SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-K

   Annual Report Pursuant to Section 13 of the Securities Exchange Act of 1934


                          Year Ended December 31, 2000

                         Commission File Number 0-24320


                           NAPRO BIOTHERAPEUTICS, INC.



Incorporated in Delaware                                  IRS ID No.  84-1187753

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

Securities registered pursuant to Section 12(b) of the Act:
none
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.0075 par value; Preferred Stock Purchase Rights

We (1) have filed all reports required to be filed by Section 13 or 15(b) of the
Securities Exchange Act of 1934 during the preceding 12 months, and (2) have
been subject to such filing requirements for the past 90 days.

Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K will be
contained, to the best of our knowledge, in a definitive proxy statement
incorporated by reference in Part III of this Form 10-K.

The aggregate market value of the voting stock held by non-affiliates was
$161,881,000 as of March 5, 2001.

The number of shares outstanding of each of the registrant's classes of common
stock, as of March 5, 2001:

Common Stock                           26,374,446
Nonvoting  Common Stock                   395,000

Incorporated by reference in Part III of this report is certain information
contained in the Proxy Statement for our 2001 Annual Meeting of Stockholders.

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                                                 Table of Contents



          Item                                                              Page
Part I     1      Business                                                     3
           2      Properties                                                  21
           3      Legal Proceedings                                           21
           4      Matters Submitted to Stockholders' Vote                     21
Part II    5      Market Information and Related Stockholder Matters          22
           6      Selected Financial Data                                     23
           7      Management's Discussion and Analysis of Financial
                  Condition and Results of Operations                         24
           7A     Quantitative and Qualitative Disclosures about
                  Market Risk                                                 30
           8      Financial Statements and Supplementary Data                 31
           9      Changes in and Disagreements with Accountants               31
Part III   10     Directors and Executive Officers                            31
           11     Executive Compensation                                      32
           12     Security Ownership of Certain Beneficial Owners and
                  Management                                                  32
           13     Certain Relationships and Related Transactions              32
Part IV    14     Exhibits, Financial Statement Schedules, and Reports on
                    Form 8-K                                                  32


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                                     Part I

                                     Item 1

                                    Business

General

NaPro BioTherapeutics, Inc. is a biopharmaceutical company focused on the
development, production and licensing of complex natural product pharmaceuticals
as well as the development and licensing of novel genetic technologies for
applications in human therapeutics and diagnostics, pharmacogenomics and
agribiotechnology. Natural product substances have been, and continue to be, the
primary source of new prototype chemotherapeutic anti-cancer agents. Our lead
product is paclitaxel, a naturally occurring chemotherapeutic anti-cancer agent
found in certain species of yew, or Taxus, trees. In addition to our efforts
with paclitaxel and genetics, we are also working on several types of compounds
that have promising activity as anti-cancer agents. We believe some of these
agents function by new and novel mechanisms, which may increase their likelihood
of success as new chemotherapeutics. We are also actively engaged in evaluating
the in-licensing or purchase of potential new products and/or technologies,
whether or not those products or technologies are derived from natural products.
Our evaluations of new products and technologies may involve examination of
individual molecules, classes of compounds or platform technologies, in the
cancer field and otherwise. Acquisitions of new products or technology may
involve the purchase of, or merger with, other companies.

To date, the majority of our resources have been directed toward the development
and manufacture of paclitaxel. The market for paclitaxel is dominated by
Bristol-Myers Squibb Company. Bristol's paclitaxel is widely used in the
treatment of breast and ovarian cancers, Kaposi's sarcoma, and non-small cell
lung cancer when used in combination with cisplatin. Bristol has publicly
announced that worldwide sales of its formulation of paclitaxel were $1.6
billion in 2000 and $1.5 billion in 1999. Our proprietary manufacturing
technology includes the extraction, isolation, and purification, or EIP(TM) and
the semisynthe sis of paclitaxel. We are developing renewable sources of
paclitaxel biomass. We have strong pharmaceutical company alliances and are
seeking additional such alliances. We believe the combination of our proprietary
manufacturing technologies, biomass capabilities, and pharmaceutical alliances
will allow us to participate significantly in the broad paclitaxel market. We
cannot assure, however, that we will be able to participate significantly in the
paclitaxel market. Prior to marketing paclitaxel, we must have approval of the
appropriate regulatory authorities. We must also have adequate quantities of
product available for sale.

Our strategy for advancing the development and commercialization of paclitaxel
has been to form strategic alliances through long-term exclusive agreements with
major pharmaceutical companies. On July 23, 1999, we entered into a 20-year
exclusive collaborative agreement with Abbott Laboratories for the development
and commercialization in the U.S. and Canada of one or more formulations of
paclitaxel for the treatment of a variety of cancers. In the agreement, we are
responsible for supply of bulk drug and clinical trials are conducted jointly
with Abbott. Abbott is responsible for finishing, regulatory filings, marketing,
and sale of the finished drug product. Most primary decisions related to the
paclitaxel development program are made by a joint Abbott-NaPro Development
Committee. In March 2001, we

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and Abbott filed an Abbreviated New Drug Application, or ANDA, with the U.S.
Food and Drug Administration, or FDA, for paclitaxel.

In 1992, we entered into a 20-year exclusive agreement with F.H. Faulding & Co.,
Ltd., Australia's largest domestic pharmaceutical company, for the clinical
development, sale, marketing and distribution of our paclitaxel. Faulding, with
sales in 2000 of approximately $1.2 billion, actively markets anti-cancer
pharmaceuticals and other health care products in Australia, Southeast Asia and
other countries throughout the world. In 2000, we amended the Faulding agreement
to, among other things, add additional countries to Faulding's exclusive
territory. In 2001 we entered into a separate agreement with Faulding covering
development and sale of our paclitaxel in Europe. With the new agreement, the
Faulding territory now includes substantially all of the world other than the
U.S., Canada, Japan, Israel and the former Soviet Union. Faulding has received
marketing approval for, and is selling our paclitaxel as ANZATAX(TM) in, more
than 20 countries.

In Europe, we are responsible for regulatory filings and for supplying
paclitaxel raw material exclusively to Faulding to formulate and finish the
product. We cannot assure that we will receive regulatory approval in Europe.
Should we receive approval, Faulding will then market and sell the final
proprietary paclitaxel formulation in Europe. Under the agreement, Faulding paid
an up-front licensing fee to us of $7.5 million. We will share equally the net
sales of the product in Europe.

For countries outside of Europe, we supply paclitaxel to Faulding and Faulding
formulates it into its commercial drug product, ANZATAX. Faulding obtained
regulatory approval and began marketing ANZATAX as a pharmaceutical for the
treatment of refractory breast and ovarian cancers in Australia in January 1995.
Since that time, ANZATAX has been approved in at least 20 additional countries.

We have established an exclusive supply and distribution agreement with Tzamal
Pharma for the development and distribution of our paclitaxel in Israel. In
January 2001 we received approval in Israel to sell paclitaxel under the trade
name, Biotax(TM). The Israeli Ministry of Health has approved Biotax for use in
a variety of cancers; Tzamal is currently selling Biotax.

We are in discussions with companies regarding the formation of alliances for
the development, sale, marketing and distribution of our paclitaxel in Japan. We
cannot assure, however, that we will succeed in entering into a development and
marketing agreement for Japan or that the terms of such an agreement would be
beneficial to us.

Paclitaxel is not patentable. However, Bristol owns U.S. patents covering the
administration method for FDA approved paclitaxel. Abbott and a number of other
companies have filed applications with the FDA for generic paclitaxel based upon
Bristol's initial FDA approval. Anyone obtaining FDA approval for generic
paclitaxel will rely upon a method of administration that might infringe the
Bristol patents. Bristol has sued some of those companies that are seeking FDA
approval for generic paclitaxel for infringement of its patents. The court ruled
that several key claims of the Bristol patents are invalid. However, the ruling
is being appealed by Bristol. Although Bristol has not yet sued Abbott or us
over this issue, we believe that Bristol is likely to do so if the FDA accepts
the Abbott ANDA. If the administration methods for generic paclitaxel are
determined to infringe Bristol's patents, our strategy of obtaining approval for
generic paclitaxel will not be viable.


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In November 2000 we in-licensed gene alteration technology from the University
of Delaware and Thomas Jefferson University. The license agreement grants us
exclusive, worldwide rights to intellectual property including patent
applications relating to the use of proprietary molecules designed to precisely
alter genes in humans, animals, plants, viruses and microbes. We have agreed to
provide research and patent funding, as well as issuances of shares of our
common stock. Our payments over the first year of the agreement are expected to
total at least $355,000 in research funding and consulting fees, in addition to
the issuance of 100,000 shares of our common stock. We have identified a number
of gene targets for internal development using this technology. We have also
begun actively seeking partnerships with biopharmaceutical, pharmacogenomics,
diagnostics and agricultural companies for commercial develop ment of the
products derived from the application of this technology.

One of the technologies licensed to us allows us to manufacture proprietary
oligonucleotides (DNA fragments) that can be used to make small, specifically
targeted modifications in the chromosomes of a target animal or plant. With this
technology, we are attempting to develop products that may allow us to:

     cure or more effectively treat certain human genetic disorders;
     improve plant traits without inserting foreign DNA into those plants; or
     to detect genetic variations in a patient's genes that may indicate which
     patients will better respond to medication or experience more severe side
     effects.

We may also be able to construct cell lines and animal models that will help
others' medical research. This technology may permit certain control over
changes in the genome. Such control may help us to determine the function of
genes or natural variations in chromosomes.

Among other disorders, we are researching Huntington's disease, a progressive
disorder which causes nerve cells in the brain to waste away. Eventually, the
patient suffers dementia, uncontrolled movements, and death. There is no known
cure for this rare disease, that affects five of every million people. Symptoms
usually appear between the ages of 35 and 50, although younger people can also
develop the disease.

A flawed gene on chromosome #4 causes Huntington's disease. If one parent
carries this flawed gene, each child will have a 50 percent chance of inheriting
the flawed gene and later developing the disease. We are involved in genetic
research aimed at developing compounds to treat or cure the disease as well as
technologies for delivering the treatment to diseased cells. Our research is
preliminary and may never lead to effective treatments for this disease or
commercially viable products.

The following chart identifies the commercial products and several classes of
compounds we are currently researching.


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<TABLE>
<CAPTION>


                                     NaPro Drugs: Commercial or in Development


Product                                      Indication(s)                            Development Status
-------                                      -------------                            ------------------
<S>                                           <C>                                     <C>
ANZATAX paclitaxel                           Breast, Ovarian & Non-                   Commercialized in Austra
(Faulding)                                   Small Cell Lung Cancer                   lia, Asia, South America
                                                                                      and the Mideast; in develop
                                                                                      ment in Europe
---------------------------------------      ----------------------------------       ----------------------------------
Biotax paclitaxel (Tzamal)                   Breast, Ovarian & Non-                   Commercialized in Israel
                                             Small Cell Lung Cancer
---------------------------------------      ----------------------------------       ----------------------------------
NaPro Paclitaxel (Abbott)                    Breast, Ovarian & Non-                   ANDA filed in U.S.
                                             Small Cell Lung Cancer
---------------------------------------      ----------------------------------       ----------------------------------
NaPro 80239                                  Hematological Cancer                     Development candidate se
                                                                                      lection
---------------------------------------      ----------------------------------       ----------------------------------
NaPro 80661                                  Solid tumors                             Development candidate se
                                                                                      lection
---------------------------------------      ----------------------------------       ----------------------------------
NaPro 82739                                  Solid tumors                             Development candidate se
                                                                                      lection
---------------------------------------      ----------------------------------       ----------------------------------
NaPro 102339                                 Directed Drug Delivery                   Technological development
---------------------------------------      ----------------------------------       ----------------------------------
NaPro proprietary                            Various genetic targets                  Research and technological
oligonucleotides                             including Huntington's dis               development
                                             ease
---------------------------------------      ----------------------------------       ----------------------------------
</TABLE>

Paclitaxel Overview

Cancer is the second leading cause of death in the U.S., with over one million
new cases diagnosed each year. Cancer is generally treated by surgery,
radiation, chemotherapy or a combination of these therapies. Since Bristol
received regulatory approval in December 1992, paclitaxel has become the largest
selling drug of the cancer chemotherapy drugs known as cytotoxic agents.

In 1963, the National Cancer Institute, or NCI, recognized that the natural
product paclitaxel killed leukemia cells and inhibited the development of a
variety of tumors. Over the next two decades, researchers working under grants
from the NCI conducted studies to determine paclitaxel's structure and its
mechanism of action. The NCI studies indicated that paclitaxel inhibits the
normal action of microtub- ules in cancer cell division. Microtubules, located
in the cytoplasm of cells, play a vital role in cellular division. Paclitaxel
promotes microtubule assembly and blocks normal microtubule disassembly in
cells, which stops cell division and causes the cancer cell to die. This
cytoplasmic mechanism of action contrasts with the nuclear mechanism of action
of the majority of cell killing drugs that kill the cell by attacking nuclear
components such as DNA.


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In June 1991, the NCI formalized a Collaborative Research and Development
Agreement, or CRADA, for development of paclitaxel with Bristol. Bristol assumed
development of paclitaxel, including completion of the necessary clinical trials
and manufacturing scale-up. In June 1992, Bristol submitted a New Drug
Application, or NDA, to the FDA. Bristol received approval for the sale of
paclitaxel as a treatment for refractory ovarian cancer in December 1992 and
since then has received approval for the sale of paclitaxel as a treatment for
other cancers.

Paclitaxel is one of a family of compounds, commonly referred to as taxanes,
that share a specific chemical structure. Taxanes are found naturally in many
parts of various species of yew trees. The concentration of individual taxanes
in yew trees is very small, generally less than 0.1%, and accordingly, the
process of extracting taxanes from yew biomass is complicated and challenging.
Several production approaches can be used to produce final stage paclitaxel
product for use in clinical trials and for commercialization. We believe the two
most prevalent processes used today are conventional biomass extraction and
semisynthesis.

With conventional biomass extraction, the manufacturing process is designed to
extract, isolate and purify paclitaxel from yew biomass leaving behind other
components, including non-paclitaxel taxanes. However, the extraction, isolation
and purification processes are complicated because there are more than 100
different taxanes present in yew biomass. In a semisynthesis process, the
initial extraction, isolation and purification is similar to that of the
conventional biomass extraction process, except that the process not only
isolates paclitaxel, but also other taxanes (which would otherwise be waste
byproducts) and converts these other taxanes into paclitaxel. By converting
other taxanes into paclitaxel, the semisyn- thesis process increases the yield
of paclitaxel from the same quantity of biomass. Regardless of which extraction
process is used, the final product must limit impurities meeting regulatory
criteria.

The Pacific yew tree initially was the primary source of biomass. Most species
of Taxus, including the Pacific yew, grow slowly, requiring a number of years to
reach harvestable size. As a result of its slow growth, Taxus in the wild is
generally found in old growth forests, frequently the habitat of endangered
species, including the spotted owl. Biomass from the Pacific yew tree includes
the bark, obtained only by destroying the tree. As a result, there was a
considerable amount of public debate and controversy in the U.S. and other
countries regarding the harvesting of bark from wild trees. We stopped
harvesting bark from wild Pacific yew trees in 1994.

Other companies have developed taxane products that are similar, but not
identical, to paclitaxel. For example, Aventis S.A., a large international
pharmaceutical company, has developed docetaxel which is being marketed in
various parts of the world under the trademark Taxotere(R). Taxotere has a
different toxicity profile than paclitaxel and has side effects not observed
with paclitaxel. In May 1996 the FDA approved Taxotere for treatment of
anthracycline-resistant breast cancer in patients without impaired liver
function.

Development of Paclitaxel

Under the terms of our agreement with Abbott, we are responsible for supplying
bulk drug and clinical trials are conducted jointly with Abbott.


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Under our agreements with Faulding, Faulding has primary responsibility for
pursuing regulatory approval of our paclitaxel within the Faulding territory
other than Europe. We have responsibility for supporting the regulatory
approvals in regard to information related to our manufacturing processes. In
Europe, we have primary responsibility for pursuing regulatory approval.

We continue to perform toxicity studies to complete our registration dossiers
worldwide. Existing regulatory approvals have a direct impact on the clinical
and marketing strategy we are pursuing. In December 1992 Bristol obtained NDA
approval in the U.S. for its paclitaxel product. Under the Waxman-Hatch Act, a
non-patented drug such as paclitaxel that gains approval through an NDA process
is granted a five-year period of marketing exclusivity, which prevents
submission by another party of an ANDA for generic substitutes until the
exclusivity period expires. Bristol's exclusivity period in the United States
expired in December 1997. However, additional Waxman-Hatch Act provisions may
result in an additional 30 month delay in the approval of an ANDA if the sponsor
(in this case Bristol) has listed a patent related to the product with the FDA,
and institutes a lawsuit based on that patent prior to the time that a generic
approval is received. Bristol currently has several patents related to
paclitaxel listed. In March 2001, we and Abbott filed an ANDA for paclitaxel
with the FDA. If Bristol files a lawsuit against us or Abbott based upon those
patents, Abbott's ANDA approval in the United States could be delayed. A statute
comparable to the Waxman-Hatch Act exists in Europe, although the related period
of exclusiv ity is ten years. Bristol's European exclusivity period ends in
2003.

Biomass

Paclitaxel and other taxanes used in the production of our paclitaxel are
present in many parts of various species of yew trees. Our EIP technology is
designed to allow extraction and purification of paclitaxel and extraction of
other taxanes from renewable sources of biomass such as needles and limbstock
harvested from cultivated yew trees. Taxanes other than paclitaxel can be
chemically converted into paclitaxel.

We believe we may be able to reduce our raw material cost while increasing our
yield of paclitaxel by growing a reliable and renewable biomass source. In order
to have access to such a stable, long-term supply of biomass for use in the
production of our paclitaxel, we entered into agreements with, among others, PRT
Biopharms Inc., referred to as PBI in 1993, Zelenka Nursery, Inc. in 1996 and
Cass-Mill, Inc. in 1997. We made our first demonstration harvest in 1996. In
2001, substantially all of our production for Abbott will be extracted from
cultivated biomass. We regularly conduct other research related to enhancing
paclitaxel production in yew trees.

Manufacturing

The manufacture of paclitaxel occurs in three steps. First, a crude paclitaxel
is extracted from yew trees. Second, the extracted crude paclitaxel mixture is
isolated and purified. In the final step, the resulting active drug substance is
formulated for final packaging. Faulding and Abbott are each responsible for
formulating and final packaging of paclitaxel marketed by them.

