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SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-Q

(Mark One)

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

For the quarterly period ended April 30, 2002

or

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

For the transition period from  to

Commission File Number 1-8366

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POLYDEX PHARMACEUTICALS LIMITED(Exact Name of Registrant as Specified in Its Charter)

Commonwealth of the Bahamas(State or Other Jurisdiction of
Incorporation or Organization)

None(I.R.S. Employer
Identification No.)421 Comstock Road, Toronto, Ontario, Canada

M1L 2H5(Address of Principal Executive Offices)

(Zip Code)


(416) 755-2231Registrant's Telephone Number, Including Area Code

Former
Name, Former Address and Former Fiscal Year, if Changed Since Last Report

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Indicate
by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities 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

Indicate
the number of shares outstanding of each of the issuer's classes of common shares, as of the latest practicable date.

|Common Shares, $.0167 Par Value |  | 3,027,777 shares             
|------------------------------- |  | -----------------------------
|(Title of Class)                |  | (Outstanding at June 3, 2002)

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POLYDEX PHARMACEUTICALS LIMITED
TABLE OF CONTENTS

|        |  |                                                                                                                     |  | PAGE
|------- |  | ------------------------------------------------------------------------------------------------------------------- |  | ----
|PART I  |  | FINANCIAL INFORMATION                                                                                               |  |     
|Item 1  |  | CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)                                                                       |  |     
|        |  | Consolidated Balance Sheets
April 30, 2002 and January 31, 2002                                                     |  | 3   
|        |  | Consolidated Statements of Operations
Three months ended April 30, 2002 and 2001                                    |  | 5   
|        |  | Consolidated Statements of Shareholders' Equity
and Comprehensive Income
Three months ended April 30, 2002 and 2001 |  | 6   
|        |  | Consolidated Statements of Cash Flows
Three months ended April 30, 2002 and 2001                                    |  | 7   
|        |  | Segmented Information
Three months ended April 30, 2002 and 2001                                                    |  | 8   
|        |  | Notes to Consolidated Financial Statements (Unaudited)                                                              |  | 9   
|Item 2  |  | MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS                               |  | 10  
|Item 3  |  | QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK                                                          |  | 13  
|PART II |  | OTHER INFORMATION                                                                                                   |  |     
|Item 6  |  | EXHIBITS AND REPORTS ON FORM 8-K                                                                                    |  | 15  
|        |  | Signatures                                                                                                          |  | 16  

2

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PART I  FINANCIAL INFORMATION

Item 1.    Consolidated Financial Statements (unaudited).

POLYDEX PHARMACEUTICALS LIMITED

Consolidated Balance Sheets  (Expressed in United States dollars)

|                                     |                                           | (Unaudited)
April 30
2002 |            | January 31
2002 |          
|------------------------------------ | ----------------------------------------- | ------------------------- | ---------- | --------------- | ---------
|Assets                               |                                           |                           |            |                 |          
|Current assets:                      |                                           |                           |            |                 |          
|                                     | Cash                                      |                           | $          | 377,700         |          
|                                     | Trade accounts receivable                 |                           |            | 1,220,628       |          
|                                     | Inventories:                              |                           |            |                 |          
|                                     |                                           | Finished goods            |            |                 | 1,477,177
|                                     |                                           | Work in process           |            |                 | 93,437   
|                                     |                                           | Raw materials             |            |                 | 486,469  
|                                     |                                           |                           |            |                 |          
|                                     | Inventories                               |                           |            | 2,057,083       |          
|                                     | Prepaid expenses and other current assets |                           |            | 67,071          |          
|                                     |                                           |                           |            |                 |          
|                                     |                                           |                           | 3,722,482  |                 |          
|Property, plant and equipment, net   |                                           |                           | 4,720,709  |                 |          
|Patents, net                         |                                           |                           | 103,699    |                 |          
|Due from Sparhawk Laboratories, Inc. |                                           |                           | 134,189    |                 |          
|Due from shareholder                 |                                           |                           | 1,086,678  |                 |          
|Deferred tax assets                  |                                           |                           | 533,204    |                 |          
|Other assets                         |                                           |                           | 32,021     |                 |          
|                                     |                                           |                           |            |                 |          
|                                     |                                           | $                         | 10,332,982 |                 | $        
|                                     |                                           |                           |            |                 |          

