UNITED STATES ~~SECURITIES AND EXCHANGE COMMISSION~~

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

~~þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15~~(dMark One) ~~OF THE SECURITIES EXCHANGE ACT OF 1934~~

~~For~~x ~~the~~QUARTERLY ~~quarterly~~REPORT ~~period~~PURSUANT ~~ended~~TO ~~July 31,~~SECTION ~~2007~~ 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

oFor ~~TRANSITION~~the ~~REPORT~~quarterly ~~PURSUANT~~period TOended ~~SECTION~~January 31, 132009 ~~OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

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

For the transition period from to

Commission File Number 001-15167

BIOPURE CORPORATION

(Exact name of registrant as specified in its charter)


Delaware		04-2836871
(State of Incorporation)		(IRS Employer Identification Number)

11 Hurley Street, Cambridge, Massachusetts		02141
(Address of principal executive offices)		(Zip Code)

(617) 234-6500 ~~(Registrant’s~~ ~~telephone number)~~

~~Indicate by check mark whether the registrant~~ (~~1) has~~Registrant’s ~~filed~~telephone ~~all reports required to be filed by Section 13 or 15(d~~number) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þ Yes o No

Indicate by check mark whether the registrant (1) has isfiled aall ~~large~~reports ~~accelerated~~required ~~filer,~~to anbe ~~accelerated~~filed ~~filer,~~ by Section 13 or a15(d) ~~non-accelerated~~of ~~filer.~~the ~~See~~Securities ~~definition~~Exchange Act of ~~“accelerated~~1934 ~~filer~~during ~~and~~the ~~large~~preceding ~~accelerated~~12 ~~filer”~~months ~~in Rule 12b-2~~(or offor such shorter period that the ~~Exchange~~registrant ~~Act.~~was ~~(Check~~required ~~one~~to file such reports):, and (2) has been subject to such filing requirements for the past 90 days. x Yes ¨ No

~~Large~~Indicate by check mark whether the registrant is a large accelerated filer, ~~o Accelerated~~an accelerated filer, ~~o Non~~a non-accelerated filer, þor a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

~~Indicate~~Large byaccelerated ~~check~~filer ~~mark~~¨ ~~whether~~Accelerated ~~the~~filer ~~registrant~~¨ isNon-accelerated afiler ~~shell~~¨ ~~company~~ (asDo ~~defined~~not incheck ~~Rule 12b-2~~if ofa ~~the Exchange~~smaller ~~Act~~reporting company). oSmaller ~~Yes þ~~reporting No company x

~~The~~Indicate ~~number~~by ofcheck ~~shares~~mark ~~outstanding~~whether ofthe ~~each~~registrant ofis ~~the~~a ~~issuer’s~~shell ~~classes~~company of(as ~~common~~defined ~~stock~~in asRule 12b-2 of ~~September 12,~~the ~~2007 was:~~Exchange Act). ¨ Yes x No

Class A Common Stock, $.01 par value		77,967,938
Class B Common Stock, $1.00 par value		117.7

The number of shares outstanding of each of the issuer’s classes of common stock as of March 17, 2009 was:

Class A Common Stock, $.01 par value: 39,709,015

Class B Common Stock, $1.00 par value: 117.7

BIOPURE CORPORATION

INDEX TO FORM 10-Q

	~~Page~~		Page
Part I — Financial Information:
Part I—Financial Information:
Item 1 — Financial Statements (Unaudited)
Item 1—Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets at July 31, 2007 and October 31, 2006		3
	Condensed Consolidated Balance Sheets at January 31, 2009 and October 31, 2008		3
Condensed Consolidated Statements of Operations for the three and nine months ended July 31, 2007 and July 31, 2006		4
	Condensed Consolidated Statements of Operations for the three months ended January 31, 2009 and January 31, 2008		4
Condensed Consolidated Statements of Cash Flows for the nine months ended July 31, 2007 and July 31, 2006		5
	Condensed Consolidated Statements of Cash Flows for the three months ended January 31, 2009 and January 31, 2008		5
~~Notes to Condensed Consolidated Financial Statements~~	Notes to Condensed Consolidated Financial Statements	6	6
Item 2 — Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
	Item 2—Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3 — Quantitative and Qualitative Disclosure of Market Risk		20
	Item 3—Quantitative and Qualitative Disclosure about Market Risk		14
Item 4 — Controls and Procedures		20
	Item 4—Controls and Procedures		14
Part II — Other Information:
Part II—Other Information:
Item 1 — Legal Proceedings		21
	Item 1—Legal Proceedings		16
Item 1A — Risk Factors		21
	Item 1A—Risk Factors		16
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds		31
	Item 2—Unregistered Sales of Equity Securities and Use of Proceeds		21
Item 3 — Defaults Upon Senior Securities		31
	Item 3—Defaults Upon Senior Securities		21
Item 4 — Submission of Matters to a Vote of Security Holders		31
	Item 4—Submission of Matters to a Vote of Security Holders		21
Item 5 — Other Information		31
	Item 5—Other Information		21
Item 6 — Exhibits		31
	Item 6—Exhibits		21
Signatures		32	22
Exhibit Index		33	23
EX-31.1 Section 302 Certification of CEO
EX-31.2 Section 302 Certification of CFO
EX-32.1 Section 906 Certification of CEO
EX-32.2 Section 906 Certification of CFO

Biopure^®, Hemopure^®, and Oxyglobin^® are registered trademarks of Biopure Corporation.

Part I

Item 1

BIOPURE CORPORATION

Condensed Consolidated Balance Sheets

(In thousands, except share and per share data)

(Unaudited)

	July 31, 2007			October 31, 2006
	January 31,2009			October 31,2008
Assets:
Current assets:
Cash and cash equivalents	$	~~6,314~~256		$	61,~~576~~095
Accounts receivable, net		~~214~~593			80426
Inventories		~~2,443~~990			21,~~850~~995
Other current assets		1,406			1,346
Prepaid expenses and other current assets		499			740
Total current assets		102,~~377~~338			104,~~852~~256
Property, plant and equipment, net		194,~~924~~465			225,~~175~~129
Other assets		~~763~~457			~~805~~592
Total assets	$	317,~~064~~260		$	339,~~832~~977
Liabilities and stockholders’ equity:
Current liabilities:
Accounts payable	$	~~574~~866		$	~~569~~591
Accrued expenses		21,~~833~~092			31,~~250~~786
Current portion of deferred revenue		108			190
Deferred revenue		1,212			35
Current portion of restructuring charges		87			207
Total current liabilities		1,993			2,412
Total current liabilities		3,602			4,216
Deferred revenue, net of current portion		—			1,177
Deferred revenue, net of current portion		1,115			987
Total long-term liabilities		—			1,177
Restructuring charges, net of current portion		—			46
Commitments and contingencies, Note 6
Other long-term liabilities		41			41
Total long-term liabilities		1,156			1,074
Commitments and contingencies, Notes 8 & 10
Stockholders’ equity:
Preferred stock, $0.01 par value, 30,000,000 shares authorized, no shares outstanding		—			—
Common stock:
Class A, $0.01 par value, 200,000,000 shares authorized, 77,960,126 shares outstanding at July 31, 2007 and 49,365,125 at October 31, 2006		780			494
Class A, $0.01 par value, 200,000,000 shares authorized, 39,709,015 shares issued and outstanding at January 31, 2009 and October 31, 2008		397			397
Class B, $1.00 par value, 179 shares authorized, 117.7 shares outstanding		—			—
Class B, $1.00 par value, 179 shares authorized, 117.7 shares outstanding at January 31, 2009 and October 31, 2008		—			—
Capital in excess of par value		~~546~~563,~~011~~683			~~529~~563,~~172~~613
Contributed capital		24,574			24,574
Notes receivable, net of reserve		—			(235	)
Accumulated other comprehensive income		(180	)		(169	)
Accumulated deficit		(~~545~~584,~~059~~384	)		(~~525~~582,~~463~~027	)
Total stockholders’ equity		264,~~306~~090			286,~~542~~388
Total liabilities and stockholders’ equity	$	317,~~064~~260		$	339,~~832~~977

See accompanying notes

BIOPURE CORPORATION

Condensed Consolidated Statements of Operations

(In thousands, except ~~per~~share and per share data)

(Unaudited)

Three Months Ended

~~Nine Months Ended~~

July 31, 2007

July 31, 2006

July 31, 2007

July 31, 2006

January 31, 2009

January 31, 2008

Revenues:

Product revenue

~~528~~865

~~313~~477

~~1,494~~

~~988~~

Research and development revenue

22293

8396

~~269~~

~~296~~

Total revenues

~~550~~1,158

~~396~~573

~~1,763~~

~~1,284~~

Cost of product revenues

31,~~089~~000

2,~~939~~788

~~9,026~~

~~9,351~~

Gross loss

(2,539

)

(2,543

)

(7,263

)

(8,067

)

Gross profit (loss)

158

(2,215

)

Operating expenses:

Research and development

1,~~618~~120

1,~~772~~487

~~5,397~~

~~5,112~~

Sales and marketing

~~341~~96

~~197~~280

~~1,099~~

~~524~~

General and administrative

21,~~107~~328

21,~~239~~996

~~6,365~~

~~6,826~~

Total operating expenses

42,~~066~~544

43,~~208~~763

~~12,861~~

~~12,462~~

Loss from operations

(62,~~605~~386

)

(65,~~751~~978

)

~~(20,124~~

)

~~(20,529~~

)

Other income, net

~~157~~29

~~127~~176

~~528~~

~~356~~

Net loss

(62,~~448~~357

)

(65,~~624~~802

)

~~(19,596~~

)

~~(20,173~~

)

Per share data:

Basic and diluted net loss per common share

(0.0806

)

(0.1617

)

~~(0.27~~

)

~~(0.55~~

)

Weighted-average shares used in computing basic and diluted net loss per common share

7739,~~956~~709,015

4133,~~616~~971,087

~~73,466~~

~~36,695~~

See accompanying notes

BIOPURE CORPORATION

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended
	Three Months Ended
	July 31, 2007			July 31, 2006
	January 31, 2009			January 31, 2008
Operating activities:
Net loss	$	(192,~~596~~357	)	$	(205,~~173~~802	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		~~2,470~~678			~~2,836~~456
Stock-based compensation expense		737			810
Stock-based compensation		70			159
Note receivable reserve		235			—
Accretion of restructuring charges		—			1
Accretion of restructuring charge		7			26
Inventory writedowns		236			962
Changes in assets and liabilities:
Accounts receivable		(~~134~~167	)		40(91	)
Inventories		~~171~~1,005			~~(350~~37	)
Other current assets		(66	)		105
Prepaid expenses and other current assets		241			132
Accounts payable		5			424
Other assets		121			—
Accrued expenses		(417	)		167
Accounts payable		275			11
Deferred revenue		46			—
Accrued expenses		(694	)		(449	)
Restructuring charges		~~(172~~—	)		(~~162~~45	)
Net cash used in operating activities		(~~16,478~~828	)		(155,~~315~~591	)
Investing activities:
Purchases of property, plant and equipment		~~(191~~—	)		(~~121~~51	)
Disposals of equipment		20			—
Net cash used in investing activities		—			(51	)
Net cash used in investing activities		(171	)		(121	)
Financing activities:
Net proceeds from sale of common stock and warrants		~~16,386~~—			914,~~116~~937
Proceeds from the exercise of options and warrants		2			2,786
Net cash provided by financing activities		—			14,937
Net cash provided by financing activities		16,388			11,902
Net (decrease) increase in cash and cash equivalents		(828	)		9,295
Net decrease in cash and cash equivalents		(261	)		(3,534	)
Effect of exchange rate changes on cash and cash equivalents		(11	)		(27	)
Cash and cash equivalents at beginning of period		61,~~576~~095			101,~~542~~910
Cash and cash equivalents at end of period	$	~~6,314~~256		$	711,~~008~~178
Supplemental disclosure of cash flow information:
Supplementary information:
Fair value of warrants issued in conjunction with sales of common stock	$	7,264		$	8,263
Interest paid	$	—		$	—
Income taxes paid	$	—		$	—

See accompanying notes

BIOPURE CORPORATION

Notes to Condensed Consolidated Financial Statements

~~July~~January 31, ~~2007~~2009

(Unaudited)

1.		Basis of Presentation
		The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three and nine month periods ended July 31, 2007 are not necessarily indicative of the results that may be expected for the year ending October 31, 2007; however, the Company expects to incur a substantial loss for the year ending October 31, 2007.
		The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, Biopure Netherlands, BV, Biopure South Africa, Pty, Ltd., Reperfusion Systems Incorporated, DeNovo Technologies Corporation and Biopure Overseas Holding Company, and NeuroBlok Incorporated, a 60% owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.
		These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2006, filed with the SEC on January 29, 2007.
		The Company has financed operations from inception primarily through sales of equity securities and development and license agreement payments. The Company has not been profitable since inception and had an accumulated deficit of $545.1 million at July 31, 2007. As of July 31, 2007, the Company had $6.3 million in cash and cash equivalents. The Company expects this funding to be sufficient to fund operations into November 2007 under the current operating plan. The Company will require significant additional funding to remain a going concern and to fund operations until such time, if ever, as it becomes profitable. The Company intends to seek additional capital through sales of equity securities and, if appropriate, to consider strategic collaborations for sharing development and commercialization costs. However, there can be no assurance that adequate additional financing will be available to the Company on terms that it deems acceptable, if at all. Furthermore, the Company may not continue to qualify for continued listing on the Nasdaq Capital Market. To maintain its listing, the Company is required, among other things, to maintain a daily closing bid price per share of $1.00. The Company is out of compliance with the $1.00 minimum bid price requirement for continued inclusion of its Class A common stock in the Nasdaq Stock Market. Under Nasdaq rules, the Company has until October 15, 2007 to regain compliance by having the bid price of our Class A common stock close at $1.00 per share or more for at least 10 consecutive business days. If the Company does not regain compliance with the minimum bid price rule by October 15, 2007, Nasdaq will provide written notification that the Company’s Class A common stock will be delisted. If that occurs, the Company’s ability to raise funds will be adversely affected. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.
		The Company’s investments in property and equipment, such as new facility construction and the asset related to the expenditures for a planned manufacturing facility in South Carolina, carried at $11.1 million, net of depreciation, at the end of the current quarter and included in property, plant and equipment in the accompanying condensed consolidated balance sheet, are the principal long-lived assets that we review for impairment. Quarterly, the Company considers whether or not there were indicators of impairment of its long-lived assets that arose during the quarter subsequent to the last review. For the quarter ended July 31, 2007, the Company has determined that no such impairment indicators have arisen. Evaluation of impairment of long-lived assets requires estimates of future operating results and the expected future undiscounted cash flows used to assess the recoverability of these assets. Circumstances with respect to the planned South Carolina manufacturing facility, or other long-lived assets, actual future operating results and the remaining economic lives of our long-lived assets could differ from these estimates. These differences, when they are identified, could result in impairment charges, which may have a material adverse impact on our results of operations.
		In the accompanying condensed consolidated balance sheet as of October 31, 2006, $231,000 has been reclassified from property, plant and equipment, net, to other current assets to conform to the current period’s presentation. See Note 7 for additional information.
		Comprehensive loss approximated net loss for all periods presented.
2.		Net Loss per Share
		Basic net loss per common share is computed based on the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed based upon the weighted-average

1.	Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been included. Operating results for the three month period ended January 31, 2009 are not necessarily indicative of the results that may be expected for any other period or for the year ending October 31, 2009.

The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Biopure Netherlands, BV, Biopure South Africa, Pty, Ltd., Reperfusion Systems Incorporated, DeNovo Technologies Corporation and Biopure Overseas Holding Company, and NeuroBlok Incorporated, a 60% owned subsidiary. All intercompany accounts and transactions have been eliminated in consolidation.

These financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K/A for the fiscal year ended October 31, 2008, filed with the SEC on March 3, 2009.

The Company has financed operations from inception primarily through sales of equity securities and development and license agreement payments. The Company has not been profitable since inception and had an accumulated deficit of $584 million at January 31, 2009. In June 2008, the Company signed an agreement with purchasers for a private placement of its class A common stock and warrants for up to $2.3 million assuming no exercise of the warrants. Under the terms of the agreement the Company sold to accredited investors in monthly tranches 4,737,928 shares of its common stock and warrants to acquire an additional 4,737,928 shares. The price for one share and one warrant was $0.3377, and the exercise price of each warrant is $0.45. The warrants have terms of five years, become exercisable six months after the closing date, and are callable by Biopure after the initial exercise date provided that the weighted average price of Biopure’s common stock for ten consecutive days is over $0.675. Under this agreement, the Company raised a total of $1.5 million.

The Company expects current assets and product sales to be sufficient to fund operations through April 2009 under the current operating plan. The Company will require significant additional funding to remain a going concern and to fund operations until such time, if ever, as it becomes profitable. There can be no assurance that adequate additional financing will be available to the Company on terms that it deems acceptable, if at all. In order to continue operations in the near term, the Company is actively seeking to raise additional capital or a strategic alliance transaction. In March 2009, the Company sold its manufacturing facility and land in Pennsylvania and entered into a lease for that facility for consideration of $1.4 million, of which $1.2 million was in the form of cash and the balance as rent abatements. The Company expects that its resources available at January 31, 2009, plus the cash proceeds from the facility sale-leaseback should be sufficient to fund operations through April 2009.

The Company may not continue to qualify for continued listing on the Nasdaq Capital Market. The NASDAQ Market Place Rules require listed companies to maintain, among other things, a minimum daily closing bid price per share of $1.00. The Company is out of compliance with the $1.00 minimum bid price requirement for continued inclusion of its class A common stock in the Nasdaq Stock Market. The Company would have received a delisting notice in December 2008, had Nasdaq not suspended enforcement of this requirement because of turmoil in the marketplace. The Company may be unable to meet the listing requirements of the Nasdaq Capital Market in the future. The Company has been out of compliance since December 14, 2007 and estimates, based on the most recent notice it has received from Nasdaq, that it now has until September 12, 2009 to regain compliance by having the bid price of its Class A common stock close at $1.00 per share or more for at least 10 consecutive business days. If the Company does not regain compliance with the minimum bid price rule, Nasdaq will provide written notification that the Company’s Class A common stock will be delisted. If that occurs, the Company’s ability to raise funds will be adversely affected. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Without sufficient capital to fund its operations the Company will be unable to continue as a going concern. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities or any other adjustments that might be necessary should the Company be unable to continue as a going concern.

