<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    Form 10-Q

                   QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                        For Quarter Ended April 30, 1997

                          Commission File Number 1-9579


                                   Ecogen Inc.
             (Exact name of registrant as specified in its charter)



             Delaware                                         22-2487948
(State or other jurisdiction of                             (I.R.S. Employer
 incorporation or organization)                           Identification Number)



2005 Cabot Boulevard West, Langhorne, Pennsylvania                      19047
(Address of principal executive offices)                             (Zip Code)



Registrant's telephone number,
including area code                             (2l5) 757-l590


     Indicate by check mark whether the registrant (l) has filed all reports
required to be filed by Section l3 or l5 (d) of the Securities Exchange Act of
l934 during the preceding l2 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    .
                                              ---       ---

     Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:

          Class                   Outstanding at June 1, l997
          -----                   ---------------------------
Common Stock, $.01 par value             7,992,072
<PAGE>   2
                                   ECOGEN INC.


                                      INDEX


                                                                            Page

PART I - FINANCIAL INFORMATION

  Item 1 - Financial Statements:

   Unaudited Consolidated Condensed Balance Sheets as of
      April 30, l997 and October 3l, l996......................................1

   Unaudited Consolidated Condensed Statements of Operations
      for the three months and six months ended April 30, 1997
      and 1996 ................................................................2

   Unaudited Consolidated Condensed Statement of Stockholders'
      Equity for the six months ended April 30, l997...........................3

   Unaudited Consolidated Condensed Statements of Cash Flows
      for the six months ended April 30, l997 and l996.........................4

   Notes to Unaudited Consolidated Condensed Financial
      Statements...............................................................6

   Item 2 - Management's Discussion and Analysis of Results
      of Operations and Financial Condition...................................10


PART II - OTHER INFORMATION

   Item 2 - Changes in Securities.............................................15

   Item 4 - Submission of Matters to Vote of Securities Holders...............15

   Item 6(a) - Exhibits.......................................................15
<PAGE>   3
PART I - FINANCIAL INFORMATION

                           ECOGEN INC. AND SUBSIDIARIES

                UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

<TABLE>
<CAPTION>
Assets                                                                                APRIL 30,         OCTOBER 31,
                                                                                        1997               1996
                                                                                    -------------      -------------
<S>                                                                                 <C>                <C>          
Current  assets:
   Cash, cash  equivalents and temporary investments ..........................     $   1,793,620      $   9,611,111
   Contract and trade receivables, net ........................................         2,470,732          1,783,605
   Inventory ..................................................................         8,053,662          6,854,472
   Prepaid expenses and other current assets ..................................           582,419            493,519
                                                                                    -------------      -------------
      Total  current  assets ..................................................     $  12,900,433         18,742,707
                                                                                    -------------      -------------
Plant and equipment, net ......................................................         4,650,034          4,569,327
Intangible and other assets, net ..............................................           770,339            549,210
                                                                                    -------------      -------------
                                                                                    $  18,320,806      $  23,861,244
                                                                                    =============      =============
Liabilities and Stockholders' Equity

Current liabilities:
   Accounts  payable  and  accrued  expenses ..................................     $   4,191,121      $   5,172,090
   Deferred  contract  revenue ................................................           711,250          1,101,367
                                                                                    -------------      -------------
        Total  current  liabilities ...........................................     $   4,902,371          6,273,457
                                                                                    -------------      -------------
Long-term debt ................................................................         1,100,835          1,297,469
Other long-term obligations ...................................................         1,788,392          1,887,078
Stockholders'  equity:
   Preferred  stock,  par  value $.01 per  share; authorized  7,500,000 shares
      Series B convertible preferred stock - 350,000 shares authorized;
          none and 5,834 shares issued and outstanding in 1997 and 1996,
          respectively (liquidation value $20 per share)  .....................                --                 58
   Common  stock,  par  value $.01 per  share;  authorized  42,000,000 shares;
         issued 8,115,335 and 7,928,171 shares  in  1997 and 1996,
         respectively..........................................................            81,153             79,282
   Additional  paid-in  capital ...............................................       117,927,266        117,548,065
   Accumulated  deficit .......................................................      (106,015,612)      (101,741,946)
   Other ......................................................................        (1,463,599)        (1,482,219)
                                                                                    -------------      -------------
        Total  stockholders'  equity ..........................................        10,529,208         14,403,240
                                                                                    -------------      -------------
                                                                                    $  18,320,806      $  23,861,244
                                                                                    =============      =============
</TABLE>

See Accompanying Notes To Unaudited Consolidated Condensed Financial Statements.


