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<TITLE>BioCryst Pharmaceuticals</TITLE>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>UNITED STATES<BR>SECURITIES
AND EXCHANGE COMMISSION<BR>Washington,
D.C. 20549</FONT></H1>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>FORM 10-Q</FONT></H1>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>(X) QUARTERLY REPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </FONT></P>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the
quarterly period ended September 30, 2000</FONT></H1>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>OR </FONT></P>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>(_) TRANSITION REPORT
PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 </FONT></P>
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<A NAME="For_the_transition_period_from_to_."></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>For the
transition period from ______________ to _____________.</FONT></H1>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Commission File Number
000-23186 </FONT></P>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>(Exact name of registrant as specified in its charter)</FONT></H1>
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<TD ALIGN=CENTER WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>DELAWARE<BR>(State or other jurisdiction of<BR>incorporation or organization) </FONT></TD>
<TD ALIGN=CENTER WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>62-1413174<BR>(I.R.S. employer identification no.) </FONT></TD>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>2190 Parkway Lake
Drive; Birmingham, Alabama 35244<BR>(Address and zip code of principal executive offices) </FONT></P>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>(205) 444-4600<BR>
(Registrant’s telephone number, including area code) </FONT></P>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>NONE<BR>(Former name,
former address and former fiscal year, if changed since last report) </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days: </FONT></P>
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<P ALIGN=CENTER><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Yes _X_ No ___ </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Indicate the number of
shares outstanding of each of the issuer’s classes of common stock, as of
the latest practicable date: 17,536,100 shares of the Company’s Common
Stock, $.01 par value, were outstanding as of September 30, 2000. </FONT></P>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.</FONT></H1>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>INDEX</FONT></H1>
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<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Page No.</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH></TR>
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<TD WIDTH="93%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
Part I. Financial Information</FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="2%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="2%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 1. Financial Statements:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Condensed Balance Sheets - September 30, 2000 and December 31, 1999</FONT></TD><TD
ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Condensed Statements of Operations - Three and Nine Months</FONT></TD><TD ALIGN="LEFT">
<FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Ended September 30, 2000 and 1999</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times
New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Condensed Statements of Cash Flows - Nine Months Ended September 30,</FONT></TD><TD
ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 2000 and 1999</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times,
Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Notes to Condensed Financial Statements</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New
Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 2. Management’s Discussion and Analysis of Financial Condition and</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT>
</TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Results of Operations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman,
Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 3. Quantitative and Qualitative Disclosures About Market Risk</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">15</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
Part II. Other Information</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 1. Legal Proceedings</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 2. Changes in Securities and Use of Proceeds</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 3. Defaults Upon Senior Securities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 4. Submission of Matters to a Vote of Security Holders</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 5. Other Information</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Item 6. Exhibits and Reports on Form 8-K</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Signatures</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">
</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">18</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<A NAME="PART_I._FINANCIAL_INFORMATION"></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART I.
FINANCIAL INFORMATION</FONT></H1>
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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 1.
Financial Statements</FONT></H2>
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<A NAME="BIOCRYST_PHARMACEUTICALS_INC."></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>CONDENSED
BALANCE SHEETS<BR>September
30, 2000 and December 31, 1999<BR>(In
thousands)</FONT></H1>
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<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2000<BR>(Unaudited) </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1999<BR>(Note 1) </FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH></TR>
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<TD WIDTH="69%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2">
<B>ASSETS</B></FONT></FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash and cash equivalents</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 8,774</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 8,631</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Securities held-to-maturity</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">16,841</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">14,545</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Prepaid expenses and other current assets</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">835</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,377</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total current assets</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">26,450</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">24,553</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Securities held-to-maturity</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">42,858</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">46,871</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Furniture and equipment, net</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,823</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,781</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Patents</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">244</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">182</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total assets</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 72,375</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 73,387</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"> <B>LIABILITIES AND STOCKHOLDERS’ EQUITY</B></FONT>
</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Accounts payable</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 254</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 292</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Accrued expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">561</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">670</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Deferred revenue</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">100</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">700</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Current maturities of capital lease obligations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">15</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
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<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total current liabilities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">932</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,677</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Capital lease obligations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Deferred license fee</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">300</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">300</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total liabilities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,232</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,984</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Stockholders’ equity:</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Convertible preferred stock, $.01 par value, shares</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> authorized - 5,000; shares issued and outstanding - none</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Common stock, $.01 par value, shares authorized -</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 45,000; shares issued and outstanding -</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> 17,536 in 2000 and 17,264 in 1999</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">175</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">172</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Additional paid-in capital</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">131,215</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">129,698</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Accumulated deficit</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(60,247</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(58,467</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total stockholders’ equity</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">71,143</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">71,403</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total liabilities and stockholders’ equity</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 72,375</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 73,387</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR>
</TABLE>
<BR><BR><BR>
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<TD>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes to
condensed financial statements. </FONT></P>
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</TR>
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<BR>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>CONDENSED
STATEMENTS OF OPERATIONS<BR>Periods
Ended September 30, 2000 and 1999<BR>(In
thousands, except per share)<BR>(Unaudited)</FONT></H1>
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</TD>
</TR>
</TABLE>
<BR>
<TABLE CELLPADDING="0" CELLSPACING="0" BORDER="0" WIDTH="600">
<TR VALIGN="BOTTOM">
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="4"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Three Months</FONT><HR WIDTH=85% SIZE=1 NOSHADE></TH>
<TH COLSPAN="4"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">Nine Months</FONT><HR WIDTH=85% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2000</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1999</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2000</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1999</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="49%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Revenues:</B></FONT></FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="8%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="4%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Collaborative and other research and development</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 60</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 48</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 4,688</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 2,456</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Interest and other</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,045</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">287</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,224</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">920</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total revenues</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,105</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">335</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">7,912</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3,376</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Expenses:</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Research and development</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,038</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,889</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">6,676</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">5,895</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">General and administrative</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">709</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">651</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,613</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,134</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Royalty expense</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">400</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">200</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Interest</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">3</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">4</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Total expenses</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,748</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,541</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">9,692</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,233</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net loss</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$(1,643</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$(2,206</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$(1,780</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$(4,857</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="10"><HR NOSHADE SIZE="2"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net loss per share (Note 2)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ (.09</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ (.15</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ (.10</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ (.32</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Weighted average shares outstanding (Note 2)</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,523</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">15,119</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">17,444</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">15,028</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes to