In August 2000, we commenced operation of our newly completed extraction
facility. In addition to paclitaxel manufactured from our own yew trees, we also
manufacture paclitaxel from raw material extracted from yew trees purchased from
others. We currently operate manufacturing facilities in Boulder, Colorado. Our
manufacturing facilities are subject to inspection by the regulatory agencies in

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the countries in which our paclitaxel is sold. In the past, our manufacturing
facilities have been inspected by the FDA, the Australian TGA and the European
Agency for the Evaluation of Medicinal Products, or EAEMP. Those agencies have
found our facilities to be acceptable suppliers of bulk paclitaxel. We are
expanding the manufacturing capacity of our Boulder, Colorado facilities in
anticipation of a U.S. approval. We believe that our Boulder, Colorado
facilities have adequate capacity to meet clinical and commercial requirements
for the near future, but we cannot assure such capacity.

In 2000, we redesigned a commercial manufacturing facility in Boulder, Colorado
to serve as a large-scale extraction facility and completed its construction. We
are planning a new large scale facility which would provide up to four times the
capacity of our current facilities. We cannot assure, however, that we will
succeed in adapting our EIP technology for large scale commercial manufacturing,
or that our facility and manufacturing processes will receive necessary
regulatory approvals. We also cannot assure that we will have the sales volume
to require additional capacity.

In order to diversify our supply options and increase our manufacturing
capacity, we are developing, and have applied for patent protection for, a
semisynthesis process for manufacturing our paclitaxel from other taxanes
contained in renewable biomass sources. We own, or have licensed, several
patents relating to this process and have applied for others. During 1999, we
manufactured crude paclitaxel with the semisynthesis process in a pilot-scale
contracted facility. This crude paclitaxel was then purified at our
manufacturing facility in Boulder, Colorado. The use of semisynthesis will
require regulatory approvals, which cannot be assured. Furthermore, we cannot
assure our semisynthesis process will perform as expected or that we will be
able to effectively adapt the process to commercial-scale manufacturing.

Strategic Alliances

Abbott Our strategy has been to pursue and enter into strategic alliances with
large international pharmaceutical companies. In July 1999 we entered into a 20
year exclusive collaborative agreement, which was amended in June 2000, with
Abbott Laboratories covering the U.S. and Canada to develop and commercialize
one or more formulations of paclitaxel for treatment of a variety of cancer
indications. Abbott is a large, multinational, diversified health care company
with 2000 sales of almost $14 billion. We are responsible for supplying bulk
drug and clinical trials are conducted jointly with Abbott. Abbott is
responsible for finishing, regulatory filings, marketing and sale of the
finished drug product. We have granted an exclusive license to Abbott for our
paclitaxel-related patents for intravenous and oral paclitaxel formulations. In
connection with the agreement, we may receive total funding of up to $122
million from Abbott in the form of development and marketing milestone payments,
a secured loan and equity investments. In July 1999 we received an initial $1
million fee. Through December 31, 2000, Abbott has purchased 1,111,111 shares of
our common stock for a total purchase price of $6 million. We have access to up
to $20 million under a secured loan arrangement with Abbott, of which we had
drawn $15.1 million as of December 31, 2000. The loan bears a primary interest
rate of 6.5% and is due in full on the earliest of: (i) the second anniversary
of the first sale of finished product by Abbott to a wholesaler or end-user
customer following approval of finished product by the FDA; (ii) the termination
of the agreement; or (iii) January 1, 2007. The loan is limited to a borrowing
base of collateralized assets, recomputed monthly. Under terms of the agreement,
Abbott will purchase bulk drug from us. Once the paclitaxel product is approved
and commercialized, Abbott will pay a percentage of its net paclitaxel sales to
us, less Abbott's payments to us for purchase of bulk drug. Abbott may terminate
the agreement at any

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time with or without cause.  Should Abbott terminate without cause, it is
obligated to make payments to us.

The Abbott agreement grants Abbott the exclusive right to develop and market our
paclitaxel in the U.S. and Canada for intravenous and oral anti-cancer uses.
Abbott is required to purchase all of its require ments for paclitaxel from us,
except in certain circumstances when we are unable to supply Abbott's
requirements. Except for limited instances where termination is due to specific
breaches of the agreement by us, we retain exclusive rights following
termination to any clinical data generated during the course of the agreement.
We are required to indemnify Abbott for defects in our paclitaxel that is
shipped to Abbott, breaches of our warranties or obligations under the
agreement, harm caused by inappropriate co- marketing activities, and some
intellectual property and product liability claims. Abbott is required to
indemnify us for defects in a finished product containing our paclitaxel
manufactured by Abbott, breaches of Abbott's representations and warranties,
harm caused by inappropriate marketing activities, and some intellectual
property and product liability claims.

Faulding We formed a strategic alliance through a long-term exclusive agreement
with Faulding that covers substantially all of the world other than the U.S.,
Canada, Japan, Israel and the former Soviet Union. Under this agreement,
Faulding agreed to fund and, with our input, undertake the development work
required to obtain regulatory approvals for commercializing our paclitaxel in
the Faulding territory other than Europe. We are responsible for supplying
Faulding with our paclitaxel and Faulding is required to purchase all of its
paclitaxel requirements from us. Faulding pays us a substantial share of its
gross sales of paclitaxel. Faulding is currently marketing paclitaxel in more
than 20 countries. We cannot assure, however, that Faulding will succeed in
obtaining further regulatory approvals to market our paclitaxel within its
territory. Furthermore, if such approvals are received, we cannot assure that
Faulding will market our paclitaxel successfully in these additional countries.

In Europe, we are responsible for regulatory filings and for funding
development. We will supply paclitaxel raw material exclusively to Faulding to
formulate and finish the product. We cannot assure that we will receive
regulatory approval in Europe. Should we receive approval, Faulding will then
market and sell the final proprietary paclitaxel formulation in Europe. Under
the agreement, Faulding has paid us an up-front licensing fee of $7.5 million.
We will share the net product sales in Europe equally.

Faulding may terminate the agreements: (i) upon our reorganization or
insolvency; (ii) if Faulding becomes controlled by a pharmaceutical company that
sells paclitaxel in the Faulding territory; (iii) if we are controlled by Ivax
or Bristol; (iv) if we are purchased by a pharmaceutical company that sells
paclitaxel in the Faulding territory and that company refuses to be bound by the
terms of the Faulding agreement; (v) if we are unable to meet the paclitaxel
supply requirements of Faulding; or (vi) for material, uncured breach. We may
terminate the agreement: (i) upon the reorganization or insolvency of Faulding;
(ii) in certain circumstances, upon a change in control of Faulding; or (iii)
for material, uncured breach.

We are required to indemnify Faulding for any defect in our paclitaxel that is
shipped to Faulding and for uncured breaches of our warranties or obligations.
Faulding is required to indemnify us against all losses (i) resulting from a
defect in a product containing our paclitaxel manufactured by Faulding except if
the defect is our fault, (ii) resulting from a product containing our paclitaxel
formulated, stored, handled,

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promoted, distributed, registered or sold by Faulding and (iii) for uncured
breaches of Faulding's representations and warranties under the Faulding
agreement.

Tzamal We have established an exclusive supply and distribution agreement with
Tzamal Pharma for the development and distribution of our paclitaxel in Israel.
In January 2001, we received approval in Israel to sell paclitaxel under the
trade name Biotax. The Israeli Ministry of Health has approved Biotax use in a
variety of cancers and Tzamal is selling Biotax.

Ivax Until March 20, 1998, we and Ivax were parties to a long-term, exclusive
agreement, under which Ivax was responsible for performing clinical trials,
filing for regulatory approvals, and selling, marketing, and distributing
commercial formulations of our paclitaxel. In March 1998, we and Ivax entered
into an agreement terminating the long-term, exclusive agreement. Ivax has two
approved ANDA's, one of which refers to a Drug Master File, or DMF, submitted by
us. We have no obligation or intent to sell additional paclitaxel to Ivax.

Marketing and Sales

Marketing and sales of our paclitaxel in the territories covered by our
agreements with Faulding are conducted by Faulding and in Israel by Tzamal.
Anticipated marketing and sales, if any, of our paclitaxel in the U.S. and
Canada, will be conducted by Abbott. Currently, we have no sales force, have
only limited marketing capabilities and have no present intention to establish a
sales or marketing force. Sales to Faulding account for a substantial portion of
our revenue. As a result, the loss of Faulding or Abbott as a customer or the
failure of Faulding or Abbott to successfully market our paclitaxel could have a
material adverse effect on us in the absence of a comparable alternative
strategic alliance arrangement.

Competition

The biopharmaceutical industry is an expanding and rapidly changing industry
characterized by intense competition for product sales, financing, executive
talent and intellectual property. We compete with all entities developing and
producing therapeutic agents for cancer treatment, many of whom have much
greater capital resources and research and development capabilities.

Within the paclitaxel segment of the cancer treatment industry, competitors'
success in entering the paclitaxel market may reduce our market share and reduce
the price we can charge for our paclitaxel, which could have a material adverse
effect upon us. In addition, marketing is being handled exclusively by Abbott
and Faulding within their territories. Regulatory approvals are being handled by
Abbott in its territory and by Faulding in its non-European territory. Although
we believe Abbott and Faulding have capable drug development and marketing
abilities, we cannot assure that they will be capable or effective in gaining
additional regulatory approvals on a timely basis, if at all, or be able to
compete effectively with existing or new competitors within their territories.

Bristol is marketing paclitaxel commercially in the U.S., Australia, Canada,
Europe and certain other territories. In addition, Aventis has developed a
proprietary analog of paclitaxel, docetaxel, which is marketed under the
trademark Taxotere. Taxotere is approved in the U.S., the European Union,
Australia, Canada and a number of other countries. Taxotere is approved in the
U.S. for treatment of patients with locally advanced or metastatic breast cancer
after failure of prior chemotherapy, and patients

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with locally advanced or metastatic non-small cell lung cancer after failure of
prior platinum-based chemotherapy. While treatment with Taxotere may cause
certain side effects not observed with paclitaxel, Taxotere competes with
paclitaxel, and thereby may reduce overall paclitaxel sales.

In connection with the termination of the Ivax Agreement, we licensed one of our
patents to Ivax on a non-exclusive basis. The generic division of the FDA has
approved Ivax' generic paclitaxel, which Ivax is selling in the U.S. Other
generic manufacturers may enter the U.S. market as early as April 2001. In most
cases, a European exclusivity period will end in 2003, 10 years after Bristol's
initial approval. However, Ivax may begin marketing paclitaxel for Kaposi's
Sarcoma (with potential for additional "off label" uses as well) in Europe. We
are aware of several other pharmaceutical companies that are in the process of
developing generic paclitaxel in the U.S., Europe and elsewhere. Finally,
academic and research organizations and pharmaceutical and biotechnology
companies are pursuing, among other things, genetically engineered drugs,
chemical synthesis and cell-tissue culture that may compete with our products or
technology. In addition, certain companies are pursuing the production of
paclitaxel and other taxanes from natural product extraction techniques.

Many of our competitors, most notably Bristol and Aventis, have substantially
greater capital resources, research and development capabilities, manufacturing
and marketing resources and experience than we do. We expect Bristol to compete
intensely to maintain its dominance of the paclitaxel market, including pursuit
of an aggressive patent strategy. Our competitors may succeed in developing
products that are more effective or less costly than any that may be developed
by us and may receive regulatory approval before we do. Many companies and
research institutions are also seeking means to obtain paclitaxel and taxanes
from renewable biomass components of yew trees and other sources in order to
increase paclitaxel yields, avoid environmental concerns and reduce the cost of
biomass. In addition, we are aware of several potential competitors that have
developed and patented or are developing various processes for producing
paclitaxel and paclitaxel-related substances semisynthetically, which may allow
such competi tors to produce a low-cost paclitaxel. The discovery by a third
party of a cost-effective means to fully synthesize paclitaxel in commercial
quantities or the manufacture of taxane derivatives or analogs that are more
effective than paclitaxel in treating cancer could have a material adverse
effect on us.

Patents and Proprietary Technology

Our success depends in part on our ability to obtain and enforce patent
protection for our products, both in the U.S. and other countries, and operate
without infringing the proprietary rights of third parties. The scope and extent
of patent protection for our product candidates is uncertain and frequently
involves complex legal and factual questions. We cannot predict the breadth of
claims that will be allowed and issued in patents related to biotechnology or
pharmaceutical applications. Once patents have issued, we cannot predict how the
claims will be construed or enforced. In addition, statutory differences between
countries may limit the protection we can obtain on some of our inventions
outside of the U.S. For example, methods of treating humans are not patentable
in many countries outside of the U.S.

We rely on patent and other intellectual property protection to prevent our
competitors from developing, manufacturing and marketing products related to our
technology. Our patents may not be enforceable and they may not afford us
protection against competitors, especially since there is a lengthy time between
when a patent application is filed and when it is actually issued. Additionally,
there are hundreds of pharmaceutical and chemical patents issuing every week
throughout the world. Many of these have patent

                                     - 12 -

<PAGE>



claims that are difficult to categorize and interpret. Because of this, we may
infringe on intellectual property rights of others without being aware of the
infringement. If a patent holder believes that one of our product candidates
infringes on their patent, they may sue us even if we have received patent
protection for our technology. If another person claims we are infringing their
technology, we could face a number of issues, including the following:

         defending a lawsuit, which is very expensive and time consuming;

         paying a large sum for damages if we are found to be infringing;

         being prohibited from selling or licensing our products or product
         candidates until we obtain a license from the patent holder, who may
         refuse to grant us a license or will only agree to do so on unfavorable
         terms. Even if we are granted a license, we may have to pay substantial
         royalties or grant cross-licenses to our patents; and

         redesigning our drug so it does not infringe on the patent holder's
         technology if we are unable to obtain a license. This may not be
         possible and, even if possible, it could require substantial additional
         capital and could delay commercialization.

The coverage claimed in a patent application can be significantly narrowed
before a patent is issued, either in the U.S. or abroad. We do not know whether
any of our pending or future patent applications will result in the issuance of
patents. To the extent patents have been issued or will be issued, some of these
patents are subject to further proceedings that may limit their scope. It is not
possible to determine which patents may provide significant proprietary
protection or competitive advantage, or which patents may be circumvented or
invalidated. Furthermore, patents already issued to us, or patents that may
issue on our pending applications, may become subject to dispute, including
interference proceedings in the U.S. to determine priority of invention. We are
currently involved in opposition proceedings in foreign countries contesting the
validity of issued patents. If our currently issued patents are invalidated or
if the claims of those patents are narrowed, our ability to prevent competitors
from marketing products that are currently protected by those patents could be
reduced or eliminated.

Paclitaxel is an unpatentable, naturally-occurring compound. Various
compositions containing paclitaxel, and also various processes and other
technologies, including those relating to extracting paclitaxel and preparing
the drug for finished formulation, are or may be patented. In addition, some
methods of administering paclitaxel are or may be patented. Some of these
patents are owned or controlled by Bristol and Aventis. Bristol's key patents
include a patent that covers stabilized paclitaxel compositions for formulation
and patents that cover paclitaxel dosing regimens, including the current
FDA-approved regimen for Taxol(R). Taxol is a registered trademark of Bristol
for an anti-cancer pharmaceutical preparation containing paclitaxel. Bristol has
obtained U.S. patents covering the administration method for paclitaxel the FDA
approved. Abbott and a number of other companies have filed applications with
the FDA for generic paclitaxel based upon Bristol's initial FDA approval. Anyone
obtaining FDA approval for generic paclitaxel will rely upon a method of
administration that might infringe the Bristol patents. Bristol has sued some of
those companies other than us that are seeking FDA approval for generic
paclitaxel for infringement of Bristol's patents. The court ruled that several
key claims of the Bristol patents are invalid. However, that ruling is being
appealed by Bristol. The appeals process could take anywhere from several months
to several years. Under U.S. laws, during the patent appeals process,

                                     - 13 -

<PAGE>



Bristol would retain U.S. patent rights to the disputed patents until all
appeals are exhausted. Therefore, if the appeal is ultimately resolved in
Bristol's favor, and the validity of Bristol's patents is upheld, generic
competitors that have sold product could face substantial liability for patent
infringement, and could be prevented from marketing paclitaxel in the U.S. using
the patented method of administration for the life of the patent. If the
decision of the lower court is upheld by the court of appeals, others will be
allowed to sell generic paclitaxel for uses covered by the invalidated patent
claims. Although Bristol has not yet sued Abbott or us over this issue, we
believe that Bristol is likely to do so if the FDA accepts the Abbott ANDA. If
the administration methods for generic paclitaxel are determined to infringe
Bristol's patents, our strategy of obtaining approval for generic paclitaxel
will not be viable.

In September 2000, we and Abbott filed a patent infringement suit in the U.S.
District Court for the District of Colorado against Bristol alleging
infringement by Bristol of two patents we own: U.S. Patent numbers 5,972,992 and
5,977,164 which relate to paclitaxel formulation. In November 2000 we amended
the complaint to add U.S. Patent number 6,140,359 to the suit. Bristol has
asserted defenses that, if successful, would result in the invalidity or
unenforceability of the patents. A finding of invalidity or unenforceability of
these patents could have a material adverse affect on us. The trial is set for
June 2002. We intend to vigorously prosecute the case.

We are aware of competitors and potential competitors who are pursuing patent
protection for various aspects of the extraction, preparation, formulation,
administration and production of natural, semisynthetic and synthetic
paclitaxel. If our technology, products or activities are deemed to infringe the
other companies' rights, we could be subject to damages or prevented from using
the technology that is infringing other companies rights, or we could be
required to obtain licenses to use that technology. We cannot be sure that we
would be able to obtain those licenses on terms acceptable to us, or at all. If
we were unable to obtain those licenses or were prevented from using our
technology, we could encounter significant delays in product market
introductions while we attempt to design around the patents or rights infringed,
or we could find the development, manufacture or sale of products to be
impossible, any of which would have a material adverse effect on us. In
addition, we could experience a loss of revenue and incur substantial cost in
defending ourselves and indemnifying Faulding or Abbott in patent infringement
or proprietary rights violation actions brought against them. We could also
incur substantial cost if we find it necessary to assert claims against third
parties to prevent the infringement of our patents and proprietary rights by
others. Participation in such infringement proceedings could have a material
adverse effect on us, even if the eventual outcome were favorable.

We also rely on trade secrets, know-how and continuing technological advancement
to maintain our competitive position, including for the protection of our EIP
technology, some of which is not patented. In addition, our success will depend
in part on our ability to protect our trade secrets related to extracting,
isolating and purifying paclitaxel. Although we have entered into
confidentiality agreements with employees, consultants and collaborators, which
contain assignment of invention provisions, no assurance can be given that
others will not gain access to these trade secrets, that such agreements will be
honored or that we will be able to effectively protect our rights to unpatented
trade secrets. Moreover, no assurance can be given that others will not
independently develop substantially equivalent proprietary information and
techniques or otherwise gain access to our trade secrets.