                                       1
<PAGE>   4
                          ECOGEN INC. AND SUBSIDIARIES

             UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED                SIX MONTHS ENDED
                                                    APRIL 30,                        APRIL 30,
                                          ----------------------------      ----------------------------
                                              1997             1996             1997            1996
                                          -----------      -----------      -----------      -----------
<S>                                       <C>              <C>              <C>              <C>        
Revenues:

  Product  sales,  net ..............     $ 2,661,913      $ 3,213,031      $ 3,574,015      $ 3,920,064
  Contract revenue ..................         713,762          618,104        1,424,063          691,971
  License and other income ..........              --          200,000               --        5,013,049
  Interest income, net ..............          56,215          246,923          117,665          278,810
                                          -----------      -----------      -----------      -----------
     Total revenues .................       3,431,890        4,278,058        5,115,743        9,903,894
                                          -----------      -----------      -----------      -----------
Costs and expenses:

  Cost of products sold .............       1,778,014        1,858,863        2,463,524        2,315,622
  Research and development:
    Funded by third parties .........         346,722          305,859          587,529          379,726
    Self funded .....................       1,042,686          955,781        2,237,130        1,903,339
  Selling, general and administrative       2,313,537        1,976,423        4,101,226        3,681,582
                                          -----------      -----------      -----------      -----------
     Total  costs and expenses ......       5,480,959        5,096,926        9,389,409        8,280,269
                                          -----------      -----------      -----------      -----------
Net income (loss) ...................     ($2,049,069)     ($  818,868)     ($4,273,666)     $ 1,623,625
                                          ===========      ===========      ===========      ===========
Net income (loss)  per  common  share
   available to common stockholders .     ($     0.26)     ($     0.12)     ($     0.54)     $      0.23
                                          ===========      ===========      ===========      ===========
Weighted average number of common
   shares outstanding ...............       7,929,000        7,148,000        7,886,000        6,594,000
                                          ===========      ===========      ===========      ===========
</TABLE>

See Accompanying Notes To Unaudited Consolidated Condensed Financial Statements.


                                       2
<PAGE>   5
                           ECOGEN INC. AND SUBSIDIARIES

         UNAUDITED CONSOLIDATED CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY
                          Six months ended April 30, 1997


<TABLE>
<CAPTION>
                                                                 CONVERTIBLE                     ADDITIONAL                  
                                                                  PREFERRED        COMMON         PAID-IN       ACCUMULATED  
                                                                    STOCK           STOCK         CAPITAL        DEFICIT     
                                                                -------------   -------------  -------------   ------------- 
<S>                                                             <C>             <C>            <C>             <C>           
Balance November 1, 1996 .....................................  $          58   $      79,282  $ 117,548,065   ($101,741,946)

Conversion of 5,834 shares of Series B convertible
     preferred stock to 44,030 shares of common stock ........            (58)            440           (382)             -- 

Dividends on preferred stock .................................             --              46         12,088              -- 

Issuance of 5,028 shares of common stock for employee benefits             --              25        (18,745)             -- 

Issuance of 136,000 shares of common stock ...................             --           1,360        386,240              -- 

Net reduction in unrealized gain on securities ...............             --              --             --              -- 

Net  loss ....................................................             --              --             --      (4,273,666)
                                                                -------------   -------------  -------------   ------------- 
Balance April 30, 1997 .......................................  $           0   $      81,153  $ 117,927,266   ($106,015,612)
                                                                =============   =============  =============   ============= 
</TABLE>

<TABLE>
<CAPTION>
                                                                  OTHER
                                                               STOCKHOLDERS'
                                                                  EQUITY           TOTAL
                                                               -------------   -------------
<S>                                                            <C>             <C>          
Balance November 1, 1996 ..................................... ($  1,482,219)  $  14,403,240

Conversion of 5,834 shares of Series B convertible
     preferred stock to 44,030 shares of common stock ........            --              --

Dividends on preferred stock .................................            --          12,134

Issuance of 5,028 shares of common stock for employee benefits        23,569           4,849

Issuance of 136,000 shares of common stock ...................            --         387,600

Net reduction in unrealized gain on securities ...............        (4,949)         (4,949)

Net  loss ....................................................            --      (4,273,666)
                                                               -------------   -------------
Balance April 30, 1997 ....................................... ($  1,463,599)  $  10,529,208
                                                               =============   =============
</TABLE>

See Accompanying Notes To Unaudited Consolidated Condensed Financial Statements.