condensed financial statements. </FONT></P>
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<BR>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>CONDENSED
STATEMENTS OF CASH FLOWS<BR>Nine Months
Ended September 30, 2000 and 1999<BR>(In
thousands)<BR>(Unaudited)</FONT></H1>
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<TR VALIGN="BOTTOM">
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1"></FONT></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">2000</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH>
<TH COLSPAN="2"><FONT FACE="Times New Roman, Times, Serif" SIZE="1">1999</FONT><HR WIDTH=75% SIZE=1 NOSHADE></TH></TR>
<TR VALIGN="BOTTOM">
<TD WIDTH="67%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Operating activities:</B></FONT></FONT></TD>
<TD WIDTH="3%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD WIDTH="10%" ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"></FONT></TD>
<TD WIDTH="5%" ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Net loss</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$(1,780</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$(4,857</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Depreciation and amortization</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">508</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">379</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Non-monetary compensation</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">78</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">40</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Changes in operating assets and liabilities, net</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(204</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(180</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Net cash (used) by operating activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,398</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(4,618</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Investing activities:</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchases of furniture and equipment</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(1,548</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(527</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchases of other assets</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(64</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Purchases of marketable securities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(8,905</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(13,248</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Maturities of marketable securities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,622</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">10,312</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Net cash provided (used) by investing activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">105</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(3,463</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Financing activities:</B></FONT></FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Principal payments on debt and capital lease obligations</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(17</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(10</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Other</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">0</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Proceeds from sale of common stock</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,441</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">2,007</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> Net cash provided by financing activities</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,436</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">1,997</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Increase/(decrease) in cash and cash equivalents</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">143</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">(6,084</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">)</FONT></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash and cash equivalents at beginning of period</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">8,631</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">12,311</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="1"></TD></TR>
<TR VALIGN="BOTTOM">
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">Cash and cash equivalents at end of period</FONT></TD><TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 8,774</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD>
<TD ALIGN="RIGHT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2">$ 6,227</FONT></TD>
<TD ALIGN="LEFT"><FONT FACE="Times New Roman, Times, Serif" SIZE="2"> </FONT></TD></TR>
<TR>
<TD COLSPAN="6"><HR NOSHADE SIZE="2"></TD></TR>
</TABLE>
<BR><BR><BR>
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<TD>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>See accompanying notes to
condensed financial statements. </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<HR SIZE=5 NOSHADE>
<BR>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>BIOCRYST
PHARMACEUTICALS, INC.<BR>NOTES TO
CONDENSED FINANCIAL STATEMENTS</FONT></H1>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 1. Basis of Preparation </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> The
condensed balance sheet as of September 30, 2000 and the condensed statements of
operations and cash flows for the nine months ended September 30, 2000 and 1999
have been prepared in accordance with generally accepted accounting principles
by the Company and have not been audited. Such financial statements reflect all
adjustments which are, in management’s opinion, necessary to present
fairly, in all material respects, the financial position at September 30, 2000
and the results of operations and cash flows for the nine months ended September
30, 2000 and 1999. These condensed financial statements should be read in
conjunction with the financial statements for the year ended December 31, 1999
and the notes thereto included in the Company’s 1999 Annual Report on Form
10-K. Interim operating results are not necessarily indicative of operating
results for the full year. The balance sheet as of December 31, 1999 has been
prepared from the audited financial statements included in the previously
mentioned Annual Report. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 2. Net Loss Per Share </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> The
Company computes net loss per share in accordance with Statement of Financial
Accounting Standards No. 128, Earnings per Share. Net loss per share is based
upon the weighted average number of common shares outstanding during the period.
Common equivalent shares from unexercised stock options and warrants are
excluded from the computation, as their effect is anti-dilutive. For the three
months ended September 30, 2000 and 1999, common stock equivalents of
approximately 2,359,000 and 2,393,000 shares, respectively, were not used to
calculate net loss per share because of their anti-dilutive effect. For the nine
months ended September 30, 2000 and 1999, common stock equivalents of
approximately 2,427,000 and 2,456,000 shares, respectively, were not used to
calculate net loss per share because of their anti-dilutive effect. There were
no reconciling items in calculating the numerator for net loss per share for any
of the periods presented. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Note 3. Recent Accounting
Pronouncements </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> In
December 1999, the SEC issued Staff Accounting Bulletin (SAB) No. 101, which
addresses accounting policies to be applied in the recognition, presentation and
disclosure of revenues from contract partnerships in financial statements filed
with the SEC. On June 26, 2000, the SEC issued SAB 101B, which delays the
implementation of SAB 101 until no later than the fiscal quarter ending December
31, 2000, in order to provide companies with additional time to determine the
effect that a change in accounting policy under SAB 101 will have on their
revenue recognition practices. We are reviewing the potential effect that the
implementation of SAB 101 would have on our net financial results. The
implementation of SAB 101 could have a material effect on the reported financial
results for the year ending December 31, 2000. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> In
March 2000, the FASB issued Interpretation No. 44 “Accounting for Certain
Transactions involving Stock Compensation”, which provides guidance for
issues that have arisen in applying APB No. 25 “Accounting for Stock Issued
to Employees”. This Interpretation is generally effective for transactions
occurring after July 1, 2000 except for the provisions related to repricings and
the definition of an employee, which apply to awards issued after December 31,
1998. We believe that this interpretation will not have a material impact on
reported financial results. </FONT></P>
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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 2. Management’s
Discussion and Analysis of Financial Condition and Results of Operations</FONT></H2>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>This Quarterly Report on
Form 10-Q contains certain statements of a forward-looking nature relating to
future events or the future financial performance of the Company. Such
statements are only predictions and the actual events or results may differ
materially from the results discussed in the forward-looking stat</I>e<I>ments.
Factors that could cause or contribute to such differences include those
discussed below as well as those discussed in other filings made by the Company
with the Securities and Exchange Commission, including the Company’s Annual
Report on Form 10-K.</I> </FONT></P>
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</TR>
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<BR>
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<TD>
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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF"><FONT SIZE="2"><I>Overview</I></FONT></FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Since
our inception in 1986, we have been engaged in research and development
activities and organizational efforts, including: </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
identification and licensing of enzyme targets; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
drug discovery; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
structure-based design of drug candidates; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
small-scale synthesis of compounds; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
conducting pre-clinical studies and clinical trials; </FONT></TD>
</TR>
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<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
recruiting our scientific and management personnel; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
establishing laboratory facilities; and </FONT></TD>
</TR>
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<BR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
raising capital. </FONT></TD>
</TR>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
revenues have generally been limited to license fees, milestone payments,
interest income, collaboration research, development and option fees. Research
and development revenue on cost-reimbursing agreements is recognized as expenses
are incurred up to contractual limits. Research and development revenue, license
fees, milestone payments and option fees are recognized as revenue when
irrevocably due. Payments received that are related to future performance are
deferred and taken into income as earned over a specified future performance
period. We have not received any revenue from the sale of pharmaceutical
products. It could be several years, if ever, before we will recognize
significant revenue from royalties received pursuant to our license agreements,
and we do not expect to ever generate revenue directly from product sales.
