Biopure Corporation (Biopure, or the Company) is a leading developer, manufacturer and supplier of a new class of pharmaceuticals, called oxygen therapeutics, which are intravenously administered to deliver oxygen to the body’s tissues. Its products are Oxyglobin, for veterinary use, and Hemopure, for human use.

During 1998, the Company began selling Oxyglobin in the United States for the treatment of anemia in dogs. Initially, sales were made on a limited basis directly to emergency and specialty veterinary practices. In October 1998, the Company began selling Oxyglobin nationwide through several veterinary distributors, who purchase product for immediate and direct resale to veterinary practices. In April 2001, the Company began selling Oxyblobin to a distributor in the United Kingdom. Oxyglobin is now available to veterinarians in selected European countries through established local veterinary distributors in Germany, France and the United Kingdom. In fiscal 2001, Hemopure was approved in South Africa for use in adult surgery patients to treat acute anemia and eliminate, reduce or delay red blood cell transfusion. Commercial sales in South Africa are expected to begin in fiscal 2002.

During fiscal 2001, the Company continued activities associated with data organization and analyses for the pivotal Phase III clinical trial of Hemopure. These clinical trials are significant factors relating to the Company’s operating losses. Although there cannot be any assurance that Hemopure will be approved for sale in additional countries, the trials to date have produced satisfactory results, which have allowed the Company to continue clinical progress. The Company is preparing to file a marketing application for Hemopure in the United States in fiscal 2002, followed by an application in Europe, for perioperative use of the product in patients undergoing elective surgery. The product is also being developed for use in trauma, cancer and ischemic events such as heart attack and stroke.

The Company expects that its cash and cash equivalents, including certain funds raised in fiscal 2002 (see Note 14), will be sufficient to fund its current plan into the first quarter of fiscal 2003. Under this plan, its operations in fiscal 2002 will be in support of its application to the FDA for marketing approval of Hemopure, the capacity upgrade of its Cambridge manufacturing facility, sales to South Africa and sales of Oxyglobin. Efforts for development of additional indications for Hemopure and for preparation to market Hemopure in the U.S. will be deferred until additional funds are available. Should management’s plans not develop as anticipated, the Company will restrict certain of its planned activities and operations, as necessary, to sustain operations and conserve cash resources.