                                       3
<PAGE>   6
                          ECOGEN INC. AND SUBSIDIARIES

            UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                             SIX MONTHS ENDED
                                                                                 APRIL 30,
                                                                          1997              1996
                                                                      ------------      ------------
<S>                                                                   <C>               <C>         
Cash  flows  from  operating  activities:
   Net  income (loss) ...........................................     ($ 4,273,666)     $  1,623,625
   Adjustments  to  reconcile  net  income (loss)  to  net
      cash provided  by ( used  in ) operating  activities:
         Depreciation  and  amortization  expense ...............          186,240           221,967
         Unrealized  foreign  currency  transaction  gain (loss).           (1,627)            2,716
    Changes  in  assets  and  liabilities, net ..................       (3,389,539)       (1,781,230)
                                                                      ------------      ------------
Net  cash (used in) provided by operating  activities ...........       (7,478,592)           67,078
                                                                      ------------      ------------
Cash  flows  from  investing  activities:
   Purchase  of  plant and  equipment ...........................         (146,622)         (258,613)
                                                                      ------------      ------------
Net  cash used in  investing  activities ........................         (146,622)         (258,613)
                                                                      ------------      ------------
Cash  flows  from  financing  activities:
   Net proceeds  from  issuance  of  Series C preferred  stock ..               --         2,793,943
   Net proceeds  from  issuance  of  common  stock ..............               --         9,470,299
   Purchase of treasury stock ...................................               --           (15,000)
   Repayment of capital lease obligation ........................         (192,277)                0
                                                                      ------------      ------------
Net  cash (used in) provided  by  financing  activities .........         (192,277)       12,249,242
                                                                      ------------      ------------
Effect  of  foreign  exchange  rate  changes  on  cash ..........               --              (943)
                                                                      ------------      ------------
Net increase  (decrease)  in  cash  and  cash  equivalents ......       (7,817,491)       12,056,764
                                                                      ------------      ------------
Cash  and  cash  equivalents,  beginning  of  period ............        9,611,111         1,775,213
                                                                      ------------      ------------
Cash  and  cash  equivalents,  end  of  period ..................     $  1,793,620      $ 13,831,977
                                                                      ============      ============
</TABLE>

                                                                     (Continued)


                                       4
<PAGE>   7
                          ECOGEN INC. AND SUBSIDIARIES

      UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS, CONTINUED

<TABLE>
<CAPTION>
                                                                  Six months ended
                                                                      April 30,
                                                               1997             1996
                                                            -----------      ----------- 
<S>                                                         <C>              <C>         
Changes  in  assets  and  liabilities:
    (Increase) decrease in  prepaid  expenses  and
       other  current  assets .........................     $    42,114      ($  239,358)
    Increase  in  inventory ...........................      (1,267,110)        (186,028)
    Increase in  receivables ..........................        (687,127)      (2,122,391)
    Decrease in  other  assets ........................           1,812          206,333
    Decrease in  accounts  payable
       and  accrued  expenses .........................        (993,764)      (1,837,387)
    (Decrease) increase in  deferred  contract  revenue        (390,117)       2,438,737
    Decrease in other long-term liabilities ...........         (95,347)         (41,136)
                                                            -----------      ----------- 
       Changes  in  assets  and  liabilities,  net ....     ($3,389,539)     ($1,781,230)
                                                            ===========      =========== 
</TABLE>

--------------------------------------------------------------------------------
Noncash investing and financing activities:
--------------------------------------------------------------------------------

     In the first six months of fiscal 1996, debt totalling approximately
     $1,178,000 was incurred by the Company for the acquisition of equipment.

     In the first six months of fiscal 1997 and 1996, the Company issued 44,030
     and 704,373 shares of its common stock upon conversion of the Company's
     convertible preferred stock.

     In the first six months of fiscal 1997 and 1996, the Company issued 1,700
     and 18,621 shares of common stock, respectively, as dividends on the
     Company's preferred stock.