BIOPURE CORPORATION ~~Notes~~ ~~to Condensed Consolidated Financial Statements July 31, 2007 (Unaudited) (continued)~~

		number of common shares outstanding during the period, adjusted for the dilutive effect of the Company’s common stock equivalents, including the maximum number of shares issuable upon the conversion of class B common stock outstanding and the exercise of common stock options and warrants. The dilutive effect of stock options and warrants is determined based on the treasury stock method using the average market price of the class A common stock for the period. However, basic and diluted net loss per common share are presented as the same for all periods presented, as the Company had losses for all periods presented, so the effect of class B common stock, options and warrants is anti-dilutive. Consequently, dilutive weighted average shares outstanding do not include 60,093,689 potential common-equivalent shares for the three and nine months ended July 31, 2007 and 19,462,944 potential common-equivalent shares for the three and nine months ended July 31, 2006, as their effect would have been anti-dilutive.
3.		Stock Based Compensation
		As of July 31, 2007, the Company had one share-based compensation plan, the Biopure Corporation 2002 Omnibus Securities and Incentive Plan (the Plan). The Plan is shareholder approved and permits the grant of stock or stock options to the Company’s employees, consultants and directors. The Plan has 4.37 million shares of common stock authorized. Employee option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Options vest at the times specified in the option grants, generally over periods of up to four years. Most options granted have a 10-year term and expire if not exercised within ten years of the date of grant. Shares issued upon exercise of options are generally issued from new shares of the Company.
		The Company adopted the provisions of Statement of Financial Accounting Standards 123(R), “Share-Based Payment” (SFAS 123(R)), beginning November 1, 2005, using the modified prospective transition method. Under the modified prospective transition method, financial statements for periods prior to the adoption date are not retrospectively adjusted. However, compensation expense is recognized, based on the requirements of SFAS 123(R), for (a) all share-based payments granted after the effective date and (b) all awards granted to employees prior to the effective date that remain unvested as of the effective date.
		Prior to adopting SFAS 123(R), the Company used the intrinsic value method to account for stock-based compensation under Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees.” Historically the fair value of options granted was calculated using the Black-Scholes option pricing model for disclosure purposes. The Company has elected to continue to use this model. SFAS 123(R) also requires companies to utilize an estimated forfeiture rate when calculating the expense for the period, while SFAS 123, “Accounting for Stock-Based Compensation”, permitted companies to record actual forfeitures as they occurred, which was the Company’s historical policy. In determining the expense recorded in the Company’s consolidated statement of operations, the Company has applied an estimated forfeiture rate to remaining unvested awards based on historical experience. This estimate is evaluated quarterly and the forfeiture rate is adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those shares that vest. The Company has elected to recognize compensation cost for awards with incremental vesting using the straight-line method.
		The fair value of each stock option is estimated on the date of grant using the Black-Scholes option pricing model with the assumptions noted in the following table. The weighted average risk-free interest rate is based on a treasury instrument, the term of which is consistent with the expected life of the stock options. Expected volatility is based exclusively on historical volatility data of the Company’s common stock. The Company estimates stock option forfeitures based on historical experience. The Company was unable to use historical information to estimate the expected term due to a lack of historical exercise activity and therefore used the “simplified” method as prescribed by the SEC Staff Accounting Bulletin No. 107.

Notes to Condensed Consolidated Financial Statements

January 31, 2009

(Unaudited)

Comprehensive Loss

The Company’s comprehensive loss includes accumulated foreign currency translation adjustments. The comprehensive loss was as follows (in thousands):


	Three Month Periods Ended
	January 31, 2009			January 31, 2008
Net loss	$	(2,357	)	$	(5,802	)
Changes in foreign currency translation adjustment		(11	)		(27	)

Comprehensive loss	$	(2,368	)	$	(5,829	)

2.	Net Loss per Share

Basic net loss per common share is computed based on the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is computed based on the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of the Company’s common stock equivalents, including the maximum number of shares issuable upon the conversion of class B common stock outstanding and the exercise of class A common stock options and warrants. The dilutive effect of stock options and warrants is determined based on the treasury stock method using the average market price of the class A common stock for the period. However, basic and diluted net loss per common share are presented as the same for all periods presented, as the Company had losses for all periods presented, so the effect of class B common stock, options and warrants for class A common stock is anti-dilutive. Consequently, dilutive weighted average shares outstanding do not include 37,232,016 common-equivalent shares for the three months ended January 31, 2009 and 32,227,646 common-equivalent shares for the three months ended January 31, 2008, as their effect would have been anti-dilutive.

3.	Stock Based Compensation

As of January 31, 2009, the Company had two share-based compensation plans, the Biopure Corporation 2008 Incentive Plan (“the 2008 Plan”) and the 2002 Biopure Corporation Omnibus Securities and Incentive Plan (“the 2002 Plan”). The Plans, as amended, which are both shareholder approved, permit the grant of options to the Company’s employees, consultants and directors for up to 8,343,328 shares of common stock. Option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Typically, granted options vest in annual increments over four years and may be exercised within seven or ten years of the date of grant. Options to the non-employee members of the board of directors generally vest monthly over one year. Shares issued upon exercise of options are generally issued from new shares of the Company.

The Company accounts for stock based compensation according to the provisions of Statement of Financial Accounting Standards 123 (R), Share Based Payment (SFAS No. 123(R)). The fair value of each stock option is estimated on the date of grant using the Black-Scholes Option Pricing Model. The risk-free interest rate is based on a treasury instrument, the term of which is consistent with the expected life of the stock options. Expected volatility is based exclusively on historical volatility data of the Company’s stock. The Company was unable to use historical information to estimate the expected term due to a lack of historical exercise activity and therefore used the “simplified” method as permitted by the Securities and Exchange Commission Staff Accounting Bulletin No. 107. The Company estimated the stock option forfeitures based on historical experience and adjusted this assumption to reflect expected forfeitures over the remaining vesting period. This estimate is evaluated quarterly and the forfeiture rate is adjusted as necessary. Ultimately, the actual expense recognized over the vesting period will only be for those shares that vest. The Company has elected to recognize compensation cost for awards with pro rata vesting using the straight-line method.

BIOPURE CORPORATION ~~Notes~~ ~~to Condensed Consolidated Financial Statements July 31, 2007 (Unaudited) (continued)~~

	Three Months Ended						Nine Months Ended
	July 31,			July 31,			July 31,			July 31,
	2007			2006			2007			2006
Weighted average risk-free interest rate		—			4.49	%		4.58	%		4.58	%
Expected volatility		—			85	%		85	%		85	%
Expected lives (years)		—			5.13			5.42			5.27
Expected dividend yield		0	%		0	%		0	%		0	%

Notes to Condensed Consolidated Financial Statements

		During the first nine months of fiscal 2007 and 2006, approximately 1.3 million and 312,000 options, respectively, were granted with a weighted average grant-date fair value of $0.39 and $0.87 per share, respectively. No options were granted during the third fiscal quarter of 2007.
		As of July 31, 2007, there was $1.2 million of unrecognized compensation expense, net of forfeitures, related to non-vested market-based share awards, which is expected to be recognized over a weighted-average period of 2.42 years.
		During the first nine months of fiscal 2007 there were 5,000 options exercised at an exercise price of $0.55. During the first nine months of fiscal 2006 there were 12,000 options exercised at an exercise price of $0.92. The total fair value of shares vested during fiscal 2007 and 2006 were $434,000 and $786,000, respectively.
4.		Inventories
		Inventories are valued at the lower of cost (determined using the first-in, first-out method) or market. Inventories were as follows at the following dates:

January 31, 2009

In thousands	July 31, 2007		October 31, 2006
Raw materials	$	752	$	535
Work-in-process		437		343
Finished goods-Oxyglobin		891		1,160
Finished goods-Hemopure		363		812
	$	2,443	$	2,850

(Unaudited)

~~Hemopure~~During ~~[hemoglobin~~the ~~glutamer~~first –three ~~250~~months ~~(bovine)]~~of ~~finished~~fiscal ~~goods~~2009 ~~represents~~and ~~those~~2008, ~~units~~no ~~the~~options ~~Company~~were ~~expects~~granted. toAs ~~sell~~a inconsequence ~~South~~of staff ~~Africa~~reductions orin ~~those~~November ~~units~~2008, options to bepurchase ~~used~~886,087 inshares ~~preclinical~~of orcommon ~~clinical~~stock ~~trials~~were ~~conducted~~forfeited by or ~~on behalf of the U~~cancelled.S. ~~Naval~~Stock ~~Medical~~based ~~Research~~compensation ~~Center (NMRC),~~ for ~~which~~ the ~~Company~~first ~~is reimbursed. Each~~ quarter ~~the Company reviews the inventory~~ of ~~Hemopure~~fiscal ~~finished~~2009 ~~goods and, if necessary, writes off any units beyond those forecast for these purposes. There~~ was a $~~241~~70,000, ~~write-down~~which ofis ~~inventory~~included in ~~the~~general ~~third fiscal quarter of 2006~~ and noadministrative ~~such~~expenses ~~write off during~~ in the ~~third~~accompanying ~~fiscal~~statement ~~quarter~~ of ~~2007~~operations. If the Company continues to experience a lack of or extremely limited sales in South Africa or further delays in the use of Hemopure by the NMRC, it expects to write off additional units in the future.

As of January 31, 2009, there was approximately $77,000 of unrecognized compensation expense, net of forfeitures, related to non-vested market-based share awards, which is expected to be recognized over a weighted-average period of .75 years.

No options were exercised during the first three months of fiscal 2009 or fiscal 2008. The total fair values of shares vested during the first three months of fiscal 2009 and 2008 were $199,000 and $72,000, respectively.

A summary of option activity under the plans as of January 31, 2009 and changes during the year the ended is presented below (in thousands, except weighted average data):


	Number of Stock Options		Weighted- Average Exercise Price		Weighted- Average Remaining Life in Years	Aggregate Intrinsic Value
Outstanding at October 31, 2008	2,819,584		$	6.23
Granted	—			—	—
Exercised	—			—	—
Forfeited/Cancelled/Expired	(886,087	)		0.71	—

Outstanding at January 31, 2009	1,933,497			8.69	5.12	$	—

Exercisable at January 31, 2009	1,643,406			10.09	5.10	$	—

Vested and expected to vest at January 31, 2009	1,933,497			8.69	5.12	$	—

4.	Inventories

Inventories are valued at the lower of cost (determined using the first-in, first-out method) or market. Inventories were as follows at the following dates:


In thousands	January 31, 2009		October 31, 2008
Raw materials	$	377	$	375
Work-in-process		13		12
Finished goods-Oxyglobin		2		720
Finished goods-Hemopure		598		888

	$	990	$	1,995

The inventory of Hemopure finished goods represents units the Company expects to sell in South Africa or use in preclinical or clinical studies where payment is received for the trial material. Each reporting period the Company reviews the inventory of Hemopure finished goods and, if necessary, writes off any units beyond those forecasted for these purposes, resulting in a charge to operations through cost of revenue or research and development. There was no write-off of inventory in the first fiscal quarter of 2009 or 2008. If the Company continues to experience extremely limited sales in South Africa or further delays in the use of Hemopure by the Naval Medical Research Center (NMRC), it could expect to write off additional units in the future.

~~BIOPURE~~5. ~~CORPORATION Notes~~Accrued ~~to Condensed Consolidated Financial Statements July 31, 2007 (Unaudited) (continued)~~ Expenses

5. Accrued ~~Expenses Accrued~~ expenses were as follows at the following dates:

In thousands	~~July~~January 31, ~~2007~~2009		October 31, 2008	~~October 31, 2006~~
Accrued payroll and related employee expenses	$	~~892~~25	$	$175	~~198~~
Financing fees		537		537	~~537~~
Accrued severance		—			568
Accrued legal and audit fees		196		312
Accrued legal and audit fees		280			1,054
Accrued severance		—		11
Accrued vacation		~~268~~18		189	~~300~~
Accrued utilities		~~213~~24		49	72
Other		~~643~~292		513	~~521~~
	$	21,~~833~~092	$	$1,786	~~3,250~~

		Accrued severance at October 31, 2006 included costs related to the resignation, in fiscal 2005, of the Company’s Chief Technology Officer. At October 31, 2006, the Company had an accrual of $568,000, representing the amount owed to him in accordance with his employment agreement. During the first nine months of fiscal 2007, the Company paid $175,000 of this amount. Because the Company was no longer obligated to pay the remaining $393,000 due to a breach of the employment agreement, it removed this amount from accrued expenses in the accompanying condensed consolidated balance sheet during the quarter ended April 30, 2007.
6.		Restructuring
		During the first quarter of fiscal 2005, the Company vacated leased office space and sublet it for a period of 38 months, ending in February 2008. The Company accounted for the transaction in accordance with FAS 146, “Accounting for Costs Associated with Exit or Disposal Activities.” These costs of $697,000 were included in general and administrative expense in the consolidated statement of operations during fiscal 2005, and the remaining obligation, to be paid monthly through February 2008, is accrued in the current portion of restructuring charges on the condensed consolidated balance sheet at July 31, 2007.
		The following table shows the restructuring activity and liability balances (in thousands):

Balance at October 31, 2006	$	253
Payments		(173	)
Accretion of liability		7
Balance at July 31, 2007	$	87

7. Other Current Assets During fiscal 2006, management identified certain manufacturing equipment that the Company was not using and did not expect to be able to use in the future, resulting in a decision by management to pursue selling this equipment. Early in fiscal 2007 the Company determined that the plan of sale criteria in FASB Statement No. 144 “Accounting for the Impairment or Disposal of Long-Lived Assets,” had been met and the Company believes that the equipment will be sold no later than early fiscal 2008. Accordingly, the carrying value of the manufacturing equipment of $225,000 has been recorded separately within other current assets on the Company’s condensed consolidated balance sheets as of July 31, 2007. The carrying amount was determined based on quoted market prices for similar assets, less continuing depreciation expense through the date that the plan of sale criteria were met. The Company reclassified the value of this equipment, $231,000 as of October 31, 2006, to other current assets within the Company’s condensed consolidated balance sheets for comparative purposes in accordance with FAS 144. The Company did not recognize any gains or losses during the quarter ended July 31, 2007 related to this asset.

BIOPURE CORPORATION ~~Notes~~ ~~to Condensed Consolidated Financial Statements July 31, 2007 (Unaudited) (continued)~~

8.Notes Commitments and Contingencies Research Agreement(1) In 2003, the Company entered into a Cooperative Research and Development Agreement (CRADA) with the NMRC. Under the CRADA, as amended, the NMRC has primary responsibility for designing, seeking U.S. Food and Drug Administration (FDA) acceptance of, and conducting a planned Phase 2/3 clinical trial of Hemopure in trauma patients with severe hemorrhagic shock (acute blood loss) in the out-of-hospital setting. The clinical development plan is being changed to ~~provide~~Condensed ~~for~~Consolidated a separate Phase 2 trial. The Company believes that all or most of its costs for developing a trauma indication in the United States could be covered by government funding. To date, the U.S. Congress has appropriated a total of $22.5 million to the Department of Defense ($16 million to the Navy, $6.5 million to the Army) for the development of Hemopure in potential civilian and military trauma applications,(2) of which approximately $1.6 million has been reverted due to delays in initiating the RESUS clinical trial. The funding is being used for the Navy’s proposed clinical trial and has supported preclinical studies of the product in animal models of hemorrhagic shock (acute blood loss), including those that mimic military trauma scenarios. If there are additional delays in the start of the proposed clinical trial, additional funds could be reverted in the future. As part of the CRADA the NMRC paid approximately $1.2 million for future inventory purchases, recorded in the accompanying consolidated balance sheet as deferred revenue. If the NMRC were to decide not to continue to pursue the RESUS project described in the CRADA, the Company could be required to return the $1.2 million. 9. Recently Issued Accounting Standards In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial ~~Assets~~Statements and Financial Liabilities — Including an Amendment of FASB Statement No. 115 (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial assets and financial liabilities at fair value. Unrealized gains and losses on items for which the fair value option has been elected are reported in earnings. SFAS 159 is effective for fiscal years beginning after November 15, 2007, or fiscal 2009 for the Company. The Company is currently assessing the impact of SFAS 159 on its consolidated financial statements. 10. Litigation Biopure, two former outside directors, its former chief executive officer, former chief technology officer, former chief financial officer and former senior vice president of regulatory affairs were named as defendants in a number of purported class action complaints, filed between December 30, 2003 and January 28, 2004, in the United States District Court for the District of Massachusetts (the “District Court”) by alleged purchasers of the Company’s common stock. Those complaints were consolidated in a single action, in regards

(1)		The content of this document does not necessarily reflect the position or the policy of the U.S. Government or the Department of Defense, and no official endorsement should be inferred of the Navy – Biopure collaborative clinical development program for Hemopure in trauma is contingent upon funding.
(2)		$5,102,306 is from Grant DAMD17-02-1-0697. The U.S. Army Medical Research Acquisition Activity, 820 Chandler Street, Fort Detrick MD 21702-5014 is the awarding and administering acquisition office.

January 31, 2009

(Unaudited)

6.	Commitments and Contingencies

In 2003, the Company entered into a Cooperative Research and Development Agreement (CRADA) with the NMRC. As part of CRADA, the NMRC paid approximately $1.2 million for inventory purchases to be delivered in the future, recorded in the accompanying consolidated financial statements as deferred revenue. If the NMRC were to decide not to continue to pursue a trauma indication, as described in the CRADA, the Company could be required to return the $1.2 million.⁽¹⁾

7.	Litigation

The seven members of the Company’s Board of Directors during the period March through December 2003 and certain officers during that period were named as defendants in two stockholder derivative actions filed on January 26, 2004 and January 29, 2004 in the U.S. District Court for the District of Massachusetts. A consolidated, amended complaint was filed in regard to Biopure Corporation Derivative Litigation. Biopure is named as a defendant, even though in a derivative action, any award is for the benefit of the Company, not individual stockholders. The consolidated, amended complaint alleges that the individual directors and officers breached fiduciary duties in connection with disclosures concerning regulatory and clinical events. The complaint does not specify an amount of alleged damages. The Company appointed two disinterested directors as a special litigation committee to determine whether or not the Company should pursue this action. The special litigation committee conducted its investigation and determined the Company should not pursue the action. The special litigation committee accordingly has filed a motion to dismiss the action. No amounts have been accrued to date with regard to this litigation or a similar claim in the Trial Court of Middlesex County in Massachusetts. The Company believes this case is without merit.

