SECURITIES AND EXCHANGE COMMISSION


                             Washington, D.C. 20549


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

                                    FORM 10-Q



                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

                     OF THE SECURITIES EXCHANGE ACT OF 1934


                                       OR


                For the quarterly period ended December 31, 1998


                           Commission File No. 0-15360


                        BIOJECT MEDICAL TECHNOLOGIES INC.
             (Exact name of registrant as specified in its charter)


          Oregon                                          93-1099680
(State of other jurisdiction of                   (I.R.S. identification no.)
employer incorporation or organization)



7620 SW Bridgeport Road
Portland, Oregon                                             97224
(Address of principal executive offices)                   (Zip code)



(Registrant's telephone number, including area code)   (503) 639-7221


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. Yes [X] No [ ]

At December 31, 1998 there were 28,920,886 outstanding shares of common stock of
the registrant.



<PAGE>


                                        PART I
                                FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

     The  following  unaudited  consolidated  financial  statements  of  Bioject
Medical  Technologies Inc. ("BMT"), an Oregon corporation,  and its subsidiaries
have been prepared  pursuant to the rules and  regulations of the Securities and
Exchange Commission. The Company's needle-free injector operations are conducted
by Bioject Inc. ("BI"), an Oregon  corporation formed in February 1985, which is
a wholly owned subsidiary of BMT Its blood glucose  monitoring system operations
are conducted by Marathon Medical Technologies Inc.("MMT"),  formerly Bioject JV
Subsidiary Inc. ("JV"), an Oregon  corporation  formed in October 1997, which is
owned 80.1% by BMT.

     The following 10-Q report reflects the consolidated  results of operations,
cash flows and financial position for the third quarter of the year ending March
31, 1999.  The results of  operations  for interim  periods are not  necessarily
indicative of the results to be expected for the year.


          -    Consolidated Statements of Operations for the quarters ended
               December 31, 1998 and December 31, 1997

          -    Consolidated Statements of Operations for the nine months ended
               December 31, 1998 and December 31, 1997

          -    Consolidated Balance Sheets dated December 31, 1998 and March
               31, 1998

          -    Consolidated Statements of Cash Flows for the quarters ended
               December 31, 1998 and December 31, 1997

          -    Consolidated  Statements  of Cash Flows for the nine months ended
               December 31, 1998 and December 31, 1997






<PAGE>


               BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                  Quarter Ended
                                  December 31,

                                                      1998            1997
                                                   ----------      ----------

REVENUES:

     Net sales of products                        $    51,476      $  313,153
     Licensing/technology fees                        887,283         125,000
                                                    -----------     ---------
                                                      938,759         438,153
                                                    -----------     ---------
EXPENSES:

     Manufacturing                                    320,687        389,048
     Research and development                       1,006,446        205,146
     Selling, general and administrative              719,067        901,270
                                                  -----------    ------------
     Total operating expenses                      2,046,200       1,495,464
                                                  -----------    ------------
     Operating loss                               (1,107,441)     (1,057,311)
        Interest expense                               --           (225,281)
        Other income                                  34,815          32,061
                                                  ------------   ------------
     Loss before taxes                            (1,072,626)    ( 1,250,531)
     Provision for income                              --            --
     Minority interest allocation                      --            --
                                                  ------------   ------------
     Net loss                                     (1,072,626)    ( 1,250,531)
     Preferred Stock dividend                       (361,234)          --
                                                  ------------   ------------

Net loss allocable to common
shareholders                                  $   (1,433,859)   $( 1,250,531)
                                                   ===========   ============

Basic and diluted net loss per
common share                                  $        (.05)    $       (.05)
                                                   ===========   ============

Shares used in per share calculation               28,908,264      24,903,892
                                                   ===========   ============


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.



<PAGE>


               BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)


                                                     Nine-Months Ended
                                                       December 31,

                                                   1998             1997
                                               ------------     -----------

REVENUES:

     Net sales of products                     $  505,288      $ 1,300,620
     Licensing/technology fees                  1,912,842          375,000
                                               -----------      ----------
                                                2,418,130        1,675,620
                                               ------------     ----------
EXPENSES:

     Manufacturing                              1,091,015        1,440,684
     Research and development                   3,086,110          677,127
     Selling, general and administrative        2,399,569        2,633,934
     Acquired in-process R&D                         --         15,000,000
                                               -----------    ------------
      Total operating expenses                  6,576,694       19,751,745
                                               -----------    ------------

Operating loss                                 (4,158,564)     (18,076,125)
        Interest Expense                             --           (225,281)
        Other (income)                             91,977           64,392
                                               -----------    ------------
     Loss before taxes                         (4,066,587)     (18,237,014)
     Provision for income taxes                      --               --
     Minority interest allocation                    --          2,985,000
                                               -----------    ------------
     Net loss                                $ (4,066,587)    $(15,252,014)
     Preferred Stock dividend                  (1,056,496)            --
                                               -----------    ------------

Net loss allocable to
common shareholders                          $ (5,123,083)    $(15,252,014)

Basic and diluted net loss per common share  $      (.18)     $       (.68)
                                               ===========    =============

Shares used in per share calculation           28,111,400        22,356,973
                                               ===========    =============


The  accompanying  notes are an integral  part of these  consolidated  financial
statements.



<PAGE>


                   BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEETS
                                     (Unaudited)

                                                 December 31,   March 31,
                                                    1998         1998
                                                  -----------   ----------
ASSETS:
CURRENT ASSETS:
     Cash and cash equivalents                  $ 2,389,254   $ 1,900,839
     Accounts receivable, net                       333,260       153,721
     Inventories                                  2,019,638     1,891,970
     Other current assets                            62,465        75,292
                                                   ---------    ----------
          Total current assets                    4,804,617     4,021,822

PROPERTY AND EQUIPMENT, at cost:
     Machinery and equipment                      2,542,515     2,241,904
     Production molds                             1,953,267     1,945,267
     Furniture and fixtures                         192,633       158,477
     Leasehold improvements                         101,615        94,115
                                                   ----------   -----------
                                                  4,790,030     4,439,763
     Less - Accumulated depreciation             (2,483,325)   (1,947,006)
                                                  ----------   ------------
                                                  2,306,705     2,492,757

Other assets                                        512,471       463,031
                                                 -----------   ------------
                                                $ 7,623,793   $ 6,977,610
                                                 ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                            $2,017,226    $   497,180
     Accrued payroll                                181,354        218,424
     Other accrued liabilities                      415,840        277,122
     Deferred revenue                               124,999         10,000
                                                 -----------   -----------
          Total current liabilities               2,739,419      1,002,726

SHAREHOLDERS' EQUITY:
     Preferred stock, no par, 10,000,000
       shares authorized; no shares issued
       and outstanding
     Series A Convertible-692,694 shares,
     $15 stated value                            8,826,052       7,826,157
     Series B Convertible -134,333 shares,
     $15 stated value                            1,547,894       1,491,289
     Common stock, no par, 100,000,000 shares
      authorized;  issued and outstanding
      28,920,886 and 25,503,038 shares
      at December 31, 1998 and
      March 31, 1998, respectively              50,533,370      47,557,297
    Accumulated deficit                        (56,022,942)    (50,899,859)

                                              -------------   --------------
          Total shareholders' equity             4,884,374       5,974,884
                                              -------------   --------------
                                                $7,623,793     $ 6,977,610
                                              =============   ==============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.


<PAGE>


                   BIOJECT MEDICAL TECHNOLOGIES INC.AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (Unaudited)

                                                         Nine-Months Ended
                                                           December 31,
                                                        1998           1997
                                                     -----------     ---------

     CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss allocable to common shareholders     $(5,123,083)   $ (15,252,014)
     Adjustments to net loss:
        Depreciation and amortization                  565,542          390,252
        Contributed capital for services                32,242           82,941
        Acquired in process R&D                                      12,015,000
        Preferred stock dividends                    1,056,496               --
Net changes in assets and liabilities:
        Accounts receivable                           (179,539)       (201,307)
        Inventories                                   (127,668)       (134,938)
        Other current assets                            12,827          (9,309)
        Accounts payable                             1,520,049         (80,834)
        Accrued payroll                                (37,070)        (13,459)
        Other accrued liabilities                      138,720         281,997
        Deferred revenue                               114,999        (250,000)
                                                    -----------     -----------
     Net cash used in operating activities          (2,026,485)     (3,171,671)
                                                   -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchase of securities available for sale            --      (1,967,749)
       Acquisition of blood glucose monitoring
        technology                                          --     (15,000,000)
       Property and equipment                         (350,267)        (99,318)
       Other assets                                    (78,664)        (43,578)
                                                     -----------    -----------
     Net cash used in investing activities            (428,931)    (17,110,645)
                                                     -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt                                  --      12,015,000
Cash proceeds from common stock                      2,943,831       4,167,828
Proceeds from minority interest capital
 Investment in joint venture subsidiary                     --       2,985,000
                                                    ------------   -------------
     Net cash provided by financing activities:      2,943,831      19,167,828
                                                   -------------   -------------
CASH AND CASH EQUIVALENTS:
     Net increase (decrease) in cash and
       cash equivalents                                488,415      (1,114,488)
     Cash and cash equivalents at beginning
       of period                                     1,900,839       2,116,478
                                                    -------------   ----------
     Cash and cash equivalents at end
       of period                                    $2,389,254     $ 1,001,990
                                                     =========       =========


The  accompanying  notes are an integral  part of these  consolidated  financial
Statements.

<PAGE>


                     BIOJECT MEDICAL TECHNOLOGIES INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.   THE COMPANY:

The  consolidated  financial  statements of Bioject  Medical  Technologies  Inc.
(the"Company"),  include  the  accounts  of Bioject  Medical  Technologies  Inc.
("BMT"),an Oregon  Corporation,  its wholly owned  subsidiary,  Bioject Inc., an
Oregon  Corporation  ("BI"),  and its 80.1% owned  subsidiary,  Marathon Medical
Technologies Inc. ("MMT"),  formerly Bioject JV Subsidiary Inc.("JV"), an Oregon
corporation.  All significant  intercompany  transactions  have been eliminated.
Bioject Inc. commenced  operations in 1985. Bioject Medical  Technologies,  Inc.
was formed in  December  1992 for the  purpose of  acquiring  all of the capital
stock of Bioject  Medical  Systems Ltd., a Company  organized  under the laws of
British Columbia,  Canada, in a stock-for-stock exchange in order to establish a
U.S. domestic  corporation as the publicly traded parent company of Bioject Inc.
and Bioject Medical Systems Ltd.  Bioject Medical Systems Ltd. was terminated in
fiscal 1997. Bioject JV Subsidiary Inc. was formed in October 1997 in connection
with a venture arrangement with Elan Corporation,  plc ("Elan").  On December 7,
1998,  the Board of  Directors  of the JV  approved  the name change to Marathon
Medical  Technologies Inc. All references to the Company include Bioject Medical
Technologies Inc. and its subsidiaries, unless the context requires otherwise.