                                     - 14 -

<PAGE>



Government Regulation and Product Approvals

Research, preclinical development, clinical trials, manufacturing and marketing
activities are subject to regulation for safety, efficacy and quality by
numerous governmental authorities in the U.S. and other countries. In the U.S.,
drugs are subject to rigorous FDA regulation. The Federal Food, Drug and
Cosmetic Act and other federal and state statutes and regulations govern, among
other things, the testing, manufacture, safety, efficacy, labeling, storage,
record keeping, approval, advertising and promotion of our products. Product
development and approval within this regulatory framework take a number of years
and involve the expenditure of substantial resources.

The steps required before a pharmaceutical agent may be marketed in the U.S.
include:

         preclinical laboratory tests, animal pharmacology and toxicology
         studies and formulation studies;

         the submission of an investigational new drug application to the FDA
         for human clinical testing, which must be accepted by the FDA before
         human clinical trials may commence;

         the carrying out of adequate and well-controlled human clinical trials
         to establish the safety and efficacy of the drug candidate;

         the submission of a new drug application to the FDA; and

         FDA approval of the new drug application to allow us to conduct any
         commercial sale or shipment of the drug.

In addition to obtaining FDA approval for each product, each domestic drug
manufacturing establishment must be registered with the FDA. Domestic drug
manufacturing establishments are subject to regular inspections by the FDA and
must comply with FDA regulations. To supply products for use in the U.S.,
foreign manufacturing establishments must also comply with FDA regulations and
are subject to periodic inspection by the FDA, or by corresponding regulatory
agencies in their home countries under reciprocal agreements with the FDA.

Preclinical studies include the laboratory evaluation of in vitro pharmacology,
product chemistry and formulation, as well as animal studies to assess the
potential safety and efficacy of a product. Compounds for toxicology testing
must be formulated according to the FDA's regulations on Good Manufacturing
Practices and preclinical safety tests must be conducted by laboratories that
comply with FDA regulations regarding good laboratory practices. The results of
some of the preclinical tests are submitted to the FDA as part of an
investigational new drug application and are reviewed by the FDA before human
clinical trials may begin. The investigational drug application must also
contain protocols for clinical trials that will be carried out. If the FDA does
not object to an investigational new drug application, the investiga tional new
drug application becomes effective 30 days following its receipt by the FDA. At
any time during this 30 day waiting period or at any time thereafter, the FDA
may halt proposed or ongoing clinical trials until the agency authorizes trials
under specified terms. Such a halt, called a clinical hold, continues in effect
until and unless the FDA's concerns are adequately addressed. In some cases,
clinical holds are never lifted. Imposition by the FDA of a clinical hold can
delay or preclude further product development.

                                     - 15 -

<PAGE>



The investigational new drug application process may be extremely costly and may
substantially delay product development.

Clinical trials must be sponsored and conducted in accordance with good clinical
practice under protocols and methodologies that:

         ensure receipt of signed consents from participants that inform them of
         risks; detail the protocol and objectives of the study; detail the
         parameters to be used to monitor safety; and detail the efficacy
         criteria to be evaluated.

Furthermore, each clinical study must be conducted under the supervision of a
principal investigator operating under the auspices of an Institutional Review
Board, or IRB, at the institution where the study is conducted. The IRB will
consider, among other things, ethical factors, the safety of human subjects and
the possible liability of the institution. Sponsors, investigators and IRB
members are obligated to avoid conflicts of interests and ensure compliance with
all legal requirements.

Clinical trials typically are conducted in three sequential phases. In Phase I,
the initial introduction of the drug into a small number of healthy volunteers
is undertaken. The drug is evaluated for safety by assessing the adverse
effects, dosage tolerance, metabolism, distribution, excretion and clinical
pharma cology. The Phase I trial must provide pharmacological data that is
sufficient to devise the Phase II trials. For certain drugs such as cancer drugs
Phase I trials may be conducted in patients rather than healthy volunteers.

Phase II trials involve studies in a limited patient population in order to:

         obtain initial indications of the efficacy of the drug for specific,
         targeted indications;
         determine dosage tolerance and optimal dosage; and
         identify possible adverse affects and safety risks.

When a compound is determined preliminarily to be effective and to have an
acceptable safety profile in Phase II evaluation, Phase III trials can be
undertaken to evaluate safety and efficacy endpoints further in expanded patient
populations at geographically diverse clinical trial sites. Positive results in
Phase II are no guarantee of positive results in Phase III.

The results of the pharmaceutical development, preclinical studies and clinical
trials are submitted to the FDA in the form of a NDA, which must be complete,
accurate and in compliance with FDA regulations. The approval of a new drug
application permits commercial-scale manufacturing, marketing, distribution,
exporting from the U.S. and sale of the drug in the U.S. The testing and
approval process typically requires substantial time, effort and expense. The
FDA may deny a new drug application filed by us or our collaborators if the
applicable scientific and regulatory criteria are not satisfied and thus, we may
not be able to manufacture and sell the product in the U.S. Moreover, the FDA
may require additional testing or information, or may require post-approval
testing, surveillance and reporting to monitor the products. Notwithstanding any
of the foregoing, the FDA may ultimately decide that a new drug application
filed by us or our collaborators does not meet the applicable agency standards,
and even if approval is granted, it can be limited or revoked if evidence
subsequently emerges casting doubt on the safety or efficacy of

                                     - 16 -

<PAGE>



a product or if the manufacturing facility, processes or controls do not comply
with regulatory standards. Finally, an approval may involve limitations on the
uses, labeling, dosage forms, distribution and packaging of the product.

Among the conditions for new drug approval is the requirement that the
prospective manufacturer's quality control, record keeping, notifications and
reporting and manufacturing systems conform to the FDA's regulations on current
Good Manufacturing Practices, or cGMP, which requires substantial time,
attention and financial resources. In complying with the standards contained in
these regulations, manufacturers must continue to expend time, money, resources
and effort in order to ensure compliance. Thus, even if regulatory approval for
our paclitaxel is acquired, our current and any future facilities will be
subject to periodic review and inspections by the FDA or the analogous
regulatory authorities of other countries for compliance with cGMP or similar
foreign regulatory standards. The FDA, the Australian TGA and the European EAEMP
have inspected our manufacturing facilities and have found them to be in
compliance with applicable regulations and to be acceptable suppliers of bulk
paclitaxel. There can be no assurance that in the future the FDA or foreign
regulatory authorities will find our current facilities, or facilities being
constructed, to be in compliance with U.S. cGMP regulations or analogous foreign
standards. Subsequent discovery of previously unknown problems with a product or
our manufacturing facilities may result in restrictions, including withdrawal of
the product from the market. Failure to comply with the applicable regulatory
requirements by us, Faulding, Abbott, Tzamal or any future strategic partner
could, among other things, result in criminal prosecution and fines, product
recalls, product seizures and operating restrictions

When patents or other periods of exclusivity on brand-name drugs expire,
manufacturers can apply to the FDA to sell generic versions by submitting an
ANDA. An ANDA contains the data required for the review of a generic drug
product. Generic applicants submit information on the generic drug's chemistry,
manufacturing steps, stability, quality control measures, packaging and labeling
and show that the generic drug and the brand-name drug are equivalent. The FDA's
review process for an ANDA may take from 6 to 24 months. If approved, an
applicant may manufacture and market the generic drug product to provide a safe,
effective, low-cost alternative for the American public. Along with Abbott, in
March 2001 we filed an ANDA to permit us to begin marketing paclitaxel in the
United States. We do not know when, if at all, the FDA will complete its
approval process of our ANDA.

Outside the U.S., our ability to market a product is contingent upon receiving a
marketing authorization from the appropriate regulatory authority. This foreign
regulatory approval process includes many of the same steps associated with FDA
approval described above.

To the extent required by the terms of our termination agreement with Ivax, we
have supported and are required to continue to support the Ivax NDA in the U.S.
and an equivalent filing in the European Union for a period co-incident with the
original term of the Ivax Agreement. In this capacity, we have communicated with
the FDA to discuss the biomass strategy employing plantation-grown yews and
technical issues associated with our DMF submitted in support of the approval of
its bulk drug product as part of the Ivax NDA.

We are also subject to U.S. statutes and regulations applicable to exporting
drugs. Those laws authorize the export of a drug before marketing approval is
obtained in the U.S. to any country, if the drug (i) complies with the laws of
the importing country, and (ii) has valid marketing authorization by the

                                     - 17 -

<PAGE>



appropriate authority in a country listed by the law, one of which is Australia.
Our paclitaxel has received valid marketing authorization from Australia.

The adoption by federal, state or local governments of significant new laws or
regulations or a change in the interpretation or implementation of existing laws
or regulations relating to environmental or other regulatory matters could
increase the cost of producing products, delay regulatory approval or otherwise
adversely affect our ability to produce or sell our paclitaxel or other
products. In addition, certain paclitaxel production has been opposed by the
Oregon Natural Resources Council, or ONRC, because of their concern over Pacific
yew in old growth forests. The ONRC and the FDA have reached an agreement on the
National Environmental Policy Act, or NEPA, requirements for NDAs, ANDAs and
INDs reporting clinical trials with more than 200 patients using paclitaxel from
Pacific yew trees. The agreement provides that an applicant shall include an
Environmental Assessment, or EA, which will identify all sources of Pacific yew
which are expected to be harvested in connection with the manufacture of
paclitaxel relating to the application. The FDA is to subject such EAs to the
NEPA process and will complete and issue a Finding of No Significant Impact, or
an Environmental Impact Statement and Record of Decision as required by NEPA,
before approving any NDA or ANDA involving paclitaxel derived from or otherwise
involving the Pacific yew tree. Because we rely on plantation-grown yews, and
will not harvest any Pacific yew trees to manufacture paclitaxel for a U.S.
marketed product, we believe that the ONRC-FDA agreement requirements can be
met, and that these requirements will not jeopardize approval of any NDA that
may be filed by us in the future. However, there can be no assurance that the
ONRC and other environmental activist groups will not oppose our other
activities, which may have the effect of delaying or halting production of our
paclitaxel, which could have a material adverse effect on our business,
financial condition and results of operations.

In addition to regulations enforced by the FDA, we are also subject to, among
others, the regulations of the European Union, Canada, the Province of British
Columbia, Israel, the governments in South America, the U.S. Environmental
Protection Agency, the Department of Interior (U.S. Fish and Wildlife Services
and the Bureau of Land Management), the Department of Agriculture (U.S. Forest
Service) and other countries and regulatory agencies. Under the National
Environmental Policy Act, certain U.S. agencies have prepared an Environmental
Impact Statement that addresses the impact of harvesting wild Pacific yew trees,
including cutting down Pacific yew trees on federally-managed land. We are also
subject to regulation under the Occupational Safety and Health Act, the
Environmental Protection Act, the Toxic Substances Control Act, the Resource
Conservation and Recovery Act and other present and future federal, state or
local regulations. Our research and development activities involve the
controlled use of hazardous materials, chemicals and various radioactive
compounds. Although we believe that our safety procedures for handling and
disposing of these materials comply with the standards prescribed by state and
federal regulations, the risk of accidental contamination or injury from these
materials cannot be completely eliminated. In the event of an accident, we could
be liable for any damages that result.

We have filed confidential DMFs and other documents describing portions of our
proprietary manufactur ing processes with regulatory agencies in the U.S.,
Australia, Canada and Europe, relating to our manufacture of our paclitaxel.
Faulding, referring to our Australian DMF, has received marketing approval in
Australia and other countries for our paclitaxel for treating refractory ovarian
and breast cancers.


                                     - 18 -

<PAGE>



Ivax, using our U.S. DMF, filed an IND with the FDA in June 1994, relating to
our paclitaxel and began its Phase I clinical trials relating to our paclitaxel
in the U.S. in October 1994. Ivax began Phase II/III clinical trials in May
1995. In 1997, Ivax filed the Ivax NDA seeking commercial approval to sell our
paclitaxel in the U.S.. On December 24,1997, the FDA ruled on the Ivax NDA and
determined that our paclitaxel was safe and effective in the treatment of
Kaposi's sarcoma, but denied Ivax the authority to market our paclitaxel for
seven years from the date Bristol received its Kaposi's sarcoma approval due to
Bristol's prior orphan drug approval for that indication. No assurance can be
given, however, that our paclitaxel will prove to be safe and effective in
future clinical trials, or that we will be able to obtain approval to market our
paclitaxel in the U.S. or other countries.

We filed an IND in May 1998, and initiated clinical trials of our paclitaxel for
three indications in June 1998 and March 1999. These studies were not
specifically designed to support an NDA filing. There can be no assurance that
these trials will demonstrate our paclitaxel to be safe or effective. In March
2001 we and Abbott filed an Abbreviated New Drug Application with the U.S. Food
and Drug Administration for paclitaxel.

Research and Development

During the years ended December 31, 1998, 1999 and 2000, we spent approximately
$10 million, $12 million and $14.3 million respectively, on research and
development activity and to produce paclitaxel. Research and development is
expected to remain a significant expense of our business. In the short term,
research and development is expected to concentrate on clinical trials,
improvement of paclitaxel yield, production cost reduction, development of our
semisynthesis process for paclitaxel production, and yield improvement in our
paclitaxel production methodology for processing needles, limbstock and roots.
In addition, we are actively engaged in genomics research targeted at creating
genetic therapeutics targeting human disease, technology directed at improving
plant traits and developing technology useful in functional genomics and
diagnostics. We plan to contract out research considered essential but for which
we lack facilities or staff. We continue in early stage research and development
of other potential natural product cancer chemotherapeutic drugs with novel
mechanisms of action. We are assessing late-stage pharmaceutical product
development opportunities in an effort to expand our pipeline of new products.

Foreign and Domestic Operations; Export Sales

The following table sets forth, for the past three years, revenue, profitability
(operating loss), and identifiable assets attributable to our U.S. and foreign
operations (amounts in thousand dollars):


                                     - 19 -

<PAGE>

<TABLE>
<CAPTION>


                                                          Year Ended December 31,
                                               2000              1999             1998
                                               ----              ----             ----

Sales to Unaffiliated Customers
         <S>                                  <C>               <C>              <C>
         U.S.                               $  8,148          $  7,592         $  4,498
         Canada                                  -                 -                454
                                           ----------        ---------           -------
         Total Sales (1)                       8,148             7,592            4,952

Operating Loss
         U.S.                               $(16,128)         $(10,624)        $(12,852)
         Canada                                  (79)             (165)            (526)

Identifiable Assets
         U.S.                               $ 34,959          $ 16,095         $ 23,260
         Canada                                3,042             3,162            2,406
------------
</TABLE>

(1) Includes export sales to Australia of $7,720 in 2000, $5,121 in 1999 and
    $2,189 in 1998.

Sales from Canada included sales of product manufactured and shipped from NaPro
Canada, our Canadian subsidiary. Such products sold by NaPro Canada to us were
then re-sold to Faulding for use outside the U.S. Such "exported" products never
physically entered the U.S.. We suspended Canadian manufacturing operations in
1998.

Sales of our paclitaxel into foreign markets accounted for approximately 48% of
our revenue for the year ended December 31, 1998, 68% of our revenue for the
year ended December 31, 1999 and 98% of our revenue for the year ended December
31, 2000. We anticipate that a lower portion of our revenue will be derived from
sales of our products in foreign markets in future years. Pending regulatory
approval, we anticipate sales to Abbott will begin in 2001.

However a substantial portion of our revenue and operations will continue to be
subject to the risks associated with foreign business, including economic or
political instability, shipping delays, fluctuations in foreign currency
exchange rates and various trade restrictions, all of which could have a
significant impact on our ability to deliver products on a competitive and
timely basis. Future imposition of, or significant increases in, the level of
customs duties, export quotas, drug regulatory restrictions or other regulatory
or trade restrictions could have a material adverse effect on us.

Employees

As of March 5, 2001, we had 121 full-time employees, 3 part-time employees, and
2 project employees. 11 of these employees hold Ph.D. or M.D. degrees. 29
employees were engaged in drug development, 26 in quality assurance, 43 in
manufacturing, 22 in administration and finance, 4 in regulatory affairs, and 2
in legal. We believe that our relations with our employees are good.



                                     - 20 -

<PAGE>



                                     Item 2

                                   Properties

We lease 54,000 square feet of space in Boulder, Colorado, that is used for
executive offices, research and development and commercial manufacturing. We
lease an additional 17,000 square feet of space in Boulder, Colorado that is
used for manufacturing and 20,000 square feet of warehouse space in Weld County,
Colorado. We anticipate that we may lease or purchase and develop additional
manufacturing capacity.


                                     Item 3

                                Legal Proceedings

In September 2000 we and Abbott filed a patent infringement suit in the U.S.
District Court for the District of Colorado against Bristol alleging
infringement of U.S. Patent numbers 5,972,992 and 5,977,164 which relate to
paclitaxel. In November 2000 we amended the complaint to add U.S. Patent number
6,140,359 to our claims of patents that Brisol is infringing. Bristol has
asserted defenses that if successful, would result in the invalidity or
unenforceability of the patents. A finding of invalidity or unenforceability of
the patents would have a material adverse affect on us. The trial is set for
June 2002. We intend to vigorously prosecute the case.

Existing regulatory approvals have a direct impact on the clinical and marketing
strategy we are pursuing.

In December 1992, Bristol obtained NDA approval in the U.S. for its paclitaxel
product. Under the Waxman-Hatch Act, a non-patented drug such as paclitaxel that
gains approval through an NDA process is granted a five-year period of marketing
exclusivity, which prevents submission by another party of an ANDA for generic
substitutes until such period of exclusivity expires. Bristol's exclusivity
period in the United States expired in December 1997. However, additional
Waxman-Hatch Act provisions may result in an additional 30 month delay in the
approval of an ANDA if the sponsor (in this case Bristol) has listed a patent
related to the product with the FDA, and institutes a lawsuit based on that
patent prior to the time that a generic approval is received. Bristol currently
has several patents related to paclitaxel listed. In March 2001, we and Abbott
filed an ANDA for paclitaxel with the FDA. If Bristol files a lawsuit against us
or Abbott based upon those patents, Abbott's ANDA approval in the United States
could be delayed. A statute comparable to the Waxman-Hatch Act exists in Europe,
although the related period of exclusiv ity is ten years. Bristol's European
exclusivity period ends in 2003.