     In the first six months of fiscal 1997, the Company transferred 2,508
     shares of treasury stock to outstanding shares pursuant to certain employee
     benefit plans.

     In the first six months of fiscal 1997, the Company issued 136,000 shares
     of common stock in satisfaction of future royalty obligations.

================================================================================

See Accompanying Notes to Unaudited Consolidated Condensed Financial Statements.


                                        5
<PAGE>   8
                         ECOGEN INC. AND SUBSIDIARIES

         NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

                             APRIL 30, 1997 AND 1996



(1)  BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     ORGANIZATION AND BASIS OF PRESENTATION:

     The consolidated condensed financial statements include the accounts of
     Ecogen Inc. ("Ecogen" or the "Company") and its wholly-owned and
     majority-owned subsidiaries. All intercompany accounts and transactions
     have been eliminated in consolidation.

     The accompanying consolidated condensed financial statements include all
     adjustments (consisting of normal recurring accruals) which are, in the
     opinion of management, necessary for a fair presentation of the
     consolidated results of operations and financial position for the interim
     periods presented. The consolidated condensed financial statements have
     been prepared in accordance with the requirements for Form l0-Q and,
     therefore, do not include all disclosures of financial information required
     by generally accepted accounting principles. These consolidated condensed
     financial statements should be read in conjunction with the Company's
     October 31, l996 consolidated financial statements and notes thereto
     included in the Company's Annual Report on Form 10-K.

     The results of operations for the interim period ended April 30, 1997 are
     not necessarily indicative of the operating results for the full year.

     OPERATIONS:

     The Company is a biotechnology company specializing in the development and
     marketing of environmentally compatible products for the control of pests
     in agricultural and related markets. The Company has not yet achieved
     profitable operations and there is no assurance that profitable operations,
     if achieved, could be sustained on a continuing basis. Further, the
     Company's future operations are dependent, among other things, on the
     success of the Company's commercialization efforts and market acceptance of
     the Company's products.

                                                                     (Continued)


                                       6
<PAGE>   9
                          ECOGEN INC. AND SUBSIDIARIES

         NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS,
                                    CONTINUED


     NET INCOME (LOSS) PER COMMON SHARE:

     Net income (loss) per common share adjusted for preferred stock dividends
     of $1,815 and none, respectively, in the six months and three months ended
     April 30, 1997, and $103,128 and $50,153, respectively, in the six months
     and three months ended April 30, 1996, is computed using the weighted
     average number of shares outstanding during the period. Common stock
     equivalents are not included in the computation of weighted average shares
     outstanding using the modified treasury stock method since the effect would
     be anti-dilutive for both primary and fully diluted earnings per share.

(2)  INVENTORY

     At April 30, l997, inventory consisted of raw materials of $2,533,338,
     work-in-progress of $2,002,412 and finished products of $3,517,912.

(3)  MONSANTO TRANSACTION

     In January 1996, the Company entered into an agreement with Monsanto
     Company ("Monsanto") for an equity investment, purchase of technology and
     joint research and development arrangement relating to the Company's
     proprietary Bacillus thuringiensis ("Bt") technology for in-plant
     applications (collectively, the "Monsanto Transaction"). The transaction
     included (i) the acquisition by Monsanto of certain rights in the Company's
     Bt technology for an aggregate purchase price of $5.0 million in cash which
     was recorded as license and other income in the first quarter of 1996; (ii)
     the sale by the Company to Monsanto of 943,397 shares of Common Stock at
     $10.60 per share for an aggregate purchase price of $10.0 million in cash
     during the first quarter; and (iii) a four-year research and development
     ("R&D") collaboration arrangement with Monsanto for the further development
     of the Company's Bt gene library for a minimum of $10.0 million, of which
     $2.5 million and $3.0 million was received in the first six months of 1997
     and 1996, respectively and recorded as deferred contract revenue. Such
     contract revenue will be recorded as earned under the terms of the
     agreement. Under this agreement, the Company recognized as contract revenue
     approximately $1.4 million and $.7 million in the six months ended April
     30, 1997 and 1996, respectively. Subsequent to April 30, 1997, Monsanto
     prepaid the remainder of its fiscal 1997 obligation under the R&D contract
     representing the funding of expected research costs under the contract
     through the first quarter of fiscal 1998.