3

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|                                     |                                              | April 30
2002           |                                                                                                                                                                                 | January 31
2002 |  
|------------------------------------ | -------------------------------------------- | ----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | --------------- | -
|Liabilities and Shareholders' Equity |                                              |                         |                                                                                                                                                                                 |                 |  
|Current liabilities:                 |                                              |                         |                                                                                                                                                                                 |                 |  
|                                     | Bank indebtedness                            |                         | $                                                                                                                                                                               | 135,675         |  
|                                     | Accounts payable                             |                         |                                                                                                                                                                                 | 922,200         |  
|                                     | Accrued liabilities                          |                         |                                                                                                                                                                                 | 413,374         |  
|                                     | Due to Sparhawk Laboratories, Inc.           |                         |                                                                                                                                                                                 | 101,453         |  
|                                     | Customer deposits received                   |                         |                                                                                                                                                                                 | 5,013           |  
|                                     | Income taxes payable                         |                         |                                                                                                                                                                                 | 69,304          |  
|                                     | Current portion of long-term debt            |                         |                                                                                                                                                                                 | 453,150         |  
|                                     | Current portion of capital lease obligations |                         |                                                                                                                                                                                 | 101,074         |  
|                                     |                                              |                         |                                                                                                                                                                                 |                 |  
|                                     |                                              |                         | 2,201,243                                                                                                                                                                       |                 |  
|Long-term debt                       |                                              |                         | 352,082                                                                                                                                                                         |                 |  
|Capital lease obligations            |                                              |                         | 393,288                                                                                                                                                                         |                 |  
|Due to shareholder                   |                                              |                         | 680,301                                                                                                                                                                         |                 |  
|                                     |                                              |                         |                                                                                                                                                                                 |                 |  
|Total liabilities                    |                                              |                         | 3,626,914                                                                                                                                                                       |                 |  
|Shareholders' equity:                |                                              |                         |                                                                                                                                                                                 |                 |  
|                                     | Capital stock                                |                         |                                                                                                                                                                                 |                 |  
|                                     |                                              | Authorized:             |                                                                                                                                                                                 |                 |  
|                                     |                                              |                         | 100,000 Class A preferred shares, par value $0.10 per share 899,400 Class B preferred shares, par value $0.0167 per share 10,000,000 common shares, par value $0.0167 per share |                 |  
|                                     |                                              | Issued and outstanding: |                                                                                                                                                                                 |                 |  
|                                     |                                              |                         | 899,400 Class B preferred shares                                                                                                                                                |                 |  
|                                     |                                              |                         | 3,027,777 common shares (fiscal 20023,027,477)                                                                                                                                 |                 |  
|                                     | Contributed surplus                          |                         |                                                                                                                                                                                 | 23,224,128      |  
|                                     | Deficit                                      |                         |                                                                                                                                                                                 | (15,459,526     | )
|                                     | Accumulated other comprehensive loss         |                         |                                                                                                                                                                                 | (1,123,978      | )
|                                     |                                              |                         |                                                                                                                                                                                 |                 |  
|                                     |                                              |                         | 6,706,068                                                                                                                                                                       |                 |  
|                                     |                                              |                         |                                                                                                                                                                                 |                 |  
|                                     |                                              | $                       | 10,332,982                                                                                                                                                                      |                 | $
|                                     |                                              |                         |                                                                                                                                                                                 |                 |  

4

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POLYDEX PHARMACEUTICALS LIMITED