                                     Item 4

                     Matters Submitted to Stockholders' Vote

None


                                     - 21 -

<PAGE>



                                     Part II

                                     Item 5

               Market Information and Related Stockholder Matters

Market Information

Our common stock is traded in the Nasdaq National Market under the symbol
"NPRO." The following table sets forth, for the periods indicated, the high and
low closing sale prices for the common stock.


                                  High            Low
2000  Fourth Quarter            $12  1/4         $ 5 1/4
      Third Quarter              11                5 1/8
      Second Quarter              8  5/8           2 1/2
      First Quarter              10  1/2           2 1/2
1999  Fourth Quarter            $ 3  7/16        $ 2 3/16
      Third Quarter               3  7/8           1 21/32
      Second Quarter              2  3/16          1 5/8
      First Quarter               2  1/2           1 3/8

Stockholders

As of December 31, 2000, there were approximately 257 stockholders of record.

Dividends

To date, we have not paid any dividends on the common stock. We intend to retain
future earnings, if any, to finance the operation and expansion of our business
and, therefore, we do not anticipate paying any cash dividends in the
foreseeable future, if at all.

Recent Sales of Unregistered Securities

In November 2000 we closed a private placement of 2,000,000 shares of common
stock. As an issuance to accredited investors not involving any public offering,
the issuance was exempt under Section 4(2) of the Securities Act and Regulation
D thereunder.

In November 2000 we issued 100,000 shares of common stock in partial
consideration for the licensing of technology. As an issuance to accredited
investors not involving any public offering, the issuance was exempt under
Section 4(2) of the Securities Act and Regulation D thereunder.

In February 2000 and March 2000, we issued a total of 11,000 shares of common
stock upon exercise of stock options by our former directors.


                                     - 22 -

<PAGE>



                                     Item 6

                             Selected Financial Data

The selected financial data presented below for each year in the five years
ended December 31, 2000, are derived from our financial statements, which have
been audited by Ernst & Young LLP, independent auditors, and are qualified by
reference to such Financial Statements and Notes thereto. The data presented
below should be read in conjunction with the consolidated financial statements
at December 31, 2000 and 1999 and for each of the three years in the period
ended December 31, 2000, the related Notes thereto, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and other financial
information included elsewhere in this report.
<TABLE>
<CAPTION>

                                                                         Year Ended December 31,
                                                       2000         1999         1998         1997         1996
                                                       ----         ----         ----         ----         ----
                                                                  (In thousands, except per share data)
Statement of Operations Data:
<S>                                                  <C>          <C>          <C>          <C>          <C>
Product Sales                                        $  8,148     $  7,592     $  4,952     $  3,814     $  3,473
                                                     ---------    ---------    --------     --------     --------

Operating Expense:
     Research, development and cost of products sold   14,335       12,047        9,973       11,769        6,837
     General and administrative                         7,815        6,188        6,458        5,992        3,712
     (Gain) loss on retirement of assets                2,245          146        1,899         (141)          27
                                                  ------------  -----------   ---------- ------------  -----------
          Total operating expense                      24,395       18,381       18,330       17,620       10,576
                                                    ----------   ----------   ---------    ----------    ---------
Operating loss                                        (16,247)     (10,789)     (13,378)     (13,806)      (7,103)
Other income (expense):
     License fees                                         -          2,320       11,110          -            -
     Interest income                                      372          309          550          494          651
     Interest expense                                    (750)        (842)        (902)      (2,161)        (373)
                                                   -----------    ---------  -----------  -----------   ----------
Net loss                                             $(16,625)    $ (9,002)    $ (2,620)    $(15,473)    $ (6,825)
                                                     =========    =========   ==========    =========    =========
Net loss attributable to common stockholders         $(16,625)    $(10,213)    $ (3,212)    $(15,537)    $ (6,825)
                                                     =========    =========   ==========    =========    =========
Basic and diluted net loss per share                 $   (.69)    $  (0.50)    $  (0.22)    $  (1.28)    $  (0.68)
                                                   ===========   ==========   ==========   ==========    =========
Weighted average shares outstanding                    23,924       20,554       14,642       12,104        9,973
                                                    ==========   ==========    =========    =========    =========

                                                                           Year Ended December 31,
                                                       2000         1999         1998          1997         1996
                                                       ----         ----         ----          ----         ----
                                                                               (In thousands)
Balance Sheet Data:
Cash, cash equivalents and short-term securities     $ 18,982     $  1,937     $  7,441     $  8,102     $ 14,767
Working capital                                        23,168        2,915        7,121       (2,485)      14,224
Total assets                                           38,001       19,257       25,666       30,358       25,021
Long term debt, net of current maturities              14,953        4,723           80          480          751
Senior convertible debt, long term portion                -            -          5,176          -            -
Senior convertible redeemable preferred stock             -            -          3,805        4,344          -
Minority interest                                         -            622          622        2,574        3,715
Accumulated deficit                                   (69,245)     (52,620)     (43,618)     (40,998)     (25,525)
Stockholders' equity                                   18,587       11,133       10,884        7,262       16,569
</TABLE>



                                                     - 23 -

<PAGE>



                                     Item 7

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

The following discussion and analysis provides information that management
believes is relevant to an assessment and understanding of the results of
operations of NaPro BioTherapeutics, Inc. You should read this discussion in
conjunction with the Financial Statements and Notes included elsewhere in this
report. Special Note: Certain statements set forth below constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995, referred to as the "Reform Act".
See "Special Note Regarding Forward Looking Statements."

General

We are a biopharmaceutical company focused on the development, production and
licensing of complex natural product pharmaceuticals as well as the development
and licensing of novel genetic technologies for applications in human
therapeutics and diagnostics, pharmacogenomics and agribiotechnology. Natural
product substances have been, and continue to be, the primary source of new
prototype chemotherapeutic anti-cancer agents. Our lead product is paclitaxel, a
naturally occurring chemotherapeutic anti-cancer agent found in certain species
of yew, or Taxus trees. In addition to our efforts with paclitaxel and genetics,
we are also working on several types of compounds which have promising activity
as anti-cancer agents. We believe some of these agents function by new and novel
mechanisms, which may increase their likelihood of success as new
chemotherapeutics. We are also actively engaged in evaluating the in- licensing
or purchase of potential new products and/or technologies, whether or not those
products or technologies are derived from natural products . Our evaluations of
new products and technologies may involve examination of individual molecules,
classes of compounds or platform technologies, in the cancer field and
otherwise. Acquisitions of new products or technology may involve the purchase
of, or merger with, other companies.

We continue to incur substantial expense for research and development related to
preclinical and clinical studies, improving manufacturing processes and other
development activity. Accordingly, we have incurred significant operating
losses, including operating losses of approximately $16.2 million, $10.8 million
and $13.4 million for the years ended December 31, 2000, 1999 and 1998,
respectively, resulting in an accumulated deficit of $69.2 million as of
December 31, 2000. We expect that we will continue to have a high level of
operating expense and will be required to make significant up-front expenditures
in connection with our paclitaxel biomass procurement, product development and
research and development activities. We anticipate that operating losses will
continue until such time, if ever, as we are able to generate sufficient revenue
to support our operations.

In March 1998, we and Ivax Corporation terminated marketing between the two
companies.

Primarily, our ability to generate sufficient revenue to support our operations
depends upon the successful completion of our paclitaxel development program.
Our strategy for that program has been to form strategic alliances through
long-term exclusive agreements with major pharmaceutical companies. On July 23,
1999, we entered into an exclusive collaborative agreement of up to 20 years
covering the U.S. and Canada with Abbott Laboratories to develop and
commercialize one or more formulations of paclitaxel for the treatment of a
variety of cancers. Under our agreement with Abbott, we are responsible for
supply

                                     - 24 -

<PAGE>



of bulk drug and clinical trials are conducted jointly. Abbott is responsible
for finishing, regulatory filings, marketing, and sale of the finished drug
product. Most primary decisions related to the paclitaxel development program
are made by a joint Abbott-NaPro Development Committee. In March 2001 we and
Abbott filed an ANDA with the FDA for paclitaxel.

In connection with the Abbott agreement, we may receive total funding of up to
$122 million in the form of development and marketing milestone payments, a
secured loan and equity investments. In July 1999 we received an initial $1
million fee. Through December 31, 2000, Abbott has purchased 1,111,111 shares of
our common stock for a total purchase price of $6 million.

Contingent upon our successful achievement of all development milestones,
including the payments received through 2000, we could receive up to $45 million
consisting of $34 million in development fees and up to $11 million for the
purchase of 2 million shares of our common stock.

In addition, we have access to a total of $20 million under a secured loan
arrangement with Abbott, including draws through 2000 of $15.1 million. The loan
bears a primary interest rate of 6.5% and is due in full on the earlier of: (i)
the second anniversary of the first sale of finished product by Abbott to a
wholesaler or end-user customer following approval of finished product by the
FDA; (ii) the termination of the Abbott agreement; or (iii) January 1, 2007. The
loan is limited to a borrowing base of collateral ized assets, recomputed
monthly. Substantially all of our hard assets are collateralized as security for
the loan.

Contingent upon receiving regulatory approval and achieving certain commercial
sales thresholds over several years, we may receive additional milestone
payments from Abbott in the range of zero up to $57 million. We cannot assure
that regulatory approval or sales thresholds will be achieved.

Under terms of the agreement, Abbott will purchase bulk drug from us. If the
paclitaxel product is approved and commercialized, Abbott will pay a percentage
of its net paclitaxel sales to us, less Abbott's payments for purchase of bulk
drug. Abbott may terminate the agreement at any time with or without cause.
Should Abbott terminate without cause, it is obligated to make payments to us.

In 1992 we entered into a 20-year exclusive agreement with F.H. Faulding & Co.,
Ltd., Australia's largest domestic pharmaceutical company, for the clinical
development, sale, marketing and distribution of our paclitaxel. Faulding, with
2000 sales of approximately $1.2 billion, actively markets anti-cancer
pharmaceuticals and other health care products in Australia, Southeast Asia and
other countries throughout the world. In 2000, we amended the Faulding agreement
to, among other things, add additional countries to Faulding's exclusive
territory. In 2001 we entered into a separate agreement with Faulding covering
development and sale of our paclitaxel in Europe. Including the new agreement
for Europe, the Faulding territory includes substantially all of the world other
than the U.S., Canada, Japan, Israel and the former Soviet Union. Faulding has
received marketing approval for, and is selling our paclitaxel as ANZATAX in,
more than 20 countries.

In Europe, we are responsible for regulatory filings and will supply paclitaxel
raw material exclusively to Faulding to formulate and finish the product. We
cannot assure that we will receive regulatory approval in Europe. Should we
receive approval, Faulding will then market and sell the final proprietary
paclitaxel

                                     - 25 -

<PAGE>



formulation in Europe. Under the agreement, Faulding paid an up-front licensing
fee to us of $7.5 million. We will share equally the net sales of the product in
Europe.

In anticipation of final FDA approval for commercial sales, we have completed
construction of our redesigned manufacturing facilities in Boulder, Colorado. We
cannot assure, however, that our paclitaxel will receive regulatory approval or
be successfully marketed.

Results of Operations

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999
---------------------------------------------------------------------
Sales. 2000 sales were $8.1 million, up $500,000 from 1999. Sales to Faulding
for 2000 were $7.7 million, up $2.6 million from 1999. The increase was mainly
due to an increase in the number of countries in which Faulding is licensed to
sell paclitaxel. Sales to Ivax, as a result of the termination agreement, ended
in the third 1999 quarter. We plan no future paclitaxel sales to Ivax. Pending
regulatory approval, we anticipate sales to Abbott will commence in 2001.

Research and Development and Cost of Products Sold. Research and development
expense and cost of product sold for 2000 was $14.3 million, up by $2.3 million
from 1999. The increase resulted primarily from a one-time charge of $800,000
for the startup cost of our Boulder, Colorado paclitaxel extraction facility and
an increased cost of clinical trials, partially offset by decreased cost
associated with develop ment of the semisynthetic manufacturing process. Our
production process is not distinct from our research and development processes.
Accordingly, the cost of products sold is included in our research and
development expense.

General and Administrative Expense. General and administrative expense for 2000
was $7.8 million, up $1.6 million from 1999. The increase is attributable
primarily to increased compensation, increased regulatory expense and increased
recruiting expense.

Loss on Disposal of Assets. Loss on disposal of assets for 2000 was $2.2
million, up $2.1 million from 1999. The increase was attributable to prior
construction cost that had no applicability in the redesign of the manufacturing
facilities in Boulder, Colorado.

License Fee Income. License fees for 1999 were $2.3 million. There was no
similar amount in 2000. The 1999 amount included $1 million in milestone
payments under the Abbott agreement. The remainder of the 1999 license fees were
paid under the terms of the Ivax termination agreement. We expect no further
payments under the Ivax agreement. Although license fees and milestone payments
are unusual and may be non-recurring, $7.5 million was received under the
Faulding European agreement in the first quarter of 2001.

Interest Income. Interest income for 2000 was $400,000, up $100,000 from 1999.
The increase is primarily attributable to higher overall balances of interest
bearing investments.

Interest Expense. Interest and other expense for 2000 was $800,000, the same as
1999. Decreased interest on the senior convertible debt because of the final
conversion was offset by interest on the Abbott loan.


                                     - 26 -

<PAGE>



Year Ended December 31, 1999 Compared to Year Ended December 31, 1998
---------------------------------------------------------------------
Sales. 1999 sales were $7.6 million, up $2.6 million from 1998. Sales to
Faulding for 1999 were $5.1 million, up $2.9 million from 1998. The increase was
partially due to an increase in the number of countries in which Faulding is
licensed to sell paclitaxel. The increase was also partially due to the timing
of product shipments and to inventory fluctuations of our strategic partners.
Sales to Ivax, as a result of the termination agreement, ended in the third 1999
quarter.

Research, Development and Cost of Products Sold. Research and development
expense and cost of products sold for 1999 was $12 million, up by $2 million
from 1998. The increase resulted primarily from an increase in clinical trial
activity and increased cost associated with development of the semisynthetic
manufacturing process. Our production process is not distinct from our research
and development processes. Accordingly, the cost of products sold is included in
our research and develop ment expense.

General and Administrative Expense. General and administrative expense for 1999
was $6.2 million, down $300,000 from 1998. The decrease is attributable
primarily to a decrease of $700,000 in legal expense related to European patent
litigation, partially offset by increased compensation and increases in
retirement plan contributions.

Loss on Disposal of Assets. Loss on disposal of assets for 1999 was $100,000,
down $1.8 million from 1998. The decrease was attributable to the losses in 1998
resulting from the suspended construction on the Boulder, Colorado manufacturing
facilities and from the closure of the contract extraction facility on Prince
Edward Island, Canada.

License Fee Income. License fees for 1999 were $2.3 million, down $8.8 million
from 1998. The 1999 amount included $1 million in milestone payments under the
Abbott agreement. The remainder of the 1999 license fees and all of the 1998
license fees were paid under the terms of the Ivax termination agreement.
License fees and milestone payments are unusual and may be non-recurring. We
expect no further payments under the Ivax agreement.

Interest Income. Interest income for 1999 was $300,000, down $200,000 from 1998.
The decrease is primarily attributable to lower overall balances of interest
bearing investments.

Interest Expense. Interest and other expense for 1999 was $800,000, down
$100,000 from 1998. The decrease is primarily attributable to the decreased
interest on senior convertible debt that was converted into shares of our common
stock, partially offset by interest on the Abbott loan.

Liquidity and Capital Resources

Our capital requirements have been, and will continue to be, significant. As of
December 31, 2000, we had a working capital balance of $23.2 million compared to
a working capital balance of $2.9 million as of December 31, 1999. We have a $20
million secured borrowing arrangement with Abbott, of which $15.1 million had
been drawn as of December 31, 2000. To date, we have funded our capital require
ments primarily with the net proceeds of public offerings of our common stock of
approximately $21.1 million, with private placements of our equity securities of
approximately $49.8 million, with the exercise

                                     - 27 -

<PAGE>



of warrants and options of $6.5 million, with net borrowings of $15.1 million,
and with loans and advances from our stockholders and strategic partners.

Our existing capital, projected 2001 sales, anticipated license fees and
milestone payments, and available borrowing under the Abbott loan are expected
to provide adequate capital to fund our operations and capital expenditures in
2001. However, pharmaceutical development is a costly and time consuming
process. We are actively pursuing additional partners to assist in the
development and marketing of our products, and may seek other forms of long-term
financing should such financing become available on acceptable terms. We may
in-license or purchase new products or technologies. The cost of acquiring and
developing such resources, and related capital expenditures, may be very large.
As a result, we may need to attract substantial amounts of capital. We cannot
assure that we will be able to do so.

In November 2000, we completed a private placement to accredited investors of 2
million shares of our common stock for an aggregate purchase price of $17.5
million; we received net proceeds of $16.3 million. We registered the resale of
the stock with the SEC.

Working Capital and Cash Flow Cash and cash equivalents increased $17.1 million
to $19 million for the year ended December 31, 2000 from $1.9 million at
December 31, 1999. Net cash used by 2000 operations of $10.5 million and by
investing activity of $3.6 million was offset by financing activity of $31.2
million.

Inventory was $6.3 million at December 31, 2000. The amount of work-in-progress
inventory and finished goods inventory is dependent on a number of factors,
including the shipping requirements of our strategic partners and its production
planning for meeting those needs. Inventory balances may vary significantly
during product development and launch periods.

We anticipate that the level of our accounts receivable may increase
significantly as we anticipate the regulatory approval to sell paclitaxel in the
U.S.

Capital Expenditures We spent $3.6 million during 2000 for capital projects.
These expenditures primarily included the extraction facility, plantation cost
and laboratory equipment.

The amount and timing of future capital expenditures will depend upon numerous
factors, including:

     the cost of manufacturing scale-up for paclitaxel; the development of new
     products; the cost of manufacturing resources for new products; the nature
     of our relationship with our strategic partners; the establishment of
     additional strategic relationships; the progress of our research and
     development programs; the magnitude and scope of these activities;
     the cost of preparing, filing, prosecuting, maintaining and enforcing
     patent claims and other intellec tual property rights; competing
     technological and marketing developments; and changes in or terminations of
     existing strategic relationships.


                                                     - 28 -

<PAGE>



For 2001 we are anticipating significant expenditures for improving efficiency
and expanding capacity at our existing facilities. We are also expecting to
complete the design for, and begin construction of, a new large-scale facility
during 2001. The expanded scope of our research and development activity will
require significant additions to laboratory equipment. All of these factors, and
others, lead us to expect a significant increase in capital expenditures in
2001. Although we may seek additional long-term financing to fund the increases
in capital expenditures, there can be no assurances that we can obtain such
financing on terms which are economically viable for us.