Future revenues, if any, are likely to fluctuate substantially from quarter to
quarter. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
have incurred operating losses since our inception. Our accumulated deficit at
September 30, 2000 was $60.2 million. We will require substantial expenditures
relating to the development of our current and future drug candidates. During
the three years ended December 31, 1999, we spent 39.0% of our research and
development expenses on contract research and development, including: </FONT></P>
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</TD>
</TR>
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<BR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
payments to consultants; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
funding of research at academic institutions; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
large scale synthesis of compounds; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
pre-clinical studies; </FONT></TD>
</TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Para Hang Bullet 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
engaging investigators to conduct clinical trials; </FONT></TD>
</TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Para Hang Bullet 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
hiring contract research organizations to monitor and gather data on clinical trials; and </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
using statisticians to evaluate the results of clinical trials. </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> The
above expenditures for contract research and development for our current and
future drug candidates will vary from quarter to quarter depending on the status
of our research and development projects. For example, in June 2000, we further
strengthened our drug research and development efforts by signing two
collaborative agreements. First, we signed an agreement with Emory University to
facilitate the discovery of new drug candidates designed to inhibit hepatitis C
polymerase. In addition, we in-licensed a series of potent inhibitors of purine
nucleoside phosphorylase from both Albert Einstein College of Medicine of
Yeshiva University and Industrial Research, Ltd. </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<BR>
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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Changes
in our existing and future research and development and collaborative
relationships will also impact the status of our research and development
projects. Although we may, in some cases, be able to control the timing of
development expenses, in part by accelerating or decelerating certain of these
costs, many of these costs will be incurred irrespective of whether or not we
are able to discover drug candidates or obtain collaborative partners for
commercialization. As a result, we believe that quarter-to-quarter comparisons
of our financial results are not necessarily meaningful and should not be relied
upon as an indication of future performance. If we fail to meet the research,
clinical and financial expectations of securities analysts and investors, it
could have a material adverse effect on the price of our common stock. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Results of Operations
(three months ended September 30, 2000 compared to the three months ended
September 30, 1999)</I></B> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Revenues
increased 229.9% to $1.1 million in the three months ended September 30, 2000
from $0.3 million in the three months ended September 30, 1999. The increase was
primarily due to an increase in interest income of $0.8 million for the three
months ending in September 2000, primarily due to reinvestment of funds from the
November 1999 $46.8 million follow-on equity offering. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Research
and development expenses increased 7.9% to $2.0 million in the three months
ended September 30, 2000 from $1.9 million in the three months ended September
30, 1999. The increase is primarily attributable to an increase in contracted
research costs at various institutions, supplies and personnel costs. These
increases were partially offset by a reduction in the cost of clinical trials.
These costs tend to fluctuate from period to period depending upon the status of
the Company’s research projects and collaborative efforts. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> General
and administrative expenses increased 8.9% to $709,000 in the three months ended
September 30, 2000 from $651,000 in the three months ended September 30, 1999.
The increase is primarily the net result of increased personnel costs and fees
related to a new Alabama share tax assessment, partially offset by a reduction
in legal expenses. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B><I>Results of Operations
(nine months ended September 30, 2000 compared to the nine months ended
September 30, 1999)</I></B> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Revenues
increased 134.4% to $7.9 million in the first nine months of 2000 from $3.4
million in the first nine months of 1999. The increase was primarily
attributable to a milestone payment of $4.0 million received from The R.W.
Johnson Pharmaceutical Research Institute (“RWJPRI”) in February 2000
versus a $2.0 million payment received from Ortho-McNeil Pharmaceutical, Inc.
(“Ortho-McNeil”) in June 1999. Both RWJPRI and Ortho-McNeil are
Johnson and Johnson companies. In addition, there was an increase of $2.3
million in interest income, primarily due to reinvestment of funds from the
November 1999 $46.8 million follow-on equity offering. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Research
and development expenses increased 13.3% to $6.7 million in the first nine
months of 2000 from $5.9 million in the first nine months of 1999. The increase
is primarily attributable to an increase in contracted research costs at various
institutions, supplies and personnel costs. These increases were partially
offset by a decrease in costs associated with conducting clinical trials. These
costs tend to fluctuate from period to period depending upon the status of the
Company’s research projects and collaborative efforts. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> General
and administrative expenses increased 22.4% to $2.6 million in the first nine
months of 2000 from $2.1 million in the first nine months of 1999. The increase
is primarily the result of increased personnel costs and fees related to a new
Alabama share tax assessment, partially offset by a reduction in legal expenses.
Royalty expense increased 100.0% to $0.4 million for the first nine months of
2000 due to royalty payments to the University of Alabama at Birmingham (UAB) in
connection with milestone payments received from RWJPRI and Ortho-McNeil. These
milestone payments were $4.0 million and $2.0 million for the nine months ended
September 30, 2000 and September 30, 1999, respectively. </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<HR SIZE=5 NOSHADE>
<BR>
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<TR VALIGN=TOP>
<TD>
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<A NAME="Liquidity_and_Capital_Resources"></A>
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF"><FONT SIZE="2"><I>Liquidity and
Capital Resources</I></FONT></FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Cash
expenditures have exceeded revenues since the Company’s inception. Our
operations have principally been funded through various sources, including the
following: </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
public offerings and private placements of equity and debt securities, </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
equipment lease financing, </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
facility leases, </FONT></TD>
</TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Para Hang Bullet 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
collaborative and other research and development agreements (including licenses and
options for licenses), o research grants and </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
interest income. </FONT></TD>
</TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Page Width Start" -->
<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> In
addition, we have attempted to contain costs and reduce cash flow requirements
by renting scientific equipment and facilities, contracting with other parties
to conduct certain research and development and using consultants. We expect to
incur additional expenses, potentially resulting in significant losses, as we
continue to expand our research and development activities and undertake
additional pre-clinical studies and clinical trials of compounds, which have
been or may be discovered. We also expect to incur substantial expenses related
to the filing, prosecution, maintenance, defense and enforcement of patent and
other intellectual property claims. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> At
September 30, 2000, our cash, cash equivalents and securities held-to-maturity
were $68.5 million, a decrease of $1.6 million from December 31, 1999,
principally due to the funding of current operations and funding for the
remodeling of our facilities. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
have financed some of our equipment purchases with lease lines of credit. We
currently have a $500,000 general line of credit with our bank. There was
nothing drawn against this line as of September 30, 2000. In July 2000, we
renegotiated our lease for our current facilities, which will expire on June 30,
2010. We have an option to renew the lease for an additional five years at
current market rates. The operating lease requires us to pay monthly rent
starting at $32,180 per month and escalating annually to a minimum of $41,987
per month in the final year, and our pro rata share of operating expenses and
real estate taxes in excess of base year amounts. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
are in the process of remodeling our facilities to gain additional laboratory
space, update our existing laboratories, and add a small Good Manufacturing
Practices (GMP) laboratory. In addition, we are updating our general office
facility to provide for growth and efficiencies. The total cost of these
changes, including furniture and laboratory equipment, is projected to be
approximately $2.4 million. We expect to be completed with this phase of
remodeling by December 31, 2000. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> At
December 31, 1999, we had long-term capital lease and operating lease
obligations, which provide for aggregate minimum payments of $301,171 in 2000,
$299,253 in 2001 and $300,828 in 2002. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Under
the terms of our license agreement with RWJPRI and Ortho-McNeil, for the
development and commercialization of our influenza neuraminidase inhibitors, we
received an initial $6.0 million payment from Ortho-McNeil and an additional
$6.0 million common stock equity investment from Johnson & Johnson
Development Corporation in 1998. In June 1999, we received a $2.0 million
milestone payment from Ortho-McNeil in connection with the initiation of Phase
II clinical testing in the United States. In February 2000, we received a $4.0
million milestone payment from RWJPRI in connection with the initiation of Phase
III clinical testing. In addition, we may receive cash payments upon specified
developmental and regulatory milestones and royalties on product sales, if any.