Consolidated Statements of Operations (Unaudited)  (Expressed in United States dollars)

|                                                                    |                                                  | Year to Date
April 30
2002 |           | Year to Date
April 30
2001 |     
|------------------------------------------------------------------- | ------------------------------------------------ | -------------------------- | --------- | -------------------------- | ----
|Sales                                                               |                                                  | $                          | 3,324,610 |                            | $   
|Cost of products sold                                               |                                                  |                            | 2,355,415 |                            |     
|                                                                    |                                                  |                            |           |                            |     
|                                                                    |                                                  |                            | 969,195   |                            |     
|Expenses:                                                           |                                                  |                            |           |                            |     
|                                                                    | General and administrative                       |                            |           | 375,945                    |     
|                                                                    | Depreciation                                     |                            |           | 135,200                    |     
|                                                                    | Research and development                         |                            |           | 55,326                     |     
|                                                                    | Interest expense                                 |                            |           | 41,385                     |     
|                                                                    | Selling and promotion                            |                            |           | 33,401                     |     
|                                                                    | Foreign exchange (gain) loss                     |                            |           | 28,451                     |     
|                                                                    | Amortization                                     |                            |           | 5,546                      |     
|                                                                    | Write down of property, plant and equipment      |                            |           |                           |     
|                                                                    |                                                  |                            |           |                            |     
|                                                                    |                                                  |                            | 675,254   |                            |     
|                                                                    |                                                  |                            |           |                            |     
|Income (loss) from operations                                       |                                                  |                            | 293,941   |                            |     
|Other income (loss):                                                |                                                  |                            |           |                            |     
|                                                                    | Interest and other                               |                            |           | 2,430                      |     
|                                                                    |                                                  |                            |           |                            |     
|                                                                    |                                                  |                            | 2,430     |                            |     
|                                                                    |                                                  |                            |           |                            |     
|Income (loss) before the undernoted                                 |                                                  |                            | 296,371   |                            |     
|Provision for income taxes                                          |                                                  |                            | 151,369   |                            |     
|                                                                    |                                                  |                            |           |                            |     
|Net income (loss) for the period                                    |                                                  | $                          | 145,002   |                            | $   
|                                                                    |                                                  |                            |           |                            |     
|Per share information:                                              |                                                  |                            |           |                            |     
|                                                                    | Earnings (loss) per common share for the period: |                            |           |                            |     
|                                                                    |                                                  | Basic                      |           | $                          | 0.05
|                                                                    |                                                  | Diluted                    |           | $                          | 0.05
|                                                                    |                                                  |                            |           |                            |     
|Weighted average number of common shares outstanding for the period |                                                  |                            | 3,027,777 |                            |     
|                                                                    |                                                  |                            |           |                            |     

5

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POLYDEX PHARMACEUTICALS LIMITED

Consolidated Statements of Shareholders' Equity and Comprehensive Income (Unaudited)  (Expressed in United States dollars)

|                                      |                                                | Year to Date
April 30
2002 |         | Year to Date
April 30
2001 |  
|------------------------------------- | ---------------------------------------------- | -------------------------- | ------- | -------------------------- | -
|Preferred Shares:                     |                                                |                            |         |                            |  
|                                      | Balance, beginning of period                   |                            | $       | 15,010                     |  
|                                      | Private placement of preferred shares          |                            |         |                           |  
|                                      |                                                |                            |         |                            |  
|                                      | Balance, end of period                         |                            | $       | 15,010                     |  
|                                      |                                                |                            |         |                            |  
|Common Shares:                        |                                                |                            |         |                            |  
|                                      | Balance, beginning of period                   |                            | $       | 50,434                     |  
|                                      | Common share options exercised                 |                            |         |                           |  
|                                      |                                                |                            |         |                            |  
|                                      | Balance, end of period                         |                            | $       | 50,434                     |  
|                                      |                                                |                            |         |                            |  
|Contributed Surplus:                  |                                                |                            |         |                            |  
|                                      | Balance, beginning of period                   |                            | $       | 23,224,128                 |  
|                                      | Common share options granted                   |                            |         |                           |  
|                                      |                                                |                            |         |                            |  
|                                      | Balance, end of period                         |                            | $       | 23,224,128                 |  
|                                      |                                                |                            |         |                            |  
|Deficit:                              |                                                |                            |         |                            |  
|                                      | Balance, beginning of period                   |                            | $       | (15,604,528                | )
|                                      | Net income (loss) for the period               |                            |         | 145,002                    |  
|                                      |                                                |                            |         |                            |  
|                                      | Balance, end of period                         |                            | $       | (15,459,526                | )
|                                      |                                                |                            |         |                            |  
|Accumulated Other Comprehensive Loss: |                                                |                            |         |                            |  
|                                      | Balance, beginning of period                   |                            | $       | (1,199,627                 | )
|                                      | Currency translation adjustment for the period |                            |         | 75,649                     |  
|                                      |                                                |                            |         |                            |  
|                                      | Balance, end of period                         |                            | $       | (1,123,978                 | )
|                                      |                                                |                            |         |                            |  
|Comprehensive Income for the period:  |                                                |                            |         |                            |  
|                                      | Net income (loss) for the period               |                            | $       | 145,002                    |  
|                                      | Currency translation adjustment for the period |                            |         | 75,649                     |  
|                                      |                                                |                            |         |                            |  
|                                      |                                                | $                          | 220,651 |                            | $
|                                      |                                                |                            |         |                            |  