The  Company  commenced  operations  in 1985  for  the  purpose  of  developing,
manufacturing and distributing a new drug delivery system.  Since its formation,
the Company has been engaged principally in organizational,  financing, research
and  development,  sales and marketing  activities.  The Company's  products and
manufacturing operations are subject to extensive government regulation, both in
the U.S. and abroad.  In the U.S., the development,  manufacture,  marketing and
promotion of medical  devices is  regulated by the Food and Drug  Administration
("FDA") under the Federal Food,  Drug, and Cosmetic Act ("FFDCA").  In 1987, the
Company  received  clearance  from the FDA under Section  510(k) of the FFDCA to
market a hand-held  CO2-powered  needle-free injection system. In June 1994, the
Company received clearance from the FDA under Section 510(k) to market a version
of its  Biojector  2000  system  in a  configuration  targeted  at  high  volume
injection  applications.  In October 1996, the Company received 510(k) clearance
for a needle-free  disposable  vial access  device.  In March 1997,  the Company
received  additional 510(k) clearance for certain  enhancements to its Biojector
2000 system.  On September  30, 1997,  the Company  entered into a joint venture
agreement  with  Elan  to  develop  and  commercialize   certain  blood  glucose
monitoring  technology,  which the Company licensed from Elan. The blood glucose
monitoring  technology is also subject to  government  regulation in the U.S. by
the FDA and abroad by various  agencies.  On March  23,1998 the Company  entered
into a  transaction  with Vitajet  Corporation  ("Vitajet")  whereby the Company
acquired,  along with certain  other  assets,  the rights to the  Vitajet(R),  a
spring-powered, needle-free self-injection device which currently has regulatory
clearance for administering injections of insulin.

The Company's  revenues to date have been derived  primarily  from licensing and
technology fees for the needle-free  injection  technology and from sales of the
Biojector  2000 system,  including  Biojector  syringes,  vial  adapters and CO2
cartridges. More recently, the Company has derived modest revenues from sales of
the Vitajet and related  disposable  supplies.  Future revenues will depend upon
i)acceptance  and  use of the  Company's  needle-free  injection  technology  by
healthcare providers;  ii) successful  realization of licensing,  technology and
product revenues under existing and future strategic  corporate  alliances;  and
iii) successful  development,  regulatory  approval and market acceptance of its
blood  glucose  monitoring  technology.   Uncertainties  created  by  government
regulation  and  competition in the  healthcare  industry may impact  healthcare
provider  expenditures and third party payer  reimbursements.  Accordingly,  the
Company cannot predict what impact, if any,  subsequent  healthcare  reforms and
industry trends might have on its business.  In the future the Company is likely
to require substantial additional financing. Failure to obtain such financing on
favorable terms could materially adversely affect the Company's business.


2.       ACCOUNTING POLICIES:

INVENTORIES

Inventories  are stated at the lower of cost or market.  Cost is determined in a
manner, which approximates the first-in, first out (FIFO) method. Costs utilized
for inventory  valuation  purposes  include labor,  materials and  manufacturing
overhead. Net inventories consist of the following:

                                          December 31,         March 31,
                                             1998                1998
                                          -----------         -----------
           Raw Materials                 $   762,704         $   754,715
           Work in Process                    10,802               9,763
           Finished Goods                  1,246,132           1,127,492
                                          -----------         -----------
                                         $ 2,019,638         $ 1,891,970
                                          ===========         ===========

<PAGE>

USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.


RECLASSIFICATIONS

Certain reclassifications have been made to the prior year's expenses to conform
to the current year's presentation.


NET LOSS PER SHARE

The  following  common stock  equivalents  are excluded  from earnings per share
calculations as their effect would have been antidilutive:

  Nine Months Ended December 31,             1998                1997
                                          ---------           ---------
    Warrants and stock options            8,535,953          14,371,101
    Convertible preferred stock           8,797,722                  --
                                          ---------          ----------
                                         16,806,223          14,351,101
                                         ==========          ==========


3.   RELATED PARTY TRANSACTIONS

A  significant  portion of the  research and  development  expenses of the blood
glucose  monitoring  business  segment  are  incurred  by Elan and billed to the
Company under a contractual  arrangement between the two companies.  Included in
accounts  payable  and  other  accrued  liabilities  at  December  31,  1998  is
approximately $1.94 million owed to Elan under this arrangement.


4.   SEGMENT INFORMATION

The Company has adopted  the  segment  reporting  requirements  of SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. At present,
the Company has two reportable segments which offer, or are developing different
products and are managed separately. Each business requires different technology
and  marketing  strategies.  The following  sets forth the unaudited  results of
operations  of the Company  for its two  segments of  operations  -  needle-free
injection technology and blood glucose monitoring technology:


                            Needle-free Injection          Needle-free Injection
                               Quarter Ended                  Nine-Months Ended
                                December 31,                   December 31,
                              ------------------         -----------------------
                                1998        1997             1998          1997
                              -------    -------           -------       -------

REVENUES:
  Net sales of products      $   51,476   $ 313,153        $505,288   $1,300,620
  Licensing/technology fees     887,283     125,000       1,912,842      375,000
                                -------     -------       ---------      -------
                                938,759     438,153       2,418,130    1,675,620
                                -------     -------        ---------    --------
EXPENSES:
  Manufacturing                 320,687     389,048       1,091,015    1,440,684
  Research & development        239,711     205,146         720,621      677,127
  Selling, general-
   & administrative             560,609     862,774       1,926,303    2,595,438
                               ---------   ---------       ---------   ---------
  Total operating expenses    1,121,007   1,456,968       3,737,939    4,713,249
                               ---------   ---------       ---------    --------

  Operating loss               (182,248) (1,018,815)     (1,319,809) (3,037,629)
  Other income/(expense)         34,816    (193,220)         91,977    (160,889)
                                 -------     -------       ---------    -------
   Loss before taxes           (147,432) (1,212,035)     (1,227,832) (3,198,518)
   Provision for income taxes         -           -               -           -
                                 -------     -------        --------   ---------
   Net loss                   $(147,432) $(1,212,035)   $(1,227,832) (3,198,518)
                                =======    =========      =========   =========




<PAGE>

<TABLE>

                              Blood glucose Monitoring            Blood glucose Monitoring
                                    Quarter Ended                       Nine-Months Ended
                                     December 31,                         December 31,
                                 1998            1997                  1998          1997
                                 ----            ----                  ----          ----

REVENUES:
<S>                         <C>              <C>                   <C>            <C>     
 Net sales of products      $       --       $        --           $      --      $     --
 Licensing/technology fees          --                --                  --            --
                                ---------       ----------          ----------  ----------
                                    --              --                    --            --
                                ---------       ----------          ----------  ----------

EXPENSES:
 Manufacturing                      --                 --                 --            --
 Research & development        766,735                 --          2,365,489            --
 Selling, general
  & administrative             158,458             38,496            473,266        38,496
 Acquired in-process R&D            --                 --                 --    15,000,000
                               --------        ----------          ----------   ----------
 Total operating expenses      925,193             38,496          2,838,755    15,038,496
                               --------        ----------          ----------   ----------

 Operating loss               (925,193)           (38,496)        (2,838,755) (15,038,496)
 Other income                       --                 --                 --           --
                              --------         ----------         ----------   ----------

 Loss before taxes            (925,193)           (38,496)        (2,838,755) (15,038,496)
 Provision for income taxes         --                 --                 --           --
 Minority interest allocation       --                 --                 --    2,985,000
                               --------        ----------         ----------   ----------

 Net loss                  $  (925,193)     $     (38,496)       $(2,838,755) (12,053,496)
                            ===========       ============        ===========  ===========
</TABLE>


At December 31, 1998, the blood glucose monitoring  business segment had cash on
hand of $3,800,  net property and  equipment,  at cost, of $252,000 and accounts
payable of $1.8  million and accrued  expenses of  $247,000.  The blood  glucose
monitoring  business segment had no other  significant  assets or liabilities at
December  31,1998.  Accordingly,  after separating the blood glucose  monitoring
business  segment  assets  and  liabilities,  the  accompanying  balance  sheets
effectively  represent the assets and liabilities of the  needle-free  injection
business  segment.  In the future,  certain  proceeds from the sale of equity or
issuance of debt by MMT may be restricted to MMT operations


5.   NEW ACCOUNTING PRONOUNCEMENT

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
130, "Reporting  Comprehensive  Income" ("SFAS 130"). This statement establishes
standards for reporting and displaying  comprehensive  income and its components
in a full set of general purpose financial statements. The objective of SFAS 130
is to report a measure of all changes in the equity of an enterprise that result
from   transactions   and  other  economic  events  of  the  period  other  than
transactions with owners.  The Company adopted SFAS 130 during the first quarter
of fiscal 1999.  Comprehensive  loss did not differ from currently  reported net
loss in the periods presented.

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
133").  SFAS  133  establishes   accounting  and  reporting  standards  for  all
derivative  instruments.  SFAS 133 is effective for fiscal years beginning after
June 15,  1999.  The  Company  does not have  any  derivative  instruments  and,
accordingly,  the  adoption  of SFAS 133 will have no  impact  on the  Company's
financial position or results of operations.


6.   BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

The accompanying, unaudited consolidated financial statements do not include all
information  and footnote  disclosures  normally  included in audited  financial
statements.  However,  in the  opinion of  management,  all  adjustments  (which
include  only normal,  recurring  adjustments)  necessary to present  fairly the
financial position,  cash flows, and results of operations have been made. It is
suggested  that  these  statements  be read in  conjunction  with the  financial
statements  included in the Company's  Annual Report on Form 10-K/A for the year
ended March 31, 1998.

<PAGE>

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

The  Company  is  placing  primary  sales and  marketing  emphasis  on  business
development  efforts  to  seek  relationships  with  major   pharmaceutical  and
biotechnology companies in key niche markets to market its needle-free injection
products for specific  applications  and to develop  other  application-specific
devices  and  companion  syringes.  At the  same  time,  with a  reduced  direct
salesforce,  the Company  continues to focus on maintaining its penetration into
the  public  health  and  flu  immunization  markets  with  its  Biojector  2000
needle-free injection system. The Company is also directing its sales efforts at
creating sales of the Biojector 2000 system to the U.S. military.

In July 1998, the Company  entered into a short-term  agreement with Merck & Co,
Inc. ("Merck"), a worldwide leader in the development, manufacture and sale of a
broad range of human and animal  health  products and  services.  The  agreement
provides  Merck the rights to use the Biojector  2000 jet injection  system with
selected Merck vaccines.  The Company  believes that this agreement is the first
step in establishing a long-term  relationship between the two companies whereby
Merck will use the Company's needle-free injection technology in connection with
certain of its  vaccines.  See  "Forward  Looking  Statements".  In the  current
quarter, the Company received a $750,000 nonrefundable payment under the current
agreement  between the Company and Merck.  This is the second and final  payment
for a total of $1.5  million  scheduled  to be paid  under the  agreement.  Also
during the  current  quarter,  the  Company and Merck  continued  negotiating  a
long-term relationship between the two companies. 