On March 17, 2009, the Company was served with a complaint captioned America’s Growth Capital, L.L.C. v. Biopure Corporation. The case was filed in the Superior Court, Commonwealth of Massachusetts (Civil action no. 09 – 0956). The complaint seeks damages in an unspecified amount, alleged to be owed by the Company under an agreement dated April 22, 2008, in which the Company engaged the plaintiff to act as its exclusive placement agent in connection with the private placement of approximately $10—15 million of Company convertible debentures or any other securities. The complaint asks for relief in the form of a declaratory judgment and compensation on the bases of breach of contract, breach of covenant of good faith and fair dealing, unjust enrichment and violation of Massachusetts law (M.G.L. c. 93A). The Company believes that it has meritorious defenses, but it is too early in the litigation for it to have assessed the matter fully. It intends to defend itself against the litigation.

8.	Recently Issued Accounting Standards

In March 2008, the Financial Accounting Standards Board (FASB) issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133, which requires enhanced disclosures about (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, as amended and its related interpretations, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. SFAS No. 161 also requires that objectives for using derivative instruments be disclosed in terms of underlying risk and accounting designation and requires cross-referencing within the footnotes. This statement also suggests disclosing the fair values of derivative instruments and their gains and losses in a tabular format. This statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008 and therefore is effective for our second quarter in fiscal 2009. The Company’s has not evaluated the impact, if any, that the adoption of SFAS No. 161 is not expected to have an impact on its consolidated financial statements.

In December 2007, the FASB issued SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements. SFAS No. 160 establishes accounting and reporting standards that require the ownership interests in subsidiaries’ non-parent owners be

⁽¹⁾	The content of this document does not necessarily reflect the position or the policy of the U.S. Government or the Department of Defense, and no official endorsement should be inferred of the Navy. Biopure collaborative clinical development program for Hemopure in trauma is contingent upon funding.

~~BIOPURE CORPORATION~~ ~~Notes~~clearly presented in the equity section of the balance sheet; requires the amount of consolidated net income attributable to ~~Condensed~~the ~~Consolidated~~parent ~~Financial~~and ~~Statements~~to the ~~July 31~~non-controlling interest be clearly identified and presented on the face of the consolidated statement of income; requires that changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently; requires that when a subsidiary is deconsolidated, ~~2007~~any retained non-controlling equity investment in the former subsidiary be initially measured at fair value and the gain or loss on the deconsolidation of ~~(Unaudited)~~the subsidiary be measured using the fair value of any non-controlling equity; requires that entities provide disclosures that clearly identify the interests of the parent and the interests of the non-controlling owners. SFAS No. 160 is ~~(continued)~~ effective as of the beginning of an entity’s first fiscal year that begins after December 15, 2008. The Company has not determined the impact, if any, SFAS No. 160 will have on its financial statements

toIn ~~Biopure~~December ~~Corporation~~2007, ~~Securities Litigation. The consolidated matter has since been settled and~~ the ~~District~~FASB ~~Court~~issued ~~entered an Order of Preliminary Approval of the settlement on May 23, 2007~~SFAS No. 141 A(revised ~~fairness hearing is scheduled for September 24~~2007), ~~2007~~Business ~~for~~Combinations ~~final approval~~(“SFAS 141(R)”). ~~Under~~In SFAS 141(R), the ~~terms~~FASB ofretained the ~~settlement,~~fundamental ~~all~~requirements ~~claims are to be dismissed with prejudice and there is no financial effect on the Company or any~~ of ~~the~~Statement ~~individual defendants~~No. 141 ~~The~~to ~~seven~~account ~~members~~for ofall ~~the~~business ~~Company’s~~combinations ~~Board~~using ~~of Directors during~~ the ~~period~~acquisition ~~March~~method ~~through~~(formerly ~~December~~the ~~2003~~purchase method) and ~~certain~~for ~~officers~~an ~~during~~acquiring ~~that~~entity ~~period~~to ~~were~~be ~~named~~identified ~~as defendants~~ in ~~two~~all ~~stockholder~~business ~~derivative actions filed on January 26~~combinations. However, ~~2004~~the ~~and~~new ~~January~~standard ~~29,~~requires ~~2004 in~~ the ~~District~~acquiring ~~Court.~~entity Ain ~~consolidated,~~a ~~amended~~business ~~complaint~~combination ~~was filed in regard~~ to ~~Biopure~~recognize ~~Corporation~~all ~~Derivative~~(and ~~Litigation.~~only) ~~Biopure~~the isassets ~~named~~acquired asand aliabilities ~~defendant,~~assumed ~~even though~~ in ~~a derivative action any award is for~~ the ~~benefit~~transaction; ofestablishes the ~~Company,~~acquisition-date ~~not~~fair ~~individual~~value ~~stockholders.~~as ~~The~~the ~~consolidated,~~measurement ~~amended~~objective for ~~complaint~~all ~~alleges~~assets ~~that~~acquired ~~the~~and ~~individual~~liabilities ~~directors~~assumed; and ~~officers~~requires ~~breached~~the ~~fiduciary~~acquirer ~~duties~~to indisclose ~~connection~~to ~~with~~investors ~~disclosures concerning regulatory~~ and ~~clinical~~other ~~events.~~users ~~The~~all ~~complaint does not specify an amount~~ of ~~alleged~~the ~~damages.~~information ~~The~~they ~~Company~~need ~~appointed two disinterested directors as a special litigation committee~~ to ~~determine~~evaluate ~~whether~~and orunderstand ~~not~~ the ~~Company~~nature ~~should pursue this action. The special litigation committee conducted its investigation~~ and ~~determined~~financial ~~the~~effect ~~Company~~of ~~should not pursue~~ the ~~action~~business combination. SFAS 141(R) ~~The~~is ~~special~~effective ~~litigation~~for ~~committee~~annual ~~accordingly~~periods ~~has~~beginning ~~filed~~on aor ~~motion~~after toDecember 15, ~~dismiss~~2008 ~~the~~(beginning ~~action. No amounts have been accrued to date~~ with ~~regard~~the toCompany’s ~~this~~2010 ~~litigation~~fiscal year) and awill ~~similar~~change ~~claim in~~ the ~~Trial~~accounting ~~Court~~for ofbusiness ~~Middlesex~~combinations ~~County~~on ina ~~Massachusetts.~~prospective ~~The Company believes these cases are without merit~~basis.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements (“SFAS157”). SFAS 157 defines fair value, establishes a framework for measuring fair value under other accounting pronouncements that permit or require fair value measurements, changes the methods used to measure fair value and expands disclosures about fair value measurements. In particular, disclosures are required to provide information on the extent to which fair value is used to measure assets and liabilities; the inputs used to develop measurements; and the effects of certain of the measurements on earnings (or changes in net assets). SFAS 157 eliminates the use of a blockage factor for fair value measurements of financial instruments trading in an active market. SFAS 157 is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. The application of SFAS 157 has not had a material impact on the Company’s results of operations or financial position since its adoption as of November 1, 2008.

In February 2008, the FASB issued FASB Staff Position (“FSP”) FAS 157-2, Effective Date of FASB Statement No. 157, which defers the effective date of SFAS No. 157 to fiscal years beginning after November 15, 2008 for nonfinancial assets and nonfinancial liabilities except those recognized or disclosed at fair value on an annual or more frequently recurring basis. The Company will apply the fair value measurement and disclose provisions of SFAS No. 157 to nonfinancial assets and liabilities effective November 1, 2009. The application of such is not expected to be material to the Company’s results of operations or financial position results of operations or financial position.

In October 2008, the FASB issued FSP No. FAS 157-3, Determining the Factor Value of a Financial Asset When the Market for that Asset is Not Active (FSP 157-3), which applies to financial assets that are required or permitted to be measured at fair value in accordance with SFAS 157. FSP 157-3 clarifies the application of SFAS 157 and provides an example to illustrate key considerations in determining the fair value of a financial asset when the market for the asset is not active. This guidance has not had a material effect on the results of operations or financial position of the Company since its adoption on November 1, 2008.

9.	Subsequent Event

In January 2009 the Company sold its plant in Pennsylvania and entered into a lease as lessee of the plant. The consideration included $1.2 million in cash and approximately $200,000 in rent abatements. The initial term of the lease is three years, and it can be renewed at the Company’s option for five additional terms of five years each.

BIOPURE CORPORATION ~~Management’s~~ ~~Discussion and Analysis of Financial Condition and Results of Operations July 31, 2007~~

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

January 31, 2009

Item 2.

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

Cautionary Statement Regarding Forward-Looking Information

The following discussion of the Company’s financial condition and results of operations includes forward-looking statements. These forward-looking statements include, without limitation, statements about the ~~clinical~~viability ~~development~~of ~~program,~~the ~~market opportunity~~Company, ~~strategies,~~the ~~expected activities~~prospects asfor ~~the~~further ~~Company~~clinical ~~pursues~~development of its ~~business~~products, other ~~plan~~expected activities, and ~~the~~finding ~~adequacy of its available~~ cash resources. Forward-looking statements include those that imply that the Company will be able to manage its expenses effectively and raise the funds needed to continue its business, that the Company will be able to stabilize and enhance its financial position, ~~that~~ ~~the Company will implement a reverse stock split,~~ that the Company will be able to commercially develop Hemopure, that in pursuing ~~cardiovascular~~clinical ~~and~~development ~~trauma indications~~ the Company will be able to address ~~pending~~ safety and ~~other~~efficacy questions of ~~the~~regulatory ~~U.S. Food and Drug Administration (FDA)~~agencies, that the U.S. Naval Medical Research Center (NMRC) may conduct a clinical trial in trauma patients, ~~that the Company will make a submission to regulatory authorities in the United Kingdom, that the Company will be able to obtain regulatory approval for the marketing~~ and ~~sale of Hemopure in the United Kingdom, the United States or the European Union,~~ that anticipated milestones will be met in the expected timetable or at all, that any preclinical or clinical trials will be successful, that Hemopure, if it receives regulatory approval, will attain market acceptance and be manufactured and sold in amounts to attain profitability and that the Company will be able to successfully increase its manufacturing capacity for Hemopure if it receives regulatory approval. Forward-looking statements are usually accompanied by words such as “believe,” “anticipate,” “plan,” “seek,” “expect,” “intend” and similar expressions. The forward-looking information is based on various factors and was derived using numerous assumptions and judgments.

Actual results may differ materially from those set forth in the forward-looking statements due to risks and uncertainties that exist in the Company’s operations and business environment. These risks include the factors identified under “Risk Factors” in this report. All forward-looking statements included or incorporated by reference in this report are based on information available to the Company on the date such statements were made. In light of the substantial risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this report should not be regarded as representations by us that the Company’s objectives or plans will be achieved. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. You are advised, however, to consult any additional disclosures the Company makes in its reports to the SEC on Forms 10-Q, 8-K, 10-K and 10-K/A.

The content of this document does not necessarily reflect the position or the policy of the U.S. Government or the Department of Defense, and no official endorsement should be inferred.

Overview

Since its founding in 1984, Biopure has been primarily a research and development company focused on developing Hemopure, the Company’s oxygen therapeutic for human use, and obtaining regulatory approval in the United States and other markets. The Company’s research and development expenses have been devoted to basic research, product development, process development, preclinical studies, clinical trials and regulatory activity. In addition, the Company’s development expenses in the past included the design, construction, validation and maintenance of a large-scale pilot manufacturing plant in Cambridge, Massachusetts.

APrior ~~manufacturing~~to ~~facility~~1998, the isCompany amanufactured ~~necessary~~products ~~part~~solely offor ~~developing~~use ain ~~product~~preclinical ~~like~~and ~~Hemopure.~~clinical ~~The~~trials, ~~FDA classifies~~and ~~Hemopure~~production ascosts awere ~~biologic~~charged ~~because~~wholly itto isresearch ~~derived~~and ~~from~~development. ~~animal-source~~As ~~material.~~an ~~Unlike~~offshoot ~~drugs that~~of ~~are~~the ~~chemical~~research ~~compounds~~and development for Hemopure, ~~biologics~~Oxyglobin, ~~are~~a ~~defined~~similar byproduct, gained ~~their~~marketing ~~manufacturing~~approval ~~process~~for veterinary use in the United States in 1998 and ~~composition~~in the European Union in 1999. ~~Under~~ ~~FDA~~Following ~~regulations~~the U.S. approval, ~~any~~Oxyglobin ~~change~~was produced for sale in the same pilot manufacturing ~~process~~plant ~~could~~that bewas ~~considered~~built toand ~~produce~~maintained anprimarily ~~altered,~~for ~~possibly~~the ~~different~~development ~~product~~of Hemopure. ~~Therefore~~Because of this marketing approval, itcosts isof ~~necessary~~production toof ~~demonstrate~~Oxyglobin for sale and an allocation of manufacturing ~~capability~~ atoverhead ~~greater~~based ~~than~~on ~~laboratory~~capacity ~~scale~~used for anOxyglobin ~~application~~are ~~for~~charged ~~regulatory~~to ~~approval~~inventory and to cost of arevenues. Since ~~biologic~~marketing toapproval beof ~~accepted~~Hemopure for ~~review.~~human ~~This~~use ~~requirement~~was ~~has~~granted ~~resulted~~ in ~~high~~South ~~manufacturing~~Africa ~~research and~~in ~~development~~2002, costs inof ~~the~~production ~~development~~of Hemopure for sale and an allocation of ~~our~~manufacturing ~~products~~overhead ~~relative~~based on capacity used for Hemopure have been charged to ~~other~~inventory ~~types~~and ofto ~~drugs.~~cost of revenues.

A substantial majority of our costs have comprised research and development and cost of revenues. The revenues from products we have marketed defrayed some of the manufacturing costs we have incurred to manufacture Hemopure. The Company suspended manufacturing operations beginning in the third quarter of fiscal 2008 to conserve cash.

Our research and development activities in 2009 and 2008 are described below. We do not currently have any trials enrolling patients.

~~BIOPURE~~Cost ~~CORPORATION Management’s~~Cutting ~~Discussion~~Measures ~~and Analysis of Financial Condition and Results of Operations July 31, 2007 (continued)~~

~~Prior~~During tofiscal ~~1998,~~2008 ~~the Company only manufactured product for use in preclinical~~ and ~~clinical trials~~2009, ~~and~~ ~~production~~the ~~costs~~Company ~~were~~took ~~charged~~measures ~~wholly~~ to ~~research~~reduce ~~and~~its ~~development.~~ongoing Ascash anburn. ~~offshoot~~In ofNovember ~~the research and development for Hemopure~~2008, ~~Oxyglobin,~~it aeffected ~~similar~~reductions ~~product,~~in ~~gained~~force ~~marketing~~and ~~approval~~shut ~~for veterinary~~down ~~use~~its inmanufacturing ~~the~~facility ~~U.S.~~ in ~~1998~~Cambridge and inits ~~the~~processing ~~European~~facility ~~Union~~ in ~~1999~~Pennsylvania. ~~Following the U.S. approval,~~By ~~Oxyglobin~~November ~~was produced for sale in the pilot manufacturing plant that was built and maintained primarily for the development of Hemopure. Because of this marketing approval~~2008, ~~costs~~nearly ofall ~~production~~ of ~~Oxyglobin~~its ~~for~~employees ~~sale~~had ~~and~~been anlaid ~~allocation~~off. ofThe ~~manufacturing~~Company ~~overhead~~has ~~based~~continued onlimited ~~capacity~~operations ~~used~~since ~~for Oxyglobin~~then. ~~are~~Notwithstanding ~~charged~~the ~~to inventory and to~~ cost ~~of revenues. Since marketing approval of Hemopure for human use was granted in South Africa in 2002~~reductions, ~~costs~~significant ofadditional ~~production~~capital ofwill ~~Hemopure~~be ~~for~~required ~~sale and an allocation of manufacturing overhead based on capacity used for Hemopure have been charged~~ to ~~inventory~~ ~~and~~fund tothe ~~cost~~Company’s ~~of revenues~~operations.

~~Thus,~~Liquidity ~~as shown by the selected information in the table below under the caption “Results of Operations,” a substantial majority of our costs comprise research~~ and ~~development~~Capital ~~and~~Resources cost of revenues. The revenues from products we now market defray some of the manufacturing costs we must incur to keep our substantial plant operational as we manufacture Hemopure for clinical trials and maintain readiness for greater volume manufacturing. We also receive governmental reimbursements of research and development costs for development of Hemopure for use in trauma.

~~Our~~At ~~research~~January 31, 2009, the Company had $256,000 in cash and ~~development~~cash ~~activities~~equivalents. During the first fiscal quarter of 2009, the Company drastically reduced operations, a process that began in ~~2006~~the second quarter of fiscal 2008. In January 2009, the Company sold substantially all of its existing inventory of Oxyglobin to the Company’s U.S. distributor, an affiliate of the Company’s European distributor, for sale in Europe and ~~2007~~the ~~include~~United States. The proceeds of that sale were $796,000. In March 2009, the ~~clinical~~Company ~~trials~~also ~~described~~sold its manufacturing facility in Pennsylvania and entered into a lease of the facility from the purchaser. The consideration was for $1.2 million in cash and approximately $200,000 in rent abatements. The Company has leased the facility, and, as additional consideration from the purchaser, the initial term of the lease is at a rent the Company believes to be below market. The initial term of the lease is three years; during this term the rental is $6,100 per month. The Company has the option to renew for five additional terms of five years each at increasing rates.

~~Ischemia~~The Company expects that its current cash, accounts receivable and the sale of its Pennsylvania facility will fund operations until April 2009. The Company will require significant additional funding to remain a going concern and to fund operations until such time, if ever, as it becomes profitable. If the Company does not raise capital or have commitments to raise capital or complete another transaction by approximately the end of April 2009, it may be required to cease operations and sell the Company or its assets. The Company is now engaged in discussions concerning its course of action. There can be no assurance that ongoing discussions will lead to an investment of capital or other transaction. The Company’s primary commitments for future expenditures are its commitments under real property leases.