6

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POLYDEX PHARMACEUTICALS LIMITED

Consolidated Statements of Cash Flows (Unaudited)  (Expressed in United States dollars)

|                                     |                                                                       | Year to Date
April 30
2002                 |          | Year to Date
April 30
2001 |        
|------------------------------------ | --------------------------------------------------------------------- | ------------------------------------------ | -------- | -------------------------- | -------
|Cash provided by (used in):          |                                                                       |                                            |          |                            |        
|Operating activities:                |                                                                       |                                            |          |                            |        
|                                     | Net income (loss) for the period                                      |                                            | $        | 145,002                    |        
|                                     | Add (deduct) items not affecting cash:                                |                                            |          |                            |        
|                                     |                                                                       | Depreciation and amortization              |          |                            | 140,746
|                                     |                                                                       | Imputed interest on long-term debt         |          |                            | 9,422  
|                                     |                                                                       | Writedown of property, plant and equipment |          |                            |       
|                                     |                                                                       | Deferred tax provision                     |          |                            | 100,863
|                                     | Net change in non-cash working capital balances related to operations |                                            |          | 33,901                     |        
|                                     |                                                                       |                                            |          |                            |        
|                                     |                                                                       |                                            | 429,934  |                            |        
|                                     |                                                                       |                                            |          |                            |        
|Investing activities:                |                                                                       |                                            |          |                            |        
|                                     | Additions to property, plant and equipment and patents                |                                            |          | (83,382                    | )      
|                                     | Repayment of due from shareholder, net                                |                                            |          | 11,464                     |        
|                                     | Advance to Sparhawk Laboratories, Inc.                                |                                            |          | (1,575                     | )      
|                                     |                                                                       |                                            |          |                            |        
|                                     |                                                                       |                                            | (73,493  | )                          |        
|                                     |                                                                       |                                            |          |                            |        
|Financing activities:                |                                                                       |                                            |          |                            |        
|                                     | Repayment of long-term debt                                           |                                            |          | (49,033                    | )      
|                                     | Repayment of capital lease obligations                                |                                            |          | (23,643                    | )      
|                                     | Decrease in due to shareholder                                        |                                            |          | (1,662                     | )      
|                                     | Increase (decrease) in bank indebtedness                              |                                            |          | (43,611                    | )      
|                                     |                                                                       |                                            |          |                            |        
|                                     |                                                                       |                                            | (117,949 | )                          |        
|                                     | Effect of exchange rate changes on cash                               |                                            |          | 15,790                     |        
|                                     |                                                                       |                                            |          |                            |        
|Increase (decrease) in cash position |                                                                       |                                            | 254,282  |                            |        
|Cash, beginning of period            |                                                                       |                                            | 123,418  |                            |        
|                                     |                                                                       |                                            |          |                            |        
|Cash, end of period                  |                                                                       | $                                          | 377,700  |                            | $      
|                                     |                                                                       |                                            |          |                            |        

7

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POLYDEX PHARMACEUTICALS LIMITED

Segmented Information (Unaudited)  (Expressed in United States dollars)

All
operations are carried out through Dextran Products Limited ("Dextran") in Canada and through Chemdex, Inc. ("Chemdex") in the United States. The operations of Chemdex represent the
veterinary products business and the operations are carried out through its wholly-owned subsidiary, Veterinary Laboratories, Inc. Each of Dextran and Chemdex operates as a strategic business
unit offering different products. Each subsidiary comprises a reportable segment as follows:

Dextran
manufactures and sells bulk quantities of Dextran and several of its derivatives to large pharmaceutical companies throughout the world.Veterinary products
manufactures and sells veterinary pharmaceutical products and specialty chemicals in the United States. The primary customers are distributors and private labelers, who in turn sell to the end-user of these
products.


|                               |                                                  | Year to Date
April 30
2002 |   | Year to Date
April 30
2001 | 
|------------------------------ | ------------------------------------------------ | -------------------------- | - | -------------------------- | 
|Sales:                         |                                                  |                            |   |                            | 
|                               | Dextran                                          |                            | $ | 1,372,319                  | 
|                               | Veterinary products                              |                            |   | 2,123,632                  | 
|                               |                                                  |                            |   |                            | 
|                               | Total segment sales                              |                            |   | 3,495,951                  | 
|                               | Less: intercompany sales elimination             |                            |   | 171,341                    | 
|                               |                                                  |                            |   |                            | 
|                               | Total consolidated sales                         |                            | $ | 3,324,610                  | 
|                               |                                                  |                            |   |                            | 
|Income (loss) from operations: |                                                  |                            |   |                            | 
|                               | Dextran                                          |                            | $ | 341,312                    | 
|                               | Veterinary products                              |                            |   | 97,959                     | 
|                               |                                                  |                            |   |                            | 
|                               | Total income from operations from segments       |                            |   | 439,271                    | 
|                               | Less: Unallocated corporate expenses             |                            |   | 145,330                    | 
|                               |                                                  |                            |   |                            | 
|                               | Total consolidated income (loss) from operations |                            | $ | 293,941                    | 
|                               |                                                  |                            |   |                            | 
|Assets:                        |                                                  |                            |   |                            | 
|                               | Dextran                                          |                            | $ | 5,316,790                  | 
|                               | Veterinary products                              |                            |   | 3,978,696                  | 
|                               |                                                  |                            |   |                            | 
|                               | Total assets from segments                       |                            |   | 9,295,486                  | 
|                               | Corporate assets                                 |                            |   | 1,037,496                  | 
|                               |                                                  |                            |   |                            | 
|                               | Total consolidated assets                        |                            | $ | 10,332,982                 | 
|                               |                                                  |                            |   |                            | 

8

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POLYDEX PHARMACEUTICALS LIMITED

Notes to Consolidated Financial Statements (Unaudited)

1.    Basis of Presentation



2.    Veterinary Laboratories, Inc.



3.    Comparative Interim Consolidated Financial Statements



9

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

The
Company's fiscal year ends on January 31st therefore fiscal year 2003 refers to the Company's year ended January 31, 2003. The following discussion should be read in
conjunction with the April 30, 2002 consolidated financial statements and notes thereto included elsewhere in this report. All amounts are in United States dollars unless otherwise denoted.

(a) Results of Operations

The operations of the Company are carried on through Dextran Products Limited ("Dextran Products") in Canada and through Chemdex, Inc. ("Chemdex") in the
United States. The operations of Chemdex are carried on through its wholly-owned subsidiary, Veterinary Laboratories, Inc. ("Vet Labs"). Each of Dextran Products and Vet Labs operates as a
strategic business unit. Dextran Products manufactures and sells bulk quantities of Dextran and several of its derivatives to large pharmaceutical companies throughout the world. Vet Labs manufactures
and sells veterinary pharmaceutical products and specialty chemicals in the United States. The primary customers are distributors and private labelers, who in turn sell to the end-user of
these products.

Net
income for the first quarter ended April 30, 2002 amounted to $145,002 or $0.05 per share as compared to net loss of $64,855 or $0.02 per share for the first quarter ended
April 30, 2001. This improvement in results is attributable to the increase in sales and operating profits at Dextran Products during the quarter.

