United States
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                    Form 10-Q

           (X) Quarterly Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934.
                  For the quarterly period ended March 31, 2000
                                       Or
          ( ) Transition Report Pursuant to Section 13 or 15(d) of the
                        Securities Exchange Act of 1934.
                 For the transition period from ______ to ______

                         Commission File Number 33-14582
                        PAINEWEBBER R&D PARTNERS II, L.P.
             (Exact name of registrant as specified in its charter)

                 Delaware                          13-3437420
      (State or other jurisdiction of           (I.R.S. Employer
      Incorporation or organization)           Identification No.)

1285 Avenue of the Americas, New York, New York       10019
   (Address of principal executive offices)         (Zip code)

       Registrant's telephone number, including area code: (212) 713-2000

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

    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 [ ]

                             ----------------------
<PAGE>

                             SPECIAL NOTE REGARDING
                           FORWARD LOOKING STATEMENTS

    The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Except for the historical information
contained herein, the matters discussed herein are forward-looking statements.
Such forward-looking statements involve known and unknown risks, uncertainties
and other factors that may cause the actual results, performance or achievements
of PaineWebber R&D Partners II, L.P. or industry results to be materially
different from any future results, performance or achievements expressed or
implied by such forward-looking statements. Such factors include, among others,
the following: general economic and business conditions; fluctuations in the
value of securities for which only a limited, or no, public market exists;
dependence on the development of new technologies; dependence on timely
development and introduction of new and competitively priced products; the need
for regulatory approvals; the Sponsor Companies (hereinafter defined) having
insufficient funds to commercialize products to their maximum potential; the
restructuring of Sponsor Companies; the dependence of PaineWebber R&D Partners
II, L.P. on the skills of certain scientific personnel; and the dependence of
PaineWebber R&D Partners II, L.P. on the General Partner (hereinafter defined).
<PAGE>

                        PAINEWEBBER R&D PARTNERS II, L.P.
                        (a Delaware Limited Partnership)

                                    Form 10-Q
                                 March 31, 2000

                                Table of Contents

PART I.        FINANCIAL INFORMATION                                        Page

Item 1.        Financial Statements

               Statements of Financial Condition (unaudited) at March          2
               31, 2000 and December 31, 1999

               Statements of Operations (unaudited) for the three              3
               months ended March 31, 2000 and 1999

               Statement of Changes in Partners' Capital (unaudited)           3
               for the three months ended March 31, 2000

               Statements of Cash Flows (unaudited) for the three              4
               months ended March 31, 2000 and 1999

               Notes to Financial Statements                                5-10
               (unaudited)

Item 2.        Management's Discussion and Analysis of Financial           11-12
               Condition and Results of Operations

PART II.       OTHER INFORMATION

Item 1.        Legal Proceedings                                              13

Item 5.        Other Information                                              13

Item 6.        Exhibits and Reports on Form                                   14
               8-K

               Signatures                                                     15

All schedules are omitted either because they are not applicable or the
information required to be submitted has been included in the financial
statements or notes thereto.

                                        1
<PAGE>

                          PART I FINANCIAL INFORMATION

Item 1. Financial Statements

PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)

Statements of Financial Condition
(unaudited)

<TABLE>
<CAPTION>
                                                                        March 31,           December 31,
                                                                             2000                   1999
------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                    <C>
Assets:

      Cash                                                    $             6,998    $             6,998

      Marketable securities, at market value                            4,379,080                175,449

      Royalty and other receivables                                     6,264,308              1,119,656

      Prepaid expense                                                       5,900                      -
                                                              -------------------    -------------------
Total assets                                                  $        10,656,286    $         1,302,103
                                                              ===================    ===================

Liabilities and partners' capital:

      Accrued liabilities                                     $           163,741    $           108,084

      Partners' capital                                                10,492,545              1,194,019
                                                              -------------------    -------------------
Total liabilities and partners' capital                       $        10,656,286    $         1,302,103
                                                              ===================    ===================
------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>

                                        2
<PAGE>

PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)

Statements of Operations
(unaudited)