Net Operating Loss Carryforwards As of December 31, 2000, we had approximately
$59 million of net operating loss carryforwards to offset future taxable income.
The Tax Reform Act of 1986 contains provisions that limit the utilization of net
operating loss carryforwards if there has been a "change of ownership" as
described in Section 382 of the Internal Revenue Code. Such a change of
ownership may limit our utilization of our net operating loss carryforwards, and
could be triggered by sales of securities by us or our stockholders.

Special Note Regarding Forward-looking Statements

This report contains forward-looking statements that involve known and unknown
risks, including, without limitation, statements containing the words
"believes", "anticipates", "estimates", "may" and words of similar import or
statements of management's opinion or statements that are not historical fact.
Such forward-looking statements include, among others:

     statements concerning our plans, objectives and future economic prospects,
     such as matters relative to seeking and obtaining additional strategic
     partners and developing new products; the availability of patent and other
     protection for our intellectual property; the completion of preclinical
     studies, clinical trials and regulatory filings; the prospects for, and
     timing of, regulatory approvals; the need and plans for, and availability
     of, additional capital; the amount and timing of capital expenditures; the
     timing of product introductions and sales; the availability of raw
     materials; prospects for future operations; and other statements of
     expectations, beliefs, future plans and strategies, anticipated events or
     trends and similar expressions concerning matters that are not historical
     facts.

Such forward-looking statements involve known and unknown risks, uncertainties
and other factors which may cause our actual results, performance or
achievements, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements. Such factors include, among other things, the
following:

     the inability to obtain regulatory approvals for paclitaxel or a delay in
     such approvals; competition from Bristol and other existing and new
     producers of paclitaxel and other drugs; technological advances in cancer
     treatment and drug development that may obsolesce paclitaxel; the risks
     associated with patent litigation; the ability to obtain rights to
     technology; the ability to obtain and enforce patents;

                                     - 29 -

<PAGE>



     the ability to maintain trade secrets;
     the ability to obtain raw materials and commercialize manufacturing
     processes; the effectiveness of our paclitaxel and other pharmaceuticals we
     develop in treating disease; the results of preclinical and clinical
     studies; the results of research and development activities; the ability to
     purchase or license new products; the successful development of new
     products; the business abilities and judgment of our management and other
     personnel; the ability to hire skilled personnel to perform research and
     development and to run our manufacturing operations; the ability of
     contract manufacturers to perform adequately under anticipated contracts;
     changes in and compliance with governmental regulations; the
     decision-making processes of regulatory agencies; the effect of capital
     market conditions and other factors on capital availability for us and
     other biopharmaceutical companies; the ability of Abbott, Faulding and
     Tzamal to perform their obligations under their existing agree ments with
     us; our ability to perform our obligations under our existing agreements
     with Abbott, Faulding and Tzamal; our ability to establish a relationship
     with a capable strategic partner to develop and market our paclitaxel in
     Japan; our limited relevant operating history upon which an evaluation of
     our prospects can be made; the effect on our revenue, cash flow and
     earnings from foreign exchange rate fluctuations; adverse economic and
     general business conditions; and other factors referenced in this report
     and in our registration statement filed December 1, 2000.

These factors are not intended to be an all-inclusive enumeration of the
business risks we face. Reference is also made to the risk factors discussed in
our registration statement filed with the Securities and Exchange Commission on
December 1, 2000. The forward-looking statements included in this report
represent our view as of the date of this report. The reader should not assume
that the statements made herein remain accurate at any future date. We do not
intend to update these statements and undertake no duty to any person to make
any update under any circumstance.


                                     Item 7A

           Quantitative and Qualitative Disclosures about Market Risk.

During 2000, virtually all of our revenue resulted from sales of our paclitaxel
to Faulding. We anticipate sales to Abbott in 2001; however, sales to Faulding
will remain significant.

Faulding purchases our paclitaxel from us at a price that varies in proportion
to the price at which Faulding sells our paclitaxel. Under our agreement with
Faulding, we are paid a fixed percentage of Faulding's sales price for
paclitaxel supplied for commercial use. In March of each year, Faulding
estimates the sales price it will receive for paclitaxel sales in the upcoming
year, and, based upon that estimate, we determine the price we will charge
Faulding for paclitaxel. We recognize the corresponding

                                     - 30 -

<PAGE>



revenue at the time of shipment of our paclitaxel to Faulding, based upon the
intended use indicated by Faulding on its purchase orders. However, Faulding may
or may not use the product in accordance with the original use stated on its
purchase orders. Additionally, Faulding's actual selling price may differ from
the amounts originally budgeted and indicated to NaPro on its purchase orders.
On or about May 31, 2001, Faulding will communicate to us the final amount and
type of sales made during the period beginning on April 1, 2000 and ending on
March 31, 2001, and an adjustment will be calculated that may increase or
decrease our revenue from sales of products to Faulding during this period.

Faulding's sales are made in the currencies of each of the countries in which it
sells our paclitaxel. As a result, our revenue from sales is affected by
fluctuations in the value of these various foreign currencies relative to the
U.S. dollar. One of Faulding's largest single markets is Australia, accounting
for approximately 24% of Faulding's commercial sales during the period beginning
March 31, 1999 and ending March 31, 2000. In the past, fluctuations in various
currencies, especially the Australian dollar, were a significant factor in
reductions in the price we charge Faulding. If changes in foreign currency
markets continue to cause a decrease in the price per gram we receive from
Faulding, there could be a material adverse effect on our earnings and cash
flow.

To the extent our efforts in developing additional international markets are
successful, we may face similar foreign currency exchange risk as that described
above for Faulding.

Certain statements set forth in Item 7A may constitute "forward-looking
statements" within the meaning of the Reform Act. See "Special Note Regarding
Forward-looking Statements."

                                     Item 8

                   Financial Statements and Supplementary Data

The information required by this item begins at Page F-1.

                                     Item 9

                  Changes in and Disagreements with Accountants

None


                                    Part III

                                     Item 10

                        Directors and Executive Officers

The information concerning our directors and executive officers is incorporated
by reference to the section entitled "Election of Directors" in our definitive
Proxy Statement with respect to our 2001 Annual Meeting of Stockholders (the
"Proxy Statement").


                                     - 31 -

<PAGE>



                                     Item 11

                             Executive Compensation

The section entitled "Executive Compensation" appearing in our Proxy Statement
is incorporated herein by reference, except for such information as need not be
incorporated by reference under rules promul gated by the SEC.

                                     Item 12

         Security Ownership of Certain Beneficial Owners and Management

The section labeled "Security Ownership of Directors and Executive Officers and
Certain Beneficial Owners" appearing in our Proxy Statement is incorporated
herein by reference.

                                     Item 13

                 Certain Relationships and Related Transactions

The section labeled "Certain Relationships and Related Transactions" appearing
in our Proxy Statement is incorporated herein by reference.

                                     Part IV

                                     Item 14

        Exhibits, Financial Statement Schedules, and Reports on Form 8-K

Financial Statements

The Financial Statement Index is on Page F-1.

Financial Statement Schedules

All schedules are omitted because they are not applicable or not required or
because the information is included in the consolidated financial statements or
the notes thereto.

Exhibits and Reports on Form 8-K

We filed a Current Report on Form 8-K dated October 31, 2000 which included a
report on Item 5.


                                     - 32 -

<PAGE>


<TABLE>
<CAPTION>

Exhibit
Number   Description of Exhibit

<S>      <C>
3.1      Amended and Restated Certificate of Incorporation of the Company, as amended August 2, 1996 (1)
3.2      Certificate of Amendment dated September 29, 1998 to the Amended and Restated Certificate of
         Incorporation of the Company (2)
3.3      Certificate of Amendment dated September 13, 2000 to the Amended and Restated Certificate of
         Incorporation of the Company (3)
3.4      Certificate of Designation for Convertible Preferred Stock, Series A (4)
3.5      Certificate of Designation for Series B Junior Participating Preferred Stock (5)
3.6      Certificate of Designation of Series C Senior Convertible Preferred Stock (6)
3.7      Bylaws of the Company as amended through December 2000
4.1      Common Stock Certificate (7)
4.2      Rights Agreement dated as of November 8, 1996 between the Company and
         American Stock Transfer and Trust Company, as Rights Agent (8)
4.3      The Certificate of Incorporation and Bylaws of the Company are included as Exhibits 3.1 - 3.7.
10.1*    Company's 1993 Stock Option Plan (7)
10.2*    Amendment dated December 11, 2000 to the Company's 1993 Stock Option Plan.
10.3*    Company's 1994 Long-Term Performance Incentive Plan, as amended May 28, 1998 (2)
10.4*    Amendment dated December 11, 2000 to the Company's 1994 Long-Term Performance Incentive Plan
10.5*    Employment Agreement effective October 5, 1998 between the Company and Leonard P. Shaykin (9)
10.6*    Employment Agreement effective October 5, 1998 between the Company and Sterling K. Ainsworth (9)
10.7*    Employment Agreement effective October 5, 1998 between the Company and Patricia A. Pilia (9)
10.8*    Employment Agreement effective October 5, 1998 between the Company and Gordon H. Link (9)
10.9*    Employment Agreement effective October 5, 1998 between the Company and David L. Denny (9)
10.10*   Employment Agreement effective October 5, 1998 between the Company and Kai P. Larson (10)
10.11*   Employment Agreement effective October 5, 1998 between the Company and James D. McChesney (9)
10.12*   Stock Option Agreement with Sterling K. Ainsworth (7)
10.13*   Stock Option Agreement with Patricia A. Pilia (7)
10.14    Second Amended and Restated Master Agreement dated June 5, 2000 between the Company and
         F.H. Faulding & Co., Ltd. (11)
10.15+   European Agreement dated March 2, 2001 between the Company and F.H. Faulding & Co., Ltd.
10.16    Development, License and Supply Agreement dated July 23, 1999 by and between the Company
         and Abbott Laboratories. (15)
10.17    Loan and Security Agreement dated July 23, 1999 by and between the Company and Abbott
         Laboratories. (15)
10.18    Stock Purchase Agreement dated July 23, 1999 by and between the Company and Abbott
         Laboratories. (15)
10.19    Amendment dated June 23, 2000 to Development, License and Supply Agreement by and between
         the Company and Abbott Laboratories. (16)

                                     - 33 -

<PAGE>



10.20    Amendment dated June 23, 2000 to Stock Purchase Agreement by and between the Company and
         Abbott Laboratories. (16)
10.21+   License Agreement dated November 21, 2000 by and between the Company and The University
         of Delaware and Thomas Jefferson University.
10.22    Lease dated October 16, 1995 between the Company and Gunbarrel Facility L.L.C. (12)
10.23    First Amendment to Lease November 27, 1995 between the Company and Gunbarrel Facility L.L.C. (12)
10.24    Services and Supply Agreement dated as of December 1, 1993 between the Company and Pacific
         BioTechnologies Inc. (7)
10.25    Agreement dated March 29, 1996 between the Company and Pacific BioTechnologies Inc. (12)
10.26    Letter Agreement dated August 14, 1999 between the Company and Pacific BioTechnologies Inc. (10)
10.27    Culture Agreement dated March 1, 1996 between Zelenka Nursery, Inc. and the Company (13)
10.28    Agreement for Sale, Harvest and Storage of Nursery Stock dated May 1, 1996 between Zelenka
         Nursery, Inc. and the  Company (13)
10.29    Culture Agreement dated March 1, 1997 between Zelenka Nursery, Inc. and the Company (14)
10.30    Lease Agreement dated March 1, 1997 between Zelenka Nursery, Inc. and the Company (14)
10.31    Agreement for Sale, Harvest and Storage of Nursery Stock dated March 1, 1997 between Zelenka
         Nursery, Inc. and the Company (14)
10.32    Culture Agreement dated July 26, 1997 between Cass-Mill, Inc. and the Company (10)
10.33    Lease Agreement dated April 28, 2000 between Cass-Mill, Inc. and the Company
10.34    Form of Subscription Agreement including Registration Rights
21.1     List of Subsidiaries
23.1     Consent of Ernst & Young LLP
--------------------------------------------------------------
* A management compensation plan.
+ The Company is applying for confidential treatment with respect to portions of
  these exhibits.

(1)    Incorporated herein by reference to the Company's Annual Report on Form
       10-K filed with the Commission for the year ended December 31, 1996 (File
       No. 0-24320).
(2)    Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended
       December 31, 1998 (File No. 0-24320).
(3)    Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period
       ending September 30, 2000. (File No. 0-24320).
(4)    Incorporated herein by reference to the Company's Quarterly Report on
       Form 10-Q filed with the Commission for the quarter ended June 30, 1995
       (File No. 0-24320).
(5)    Incorporated herein by reference to the Company's November 8, 1996 Current Report Form 8-K
       (File No. 0-24320).
(6)    Incorporated herein by reference to the Company's Registration Statement on Form S-3, filed on
       December 16, 1997 (No. 333-42419).
(7)    Incorporated herein by reference to the Registration Statement on Form S-1 of the Company, filed
       with the Commission on July 24, 1994 (No. 33-78016).
(8)    Incorporated herein by reference to the Registration Statement of the Company on Form 8-A, filed
       with the Commission on November 26, 1996 (File No. 0-24320).
(9)    Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period
       ending  September 30, 1998 (File No. 0-24320).

                                                     - 34 -

<PAGE>



(10)   Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year
       ending December 31, 1999 (File No. 0-24320).
(11)   Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period
       ending June 30, 2000 (File No. 0-24320).
(12)   Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended
       December 31, 1995 (File No. 0-24320).
(13)   Incorporated herein by reference to the Registration Statement on Form S-1 of the Company filed
       with the Commission on August 1, 1996 (No. 333-3051).
(14)   Incorporated herein by reference to the Company's Annual Report on Form 10-K for the year ended
       December 31, 1996 (File No. 0-24320).
(15)   Incorporated herein by reference to the Company's Current Report on Form 8-K, dated July 23,
       1999  (File No. 0-24320).
(16)   Incorporated herein by reference to the Company's Quarterly Report on Form 10-Q for the period
       ending June 30, 2000 (File No. 0-24320).

</TABLE>

                                     - 35 -

<PAGE>


                                   Signatures

Pursuant to Section 13 of the Securities Exchange Act of 1934, NaPro caused this
report on Form 10-K to be signed on its behalf.
<TABLE>
<CAPTION>
<S>                                                                                                 <C>

NAPRO BIOTHERAPEUTICS, INC.

By:  /s/ Leonard P. Shaykin                                                                         March 30, 2001
----------------------------
Leonard P. Shaykin
Chairman of the Board of Directors,
Chief Executive Officer

Pursuant to the Exchange Act, this report has been signed on behalf of NaPro and
in the capacities indicated.

/s/ Leonard P. Shaykin                         Chairman of the Board of Directors,                  March 30, 2001
-----------------------------------            Chief Executive Officer
Leonard P. Shaykin

/s/ Sterling K. Ainsworth                      Vice Chairman, President,                            March 30, 2001
-----------------------------------            Chief Scientific Officer, Director
Sterling K. Ainsworth, Ph.D.

/s/ Patricia A. Pilia                          Executive Vice President,                            March 30, 2001
---------------------------------------        Director
Patricia A. Pilia, Ph.D.

/s/ Gordon H. Link, Jr.                        Vice President,                                      March 30, 2001
-----------------------------------            Chief Financial Officer
Gordon H. Link, Jr.                            (Principal Financial Officer)

/s/ Robert L. Poley                            Controller                                           March 30, 2001
-------------------------------------          (Principal Accounting Officer)
Robert L. Poley

/s/ Edward L. Erickson                         Director                                             March 30, 2001
----------------------------------
Edward L. Erickson

/s/ Arthur H. Hayes, Jr.                       Director                                             March 30, 2001
-----------------------------------
Arthur H. Hayes, Jr., M.D.

/s/ Marc J. Ostro                              Director                                             March 30, 2001
--------------------------------------
Marc J. Ostro

/s/ Richard N. Perle                           Director                                             March 30, 2001
-------------------------------------
The Honorable Richard N. Perle

/s/ Robert E. Pollack                          Director                                             March 30, 2001
-------------------------------------
Robert E. Pollack, Ph.D.
</TABLE>


                                     - 36 -

                                   NaPro BioTherapeutics, Inc. and Subsidiaries

                                               Financial Statements


                                   Years ended December 31, 2000, 1999 and 1998



Index to Financial Statements

Report of Independent Auditors...........................................F-2

Audited Consolidated Financial Statements

Consolidated Balance Sheet...............................................F-3
Consolidated Operations Statement........................................F-5
Consolidated Stockholders' Equity Statement..............................F-6
Consolidated Cash Flow Statement.........................................F-10
Notes to Consolidated Financial Statements ..............................F-12




                                       F-1

<PAGE>



                         Report of Independent Auditors


The Board of Directors and Stockholders
NaPro BioTherapeutics, Inc.

We have audited the accompanying consolidated balance sheet of NaPro
BioTherapeutics, Inc. and subsidiaries as of December 31, 2000 and 1999, and the
related consolidated operations statement, stockholders' equity statement, and
cash flow statement for each of the three years in the period ended December 31,
2000. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of NaPro
BioTherapeutics, Inc. and subsidiaries at December 31, 2000 and 1999, and the
consolidated results of its operations and its cash flow for each of the three
years in the period ended December 31, 2000 in conformity with accounting
principles generally accepted in the United States.