                                                                    (Continued)

                                       7
<PAGE>   10

                          ECOGEN INC. AND SUBSIDIARIES

   NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, (CONTINUED)


(3)  MONSANTO TRANSACTION (CONTINUED)

     As part of the agreement, Monsanto has agreed to maintain its ownership
     position during the term of the research and development agreement and
     Monsanto is prohibited, during the first three years following the closing,
     from acquiring more than 25% of the Company's voting stock without the
     Company's consent, except in certain circumstances primarily related to a
     change of control of the Company. Monsanto was granted certain demand and
     piggyback registration rights with respect to its shares. In addition,
     Monsanto has a right of first refusal to purchase securities of the Company
     so as to maintain its ownership percentage in the Company except in certain
     circumstances defined in the applicable agreement. Further, Monsanto has
     the right to terminate the R&D contract upon the occurrence of certain
     events involving a change in control of the Company or a sale of
     substantially all of the assets of the Company as defined in the agreement.

(4)  LONG-TERM DEBT

     The Company has a $2.1 million line of credit for leasing of production
     equipment. At April 30, 1997, the Company had borrowed approximately $1.9
     million, respectively, under the line of credit. The Company is required to
     pay interest only until the equipment is delivered and accepted at which
     time the notes are converted to capital lease obligations.

     In July 1996, the Company established a two year revolving working capital
     line of credit with a commercial bank for up to $5,000,000. Borrowings
     under this line are required to be fully collateralized by certain of the
     Company's investments. As of April 30, 1997 there have been no borrowings
     under this agreement.

(5)  STOCKHOLDERS' EQUITY

     PREFERRED STOCK


     In November 1995, the Company raised $2.8 million, net of expenses, from
     institutional investors from the private placement of 122,000 shares of 8%
     Series C Convertible Preferred Stock (the "Series C Preferred Stock"). All
     of the Series C Preferred Stock has been converted into shares of the
     Company's Common stock in accordance with its terms.

                                                                     (Continued)


                                       8
<PAGE>   11
                          ECOGEN INC. AND SUBSIDIARIES

    NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS, CONTINUED


     STOCKHOLDERS' EQUITY (CONTINUED)

     During the first six months of fiscal 1997 and 1996, the Company issued
     44,030 and 704,373 shares, respectively, of its common stock upon
     conversion of the Company's Series B Convertible Preferred Stock and Series
     C Convertible Preferred Stock. Further, in the first six months of fiscal
     1997 and 1996, the Company issued 1,700 and 18,621 shares, respectively, of
     its common stock in payment of dividends on its preferred stock.

     COMMON STOCK

     In January 1996, the shareholders approved an amendment to the Company's
     Restated Certificate of Incorporation (the "Amendment") which effected a
     one-for-five reverse stock split (the "Reverse Split") of the Company's
     outstanding shares of common stock.

     In April 1996, the Company's Board of Directors authorized a program to
     purchase up to 350,000 shares of the Company's common stock over a two year
     period. As of April 30, 1997, 92,000 shares have been purchased in the open
     market pursuant to this program.

     In December 1996, the Board of Directors granted the Company's U.S.
     employees, excluding officers, the right to exchange 224,360 options at
     exercise prices from $2.75 to $15.63 for new options at an exercise price
     of $2.56, the fair market value at the new grant date. The new options
     generally vest over a three year period.

     In April 1997, the Company issued 136,000 unregistered shares of its common
     stock in satisfaction of a royalty obligation. In exchange for the common
     stock the Company also was assigned certain patents and patent
     applications. In connection therewith, the Company recorded a prepaid
     royalty of $387,600 during the second quarter of 1997. The holder of the
     shares has certain demand and piggyback registration rights with respect to
     the shares of common stock.


                                       9
<PAGE>   12
                          ECOGEN INC. AND SUBSIDIARIES

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

            THREE MONTHS AND SIX MONTHS ENDED APRIL 30, 1997 AND 1996


OVERVIEW

For the first six months of fiscal 1997, total revenues decreased $4.8 million
from $9.9 million in fiscal 1996 to $5.1 million in fiscal 1997, due to a
nonrecurring upfront fee from the Monsanto Company recorded in the first quarter
of fiscal 1996. Product sales decreased 9% from $3.9 million for the six months
ended April 30, 1996 to $3.6 million for the six months ended April 30, 1997.
For the six months ended April 30, 1997, the Company reported a net loss of
($4.3) million or ($.54) per share compared to net income of $1.6 million or
$.23 per share in the comparable period in fiscal 1996 on weighted average
shares of 7.9 million and 6.6 million, respectively, in fiscal 1997 and 1996.
The difference between the net loss of ($4.3) million for the six month period
ended April 30, 1997 and the net income of $1.6 million for the same period in
fiscal 1996 is principally the $4.8 million in other revenue recognized in
January 1996 from the Company's strategic alliance with Monsanto Company
("Monsanto") and increased operating costs.