We cannot assure you that RWJPRI or Ortho-McNeil will continue to develop the
product or, if they do so, that such development will result in receiving
milestone payments, obtaining regulatory approval, or achieving future sales of
licensed products. For example, on October 11, 2000 we were notified by RWJPRI
that “due solely to logistical considerations,” during this influenza
season, they would not be able to “initiate two clinical studies in the
Northern Hemisphere for our influenza neuraminidase inhibitor in elderly
patients.” However, they informed us that they “anticipate proceeding
as planned with the pivotal Phase III clinical studies of RWJ-270201 in the
Northern Hemisphere during this influenza season.” </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<BR>
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<TR VALIGN=TOP>
<TD>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
plan to finance our needs principally from the following: </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
our existing capital resources and interest earned on that capital; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
payments under collaborative and licensing agreements with corporate partners; and </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
through lease or loan financing and future public or private financing. </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We believe
that our available funds will be sufficient to fund our operations at least
through 2002. However, this is a forward-looking statement, and there may be
changes that would consume available resources significantly before such time.
Our long-term capital requirements and the adequacy of our available funds will
depend upon many factors, including: </FONT></P>
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</TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
the progress of our research, drug discovery and development programs; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
changes in existing collaborative relationships; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
our ability to establish additional collaborative relationships; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
the magnitude of our research and development programs; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
the scope and results of pre-clinical studies and clinical trials to identify drug
candidates; </FONT></TD>
</TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Para Hang Bullet 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
competitive and technological advances; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
the time and costs involved in obtaining regulatory approvals; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
the costs involved in preparing, filing, prosecuting, maintaining and enforcing patent
claims; </FONT></TD>
</TR>
</TABLE>
<BR>
<!-- MARKER FORMAT-SHEET="Para Hang Bullet 10 In 1" -->
<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
our dependence on others, including RWJPRI and Ortho-McNeil, for development and
commercialization of our product candidates, in particular, our neuraminidase inhibitor;
and </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
successful commercialization of our products consistent with our licensing strategy. </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLSPACING=0 CELLPADDING=0 BORDER=0>
<TR VALIGN=TOP>
<TD>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Additional
funding, whether through additional sales of securities or collaborative or
other arrangements with corporate partners or from other sources, may not be
available when needed or on terms acceptable to us. The issuance of preferred or
common stock or convertible securities, on terms and prices significantly more
favorable than those of the currently outstanding common stock, could have the
effect of diluting or adversely affecting the holdings or rights of our existing
stockholders. In addition, collaborative arrangements may require us to transfer
certain material rights to such corporate partners. Insufficient funds may
require us to delay, scale-back or eliminate certain of our research and
development programs. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF"><FONT SIZE="2"><I>Certain Risk
Factors That May Affect Future Results, Financial Condition and the Market
Price of Securities</I></FONT></FONT></H2>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>We have incurred
substantial losses since our inception in 1986, expect to continue to incur such
losses, may never be profitable and may need additional financing</I> </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Since
our inception in 1986, we have not been profitable. We expect to incur
additional losses for the foreseeable future, and our losses could increase as
our research and development efforts progress. As of September 30, 2000, our
accumulated deficit was approximately $60.2 million. To become profitable,
we must successfully develop drug candidates, enter into profitable agreements
with other parties and our drug candidates must receive regulatory approval.