During
the first quarter ended April 30, 2002, the Company's income from operations amounted to $293,941 or $0.10 per share, as compared to loss from operations of $43,425 or
$0.01 per share for the first quarter of fiscal 2002, ending April 30, 2001. This improvement in results is primarily due to an increase in operating profits at Dextran Products of $282,694.
The increase in operating profits at Dextran Products is primarily attributable to the increase in sales and margins as compared to the same quarter last year.

Sales
volume for the first quarter of fiscal 2003 increased from $3,061,191 to $3,324,610, representing an increase of $263,419 or 9%. Sales at Dextran Products increased by $302,993 or
28% as compared to the same quarter in fiscal 2002. This increase in sales at Dextran Products is primarily due to stronger demand. In the first quarter of fiscal 2002, Dextran Products experienced
equipment breakdown and product quality issues that resulted in lower sales volume. Sales at Vet Labs during the first quarter were consistent with volumes experienced in the same quarter last year.

The
summer months are typically slower sales months for Vet Labs as large animals are put outdoors to pasture and therefore have less need for vitamins and other supplements. Management
is therefore forecasting lower sales levels in the second quarter of fiscal 2003 than were achieved in the first quarter of fiscal 2003 at Vet Labs. Margins are expected to remain steady, but the
expected lower sales volume may reduce operating profits for the second quarter of fiscal 2003. Management expects sales levels for the second quarter of fiscal 2003 to equal sales levels achieved in
the second quarter of fiscal 2002 at Vet Labs.

Gross
margins increased from 22% in the first quarter of fiscal 2002 to 29% in the first quarter of fiscal 2003. Dextran Products' gross margin increased from 35% in the first quarter of
fiscal 2002 to 48% during the first quarter of fiscal 2003. Vet Labs' gross margin increased from 15% in the first quarter of fiscal 2002 to 17% in the first quarter of fiscal 2003. The margin
increase at Dextran Products is primarily a result of a product mix variance. There was a significant increase in sales volume in one of the highest margin products during the quarter as compared to
the same quarter last year. In addition, margins were reduced in the first quarter of 2002 because of the equipment breakdown and product quality issues. Management expects sales and margins to
continue at levels similar to the prior year at Dextran Products.

The
margin increase at Vet Labs is a result of a product mix variance. Vet Labs experienced increased sales in the injectables product line, the higher margin product line, and decreased
sales in one of the lower margin product lines.

General
and administrative expenses in the first quarter of fiscal 2003 decreased by $17,451 or 4% from the first quarter of fiscal 2002 due primarily to cost control measures at Dextran
Products. Depreciation and amortization in the first quarter of fiscal 2003 increased by $6,432 or 5% from the first quarter of fiscal 2002 due to the installation of new equipment at Dextran Products
during the fourth quarter of fiscal 2002. Selling and promotion expenses in the first quarter of fiscal 2003 were consistent with the same period in the prior year.

10

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Due
to continued funding by research and development partners, research and development costs in the first quarter of fiscal 2003 decreased by $42,424 or 43% as compared to the first
quarter of fiscal 2002, to $55,326. Funding from all sources for existing research and development projects is expected to continue. The Company's portion of these costs is expected to continue at
slightly higher levels for the remainder of the year.

Research
and development, in conjunction with the Consortium for Industrial Collaboration in Contraceptive Research (CICCR) and the Rush Medical Center in Chicago, relating to Cellulose
Sulphate gel is progressing. Pre-IND tests have indicated that this gel holds great promise as a topical prophylactic for sexually transmitted diseases, including AIDS, and as a
contraceptive. Two Phase I human clinical trials funded by CICCR testing the safety and tolerance of this gel were successfully completed. The project team is currently developing the supply
chain for long-term toxicology studies and further clinical trials. Management expects funding to continue from CICCR for this project.

The
Company licensed the cystic fibrosis product, Usherdex, to BCY Lifesciences of Vancouver, British Columbia. Under this license agreement, BCY Lifesciences will provide funding for
research and development and will pay a royalty to the Company based on sales and sublicensing revenue in return for the exclusive right to sublicense, manufacture, distribute and sell the product or
products developed. BCY Lifesciences filed an Investigative New Drug application in Canada to seek approval to conduct a Phase I clinical trial, during the second quarter of fiscal 2002. BCY
Lifesciences is completing preparations for the Phase I clinical trial. In anticipation of successful Phase I human clinical testing, BCY Lifesciences is already planning to commence Phase II clinical
trials in the first half of fiscal 2003.