SIX MONTHS ENDED APRIL 30, 1997 AND 1996

REVENUES

Net product sales decreased $.3 million or 9% to $3.6 million in the first six
months of fiscal 1997 compared with $3.9 million in the comparable period in
fiscal 1996. Sales of the Company's Bt product line, representing 46% of total
sales, decreased 30% due to decreased volume in the first six months of fiscal
1997 from the comparable period in 1996 principally as a result of lower sales
of Condor, a Bt bioinsecticide for the cotton market, caused by a delay in
planting cotton due to unfavorable weather conditions and lower cotton acreage
available for sprayable Bt products due to increased usage of Bt cotton seeds.
Pheromone product sales, representing 34% of total sales, decreased 8%
principally due to decreased sales of NoMate PBW for control of pink bollworm in
the cotton market, partially offset by sales of the Company's new NoMate OLR
product for control of the omnivorous leafroller in vine and tree fruits.
Biofungicide product sales, representing 20% of total sales increased 164% due
to increased volume of Ecogen's two biofungicide products, Aspire and AQ10. The
minor shortfall in product sales during the first six months of fiscal 1997 is
not expected to have a major impact on the Company's ability to grow product
sales in 1997. The Company anticipates stronger sales during the second half of
fiscal 1997 as it launches its new products into the fruits and vegetables
market.

Other revenues decreased $4.4 million in the current period, due primarily to
$4.8 million in nonrecurring upfront fees recognized in the first six months of
fiscal 1996 pursuant to the Company's


                                       10
<PAGE>   13
REVENUES (CONTINUED)

strategic alliance with Monsanto partially offset by higher research contract
revenues from Monsanto in the first six months of fiscal 1997. Research
contract revenues increased from $.7 million to $1.4 million in the first half
of fiscal 1997 when compared to the same period in 1996, reflecting the fact
that fiscal 1997 represents the first full year of the Monsanto Research and
Development Contract.

COSTS AND EXPENSES

Cost of products sold increased 6% due to increased costs for, among other
things, raw materials etc. Gross margins decreased to 31% in 1997 compared to
41% in 1996. This decrease was due primarily to changes in product mix and
higher costs on initial production of new products.

Research and development costs increased $.5 million or 24% principally as a
result of increased process development costs for CRYMAX and Aspire, two of the
Company's new products. After the announcement of manufacturing problems
associated with equipment design failures, the Company began working on
developing alternative processes for the manufacturing of its new water
dispersible granule products. An alternative process is now in full scale
commercial production for both products. Selling, general and administration
expenses increased $.4 million or 11% primarily as a result of planned higher
marketing and promotional expenses including costs associated with significant
expansion to the Company's field sales force at the end of fiscal 1996, as the
Company aggressively launches several new products into the fruits and
vegetables market.

Net loss for the six months ended April 30, 1997 was ($4.3) million, compared to
net income of $1.6 million for the same period in 1996. Net loss per share was
($.54), compared to net income per share of $.23 on weighted average shares
outstanding of 7.9 million and 6.6 million, respectively, in the first six
months of fiscal 1997 and 1996. Excluding the Monsanto nonrecurring upfront
payment in fiscal 1996, the net loss for the first half increased from ($3.2)
million in fiscal 1996, compared to ($4.3) million in fiscal 1997 principally
due to increased operating costs.

THREE MONTHS ENDED APRIL 30, 1997 AND 1996

REVENUES

Net product sales decreased 17% to $2.7 million compared with $3.2 million in
the second quarter of 1996, due primarily to a decrease in Bt product sales
resulting from the Company's shift in strategic direction with less dependence
on the cotton market for sprayable Bt products to the Company's focus on the
fruits and vegetables market where the lion share of products are purchased
and applied later in the year. Sales of the Company's Bt product line,
representing 43% of total sales, decreased 40% due primarily to decreased volume
in the second quarter of fiscal


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<PAGE>   14
REVENUES (CONTINUED)

1997 from the comparable period in 1996. Pheromone product sales, representing
39% of total sales in the second quarter of fiscal 1997, remained substantially
consistent with 1996. Lower sales of NoMate PBW, for control of pink bollworm
in cotton, and a decrease in government contracts for trap and lure products,
were substantially offset by initial sales of NoMate OLR, for control of
omnivorous leafroller on grapes and kiwi. Biofungicide sales, representing 18%
of total sales in the second quarter of fiscal 1997, increased 76% due to
increased volume over the same period in 1996.