<TABLE>
<CAPTION>
For the three months ended March 31,                                         2000                   1999
------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                    <C>
Revenues:
      Interest income                                         $             4,030    $             3,700
      Income from product development projects                          9,459,498              1,522,910
      Unrealized appreciation of marketable securities                          -                629,998
                                                              -------------------    -------------------
                                                                        9,463,528              2,156,608
                                                              -------------------    -------------------

Expenses:
      General and administrative costs                                    165,002                 69,823
                                                              -------------------    -------------------
Net income                                                    $         9,298,526    $         2,086,785
                                                              ===================    ===================

Net income per partnership unit:
      Limited partners (based on 8,257 units)                 $          1,114.88    $            250.20
      General partner                                         $         92,985.26    $         20,867.85
------------------------------------------------------------------------------------------------------------------------------

<CAPTION>

Statement of Changes in Partners' Capital
(unaudited)

                                                                     Limited                General
For the three months ended March 31, 2000                           Partners                Partner                Total
------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                    <C>                    <C>
Balance at January 1, 2000                                    $         1,177,996    $            16,023    $       1,194,019

Net income                                                              9,205,541                 92,985            9,298,526
                                                              -------------------    -------------------    -----------------
Balance at March 31, 2000                                     $        10,383,537    $           109,008    $      10,492,545
                                                              ===================    ===================    =================
------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>

                                        3
<PAGE>

PAINEWEBBER R&D PARTNERS II, L.P.
(a Delaware Limited Partnership)

Statements of Cash Flows
(unaudited)

<TABLE>
<CAPTION>
For the three months ended March 31,                                         2000                   1999
------------------------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                    <C>
Cash flows from operating activities:
Net income                                                    $         9,298,526    $         2,086,785
Adjustments to reconcile net income to cash
  provided by operating activities:
Unrealized appreciation of marketable securities                                -               (629,998)

(Increase) decrease in operating assets:
  Marketable securities                                                (4,203,631)                 2,052
  Royalty and other receivables                                        (5,144,652)               (62,165)
  Prepaid expense                                                          (5,900)                     -

 Increase in operating liabilities:
  Accrued liabilities                                                      55,657                 62,896
                                                              -------------------    -------------------
Cash provided by operating activities                                           -              1,459,570
                                                              -------------------    -------------------
Cash flows from financing activities:
  Distributions to partners                                                     -             (1,459,570)
                                                              -------------------    -------------------
Increase in cash                                                                -                      -

Cash at beginning of period                                                 6,998                  6,998
                                                              -------------------    -------------------
Cash at end of period                                         $             6,998    $             6,998
                                                              ===================    ===================
------------------------------------------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow information:
The Partnership paid no cash for interest or taxes during the three months ended
March 31, 2000 and 1999.
------------------------------------------------------------------------------------------------------------------------------
See notes to financial statements.
</TABLE>

                                        4
<PAGE>

                        PAINEWEBBER R&D PARTNERS II, L.P.
                        (a Delaware Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  Organization and Business

    The financial information as of and for the periods ended March 31, 2000 and
1999 is unaudited. However, in the opinion of management of PaineWebber R&D
Partners II, L.P. (the "Partnership"), such information includes all
adjustments, consisting only of normal recurring accruals, necessary for a fair
presentation. The results of operations reported for the interim period ended
March 31, 2000, are not necessarily indicative of results to be expected for the
year ended December 31, 2000. These financial statements should be read in
conjunction with the most recent annual report of the Partnership on Form 10-K
for the year ended December 31, 1999.

    The Partnership is a Delaware limited partnership that commenced operations
on September 30, 1987 with a total of $72.0 million available for investment.
PWDC Holding Company (the "Manager") is the general partner of PaineWebber
Technologies II, L.P. (the "General Partner"), which is the general partner of
the Partnership. PWDC Holding Company is a wholly-owned subsidiary of Paine
Webber Development Corporation ("PWDC"), an indirect, wholly-owned subsidiary of
Paine Webber Group Inc. ("PWG"). The Partnership will terminate on December 31,
2012, unless its term is extended or reduced by the General Partner.