~~Biopure~~Net ~~is conducting~~cash ~~Phase 2~~used ~~clinical trials of Hemopure~~ in ~~Europe~~operating ~~and~~activities ~~South~~decreased ~~Africa~~$4,763,000 toin ~~assess~~ the ~~product’s~~ ~~safety~~first ~~and~~three ~~feasibility~~months inof ~~ischemia~~fiscal ~~applications,~~2009 ~~such~~compared asto ~~cardiac~~the ~~surgery, wound healing~~corresponding ~~and~~period ~~acute~~in ~~coronary~~fiscal ~~ischemia~~2008 ~~(e.g.,~~because ~~heart~~of ~~attack).~~the ~~The~~work ~~primary~~force ~~goal~~reductions ofdescribed ~~these~~above ~~trials~~and isother ~~to provide~~measures ~~preliminary data~~ to ~~support~~control ~~advanced trials in heart attack patients~~costs. InCash ~~contrast~~used ~~to previous~~in ~~trials~~operating ~~where~~activities ~~Hemopure~~ was ~~administered as a red blood cell replacement~~$828,000 infor ~~these ischemia~~the ~~trials~~first ~~Hemopure~~three ismonths ~~being~~of ~~administered~~fiscal ~~as an oxygen-carrying drug~~2009. ~~The trials are:~~

•Results A 60-patient Phase 2 clinical trial in patients undergoing multi-vessel coronary artery bypass graft (CABG) surgery continues to enroll patients in South Africa, Greece and the U.K. and has enrolled 36 patients. • A 100-patient Phase 2 clinical trial to assess the safety and feasibility of ~~Hemopure~~Operations in increasing the incidence of complete wound healing and reducing the incidence of subsequent amputations in patients with severe peripheral vascular disease who are undergoing limb amputation below or through the knee joint. • In the Netherlands, an 8-patient Phase 2 safety and feasibility study in patients with multi-vessel coronary artery disease who are undergoing percutaneous coronary intervention (PCI), has enrolled 4 patients.

~~Trauma~~As the Company generates net losses, the key drivers of the losses have been cost of revenues, research and development and general and administrative expenses. Inflation and changing prices have not had a significant impact on the revenues or loss from operations in the periods presented below. The key drivers of losses in the first quarter of 2009 have changed because of the suspension of Company activity in 2008 and the first quarter of fiscal 2009. For the three-month periods ended January 31, 2009 and 2008, these items were as follows (dollars in thousands):

The Company is working under a cooperative research and development agreement (CRADA) with the NMRC to develop Hemopure for use in trauma patients in out-of-hospital settings (for example, at accident scenes, in ambulances or on battlefields). In June 2005, the NMRC submitted an IND application to the FDA for a clinical trial called RESUS (Restore Effective Survival in Shock). The FDA placed the proposed IND on clinical hold in July 2005. In December 2006, NMRC and the Company presented at a meeting of the FDA’s Blood Products Advisory Committee (BPAC) regarding RESUS. Following recommendations made at the meeting, the NMRC with support from the Company submitted in July 2007 a new RESUS study protocol for a Phase 2 pre-hospital trauma study of Hemopure. The study continues to be on clinical hold.


	Three Months Ended
	January 31, 2009				January 31, 2008
	Amount		Percent of Total Costs		Amount		Percent of Total Costs
Oxyglobin Product Sales	$	797			$	419
Hemopure Product Sales		68				58
Research and Development Revenues		293				96

Total Revenues	$	1,158			$	573


Cost of Revenues
Oxyglobin		706	20	%		569	9	%
Hemopure		294	8	%		2,219	34	%


Total Cost of Revenues		1,000	28	%		2,788	43	%

Research and Development		1,120	32	%		1,487	23	%

Sales and Marketing
Oxyglobin		12	0	%		25	0	%
Hemopure		84	2	%		255	4	%

BIOPURE CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations July 31, 2007 (continued)


	Three Months Ended
	January 31, 2009				January 31, 2008
	Amount		Percent of Total Costs		Amount		Percent of Total Costs
Total Sales and Marketing		96	2	%		280	4	%

General and Administrative		1,328	38	%		1,966	30	%

Total Costs	$	3,544	100	%	$	6,551	100	%

~~The~~Three ~~Company~~months isended ~~sponsoring a separate~~January 31, ~~Phase~~2009 2,compared ~~50-patient clinical trial in South Africa that is designed~~ to ~~assess~~three ~~the~~months ~~safety~~ended ~~and tolerability of Hemopure~~January 31, ~~in a hospital setting, for emergency~~2008 ~~treatment of unstable patients who have significant blood loss as a result of blunt or penetrating trauma and the trial has enrolled 28 patients.~~

~~Compassionate~~Total ~~Use~~revenues for the first fiscal quarter of 2009 were $1.2 million, or 102% higher than revenues of $573,000 for the same period in fiscal 2008. The increase is attributable to the Company selling substantially all of its inventory of Oxyglobin to distributors. The Company does not expect additional revenue from sales of Oxyglobin for the balance of fiscal 2009 and until such later time as it resumes manufacturing.

Revenues from sales of Hemopure ~~has~~were ~~been~~$68,000 ~~available~~in ~~for~~the ~~compassionate~~first ~~use~~quarter ~~since~~of ~~December 2006.~~fiscal ~~Under~~2009 ~~the~~compared ~~existing~~to ~~program the~~$58,000 ~~Company~~in ~~evaluates~~fiscal ~~individual~~2008 ~~requests~~following increasing ~~from~~customer ~~treating~~acceptance ~~physicians~~of ~~for~~the ~~specific~~product ~~patients~~during 2008. IfHowever, in November 2008, the ~~patient~~ isCompany’s ~~deemed~~sales anpersonnel ~~appropriate~~in ~~candidate~~South ~~for~~Africa ~~treatment~~were laid off. Sales are continuing, but the ~~FDA~~Company is ~~contacted~~not actively marketing to customers and adoes ~~single~~not ~~patient~~expect ~~IND~~sales isto ~~requested~~increase in the balance of fiscal 2009 over comparable quarters of 2008. ToIn ~~date~~addition, the ~~FDA~~South ~~has~~Africa ~~authorized~~regulatory ~~shipment~~authority ofnotified ~~Hemopure~~the ~~for~~Company 21in ~~patients~~October 2008 that it had decided to revoke its marketing authorization for Hemopure. The Company is appealing that decision. The appeal may take until approximately October 2009 to complete, but in the meantime the Company is permitted to market product.

~~Surgical~~Cost ~~Anemia~~of ~~Marketing~~revenues ~~Application~~includes costs of both Oxyglobin and Hemopure. Cost of revenues was $1.0 million for the first quarter of fiscal 2009, compared to $2.8 million for the same period in 2008. Hemopure cost of revenues were $1.9 million lower for the first fiscal quarter of 2009 than the first fiscal quarter of 2008 because of the suspension of manufacturing and reduction of manufacturing personnel described above in “Overview – Cost Cutting Measures.” This suspension in operations caused are classification of the underlying costs, yielding a reduction in cost of goods sold with an increase in research and development expense. Oxyglobin cost of revenues increased due to the sale of substantially all remaining inventory in the first quarter of 2009.

InResearch ~~July 2006, the Company submitted an application to the United Kingdom’s Medicines~~ and ~~Healthcare Products~~development ~~Regulatory~~costs ~~Agency~~decreased ~~(MHRA) seeking~~25% ~~authorization~~from to$1,487,000 ~~market Hemopure~~ in the ~~U.K.~~first ~~for the~~fiscal ~~treatment~~quarter of ~~acutely~~2008 ~~anemic adult orthopedic surgery patients less than 80 years of age. The Company is preparing the next submission responding~~ to ~~a provisional opinion letter. Pending a meeting with the MHRA~~$1,120,000 ~~the Company expects to make its response~~ in ~~September 2007. There is no prescribed time frame for a final decision from~~ the ~~MHRA~~first ~~once~~quarter ~~the~~of ~~Company~~fiscal ~~makes its submission addressing pending MHRA questions, but four to six months is typical~~2009. ~~Based~~The ondecrease ~~the Company’s preliminary understanding of the possible market size~~ in ~~the~~research ~~U.K.,~~and itdevelopment ~~does~~costs ~~not~~is ~~expect~~expected anto ~~approval for~~continue ~~the proposed indication, if granted,~~ to ~~result~~decrease ingoing ~~sufficient~~forward ~~near-term~~due ~~sales~~ to ~~make us profitable. If a marketing authorization were granted in~~ the ~~U.K., the~~ Company’s ~~would~~reduced ~~have the option to seek registration of Hemopure for the same indication in other member states in the European Economic Area~~operations.

~~Significant~~Sales ~~Estimates~~ and ~~Assumptions~~ marketing expenses decreased from $280,000 in fiscal 2008 to $96,000 in the first fiscal quarter of 2009 due to the reduced activity.

~~The~~General ~~preparation~~and ofadministrative ~~financial~~expenses ~~statements~~were in$1.3 ~~conformity~~million ~~with~~for ~~accounting~~the ~~principles~~first ~~generally~~fiscal ~~accepted in~~quarter ~~the~~of ~~United~~2009 ~~States~~compared ~~requires management~~ to ~~make~~$2.0 ~~significant~~million ~~estimates~~for ~~and assumptions that affect~~ the ~~reported~~same ~~amounts~~period ofin ~~assets~~2008 ~~and~~because ~~liabilities and disclosure~~ of ~~contingent assets and liabilities at the date of the financial~~staff ~~statements~~reductions and ~~the~~related ~~reported~~reductions ~~amounts~~in of expenses ~~during the reporting periods~~. ~~Significant estimates and assumptions by management affect accrued expenses, stock-based compensation, long-lived assets and inventory valuation.~~

~~Although~~Item ~~the Company regularly assesses these estimates, actual results could differ materially from these estimates~~3. ~~Changes~~Quantitative ~~in estimates are recorded in the period in which they occur. The Company bases its estimates on historical experience~~ and ~~various~~Qualitative ~~other~~Disclosure ~~assumptions~~About ~~that~~Market ~~it believes to be reasonable under the circumstances.~~ Risk

~~Critical Accounting Policies~~Not applicable.

~~The~~Item ~~Company’s significant accounting policies are described in the Notes to the Consolidated Financial Statements contained in its Annual Report on Form 10-K for the fiscal year ended October 31, 2006~~4T. ~~The~~Controls ~~application of the Company’s critical accounting policies is particularly important to the accurate portrayal of its financial position~~ and results of operations. These critical accounting policies require the Company to make subjective judgments in determining estimates about the effect of matters that are inherently uncertain. The following critical accounting policies are considered most significant. Procedures

(a) Evaluation of Disclosure Controls and Procedures.

The Company’s management, under the supervision of and with the participation of the Chief Executive Officer, performed an evaluation of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”) as of the end of the period covered by this report, January 31, 2009. Based on this evaluation, the Chief Executive Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.

~~BIOPURE~~(b) ~~CORPORATION Management’s~~Changes ~~Discussion~~in ~~and~~Internal ~~Analysis~~Control of Over Financial ~~Condition~~Reporting ~~and Results of Operations July 31, 2007 (continued)~~

~~Inventories~~There have been no change in the Company’s internal control over financial reporting (as defined under Rules 13a-(f) or 15d-15(f) of the Exchange Act) during the quarter ended January 31, 2009, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. As previously reported in the Company’s annual report on Form 10-K/A, as filed with the SEC on March 3, 2009, management identified material weaknesses in the internal control over financial reporting in the last quarter of fiscal 2008.

Inventories are stated at the lower of cost (determined using the first-in, first-out method) or market. Inventories consist of raw material, work-in-process and Hemopure and Oxyglobin finished goods. Inventories are reviewed periodically to identify expired units and units with a remaining life too short to be commercially viable based on projected sales activity, including sales of Hemopure in the proposed RESUS clinical trials. Inventories are also subject to internal quality compliance investigations. Inventory that is not expected to be utilized based on projected demand or fails quality assessment is written off. The inventory of Hemopure finished goods represents the units the Company expects to sell in South Africa or use in preclinical and clinical studies where payment is received for the trial material. The Company has been and expects to continue to be reimbursed for the cost of units to be used in a proposed trauma trial to be conducted by or on behalf of the NMRC. Any units expected to be consumed by the Company in its own preclinical or clinical trials are expensed to research and development when manufactured. If the Company continues to experience a lack of or extremely limited sales in South Africa or further delays in the use of Hemopure by the NMRC, it expects to write off additional units in the future.

Stock-Based Compensation

The Company adopted the provisions of Statement of Financial Accounting Standards 123R, “Share-Based Payment” (“SFAS 123R”), beginning November 1, 2005, using the modified prospective transition method. SFAS 123R requires the Company to measure the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and to recognize cost over the requisite service period. Option valuation models require the input of subjective assumptions, including stock price volatility and expected term of options.

Long-Lived Assets

Financial Accounting Standards Board (FASB) SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Evaluation of impairment of long-lived assets requires estimates of future operating results that are used in the preparation of the expected future undiscounted cash flows. Actual future operating results and the remaining economic lives of our long-lived assets could differ from the estimates used in assessing the recoverability of these assets.

The Company’s investments in property and equipment, such as new facility construction and the asset related to the expenditures for a planned manufacturing facility in South Carolina, carried at $11.1 million, net of depreciation, at the end of the current quarter and included in property, plant and equipment in the accompanying condensed consolidated balance sheet, are the principal long-lived assets that we review for impairment. Quarterly, the Company considers whether or not there were indicators of impairment of its long-lived assets that arose during the quarter subsequent to the last review. For the quarter ended July 31, 2007, the Company has determined that no such impairment indicators have arisen. Evaluation of impairment of long-lived assets requires estimates of future operating results and the expected future undiscounted cash flows used to assess the recoverability of these assets. Circumstances with respect to the planned South Carolina manufacturing facility, or other long-lived assets, actual future operating results and the remaining economic lives of our long-lived assets could differ from these estimates. These differences, when they are identified, could result in impairment charges, which may have a material adverse impact on our results of operations.

Revenue Recognition

The Company recognizes revenue from sales of Hemopure and Oxyglobin in accordance with Staff Accounting Bulletin (“SAB”) No. 104, “Revenue Recognition,” whereby sales are recorded upon shipment, provided that there

BIOPURE CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations July 31, 2007 (continued)

is evidence of a final arrangement, there are no uncertainties surrounding acceptance, title has passed, collectibility is probable and the price is fixed or determinable. Hemopure marketing in South Africa is directed toward institutions. Revenues from Hemopure sold for clinical use in South Africa are recognized when sold, in accordance with SAB 104 described above. The Company sells Oxyglobin directly to veterinarians in the United States. The Company sells Oxyglobin to a distributor in the United Kingdom for resale in the European Union. Collectibility is reasonably assured once pricing arrangements are established, as these agreements establish the distributor’s intent to pay. The Company’s customers do not have a right to return product. The Company monitors creditworthiness on a regular basis and believes collectibility of product revenues is reasonably assured at the time of sale. The Company recognizes revenue from the U.S. military upon invoicing for reimbursable expenses in connection with developing Hemopure for a trauma indication. Amounts received as advance payment for product purchases, recorded as deferred revenue, are recognized upon shipment.

Results of Operations

As the Company generates net losses, the key drivers of the losses are cost of revenues, research and development and general and administrative expenses. Inflation and changing prices have not had a significant impact on the revenues or loss from operations in the periods presented below. For the three and nine month periods ended July 31, 2007 and 2006, these items were as follows (dollars in thousands):

	Three Months Ended										Nine Months Ended
	July 31, 2007					July 31, 2006					July 31, 2007					July 31, 2006
			Percent of					Percent of					Percent of					Percent of
	Amount		Total Costs			Amount		Total Costs			Amount		Total Costs			Amount		Total Costs
Oxyglobin Product Sales	$	470				$	312				$	1,414				$	980
Hemopure Product Sales		58					1					80					8
Research and Development Revenues		22					83					269					296
Other Revenues		—					—					—					—
Total Revenues		550					396					1,763					1,284
Cost of Revenues Oxyglobin		636		9	%		725		10	%		2,098		9	%		2,140		10	%
Hemopure		2,453		34	%		2,214		31	%		6,928		32	%		7,211		33	%
Total Cost of Revenues		3,089		43	%		2,939		41	%		9,026		41	%		9,351		43	%
Research and Development		1,618		23	%		1,772		25	%		5,397		25	%		5,112		24	%
Sales and Marketing Oxyglobin		20		0	%		16		0	%		60		0	%		57		0	%
Hemopure		321		5	%		181		3	%		1,039		5	%		467		2	%
Total Sales and Marketing		341		5	%		197		3	%		1,099		5	%		524		2	%
General and Administrative		2,107		29	%		2,239		31	%		6,365		29	%		6,826		31	%
Total Costs	$	7,155		100	%	$	7,147		100	%	$	21,887		100	%	$	21,813		100	%

Three months ended July 31, 2007 compared to three months ended July 31, 2006

Total revenues for the third quarter of 2007 were $550,000, including $470,000 from sales of Oxyglobin and $58,000 from sales of Hemopure in South Africa. Total revenues for the same period in 2006 were $396,000, including $312,000 from Oxyglobin sales and $1,000 from sales of Hemopure. The increase in Hemopure sales reflects the Company’s marketing efforts and increasing use of the product. Although unit sales of Oxyglobin decreased during the third quarter of fiscal 2007 compared to the same period in fiscal 2006 revenues increased due to a higher average selling price.

Cost of revenues includes costs of both Oxyglobin and Hemopure. Cost of revenues was $3.1 million for the third quarter of fiscal 2007, compared to $2.9 million for the same period in 2006. This increase is largely due to higher salaries expense and plant costs.

BIOPURE CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations July 31, 2007 (continued)

The Company’s major research and development programs and related expenses are as follows (dollars in thousands):

	Three Months Ended
	July 31, 2007					July 31, 2006
			Percent of					Percent of
	Amount		Total R&D Costs			Amount		Total R&D Costs
Ischemia Program	$	509		32	%	$	360		20	%
Trauma Program		496		31			351		20

Historically, virtually all research and development expenses related to an anticipated surgical anemia indication where Hemopure would be used to eliminate or reduce the need for red blood cell transfusion. Biopure is not currently seeking FDA approval for this indication.

The Company’s primary strategic focus is now the development of Hemopure for ischemia and trauma indications, discussed below.