Other revenues decreased $.3 million in the current period, due primarily to
certain upfront fees from Decco in 1996 and lower interest income resulting from
lower cash balances in fiscal 1997.


COSTS AND EXPENSES

Cost of products sold decreased 4%. Gross margins decreased to 33% in 1997
compared to 42% in 1996. This decrease was due primarily to changes in product
mix and higher costs on initial production of new products.

Research and development costs increased $.1 million or 10% principally as a
result of start-up costs associated with process development for CRYMAX(TM) and
Aspire, two of the Company's new products. Selling, general and administration
expenses increased $.3 million or 17% primarily as a result of higher marketing
and promotional costs.

Net loss for the three months ended April 30, 1997 was ($2.0) million, compared
to net loss of ($.8) million for the same period in 1996. Net loss per share for
the three months ended April 30, 1997 was ($.26), compared to net loss per share
of ($.12) on weighted average shares outstanding of 7.9 million and 7.1 million,
respectively, in the second quarter of fiscal 1997 and 1996.

SEASONALITY OF BUSINESS

The bulk of the Company's current products are presently marketed for
agricultural applications in the northern hemisphere, where the growing season
generally runs from spring through fall. Commercial introduction of the
Company's new products is contingent on, among other factors, completion of
field testing and receipt of required regulatory approvals. Unusual weather
conditions during field tests or failure to receive regulatory approvals prior
to the growing season may require additional field tests in subsequent growing
seasons, with resulting delays in product development and commercialization. In
addition, because of the seasonal nature of its business, the Company's product
revenues are likely to be concentrated in the fiscal quarters prior to and
during a particular growing season which


                                       12
<PAGE>   15
SEASONALITY OF BUSINESS (CONTINUED)

may result in substantial variations in quarter-to-quarter financial results.
Product sales from year-to-year and quarter-to-quarter are also affected by
unusual weather conditions, such as droughts or floods, and the level of insect
pressure in grower areas.

LIQUIDITY AND CAPITAL RESOURCES

At April 30, 1997, the Company had cash and liquid investments of $1.8 million,
representing a net decrease of $7.8 million from October 31, 1996. The decrease
was due to $7.5 million of cash used in operations, $.1 million used for capital
expenditures and $.2 million for repayment of capital lease obligations for the
purchase of equipment. Cash used in operations during the six months ended April
30, 1997 principally funded the net loss of $4.3 million, an increase in
receivables of $.7 million, an increase in inventory of $1.3 million and a
reduction in accounts payable and accrued expenses of $1.0 million.


To date, the Company has not generated positive cash flow from operations. The
Company has financed its working capital needs primarily through private and
public offerings of equity securities, research contract revenues, license and
other fees and product sales. The Company believes that its existing working
capital and cash flows generated from total revenues in 1997 should be
sufficient to meet its capital and liquidity requirements for fiscal 1997 based
on reduced spending levels. The Company will need additional financing to
support current levels of product development and commercialization over the
short-term. There is no assurance that such financing will be available on
terms acceptable to the Company or at all. The Company's working capital and
working capital requirements are affected by numerous factors and there is no
assurance that such factors will not have a negative impact on the Company's
liquidity. Principal among these are the success of its product
commercialization and marketing efforts and the efforts of its strategic
partners in commercializing and selling products based on the Company's
technology, the technological advantages and pricing of the Company's products,
economic and environmental considerations which impact agricultural crop
production and the agricultural sector generally, competitive conditions in the
agricultural pest control market, and access to capital markets that can
provide the Company with the resources necessary to fund its strategic
priorities. Over the long term, the Company's liquidity is dependent on market
acceptance of its products and technology.