Interest
expense in the first quarter of fiscal 2003 decreased by $16,929 or 29% as compared to the first quarter in fiscal 2002 due to the repayment of long-term debt and
capital lease obligations.

In
1992, Chemdex, through its Vet Labs subsidiary, entered into a joint venture (the "Joint Venture") for the manufacture and sale of veterinary pharmaceutical products with Sparhawk
Laboratories, Inc. ("Sparhawk"). Chemdex owns 50% of the Joint Venture and controls its Board of Directors. The Company consolidates the assets, liabilities, revenue and expenses of the Joint
Venture in its financial statements. The Joint Venture Agreement expires by its terms on December 1, 2002. Sparhawk has an option to purchase 40% of the assets held by Vet Labs for a price
equal to 40% of the fair market value of the land, building and equipment owned by Vet Labs plus $1,000,000. The Company is currently in negotiations with Sparhawk regarding the future of the Joint
Venture.

Operating
results for the first quarter ended April 30, 2002 are not necessarily indicative of the results that may be expected for the year ended January 31, 2003. For
further information, refer to the consolidated statements and footnotes thereto included in the Company's annual report on Form 10-K for the year ended January 31, 2002.

(b) Liquidity and Capital Resources

The Company, in the first quarter of fiscal 2003, generated cash flow from operations of $429,934 compared to negative cash flow from operations of $77,690 in the
first quarter of fiscal 2002. This increase of $507,624 or 653% is primarily attributable to increased earnings during the quarter and increased non-cash expenses.

At
April 30, 2002, the Company had trade accounts receivable of $1,220,628 and $2,057,083 in inventory compared to $1,067,709 and $2,112,854, respectively, at January 31,
2002. The increase in trade accounts receivable during the first quarter of fiscal 2003 was due to increased sales at Dextran Products during the quarter. Inventory levels remained relatively constant
during the quarter.

There
were no significant changes in financing or investing activities and there were no significant capital expenditures during the first quarter of fiscal 2003.

The
reduction in the accumulated other comprehensive loss of $75,649 during the first quarter of fiscal 2003 is entirely attributable to the currency translation adjustment of Dextran
Products. Dextran Products' functional currency is the Canadian dollar. This currency translation adjustment arises from the translation of Dextran Products' financial statements to U.S. dollars.

Dextran
Products has a CDN$750,000 (US$500,000) line of credit, of which $95,675 was utilized at April 30, 2002. Management anticipates using the credit line for the purposes of
funding a portion of the costs associated with the refurbishment of the Toronto facility. The Vet LabsSparhawk Joint Venture has a $175,000 line of credit to fund operations, of which
$40,000 was utilized at April 30, 2002. Vet Labs has a loan commitment for

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$400,000 to be used for building construction. Management is not planning any construction at Vet Labs during fiscal 2003, and therefore does not expect to borrow any funds under this loan commitment
in the current fiscal year.

The
amount due from shareholder decreased from $1,098,142 at January 31, 2002 to $1,086,678 at April 30, 2002 due to monthly repayments from the shareholder. The amount due
to shareholder also decreased to $680,301 at April 30, 2002 from $681,963 at January 31, 2002 due to monthly payments by the Company.

Management
expects the primary source of its future capital needs to be a combination of Company earnings and borrowings. The Company, at present, does not have any material commitments
for capital expenditures, although management intends to continue the plant refurbishment at Dextran Products.

No
changes in accounting principles or their application have been implemented in the reporting period that would have a material effect on reported income.

Changes
in the relative values of the Canadian dollar and the U.S. dollar occur from time to time and may, in certain instances, materially affect the Company's results of operations.

The
Company does not believe that the impact of inflation and changing prices on its operations are material.

Long-term Objectives

At the beginning of the year, two critical long-term objectives were identified.