These other parties must then successfully manufacture and market our drug
candidates. It could be several years, if ever, before we receive royalties
under our existing license agreements or any future license agreements. In
addition, we never expect to generate revenue directly from product sales. If we
do not generate revenue, or if our drug development expenses increase, we may
need to raise additional funds through new or existing collaborations or through
private or public equity or debt financing. If financing is not available on
acceptable terms or not available at all, we may not have enough capital to
continue our current business strategy. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If RWJPRI and
Ortho-McNeil were to terminate, substantially modify or fail to fulfill their
obligations under their license agreement with us, we would lose substantially
all of our revenue</I> </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> If
RWJPRI and Ortho-McNeil change their exclusive worldwide license agreement with
us, including by terminating it or failing to fulfill their obligations, we
would lose substantially all of our revenue. Approximately 59.2% of our revenues
for the nine months ended September 30, 2000, approximately 46.9% of our
revenues for the year ended December 31, 1999 and approximately 83.5% of our
revenues for the year ended December 31, 1998 resulted from this license
agreement. These revenues represent approximately 45.6% of our total revenues
since our inception in 1986. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Under this agreement,
RWJPRI and Ortho-McNeil have several rights that could delay or stop the
development of our flu drug candidate, including sole discretion on all elements
of research and development of RWJ-270201, including timing and design of
further clinical trials, sole control over the amount of resources devoted to
the research and development of RWJ-270201 and the right to terminate or cancel
the agreement, which they may do at any time on four months notice. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If our development
collaborations with other parties fail, the development of our drug candidates
will be delayed or stopped</I> </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
rely completely upon other parties for many important stages of our drug
development programs, including: </FONT></P>
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discovery of proteins that cause or enable biological reactions necessary for the
progression of the disease or disorder, called enzyme targets; </FONT></TD>
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execution of some pre-clinical studies and late-stage development for our compounds and
drug candidates; and </FONT></TD>
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manufacturing, sales, marketing and distribution of our drug candidates. </FONT></TD>
</TR>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
failure to engage in successful collaborations at any one of these stages would
greatly impact our business. For example, if we do not license enzyme targets
from academic institutions or from other biotechnology companies on acceptable
terms, our product development efforts would suffer. Similarly, if the contract
research organizations that conduct our initial clinical trials breached their
obligations to us, this would delay or prevent the development of our drug
candidates. </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Even
more critical to our success is our ability to enter into successful
collaborations for the late-stage clinical development, regulatory approval,
manufacture, marketing, sales and distribution of our drug candidates. Our
strategy is to rely upon other parties for all of these steps so that we can
focus exclusively on the key areas of our expertise. This heavy reliance upon
third parties for these critical functions presents several risks, including: </FONT></P>
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these contracts may expire or the other parties to the contract may terminate them; </FONT></TD>
</TR>
</TABLE>
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our partners may choose to pursue alternative technologies, including those of our
competitors; </FONT></TD>
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we may have disputes with a partner that could lead to litigation or arbitration; </FONT></TD>
</TR>
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<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
our partners may not devote sufficient capital or resources towards our drug candidates;
and </FONT></TD>
</TR>
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our partners may not comply with applicable government regulatory requirements. </FONT></TD>
</TR>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Any
problems encountered with our partners could delay or prevent the development of
our compounds, which would severely affect our business, because if our
compounds do not reach the market in a timely manner, or at all, we will
experience a significant decrease in milestone payments received by us and may
never receive any royalty payments. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If the clinical trials
of our drug candidates fail, our drug candidates will not be marketed, which
would result in a decrease in, or complete absence of, revenue</I> </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> To
receive the regulatory approvals necessary for the sale of our drug candidates,
we or our licensees must demonstrate through pre-clinical studies and clinical
trials that each drug candidate is safe and effective. If we or our licensees
are unable to demonstrate that our drug candidates are safe and effective, our
drug candidates will not receive regulatory approval and will not be marketed,
which would result in a decrease in, or complete absence of, revenue. The
clinical trial process is complex and uncertain. Positive results from
pre-clinical studies and early clinical trials do not ensure positive results in
clinical trials designed to permit application for regulatory approval, called
pivotal clinical trials. We may suffer significant setbacks in pivotal clinical
trials, even after earlier clinical trials show promising results. Any of our
drug candidates may produce undesirable side effects in humans. These side
effects could cause us or regulatory authorities to interrupt, delay or halt
clinical trials of a drug candidate. These side effects could also result in the
FDA or foreign regulatory authorities refusing to approve the drug candidate for
any targeted indications. We, our licensees, the FDA or foreign regulatory
authorities may suspend or terminate clinical trials at any time if we or they
believe the trial participants face unacceptable health risks. Clinical trials
may fail to demonstrate that our drug candidates are safe or effective. </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Clinical
trials are lengthy and expensive. We or our licensees incur substantial expense
for, and devote significant time to, pre-clinical testing and clinical trials,
yet cannot be certain that the tests and trials will ever result in the
commercial sale of a product. For example, clinical trials require adequate
supplies of drug and sufficient patient enrollment. Delays in patient enrollment
can result in increased costs and longer development times. Even if we or our
licensees successfully complete clinical trials for our product candidates, our
licensees might not file the required regulatory submissions in a timely manner
and may not receive regulatory approval for the drug candidate. </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
licensed our flu drug candidate, RWJ-270201, to Ortho-McNeil and to RWJPRI, who
are conducting Phase III clinical trials. However, the Phase III clinical trials
may not be successful. Even if RWJPRI completes the Phase III trials, we do not
know when, if ever, it will receive FDA or foreign regulatory agency approvals
for, or when Ortho-McNeil will begin marketing of, RWJ-270201. If RWJPRI is
unable to complete the clinical trials or demonstrate the safety and efficacy of
our compounds, the loss of our future revenues that depend on the success of
RWJ-270201 will harm our business. Even if the results of RWJPRI’s trials
are positive, a product is not likely to be commercially available for one or
more years, if at all. </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> On
October 11, 2000, we were notified by RWJPRI that “due solely to logistical
considerations, The R.W. Johnson Research Institute will not be in a position
during this influenza season to initiate two clinical studies in the Northern
Hemisphere for our influenza neuraminidase inhibitor in elderly patients.”
RWJPRI also added that, “we anticipate proceeding as planned with the
pivotal Phase III clinical studies of RWJ-270201 in the Northern Hemisphere
during this influenza season.” RWJPRI also informed BioCryst that it is
unlikely they will be able to file a new drug application (NDA) for RWJ-270201
with the U.S. Food and Drug Administration (FDA) before 2002. We issued a press
release on October 12, 2000 to announce that we had been notified of this
information by RWJPRI. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If we or our licensees
do not obtain and maintain governmental approvals for our products under
development, we or our partners will not be able to sell these potential
products, which would significantly harm our business because we will receive no
revenue</I> </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
or our licensees must obtain regulatory approval before marketing or selling our
future drug products. If we or our licensees are unable to receive regulatory
approval and do not market or sell our future drug products, we will never
receive any revenue from such product sales. In the United States, we or our
partners must obtain FDA approval for each drug that we intend to commercialize.
The FDA approval process is typically lengthy and expensive, and approval is
never certain. Products distributed abroad are also subject to foreign
government regulation. The FDA or foreign regulatory agencies have not approved
any of our drug candidates. If we or our licensees fail to obtain regulatory
approval we will be unable to market and sell our future drug products. We have
several drug products in various stages of pre-clinical and clinical
development; however, we are unable to determine when, if ever, any of these
products will be commercially available. Because of the risks and uncertainties
in biopharmaceutical development, our drug candidates could take a significantly
longer time to gain regulatory approval than we expect or may never gain
approval. If the FDA delays regulatory approval of our drug candidates, our
management’s credibility, our company’s value and our operating
results may suffer. Even if the FDA or foreign regulatory agencies approve a
drug candidate, the approval may limit the indicated uses for a drug candidate
and/or may require post-marketing studies. </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> The
FDA regulates, among other things, the record keeping and storage of data
pertaining to potential pharmaceutical products. We currently store most of our
pre-clinical research data at our facility. While we do store duplicate copies
of some of our clinical data offsite, we could lose important pre-clinical data
if our facility incurs damage. </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> If
we get approval to market our potential products, whether in the United States
or internationally, we will continue to be subject to extensive regulatory
requirements. These requirements are wide ranging and govern, among other
things: </FONT></P>
</TD>
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adverse drug experience reporting regulations; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
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product promotion; </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
product manufacturing, including good manufacturing practice requirements; and </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
product changes or modifications. </FONT></TD>
</TR>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
failure to comply with existing or future regulatory requirements, or our loss
of, or changes to, previously obtained approvals, could have a material adverse
effect on our business because we will not receive royalty revenues if our
licensees do not receive approval of our products for marketing. </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> In
June 1995, we notified the FDA that we submitted incorrect efficacy data for our
Phase II trials of BCX-34 applied to the skin for the treatment of cutaneous
T-cell lymphoma and psoriasis. Cutaneous T-cell lymphoma is a skin cancer in
which T-cells, which normally help fight disease in the body, duplicate rapidly
and cause skin cancer. Psoriasis is a disease where the immune system attacks
the body’s own skin cells. The FDA inspected us and issued to us Lists of
Inspectional Observations, on Form FDA 483, that cited our failure to follow
good clinical practices. The FDA also issued a Form FDA 483 to a principal
investigator at a clinical trial site, and the FDA notified us that they would
not accept any work performed by this investigator without further validation.