                                       13
<PAGE>   16
ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY

Inventory increased $1.3 million as a result of building inventories for sales
in the second half of fiscal 1997. Trade receivables increased $.7 million due
to the seasonality of sales. Accounts payable and accrued expenses
decreased $1.0 million due to timing of payments to vendors and refunds paid to
distributors in the first quarter of fiscal 1997 for product returns in the
fourth quarter of fiscal 1996. Deferred contract revenue decreased $.4 million
during the six months ended April 30, 1997 due to amounts earned under the
Monsanto Research and Development Agreement relating to certain Bt technology
for use in plants.

In late February 1997 the Financial Accounting Standards Board issued FASB
Statement No. 128 "Earnings per Share". The Company is beginning to assess the
effect of this statement but does not believe the statement will have
significant impact because the Company's common stock equivalents are presently
anti-dilutive and therefore are excluded from earnings per share calculations.

The discussion set forth in this document contains forward looking statements
that involve a number of risks and uncertainties that could cause actual results
to differ materially from expected results. The Company intends to market and
sell a number of newly introduced products over the next several weeks and
months. These products, some of which utilize new formulations, have not to date
been produced on a commercial scale or produced on a commercial scale that has
been replicated. Certain of the manufacturing processes for such products
include newly developed equipment and techniques which may not be successfully
incorporated into the manufacturing process in time to meet targeted sales
opportunities. Additional risks and uncertainties include: (i) the market
acceptance of the Company's current and newly introduced products; (ii) the
efficacy, pricing, ease of use and performance of the Company's products; (iii)
the successful development, registration, commercialization and marketing of
technologically advanced new products; (iv) the continued and uninterrupted
supply of the Company's products from third party toll manufacturers and the
continued financial viability of such manufacturers; (v) economic and
environmental considerations which impact agricultural crop production and
agricultural crop protection including the amount of acres of target crops
planted, the cost and efficacy of competitive products, weather conditions and
the level of insect and disease infestation on target crops, and (vi) the
ability of the Company to fund its strategic priorities through operations or
access to capital markets.


                                       14
<PAGE>   17
PART II - OTHER INFORMATION


ITEM 2(c): Changes in Securities

        In April 1997, the Company issued 136,000 unregistered shares of its
common stock to PruTech Research & Development Partnership II ("PruTech") in
satisfaction of a royalty obligation of the Company to PruTech through fiscal
2005. In exchange for the common stock, the Company also was assigned certain
patents and patent applications. In connection with the transaction, the
Company recorded a prepaid royalty of $387,000, calculated based on the
estimated fair value of the unregistered shares, during the second quarter of
1997. PruTech has certain registration rights with respect to the shares of
common stock. The shares were issued to PruTech in reliance upon the exemption
from securities registration afforded by Rule 506 under Regulation D under the
Securities Act of 1933, as amended.


ITEM 4: Submission of Matters to a Vote of Security Holders

The Company held its Annual Meeting of the Stockholders on March 5, 1997, at
which time matters were submitted to a vote of the stockholders and were
approved:

I.   Election of John E. Davies, Jack D. Early, Esteban A. Ferrer, Lowell N.
     Lewis, Mary E. Paetzold, James P. Reilly, Jr. and John R. Sutley to serve
     on the Board of Directors of the Company until the next annual meeting.

II.  Ratification of the appointment of KPMG Peat Marwick LLP as independent
     auditors to audit the Company's books and accounts for the fiscal year
     1997.


Item 6(a): Exhibits

Exhibit No.         Description
-----------         -----------

3.1                 Restated Certificate of Incorporation of Ecogen Inc., filed
                    with the Secretary of State of the State of Delaware on
                    October 16, 1992. (Form 10-K for fiscal year ended December
                    31, 1992.)*

3.8                 By-Laws of Ecogen Inc., as amended. (Form S-1 Registration
                    Statement.)*

10.125              Amendment No. 1 to Research and Development Agreement by and
                    between Monsanto Company and Ecogen Inc. dated May 22, 1997.

27                  Financial Data Schedule


                                       15
<PAGE>   18
                                   Signatures


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


Date: June 16, 1997


                              ECOGEN INC.



                              By:  /s/ JAMES P. REILLY, JR.
                                   ------------------------------
                                   James P. Reilly, Jr.
                                   Chairman and Chief Executive
                                   Officer



                              By:  /s/ MARY E. PAETZOLD
                                   ------------------------------
                                   Mary E. Paetzold
                                   Vice President and Chief Financial Officer


                                       16