ERNST & YOUNG LLP

Denver, Colorado
February 22, 2001, except for Note 11, as to which the date is March 13, 2001



                                                        F-2

<PAGE>

<TABLE>
<CAPTION>


                                   NaPro BioTherapeutics, Inc. and Subsidiaries

                                            Consolidated Balance Sheet



                                                                                        December 31,
                                                                               2000                   1999
                                                                               ----                   ----

Assets
<S>                                                                          <C>                   <C>
Current assets:
       Cash and cash equivalents                                             $18,982,000           $ 1,937,000
       Accounts receivable                                                     1,413,000             1,416,000
       Inventory:
              Raw materials                                                    2,409,000               129,000
              Work-in-process                                                  1,438,000               481,000
              Finished goods                                                   1,926,000             1,578,000
                                                                            ------------           -----------
                                                                               5,773,000             2,188,000
       Prepaid expense and other                                               1,461,000               153,000
                                                                            ------------          ------------
Total current assets                                                          27,629,000             5,694,000

Property and equipment, at cost:
       Plantation cost                                                         5,465,000             4,953,000
       Laboratory equipment                                                    5,267,000             3,010,000
       Leasehold improvements                                                  5,962,000             4,478,000
       Office equipment and other                                                782,000               654,000
       Construction in progress                                                  398,000             3,882,000
                                                                           -------------          ------------
                                                                              17,874,000            16,977,000
       Accumulated depreciation                                                8,237,000             6,284,000
                                                                            ------------          ------------
Property and equipment, net                                                    9,637,000            10,693,000

Inventory:
       Raw materials                                                             484,000             1,562,000
       Work-in-process                                                               -                 892,000
                                                                       -----------------         -------------
                                                                                 484,000             2,454,000
Other assets        251,000                                                      416,000
              -------------                                                -------------
Total assets  $38,001,000                                                    $19,257,000
              ===========                                                    ===========

</TABLE>


                                       F-3

<PAGE>


<TABLE>
<CAPTION>

                                   NaPro BioTherapeutics, Inc. and Subsidiaries

                                            Consolidated Balance Sheet

                                                                                        December 31,
                                                                                2000                  1999
                                                                                ----                  ----
Liabilities and stockholders' equity Current liabilities:
<S>                                                                         <C>                   <C>
       Accounts payable                                                     $ 3,371,000           $ 2,174,000
       Accrued payroll and payroll taxes                                        955,000               557,000
       Notes payable--current (Note 2)                                          135,000                48,000
                                                                           -------------        --------------
Total current liabilities                                                     4,461,000             2,779,000

Notes payable--long term (Note 2)                                            14,953,000             4,723,000

Commitments and contingencies (Note 9)

Minority interest  (Note 6)                                                         -                 622,000

Stockholders' equity (Note 6):
       Preferred stock,$.001 par value:
              Authorized shares--2,000,000                                          -                     -
       Nonvoting common stock, convertible on disposition
              into voting common stock, $.0075 par value:
              Authorized shares--1,000,000
              Issued and outstanding shares--395,000
              in 2000 and 1999                                                    3,000                 3,000
       Common stock, $.0075 par value:
              Authorized shares-45,000,000 in 2000,
              30,000,000 in 1999
              Issued shares--26,758,144 in 2000,
              23,482,671 in 1999                                                201,000               176,000
       Additional paid-in capital                                            88,970,000            65,358,000
       Accumulated deficit                                                  (69,245,000)          (52,620,000)
       Treasury stock-405,885 shares in 2000;
              539,867 shares in 1999                                         (1,342,000)           (1,784,000)
                                                                           -------------         -------------
Total stockholders' equity                                                   18,587,000            11,133,000
                                                                           -------------         -------------
Total liabilities and stockholders' equity                                  $38,001,000           $19,257,000
                                                                            ============          ============


See accompanying notes.

</TABLE>

                                       F-4

<PAGE>
<TABLE>
<CAPTION>



                                   NaPro BioTherapeutics, Inc. and Subsidiaries

                                         Consolidated Operations Statement


                                                                      Year Ended December 31,
                                                         2000                    1999                     1998
                                                         ----                    ----                     ----

Expense:
<S>                                                  <C>                     <C>                      <C>
Product sales                                        $  8,148,000            $  7,592,000             $  4,952,000
                                                     -------------           -------------            ------------

       Research, development and cost of
              products sold                            14,335,000              12,047,000                9,973,000
       General and administrative                       7,815,000               6,188,000                6,458,000
       Loss on disposal of assets                       2,245,000                 146,000                1,899,000
                                                    --------------          --------------           --------------
                                                       24,395,000              18,381,000               18,330,000
                                                     -------------           -------------            -------------
       Operating loss                                 (16,247,000)            (10,789,000)             (13,378,000)

Other income (expense):
       License fees                                          -                  2,320,000               11,110,000
       Interest income                                    372,000                 309,000                  550,000
       Interest expense                                  (750,000)               (842,000)                (902,000)
                                                   ---------------          --------------           --------------
Net loss                                             $(16,625,000)           $ (9,002,000)            $ (2,620,000)
                                                     =============           =============            =============

Net loss attributable to common
       stockholders                                  $(16,625,000)           $(10,213,000)            $ (3,212,000)
                                                     =============           =============            =============

Basic and diluted net loss per share             $          (0.69)       $          (0.50)         $         (0.22)
                                                 =================       =================         ================

Weighted average shares outstanding                    23,923,506              20,553,557               14,641,769
                                                    ==============          ==============            =============

</TABLE>



See accompanying notes.






                                       F-5

<PAGE>

<TABLE>
<CAPTION>

                                         NaPro BioTherapeutics, Inc. and Subsidiaries

                                          Consolidated Stockholders' Equity Statement

                                         Years Ended December 31, 1998, 1999 and 2000



                                             Nonvoting           Number of   Additional
                                             Common     Common   Common      Paid-in      Accumulated     Treasury
                                             Stock      Stock    Shares      Capital      Deficit         Stock        Total
                                                                 Issued
                                             ---------  -------  ---------   ----------   -------------   -----------  ----------

<S>                                          <C>        <C>      <C>         <C>          <C>             <C>          <C>
Balance as of December 31, 1997              3,000      $98,000  13,134,021  $50,833,000  $ (40,998,000)  $(2,674,000) $7,262,000
Issuance of option grants to
     purchase 30,265 shares of
     common stock at prices
     ranging from $1.00 to $2.00
     per share in exchange for
     consulting services                         -            -           -       23,000              -             -      23,000
Issuance of 186,656 shares of
     common stock in payment
     for dividends on convertible
     preferred stock at prices
     ranging from $0.82 to $1.43 per
     share                                        -       1,000     186,656       (1,000)             -             -           -
Compensation relating to repricing
     warrants                                     -           -           -       97,000              -             -      97,000
Receipt of 1,126,398 shares treasury
     stock as part of contract
     termination agreement                        -           -           -    1,768,000              -    (1,768,000)          -
Issuance of 4,264 restricted shares of
     common stock for compensation                -           -       4,264       40,000              -             -      40,000
Exercise of employee stock options for
     163,467 shares of common stock at
     prices ranging from $0.188 to $0.75
     per share                                    -       1,000     163,467       41,000              -             -      42,000
Issuance of 296,019 shares of common
     stock in payment for interest on
     debt at prices ranging from $0.84
     to $1.24                                     -       2,000     296,019      293,000              -             -     295,000
Contribution of 56,827 shares of common
     stock at $1.64 per share to
     retirement plan                              -       1,000      56,827       92,000              -             -      93,000
Exchange of 240,900 shares of subsidiary's
     preferred stock for 240,900 shares of
     common stock                                 -       2,000     240,900    1,949,000              -             -   1,951,000
Conversion of senior convertible note to
     2,833,587 shares of common stock at
     prices ranging from $0.70 to $1.72
     per share                                    -      21,000   2,833,587    2,734,000              -             -   2,755,000
Accretion of offering cost, conversion
     rights and value of warrant as
     preferred dividends on redeemable
     preferred stock                              -           -           -     (362,000)             -             -    (362,000)
</TABLE>


                                       F-6


<PAGE>
<TABLE>
<CAPTION>


                                         NaPro BioTherapeutics, Inc. and Subsidiaries

                                          Consolidated Stockholders' Equity Statement

                                         Years Ended December 31, 1998, 1999 and 2000




                                           Nonvoting              Number of   Additional
                                            Common     Common     Common      Paid-in      Accumulated   Treasury
                                             Stock     Stock      Shares      Capital      Deficit       Stock          Total
                                                                  Issued
                                           ----------  -------    ----------   ----------  -----------   ---------      -------
<S>                                        <C>           <C>       <C>        <C>          <C>           <C>            <C>
Conversion of redeemable, convertible
     preferred stock to 986,666 shares
     of common stock at prices ranging
     from $0.82 to $1.43                        -        8,000     986,666        889,000             -             -       897,000
Payment of convertible preferred stock
     dividends in cash                          -            -           -        (51,000)            -             -       (51,000)
Contribution of 230,711 shares of common
     stock from the treasury at $2.00 per
     share to retirement plan                   -            -           -       (300,000)            -       762,000       462,000
Net Loss                                        -            -           -              -    (2,620,000)            -    (2,620,000)
                                             -------- -------- -----------    -----------  ------------  ------------   -----------
Balance as of December 31, 1998            $3,000     $134,000  17,902,407    $58,045,000  $(43,618,000) $ (3,680,000)  $10,884,000

Issuance of option grants to purchase
     42,795 shares of common stock at
     prices ranging from $1.72 to $2.25
     per share in exchange for
     consulting services                        -            -           -         65,000             -             -        65,000
Issuance of 6,761 shares of common
     stock in payment for dividends
     on convertible preferred stock at
     prices ranging from $1.16 to
     $1.96 per share                            -            -       6,761              -             -             -             -
Issuance of 173,991 shares of common
     stock for compensation                     -        1,000     173,991        369,000             -             -       370,000
Exercise of employee stock options for
     60,476 shares of common stock at
     prices ranging from $0.19 to $2.00
     per share                                  -        1,000      60,476         80,000             -             -        81,000
Issuance of 400,000 shares of common
     stock at $5.00 per share net of
     issue cost of $294,000                     -        3,000     400,000      1,703,000             -             -     1,706,000
Issuance of 19,234 shares of common
     stock in payment for interest on
     debt at prices ranging from $1.07
     to $1.80 per share                         -            -      19,234         27,000             -             -        27,000

Conversion of senior convertible notes
     to 3,585,203 shares of common stock
     at prices ranging from $1.07 to
     $1.80 per share                            -       27,000   3,585,203      4,931,000             -             -     4,958,000
</TABLE>


                                       F-7


<PAGE>

<TABLE>
<CAPTION>

                                         NaPro BioTherapeutics, Inc. and Subsidiaries

                                          Consolidated Stockholders' Equity Statement

                                         Years Ended December 31, 1998, 1999 and 2000




                                           Nonvoting             Number of   Additional
                                            Common    Common     Common      Paid-in      Accumulated   Treasury
                                             Stock    Stock      Shares      Capital      Deficit       Stock          Total
                                                                 Issued
                                           ---------  -------    ----------  ----------   -----------   ---------      -------
<S>                                        <C>        <C>        <C>         <C>          <C>           <C>            <C>
Accretion of offering cost, conversion
     rights and value of warrant as
     preferred dividends on
     redeemable preferred stock                 -           -             -     (298,000)            -            -       (298,000)
Conversion of redeemable, convertible
     preferred stock to 1,299,085
     shares of common stock at
     prices ranging from $1.16 to $1.96         -      10,000     1,299,085    2,093,000             -            -      2,103,000
Payment of convertible preferred stock
     dividends in cash                          -           -             -      (98,000)            -            -        (98,000)
Contribution of 574,658 shares of
     common stock from the treasury at
     $2.00 per share to retirement plans        -           -             -     (770,000)            -    1,896,000      1,126,000
Premium  on redemption of 2,000 shares
     of redeemable convertible preferred
      stock                                     -           -             -     (805,000)            -            -       (805,000)
Issuance of 35,514 shares of common
     stock for cash and cashless
     exercises of 170,504 warrants              -           -        35,514       16,000             -            -         16,000
Net loss                                        -           -             -            -    (9,002,000)           -     (9,002,000)
                                           --------- --------    --------- -------------  ------------  -----------    ------------
Balance as of December 31, 1999            $3,000    $176,000    23,482,671  $65,358,000  $(52,620,000) $(1,784,000)   $11,133,000
Contribution of 133,982 shares of
     common stock from the treasury
     at $6.44 per share to retirement
     plans                                      -           -             -      420,000             -      442,000        862,000
Issuance of 25,000 shares of common
     stock at $7.44 to retirement plan          -           -        25,000      186,000             -            -        186,000
Issuance of 711,111 shares of common
     stock at $5.63 per share upon
     completion of milestone                    -       5,000       711,111    3,995,000             -            -      4,000,000
Issuance of options to purchase
     38,830 shares of common stock
     at prices ranging from $2.00 to
     $7.38 per share in exchange for
     consulting services                        -           -             -       27,000             -            -         27,000
</TABLE>


                                       F-8


<PAGE>
<TABLE>
<CAPTION>


                                         NaPro BioTherapeutics, Inc. and Subsidiaries

                                          Consolidated Stockholders' Equity Statement

                                         Years Ended December 31, 1998, 1999 and 2000



                                           Nonvoting              Number of   Additional
                                            Common     Common     Common      Paid-in      Accumulated   Treasury
                                             Stock     Stock      Shares      Capital      Deficit       Stock          Total
                                                                  Issued
                                           ----------  ------     ----------   ----------  -----------   ---------      -------
<S>                                        <C>         <C>        <C>         <C>          <C>           <C>            <C>
Exercise of warrants on 170,000 shares
     of common stock at $2.00 per share         -         1,000      170,000      339,000             -             -       340,000
Private placement of 2,000,000 shares
     of common stock at $8.75 per share
     net of issue cost of $1,152,000            -        15,000    2,000,000   16,333,000             -             -    16,348,000
Issuance of 60,044 shares of common stock
     for compensation                           -         1,000       60,444      472,000             -             -       473,000
Issuance of 100,000 shares of common
     stock for in-licensing of
     genomics technology                        -         1,000      100,000      993,000             -             -       994,000
Exercise of options on 131,646 shares
     of common stock at prices ranging
     from $1.00 to $10.13 per share             -         1,000      131,646      226,000             -             -       227,000
Exchange of 77,272 shares of
     subsidiary's preferred stock
     for 77,272 shares of common stock          -         1,000       77,272      621,000             -             -       622,000
Net loss                                        -             -            -            -   (16,625,000)            -   (16,625,000)
                                           ----------  -------- ------------  - ---------  ------------  ------------   -----------
Balance as of December 31, 2000            $3,000      $201,000   26,758,144  $88,970,000  $(69,245,000) $ (1,342,000)  $18,587,000

      See accompanying notes.
</TABLE>

                                       F-9


<PAGE>




<TABLE>
<CAPTION>


                                    NaPro BioTherapeutics, Inc. and Subsidiaries

                                          Consolidated Cash Flow Statement


                                                                               Year Ended December 31,
                                                                        2000             1999             1998
                                                                        ----             ----             ----

Operating activity
<S>                                                                 <C>             <C>                  <C>
Net loss                                                           $(16,625,000)     $(9,002,000)      $(2,620,000)
Adjustments to reconcile net loss
     to net cash provided (used) by operating activity:
     Depreciation                                                     1,805,000        1,604,000         1,732,000
     Accretion of debt issue cost, warrant
         allocation and conversion rights allocation                     40,000          413,000           429,000
     Amortization of license fee                                         83,000              -                 -
     Compensation paid with common stock,
         options and warrants                                         1,206,000        1,584,000           666,000
     Interest expense paid with common stock                                -             27,000           295,000
     Loss on disposal of assets                                       2,245,000          146,000         1,896,000
     Changes in operating assets and liabilities:
         Accounts receivable                                              3,000       (1,013,000)        1,104,000
         Inventory                                                     (968,000)        (343,000)          254,000
         Prepaid expense and other assets                               110,000           90,000           358,000
         Accounts payable                                             1,197,000          857,000        (2,884,000)
         Accrued liabilities                                            398,000          106,000           (95,000)
         Deferred revenue                                                   -         (2,910,000)        1,020,000
                                                             -------------------    -------------      ------------
     Net cash provided (used) by operating activity                 (10,506,000)      (8,441,000)        2,155,000
Investing activity
     Additions to property and equipment                             (3,642,000)        (918,000)         (474,000)
     Proceeds from sale of property and equipment                         1,000           16,000           105,000
     Proceeds from securities held to maturity                              -            197,000               -
     Transfer of restricted cash                                            -          1,320,000        (1,271,000)
                                                              ------------------     ------------      ------------
     Net cash provided (used) by investing activity                  (3,641,000)         615,000        (1,640,000)
Financing activity
     Proceeds from notes payable, net of issuance cost               10,562,000        4,914,000           188,000
     Payments on notes payable                                         (285,000)      (1,295,000)       (1,556,000)
     Preferred stock dividend                                               -            (98,000)          (51,000)
     Redemption of preferred stock                                          -         (2,805,000)              -
     Proceeds from sale of common and preferred
         stock including the exercise of common
         stock warrants and options                                  22,067,000        2,097,000            46,000
     Offering cost of common and preferred stock                     (1,152,000)        (294,000)              -
                                                                   -------------     ------------ -----------------
     Net cash provided (used) by financing activity                  31,192,000        2,519,000        (1,373,000)
                                                                   -------------     ------------       -----------
Net increase (decrease) in cash and cash equivalents                 17,045,000       (5,307,000)         (858,000)
Cash and cash equivalents at beginning of year                        1,937,000        7,244,000         8,102,000
                                                                   -------------     ------------      ------------
Cash and cash equivalents at end of year                           $ 18,982,000      $ 1,937,000       $ 7,244,000
                                                                    ============      ===========       ===========

</TABLE>

                                      F-10

<PAGE>

<TABLE>
<CAPTION>


                                    NaPro BioTherapeutics, Inc. and Subsidiaries

                                    Consolidated Cash Flow Statement (continued)


                                                                            Year ended December 31,
                                                                        2000           1999              1998
                                                                        ----           ----              ----

Supplemental schedule of noncash investing and
     financing activities
     <S>                                                          <C>                 <C>               <C>
     Conversion of senior convertible debt to
         common stock                                             $         -         $4,958,000        $2,755,000
     Conversion of convertible preferred shares
         to common stock                                                    -          2,103,000           897,000
     Exchange of preferred shares of subsidiary
         for common stock of NaPro                                      622,000              -           1,951,000
     Issuance of common stock for compensation
         previously accrued                                                 -                -              40,000
     Issuance of common stock as payment of dividends                       -             10,000           179,000
     Accretion of convertible preferred stock
         conversion rights valuation, offering
         cost and warrant valuation                                         -            298,000           362,000
     Receipt of common stock into treasury                                  -                -           1,768,000
     Non-cash exercise of warrants                                          -             64,000               -
     Plantation cost harvested to inventory                             647,000          113,000               -
     Issuance of common stock to prepay license fee                     994,000              -                 -
     Issuance of restricted stock to prepay compensation                342,000              -                 -

</TABLE>

See accompanying notes.



                                      F-11

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


                                December 31, 2000


1.   Basis of Presentation and Summary of Significant Accounting Policies

Organization

NaPro BioTherapeutics, Inc. ("NaPro" or "the Company"), a Delaware corporation,
was incorporated in 1991. In 1994 NaPro completed an initial public offering
("IPO") of its common stock. In 1994 NaPro formed a subsidiary, NaPro
BioTherapeutics (Canada), Inc., of which the Company owns 100% of the voting
rights. In 1997 NaPro formed a wholly-owned subsidiary, NBT Ltd., a Cayman
Islands corpora tion.