Because of these investigations by the FDA, our ongoing and future clinical
studies or trials may receive increased scrutiny, which would delay the
regulatory review process. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><I>If our drug candidates do not
achieve broad market acceptance, our business may never become profitable</I></FONT></FONT> </P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
drug candidates, including our influenza neuraminidase inhibitor, may not gain
the market acceptance required for us to be profitable even after they receive
approval for sale by the FDA or foreign regulatory agencies. Influenza
neuraminidase inhibitors are drugs designed to stop the spread of the flu virus
in the body. The degree of market acceptance of any drug candidates that we or
our partners develop will depend on a number of factors, including: </FONT></P>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
cost-effectiveness of our drug candidates; </FONT></TD>
</TR>
</TABLE>
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<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
their safety and effectiveness relative to alternative treatments, such as Hoffmann-La
Roche’s and Glaxo Wellcome’s influenza neuraminidase inhibitors, amantadine, rimantadine,
or vaccines for prevention of influenza; </FONT></TD>
</TR>
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<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
reimbursement policies of government and third-party payers; and </FONT></TD>
</TR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
marketing and distribution support for our drug candidates. </FONT></TD>
</TR>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Physicians,
patients, payers or the medical community in general may not accept or use our
drug candidates even after the FDA or foreign regulatory agencies approve the
drug candidates. If our drug candidates do not achieve significant market
acceptance, we will not have enough revenues to become profitable. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If competitive products
from other companies are better than our product candidates, our future revenues
might fail to meet expectations</I> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> The
biotechnology and pharmaceutical industries are highly competitive and are
subject to rapid and substantial technological change. Other products and
therapies that either currently exist on the market or are under development
could compete directly with some of the compounds that we are seeking to develop
and market. These other products may render some or all of our compounds under
development noncompetitive or obsolete. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> If
our influenza neuraminidase inhibitor drug candidate, RWJ-270201, receives FDA
or foreign regulatory approval, it will have to compete with a number of
products that are already on the market such as vaccines, the two influenza
neuraminidase inhibitors already on the market, the drugs amantadine and
rimantadine and with additional products that may beat RWJ-270201 to the market.
If approved, RWJ-270201 will be, at best, the third neuraminidase inhibitor to
the market, because the FDA has approved both Glaxo-Wellcome’s and
Hoffman-La Roche’s neuraminidase inhibitors in the U.S. and both companies
have also obtained approval in several other countries. Both Glaxo-Wellcome and
Hoffmann-La Roche, the companies responsible for the development and marketing
of the two neuraminidase inhibitors that reached the market before RWJ-270201,
are large multinational pharmaceutical companies that have significant
financial, technical and human resources and could therefore establish brand
recognition and loyalty with consumers before RWJ-270201 is on the market.
Another potential competitor is Aviron Inc. with their inhaled FluMist vaccine.
They are in the process of completing the requirements they believe necessary to
support a Biologics License Application to the FDA in the fourth quarter 2000.
Products marketed by our competitors may prove to be more effective than our
own, and our products, if any, may not offer an economically feasible or
preferable alternative to existing therapies. If we fail to adequately protect
or enforce our intellectual property rights or secure rights to patents of
others, the value of those rights would diminish. </FONT></P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
success will depend in part on our ability and the abilities of our licensors to
obtain patent protection for our products, methods, processes and other
technologies to preserve our trade secrets, and to operate without infringing
the proprietary rights of third parties. If we or our partners are unable to
adequately protect or enforce our intellectual property rights for our products,
methods, processes and other technologies, the value of the drug candidates that
we license to derive revenue would diminish. Additionally, if our products,
methods, processes and other technologies infringe the proprietary rights of
other parties, we could incur substantial costs. The U.S. Patent and Trademark
Office has issued to us a number of U.S. patents for our various inventions and
we have in-licensed several patents from various institutions. We have filed
additional patent applications and provisional patent applications with the U.S.
Patent and Trademark Office. We have filed a number of corresponding foreign
patent applications and intend to file additional foreign and U.S. patent
applications, as appropriate. We cannot assure you as to: </FONT></P>
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</TD>
</TR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
the degree and range of protection any patents will afford against competitors with
similar products; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
if and when patents will issue; or </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
whether or not others will obtain patents claiming aspects similar to those covered by
our patent applications. </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> If
the U.S. Patent and Trademark Office upholds patents issued to others or if the
U.S. Patent and Trademark Office grants patent applications filed by others, we
may have to: </FONT></P>
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</TD>
</TR>
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<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
obtain licenses or redesign our products or processes to avoid infringement; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
stop using the subject matter claimed in those patents; or </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
pay damages. </FONT></TD>
</TR>
</TABLE>
<BR>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
may initiate, or others may bring against us, litigation or administrative
proceedings related to intellectual property rights, including proceedings
before the U.S. Patent and Trademark Office. Any judgement adverse to us in any
litigation or other proceeding arising in connection with a patent or patent
application could materially and adversely affect our business, financial
condition and results of operations. In addition, the costs of any such
proceeding may be substantial whether or not we are successful. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
success is also dependent upon the skills, knowledge and experience, none of
which is patentable, of our scientific and technical personnel. To help protect
our rights, we require all employees, consultants, advisors and collaborators to
enter into confidentiality agreements that prohibit the disclosure of
confidential information to anyone outside of our company and require disclosure
and assignment to us of their ideas, developments, discoveries and inventions.