There can be no assurance that such long-term  relationship will be established.
See "Forward  Looking  Statements."  Through its joint  venture  with Elan,  the
Company  is  actively   engaged  in  developing  its  continuous  blood  glucose
monitoring  technology.  To date,  the Company  continues  to develop and test a
clinical prototype. In April 1998, a human clinical study of six patients with a
prototype of the blood glucose  monitoring device was conducted.  The Company is
planning  further  preliminary  clinical studies in the spring of 1999. Based on
the results of these studies,  the Company  intends to plan and conduct  further
preliminary  clinical  studies leading to conducting  pivotal clinical trials of
the  monitoring  system,  the  results  of which are  intended  to  support  its
application to the FDA to market the product in the United States.  See "Forward
Looking Statements"

The  Company's  revenues  to date have not been  sufficient  to cover  operating
expenses.  The Company  believes that increased  revenues  should result from i)
expanded  licensing  and  technology  revenues  from  both  current  and  future
strategic   corporate   relationships;   ii)increased  sales  of  the  Company's
needle-free injection products as the products achieve greater market acceptance
and  penetration,  both  through  continued  direct  sales  efforts  and through
corporate  marketing  relationships;  and iii) revenues from the Company's blood
glucose  monitoring  technology,  provided  that the  Company is  successful  in
completing development of that technology and bringing the technology to market.
See  "Forward-Looking  Statements."  In  addition  to  continuing  to  fund  the
operations of its  needle-free  injection  business,  the Company is required to
fund  substantial,  ongoing  research  and  development  costs  associated  with
developing the blood glucose  monitoring  technology as well as future milestone
payments to Elan  totaling  $15.5  million.  Since no revenue from blood glucose
monitoring  products is  expected  for a number of years,  the  Company  expects
significant  losses unless  licensing  and  technology  revenues from  strategic
corporate  relationships  and revenues from sales of the  Company's  needle-free
products increase substantially.  See "Forward Looking Statements." The level of
revenues required to generate net income will be affected by a number of factors
including  the pricing of the Company's  products,  its ability to attain volume
purchasing and efficiencies, the ability to develop and market products pursuant
to its  relationships  with  companies such as Merck and Elan, and the impact of
inflation on the Company's manufacturing and other operating costs. There can be
no assurance that the Company will be able to successfully  generate additional,
ongoing  licensing  and  technology  revenues  or sell  products at prices or in
volumes  sufficient  to  achieve  profitability  or to offset  increases  in the
Company's research and development expenses or other costs.

<PAGE>


Revenues  and  results of  operations  have  fluctuated  and can be  expected to
continue to  fluctuate  significantly  from  quarter to quarter and from year to
year.  Various  factors  may  affect  quarterly  and  yearly  operating  results
including  (i)timing  of new  product  introductions  by  the  Company  and  its
competition,  (ii) the cost and length of time required to complete  development
and  commercialization  of, and gain regulatory clearance for, the blood glucose
monitoring  technology,  (iii)  length  of time to  close  product  sales,  (iv)
customer budget cycles,  (v) uncertainties and changes in customer purchases due
to changes in third party reimbursement  policies, (iv) the timing and amount of
payments under  technology  development  and licensing  arrangements,  and (vii)
variations in the amount of manufacturing overhead absorbed into inventory.  The
Company  anticipates  drawing  primarily on current product  inventories to fill
most of its orders for needle-free  injection products through the end of fiscal
1999 and  through the first  quarter of fiscal  2000.  Accordingly,  the Company
anticipates  that production  levels,  and related  absorption of  manufacturing
overhead,  for the  remainder of fiscal 1999 and for the first quarter of fiscal
2000 will be  substantially  lower than production  levels in the  corresponding
periods of fiscal 1998 and 1999. See "Forward-Looking Statements."

THREE  MONTHS ENDED  DECEMBER  31,1998  COMPARED TO THREE MONTHS ENDED  DECEMBER
31,1997  Revenues  for the three  months  ended  December  31,  1998  consist of
needle-free  injection  product sales of $51,000 and  licensing  and  technology
revenues of $887,000. This compares to $313,000 in product sales and $125,000 in
licensing and  technology  revenues for the quarter ended December 31, 1997. The
product sales  decrease was due to flu season orders at levels lower than in the
prior year and due to returns in the current  quarter of unused product  shipped
to a few major  customers in the second quarter.  The product  returns  resulted
from  certain  customers  misinterpreting  regulatory  labeling  on certain  flu
vaccines. The Company believes that the label interpretation problem is resolved
and  will  not  recur  in the  fiscal  2000 flu  season.  See  "Forward  Looking
Statements". The increase in licensing and technology revenues was primarily due
to receipt of $750,000 under the agreement signed with Merck in July 1998.

Manufacturing  expense  decreased  from the third  quarter of fiscal 1998 to the
third  quarter  of fiscal  1999 by  $68,000,  primarily  due to lower unit sales
volumes, resulting in a lower charge to cost of goods sold. The decrease in cost
of goods sold was  partially  offset by lower  production  levels in the current
quarter  resulting in a decrease of $135,000 in manufacturing  overhead absorbed
into inventories.

Research and development expense increased from $205,000 in the third quarter of
fiscal 1998 to $1.0 million in the third  quarter of fiscal  1999.  The increase
was  principally  due to research  and  development  costs of the blood  glucose
monitoring technology. The Company incurred $767,000 of research and development
costs in the current quarter to develop the blood glucose monitoring  technology
as compared to no spending in the same quarter a year ago.

Selling, general and administrative expense decreased from $901,000 in the third
quarter  of fiscal  1998 to  $719,000  in the  third  quarter  of  fiscal  1999,
primarily as a result of the reduced size of the  Company's  direct sales force.
Selling expense for the current quarter decreased by $180,000 when compared with
the same period a year ago.

No interest  expense has been  incurred in fiscal  1998.  As a result,  interest
expense  decreased by $225,000 in fiscal 1999 due to the conversion of long-term
debt into  preferred  stock in the fourth  quarter  fiscal  1998.  Other  income
consists of earnings on available  cash  balances and  fluctuates  based on such
balances.

On a segment basis, the needle-free  injection operations reported a net loss of
$147,000  for the quarter  ended  December  31,1998 as compared to a net loss of
$1.2 million for the quarter ended December 31, 1997.  The improved  performance
is the result of  increased  licensing  and  technology  revenues,  and  reduced
spending on selling,  general and administrative  expenses. No further licensing
revenues are expected in the fourth  quarter  under the current  agreement  with
Merck. As a result,  unless a new licensing agreement is concluded with Merck or
another corporate  partner that results in significant  licensing revenue in the
fourth  quarter,  the  Company  anticipates  licensing  revenues  for the fourth
quarter of fiscal 1999 to be substantially lower than licensing revenues for the
quarter ended December 31, 1998.

The blood glucose  monitoring  business  segment reported a net loss of $925,000
for the quarter  ended  December 31, 1998  compared to a net loss of $38,000 for
the quarter ended  December 31, 1997. The increased loss is due to the fact that
pursuant to the agreement with Elan,  MMT is funding,  and will continue to fund
the full  research  and  development  effort  of the  blood  glucose  monitoring
technology.  In the same  quarter a year ago,  Elan was funding the cost of that
development.

<PAGE>


NINE MONTHS ENDED  DECEMBER 31, 1998 COMPARED TO NINE MONTHS ENDED  DECEMBER 31,
1997  Revenues  for the nine months  ended  December 31, 1998 consist of product
sales of $505,000 and licensing and  technology  revenues of $1.9 million.  This
compares  to $1.3  million  in  product  sales and  $375,000  in  licensing  and
technology  revenues  for the nine months ended  December 31, 1997.  The product
sales decrease was due to a reduction in orders in fiscal 1999 for flu season, a
significant  portion  of which  was  attributable  to  certain  customers  using
inventory  acquired but not used in earlier  periods to meet their  current year
flu season  requirements  and also due to a reduced  direct  sales  force.  Also
contributing  to the  product  sales  decline  in fiscal  1999 was the return of
unused product by certain  customers as discussed in the comparison of operating
results for the three  months  ended  December  31,  1998  compared to the three
months  ended  December  31, 1997.  The  increase in  licensing  and  technology
revenues was primarily due to receipt of $1.5 million under the agreement signed
with Merck in July 1998.

Manufacturing  expense  decreased from $1.4 million for the first nine months of
fiscal 1998 to $1.1  million for the nine months ended  December  31, 1998.  The
reduction was primarily  due to lower unit sales  volumes,  resulting in a lower
charge to cost of goods sold.  The decrease in cost of goods sold was  partially
offset by lower  production  levels in the current  fiscal year,  resulting in a
decrease of  $199,000  in the amount of  manufacturing  overhead  absorbed  into
inventory   during  the  nine  months  ended  December  31,  1998.  The  Company
anticipates  drawing  primarily  on  current  inventories  to  fill  most of its
needle-free  injection product orders through the end of fiscal 1999 and through
the first  quarter of fiscal 2000.  Accordingly,  the Company  anticipates  that
production  levels for the remainder of fiscal 1999 and for the first quarter of
fiscal  2000  will  be  substantially   lower  than  production  levels  in  the
corresponding periods of fiscal 1998 and 1999. See "Forward-Looking Statements."

Research and  development  expense  increased  from  $677,000 in the nine months
ended December 31, 1997 to $3.1 million in the first nine months of fiscal 1999.
The increase was principally  due to research and development  costs relating to
the blood glucose  monitoring  technology.  The Company incurred $2.4 million of
research  and  development  costs in the first  nine  months  of fiscal  1999 to
develop the blood  glucose  monitoring  technology as compared to no spending in
the same period a year ago.

Selling,  general and administrative  expense decreased from $2.6 million in the
nine months  ended  December  31, 1997 to $2.4  million in the nine months ended
December 31, 1998.  This  decrease was a result of  reductions  in the Company's
direct  sales force,  resulting in selling  expense for the first nine months of
fiscal 1999  decreasing  by $578,000  when  compared with the same period a year
ago.  The  savings in selling  expenses  were  offset by a $343,000  increase in
administrative expenses, all of which is attributable to administrative costs of
the Company's blood glucose monitoring  development  operations.  Administrative
costs  associated with the blood glucose  monitoring  operations were $38,000 in
the period ended December 31, 1997.

No interest  expense has been  incurred in fiscal  1998.  As a result,  interest
expense  decreased by $225,000 in fiscal 1999 due to the conversion of long-term
debt into  preferred  stock in the fourth  quarter  fiscal  1998.  Other  income
consists of earnings on available  cash  balances and  fluctuates  based on such
cash balances.