Basis of Presentation

The accompanying financial statements include the consolidated financial
position, consolidated results of operations and consolidated cash flow of NaPro
and its subsidiaries. All transactions have been accounted for at historical
cost. All balances and transactions between these entities have been eliminated
in the accompanying financial statements.

Description of Business

NaPro is a biopharmaceutical company focused on the development, production and
licensing of complex natural-product pharmaceuticals as well as the development
and licensing of novel genetic technologies for applications in
agribiotechnology, pharmacogenomic, and human therapeutic and diagnostic
applications.

Cash and Cash Equivalents

NaPro considers all highly liquid investments purchased with a maturity of three
months or less to be cash equivalents.

Fair Value of Financial Instruments

The carrying values of cash and cash equivalents, accounts receivable and
payable and notes payable (other than the note payable to Abbott Laboratories
("Abbott")) approximate fair value. The fair value of notes payable other than
the Abbott note is estimated using discounted cash flow analysis based on
NaPro's estimated current borrowing rate for similar types of arrangements.
NaPro has not estimated the fair value of the Abbott note because it is not
practical to estimate due to a lack of quoted market price for such debt.

Inventory

Inventory is stated at the lower of cost (first-in, first-out method) or market.




                                      F-12

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


Research and Development

NaPro expenses research and development cost as it is incurred.

Plantation Cost

NaPro has determined the cultivation of renewable sources of biomass to be used
in the manufacture of paclitaxel is a technically feasible business strategy.
Paclitaxel (referred to in some scientific and medical literature as "taxol"*)
is a naturally occurring cancer-fighting compound found in certain species of
yew (Taxus) trees. NaPro capitalizes plantation expenditures incurred prior to
the first commercial harvest. Plantation expenditures include the acquisition
cost of trees and the related cost of planting and growing. NaPro depletes such
cost evenly over the expected number of annual harvests, six to eight, and
retains a 20% residual value to be depleted at the time the whole tree is
harvested. If in any year a harvest is not performed, the depletion is deferred
and added to the depletion that would otherwise be charged to the next actual
harvest, as the harvest would benefit from an additional year's growth.

Long-Lived Assets

The carrying amount of long-lived assets is reviewed when facts and
circumstances suggest they may be impaired. If this review indicates long-lived
assets will not be recoverable as determined based on the undiscounted cash flow
estimated to be generated by these assets, the carrying amount of these
long-lived assets is reduced to estimated fair value or discounted cash flow, as
appropriate.

Depreciation and Amortization

Depreciation of property and equipment is computed on the straight-line method
over estimated useful lives between three and seven years. Leasehold
improvements are amortized over the lesser of estimated useful lives or the
lease term. Depreciation and amortization expense is allocated to either
research, development and cost of products sold, or general and administrative
expense, depending on the use of the related property and equipment.

Stock Options

NaPro has elected to follow Accounting Principles Board Opinion No. 25,
Accounting for Stock Issued to Employees (APB 25), and related interpretations
in accounting for outstanding stock options. Under APB 25, when the exercise
price of NaPro stock options equals the fair value of the underlying stock on
the date of grant, no compensation expense is recognized.



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

*TAXOL(R) is a registered trademark of Bristol-Myers Squibb Company for an
anticancer pharmaceutical preparation containing paclitaxel.


                                      F-13

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


Revenue Recognition

Revenue from product sales is recognized at the time of shipment or if shipped
on consignment, at time of draw-down from consignment. NaPro's production
process is not distinct from its research and develop ment processes.
Accordingly, the cost of products sold is included with its research and
development expense. Payments received in advance against future sales are
recorded as deferred revenue until earned.

Foreign and Domestic Operations and Export Sales; Significant Customers
<TABLE>
<CAPTION>

Domestic and foreign financial information follow:
                                                                    United                   Elimin-
                                                          Year     States        Canada      ations        Total
                                                          ----     -------       ------     --------       -----
<S>                                                       <C>   <C>            <C>        <C>             <C>
Net sales to affiliated and unaffiliated customers        2000  $ 8,148,000$           -  $            -  $ 8,148,000
                                                          1999    7,592,000          -            -       7,592,000
                                                          1998    4,952,000      454,000    (454,000)     4,952,000

Operating loss                                            2000   16,168,000       79,000          -      16,247,000
                                                          1999   10,624,000      165,000          -      10,789,000
                                                          1998   12,852,000      526,000          -      13,378,000

Total identifiable assets
     December 31,                                         2000   40,918,000    3,042,000  (5,959,000)    38,001,000
                                                          1999   21,432,000    3,162,000  (5,337,000)    19,257,000
</TABLE>

NaPro is dependent on sales to its development and marketing partner, F.H.
Faulding & Co., Ltd. ("Faulding"). In 1998 NaPro terminated its agreement with
its former marketing partner, the Baker Norton subsidiary of Ivax Corporation
("Ivax"). In 1999 NaPro completed its sales obligations to Ivax. See Note 8.
NaPro does not require collateral to secure accounts receivable. Substantially
all of NaPro's accounts receivable at December 31, 2000 and 1999 were from these
partners. Sales to these partners as a percent of total sales were:

                                   2000             1999             1998
                                   ----             ----             ----
Faulding                            95%              67%              44%
Ivax                                  -              31%              55%



                                      F-14

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


Export sales follow:

Sales                            2000               1999              1998
                                 ----               ----              ----
Australia                  $7,720,000         $5,121,000        $2,189,000
Other Foreign                 288,000              3,000           193,000
                          -----------       ------------       -----------
Total Foreign               8,008,000          5,124,000         2,382,000
United States                 140,000          2,468,000         2,570,000
                          -----------         ----------        ----------
Total Sales                $8,148,000         $7,592,000        $4,952,000
                           ==========         ==========        ==========

Patent Cost

NaPro expenses all cost incurred in prosecuting and enforcing patents.

Loss on Disposal of Assets

In 1996 NaPro initiated the construction of expanded manufacturing facilities in
Boulder, Colorado. NaPro suspended such construction in 1998. Due to the signing
of the agreement with Abbott and other reasons, NaPro has restarted such
construction. Because of manufacturing improvements and design changes, certain
cost incurred in the earlier construction which had been recorded in fixed
assets as construction-in- progress no longer has applicability in the current
improvements. Accordingly, in 2000 NaPro expensed $2.2 million of such cost.

Net Loss Per Share

NaPro's basic and diluted net loss per share is computed using the weighted
average number of shares of common stock outstanding. Potential common shares
from stock options, warrants and convertible securities are excluded from the
computation of diluted earnings per share as their effect is antidilutive. The
following table sets forth the computation of basic and diluted net loss per
share:
<TABLE>
<CAPTION>


                                                             2000                 1999                 1998
                                                             ----                 ----                 ----
Numerator:
<S>                                                         <C>                  <C>                   <C>
   Net loss                                                 $(16,625,000)        $( 9,002,000)         $(2,620,000)
    Premium on redemption of preferred
    stock                                                               -            (805,000)                    -
   Preferred stock dividends                                         -               (406,000)            (592,000)
                                                       ------------------      ---------------        ------------
   Numerator for loss per share--
    loss attributable to common stockholders                $(16,625,000)        $(10,213,000)         $(3,212,000)
                                                            =============        =============         ===========
</TABLE>



                                      F-15

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued



Denominator:
   Denominator for loss per share --
         weighted average shares         23,923,506     20,553,557    14,641,769
                                        ===========    ===========   ===========

Basic and diluted net loss per share  $      (0.69)  $      (0.50) $      (0.22)
                                      =============  ============= ============

Use of Estimates

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of management's estimates and
assumptions. Actual results could vary from the estimates used.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard No. ("Statement") 133, Accounting for
Derivative Instruments and Hedging Activities. Statement 133 establishes new
standards of accounting and reporting for derivative instruments and hedging
activities. Statement 133 requires that all derivatives be recognized at fair
value in the balance sheet, and that the corresponding gains or losses be
reported either in the operations statement or as a component of comprehensive
income, depending on the type of relationship that exists. In July 1999, the
Financial Accounting Standards Board issued Statement 137, Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the Effective Date
of FASB Statement 133. Statement 137 deferred the effective date until fiscal
years beginning after June 15, 2000. NaPro has not engaged in hedging activities
or invested in derivative instruments.

In December 1999, the Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") 101, Revenue Recognition, which provides guidance on
the recognition, presentation and disclosure on revenue in financial statements
filed with the SEC. SAB 101 outlines the basic criteria that must be met to
recognize revenue and provides guidance for disclosure related to revenue
recognition policies. NaPro believes that its current revenue recognition policy
is in compliance with SAB 101.

In March 2000, the FASB issued Interpretation 44, Accounting for Certain
Transactions Involving Stock Compensation -- an Interpretation of APB 25 ("FIN
44"). This interpretation clarifies (1) the definition of employee for purposes
of applying APB 25; (2) the criteria for determining whether a plan qualifies as
a noncompensatory plan; (3) the accounting consequences of various modifications
to the terms of a previously fixed stock option or award; and (4) the accounting
for an exchange of stock compensation awards in a business combination. This
interpretation is effective July 1, 2000, but certain conclusions in this
interpretation cover specific events that occur after either December 15, 1998,
or January 12, 2000. To the extent that this interpretation covers events
occurring during the period after December 15, 1998, or January 12, 2000, but
before the effective date of July 1, 2000, the effects of applying this
interpretation


                                      F-16

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


are recognized on a prospective basis from July 1, 2000. The adoption of FIN 44
did not impact NaPro's financial statements.

2.       Notes Payable

Notes payable consist of:

                                                         Year Ended December 31,
                                                          2000         1999
                                                          ----         ----
Note payable, due in May 2003, interest at 10.82%,
       principal and interest payable monthly          $   228,000   $      -
Note payable, due in March 2001, interest at 7.9%,
       principal and interest payable monthly               48,000          -
Note payable, due in March 2000, interest at 6.26%,
       principal and interest payable monthly                  -         48,000
Note payable to Abbott,  interest at 6.5%, interest
       only payable quarterly, net of issuance cost
       of $238,000 and $277,000 at December 31, 2000
       and 1999, respectively (see Note 8)              14,812,000    4,723,000
                                                       -----------   ----------
                                                        15,088,000    4,771,000
Less amounts currently payable                             135,000       48,000
                                                       -----------   ----------
Notes payable - long term                              $14,953,000   $4,723,000
                                                       ===========   ==========

NaPro has access to up to a total of $20 million under a secured loan
arrangement with Abbott, including the draws through 2000 of $15.1 million. The
loan bears a primary interest rate of 6.5% and is due in full on the earliest
of: 1) the second anniversary of the first sale of finished product by Abbott to
a wholesaler or end-user customer following approval of finished product by the
FDA; 2) the termination of the Agreement; or 3) January 1, 2007. The loan is
limited to a borrowing base of collateralized assets, recomputed monthly.
Substantially all of NaPro's hard assets are collateralized as security for the
loan.

The notes payable, other than the Abbott note, will have the following minimum
future payments:

                                    2001                       $135,000
                                    2002                         97,000
                                    2003                         44,000

For the years ended December 31, 2000, 1999, and 1998, interest paid in cash was
$467,000, $281,000, and $189,000 respectively. Also, 1999 and 1998 interest
expense includes $27,000 and $295,000 paid in NaPro common stock on the senior
convertible debt.

NaPro had entered into an irrevocable standby letter of credit agreement with a
financial institution to support a note payable for up to $200,000 at an
interest rate of prime plus 2%. In April 1999, NaPro paid off the note and the
letter of credit was canceled.



                                      F-17

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


3.       Senior Convertible Notes

In June 1997 NaPro privately issued $10.3 million of senior convertible notes.
As part of this transaction, NaPro issued warrants to purchase up to 323,700
shares of common stock at $10.00, including a warrant to purchase 33,700 shares
of common stock that was issued to the placement agent. The $10.00 exercise
price was subsequently reduced to $1.50 in amendments to the terms of the notes
(see Note 4). Through August 1999, all of the notes had been redeemed or were
converted into common stock.

4.       Redeemable, convertible preferred stock

On December 8, 1997 NaPro privately issued $5 million of nonvoting redeemable,
convertible preferred stock, Series C (the "C Preferred") at $1,000 per share
(5,000 shares). The C Preferred accrued dividends at 5% per year, which were
cumulative, payable in common stock or cash at NaPro's option. Additionally,
NaPro issued to the investor a warrant to purchase 175,000 shares of common
stock at $10.00 per share, subsequently amended to $2.00 per share. Through 1999
all of NaPro C Preferred had been redeemed or was converted into common stock.
Funding for the redemption of the convertible notes and the C Preferred was
provided by NaPro cash and cash received from Abbott.

5.       Income Taxes

As of December 31, 2000, NaPro had the following net operating loss
carryforwards and research and development credits to offset future taxable
income in the U.S.:

                                Net                 Research and
   Expiring                     Operating           Development
     December 31,               Losses               Credits
     ------------            -----------         ---------------

   2007                      $  1,746,000         $    52,000
   2008                         3,328,000              54,000
   2009                         4,713,000              38,000
   2010                         4,960,000              15,000
   2011                         7,389,000              49,000
   2012                        12,043,000             140,000
   2018                               -               205,000
   2019                         8,290,000             230,000
   2020                        16,141,000             547,000
                              -----------         -----------

                              $58,610,000          $1,330,000
                              ===========          ==========

The Tax Reform Act of 1986 contains provisions that limit the utilization of net
operating loss and tax credit carryforwards if there has been a "change of
ownership" as described in Section 382 of the Internal Revenue Code. Such a
change of ownership may limit NaPro's utilization of its net operating loss and
tax credit carryforwards, and could be triggered by sales of securities by NaPro
or its stockholders.



                                                        F-18

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


In Canada, NaPro has net operating loss carryforwards of approximately
US$1,570,000, expiring in years ending in 2002 through 2007.

Significant components of NaPro's deferred tax assets are:

                                                Year Ended December 31,
                                         2000         1999               1998
                                         ----         ----             ----

Deferred tax assets:
Tax net operating loss carryforward  $21,975,000   $16,062,000     $12,763,000
Research and development credits       1,330,000       910,000         663,000
Depreciation                           1,371,000     1,027,000         637,000
Deferred revenue                             -             -           596,000
Other                                    186,000       231,000         217,000
                                    -------------  ------------     -----------

Total deferred tax assets             24,862,000    18,230,000      14,876,000
Valuation allowance                  (24,862,000)  (18,230,000)    (14,876,000)
                                     ------------  ------------    ------------
Net deferred tax assets             $        -    $        -      $        -
                                    ============= =============   =============

6.       Stockholders' Equity

Preferred Stock Private Placement

In July and August 1995, NaPro closed a private placement of 725,513 shares of
Exchangeable Preferred Stock, Series A (the "Canadian Preferred") of NaPro's
Canadian subsidiary, NaPro BioTherapeutics (Canada), Inc. ("NaPro Canada"), for
net proceeds of $5,959,000.

By December 31, 2000, all shares of the Canadian Preferred had been exchanged
for shares of NaPro common stock and none of the Canadian Preferred remained
outstanding.

Stockholder Rights Plan

In November 1996, NaPro adopted a Stockholder Rights Plan and distributed a
dividend of one Right to purchase one one-hundredth of a share of a new series
of junior participating preferred stock, Series B, for each share of NaPro
common stock. The objective of the Rights Plan is to secure for stockholders the
long term value of their investment and to protect stockholders from coercive
takeover attempts by strongly encouraging anyone seeking to acquire NaPro to
negotiate with its Board of Directors. The adoption of the Rights Plan was not
in response to any hostile takeover proposal.

The Rights trade with common stock as a unit unless the Rights become
exercisable upon the occurrence of certain triggering events relating to the
acquisition of 20% or more of common stock. In certain events after the Rights
become exercisable they will entitle each holder, other than the acquirer, to
purchase, at the Rights' then current exercise price (currently set at $60), a
number of shares of common stock having market value of twice the Right's
exercise price or a number of the acquiring company's common shares having a
market value at the time of twice the Rights' exercise price. For example, in
the event of an


                                      F-19

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


acquisition of greater than 20% of NaPro stock without approval of NaPro's
Board of Directors, its stockholders (other than the 20% acquirer) would have
the right to purchase $120 worth of stock for $60. A stockholder would have one
such right for each share of stock held at the time the rights become
exercisable.

NaPro may amend the Rights except in certain limited respects or redeem the
Rights at $0.01 per Right, in each case at any time prior to the Rights becoming
exercisable. The Rights will expire on November 8, 2006.

5,366,059 unissued, authorized shares of common stock are reserved for future
issuance for nonvoting common, common stock options and warrants.

Private Placement

In November 2000 NaPro sold privately 2 million shares of common stock to a
group of institutional investors for $17.5 million, receiving $16,348,000 in
proceeds net of issuance cost. NaPro subsequently registered the resale of the
shares under the Securities Act of 1933. NaPro issued to the placement agent a
three year warrant for 100,000 shares exercisable at $8.75 per share.

Gene Alteration Technology License

In November 2000, NaPro entered into a 20 year gene alteration technology
license relating to the use of proprietary oligonucleotides (DNA fragments)
designed to precisely alter genes in humans, animals, plants, viruses and
microbes. The license agreements are cancelable by NaPro at any time and provide
for research and patent funding commitments and payments in NaPro common stock.
NaPro issued 100,000 shares of common stock for the licenses and will fund at
least $355,000 in research in the first year.

Non-voting Common Stock

The 395,000 shares of non-voting common stock are owned by Faulding.

7.       Common Stock Warrants and Options

Warrant Restructuring

During 1998 and 1999 changes were made to warrants issued in connection with the
senior convertible debt and the C Preferred (see Notes 3 and 4).

The following summarizes warrant activity:


                                      F-20

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued



                                                      Exercise      Expiration
                                       Warrants        Price          Dates

Outstanding at December 31, 1998        697,538    $1.500 - $2.500   1999-2003
Exercised                             (170,504)    1.900 -   2.000   1999-2001
                                     ----------

Outstanding at December 31, 1999        527,034    1.500 -   2.000   2001-2003
Exercised                             (170,000)              2.000        2001
Issued in private placement (see
     Note 6)                           100,000               8.750        2003
                                     ----------

Outstanding at December 31, 2000       457,034     $1.500 - $8.750   2001-2003
                                     ==========

Nonplan Stock Options

In January 1994, NaPro granted to the four NaPro outside directors 27,000
nonplan options to purchase shares of common stock which are immediately
exercisable at a price of $2.40 and which expire in January 2004. As a result of
option exercises, 16,000 of these options remained outstanding on December 31,
2000. In September 1997, NaPro granted to its employees 20,075 nonplan options
to purchase shares of common stock which vest over two years and which expire in
September 2007.