These agreements may not provide adequate protection for our trade secrets,
know-how or other proprietary information in the event of any unauthorized use
or disclosure or the lawful development by others of such information, and if
any of our proprietary information is disclosed, our business will suffer
because our revenues depend upon our ability to license our technology and any
such events would significantly impair the value of such a license. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If we fail to retain our
existing key personnel or fail to attract and retain additional key personnel,
the development of our drug candidates and the expansion of our business will be
delayed or stopped</I> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
are highly dependent upon our senior management and scientific team, the loss of
whose services might impede the achievement of our development and commercial
objectives. Although we maintain, and are the beneficiary of, a $1.8 million
key-man insurance policy on the life of Charles E. Bugg, Ph.D., Chairman of the
Board of Directors and Chief Executive Officer, we do not believe the proceeds
would be adequate to compensate for his loss. Competition for key personnel with
the experience that we require is intense and is expected to continue to
increase. Our inability to attract and retain the required number of skilled and
experienced management, operational and scientific personnel, will harm our
business because we rely upon these personnel for many critical functions of our
business. In addition, we rely on members of our scientific advisory board and
consultants to assist us in formulating our research and development strategy.
All of the members of the scientific advisory board and all of our consultants
are otherwise employed and each such member or consultant may have commitments
to other entities that may limit their availability to us. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If users of our drug
products are not reimbursed for use, future sales of our drug products will
decline</I> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> The
lack of reimbursement for the use of our product candidates by hospitals,
clinics, patients or doctors will harm our business. Medicare, Medicaid, health
maintenance organizations and other third-party payers may not authorize or
otherwise budget for the reimbursement of our products. Governmental and
third-party payers are increasingly challenging the prices charged for medical
products and services. We cannot be sure that third-party payers would view our
product candidates as cost-effective, that reimbursement will be available to
consumers or that reimbursement will be sufficient to allow our product
candidates to be marketed on a competitive basis. Changes in reimbursement
policies, or attempts to contain costs in the health care industry, limit or
restrict reimbursement for our product candidates, would materially and
adversely affect our business, because future product sales would decline and we
would receive less royalty revenue. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If we face clinical
trial liability claims related to the use or misuse of our compounds in clinical
trials, our management’s time will be diverted and we will incur litigation
costs</I> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> We
face an inherent business risk of liability claims in the event that the use or
misuse of our compounds results in personal injury or death. We have not
experienced any clinical trial liability claims to date, but we may experience
these claims in the future. After commercial introduction of our products we may
experience losses due to product liability claims. We currently maintain
clinical trial liability insurance coverage in the amount of $1.0 million per
occurrence and $2.0 million in the aggregate, with an additional $5.0 million
potentially available under our umbrella policy. The insurance policy may not be
sufficient to cover claims that may be made against us. Clinical trial liability
insurance may not be available in the future on acceptable terms, if at all. Any
claims against us, regardless of their merit, could materially and adversely
affect our financial condition, because litigation related to these claims would
strain our financial resources in addition to consuming the time and attention
of our management. </FONT></P>
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<TD>
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<P><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><I>If our computer systems fail, our
business will suffer harm</I></FONT></FONT> </P>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
drug development activities depend on the security, integrity and performance of
the computer systems supporting them, and the failure of our computer systems
would delay or stop our drug development efforts. We currently store most of our
pre-clinical and clinical data at our facility. Duplicate copies of some data
are stored off-site, but we could lose important data if our systems are
impaired. Any significant degradation or failure of our computer systems could
cause us to inaccurately calculate or lose our data. Loss of data could result
in significant delays in our drug development process and any system failure
could harm our business and operations. We are in the process of upgrading our
computer network and systems company-wide. Software we have installed is
designed to automatically archive critical scientific raw data. We have
installed additional hardware and software to protect our systems from outside
intrusion. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>If, because of our use
of hazardous materials, we violate any environmental controls or regulations
that apply to such materials, we may incur substantial costs and expenses in our
remediation efforts</I> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
research and development involves the controlled use of hazardous materials,
chemicals and various radioactive compounds. We are subject to federal, state
and local laws and regulations governing the use, storage, handling and disposal
of these materials and some waste products. Accidental contamination or injury
from these materials could occur. In the event of an accident, we could be
liable for any damages that result and any liabilities could exceed our
resources. Compliance with environmental laws and regulations could require us
to incur substantial unexpected costs, which would materially and adversely
affect our results of operations. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Because stock ownership
is concentrated, you and other investors will have minimal influence on
stockholder decisions</I> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
directors, executive officers and some principal stockholders and their
affiliates, including Johnson & Johnson Development Corporation,
beneficially own approximately 31.2% of our outstanding common stock and common
stock equivalents. As a result, these holders, if acting together, are able to
significantly influence matters requiring stockholder approval, including the
election of directors. This concentration of ownership may delay, defer or
prevent a change in our control. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para Flush 10" -->
<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>We have anti-takeover
provisions in our corporate charter documents that may result in outcomes with
which you do not agree</I> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> Our
board of directors has the authority to issue up to 5,000,000 shares of
undesignated preferred stock and to determine the rights, preferences,
privileges and restrictions of those shares without further vote or action by
our stockholders. The rights of the holders of any preferred stock that may be
issued in the future may adversely affect the rights of the holders of common
stock. The issuance of preferred stock could make it more difficult for third
parties to acquire a majority of our outstanding voting stock. </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> In
addition, our certificate of incorporation provides for staggered terms for the
members of the board of directors and supermajority approval of the removal of
any member of the board of directors and prevents our stockholders from acting
by written consent. Our certificate also requires supermajority approval of any
amendment of these provisions. These provisions and other provisions of our
by-laws and of Delaware law applicable to us could delay or make more difficult
a merger, tender offer or proxy contest involving us. </FONT></P>
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<P><FONT FACE="Times New Roman, Times, Serif" SIZE=2><I>Our stock price is
likely to be highly volatile and the value of your investment could decline
significantly</I> </FONT></P>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> The
market prices for securities of biotechnology companies in general have been
highly volatile and may continue to be highly volatile in the future. Moreover,
our stock price has fluctuated frequently, and these fluctuations are often not
related to our financial results. For the twelve months ended September 30,
2000, the 52-week range of the market price of our stock has been from $15.50 to
$37.25 per share, and the market price has been as low as $4.25 since September
30, and, specifically, since the announcement by RWJPRI of the delay in two
clinical studies on elderly patients using the influenza neuraminidase inhibitor
RWJ-270201. This range is significantly greater than that experienced by many
other companies. The following factors, in addition to other risk factors
described in this section, may have a significant impact on the market price of
our common stock: </FONT></P>
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</TD>
</TR>
</TABLE>
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<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
announcements of technological innovations or new products by us or our competitors; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
developments or disputes concerning patents or proprietary rights; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
our licensees achieving or failing to achieve development milestones; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
publicity regarding actual or potential medical results relating to products under
development by us or our competitors; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
regulatory developments in both the United States and foreign countries; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
public concern as to the safety of pharmaceutical products; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
actual or anticipated fluctuations in our operating results; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
changes in financial estimates or recommendations by securities analysts; </FONT></TD>
</TR>
</TABLE>
<BR>
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<TABLE WIDTH=600 CELLPADDING=0 CELLSPACING=0>
<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
economic and other external factors or other disasters or crises; and </FONT></TD>
</TR>
</TABLE>
<BR>
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<TR VALIGN=TOP>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>•</FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
period-to-period fluctuations in our financial results. </FONT></TD>
</TR>
</TABLE>
<BR>
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<TD>
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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 3.
