the collaborative agreement. Consequently, both parties believe that
their interests can best be served without a Chiron-designated member on our
Board; therefore, effective November 13, 2001, Chiron is longer represented on
our Board of Directors. The ANGIOZYME breast and colorectal clinical trials are
ongoing and we expect that the development of ANGIOZYME will continue. 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. An expense of $275,000 was recorded during the period ending March 31,
2001 in connection with the issuance of the stock. During the nine month period
ended September 30, 2001, we recorded $2.2 million and $5.8 million 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 with Schering AG and
Schering Berlin Venture Corporation ("SBVC"), an affiliate of Schering AG,
subsequently amended, 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 last 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.  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
balance into 42,435 shares of our common stock at a conversion price of $23.50.
According to the terms of our agreement with Schering AG, 50.0% of any
borrowings on

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<PAGE>

the line of credit must be collateralized by equipment purchases. At September
30, 2001, we had $3.2 million in outstanding loans from Schering AG, which was
convertible into approximately 533,000 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.

     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.  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 an additional 500,500 shares of common
stock for $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 credit
facility to fund our portion of Medizyme operating costs over a 30-month period.
At the end of September 2001, we utilized the credit facility and had borrowed
$6.0 million.  Elan may convert this debt into shares of our Series B
Convertible Preferred Stock in the future.

     In November 2000, we signed an agreement with Acqua Wellington North
American Equities Fund Ltd. to set up an equity financing facility covering the
sale of up to $60 million of our common stock. Any sale of our common stock will
be made pursuant to a shelf registration we filed with the Securities and
Exchange Commission (SEC) covering the sale of up to 3 million shares of our
common stock. The shelf registration was declared effective by the SEC in
November 2000. We may sell the shares at our discretion and as market conditions
warrant at a small discount to market at the time of sale. We will control the
quantity and timing of each incremental sale of stock, if any. Proceeds from any
sale of stock will be used for general corporate purposes. As of this filing
date, we have not sold any shares of our common stock under the agreement with
Acqua Wellington.

     On July 27, 2001, we filed a Form S-3 Registration Statement to register 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.  As of this
filing date, we have not sold any shares of our common or preferred stock, or
warrants under this registration statement.

    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 our research, drug discovery and development
          programs;
     .    preclinical studies and clinical trials of our products, if developed;
     .    prosecuting and enforcing patent claims;
     .    general administrative and legal items; and
     .    manufacturing and marketing of our products, if any.


  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.


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<PAGE>

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.


PART II - OTHER INFORMATION

ITEM 2.   CHANGES IN SECURITIES

     On July 27, 2001, we filed a Form S-3 Registration Statement to register 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.


ITEM 6.   EXHIBITS AND REPORTS ON FORM 8-K

     (a)  Exhibits

          3(i)      Amended and Restated Certificate of Incorporation (1)
          3(ii)     Restated Bylaws (2)
          10.1      Amendment to Employment Agreement dated June 18, 2001
                    between Howard W. Robin and the Company.
          10.2      Amendment to Employment Agreement dated July 1, 2001 between
                    Ralph E. Christoffersen and the Company.
          10.3      Amendment to Employment Agreement dated July 15, 2001
                    between Marvin Tancer and the Company.

     (b)  Reports on Form 8-K

     No reports on Form 8-K were filed for the quarter ending September 30,
2001.
--------------------------------------------------------------------------------
(1)  Incorporated by reference from the Company's Registration Statement on Form
     SB-2, file no. 333-34981, dated September 5, 1997.
(2)  Incorporated by reference from the Company's Registration Statement on Form
     SB-2, file no. 333-1908-D, dated April 11, 1996.

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<PAGE>

                                  SIGNATURES

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

                                  RIBOZYME PHARMACEUTICALS, INC.

Dated:    November 14, 2001        /s/ Howard W. Robin
          -----------------        --------------------------
                                   Howard W. Robin
                                   President and Chief
                                   Executive Officer

Dated:    November 14, 2001    By: /s/ Marvin Tancer
          -----------------        --------------------------
                                   Marvin Tancer
                                   Chief Financial Officer and Vice President of
                                   Operations
                                   (Principal Financial Officer and
                                   Principal Accounting Officer)

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<PAGE>

                                 Exhibit Index


Exhibit No.                       Exhibit Description
-----------                       -------------------

3(I)          Amended and Restated Certificate of Incorporation (1)
3(ii)         Restated Bylaws (2)
10.1          Amendment to Employment Agreement dated June 18, 2001 between
              Howard W. Robin and the Company.
10.2          Amendment to Employment Agreement dated July 1, 2001 between Ralph
              E. Christoffersen and the Company.
10.3          Amendment to Employment Agreement dated July 15, 2001 between
              Marvin Tancer and the Company.

------
(1)  Incorporated by reference from the Company's Registration Statement on Form
     SB-2, file no. 333-34981, dated September 5, 1997.
(2)  Incorporated by reference from the Company's Registration Statement on Form
     SB-2, file no. 333-1908-D, dated April 11, 1996.

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