Forward-Looking Statements

This Form 10-Q, including the Management's Discussion and Analysis of Financial Condition and Results of Operations, contains various
"forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which
represent the Company's expectations or beliefs concerning future events, including, but not limited to statements regarding management's expectations of regulatory approval and the commencement of
sales. In addition, statements containing expressions such as "believes", "anticipates", "plans" or "expects" used in this Form 10-Q, the Company's Annual Report, and the Company's
periodic reports on Forms 10-K and 10-Q previously filed with the Securities and Exchange Commission are intended to identify forward-looking statements. The Company cautions
that these and similar statements in this Form 10-Q, the Company's Annual Report, and in previously filed periodic reports including reports filed on Forms 10-K and
10-Q are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements. These factors include, without
limitation, changing market conditions, the progress of clinical trials, and the results obtained, the establishment of new corporate alliances, the impact of competitive products and pricing, and the
timely development, FDA approval and market acceptance of the Company's products, none of which can be assured.

The
accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles for interim financial
information and 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 normally recurring accruals) considered necessary
for a fair presentation have been included.

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Item 3.    Quantitative and Qualitative Disclosures about Market Risk.

POLYDEX PHARMACEUTICALS LIMITED
April 30, 2002
Exchange Rate Sensitivity

The table below provides information about the Company's financial instruments that are sensitive to changes in foreign currency exchange rates. All financial
instruments are held for other than trading purposes. The Company's major exposure to exchange rate risk is that the Canadian dollar rises dramatically in relation to the U.S. dollar and that this
significantly reduces the gross margin experienced at Dextran Products. Management monitors the margin at Dextran to ensure that an acceptable margin level is maintained. Management has the ability,
to some extent, to adjust sales prices to maintain an acceptable margin level.

The
table presents principal cash flows and related weighted average interest rates by expected maturity dates.

|                |                   | Expected Maturity Date |         |      |         |     
|--------------- | ----------------- | ---------------------- | ------- | ---- | ------- | ----
|
|
|
|Liabilities:    |                   |                        |         |      |         |     
|Long-term debt: |                   |                        |         |      |         |     
|                | Fixed rate ($CDN) |                        | 105,253 |      | 107,656 |     
|                |                   | Average interest rate  |         | 8.65 | %       | 8.45

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POLYDEX PHARMACEUTICALS LIMITED  April 30, 2002  Interest Rate Sensitivity

The table below provides information about the Company's financial instruments that are sensitive to changes in interest rates. All financial instruments are held
for other than trading purposes. The Company does not have a material exposure to interest rate risk.

The
table presents principal cash flows and related weighted average interest rates by expected maturity dates.

|                  |                     | Expected Maturity Date |         |      |         |     
|----------------- | ------------------- | ---------------------- | ------- | ---- | ------- | ----
|
|
|
|Assets:           |                     |                        |         |      |         |     
|Notes receivable: |                     |                        |         |      |         |     
|                  | Variable rate ($US) |                        | 11.258  |      | 11,934  |     
|                  |                     | Average interest rate  |         | 6.00 | %       | 6.00
|Liabilities:      |                     |                        |         |      |         |     
|Long-term debt:   |                     |                        |         |      |         |     
|                  | Fixed rate ($US)    |                        | 52,655  |      | 280,381 |     
|                  |                     | Average interest rate  |         | 8.21 | %       | 8.11
|                  | Fixed rate ($CDN)   |                        | 105,253 |      | 107,656 |     
|                  |                     | Average interest rate  |         | 8.65 | %       | 8.45
|                  | Variable rate ($US) |                        | (1,917  | )    | (2,032  | )   
|                  |                     | Average interest rate  |         | 6.00 | %       | 6.00

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PART II  OTHER INFORMATION

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



Not
applicable.

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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.

|Date: June 13, 2002 |                                              |  |                                                                                                                                     
|------------------- | -------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|                    | POLYDEX PHARMACEUTICALS LIMITED
(Registrant)
|                    | By                                           |  | /s/GEORGE G. USHERGeorge G. Usher, Chairman, President and Chief Executive Officer (Principal Executive Officer)                    
|                    | By                                           |  | /s/SHARON L. WARDLAWSharon L. Wardlaw, Treasurer, Secretary and Chief Financial and Accounting Officer (Principal Financial
Officer)

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