Both the ischemia and the trauma projects are in early stages (i.e., safety clinical trials and preclinical animal studies). Cumulative ischemia project expenditures of $6.2 million as of July 31, 2007 consist primarily of the costs of preparing and carrying out Phase 2 clinical trials in Europe. Cumulative trauma expenditures of $5.2 million as of July 31, 2007 consist of costs to conduct preclinical studies and preparation costs primarily associated with protocol design and preparation of the IND application for the proposed NMRC sponsored out-of-hospital trauma trial. Of these trauma expenses, $2.9 million has been reimbursed to date by payments administered by the U.S. Army as described in Note 8 to the condensed consolidated financial statements.

Regulatory agency requirements for additional clinical trials and any further preclinical studies that might be necessary for either an ischemia indication or for use in trauma patients cannot be estimated at this time. The risks and uncertainties associated with the early stage of planning and execution of the ischemia and trauma clinical development programs include, among other things, uncertainties about results that at any time could require us to abandon or greatly modify either project. Accordingly, the Company cannot estimate the period in which material net cash inflows for either of these two projects might commence, if ever, and it does not expect to obtain marketing approval of a potential ischemia indication or trauma indication for several years.

Research and development expenses were $1.6 million for the third quarter of fiscal 2007 compared to $1.8 million for the same period in 2006. Expenses during the third fiscal quarter of 2006 include costs related to the marketing authorization application the Company submitted to the United Kingdom regulatory authority in 2006, for which there are no comparable expenses in 2007. Partially offsetting the decline in these costs was higher salaries expense due to increased headcount.

Sales and marketing expenses increased to $341,000 for the third quarter of fiscal 2007, from $197,000 for the same period in 2006 due to planning activities for Hemopure in the U.K. and to increased personnel in South Africa.

General and administrative expenses were $2.1 million for the third quarter of fiscal 2007 compared to $2.2 million for the corresponding period in fiscal 2006, due mostly to lower insurance premiums.

Nine months ended July 31, 2007 compared to nine months ended July 31, 2006

Total revenues for the first nine months of fiscal 2007 were $1.8 million, including $1.4 million from sales of Oxyglobin and $80,000 from sales of Hemopure in South Africa. Total revenues for the same period in fiscal 2006 were $1.3 million, including $980,000 from Oxyglobin sales and $8,000 from sales of Hemopure. Oxyglobin

BIOPURE CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations July 31, 2007 (continued)

revenues increased due to increased unit sales and a higher average selling price. Sales of Hemopure increased due to marketing progress and further adoption of the product.

Cost of revenues decreased to $9.0 million for the first nine months of fiscal 2007, from $9.4 million for the same period in fiscal 2006. Cost of revenues includes costs of both Oxyglobin and Hemopure. Hemopure cost of revenues, consisting primarily of the allocation of unabsorbed fixed manufacturing costs, was $6.9 million for the first nine months of fiscal 2007 compared to $7.2 million during the same period in fiscal 2006. This decrease is mostly due to a $726,000 reduction in inventory write-downs during the first nine months of 2007 compared to the same period in fiscal 2006. This decrease was partially offset by an increase in salaries expense compared to last year.

A breakdown of the Company’s research and development expenses by major activity is as follows (dollars in thousands):

	Nine Months Ended
	July 31, 2007					July 31, 2006
			Percent of					Percent of
	Amount		Total R&D Costs			Amount		Total R&D Costs
Ischemia Program	$	1,748		32	%	$	1,272		25	%
Trauma Program		1,640		30			772		15

Research and development expenses were $5.4 million for the first nine months of fiscal 2007, compared to $5.1 million for the corresponding period in 2006. The increase was primarily due to higher expenses for salaries and preclinical animal studies compared to the comparable period of fiscal 2006, partially offset by lower outside services expense.

Sales and marketing expenses increased to $1.1 million during the first nine months of fiscal 2007 compared to $524,000 during the corresponding period in fiscal 2006. The increase in fiscal 2007 is attributable to expenses of $274,000 related to a U.K. advisory board and meetings in the U.K. for Hemopure, a $163,000 charge for Hemopure units donated to public hospitals in South Africa to encourage product usage and generate treatment data and to $59,000 for market research for Hemopure in the U.K. Spending in South Africa also increased during the first nine months of fiscal 2007 compared to the same period last year.

General and administrative expenses were $6.4 million for the first nine months of fiscal 2007, compared to $6.8 million for the same period in fiscal 2006. The decrease is due to a $450,000 reduction in insurance premiums, a $190,000 reduction in severance expense and a $130,000 reduction in facilities costs. These were partially offset by a $367,000 increase in consulting expense.

Liquidity and Capital Resources

At July 31, 2007, the Company had $6.3 million in cash and cash equivalents. The Company believes this funding will be sufficient to fund operations into November 2007. The Company will require significant additional funding to remain a going concern and to fund operations until such time, if ever, as it becomes profitable. On September 12, 2007 the Company filed a registration statement, on Form S-1, with the Securities and Exchange Commission to sell class A common stock and warrants to purchase its class A common stock in a firm committment public offering. The Company will continue to explore opportunities to raise capital, through sales of equity securities and, if appropriate, to consider strategic collaborations for sharing development and commercialization costs. However, there can be no assurance that adequate additional financing will be available to the Company on terms that it deems acceptable, if at all.

BIOPURE CORPORATION Management’s Discussion and Analysis of Financial Condition and Results of Operations July 31, 2007 (continued)

Net cash used in operating activities increased $1.2 million in the first nine months of fiscal 2007 compared to the corresponding period in fiscal 2006. Cash used in operating activities was $16.5 million for the first nine months of fiscal 2007, which included a net loss of $19.6 million, decreased by compensation expense related to the issuance of stock options, non-cash charges for depreciation and amortization, inventory write-downs and reserve for bad debt. Accrued expenses consumed $412,000 during the first nine months of fiscal 2007 largely due to the payment, in fiscal 2007, of non-recurring expense accrued in fiscal 2006.

Cash provided by financing activities includes approximately $16.4 million in net proceeds raised during the first nine months of fiscal 2007 through sales of common stock and warrants.

BIOPURE CORPORATION Part II — Other Information July 31, 2007

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The Company does not have foreign currency exchange risks, with the exception of the negligible effect of exchange fluctuations associated with expenses for marketing and regulatory activities outside of the United States. Biopure sells Oxyglobin to its European distributors in U.S. dollars; therefore its customers bear the risk of foreign currency effect of exchange fluctuation. Customers in South Africa are charged and pay in South African Rand. The Company expects any foreign currency exchange fluctuation to be negligible initially, as sales are not expected to be significant, and the effect of fluctuations in revenue should be offset by the effect of fluctuations on the Company’s expenses in South Africa, which are paid in local currency. The Company intends to develop policies to minimize exchange fluctuation risk if and when sales volume increases. The Company invests its cash and cash equivalents in money market funds. These investments are subject to interest rate risk. However, due to the short-term nature of the Company’s investments, it believes that the financial market risk exposure is not significant.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures.

Under the supervision and with the participation of the Company’s management, including its Chief Executive Officer and Chief Financial Officer, the Company conducted an evaluation of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this report to ensure that information required to be disclosed by the Company in its Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

(b) Changes in Internal Control Over Financial Reporting.

There have been no changes in the Company’s internal control over financial reporting (as defined under Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during its most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting.

BIOPURE CORPORATION

Part II II— Other Information

~~July~~January 31, ~~2007~~2009

Item 1.

Legal Proceedings

The information in Note 107 to the Condensed Consolidated Financial Statements is incorporated herein by reference.

Item 1A.

Risk Factors

Company Risks

WeFailure ~~have~~to araise ~~history~~sufficient additional funds will cause the Company to cease the development of ~~losses~~its products and ~~expect~~its ~~future~~ability ~~losses~~to operate.

WeThe ~~have~~Company’s ~~had~~cash ~~annual~~on ~~losses~~hand ~~from~~and ~~operations~~anticipated ~~since~~revenue ~~our~~are ~~inception~~only sufficient to last into April 2009. InUnless the ~~fiscal~~Company ~~years~~obtains ~~ended October 31~~financing imminently, ~~2004~~it will be forced to cease operations, ~~2005~~liquidate its assets, and ~~2006~~possibly seek bankruptcy protection. Given this need for capital, wethe ~~had~~Company ~~losses~~is ~~from~~seeking ~~operations~~new offunding ~~$41~~and minimizing cash outflow.~~8 million~~ It has taken steps to reduce administrative, ~~$29.1 million~~sales, marketing and ~~$26.9 million~~ clinical spending, ~~respectively~~including reducing headcount. WeAdditionally, ~~had~~it anis ~~accumulated~~exploring ~~deficit~~strategic alternatives, including monetizing selected assets and a sale of ~~$545.1 million~~all asassets to protect the interests of ~~July 31~~its stockholders, ~~2007.~~creditors and other Westakeholders, ~~anticipate~~and ~~that~~in wethe ~~will~~first ~~continue~~quarter toof ~~generate~~fiscal ~~losses~~2009 ~~for~~entered ~~the~~into ~~next~~a ~~several~~sale-leaseback ~~years~~of its Pennsylvania manufacturing facility. ~~Even~~The ifdevelopment and regulatory processes for seeking and obtaining regulatory approval to market Hemopure has been and ~~were~~will continue to be ~~approved~~costly. bySubstantial ~~the~~working ~~FDA~~capital orwill ~~obtain~~be ~~marketing~~needed ~~authorization~~to indevelop, ~~another~~manufacture ~~major~~and ~~market~~sell Hemopure and to finance operations until such time, weif ~~might~~ ever, as it can generate positive cash flow. If additional financing is not available when needed, the Company will be ~~able~~unable to ~~achieve~~successfully ~~profitable~~develop ~~operations~~or commercialize Hemopure or to continue to operate. A sustained period in which financing is not available could force the Company to go out of business and liquidate its assets. If the U.S. Navy does not continue its development of Hemopure for a trauma indication, the Company will likely cease development of Hemopure for that indication because of limited resources.

WeThe ~~could~~Company ~~fail~~has toa ~~remain~~history aof ~~going~~losses ~~concern~~and expects future losses.

WeAnnual ~~expect~~losses ~~that~~have ~~our~~existed from ~~cash~~operations onsince ~~hand~~inception. In the fiscal years ended October 31, 2008 and ~~forecasted~~2007, ~~sales~~the ~~will~~Company ~~fund~~had losses from operations ~~into~~of ~~November~~$20.3 ~~2007~~million and $36.3 million, respectively. It had an accumulated deficit of $584 million as of ~~Sufficient~~January 31, 2009. ~~funds~~It ~~may~~anticipates ~~not~~that beit ~~available~~will continue to usgenerate ~~thereafter~~losses for the next several years. Even if Hemopure were to be approved by the FDA or onthe ~~terms~~Company ~~that~~obtains wemarketing ~~deem~~authorization ~~acceptable~~in another major market, ifit ~~they~~might not be ~~are~~able ~~available~~to atachieve ~~all~~profitable operations. ~~Our~~Cash ~~independent~~on ~~registered~~hand ~~public~~and ~~accounting~~expected ~~firm~~cash ~~has~~inflows ~~modified~~are ~~their~~expected ~~report for~~to ~~our~~only ~~fiscal~~last ~~year~~into ~~ended~~April ~~October 31,~~2009. ~~2006~~Without ~~with~~sufficient ~~respect~~additional tocash, ~~our~~the ~~ability~~Company will be forced to ~~continue~~cease asoperations aand ~~going concern~~liquidate its assets.

~~This~~The ~~type~~Company ofcould ~~modification~~fail ~~typically would indicate that our recurring losses from operations and current lack of sufficient funds~~ to ~~sustain~~remain ~~operations through the end of the following fiscal year raise substantial doubt about our ability to continue as~~ a going concern. Our consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. If we became unable to continue as a going concern, we would have to liquidate our assets and we might receive significantly less than the values at which they are carried on our consolidated financial statements. Any shortfall in the proceeds from the liquidation of our assets would directly reduce the amounts, if any, that holders of our common stock could receive in liquidation.

ToThe ~~remain~~Company ahas ~~going~~not ~~concern,~~had weadequate ~~require~~cash ~~significant~~to ~~funding~~fund operations since late in fiscal 2008. ~~The~~Sufficient ~~inclusion~~funds ofmay anot ~~going~~be ~~concern modification~~available into ~~Ernst~~it &hereafter. ~~Young~~Its ~~LLP’s~~independent ~~audit~~registered ~~opinion~~public ~~for~~accounting ~~fiscal~~firm ~~2006~~has ~~may~~modified ~~materially~~their ~~and~~report ~~adversely~~for fiscal year ended ~~affect~~October 31, ~~our~~2008 ~~stock~~with ~~price~~respect ~~and~~to ~~our~~the Company’s ability to ~~raise~~continue ~~new~~as ~~capital~~a going concern.

WeThis ~~could~~type ~~fail~~of modification typically would indicate that the Company’s recurring losses from operations and current lack of sufficient funds to sustain operations through the end of the following fiscal year raise substantial doubt about its ability to continue as a going concern. Its unaudited condensed consolidated financial statements have been prepared on the basis of a going concern, which contemplates the realization of assets and the satisfaction of liabilities in ~~financing~~the ~~efforts~~normal ifcourse weof ~~fail~~business. If the Company became unable to continue as a going concern, it would have to liquidate its assets and might receive ~~stockholder~~significantly ~~approval~~less ~~when~~than ~~needed~~the values at which they are carried on its consolidated financial statements. Any shortfall in the proceeds from the liquidation of its assets would directly reduce the amounts, if any, that holders of our common stock could receive in liquidation.

WeTo ~~are~~remain ~~required~~a ~~under the Nasdaq Marketplace Rules to obtain stockholder approval for any~~going ~~issuance~~concern, ofsignificant ~~additional~~funding ~~equity securities that~~ would ~~comprise~~be ~~more~~required. ~~than~~The ~~20%~~inclusion of ~~our~~a ~~total~~going ~~shares~~concern ~~of common~~modification ~~stock~~in ~~outstanding before~~ the ~~issuance~~audit report of the ~~securities~~Company’s atregistered ~~a discount to the greater of book or market value in an offering that is not deemed to be a “~~public ~~offering”~~accounting byfirm ~~Nasdaq.~~for Iffiscal we2008 ~~remain listed on Nasdaq, funding of our operations in the future~~ may ~~require~~materially ~~stockholder~~and ~~approval~~adversely ~~for purposes~~affect ~~of complying with~~ the ~~Nasdaq~~Company’s ~~Marketplace Rules. We could require such approval~~ ability to raise ~~additional~~ ~~funds,~~new ~~but might not be successful in obtaining any such required stockholder approval~~capital. If ~~we remain listed on Nasdaq and we fail to obtain approval prior to a financing for which the Nasdaq believes we need stockholder approval, we may be delisted.~~

~~Failure~~The toCompany ~~raise~~could ~~sufficient~~fail ~~additional~~in ~~funds~~financing ~~will~~efforts ~~significantly~~if ~~impair~~it orfails ~~possibly cause us~~ to ~~cease~~ ~~the~~receive ~~development,~~stockholder ~~manufacture~~approval ~~and~~when ~~sale of our products and our ability to operate~~needed.

21The Company is required under the Nasdaq Marketplace Rules to obtain stockholder approval for any issuance of additional equity securities that would comprise more than 20% of our total shares of common stock outstanding before the issuance of the securities at a discount to the greater of book or market value in an offering that is not deemed to be a “public offering” by Nasdaq. The Company is also required to obtain stockholder approval for the issuance of shares that would cause a change in control of Biopure. If it remains listed on Nasdaq, funding of its operations in the future may require stockholder approval for purposes of

~~BIOPURE CORPORATION~~ ~~Part~~complying IIwith —the ~~Other~~Nasdaq ~~Information July 31~~Marketplace Rules. The Company could require such approval to raise additional funds, ~~2007~~but might not be successful in obtaining any such required stockholder approval. If the Company remains listed on Nasdaq and fails to obtain approval prior to a financing for which the Nasdaq believes it needs stockholder approval, it may be delisted.

The ~~development~~Company ~~and~~could ~~regulatory~~fail ~~processes for seeking and obtaining regulatory approval~~ to ~~market~~ ~~Hemopure~~maintain inadequate ~~the~~controls ~~U.S. and the European Union have been and will continue~~ to beensure ~~costly.~~accurate ~~We will~~financial ~~require substantial working capital to develop, manufacture and sell Hemopure and to finance our operations until such time, if ever, as we can generate positive cash flow~~reporting. If Hemopure is approved for sale in the U.S. or the European Union, we expect that we will need to increase our manufacturing capacity, for which we will require significant additional funding. If additional financing is not available when needed or is not available on acceptable terms, we may be unable to successfully develop or commercialize Hemopure or to continue to operate. A sustained period in which financing is not available could force us to go out of business. If the U.S. Navy does not continue its development of Hemopure for a trauma indication, we will likely cease development of Hemopure for that indication because of limited resources.

IfIn wethe ~~fail~~fourth toquarter ~~obtain~~of ~~FDA~~2008 ~~approval~~and 2007, material weaknesses in financial reporting were identified. If the Company continues to ~~market~~operate ~~Hemopure~~with minimal staff, wethere ~~will~~could be ~~highly~~inadequacies ~~adversely~~in ~~affected~~financial statements for future periods.