On a segment basis, the needle-free  injection operations reported a net loss of
$1.2  million for the nine months  ended  December 31, 1998 as compared to a net
loss of $3.2 million for the nine months ended  December 31, 1997.  The improved
performance is the result of increased  licensing and technology  revenues,  and
reduced spending on selling, general and administrative expenses.

The  blood  glucose  monitoring  business  segment  reported  a net loss of $2.8
million for the nine months ended  December  31, 1998  compared to a net loss of
$12.1 million for the quarter ended December 31, 1997. The decreased loss is due
to a $12.1 million  write-off of acquired  in-process  research and  development
cost in fiscal 1998.


<PAGE>


LIQUIDITY AND CAPITAL RESOURCES

Since its inception in 1985,  the Company has financed its  operations,  working
capital needs and capital  expenditures  from private  placements of securities,
exercises of stock  options and  warrants,  proceeds  received  from its initial
public  offering in 1986,  proceeds  received  from a public  offering of common
stock in November 1993, investment by Elan pursuant to the joint venture between
the Company  and Elan in October  1997,licensing  and  technology  revenues  and
revenues  from  sales of  products.  Net  proceeds  received  from  issuance  of
securities from inception through December 31, 1998 totaled  approximately $59.8
million.

Working capital at December 31, 1998 was $2.0 million compared with $3.0 million
at March 31, 1998. Cash, cash equivalents and marketable securities totaled $2.4
million at December 31, 1998  compared to $1.9  million at March 31,  1998.  The
increase  resulted  primarily  from cash proceeds  received from issuance of the
Company's  common  stock  pursuant to warrant  and stock  option  exercises  and
licensing and technology revenues offset by operating cash requirements, capital
asset purchases and increases in product inventories.

Inventories  increased  from $1.9  million at March 31, 1998 to $2.0  million at
December  31,1998  due to the volume of  syringe  units sold being less than the
volume of syringe  units  produced  and the  build-up of raw  materials  for the
manufacturing of the Vitajet product line.

A  significant  portion of the  research and  development  expenses of the blood
glucose  monitoring  business  segment  are  incurred  by Elan and billed to the
Company under a contractual  arrangement between the two companies.  Included in
accounts  payable  and  other  accrued  liabilities  at  December  31,  1998  is
approximately $1.94 million owed to Elan under this arrangement.

The Company  believes that its current cash  position,  combined with  revenues,
other cash  receipts,  proceeds from the exercise of stock warrants and options,
proceeds from the issuance of the Company's preferred stock to Elan and proceeds
from the  purchase by Elan of  additional  stock in MMT  pursuant to  agreements
entered into in connection  with the joint  venture,  will be sufficient to fund
the Company's  operations  into the second  quarter of fiscal 2000. See "Forward
Looking  Statements."  The Company is  considering  a number of other  potential
financing alternatives.  Even if the Company is successful in raising additional
financing, unforeseen costs and expenses or lower than anticipated cash receipts
from product  sales or licensing and  technology  revenues  could  accelerate or
increase the financing requirements.  The Company has been successful in raising
additional  financing in the past and  believes  that  sufficient  funds will be
available to fund future operations.  See "Forward Looking Statements." However,
there can be no assurance  that the Company's  efforts will be  successful,  and
that  such  additional  financing  will  be  available  on  terms  that  are not
significantly  dilutive  to  existing  shareholders.  Failure  to obtain  needed
additional  capital  on  terms  acceptable  to the  Company,  or at  all,  would
significantly  restrict the Company's operations and ability to continue product
development and would materially  adversely affect the Company's  business.  The
Company has no banking line of credit or other established source of borrowing.


GOVERNMENTAL REGULATION

No  clearances  from the FDA have been  obtained for marketing the blood glucose
monitoring  technology presently being developed by the Company. The Company has
concluded that a premarket approval("PMA") device clearance will be required for
products developed based on this technology.  A PMA must show that the device is
safe and  effective  and is  generally a more complex  submission  than a 510(k)
notification,  the regulatory  clearance under which the Company's jet injection
products  have  been  cleared  for  marketing.  A PMA  typically  requires  more
extensive testing before regulatory filing and a longer FDA review process.  See
"Forward  Looking  Statements."  There can be no assurance  that the  regulatory
review  process  will not cause  significant  delays in the product  development
schedule or that regulatory clearance will be obtained at all.


YEAR 2000 ISSUES

The Company is in the process of  assessing  its Year 2000 ("Y2K")  issues.  The
Assessment  includes  steps to review and  obtain  vendor  certification  of Y2K
compliance  of current  systems,  testing  system  compliance  and  implementing
corrective action where necessary.  A Y2K team composed of manager-level members
from Manufacturing,  Purchasing,  Information Services and Finance is continuing
to conduct the assessment. Assessment of the compliance of all critical systems,
plans for remedial  action,  if any, and  estimates of the cost of such remedial
action are expected to be completed by the end of February  1999.  Until the Y2K
assessment  is complete,  the cost to address the Company's Y2K issues cannot be
estimated with certainty.

<PAGE>


Products

The  Company's  products  do not  incorporate  either  application  or  embedded
software and are therefore not subject to Y2K issues.

Information Systems

The  Company  utilizes  or  will  utilize  by  mid  1999,  packaged  application
strategies  for all  critical  information  systems  functions  which  have been
certified  by the  vendors  as being  Y2K  compliant.  This  includes  financial
software, operating and networking systems, application and data servers, PC and
communications hardware and core office automation software.

Manufacturing Systems

The Company is currently in the process of gaining manufacturer certification of
Y2K compliance for all critical  automated  components used in manufacturing the
Company's products.

Supplier Base

The Company is in the process of  implementing  a Y2K audit program of suppliers
critical to the  Company's  operations.  Suppliers  will be asked to certify Y2K
compliance of systems  critical to maintaining a continuing  source of supply to
the Company.

Risk

The Company will be at risk from  external  infrastructure  failures  that could
arise  from  Y2K   failures,   including   failure  of   electrical   power  and
telecommunications.  Investigation and assessment of the risk of failure of such
infrastructure  is beyond the scope and  resources of the  Company.  The Company
intends to rely on vendor  certification  of Y2K compliance and does not plan to
audit vendor systems to test their compliance.  The Company will be at risk with
respect to vendors who certify  their systems as being Y2K compliant but who are
unable to deliver  potentially  critical supplies and services to the Company on
account of Y2K noncompliance.

Business  risks to the Company of not  successfully  identifying  Y2K issues and
undertaking  effective  remedial  action  include the inability to ship product,
delay or loss of revenue  and delay in  manufacturing  operations.  The  Company
believes   that  it  will   successfully   identify   critical  Y2K  issues  and
substantially  complete  required  remedial action before the end of 1999. Other
than risks created by infrastructure  failures or by the Company's dealings with
third parties,  where the actions of such third parties are beyond the Company's
control,  the Company believes that it will have no material  business risk from
Y2K issues.  There can be no assurance  that  infrastructure  failures  will not
occur or that  third  parties,  over  which  the  Company  has no  control  will
successfully address their own Y2K issues.


FORWARD LOOKING STATEMENTS

This report  contains  "forward  looking  statements"  within the meaning of the
Private Securities Litigation Reform Act of 1995 concerning, among other things,
the  Company's  strategic  relationships  with  Merck and Elan,  future  product
development plans and plans for clinical studies in the blood glucose monitoring
business  segment,   anticipated   product  sales  revenues  and  licensing  and
technology  revenues,  expected  sufficiency  of  capital  resources  and future
sources of working capital, and Year 2000 issues. Forward looking statements are
identified  with  a  cross-reference  to  this  section.  Such  forward  looking
statements  involve  known and unknown  risks,  uncertainties  and other factors
which may cause the actual results,  performance or achievements of the Company,
or  industry  results,  to be  materially  different  from any  future  results,
performance,  or  achievements  expressed  or  implied by such  forward  looking
statements.  Such risks,  uncertainties and factors include,  without limitation
and  inclusive  of  risks,   uncertainties   and  other  factors   contained  in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations-Overview,"    "-Liquidity   and   Capital   Resources"   "-Government
Regulations"  and  "Year  2000  Issues"  as well as:  i) the risk  that  current
strategic  partnerships  will  not  develop  into  long-term,  revenue-producing
relationships;  ii) the risk that research and product  development efforts will
not produce the desired  results;  iii)  uncertainties  relating to the time and
cost required to complete research and development; iv) uncertainties related to
obtaining  necessary clinical data and regulatory  clearances;  v) dependence on
the continued  performance of strategic partners such as Merck and Elan; and vi)
dependence  on the  availability  of  additional  financing at times and in such
amounts as are  necessary to continue to fund the  Company's  operations.  For a
more detailed description and discussion of such risks,  uncertainties and other
factors,  readers of this report are referred to the Company's  filings with the
Securities  and Exchange  Commission,  including the Company's  Annual Report on
Form 10-K/A for the year ended March 31, 1998.

Forward-looking statements are based on the estimates and opinions of management
on the date the statements  are made,  and the Company  assumes no obligation to
update  forward-looking  statements if conditions or  management's  estimates or
opinions should change.


<PAGE>


ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.



                                  PART II
                             OTHER INFORMATION


Item 1.   Legal Proceedings

          None during the quarter ended December 31, 1998.

Item 2.   Changes in Securities

          None during the quarter ended December 31, 1998.

Item 3.   Defaults Upon Senior Securities

          None during the quarter ended December 31, 1998.

Item 4.   Submission of Matters to a Vote of Security Holders

          None during the quarter ended December 31, 1998.

Item 5.   Other Information

          None during the quarter ended December 31, 1998.

Item 6.   Exhibits and Reports on Form 8-K

          EXHIBITS:

             27.1  Financial Data Schedule

           REPORTS ON FORM 8K:

            None during the quarter ended December 31, 1998




<PAGE>



                                SIGNATURE

     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.