Quantitative and Qualitative Disclosures about Market Risk</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> The
primary objective of our investment activities is to preserve principal while at
the same time maximize the income we receive from our investments without
significantly increasing our risk. We invest excess cash principally in U.S.
marketable securities from a diversified portfolio of institutions with strong
credit ratings and in U.S. government and agency bills and notes, and by policy,
limit the amount of credit exposure at any one institution. Some of the
securities we invest in may have market risk. This means that a change in
prevailing interest rates may cause the principal amount of the investment to
fluctuate. To minimize this risk, we schedule our investments to coincide with
our cash flow needs, thus avoiding the need to redeem an investment prior to its
maturity date. Accordingly, we believe we have no material exposure to interest
rate risk arising from our investments. Therefore, no quantitative tabular
disclosure is provided. </FONT></P>
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<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>PART II.
OTHER INFORMATION</FONT></H1>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 1. Legal Proceedings:</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> None. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 2. Changes in
Securities and Use of Proceeds:</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> None </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 3.
Defaults Upon Senior Securities:</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> None </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 4. Submission of
Matters to a Vote of Security Holders:</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> None </FONT></P>
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</TD>
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<BR>
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<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 5. Other
Information:</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> None. </FONT></P>
<!-- MARKER FORMAT-SHEET="Head Minor" -->
<A NAME="Item_6._Exhibits_and_Reports_on_Form_8-K:"></A>
<H2 ALIGN=LEFT><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2>Item 6.
Exhibits and Reports on Form 8-K:</FONT></H2>
<!-- MARKER FORMAT-SHEET="Para 10" -->
<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> a.
Exhibits: </FONT></P>
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</TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Number</B></FONT></FONT> </TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91% ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif"><FONT SIZE="2"><B>Description</B></FONT></FONT></TD>
</TR>
</TABLE>
<BR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.1 </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Composite
Certificate of Incorporation of Registrant. Incorporated by reference to Exhibit 3.1 to
the Company’s Form 10-Q for the second quarter ending June 30, 1995 dated August 11, 1995.</FONT></TD>
</TR>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>3.2</FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Bylaws of Registrant. Incorporated by reference to Exhibit 3.1 to the
Company’s Form 10-Q for the second quarter ending June 30, 1995 dated
August 11, 1995.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>4.1</FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
See Exhibits 3.1 and 3.2 for provisions of the Composite Certificate of
Incorporation and Bylaws of the Registrant defining rights of holders of Common
Stock of the Registrant.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.1 </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>1991
Stock Option Plan, as amended and restated as of March 6, 2000. Incorporated by reference
to Exhibit 99.1 to the Company’s Form S-8 Registration Statement dated June 16, 2000
(Registration No. 333-39484).</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.2</FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Employment Agreement dated December 27, 1999 between the Registrant and
Charles E. Bugg, Ph.D. Incorporated by reference to Exhibit 10.10 to the
Company’s Form 10-K for the year ending December 31, 1999 dated March 24,
2000.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.3 </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>License
Agreement dated April 15, 1993 between Ciba-Geigy Corporation (now merged into Novartis)
and the Registrant. Incorporated by reference to Exhibit 10.40 to the Company’s Form S-1
Registration Statement (Registration No. 33-73868).</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.4 </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Employee
Stock Purchase Plan. Incorporated by reference to Exhibit 99.4 to the Company’s Form S-8
Registration Statement (Registration No. 33-95062).</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.5#</FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
License Agreement dated as of September 14, 1998 between Registrant and The R.W.
Johnson Pharmaceutical Research Institute and Ortho-McNeil Pharmaceutical, Inc.
Incorporated by reference to Exhibit 10.23 to the Company’s Form 10-Q for
the third quarter ending September 30, 1998 dated November 10, 1998.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.6#</FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Stock Purchase Agreement dated as of September 14, 1998 between Registrant and
Johnson & Johnson Development Corporation. Incorporated by reference to
Exhibit 10.24 to the Company’s Form 10-Q for the third quarter ending
September 30, 1998 dated November 10, 1998.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.7#</FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Stockholder’s Agreement dated as of September 14, 1998 between Registrant
and Johnson & Johnson Development Corporation. Incorporated by reference to
Exhibit 10.25 to the Company’s Form 10-Q for the third quarter ending
September 30, 1998 dated November 10, 1998.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>10.8</FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
Warehouse Lease dated July 12, 2000 between RBP, LLC an Alabama Limited
Liability Company and the Registrant for office/warehouse space. Incorporated by
reference to Exhibit 10.8 to the Company’s Form 10-Q for the second quarter
ending June 30, 2000 dated August 8, 2000.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>27.1* </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=91%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Financial
Data Schedule.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2># </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Confidential
treatment granted.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>* </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Filed
herewith.</FONT></TD>
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<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>b. </FONT></TD>
<TD WIDTH=3%><FONT FACE="Times New Roman, Times, Serif" SIZE=2></FONT></TD>
<TD WIDTH=94%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Reports
on Form 8-K:</FONT></TD>
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<TD WIDTH=5%> </TD>
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None.</FONT></TD>
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<A NAME="SIGNATURES"></A>
<H1 ALIGN=CENTER><FONT FACE="Times New Roman, Times, Serif" SIZE=2>SIGNATURES</FONT></H1>
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<P><FONT FACE="TIMES NEW ROMAN, TIMES, SERIF" SIZE=2> 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. </FONT></P>
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<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2><B>BIOCRYST PHARMACEUTICALS, INC.</B></FONT></TD>
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<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: November 8, 2000 </FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ Charles E. Bugg<BR>——————————————<BR>
Charles E. Bugg<BR>Chairman and Chief Executive Officer</FONT></TD>
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<TD WIDTH=40%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>Date: November 8, 2000 </FONT></TD>
<TD WIDTH=10%><FONT FACE="Times New Roman, Times, Serif" SIZE=2> </FONT></TD>
<TD WIDTH=50%><FONT FACE="Times New Roman, Times, Serif" SIZE=2>
/s/ W. Randall Pittman<BR>——————————————<BR>
W. Randall Pittman<BR>Chief Financial Officer and Chief
Accounting Officer</FONT></TD>
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</TABLE>
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