WeIf ~~will~~the ~~not~~Company befails ~~able~~ to ~~market~~obtain ~~Hemopure in the U.S. unless and until we receive~~ FDA approval~~. In~~ ~~pursuing both the ischemia and trauma indications for Hemopure, as a prerequisite~~ to ~~further clinical~~market ~~trials for~~ Hemopure ~~in the U.S.~~, we must address ongoing FDA questions. We have been delayed, and could be further delayed, in responding either by outside contractors’ failure or inability to complete their tasks in a timely manner, our own staff limitations or by other unanticipated delays or difficulties and lack of resources. The FDA to date has found inadequate the ~~responses of the U.S. Naval Medical Research Center (NMRC) to questions raised in connection~~ ~~with~~Company ~~its~~will ~~proposal to conduct a trial of Hemopure in trauma patients in the out-of-hospital setting. If the FDA finds future responses made by us or the NMRC to~~ be ~~inadequate,~~highly weadversely ~~would be indefinitely unable to pursue development of Hemopure in the U~~affected.~~S.,~~ ~~a very large, key market.~~

~~Moreover,~~The ~~even~~Company ifwill wenot ~~adequately~~be ~~address~~able ~~the FDA’s questions, we will need~~ to ~~obtain~~market ~~FDA acceptance~~Hemopure ofin the ~~protocols~~United ~~for,~~States unless and tountil ~~complete,~~it receives ~~human~~FDA ~~clinical~~approval. ~~trials~~The ~~before applying for~~ FDA ~~approval~~ to ~~market~~date ~~Hemopure~~has ~~for~~found aninadequate ~~ischemia~~the ~~indication.~~Company’s Weresponses ~~cannot~~and ~~predict~~the ~~whether~~responses orof ~~when~~the weU.S. ~~will submit~~Naval anMedical ~~Investigational~~Research ~~New~~Center ~~Drug application~~ (~~IND~~NMRC) ~~for~~to anquestions ~~ischemia~~it ~~indication~~has raised. ~~Consequently,~~Given ~~we do~~the ~~not~~persistence ~~know~~of ~~whether~~clinical orholds ~~when~~on weall ~~will~~proposals submitted beby ~~able~~the ~~to commence a~~ U.S. ~~clinical~~Navy ~~trial~~and ofthe ~~Hemopure~~Company, ~~for~~it ~~an ischemia~~appears ~~indication or~~ that wethe Company will be ~~able~~unable to ~~conduct~~pursue ordevelopment ~~satisfactorily~~of ~~conclude~~Hemopure ~~additional clinical~~in ~~trials~~the ~~required~~United toStates, ~~obtain~~a ~~FDA~~very ~~marketing~~large, ~~approval~~key ~~for~~market, ~~this~~in ~~indication~~the near term.

InIf the ~~case~~Company offails ~~the~~to ~~trauma~~obtain ~~indication,~~regulatory ~~the~~approvals ~~NMRC has primary responsibility for designing, seeking FDA acceptance of and conducting a clinical trial of Hemopure for out-of-hospital treatment of trauma patients~~ in ~~hemorrhagic~~foreign ~~shock. In 2005~~jurisdictions, it ~~proposed~~will a two-stage Phase 2b/3 clinical trial, which has been on clinical hold. Further, the FDA’s Blood Products Advisory Committee in December 2006 recommended that the trial be redesigned as a Phase 2 trial. The NMRC submitted a Phase 2 protocol, which continues to be on clinical hold. The FDA may not ~~approve the redesigned Phase 2 trial. If the FDA ultimately lifts the clinical hold and the RESUS trial, as it may~~ be ~~redesigned,~~ isable ~~commenced and concluded, the trial results may not lead~~ to ~~FDA~~market ~~marketing~~Hemopure ~~approval for the proposed trauma indication because of poor outcome or need for additional trials~~abroad. ~~Usually a Phase 2 trial is not adequate for market approval.~~

InThe ~~addition,~~Company ~~future~~intends orto ~~existing~~seek ~~governmental~~to ~~action~~market orHemopure ~~changes~~ in ~~FDA~~international ~~policies~~markets. orSeparate ~~precedents may~~regulatory ~~result~~approvals inmust ~~delays~~be orobtained ~~rejection~~in oforder anto ~~application~~market ~~for~~products ~~marketing~~in ~~approval~~foreign jurisdictions. The ~~FDA~~regulatory ~~has considerable~~approval ~~discretion~~processes indiffer from ~~determining~~one ~~whether~~jurisdiction to ~~grant~~another, ~~marketing~~and ~~approval~~the ~~for~~time aneeded ~~drug~~to ~~and~~secure marketing approvals may ~~delay or~~be ~~deny~~very ~~approval~~long. ~~even~~Marketing approval in ~~circumstances~~any ~~where~~one ~~the~~jurisdiction ~~applicant’s~~does ~~clinical~~not ~~trials~~ensure ~~have~~approval ~~proceeded~~ in ~~compliance~~ ~~with~~a ~~FDA~~different ~~procedures~~jurisdiction. ~~and~~As ~~regulations~~a ~~and~~result, ~~have~~obtaining ~~met~~foreign ~~the~~approvals ~~established~~will require ~~end~~additional ~~points~~expenditures and significant amounts of ~~the trials~~time. ~~Despite~~The ~~all~~Company ofcan ~~our~~give ~~efforts,~~no ~~the~~assurance ~~FDA~~that ~~could~~it ~~refuse~~will toobtain ~~grant~~ marketing approval for Hemopure ~~for~~ in any ~~indication~~foreign jurisdiction other than that already obtained in South Africa. The Company is not currently pursuing any such approvals.

Challenges to FDA determinations are generally time consuming and costly, and rarely succeed. We can give no assurance that we will obtain FDA marketing approval for Hemopure for any indication. The failure to obtain any approval would have severe adverse consequences.

BIOPURE CORPORATION Part II — Other Information July 31, 2007

If we fail to obtain regulatory approvals in foreign jurisdictions, we will not be able to market Hemopure abroad.

We also intend to seek to market Hemopure in international markets, including the European Union. Whether or not FDA marketing approval has been obtained, we must obtain separate regulatory approvals in order to market our products in the European Union and many other foreign jurisdictions. The regulatory approval processes differ among these jurisdictions, and the time needed to secure marketing approvals may be even longer than that required for FDA approval. Marketing approval in any one jurisdiction does not ensure approval in a different jurisdiction. As a result, obtaining foreign approvals will require additional expenditures and significant amounts of time. We can give no assurance that we will obtain marketing approval for Hemopure in any foreign jurisdiction other than that already obtained in South Africa. In December 2006, we received a provisional opinion letter from the U.K. Commission on Human Medicines containing comments and questions regarding our surgical anemia marketing authorization. While we believe the issues are addressable, we can give no assurance that we will receive a marketing authorization in the U.K.

Clinical trials are extremely costly and subject to numerous risks and uncertainties.

To gain regulatory approval ~~from the FDA and European regulatory authorities~~ for the commercial sale of any product, including Hemopure, ~~we must demonstrate in clinical trials, and satisfy~~ the ~~FDA and foreign regulatory authorities as to, the~~ safety and efficacy of the product~~. Like~~ ~~the~~must ~~regulatory~~be ~~review~~demonstrated ~~process,~~ in clinical trials. Clinical trials are expensive and time-consuming. Clinical trials are also subject to numerous risks and uncertainties not within our control. For example, data weobtained ~~obtain~~ from preclinical and clinical studies are susceptible to varying interpretations that could impede regulatory approval.

In addition, many factors ~~could~~can delay or result in termination of ongoing or future clinical trials. Results from ongoing or completed preclinical or clinical studies or analyses could raise concerns, real or perceived, over the safety or efficacy of a product candidate. WeThe Company cannot assure investors that the FDA will not delay the development of Hemopure by further continuing its current ~~hold~~ holds or placing other clinical trials ~~we sponsor or others may sponsor~~ on hold in the future. A clinical trial may be delayed by slow patient enrollment. There may be limited availability of patients who meet the criteria for certain clinical trials. Delays in planned patient enrollment can result in increased development costs and delays in regulatory approvals. Further, we rely on investigating physicians and the hospital trial sites to enroll patients. In addition, patients may experience adverse medical events or side effects resulting in delays, whether or not the events or the side effects relate to ~~our~~the Company’s product.

If wethe doCompany does not have the financial resources to fund trials required to develop Hemopure for multiple potential indications, ~~our~~its success will be adversely affected.

In general, wethe Company cannot sell Hemopure for any indication unless weit ~~receive~~receives regulatory approval for that indication. Regulatory authorities generally require a separate marketing approval for each proposed indication for the use of Hemopure. In order to market Hemopure for more than one indication, wethe Company will have to design additional clinical trials, submit the trial designs to applicable regulatory authorities for review and complete those trials successfully. If any applicable regulatory authority approves Hemopure for an indication, it may require a label cautioning against the product’s use for indications or classes of patients for which it has not been approved. WeThe Company may not have funds available to try to exploit Hemopure for all of its potential indications. ~~Our~~Potential ~~potential~~ revenues will be impaired by limitations on the use of Hemopure.

If the Navy were to abandon its attempt to develop Hemopure for a trauma indication, it would have a serious adverse effect on ~~our~~the Company’s prospects.

23The Company’s current clinical development activity is supporting the pursuit by the Navy of a trauma indication. The NMRC has agreed to be responsible for virtually all aspects of an advanced trauma trial. The FDA has prevented the start of the proposed NMRC trials. If the Navy were to decide not to continue to pursue this project, the Company would not have the benefit of this alliance and would be required to delay indefinitely work on this indication.

~~BIOPURE~~If ~~CORPORATION Part~~the IICompany —cannot ~~Other~~hire ~~Information July 31~~or retain highly qualified people, ~~2007~~ its operations will suffer.

~~Our~~The ~~current~~Company ~~clinical~~has ~~development~~experienced ~~activities involve~~ the ~~pursuit~~loss of ~~two~~personnel ~~indications:~~through ~~ischemia and~~cost ~~trauma~~containment. WeIt ~~are~~expects ~~pursuing~~that ~~the latter~~ in the ~~U.S.~~future ~~because~~it ~~the~~will ~~NMRC~~need ~~has agreed~~ to berecruit ~~responsible for~~and ~~virtually~~retain ~~all~~personnel ~~aspects~~for important ~~of an advanced trauma trial~~positions. The ~~FDA~~Company ~~has~~may ~~prevented~~be ~~the~~unable ~~start of the proposed NMRC trial since June 2005. If the Navy were~~ to ~~decide~~do ~~not to continue to pursue this project~~so, wein ~~would~~particular ~~not~~if ~~have~~it ~~the~~is ~~benefit~~unable ofto ~~this~~improve ~~alliance~~its ~~and~~financial ~~would~~ability ~~be required~~ to ~~delay~~offer ~~indefinitely work~~secure ~~on this indication~~employment.

If ~~we cannot retain~~ the ~~personnel~~Company ~~we need, our costs will rise significantly. If we~~ cannot ~~hire~~generate ~~or retain~~adequate, ~~highly~~profitable ~~qualified~~sales ~~people~~of Hemopure, ~~our~~it ~~operations~~ will ~~suffer~~not be successful.

WeTo succeed, Hemopure must be developed commercially and adequate quantities of Hemopure sold at a profit. The Company may ~~experience~~not ~~the~~accomplish ~~loss~~either of ~~personnel~~these objectives. To date, ~~including~~efforts ~~executives~~have ~~and~~been ~~other~~focused ~~employees~~on developing Hemopure, asestablishing aits ~~result~~safety and efficacy. Uncertainty exists regarding the potential size of ~~attrition,~~any ~~which~~geographic wemarket ~~have~~for ~~previously~~Hemopure ~~experienced.~~and Wethe ~~expect~~price that incan be charged for it. Additionally, the ~~future~~size weof the market will ~~need~~be ~~to recruit~~affected ~~and~~by ~~retain~~the ~~personnel~~indication(s) for ~~important~~which ~~positions.~~Hemopure Weis ~~may~~approved and will be greatly ~~unable~~reduced toif doreimbursement ~~so,~~for inthe ~~particular~~cost ~~if we~~of ~~are~~Hemopure ~~unable~~is tonot ~~improve~~available ~~our~~from ~~financial~~health ~~position~~insurance companies or government programs.

If wethe Company cannot ~~generate~~obtain ~~adequate,~~market ~~profitable~~acceptance ~~sales~~ of Hemopure, weit will not be ~~successful~~able to generate adequate, profitable sales.

ToEven ~~succeed,~~if wemarketing ~~must~~approval for ~~develop~~ Hemopure ~~commercially~~is ~~and~~obtained, ~~sell~~a ~~adequate~~number ~~quantities~~ of ~~Hemopure~~factors ~~at a profit. We~~ may ~~not~~affect ~~accomplish~~future ~~either~~sales of ~~these objectives. To date, we have focused our efforts on developing Hemopure, establishing its safety and efficacy. Uncertainty exists regarding~~ the ~~potential~~ ~~size of any geographic market for Hemopure and the price that we can charge for it~~product. ~~Additionally,~~ ~~the~~These ~~size~~factors ofinclude: the market will be affected by the indication(s) for which Hemopure is approved and will be greatly reduced if reimbursement for the cost of Hemopure is not available from health insurance companies or government programs.

If• wewhether ~~cannot~~and ~~find~~how ~~appropriate~~quickly ~~marketing~~physicians ~~partners,~~and wethird-party ~~may~~payors ~~not~~accept beHemopure ~~able~~as toa ~~market~~cost-effective ~~and distribute Hemopure effectively.~~ therapeutic;

~~Our~~• ~~success~~whether ~~depends,~~medical incare ~~part,~~providers onor ~~our~~the ~~ability~~public toaccept ~~market~~the ~~and~~use ~~distribute~~of ~~Hemopure~~a ~~effectively~~bovine-derived ~~in major~~protein ~~markets.~~as Wea ~~have~~therapeutic ~~no experience~~ in ~~the~~ischemia ~~sale~~ or ~~marketing~~any ofother ~~medical~~indication, ~~products~~particularly ~~for~~in ~~humans~~light inof ~~a major~~public ~~market.~~perceptions Inin the ~~event~~United ~~that we obtain FDA approval of Hemopure~~States, weEurope ~~may~~and ~~choose~~elsewhere ~~initially~~about ~~to market~~the ~~Hemopure~~risk ~~using~~of an“mad ~~independent~~cow ~~distributor.~~disease”; ~~Any such distributor:~~ and

• ~~might~~product ~~not be successful in marketing Hemopure; • might~~price, atwhich ~~its discretion, limit~~ the ~~amount~~company ~~and~~believes ~~timing~~has ofbeen ~~resources~~an itimportant ~~devotes~~factor toin ~~marketing~~South ~~Hemopure;~~Africa and~~/or~~ •may ~~might~~be ~~terminate its agreement with us and abandon our products at any time whether or not permitted by the applicable agreement~~elsewhere.

WeIf ~~may~~the ~~instead~~Company ~~seek~~fails anto ~~alternative~~comply ~~arrangement such as an alliance~~ with agood ~~pharmaceutical company,~~manufacturing ~~or may be required to recruit~~practices, ~~train~~it ~~and retain a marketing staff and sales force of our own. We~~ may not be ~~successful~~able into ~~obtaining~~sell ~~satisfactory~~its ~~distributorship agreements or entering into alternative arrangements~~products.

IfThe weCompany ~~cannot~~must ~~obtain~~demonstrate ~~market~~to ~~acceptance~~regulatory ofauthorities that it can manufacture Hemopure in compliance with applicable good manufacturing practices, commonly weknown ~~will~~as ~~not~~GMPs. beGMPs ~~able~~are stringent requirements that apply to ~~generate~~all ~~adequate, profitable~~aspects ~~sales~~of the manufacturing process. The Company is subject to inspections by the FDA and European regulatory authorities at any time to determine whether it is in compliance with GMP requirements. If the Company fails to manufacture in compliance with GMPs, these regulatory authorities could revoke approval of Oxyglobin or take other enforcement actions.

~~Even~~The ifmanufacturing weprocess ~~succeed~~for inHemopure ~~obtaining~~is ~~marketing~~complicated ~~approval~~and ~~for Hemopure~~time-consuming, aand ~~number~~may ofexperience ~~factors~~problems ~~may affect~~that ~~future~~would ~~sales~~limit ofthe ~~our~~Company’s ~~product.~~ability ~~These~~to ~~factors~~manufacture ~~include:~~ and sell Hemopure.

•The ~~whether~~Company’s ~~and~~products ~~how~~are ~~quickly~~biologic ~~physicians~~drugs and ~~third~~require ~~party~~product ~~payers~~manufacturing ~~accept~~steps ~~Hemopure~~that asare amore ~~cost-effective~~complicated, ~~therapeutic;~~time •consuming ~~whether~~and ~~medical~~costly ~~care~~than ~~providers~~those required orfor ~~the~~most ~~public~~chemical ~~accept~~drugs. Minor deviations in the ~~use~~manufacturing ofprocesses aor ~~bovine-derived~~other ~~protein~~problems ascould aresult ~~therapeutic~~in unacceptable changes in ~~ischemia~~the orproducts ~~any~~that ~~other~~result ~~indication~~in lot failures, ~~particularly~~increased inproduction ~~light~~scrap, ofshipment ~~public~~delays, ~~perceptions~~regulatory inproblems, product ~~the~~recalls ~~U.S.~~or product liability, ~~Europe~~all ~~and~~of ~~elsewhere~~which ~~about~~could negatively affect the ~~risk~~results of ~~“mad~~the ~~cow~~Company’s ~~disease”;~~operations. ~~and~~

24If the Company were unable to restart its manufacturing facilities without undue delay or expense, it would not be able to manufacture for an extended period of time.

Manufacturing has been suspended as part of cost containment measures described elsewhere in this report and manufacturing personnel have been laid-off. The Company may not be able to rehire the personnel who have expertise in the Company’s complex manufacturing processes. Consequently, the Company may experience extended and costly delays if it attempts to resume manufacturing.

If the Company were unable to use its manufacturing facilities in Massachusetts or Pennsylvania, it would not be able to manufacture for an extended period of time.

The Company has a single manufacturing location in Massachusetts with raw material sourcing and initial processing in Pennsylvania. Damage to either of these manufacturing facilities due to fire, contamination, natural disaster, power loss or other events could cause the Company to cease manufacturing. For example, if the Massachusetts manufacturing facility were destroyed, it would take approximately two years or more to rebuild and qualify it. In the reconstruction period, the Company would not be able to manufacture product and thus would have no supply of Hemopure for research and development, clinical trials or sales after all finished goods in our inventory were used up. A new manufacturing facility would take longer to construct.

~~BIOPURE~~The ~~CORPORATION Part~~Company’s IIlack —of ~~Other~~operating ~~Information July 31,~~history ~~2007~~ makes evaluating its business difficult.

•Proceeds ~~product~~from ~~price~~the sales of equity securities, ~~which~~payments weto ~~believe~~fund ~~has~~the ~~been~~Company’s anresearch ~~important~~and ~~factor~~development inactivities, ~~South~~licensing ~~Africa~~fees, and ~~may~~interest beincome have ~~elsewhere~~provided almost all of our funding to date. The Company has no operating history of selling Hemopure upon which to base an evaluation of its business and prospects.

If wethe ~~fail~~Company tois ~~comply~~not ~~with~~able ~~good~~to ~~manufacturing~~protect ~~practices,~~its weintellectual ~~may~~property, ~~not~~it bewill ~~able~~suffer toeconomic ~~sell our products~~loss.