                                    BIOJECT MEDICAL TECHNOLOGIES INC.
                                    (Registrant)



Date:  February 11, 1999            /S/ James O'Shea
                                    ---------------------------------
                                    James O'Shea
                                    Chairman, Chief Executive Officer
                                    and President



                                    /S/ Michael A. Temple
                                    ---------------------------------
                                    Michael A. Temple
                                    Vice President and Chief Financial Officer



<PAGE>


                                  EXHIBIT INDEX

EXHIBIT
NUMBER         EXHIBIT DESCRIPTION


27.1      Financial Data Schedule
[{"type": "10-Q", "sequence": "1", "description": "FOURTH QUARTER REPORT", "secsgml_size_bytes": 58429}]
{"company-data": {"conformed-name": "BIOJECT MEDICAL TECHNOLOGIES INC", "cik": "0000810084", "assigned-sic": "3841", "irs-number": "931099680", "state-of-incorporation": "OR", "fiscal-year-end": "0331"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "000-15360", "film-number": "99531686"}, "business-address": {"street1": "7620 S W BRIDGEPORT RD", "city": "PORTLAND", "state": "OR", "zip": "97224", "phone": "5036397221"}, "mail-address": {"street1": "7620 S W BRIDGEPORT ROAD", "city": "PORTLAND", "state": "OR", "zip": "97224"}, "former-company": {"former-conformed-name": "BIOJECT MEDICAL SYSTEMS LTD", "date-changed": "19920703"}}
SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

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

                                    FORM 10-Q

                QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

                                       OR

                For the quarterly period ended December 31, 1998

                           Commission File No. 0-15360

                        BIOJECT MEDICAL TECHNOLOGIES INC.
             (Exact name of registrant as specified in its charter)

          Oregon                                          93-1099680
(State of other jurisdiction of                   (I.R.S. identification no.)
employer incorporation or organization)

7620 SW Bridgeport Road
Portland, Oregon                                             97224
(Address of principal executive offices)                   (Zip code)

(Registrant's telephone number, including area code)   (503) 639-7221

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. Yes [X] No [ ]

At December 31, 1998 there were 28,920,886 outstanding shares of common stock of
the registrant.
PART I
                                FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

     The  following  unaudited  consolidated  financial  statements  of  Bioject
Medical  Technologies Inc. ("BMT"), an Oregon corporation,  and its subsidiaries
have been prepared  pursuant to the rules and  regulations of the Securities and
Exchange Commission. The Company's needle-free injector operations are conducted
by Bioject Inc. ("BI"), an Oregon  corporation formed in February 1985, which is
a wholly owned subsidiary of BMT Its blood glucose  monitoring system operations
are conducted by Marathon Medical Technologies Inc.("MMT"),  formerly Bioject JV
Subsidiary Inc. ("JV"), an Oregon  corporation  formed in October 1997, which is
owned 80.1% by BMT.

     The following 10-Q report reflects the consolidated  results of operations,
cash flows and financial position for the third quarter of the year ending March
31, 1999.  The results of  operations  for interim  periods are not  necessarily
indicative of the results to be expected for the year.

          -    Consolidated Statements of Operations for the quarters ended
               December 31, 1998 and December 31, 1997

          -    Consolidated Statements of Operations for the nine months ended
               December 31, 1998 and December 31, 1997

          -    Consolidated Balance Sheets dated December 31, 1998 and March
               31, 1998

          -    Consolidated Statements of Cash Flows for the quarters ended
               December 31, 1998 and December 31, 1997

          -    Consolidated  Statements  of Cash Flows for the nine months ended
               December 31, 1998 and December 31, 1997
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                  Quarter Ended
                                  December 31,

                                                      1998            1997
                                                   ----------      ----------

REVENUES:

     Net sales of products                        $    51,476      $  313,153
     Licensing/technology fees                        887,283         125,000
                                                    -----------     ---------
                                                      938,759         438,153
                                                    -----------     ---------
EXPENSES:

     Manufacturing                                    320,687        389,048
     Research and development                       1,006,446        205,146
     Selling, general and administrative              719,067        901,270
                                                  -----------    ------------
     Total operating expenses                      2,046,200       1,495,464
                                                  -----------    ------------
     Operating loss                               (1,107,441)     (1,057,311)
        Interest expense                               --           (225,281)
        Other income                                  34,815          32,061
                                                  ------------   ------------
     Loss before taxes                            (1,072,626)    ( 1,250,531)
     Provision for income                              --            --
     Minority interest allocation                      --            --
                                                  ------------   ------------
     Net loss                                     (1,072,626)    ( 1,250,531)
     Preferred Stock dividend                       (361,234)          --
                                                  ------------   ------------

Net loss allocable to common
shareholders                                  $   (1,433,859)   $( 1,250,531)
                                                   ===========   ============

Basic and diluted net loss per
common share                                  $        (.05)    $       (.05)
                                                   ===========   ============

Shares used in per share calculation               28,908,264      24,903,892
                                                   ===========   ============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

                                                     Nine-Months Ended
                                                       December 31,

                                                   1998             1997
                                               ------------     -----------

REVENUES:

     Net sales of products                     $  505,288      $ 1,300,620
     Licensing/technology fees                  1,912,842          375,000
                                               -----------      ----------
                                                2,418,130        1,675,620
                                               ------------     ----------
EXPENSES:

     Manufacturing                              1,091,015        1,440,684
     Research and development                   3,086,110          677,127
     Selling, general and administrative        2,399,569        2,633,934
     Acquired in-process R&D                         --         15,000,000
                                               -----------    ------------
      Total operating expenses                  6,576,694       19,751,745
                                               -----------    ------------

Operating loss                                 (4,158,564)     (18,076,125)
        Interest Expense                             --           (225,281)
        Other (income)                             91,977           64,392
                                               -----------    ------------
     Loss before taxes                         (4,066,587)     (18,237,014)
     Provision for income taxes                      --               --
     Minority interest allocation                    --          2,985,000
                                               -----------    ------------
     Net loss                                $ (4,066,587)    $(15,252,014)
     Preferred Stock dividend                  (1,056,496)            --
                                               -----------    ------------

Net loss allocable to
common shareholders                          $ (5,123,083)    $(15,252,014)

Basic and diluted net loss per common share  $      (.18)     $       (.68)
                                               ===========    =============

Shares used in per share calculation           28,111,400        22,356,973
                                               ===========    =============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
BIOJECT MEDICAL TECHNOLOGIES INC. AND SUBSIDIARIES
                              CONSOLIDATED BALANCE SHEETS
                                     (Unaudited)

                                                 December 31,   March 31,
                                                    1998         1998
                                                  -----------   ----------
ASSETS:
CURRENT ASSETS:
     Cash and cash equivalents                  $ 2,389,254   $ 1,900,839
     Accounts receivable, net                       333,260       153,721
     Inventories                                  2,019,638     1,891,970
     Other current assets                            62,465        75,292
                                                   ---------    ----------
          Total current assets                    4,804,617     4,021,822

PROPERTY AND EQUIPMENT, at cost:
     Machinery and equipment                      2,542,515     2,241,904
     Production molds                             1,953,267     1,945,267
     Furniture and fixtures                         192,633       158,477
     Leasehold improvements                         101,615        94,115
                                                   ----------   -----------
                                                  4,790,030     4,439,763
     Less - Accumulated depreciation             (2,483,325)   (1,947,006)
                                                  ----------   ------------
                                                  2,306,705     2,492,757

Other assets                                        512,471       463,031
                                                 -----------   ------------
                                                $ 7,623,793   $ 6,977,610
                                                 ==========    ==========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
     Accounts payable                            $2,017,226    $   497,180
     Accrued payroll                                181,354        218,424
     Other accrued liabilities                      415,840        277,122
     Deferred revenue                               124,999         10,000
                                                 -----------   -----------
          Total current liabilities               2,739,419      1,002,726

SHAREHOLDERS' EQUITY:
     Preferred stock, no par, 10,000,000
       shares authorized; no shares issued
       and outstanding
     Series A Convertible-692,694 shares,
     $15 stated value                            8,826,052       7,826,157
     Series B Convertible -134,333 shares,
     $15 stated value                            1,547,894       1,491,289
     Common stock, no par, 100,000,000 shares
      authorized;  issued and outstanding
      28,920,886 and 25,503,038 shares
      at December 31, 1998 and
      March 31, 1998, respectively              50,533,370      47,557,297
    Accumulated deficit                        (56,022,942)    (50,899,859)

                                              -------------   --------------
          Total shareholders' equity             4,884,374       5,974,884
                                              -------------   --------------
                                                $7,623,793     $ 6,977,610
                                              =============   ==============

The  accompanying  notes are an integral  part of these  consolidated  financial
statements.
BIOJECT MEDICAL TECHNOLOGIES INC.AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                                    (Unaudited)

                                                         Nine-Months Ended
                                                           December 31,
                                                        1998           1997
                                                     -----------     ---------

     CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss allocable to common shareholders     $(5,123,083)   $ (15,252,014)
     Adjustments to net loss:
        Depreciation and amortization                  565,542          390,252
        Contributed capital for services                32,242           82,941
        Acquired in process R&D                                      12,015,000
        Preferred stock dividends                    1,056,496               --
Net changes in assets and liabilities:
        Accounts receivable                           (179,539)       (201,307)
        Inventories                                   (127,668)       (134,938)
        Other current assets                            12,827          (9,309)
        Accounts payable                             1,520,049         (80,834)
        Accrued payroll                                (37,070)        (13,459)
        Other accrued liabilities                      138,720         281,997
        Deferred revenue                               114,999        (250,000)
                                                    -----------     -----------
     Net cash used in operating activities          (2,026,485)     (3,171,671)
                                                   -----------     -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
       Purchase of securities available for sale            --      (1,967,749)
       Acquisition of blood glucose monitoring
        technology                                          --     (15,000,000)
       Property and equipment                         (350,267)        (99,318)
       Other assets                                    (78,664)        (43,578)
                                                     -----------    -----------
     Net cash used in investing activities            (428,931)    (17,110,645)
                                                     -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of long-term debt                                  --      12,015,000
Cash proceeds from common stock                      2,943,831       4,167,828
Proceeds from minority interest capital
 Investment in joint venture subsidiary                     --       2,985,000
                                                    ------------   -------------
     Net cash provided by financing activities:      2,943,831      19,167,828
                                                   -------------   -------------
CASH AND CASH EQUIVALENTS:
     Net increase (decrease) in cash and
       cash equivalents                                488,415      (1,114,488)
     Cash and cash equivalents at beginning
       of period                                     1,900,839       2,116,478
                                                    -------------   ----------
     Cash and cash equivalents at end
       of period                                    $2,389,254     $ 1,001,990
                                                     =========       =========

The  accompanying  notes are an integral  part of these  consolidated  financial
Statements.
BIOJECT MEDICAL TECHNOLOGIES INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   THE COMPANY:

The  consolidated  financial  statements of Bioject  Medical  Technologies  Inc.
(the"Company"),  include  the  accounts  of Bioject  Medical  Technologies  Inc.
("BMT"),an Oregon  Corporation,  its wholly owned  subsidiary,  Bioject Inc., an
Oregon  Corporation  ("BI"),  and its 80.1% owned  subsidiary,  Marathon Medical
Technologies Inc. ("MMT"),  formerly Bioject JV Subsidiary Inc.("JV"), an Oregon
corporation.  All significant  intercompany  transactions  have been eliminated.
Bioject Inc. commenced  operations in 1985. Bioject Medical  Technologies,  Inc.
was formed in  December  1992 for the  purpose of  acquiring  all of the capital
stock of Bioject  Medical  Systems Ltd., a Company  organized  under the laws of
British Columbia,  Canada, in a stock-for-stock exchange in order to establish a
U.S. domestic  corporation as the publicly traded parent company of Bioject Inc.
and Bioject Medical Systems Ltd.  Bioject Medical Systems Ltd. was terminated in
fiscal 1997. Bioject JV Subsidiary Inc. was formed in October 1997 in connection
with a venture arrangement with Elan Corporation,  plc ("Elan").  On December 7,
1998,  the Board of  Directors  of the JV  approved  the name change to Marathon
Medical  Technologies Inc. All references to the Company include Bioject Medical
Technologies Inc. and its subsidiaries, unless the context requires otherwise.