The 1993 Stock Option Plan

During 1993, the board of directors adopted the NaPro BioTherapeutics, Inc. 1993
Stock Option Plan (the "Plan") to provide stock options to employees and other
individuals as determined by the board of directors. The Plan provides for
option grants designated as either nonqualified or incentive stock options. The
Plan provides for the issuance of up to 146,667 shares of NaPro common stock.
The initial term of the Plan is ten years, and the maximum option exercise
period shall be no more than ten years from the date of grant. The term of
options for 667 or more shares is eight years, and the term of options for fewer
than 667 shares is five years. Options for 667 shares or more vest 25% after
each anniversary date of the grant, and options for fewer than 667 shares vest
50% after each anniversary date of the grant. The exercise price for stock
options issued under the Plan is equal to the fair market value of NaPro common
stock on the day of grant.

1994 Long-Term Performance Incentive Plan

In July 1994, NaPro's stockholders approved the 1994 Long-Term Performance
Incentive Plan (the "Incentive Plan"). Originally, an aggregate of 375,000
shares were authorized for issuance under the Incentive Plan. Subsequently,
including during 2000, NaPro stockholders approved increases in the number of
authorized shares, and, as a result of these increases, there are currently
3,875,000 shares authorized for issuance under the Incentive Plan. The Incentive
Plan provides for granting to employees and other key individuals who perform
services for NaPro ("Participants") the following types of incentive awards:
stock options, stock appreciation rights, restricted stock, performance units,
performance grants and other types of awards that the Compensation Committee
deems to be consistent with the purposes of the Incentive Plan. In addition,
each person who is not an employee of NaPro or one of its subsidiaries


                                      F-21

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


and (i) who is elected or re-elected as a director of NaPro by the stockholders
at any annual meeting of stockholders, (ii) who continues as a director
following an annual meeting of NaPro stockholders at which such director is not
subject to re-election or (iii) is appointed as a director of NaPro in
accordance with its bylaws other than at an annual meeting, upon such election
or appointment, will receive, as of the business day following the date of each
such election or appointment, a nonqualified option to purchase 10,000 shares of
NaPro common stock. The Incentive Plan also provides for annual automatic grants
of options to purchase 10,000 shares to the chairs of the board of directors'
Audit, Compensation and Strategic Planning Committees.

The 1998 Stock Option Plan

In 1998, the board of directors adopted the 1998 Stock Option Plan (the "1998
Plan") to provide stock options for employees and other individuals performing
services for NaPro. Originally, an aggregate of 125,000 shares was authorized
for issuance under the 1998 Plan. In 1999 and February 2000 the board of
directors approved increases in the number of authorized shares. As a result of
these increases, there are currently 925,000 shares authorized for issuance
under the 1998 Plan. Under the terms of the 1998 Plan, non-qualified stock
options cannot be granted to persons who are NaPro officers or directors.

The following summarizes stock option activity and balances:

                                                                       Weighted
                                                                        Average
                                          Stock           Exercise     Exercise
                                        Options             Price       Price
                                        -------           ---------   ---------

 Outstanding at December 31, 1997     1,190,783     $0.188 - $11.750     $6.57
 Granted                                978,705      1.000 -   1.39
 Forfeited                              (67,968)     1.000 -   5.36
 Exercised                             (163,467)     0.188 -   0.26
 Canceled in restructuring             (836,785)     3.650 -   8.49
 Issued in restructuring                632,799      1.813                1.81
                                     -----------    ----------------    ------

 Outstanding at December 31, 1998     1,734,067      0.188 -  10.250      1.71
 Granted                              1,244,295      1.719 -   2.656      2.39
 Forfeited                             (116,451)     1.000 -  10.250      2.07
 Exercised                              (60,476)     0.188 -   2.000      1.38
                                     -----------    ----------------    ------

 Outstanding at December 31, 1999     2,801,435      0.750 -  10.125      2.00
 Granted                                890,310      2.250 -   9.000      7.34
 Forfeited                               (6,364)     1.000 -   9.500      2.19
 Exercised                             (131,646)     1.000 -  10.125      1.71
                                      ----------  ------------------    ------

 Outstanding at December 31, 2000     3,553,735     $0.750 - $10.125     $3.35
                                      =========    ================      =====



                                      F-22

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued

<TABLE>
<CAPTION>

The weighted-average fair value of options granted during 2000 was $5.84.


                                Outstanding Options                                          Exercisable Options
                                              Weighted-
                                               Average              Weighted-                              Weighted-
      Range of             Number             Remaining              Average             Number             Average
   Exercise Price       Outstanding        Contractual Life       Exercise Price       Exercisable       Exercise Price
   --------------       -----------        ----------------       --------------       -----------       --------------

<S>                            <C>               <C>               <C>                        <C>         <C>
$0.75 - $  1.19                541,591           7.52              $           1.00           294,386     $           1.00
$1.63 - $  2.00                875,686           7.14                          1.83           492,732                 1.83
$2.13 - $  2.66              1,150,520           8.33                          2.39           629,895                 2.45
$3.25 - $  3.65                 70,758           7.70                          3.31            70,758                 3.31
$6.00 - $ 8.00                 884,080           9.44                          7.36            87,053                 7.20
$8.31 - $10.13                  31,100           8.27                          8.87             8,989                 9.32
                           -----------           ----             -----------------      ------------    -----------------
$0.75 - $10.13               3,553,735           8.18              $           3.35         1,583,813     $           2.32
                             =========           ====              ================         =========     ================
</TABLE>

Pro forma information regarding net income and earnings per share is required by
FASB Statement 123, which also requires that the information be determined as if
NaPro had accounted for its employee stock options granted subsequent to
December 31, 1994 under the fair value method of that statement. The fair value
for these options was estimated at the date of grant using a Black-Scholes
option pricing model with the following weighted-average assumptions for 2000,
1999 and 1998 respectively: risk-free interest rate ranges of 5.01% to 5.16%,
5.24% to 6.35% and 4.24% to 5.67%; no expected dividend; volatility factor of
 .984, .868 to .876 and .858; and an estimated expected life range of three to
six years.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. NaPro's pro forma
information follows:
<TABLE>
<CAPTION>

                                                            2000                  1999                 1998
                                                            ----                  ----                 ----
<S>                                                     <C>                   <C>                <C>
Pro forma net loss                                      $(17,736,000)         $  (9,821,000)     $(3,104,000)
                                                        =============         ==============     ============
Pro forma net loss attributable to
    common stockholders                                 $(17,736,000)          $(11,032,000)     $(3,696,000)
                                                        =============          =============     ============
Pro forma loss per share                               $       (0.74)         $       (0.54)     $     (0.25)
                                                       ==============         ==============     ============
</TABLE>

NaPro does account for options issued to consultants using the provisions of
FASB Statement 123. Current expense in 2000 was $27,000.

8.       Strategic Alliances

NaPro has strategic alliances with three pharmaceutical companies, Abbott,
Faulding and Tzamal, which NaPro believes have the capabilities to obtain
commercial approval for NaPro paclitaxel in various markets and to establish
NaPro paclitaxel as a major product in the markets. Faulding commenced
commercial sales in 1995. NaPro had previously had an alliance with Ivax which
was terminated in March 1998.


                                      F-23

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


Abbott Agreement

In July 1999 NaPro entered into a collaborative agreement of up to 20 years (the
"Agreement") with Abbott to develop and commercialize one or more formulations
of paclitaxel for the treatment of a variety of cancer indications. The
exclusive agreement covers the U.S. and Canada. Abbott may terminate the
Agreement at any time with or without cause. Should Abbott terminate without
cause, it is obligated to make certain payments to NaPro and to give NaPro
twelve months prior written notice. In June 2000, NaPro and Abbott amended the
Agreement to expand the scope of the relationship between the two companies and
to, among other things, provide increased flexibility to deal with the
development and marketing of paclitaxel in the U.S.

NaPro is responsible for supply of bulk drug; clinical trials are conducted
jointly with Abbott. Abbott is responsible for finishing, regulatory filings,
marketing and sale of the finished drug product. NaPro has licensed to Abbott
its paclitaxel-related patents. Most primary decisions related to the
development program will be made by a joint NaPro and Abbott development
committee.

NaPro has received and will, contingent upon successful development of product
and achievement of milestones, receive funding from Abbott in the form of
development and marketing milestone payments, a secured loan and an equity
investment. In 1999 NaPro received $8 million, consisting of an initial $1
million fee, $2 million on the issuance of 400,000 shares of common stock, and
$5 million of draws on a secured loan. In 2000 NaPro received $14.1 million,
consisting of $4 million on the issuance of 711,111 shares of common stock upon
achievement of the first milestone under the Agreement, and $10.1 million of
draws on the secured loan.

Contingent upon NaPro's successful achievement of all development milestones and
including the payments received through 2000, NaPro could receive up to $45
million consisting of $34 million in development fees and up to $11 million for
the purchase of 2 million shares of NaPro common stock.

Contingent upon receiving regulatory approval and achieving certain commercial
sales thresholds over several years, NaPro may receive additional milestone
payments from Abbott in the range of zero to $57 million. No assurance can be
given that regulatory approval or sales thresholds will be achieved.

Under terms of the Agreement, Abbott will purchase bulk drug from NaPro. Once
the paclitaxel product is approved and commercialized, Abbott will pay a
percentage of its net paclitaxel sales to NaPro, less Abbott's payments to NaPro
for purchase of bulk drug (see Note 11).

The Faulding Agreement

In 1992, NaPro entered into an initial 20 year exclusive agreement with
Faulding, which has subsequently been amended, most recently in June 2000 (the
"Faulding Agreement"), to develop and market paclitaxel in more than 70
countries, including Australia, Asia, South and Central America. The Faulding
Agreement provides that NaPro shall supply all of Faulding's requirements for
paclitaxel. NaPro is paid a fixed percentage of Faulding's original sales price
for paclitaxel supplied for commercial use (see Notes 9 and 11).


                                      F-24

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


The Tzamal Agreement

NaPro has established an exclusive supply and distribution agreement with Tzamal
Pharma for the development and distribution of NaPro paclitaxel in Israel. NaPro
has received approval in Israel to sell NaPro paclitaxel under the trade name
Biotax(TM) in Israel. The Israeli Ministry of Health has approved Biotax(TM) for
use in a variety of cancers and Tzamal is selling Biotax(TM) in Israel.

The Ivax Agreement (terminated in March 1998)

In June 1993, NaPro entered into an initial 20 year exclusive agreement with
Ivax to develop and market paclitaxel in the U.S., Europe, Japan and much of the
rest of the world not covered by the Faulding Agreement (the "Ivax Agreement").

NaPro and Ivax terminated the Ivax Agreement on March 20, 1998. Under the
termination agreement, Ivax received a royalty-free, limited, non-exclusive
license to one of NaPro's patents (the "Patent") in the U.S., Europe and certain
other world markets. In return, NaPro received a cash payment of $6 million, $2
million of which was placed in escrow to be released as remaining product is
delivered. In April, 1998, Ivax returned approximately 1.1 million shares of
NaPro common stock. In addition, upon the issuance of the Patent in various
countries, Ivax made additional payments of $6.4 million. NaPro manufactured a
fixed amount of paclitaxel for delivery to Ivax periodically during 1998 and
1999. All such paclitaxel was sold to Ivax at a fixed price. In 1998 and 1999
NaPro received $680,000 and $1,320,000 of the $2 million escrow, respectively.
NaPro does not anticipate sales of paclitaxel to Ivax after 1999.

9.       Commitments and Contingencies

Operating Leases

NaPro has executed noncancellable operating lease agreements for office,
research and production facilities, equipment and for plantations. As of
December 31, 2000, future minimum lease payments under noncancellable operating
lease agreements are as follows:

                           2001                        $   870,000
                           2002                            693,000
                           2003                            160,000
                           2004                             23,000
                           2005                             20,000
                           Thereafter                       19,000
                                                     -------------

                                  Total                 $1,785,000
                                                        ==========

Rent expense for the years ended December 31, 2000, 1999 and 1998 was $955,000,
$793,000, and $600,000, respectively.



                                      F-25

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


Intellectual Property Contingency

NaPro's intellectual property is a key asset. NaPro's intellectual property
rights are subject to legal challenge. Such rights are uncertain and involve
complex legal and factual questions for which important legal principles are
largely unresolved. A number of other entities have developed technologies that
may be related to NaPro's technology. Some of these entities are larger and have
significantly greater resources than NaPro. Some of the technologies may
conflict with NaPro's technologies, and therefore increase the potential of
legal challenge.

NaPro relies on trade secret protection for its confidential and proprietary
information. There can be no assurance that competitors or potential competitors
of NaPro will not independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to NaPro's trade secrets or
disclose such technology, or that NaPro can meaningfully protect its trade
secrets.

Uncertainty Over the Selling Price Under the Faulding Agreement

Under the Faulding Agreement (see Note 8), NaPro is paid a fixed percentage of
Faulding's sales price. NaPro recognizes the corresponding revenue at the time
of shipment of paclitaxel to Faulding. Faulding's actual selling price may
differ from the amounts originally budgeted and indicated to NaPro. In mid-2001,
Faulding will communicate to NaPro the final amount of sales for the period
April 1, 2000 to March 31, 2001, and an adjustment will be calculated, which may
either increase or decrease NaPro's revenue from sales of products to Faulding
for 2000 and 2001. In 1998, 1999 and 2000 such adjustments were not material.

Suit against Bristol

In September 2000 NaPro and Abbott filed a patent infringement suit in the
United States District Court for the District of Colorado against Bristol
alleging infringement of U.S. Patent numbers 5,972,992 and 5,977,164 which
relate to paclitaxel. Bristol has asserted defenses that if successful would
result in the invalidity or unenforceability of the patents. A finding of
invalidity or unenforceability of the patents would have a material adverse
affect on NaPro. The trial is set for June 2002. NaPro intends to vigorously
prosecute the case.

Litigation related to Bristol patents

The compound, paclitaxel, is not patented. Bristol has obtained, however, U.S.
patents covering the method of administration upon which its FDA approval was
received. Abbott and a number of other companies have filed applications with
the FDA for generic paclitaxel based upon Bristol's initial FDA approval. Anyone
obtaining FDA approval for generic paclitaxel will rely upon a method of
administration that might infringe the Bristol patents. Bristol has sued some of
those companies that are seeking FDA approval for generic paclitaxel for
infringement of Bristol's patents. The court before which the action is pending
ruled that several key claims of the patents are invalid. An appeal of the court
ruling has been heard. While Bristol has not yet sued NaPro or Abbott over this
issue, that situation is likely to change once the FDA accepts the ANDA filed by
Abbott. Should generic paclitaxel be found to infringe Bristol's


                                      F-26

<PAGE>


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued


patents, such finding could have a material adverse affect on NaPro, because
NaPro's current strategy for obtaining a generic approval would no longer be
viable.

10.      Retirement Plans

NaPro has a defined contribution retirement plan for its employees established
in accordance with the provisions of Internal Revenue Code section 401(k) (the
"Plan"). Employees over the age of 17 are eligible to participate in the Plan on
the first day of the month immediately following the completion of six months of
continuous service or 1,000 hours of service during a 12 continuous month
period.

Participants may contribute up to 15% of their pay to the Plan. NaPro may make
additional contributions to the Plan on behalf of the participants in the form
of cash or in shares of its common stock. In 2000, 1999 and 1998, NaPro elected
to match the first $2,000 in contributions of each participating employee with
NaPro common stock at a rate of 284% for 2000 and 200% for 1999 and 1998. In
1999 and 1998 NaPro elected to make a discretionary contribution in the form of
NaPro common stock at the rates of 6% and 10% of all eligible employees' pay. In
2000, 1999 and 1998 NaPro contributed 44,661, 322,750 and 287,538 shares of
common stock to the Plan, valued at $287,000, $646,000 and $855,000,
respectively.

During 1999 NaPro adopted an Employee Stock Ownership Plan (ESOP) for its
employees established in accordance with the provisions of Internal Revenue
Code. Employees over the age of 17 are eligible to participate in the ESOP on
the first day of the month immediately following the completion of six months of
continuous service or 1,000 hours of service during a 12 continuous month
period. Participants make no contributions to the ESOP. Each year NaPro
contributes NaPro common stock to the ESOP with a value of 10% or more of all
eligible employees' pay, subject to amendment. For 2000 and 1999 NaPro
contributed 114,321 and 239,952 shares to the ESOP, valued at $761,000 and
$480,000, respectively. All shares held by the ESOP are treated as outstanding
in computing earnings per share.

11.      Subsequent Events

European Distribution In March 2001 NaPro entered into a marketing and
distribution agreement with Faulding covering the distribution of NaPro
paclitaxel in Europe. The agreement adds to NaPro's earlier agreement with
Faulding (see Note 8).

Under the agreement, NaPro will be responsible for regulatory filings and will
supply paclitaxel raw material exclusively to Faulding to formulate and finish
the product. The final proprietary paclitaxel formulation will then be marketed
and sold by Faulding in Europe. Under the agreement, Faulding has paid an
up-front licensing fee to NaPro of $7.5 million and the parties will share
equally in the net sales of the product in Europe.

ANDA Filing In March 2001 NaPro and Abbott filed an Abbreviated New Drug
Application (ANDA) with the U.S. Food and Drug Administration (FDA) for
paclitaxel.


                                      F-27

<PAGE>


12.      Quarterly Data (unaudited)


                  NaPro BioTherapeutics, Inc. and Subsidiaries

              Notes to Consolidated Financial Statements, continued

                                                    Net Loss
                                    Loss            per Share
                                    Before          Attributable to
                  Net Sales         Extraordinary   Common            Net Loss
Period              (000's)         Items (000's)   Stockholders      (000's)

 1Q 1999         $   2,037      $   (1,939)         $      (0.11)    $  (1,939)
 2Q 1999           1,950            (1,590)            (0.09)          (1,590)
 3Q 1999           2,181            (2,052)            (0.14)          (2,052)
 4Q 1999           1,424            (3,421)            (0.15)          (3,421)

 1999            $   7,592        $     (9,002)     $      (0.50)    $  (9,002)
                 ==========       =============     =============    ==========

 1Q 2000         $     733        $     (3,039)     $      (0.13)    $  (3,039)
 2Q 2000           3,298            (5,645)            (0.24)          (5,645)
 3Q 2000           2,343            (3,412)            (0.14)          (3,412)
 4Q 2000           1,774            (4,529)            (0.18)          (4,529)

   2000          $   8,148        $   (16,625)      $     (0.69)     $ (16,625)
                 ==========       ============      ============     ==========


                                      F-28

<PAGE>