ToThe ~~obtain~~Company ~~the~~believes ~~approval~~that ofits ~~the~~patents ~~FDA~~ and ~~European~~other ~~regulatory~~intellectual ~~authorities~~property torights, ~~sell~~including ~~Hemopure~~its proprietary knowledge, ~~we must~~are ~~demonstrate~~important to ~~them~~its ~~that~~success. weAccordingly, ~~can~~the ~~manufacture~~success ~~Hemopure~~of inits ~~compliance~~business ~~with~~will ~~applicable~~depend, ~~good manufacturing~~in ~~practices~~part, ~~commonly~~upon ~~known~~its asability ~~GMPs.~~to ~~GMPs~~defend ~~are~~its intellectual ~~stringent~~property ~~requirements~~against ~~that~~infringement ~~apply~~by tothird ~~all aspects of the manufacturing process~~parties. WeThe ~~are~~Company ~~subject~~cannot toguarantee ~~inspections~~that byits ~~the~~intellectual ~~FDA~~property ~~and~~rights ~~European regulatory~~will ~~authorities~~protect atit ~~any~~adequately ~~time~~from tocompetition ~~determine~~from ~~whether~~similar ~~we are in compliance with GMP requirements~~products. If weSome ~~fail~~of toits ~~manufacture~~important inpatents ~~compliance~~have ~~with~~relatively ~~GMPs,~~short remaining ~~these~~terms. ~~regulatory~~Nor ~~authorities~~can ~~may~~it ~~refuse~~guarantee ~~to approve~~that ~~Hemopure~~additional products or ~~revoke~~processes ~~approval~~it ofdiscovers ~~Oxyglobin~~ or ~~may~~seeks ~~take~~to ~~other~~commercialize ~~enforcement~~will ~~actions~~receive ~~with~~adequate ~~respect to~~intellectual ~~Hemopure~~property ~~or Oxyglobin~~protection.

~~The~~In ~~manufacturing~~addition, ~~process~~third ~~for~~parties ~~Hemopure~~may issuccessfully ~~complicated~~challenge ~~and~~the ~~time-consuming~~Company’s intellectual property. It has not filed patent applications in every country. In certain countries, obtaining patents for the Company’s products, processes and weuses may ~~experience problems~~be ~~that~~difficult ~~would~~or ~~limit~~impossible. ~~our~~Patents ~~ability~~issued in regions other than the United States and Europe may be harder to ~~manufacture~~enforce than, and ~~sell~~may ~~Hemopure.~~not provide the same protection as, patents obtained in the United States and Europe.

~~Our~~Failure ~~products~~to ~~are~~avoid ~~biologic~~infringement ~~drugs~~of ~~and~~others’ ~~require~~intellectual ~~product~~property ~~manufacturing~~rights ~~steps that are more complicated, time consuming and costly than those required for most chemical drugs. Minor deviations in our manufacturing processes or other problems~~ could ~~result~~impair ~~in unacceptable changes in~~ the ~~products~~Company’s ~~that~~ability ~~result~~to inmanufacture ~~lot~~and ~~failures, increased production scrap, shipment delays, regulatory~~market ~~problems,~~its ~~product recalls or product liability, all of which could negatively affect our results of operations~~products.

IfThe weCompany ~~were~~cannot ~~unable~~guarantee tothat ~~use~~its ~~our~~products and manufacturing ~~facilities~~process inwill ~~Massachusetts~~be free of claims by third parties alleging that it has infringed their intellectual property rights. Several third parties hold patents with claims to compositions comprising polymerized hemoglobin and their methods of manufacture and use. One or ~~Pennsylvania,~~more weof ~~would~~these third parties may ~~not~~assert that the Company activities infringe claims under an existing patent. Any such claim could be ~~able~~expensive and time-consuming to ~~manufacture~~defend, ~~for~~and an ~~extended~~adverse ~~period~~litigation result or a settlement of ~~time~~litigation could require the Company to pay damages, obtain a license from the complaining party or a third party, develop non-infringing alternatives or cease using the challenged intellectual property. Any such result could be expensive or result in a protracted plant shutdown, in turn adversely affecting the Company’s ability to operate profitably.

WeThere ~~manufacture~~can atbe ano ~~single~~assurance ~~location~~that inthe ~~Massachusetts~~Company ~~with~~would ~~raw~~prevail ~~material~~in ~~sourcing~~any ~~and initial~~intellectual ~~processing~~property ininfringement ~~Pennsylvania.~~action, ~~Damage~~or tobe ~~either~~able ofto ~~these~~obtain ~~manufacturing~~a ~~facilities~~license ~~due~~ to ~~fire, contamination,~~any ~~natural~~third-party ~~disaster,~~intellectual ~~power~~property ~~loss~~on orcommercially ~~other~~reasonable ~~events~~terms, ~~could cause us~~ to ~~cease~~successfully ~~manufacturing. For~~develop ~~example,~~non-infringing ifalternatives ~~our~~on ~~Massachusetts~~a ~~manufacturing~~timely ~~facility were destroyed~~basis, ~~it would take approximately two years~~ or ~~more~~ to ~~rebuild~~license ~~and~~alternative ~~qualify~~non-infringing intellectual ~~it.~~property, Inif ~~the~~any ~~reconstruction period~~exists, weon ~~would not~~commercially bereasonable ~~able~~terms. toAny ~~manufacture~~significant ~~product~~intellectual ~~and~~property ~~thus~~impediment ~~would~~to ~~have~~the noCompany’s ~~supply~~ability ofto ~~Hemopure~~develop ~~for research~~ and ~~development,~~ ~~clinical~~commercialize ~~trials~~Hemopure orwould ~~sales~~seriously ~~after~~harm weits ~~used~~business upand ~~all finished goods in our inventory~~prospects. ~~A new manufacturing facility would take longer to construct.~~

IfThe ~~Hemopure~~Company’s ~~receives~~operating ~~regulatory~~results ~~approval in a major market, we~~ will be ~~required~~adversely toaffected ~~expand~~if ~~our manufacturing~~it ~~capacity~~incurs toproduct ~~develop~~liability ~~our~~claims ~~business,~~in ~~which~~excess ~~will require substantial third-party financing. Failure to increase our manufacturing capacity and to lower our manufacturing cost per unit may impair market acceptance~~ of ~~Hemopure~~its ~~and~~insurance ~~prevent us from achieving profitability~~coverage.

IfThe ~~Hemopure~~testing isand ~~approved~~marketing ~~for~~of ~~indications~~medical ~~with~~products, ~~high~~even ~~demand~~after inregulatory ~~one or more markets~~approval, wehave ~~will~~an ~~need to~~inherent ~~construct~~risk ~~new~~of ~~manufacturing~~product ~~capacity to develop our business~~liability. The ~~increase~~Company ~~in our manufacturing~~maintains ~~capacity~~limited isproduct ~~dependent~~liability ~~upon~~insurance ~~our obtaining substantial financing from third parties~~coverage. ~~Third~~The ~~parties can~~Company’s beprofitability ~~expected~~would to be ~~unwilling~~adversely toaffected ~~commit~~by ~~to finance~~ a ~~new~~successful ~~manufacturing~~product ~~facility~~liability soclaim ~~long~~in asexcess weof ~~do not~~its ~~have~~insurance ~~regulatory approval to market Hemopure in a major market~~coverage. WeThe Company cannot ~~assure~~guarantee that ~~sufficient financing~~product ~~for~~liability ~~new~~insurance ~~manufacturing~~in adequate ~~capacity~~coverage amounts will be available ~~or,~~in ifthe ~~available,~~future ~~will~~or be available on terms ~~that are acceptable to us. After the required significant financing was in place,~~ it ~~would~~could ~~take~~afford ~~at least 30~~ to ~~36 months from groundbreaking to build a large Hemopure manufacturing facility and to qualify and obtain facility approval from the FDA or European regulatory authorities~~pay.

IfReplacing ~~Hemopure~~its issole ~~approved~~source ~~for~~suppliers ~~marketing in a major market and receives market acceptance, we may~~for ~~experience~~key ~~difficulty~~materials ~~manufacturing~~could ~~enough~~result ofin ~~the~~unexpected ~~product~~delays toand ~~meet demand~~expenses. ~~The manufacturing processes we currently employ~~

25The Company obtains some key materials, including membranes and chemicals, and services from sole-source suppliers. All of these materials are commercially available elsewhere. If such materials were no longer available at a reasonable cost from existing suppliers, the Company would need to purchase substitute materials from new suppliers. If a new supplier needed to be located, the substitute or replacement materials or facilities would need to be tested for equivalency. Such equivalency tests could significantly delay product development, or delay or limit commercial sales of approved products and cause the Company to incur additional expense.

The Company obtains bovine hemoglobin from one abattoir from animals raised in several states of the United States. The Company cannot predict the future effect, if any, on the Company of the spread of bovine spongiform encephalopathy (“mad cow” disease) in the United States. Any quarantine affecting herds that supply the Company or a shutdown of the abattoir that the Company uses could have a material adverse effect on the Company, as it would have to find, validate and obtain regulatory approval of new sources of supply or new facilities.

Provisions of the Company’s restated certificate of incorporation and by-laws could impair or delay stockholders’ ability to replace or remove Company management and could discourage takeover transactions that stockholders might consider to be in their best interest.

Provisions of the Company’s restated certificate of incorporation and by-laws, as well as its stockholder rights plan, could impede attempts by stockholders to remove or replace management or could discourage others from initiating a potential merger, takeover or other change of control transaction, including a potential transaction at a premium over market price that stockholders might consider to be in their best interest. In particular:

•

The Company’s restated certificate of incorporation does not permit stockholders to take action by written consent and provides for a classified board of directors, and the Company by-laws provide that stockholders who wish to bring business before an annual meeting of stockholders or to nominate candidates for election of directors at an annual meeting of stockholders must deliver advance notice of their proposals to the Company before the meeting. These provisions could make it more difficult for a party to replace the board of directors by requiring two annual stockholder meetings to replace a majority of the directors, making it impossible to remove or elect directors by written consent in lieu of a meeting and making it more difficult to introduce business at meetings

~~BIOPURE~~• ~~CORPORATION Part~~The IICompany’s —stockholder ~~Other~~rights ~~Information July 31~~plan may have the effect of discouraging any person or group that wishes to acquire more than 20% of our Class A common stock from doing so without obtaining the Company’s agreement to redeem the rights. If the Company agreement to redeem the rights is not obtained, ~~2007~~ the acquiring person or group would suffer substantial dilution. Consequently, the possible acquirer would likely not complete a transaction that stockholders might consider to be in their best interest.

to produce small quantities of material for research and development activities and clinical trials may not be successfully scaled up for production of commercial quantities at a reasonable cost or at all. We will face risks in the scale-up of our processes in the construction of any new manufacturing facility, and in turn could encounter delays, higher than usual rejects, additional reviews and tests of units produced and other costs attendant to an inability to manufacture saleable product. Furthermore, scale-up might not succeed in lowering our product cost, which also could negatively affect our results of operations. If we cannot manufacture sufficient quantities of Hemopure, we may not be able to build our business or operate profitably. In addition, if we cannot fill orders for Hemopure, customers might turn to alternative products and may choose not to use Hemopure even after we have addressed any capacity shortage.

Our lack of operating history makes evaluating our business difficult.

Proceeds from the sales of equity securities, payments to fund our research and development activities, licensing fees, and interest income have provided almost all of our funding to date. We have no operating history of selling Hemopure upon which to base an evaluation of our business and prospects.

If we are not able to protect our intellectual property, competition could force us to lower our prices, which might reduce profitability.

We believe that our patents, trademarks and other intellectual property rights, including our proprietary knowledge, are important to our success. Accordingly, the success of our business will depend, in part, upon our ability to defend our intellectual property against infringement by third parties. We cannot guarantee that our intellectual property rights will protect us adequately from competition from similar products. Some of our important patents have relatively short remaining terms. Nor can we guarantee that additional products or processes we discover or seek to commercialize will receive adequate intellectual property protection.

In addition, third parties may successfully challenge our intellectual property. We have not filed patent applications in every country. In certain countries, obtaining patents for our products, processes and uses may be difficult or impossible. Patents issued in regions other than the U.S. and Europe may be harder to enforce than, and may not provide the same protection as, patents obtained in the U.S. and Europe.

Failure to avoid infringement of others’ intellectual property rights could impair our ability to manufacture and market our products.

We cannot guarantee that our products and manufacturing process will be free of claims by third parties alleging that we have infringed their intellectual property rights. Several third parties hold patents with claims to compositions comprising polymerized hemoglobin and their methods of manufacture and use. One or more of these third parties may assert that our activities infringe claims under an existing patent. Any such claim could be expensive and time-consuming to defend, and an adverse litigation result or a settlement of litigation could require us to pay damages, obtain a license from the complaining party or a third party, develop non-infringing alternatives or cease using the challenged intellectual property. Any such result could be expensive or result in a protracted plant shutdown, in turn adversely affecting our ability to operate profitably.

There can be no assurance that we would prevail in any intellectual property infringement action, or be able to obtain a license to any third-party intellectual property on commercially reasonable terms, to successfully develop non-infringing alternatives on a timely basis, or to license alternative non-infringing intellectual property, if any exists, on commercially reasonable terms. Any significant intellectual property impediment to our ability to develop and commercialize Hemopure would seriously harm our business and prospects.

BIOPURE CORPORATION Part II — Other Information July 31, 2007

Our operating results will be adversely affected if we incur product liability claims in excess of our insurance coverage.

The testing and marketing of medical products, even after regulatory approval, have an inherent risk of product liability. We maintain limited product liability insurance coverage. Our profitability would be adversely affected by a successful product liability claim in excess of our insurance coverage. We cannot guarantee that product liability insurance in adequate coverage amounts will be available in the future or be available on terms we could afford to pay.

Replacing our sole- source suppliers for key materials could result in unexpected delays and expenses.

We obtain some key materials, including membranes and chemicals, and services from sole-source suppliers. All of these materials are commercially available elsewhere. If such materials were no longer available at a reasonable cost from our existing suppliers, we would need to purchase substitute materials from new suppliers. If we needed to locate a new supplier, the substitute or replacement materials or facilities would need to be tested for equivalency. Such equivalency tests could significantly delay product development, or delay or limit commercial sales of approved products and cause us to incur additional expense.

We obtain bovine hemoglobin from one abattoir, from animals raised in several states of the U.S. We cannot predict the future effect, if any, on us of the spread of bovine spongiform encephalopathy (“mad cow” disease) in the U.S. Any quarantine affecting herds that supply us or a shutdown of the abattoir that we use could have a material adverse effect on us, as we would have to find, validate and obtain regulatory approval of new sources of supply or new facilities.

Changes in the securities laws and regulations are likely to increase our costs.

The Sarbanes-Oxley Act of 2002, which became law in July 2002, has required changes in some of our corporate governance, securities disclosure and compliance practices. In response to the requirements of that Act, the SEC and the Nasdaq Stock Market promulgated new rules and listing standards covering a variety of subjects. Compliance with these new rules and listing standards has increased our general and administrative costs, and we expect to continue to experience increased costs. These developments also could make it more difficult and more expensive for us to obtain director and officer liability insurance. Likewise, these developments may make it more difficult for us to attract and retain qualified members of our board of directors, particularly independent directors, or qualified executive officers.

As directed by Section 404 of the Sarbanes-Oxley Act of 2002, the SEC adopted rules requiring public companies to include a report of management on a company’s internal controls over financial reporting in their annual reports on Form 10-K that contains an assessment by management of the effectiveness of the company’s internal controls over financial reporting. In addition, the independent registered public accounting firm auditing a company’s financial statements must attest to and report on the effectiveness of the company’s internal controls over financial reporting. We have determined that we are not an “accelerated filer” and consequently Section 404 requirements did not apply to us for our 2006 annual report on Form 10-K. Nevertheless, if our independent registered public accounting firm does not provide us with an unqualified report as to the effectiveness of our internal controls over financial reporting for one or more future year-ends, investors could lose confidence in the reliability of our financial statements, which could result in a decrease in the value of our securities.

Provisions of our restated certificate of incorporation and by-laws could impair or delay stockholders’ ability to replace or remove our management and could discourage takeover transactions that a stockholder might consider to be in its best interest.

BIOPURE CORPORATION Part II — Other Information July 31, 2007

Provisions of our restated certificate of incorporation and by-laws, as well as our stockholder rights plan, could impede attempts by stockholders to remove or replace our management or could discourage others from initiating a potential merger, takeover or other change of control transaction, including a potential transaction at a premium over market price that a stockholder might consider to be in its best interest. In particular:

	•		Our restated certificate of incorporation does not permit stockholders to take action by written consent and provides for a classified board of directors, and our by-laws provide that stockholders who wish to bring business before an annual meeting of stockholders or to nominate candidates for election of directors at an annual meeting of stockholders must deliver advance notice of their proposals to us before the meeting. These provisions could make it more difficult for a party to replace our board of directors by requiring two annual stockholder meetings to replace a majority of the directors, making it impossible to remove or elect directors by written consent in lieu of a meeting and making it more difficult to introduce business at meetings.
	•		Our stockholder rights plan may have the effect of discouraging any person or group that wishes to acquire more than 20% of our Class A common stock from doing so without obtaining our agreement to redeem the rights. If our agreement to redeem the rights is not obtained, the acquiring person or group would suffer substantial dilution. Consequently, the possible acquiror would likely not complete a transaction that stockholders might consider to be in their best interest.

Industry Risks

Intense competition could harm ~~our~~the Company’s financial performance.

The biotechnology and pharmaceutical industries are highly competitive. There are a number of companies, universities and research organizations actively engaged in research and development of products that may be similar to, or alternatives to, Hemopure for trauma or ischemia indications. We ~~are~~The Company is aware that one public company competitor, Northfield Laboratories Inc., has completed a ~~pivotal~~ pivotal trial of a hemoglobin-based oxygen carrier produced from human blood that has passed its expiration date for human transfusion, and has ~~stated~~filed ~~its~~with ~~intention~~the toFDA ~~file~~an aapplication ~~BLA~~for inmarketing ~~2008~~authorization. WeThe ~~are~~ Company is also aware that other companies are conducting preclinical studies and clinical trials of hemoglobin-based or perfluorocarbon oxygen carriers. The products being developed by these companies are intended for use in humans and as such could compete, if approved by regulatory authorities, with Hemopure. ~~We may also encounter competition in ischemia indications from medical devices and drugs on the market or currently under development.~~

~~Competition~~Stringent, ~~could~~ongoing ~~diminish~~government ~~our~~regulation ~~ability~~and toinspection ~~become~~of ~~profitable~~the orCompany’s ~~affect~~facilities ~~our~~could ~~profitability~~lead to delays in the ~~future.~~manufacture, ~~Our~~marketing ~~existing~~ and ~~potential~~sale ~~competitors:~~ of its products.