The  Company  commenced  operations  in 1985  for  the  purpose  of  developing,
manufacturing and distributing a new drug delivery system.  Since its formation,
the Company has been engaged principally in organizational,  financing, research
and  development,  sales and marketing  activities.  The Company's  products and
manufacturing operations are subject to extensive government regulation, both in
the U.S. and abroad.  In the U.S., the development,  manufacture,  marketing and
promotion of medical  devices is  regulated by the Food and Drug  Administration
("FDA") under the Federal Food,  Drug, and Cosmetic Act ("FFDCA").  In 1987, the
Company  received  clearance  from the FDA under Section  510(k) of the FFDCA to
market a hand-held  CO2-powered  needle-free injection system. In June 1994, the
Company received clearance from the FDA under Section 510(k) to market a version
of its  Biojector  2000  system  in a  configuration  targeted  at  high  volume
injection  applications.  In October 1996, the Company received 510(k) clearance
for a needle-free  disposable  vial access  device.  In March 1997,  the Company
received  additional 510(k) clearance for certain  enhancements to its Biojector
2000 system.  On September  30, 1997,  the Company  entered into a joint venture
agreement  with  Elan  to  develop  and  commercialize   certain  blood  glucose
monitoring  technology,  which the Company licensed from Elan. The blood glucose
monitoring  technology is also subject to  government  regulation in the U.S. by
the FDA and abroad by various  agencies.  On March  23,1998 the Company  entered
into a  transaction  with Vitajet  Corporation  ("Vitajet")  whereby the Company
acquired,  along with certain  other  assets,  the rights to the  Vitajet(R),  a
spring-powered, needle-free self-injection device which currently has regulatory
clearance for administering injections of insulin.

The Company's  revenues to date have been derived  primarily  from licensing and
technology fees for the needle-free  injection  technology and from sales of the
Biojector  2000 system,  including  Biojector  syringes,  vial  adapters and CO2
cartridges. More recently, the Company has derived modest revenues from sales of
the Vitajet and related  disposable  supplies.  Future revenues will depend upon
i)acceptance  and  use of the  Company's  needle-free  injection  technology  by
healthcare providers;  ii) successful  realization of licensing,  technology and
product revenues under existing and future strategic  corporate  alliances;  and
iii) successful  development,  regulatory  approval and market acceptance of its
blood  glucose  monitoring  technology.   Uncertainties  created  by  government
regulation  and  competition in the  healthcare  industry may impact  healthcare
provider  expenditures and third party payer  reimbursements.  Accordingly,  the
Company cannot predict what impact, if any,  subsequent  healthcare  reforms and
industry trends might have on its business.  In the future the Company is likely
to require substantial additional financing. Failure to obtain such financing on
favorable terms could materially adversely affect the Company's business.

2.       ACCOUNTING POLICIES:

INVENTORIES

Inventories  are stated at the lower of cost or market.  Cost is determined in a
manner, which approximates the first-in, first out (FIFO) method. Costs utilized
for inventory  valuation  purposes  include labor,  materials and  manufacturing
overhead. Net inventories consist of the following:

                                          December 31,         March 31,
                                             1998                1998
                                          -----------         -----------
           Raw Materials                 $   762,704         $   754,715
           Work in Process                    10,802               9,763
           Finished Goods                  1,246,132           1,127,492
                                          -----------         -----------
                                         $ 2,019,638         $ 1,891,970
                                          ===========         ===========
USE OF ESTIMATES

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of  assets  and  liabilities  at the date of the
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

RECLASSIFICATIONS

Certain reclassifications have been made to the prior year's expenses to conform
to the current year's presentation.

NET LOSS PER SHARE

The  following  common stock  equivalents  are excluded  from earnings per share
calculations as their effect would have been antidilutive:

  Nine Months Ended December 31,             1998                1997
                                          ---------           ---------
    Warrants and stock options            8,535,953          14,371,101
    Convertible preferred stock           8,797,722                  --
                                          ---------          ----------
                                         16,806,223          14,351,101
                                         ==========          ==========

3.   RELATED PARTY TRANSACTIONS

A  significant  portion of the  research and  development  expenses of the blood
glucose  monitoring  business  segment  are  incurred  by Elan and billed to the
Company under a contractual  arrangement between the two companies.  Included in
accounts  payable  and  other  accrued  liabilities  at  December  31,  1998  is
approximately $1.94 million owed to Elan under this arrangement.

4.   SEGMENT INFORMATION

The Company has adopted  the  segment  reporting  requirements  of SFAS No. 131,
Disclosures about Segments of an Enterprise and Related Information. At present,
the Company has two reportable segments which offer, or are developing different
products and are managed separately. Each business requires different technology
and  marketing  strategies.  The following  sets forth the unaudited  results of
operations  of the Company  for its two  segments of  operations  -  needle-free
injection technology and blood glucose monitoring technology:

                            Needle-free Injection          Needle-free Injection
                               Quarter Ended                  Nine-Months Ended
                                December 31,                   December 31,
                              ------------------         -----------------------
                                1998        1997             1998          1997
                              -------    -------           -------       -------

REVENUES:
  Net sales of products      $   51,476   $ 313,153        $505,288   $1,300,620
  Licensing/technology fees     887,283     125,000       1,912,842      375,000
                                -------     -------       ---------      -------
                                938,759     438,153       2,418,130    1,675,620
                                -------     -------        ---------    --------
EXPENSES:
  Manufacturing                 320,687     389,048       1,091,015    1,440,684
  Research & development        239,711     205,146         720,621      677,127
  Selling, general-
   & administrative             560,609     862,774       1,926,303    2,595,438
                               ---------   ---------       ---------   ---------
  Total operating expenses    1,121,007   1,456,968       3,737,939    4,713,249
                               ---------   ---------       ---------    --------

  Operating loss               (182,248) (1,018,815)     (1,319,809) (3,037,629)
  Other income/(expense)         34,816    (193,220)         91,977    (160,889)
                                 -------     -------       ---------    -------
   Loss before taxes           (147,432) (1,212,035)     (1,227,832) (3,198,518)
   Provision for income taxes         -           -               -           -
                                 -------     -------        --------   ---------
   Net loss                   $(147,432) $(1,212,035)   $(1,227,832) (3,198,518)
                                =======    =========      =========   =========
Blood glucose Monitoring            Blood glucose Monitoring
                                    Quarter Ended                       Nine-Months Ended
                                     December 31,                         December 31,
                                 1998            1997                  1998          1997
                                 ----            ----                  ----          ----

REVENUES:
Net sales of products      $       --       $        --           $      --      $     --
 Licensing/technology fees          --                --                  --            --
                                ---------       ----------          ----------  ----------
                                    --              --                    --            --
                                ---------       ----------          ----------  ----------

EXPENSES:
 Manufacturing                      --                 --                 --            --
 Research & development        766,735                 --          2,365,489            --
 Selling, general
  & administrative             158,458             38,496            473,266        38,496
 Acquired in-process R&D            --                 --                 --    15,000,000
                               --------        ----------          ----------   ----------
 Total operating expenses      925,193             38,496          2,838,755    15,038,496
                               --------        ----------          ----------   ----------

 Operating loss               (925,193)           (38,496)        (2,838,755) (15,038,496)
 Other income                       --                 --                 --           --
                              --------         ----------         ----------   ----------

 Loss before taxes            (925,193)           (38,496)        (2,838,755) (15,038,496)
 Provision for income taxes         --                 --                 --           --
 Minority interest allocation       --                 --                 --    2,985,000
                               --------        ----------         ----------   ----------

 Net loss                  $  (925,193)     $     (38,496)       $(2,838,755) (12,053,496)
                            ===========       ============        ===========  ===========
At December 31, 1998, the blood glucose monitoring  business segment had cash on
hand of $3,800,  net property and  equipment,  at cost, of $252,000 and accounts
payable of $1.8  million and accrued  expenses of  $247,000.  The blood  glucose
monitoring  business segment had no other  significant  assets or liabilities at
December  31,1998.  Accordingly,  after separating the blood glucose  monitoring
business  segment  assets  and  liabilities,  the  accompanying  balance  sheets
effectively  represent the assets and liabilities of the  needle-free  injection
business  segment.  In the future,  certain  proceeds from the sale of equity or
issuance of debt by MMT may be restricted to MMT operations

5.   NEW ACCOUNTING PRONOUNCEMENT

In June 1997, the FASB issued  Statement of Financial  Accounting  Standards No.
130, "Reporting  Comprehensive  Income" ("SFAS 130"). This statement establishes
standards for reporting and displaying  comprehensive  income and its components
in a full set of general purpose financial statements. The objective of SFAS 130
is to report a measure of all changes in the equity of an enterprise that result
from   transactions   and  other  economic  events  of  the  period  other  than
transactions with owners.  The Company adopted SFAS 130 during the first quarter
of fiscal 1999.  Comprehensive  loss did not differ from currently  reported net
loss in the periods presented.

In June 1998, the FASB issued  Statement of Financial  Accounting  Standards No.
133,  "Accounting  for Derivative  Instruments  and Hedging  Activities"  ("SFAS
133").  SFAS  133  establishes   accounting  and  reporting  standards  for  all
derivative  instruments.  SFAS 133 is effective for fiscal years beginning after
June 15,  1999.  The  Company  does not have  any  derivative  instruments  and,
accordingly,  the  adoption  of SFAS 133 will have no  impact  on the  Company's
financial position or results of operations.

6.   BASIS OF PREPARATION OF CONSOLIDATED FINANCIAL STATEMENTS

The accompanying, unaudited consolidated financial statements do not include all
information  and footnote  disclosures  normally  included in audited  financial
statements.  However,  in the  opinion of  management,  all  adjustments  (which
include  only normal,  recurring  adjustments)  necessary to present  fairly the
financial position,  cash flows, and results of operations have been made. It is
suggested  that  these  statements  be read in  conjunction  with the  financial
statements  included in the Company's  Annual Report on Form 10-K/A for the year
ended March 31, 1998.
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

OVERVIEW

The  Company  is  placing  primary  sales and  marketing  emphasis  on  business
development  efforts  to  seek  relationships  with  major   pharmaceutical  and
biotechnology companies in key niche markets to market its needle-free injection
products for specific  applications  and to develop  other  application-specific
devices  and  companion  syringes.  At the  same  time,  with a  reduced  direct
salesforce,  the Company  continues to focus on maintaining its penetration into
the  public  health  and  flu  immunization  markets  with  its  Biojector  2000
needle-free injection system. The Company is also directing its sales efforts at
creating sales of the Biojector 2000 system to the U.S. military.

In July 1998, the Company  entered into a short-term  agreement with Merck & Co,
Inc. ("Merck"), a worldwide leader in the development, manufacture and sale of a
broad range of human and animal  health  products and  services.  The  agreement
provides  Merck the rights to use the Biojector  2000 jet injection  system with
selected Merck vaccines.  The Company  believes that this agreement is the first
step in establishing a long-term  relationship between the two companies whereby
Merck will use the Company's needle-free injection technology in connection with
certain of its  vaccines.  See  "Forward  Looking  Statements".  In the  current
quarter, the Company received a $750,000 nonrefundable payment under the current
agreement  between the Company and Merck.  This is the second and final  payment
for a total of $1.5  million  scheduled  to be paid  under the  agreement.  Also
during the  current  quarter,  the  Company and Merck  continued  negotiating  a
long-term relationship between the two companies. 

There can be no assurance that such long-term  relationship will be established.
See "Forward  Looking  Statements."  Through its joint  venture  with Elan,  the
Company  is  actively   engaged  in  developing  its  continuous  blood  glucose
monitoring  technology.  To date,  the Company  continues  to develop and test a
clinical prototype. In April 1998, a human clinical study of six patients with a
prototype of the blood glucose  monitoring device was conducted.  The Company is
planning  further  preliminary  clinical studies in the spring of 1999. Based on
the results of these studies,  the Company  intends to plan and conduct  further
preliminary  clinical  studies leading to conducting  pivotal clinical trials of
the  monitoring  system,  the  results  of which are  intended  to  support  its
application to the FDA to market the product in the United States.  See "Forward
Looking Statements"

The  Company's  revenues  to date have not been  sufficient  to cover  operating
expenses.  The Company  believes that increased  revenues  should result from i)
expanded  licensing  and  technology  revenues  from  both  current  and  future
strategic   corporate   relationships;   ii)increased  sales  of  the  Company's
needle-free injection products as the products achieve greater market acceptance
and  penetration,  both  through  continued  direct  sales  efforts  and through
corporate  marketing  relationships;  and iii) revenues from the Company's blood
glucose  monitoring  technology,  provided  that the  Company is  successful  in
completing development of that technology and bringing the technology to market.
See  "Forward-Looking  Statements."  In  addition  to  continuing  to  fund  the
operations of its  needle-free  injection  business,  the Company is required to
fund  substantial,  ongoing  research  and  development  costs  associated  with
developing the blood glucose  monitoring  technology as well as future milestone
payments to Elan  totaling  $15.5  million.  Since no revenue from blood glucose
monitoring  products is  expected  for a number of years,  the  Company  expects
significant  losses unless  licensing  and  technology  revenues from  strategic
corporate  relationships  and revenues from sales of the  Company's  needle-free
products increase substantially.  See "Forward Looking Statements." The level of
revenues required to generate net income will be affected by a number of factors
including  the pricing of the Company's  products,  its ability to attain volume
purchasing and efficiencies, the ability to develop and market products pursuant
to its  relationships  with  companies such as Merck and Elan, and the impact of
inflation on the Company's manufacturing and other operating costs. There can be
no assurance that the Company will be able to successfully  generate additional,
ongoing  licensing  and  technology  revenues  or sell  products at prices or in
volumes  sufficient  to  achieve  profitability  or to offset  increases  in the
Company's research and development expenses or other costs.
Revenues  and  results of  operations  have  fluctuated  and can be  expected to
continue to  fluctuate  significantly  from  quarter to quarter and from year to
year.  Various  factors  may  affect  quarterly  and  yearly  operating  results
including  (i)timing  of new  product  introductions  by  the  Company  and  its
competition,  (ii) the cost and length of time required to complete  development
and  commercialization  of, and gain regulatory clearance for, the blood glucose
monitoring  technology,  (iii)  length  of time to  close  product  sales,  (iv)
customer budget cycles,  (v) uncertainties and changes in customer purchases due
to changes in third party reimbursement  policies, (iv) the timing and amount of
payments under  technology  development  and licensing  arrangements,  and (vii)
variations in the amount of manufacturing overhead absorbed into inventory.  The
Company  anticipates  drawing  primarily on current product  inventories to fill
most of its orders for needle-free  injection products through the end of fiscal
1999 and  through the first  quarter of fiscal  2000.  Accordingly,  the Company
anticipates  that production  levels,  and related  absorption of  manufacturing
overhead,  for the  remainder of fiscal 1999 and for the first quarter of fiscal
2000 will be  substantially  lower than production  levels in the  corresponding
periods of fiscal 1998 and 1999. See "Forward-Looking Statements."

THREE  MONTHS ENDED  DECEMBER  31,1998  COMPARED TO THREE MONTHS ENDED  DECEMBER
31,1997  Revenues  for the three  months  ended  December  31,  1998  consist of
needle-free  injection  product sales of $51,000 and  licensing  and  technology
revenues of $887,000. This compares to $313,000 in product sales and $125,000 in
licensing and  technology  revenues for the quarter ended December 31, 1997. The
product sales  decrease was due to flu season orders at levels lower than in the
prior year and due to returns in the current  quarter of unused product  shipped
to a few major  customers in the second quarter.  The product  returns  resulted
from  certain  customers  misinterpreting  regulatory  labeling  on certain  flu
vaccines. The Company believes that the label interpretation problem is resolved
and  will  not  recur  in the  fiscal  2000 flu  season.  See  "Forward  Looking
Statements". The increase in licensing and technology revenues was primarily due
to receipt of $750,000 under the agreement signed with Merck in July 1998.

Manufacturing  expense  decreased  from the third  quarter of fiscal 1998 to the
third  quarter  of fiscal  1999 by  $68,000,  primarily  due to lower unit sales
volumes, resulting in a lower charge to cost of goods sold. The decrease in cost
of goods sold was  partially  offset by lower  production  levels in the current
quarter  resulting in a decrease of $135,000 in manufacturing  overhead absorbed
into inventories.

Research and development expense increased from $205,000 in the third quarter of
fiscal 1998 to $1.0 million in the third  quarter of fiscal  1999.  The increase
was  principally  due to research  and  development  costs of the blood  glucose
monitoring technology. The Company incurred $767,000 of research and development
costs in the current quarter to develop the blood glucose monitoring  technology
as compared to no spending in the same quarter a year ago.

Selling, general and administrative expense decreased from $901,000 in the third
quarter  of fiscal  1998 to  $719,000  in the  third  quarter  of  fiscal  1999,
primarily as a result of the reduced size of the  Company's  direct sales force.
Selling expense for the current quarter decreased by $180,000 when compared with
the same period a year ago.

No interest  expense has been  incurred in fiscal  1998.  As a result,  interest
expense  decreased by $225,000 in fiscal 1999 due to the conversion of long-term
debt into  preferred  stock in the fourth  quarter  fiscal  1998.  Other  income
consists of earnings on available  cash  balances and  fluctuates  based on such
balances.

On a segment basis, the needle-free  injection operations reported a net loss of
$147,000  for the quarter  ended  December  31,1998 as compared to a net loss of
$1.2 million for the quarter ended December 31, 1997.  The improved  performance
is the result of  increased  licensing  and  technology  revenues,  and  reduced
spending on selling,  general and administrative  expenses. No further licensing
revenues are expected in the fourth  quarter  under the current  agreement  with
Merck. As a result,  unless a new licensing agreement is concluded with Merck or
another corporate  partner that results in significant  licensing revenue in the
fourth  quarter,  the  Company  anticipates  licensing  revenues  for the fourth
quarter of fiscal 1999 to be substantially lower than licensing revenues for the
quarter ended December 31, 1998.

The blood glucose  monitoring  business  segment reported a net loss of $925,000
for the quarter  ended  December 31, 1998  compared to a net loss of $38,000 for
the quarter ended  December 31, 1997. The increased loss is due to the fact that
pursuant to the agreement with Elan,  MMT is funding,  and will continue to fund
the full  research  and  development  effort  of the  blood  glucose  monitoring
technology.  In the same  quarter a year ago,  Elan was funding the cost of that
development.
NINE MONTHS ENDED  DECEMBER 31, 1998 COMPARED TO NINE MONTHS ENDED  DECEMBER 31,
1997  Revenues  for the nine months  ended  December 31, 1998 consist of product
sales of $505,000 and licensing and  technology  revenues of $1.9 million.  This
compares  to $1.3  million  in  product  sales and  $375,000  in  licensing  and
technology  revenues  for the nine months ended  December 31, 1997.  The product
sales decrease was due to a reduction in orders in fiscal 1999 for flu season, a
significant  portion  of which  was  attributable  to  certain  customers  using
inventory  acquired but not used in earlier  periods to meet their  current year
flu season  requirements  and also due to a reduced  direct  sales  force.  Also
contributing  to the  product  sales  decline  in fiscal  1999 was the return of
unused product by certain  customers as discussed in the comparison of operating
results for the three  months  ended  December  31,  1998  compared to the three
months  ended  December  31, 1997.  The  increase in  licensing  and  technology
revenues was primarily due to receipt of $1.5 million under the agreement signed
with Merck in July 1998.

Manufacturing  expense  decreased from $1.4 million for the first nine months of
fiscal 1998 to $1.1  million for the nine months ended  December  31, 1998.  The
reduction was primarily  due to lower unit sales  volumes,  resulting in a lower
charge to cost of goods sold.  The decrease in cost of goods sold was  partially
offset by lower  production  levels in the current  fiscal year,  resulting in a
decrease of  $199,000  in the amount of  manufacturing  overhead  absorbed  into
inventory   during  the  nine  months  ended  December  31,  1998.  The  Company
anticipates  drawing  primarily  on  current  inventories  to  fill  most of its
needle-free  injection product orders through the end of fiscal 1999 and through
the first  quarter of fiscal 2000.  Accordingly,  the Company  anticipates  that
production  levels for the remainder of fiscal 1999 and for the first quarter of
fiscal  2000  will  be  substantially   lower  than  production  levels  in  the
corresponding periods of fiscal 1998 and 1999. See "Forward-Looking Statements."

Research and  development  expense  increased  from  $677,000 in the nine months
ended December 31, 1997 to $3.1 million in the first nine months of fiscal 1999.
The increase was principally  due to research and development  costs relating to
the blood glucose  monitoring  technology.  The Company incurred $2.4 million of
research  and  development  costs in the first  nine  months  of fiscal  1999 to
develop the blood  glucose  monitoring  technology as compared to no spending in
the same period a year ago.

Selling,  general and administrative  expense decreased from $2.6 million in the
nine months  ended  December  31, 1997 to $2.4  million in the nine months ended
December 31, 1998.  This  decrease was a result of  reductions  in the Company's
direct  sales force,  resulting in selling  expense for the first nine months of
fiscal 1999  decreasing  by $578,000  when  compared with the same period a year
ago.  The  savings in selling  expenses  were  offset by a $343,000  increase in
administrative expenses, all of which is attributable to administrative costs of
the Company's blood glucose monitoring  development  operations.  Administrative
costs  associated with the blood glucose  monitoring  operations were $38,000 in
the period ended December 31, 1997.