•Generally, ~~are~~regulatory ~~conducting~~authorities ~~clinical~~continue ~~trials~~to regulate products even after they receive marketing authorization. On September 27, 2007, the Food and Drug Administration Amendments Act of ~~their~~2007 ~~products;~~was •enacted, ~~have~~giving the FDA enhanced post-market authority. If the FDA or ~~may~~a foreign regulatory agency were to approve Hemopure, the manufacture and marketing of Hemopure would be ~~able~~subject to ~~access~~ongoing ~~substantially~~regulation, ~~greater~~including ~~resources~~compliance ~~than~~with wecurrent ~~have~~good manufacturing practices, adverse event reporting requirements and general prohibitions against promoting products for unapproved or “off-label” uses. The Company would also be ~~better~~subject ~~equipped~~to inspection and market surveillance for compliance with these and other requirements. The Company is subject to ~~develop~~such regulation, inspection and surveillance in South Africa. Any enforcement action resulting from failure, even by inadvertence, to comply with these requirements could affect the manufacture and ~~market~~marketing ~~their~~of ~~products;~~Hemopure. •In ~~may~~addition, ~~have~~the ~~their~~regulatory ~~products~~authorities could withdraw a previously approved ~~for~~product ~~marketing~~from ~~prior~~the applicable market(s) upon receipt of newly discovered information. Furthermore, the FDA or foreign regulatory authorities could require the Company to ~~Hemopure;~~conduct additional, and •potentially ~~may~~expensive, ~~develop~~studies ~~superior~~in ~~technologies~~areas outside its approved indications. Also, unanticipated changes in existing regulations or ~~products~~the ~~rendering~~adoption ~~our~~of ~~technology~~new regulations could affect and ~~products~~make ~~non-competitive~~more orexpensive ~~obsolete~~the continued manufacturing and marketing of the Company’s products.

~~Stringent,~~Uncertainty ~~ongoing government regulation and inspection~~ of ~~our~~third-party ~~facilities~~reimbursement could ~~lead~~affect ~~to delays in~~ the ~~manufacture,~~Company’s ~~marketing and sale of our products~~profitability.

28Sales of medical products largely depend on the reimbursement of patients’ medical expenses by governmental health care programs and private health insurers. Even if Hemopure is approved for marketing, there is no guarantee that governmental health care programs or private health insurers would reimburse for purchases of Hemopure, or reimburse a sufficient amount to permit the Company to sell Hemopure at high enough prices to generate a profit. Hemopure sales in South Africa have been adversely affected by a lack of third-party reimbursement.

BIOPURE CORPORATION Part II — Other Information July 31, 2007

The FDA and foreign regulatory authorities continue to regulate products even after they receive marketing authorization. If the FDA or a foreign regulatory agency approves Hemopure, the manufacture and marketing of Hemopure will be subject to ongoing regulation, including compliance with current good manufacturing practices, adverse event reporting requirements and general prohibitions against promoting products for unapproved or “off-label” uses. We would also be subject to inspection and market surveillance by the FDA and foreign regulatory authorities for compliance with these and other requirements. We are subject to such regulation, inspection and surveillance in South Africa. Any enforcement action resulting from failure, even by inadvertence, to comply with these requirements could affect the manufacture and marketing of Hemopure. In addition, the FDA or foreign regulatory authorities could withdraw a previously approved product from the applicable market(s) upon receipt of newly discovered information. Furthermore, the FDA or foreign regulatory authorities could require us to conduct additional, and potentially expensive, studies in areas outside our approved indications. Also, unanticipated changes in existing regulations or the adoption of new regulations could affect and make more expensive the continued manufacturing and marketing of our products.

Health care reform and controls on health care spending may limit the price we can charge for Hemopure and the amount we can sell.

The federal government and private insurers have considered ways to change, and have changed, the manner in which health care services are provided in the U.S. Potential approaches and changes in recent years include controls on health care spending and the creation of large purchasing groups. In the future, it is possible that the government may institute price controls and limits on Medicare and Medicaid spending. These controls and limits might affect the payments we collect from sales of our products. European governments generally control expenditures on medicines through price control and other restrictive practices. Assuming we succeed in bringing Hemopure to market, uncertainties regarding future health care reform and private market practices could affect our ability to sell Hemopure in large quantities at profitable pricing in the U.S. and abroad.

Uncertainty of third-party reimbursement could affect our profitability.

Sales of medical products largely depend on the reimbursement of patients’ medical expenses by governmental health care programs and private health insurers. Even if Hemopure is approved for marketing, there is no guarantee that governmental health care programs or private health insurers would reimburse for purchases of Hemopure, or reimburse a sufficient amount to permit us to sell Hemopure at high enough prices to generate a profit. Hemopure sales in South Africa have been adversely affected by a lack of third-party reimbursement.

Investment Risks

The Nasdaq Capital Market may cease to list ~~our~~the Company’s Class A common stock which may cause the value of of an investment in ~~our~~the Company to substantially decrease.

WeThe Company may be unable to meet the listing requirements of the Nasdaq Capital Market in the future. To maintain ~~our~~its listing, wethe ~~are~~Company is required, among other things, to maintain a daily closing bid price per share of $1.00. OnThe ~~October 18,~~Company ~~2006,~~has webeen ~~received notice from the Nasdaq Stock Market that the closing bid price of our Class A common stock had fallen below and remained below $1.00 for 30 consecutive business days. As a result, we are~~ out of compliance ~~with~~since ~~the~~December 14, $12007.00 ~~minimum~~Nasdaq ~~bid price~~suspended ~~requirement~~enforcement ~~for continued inclusion~~ of ~~our~~this ~~Class A~~rule ~~common~~because ~~stock~~of turmoil in the ~~Nasdaq~~market ~~Capital Market~~place. ~~Under Nasdaq~~The ~~rules,~~Company weestimates ~~have~~that it now has until ~~October~~September 1512, ~~2007~~2009 to regain compliance by having the bid price of ~~our~~ its Class A common stock close at $1.00 per share or more for at least 10 consecutive business days. If we dothe Company does not regain compliance with the minimum bid price rule ~~by October 15~~, ~~2007,~~ Nasdaq will provide written notification that ~~our~~the Company’s Class A common stock will be delisted.

29 20

~~BIOPURE~~Delisting ~~CORPORATION Part~~would IIadversely —affect ~~Other~~the ~~Information July 31,~~trading ~~2007~~price and limit the liquidity of the Company’s common stock and therefore could cause the value of an investment in the Company to decrease.

~~Delisting~~As ~~would adversely affect~~ the ~~trading~~Company ~~price~~sells ~~and~~additional ~~limit~~shares, the ~~liquidity~~stock ofprice ~~our common stock~~may ~~and~~decline ~~therefore~~as ~~could~~a ~~cause~~result ~~the value~~ of anthe ~~investment~~dilution inthat ~~our~~will ~~Company~~occur to ~~decrease~~existing stockholders.

AsUntil wethe ~~sell~~Company is profitable, it will need significant additional funds to develop its business and sustain its operations. Any additional sales of shares, ~~our~~of its common stock ~~price~~are ~~may~~likely ~~decline~~to ashave a ~~result~~dilutive effect on some or all of the ~~dilution~~then ~~which~~existing ~~will~~stockholders. Re-sales of newly issued ~~occur~~shares in the open market could also have the effect of lowering its stock price, thereby increasing the number of shares the Company may need to ~~existing~~issue ~~stockholders.~~in the future to raise the same dollar amount and consequently further diluting its outstanding shares.

~~Until~~The weperceived ~~are~~risk ~~profitable,~~associated wewith ~~will~~the ~~need~~possible ~~significant~~sale ~~additional~~of ~~funds~~a tolarge ~~develop~~number ~~our business and sustain our operations. Any additional sales~~ of shares ofcould ~~our~~cause ~~common~~some ~~stock~~of ~~are~~the ~~likely~~Company tostockholders ~~have a~~to ~~dilutive~~sell ~~effect~~their onstock, ~~some~~thus orcausing ~~all~~the price of ~~our~~the ~~then~~stock ~~existing~~to ~~stockholders~~decline. ~~Resales~~In ofaddition, ~~newly~~actual ~~issued~~or ~~shares~~anticipated ~~in the~~downward ~~open~~pressure ~~market~~on ~~could~~the ~~also~~Company’s ~~have~~stock ~~the~~price ~~effect~~due ofto ~~lowering~~actual ~~our~~or ~~stock~~anticipated ~~price,~~sales ~~thereby~~of ~~increasing~~stock ~~the number~~could ofcause ~~shares~~some weinstitutions ~~may~~or ~~need~~individuals to engage ~~issue~~ in ~~the~~short ~~future~~sales toof ~~raise~~its ~~the~~common ~~same~~stock, ~~dollar~~which ~~amount~~may ~~and consequently~~itself ~~further~~cause ~~diluting~~the ~~our~~price ~~outstanding~~of ~~shares~~the stock to decline.

~~The~~Item ~~perceived risk associated with the possible sale of a large number of shares could cause some of our stockholders to sell their stock, thus causing the price of our stock to decline~~2. ~~In addition,~~Unregistered ~~actual~~Sales ~~or anticipated downward pressure on our stock price due to actual or anticipated sales~~ of ~~stock~~Equity ~~could~~Securities ~~cause~~and ~~some~~Use ~~institutions or individuals to engage in short sales~~ of ~~our common stock, which may itself cause the price of our stock to decline.~~ Proceeds

~~If our stock price declines, we may be unable to raise additional capital~~None. ~~A sustained~~ inability to raise capital could force us to go out of business. Significant declines in the price of our common stock could also impair our ability to attract and retain qualified employees, reduce the liquidity of our common stock and result in the delisting of our common stock from the Nasdaq Stock Market. We expect to have a “reverse split” of our stock, whereby the number of shares outstanding would be reduced and the price per share would increase before October 15, 2007. However, we cannot be sure that after the reverse stock split, the higher stock price would continue long enough to prevent a delisting notice.

Shares eligible for future sale may cause the market price for our common stock to drop significantly, even if our business is doing well.

We cannot predict the effect, if any, of future sales of our common stock or the availability of shares for future sale will have on the market price of our common stock from time to time. Shares of our common stock issued in the future, including shares issued upon exercise of outstanding options and warrants and shares offered in this prospectus, may become available for resale in the public market from time to time, and the market price of shares of our common stock could drop significantly if the holders of these shares sell them or are perceived by the market as intending to sell them.

Our stock price has been and may continue to be highly volatile, which may adversely affect holders of our stock and our ability to raise capital.

The trading price of our common stock has been and is likely to continue to be extremely volatile. During the period from November 1, 2004 to August 31, 2007, the trading price of our stock ranged from a low of $0.315 per share (on December 15, 2006) to a high of $4.62 per share (on January 4, 2005). Our stock price and trading volume could be subject to wide fluctuations in response to a variety of factors including, but not limited to, the following:

• failure to identify and hire key personnel or the loss of key personnel; • an inability to obtain or the perception that we will be unable to obtain adequate financing to fund our operations; • FDA action or delays in FDA action on Hemopure or competitors’ products;

BIOPURE CORPORATION Part II — Other Information July 31, 2007

• publicity regarding actual, perceived or potential medical issues relating to products under development by us or our competitors; • actual or potential preclinical or clinical trial results relating to products under development by us or our competitors; • delays in our testing and development schedules; • announcements of technological innovations or new products by our competitors; • developments or disputes concerning patents or proprietary rights; • regulatory developments in the U.S. and foreign countries; • economic and other factors, as well as period-to-period fluctuations in our financial results; • market conditions for pharmaceutical and biotechnology stocks; and • additional, future communications from the Nasdaq Stock Market concerning delisting or potential delisting.

External factors may also adversely affect the market price for our common stock. The price and liquidity of our common stock may be significantly affected by the overall trading activity and market factors affecting small capitalization biotechnology stocks generally.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3.

Defaults Upon Senior Securities

None .

Item 4.

Submission of Matters to a Vote of Security Holders

None .

Item 5. Other Information.

~~None~~On June 17, 2008, the Board of Directors of the Company approved, authorized and adopted the Amended and Restated Bylaws of the Company (the “Amended Bylaws”), which amended and restated the Company’s prior Amended Bylaws to, among other things, change the procedures by which stockholders may recommend nominees to the Company’s Board of Directors. The Amended Bylaws took effect upon adoption by the Board.

Descriptions of the amended provisions include:

Article 2, Section 4 (Advance Notice): This section was amended to require that any advance notice submitted by a stockholder include additional information about the proposing stockholder and certain affiliated stockholders, including their ownership interests in the Company’s capital stock and any derivative positions held or beneficially held or any hedging transactions entered into by them, as relates to the Company’s capital stock. A provision was also added to specifically require that information about a director nominee’s occupation, address and share ownership also be included in the advance notice.

Article 2, Section 9 (Notice): The section was amended to add that notice may be given to a stockholder by any electronic means to which that stockholder has consented. In addition, any notice of a meeting must include the means of remote communication, if any, by which stockholders or proxyholders may be deemed present and vote at the meeting.

Item 6.

Exhibits

The ~~exhibits~~Exhibits ~~are~~ listed in the ~~accompanying~~ Exhibit Index. are filed with, or incorporated by reference in, this report.

31 21

SIGNATURES

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

	~~BIOPURE CORPORATION~~	BIOPURE CORPORATION
Date: September 14, 2007	By:	/s/ Francis H Murphy
Date: March 25, 2009		By:	/s/ Zafiris G. Zafirelis
		Francis H. Murphy
			Zafiris G. Zafirelis
		Chief Financial Officer
			President and Chief Executive Officer

32 22

EXHIBIT INDEX

Exhibits	Description	Location
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
3 (i)	Restated Certificate of Incorporation of Biopure, as amended		(1	)
31.2	Certification of the Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
3 (ii)	By-laws of Biopure, as amended		(2	)
32.1	Certification of the Chief Executive Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
4.1	Form of Selling Agent Warrants, dated April 23, 2002		(3	)
32.2	Certification of the Principal Financial Officer Pursuant to 18 U.S.C Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
4.2	Form of Underwriter Warrant, dated March 2003		(4	)
4.3	Form of Investor Warrant, dated April 2003		(4	)
4.4	Form of Underwriter Warrant, dated April 2003		(4	)
4.5	Underwriter Warrant dated, April 16, 2003		(5	)
4.6	Form of Investor Warrant, dated May 2, 2003		(4	)
4.7	Form of Investor Warrant, dated May 6, 2003		(4	)
4.8	Form of Investor Warrant, dated October 17, 2003		(5	)
4.9	Form of Investor Warrant, dated February 19, 2004		(5	)
4.10	Form of Investor Warrant, dated September 2004		(6	)
4.11	Form of Underwriter Warrant, dated September 2004		(6	)
4.12	Form of Investor Warrant, dated December 14, 2004		(7	)
4.13	Form of Underwriter Warrant, dated December 14, 2004		(7	)
4.14	Form of Underwriter Warrants, dated January 10, 2005		(8	)
4.15	Form of Consultant Warrant, dated July 29, 2005		(5	)
4.16	Form of Underwriter Warrant, dated December 2005		(9	)
4.17	Amended Form of Investor Warrant, dated December 27, 2005		(10	)
4.18	Amended Form of Underwriter Investor Warrant, dated December 27, 2005		(5	)
4.19	Form of Investor Warrant, dated January 2006		(5	)
4.20	Form of Underwriter Warrant, dated January 2006		(5	)
4.21	Form of Underwriter Investor Warrant, dated January 17, 2006		(10	)
4.22	Form of Investor Warrant, dated August 23, 2006		(11	)
4.23	Form of Underwriter Warrant, dated August 23, 2006		(11	)
4.24	Form of Underwriter Investor Warrant, dated August 23, 2006		(10	)
4.25	Form of Investor Warrant, dated December 2006		(12	)

33 23

Exhibits	Description	Location
4.26	Form of Underwriters’ Investor Warrant, dated December 13, 2006		(12	)
4.27	Form of Underwriters’ Warrant, dated December 13, 2006		(12	)
31.1	Certification of Zafiris G. Zafirelis pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Francis H. Murphy pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Zafiris G. Zafirelis pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Francis H. Murphy pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

(1)		Previously filed as an exhibit to the Company’s report on Form 10-Q for the quarter ended April 30, 2005, filed June 9, 2005 and incorporated herein by reference thereto.
(2)		Previously filed as an exhibit to the Company’s registration statement on Form S-1/A (File No. 333-78829) and incorporated herein by reference thereto.
(3)		Previously filed as an exhibit to the Company’s report on Form 8-K dated April 26, 2002 and incorporated herein by reference thereto.
(4)		Previously filed as an exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended April 30, 2003, filed June 16, 2003 and incorporated herein by reference thereto.
(5)		Previously filed as an exhibit to the Company’s report on Form 10-K for the year ended October 31, 2005, filed January 17, 2006 and incorporated herein by reference thereto.
(6)		Previously filed as an exhibit to the Company’s report on Form 8-K dated September 10, 2004 and incorporated herein by reference thereto.
(7)		Previously filed as an exhibit to the Company’s report on Form 8-K dated December 9, 2004 and incorporated herein by reference thereto.
(8)		Previously filed as an exhibit to the Company’s report on Form 8-K dated January 5, 2005 and incorporated herein by reference thereto.
(9)		Previously filed as an exhibit to the Company’s report on Form 8-K filed December 21, 2005 and incorporated herein by reference thereto.
(10)		Previously filed as an exhibit to the Company’s report on Form 10-Q for the quarter ended July 31, 2006, filed September 11, 2006 and incorporated herein by reference thereto.
(11)		Previously filed as an exhibit to the Company’s report on Form 8-K dated August 23, 2006 and incorporated herein by reference thereto.
(12)		Previously filed as an exhibit to the Company’s registration statement on Form S-1/A (File No. 333-138049) and incorporated herein by reference thereto.

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