No interest  expense has been  incurred in fiscal  1998.  As a result,  interest
expense  decreased by $225,000 in fiscal 1999 due to the conversion of long-term
debt into  preferred  stock in the fourth  quarter  fiscal  1998.  Other  income
consists of earnings on available  cash  balances and  fluctuates  based on such
cash balances.

On a segment basis, the needle-free  injection operations reported a net loss of
$1.2  million for the nine months  ended  December 31, 1998 as compared to a net
loss of $3.2 million for the nine months ended  December 31, 1997.  The improved
performance is the result of increased  licensing and technology  revenues,  and
reduced spending on selling, general and administrative expenses.

The  blood  glucose  monitoring  business  segment  reported  a net loss of $2.8
million for the nine months ended  December  31, 1998  compared to a net loss of
$12.1 million for the quarter ended December 31, 1997. The decreased loss is due
to a $12.1 million  write-off of acquired  in-process  research and  development
cost in fiscal 1998.
LIQUIDITY AND CAPITAL RESOURCES

Since its inception in 1985,  the Company has financed its  operations,  working
capital needs and capital  expenditures  from private  placements of securities,
exercises of stock  options and  warrants,  proceeds  received  from its initial
public  offering in 1986,  proceeds  received  from a public  offering of common
stock in November 1993, investment by Elan pursuant to the joint venture between
the Company  and Elan in October  1997,licensing  and  technology  revenues  and
revenues  from  sales of  products.  Net  proceeds  received  from  issuance  of
securities from inception through December 31, 1998 totaled  approximately $59.8
million.

Working capital at December 31, 1998 was $2.0 million compared with $3.0 million
at March 31, 1998. Cash, cash equivalents and marketable securities totaled $2.4
million at December 31, 1998  compared to $1.9  million at March 31,  1998.  The
increase  resulted  primarily  from cash proceeds  received from issuance of the
Company's  common  stock  pursuant to warrant  and stock  option  exercises  and
licensing and technology revenues offset by operating cash requirements, capital
asset purchases and increases in product inventories.

Inventories  increased  from $1.9  million at March 31, 1998 to $2.0  million at
December  31,1998  due to the volume of  syringe  units sold being less than the
volume of syringe  units  produced  and the  build-up of raw  materials  for the
manufacturing of the Vitajet product line.

A  significant  portion of the  research and  development  expenses of the blood
glucose  monitoring  business  segment  are  incurred  by Elan and billed to the
Company under a contractual  arrangement between the two companies.  Included in
accounts  payable  and  other  accrued  liabilities  at  December  31,  1998  is
approximately $1.94 million owed to Elan under this arrangement.

The Company  believes that its current cash  position,  combined with  revenues,
other cash  receipts,  proceeds from the exercise of stock warrants and options,
proceeds from the issuance of the Company's preferred stock to Elan and proceeds
from the  purchase by Elan of  additional  stock in MMT  pursuant to  agreements
entered into in connection  with the joint  venture,  will be sufficient to fund
the Company's  operations  into the second  quarter of fiscal 2000. See "Forward
Looking  Statements."  The Company is  considering  a number of other  potential
financing alternatives.  Even if the Company is successful in raising additional
financing, unforeseen costs and expenses or lower than anticipated cash receipts
from product  sales or licensing and  technology  revenues  could  accelerate or
increase the financing requirements.  The Company has been successful in raising
additional  financing in the past and  believes  that  sufficient  funds will be
available to fund future operations.  See "Forward Looking Statements." However,
there can be no assurance  that the Company's  efforts will be  successful,  and
that  such  additional  financing  will  be  available  on  terms  that  are not
significantly  dilutive  to  existing  shareholders.  Failure  to obtain  needed
additional  capital  on  terms  acceptable  to the  Company,  or at  all,  would
significantly  restrict the Company's operations and ability to continue product
development and would materially  adversely affect the Company's  business.  The
Company has no banking line of credit or other established source of borrowing.

GOVERNMENTAL REGULATION

No  clearances  from the FDA have been  obtained for marketing the blood glucose
monitoring  technology presently being developed by the Company. The Company has
concluded that a premarket approval("PMA") device clearance will be required for
products developed based on this technology.  A PMA must show that the device is
safe and  effective  and is  generally a more complex  submission  than a 510(k)
notification,  the regulatory  clearance under which the Company's jet injection
products  have  been  cleared  for  marketing.  A PMA  typically  requires  more
extensive testing before regulatory filing and a longer FDA review process.  See
"Forward  Looking  Statements."  There can be no assurance  that the  regulatory
review  process  will not cause  significant  delays in the product  development
schedule or that regulatory clearance will be obtained at all.

YEAR 2000 ISSUES

The Company is in the process of  assessing  its Year 2000 ("Y2K")  issues.  The
Assessment  includes  steps to review and  obtain  vendor  certification  of Y2K
compliance  of current  systems,  testing  system  compliance  and  implementing
corrective action where necessary.  A Y2K team composed of manager-level members
from Manufacturing,  Purchasing,  Information Services and Finance is continuing
to conduct the assessment. Assessment of the compliance of all critical systems,
plans for remedial  action,  if any, and  estimates of the cost of such remedial
action are expected to be completed by the end of February  1999.  Until the Y2K
assessment  is complete,  the cost to address the Company's Y2K issues cannot be
estimated with certainty.
Products

The  Company's  products  do not  incorporate  either  application  or  embedded
software and are therefore not subject to Y2K issues.

Information Systems

The  Company  utilizes  or  will  utilize  by  mid  1999,  packaged  application
strategies  for all  critical  information  systems  functions  which  have been
certified  by the  vendors  as being  Y2K  compliant.  This  includes  financial
software, operating and networking systems, application and data servers, PC and
communications hardware and core office automation software.

Manufacturing Systems

The Company is currently in the process of gaining manufacturer certification of
Y2K compliance for all critical  automated  components used in manufacturing the
Company's products.

Supplier Base

The Company is in the process of  implementing  a Y2K audit program of suppliers
critical to the  Company's  operations.  Suppliers  will be asked to certify Y2K
compliance of systems  critical to maintaining a continuing  source of supply to
the Company.

Risk

The Company will be at risk from  external  infrastructure  failures  that could
arise  from  Y2K   failures,   including   failure  of   electrical   power  and
telecommunications.  Investigation and assessment of the risk of failure of such
infrastructure  is beyond the scope and  resources of the  Company.  The Company
intends to rely on vendor  certification  of Y2K compliance and does not plan to
audit vendor systems to test their compliance.  The Company will be at risk with
respect to vendors who certify  their systems as being Y2K compliant but who are
unable to deliver  potentially  critical supplies and services to the Company on
account of Y2K noncompliance.

Business  risks to the Company of not  successfully  identifying  Y2K issues and
undertaking  effective  remedial  action  include the inability to ship product,
delay or loss of revenue  and delay in  manufacturing  operations.  The  Company
believes   that  it  will   successfully   identify   critical  Y2K  issues  and
substantially  complete  required  remedial action before the end of 1999. Other
than risks created by infrastructure  failures or by the Company's dealings with
third parties,  where the actions of such third parties are beyond the Company's
control,  the Company believes that it will have no material  business risk from
Y2K issues.  There can be no assurance  that  infrastructure  failures  will not
occur or that  third  parties,  over  which  the  Company  has no  control  will
successfully address their own Y2K issues.

FORWARD LOOKING STATEMENTS

This report  contains  "forward  looking  statements"  within the meaning of the
Private Securities Litigation Reform Act of 1995 concerning, among other things,
the  Company's  strategic  relationships  with  Merck and Elan,  future  product
development plans and plans for clinical studies in the blood glucose monitoring
business  segment,   anticipated   product  sales  revenues  and  licensing  and
technology  revenues,  expected  sufficiency  of  capital  resources  and future
sources of working capital, and Year 2000 issues. Forward looking statements are
identified  with  a  cross-reference  to  this  section.  Such  forward  looking
statements  involve  known and unknown  risks,  uncertainties  and other factors
which may cause the actual results,  performance or achievements of the Company,
or  industry  results,  to be  materially  different  from any  future  results,
performance,  or  achievements  expressed  or  implied by such  forward  looking
statements.  Such risks,  uncertainties and factors include,  without limitation
and  inclusive  of  risks,   uncertainties   and  other  factors   contained  in
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations-Overview,"    "-Liquidity   and   Capital   Resources"   "-Government
Regulations"  and  "Year  2000  Issues"  as well as:  i) the risk  that  current
strategic  partnerships  will  not  develop  into  long-term,  revenue-producing
relationships;  ii) the risk that research and product  development efforts will
not produce the desired  results;  iii)  uncertainties  relating to the time and
cost required to complete research and development; iv) uncertainties related to
obtaining  necessary clinical data and regulatory  clearances;  v) dependence on
the continued  performance of strategic partners such as Merck and Elan; and vi)
dependence  on the  availability  of  additional  financing at times and in such
amounts as are  necessary to continue to fund the  Company's  operations.  For a
more detailed description and discussion of such risks,  uncertainties and other
factors,  readers of this report are referred to the Company's  filings with the
Securities  and Exchange  Commission,  including the Company's  Annual Report on
Form 10-K/A for the year ended March 31, 1998.

Forward-looking statements are based on the estimates and opinions of management
on the date the statements  are made,  and the Company  assumes no obligation to
update  forward-looking  statements if conditions or  management's  estimates or
opinions should change.
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

                                  PART II
                             OTHER INFORMATION

Item 1.   Legal Proceedings

          None during the quarter ended December 31, 1998.

Item 2.   Changes in Securities

          None during the quarter ended December 31, 1998.

Item 3.   Defaults Upon Senior Securities

          None during the quarter ended December 31, 1998.

Item 4.   Submission of Matters to a Vote of Security Holders

          None during the quarter ended December 31, 1998.

Item 5.   Other Information

          None during the quarter ended December 31, 1998.

Item 6.   Exhibits and Reports on Form 8-K

          EXHIBITS:

             27.1  Financial Data Schedule

           REPORTS ON FORM 8K:

            None during the quarter ended December 31, 1998
SIGNATURE

     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.

                                    BIOJECT MEDICAL TECHNOLOGIES INC.
                                    (Registrant)

Date:  February 11, 1999            /S/ James O'Shea
                                    ---------------------------------
                                    James O'Shea
                                    Chairman, Chief Executive Officer
                                    and President

                                    /S/ Michael A. Temple
                                    ---------------------------------
                                    Michael A. Temple
                                    Vice President and Chief Financial Officer
EXHIBIT INDEX

EXHIBIT
NUMBER         EXHIBIT DESCRIPTION

27.1      Financial Data Schedule