    The principal objective of the Partnership has been to provide long-term
capital appreciation to investors through investing in the development and
commercialization of new products with technology companies ("Sponsor
Companies"), which have been expected to address significant market
opportunities. The Partnership has been engaged in diverse product development
projects (the "Projects") including product development contracts, participation
in other partnerships and investments in securities of the Sponsor Companies.
Once the product development phase has been completed, the Sponsor Companies
have had the option to license and commercialize the products resulting from the
product development project, and the Partnership has had the right to receive
payments based upon the sale of such products.

                                        5
<PAGE>

                        PAINEWEBBER R&D PARTNERS II, L.P.
                        (a Delaware Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

(Note 1 Continued)

    All distributions to the limited partners of the Partnership (the "Limited
Partners") and the General Partner (collectively, the "Partners") from the
Partnership have been made pro rata in accordance with their respective capital
contributions. The following table sets forth the proportion of each
distribution to be received by the Limited Partners and the General Partner,
respectively:

                                                              Limited    General
                                                              Partners   Partner
                                                              --------   -------
   I.    Until the value of the aggregate
         distributions for each limited partnership
         unit ("Unit") equals $10,000 plus simple
         interest on such amount accrued at 7% per
         annum for each Unit sold at the Initial
         Closing (6% per annum for each subsequent
         Unit sold up to the 5,000th Unit and 5% per
         annum for each Unit sold thereafter)
         ("Contribution Payout"). At March 31, 2000,
         Contribution Payout ranged from $15,375 per
         Unit to $18,750 per Unit...................             99%         1%

  II.    After Contribution Payout and until the
         value of the aggregate distributions for
         each Unit equals $50,000 ("Final Payout")..             80%        20%

 III.    After Final Payout.........................             75%        25%

    For the quarter ended March 31, 2000, the Partnership made no cash or
security distributions. As of this date, the Partnership has made cash and
security distributions, as valued on the dates of distribution, since inception
of $4,466 and $7,206 per Unit, respectively.

    Profits and losses of the Partnership are allocated as follows: (i) until
cumulative profits and losses for each Unit equals Contribution Payout, 99% to
Limited Partners and 1% to the General Partner, (ii) after Contribution Payout
and until cumulative profits and losses for each Unit equals Final Payout, 80%
to Limited Partners and 20% to the General Partner, and (iii) after Final
Payout, 75% to Limited Partners and 25% to the General Partner. As of March 31,
2000, the cumulative profit for the Partnership was $485 per Unit.

2.  Summary of Significant Accounting Policies

    The financial statements are prepared in conformity with accounting
principles generally accepted in the United States which require management to
make certain estimates and assumptions that affect the amounts reported in the
financial statements and accompanying notes. Actual results could differ from
those estimates.

    Marketable securities consist of a money market fund which is recorded at
market value. Marketable securities are not considered cash equivalents for the
Statements of Cash Flows.

    Realized and unrealized gains or losses are determined on a specific
identification method and are reflected in the Statements of Operations during
the period in which the change in value occurs.

                                        6
<PAGE>

                        PAINEWEBBER R&D PARTNERS II, L.P.
                        (a Delaware Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

(Note 2 Continued)

    The Partnership has invested in product development contracts with Sponsor
Companies either directly or through product development limited partnerships.
The Partnership expenses product development costs when incurred by the Sponsor
Companies and such costs are reflected as expenditures under product development
projects in the accompanying Statements of Operations. Income received and/or
accrued from investments in Projects is reflected in the Statements of
Operations for the period in which the income is earned.

3.  Marketable Securities

    As of March 31, 2000 and December 31, 1999, the Partnership had invested
$4,379,080 and $175,449, respectively, in a money market fund.

    At March 31, 1999, the Partnership owned 240,000 shares of Cygnus, Inc.
whereby the market value as of this date was $7.50 per share. The carrying value
of the investment as of December 31, 1998 was $4.875 per share and the
Partnership recognized unrealized appreciation of $629,998 for the three months
ended March 31, 1999.

4.  Related Party Transactions

    The Manager is entitled to receive a management fee for services rendered to
the Partnership. Commencing July 1, 1996, the Manager elected to discontinue the
management fee charged to the Partnership.

    The money market fund invested in by the Partnership is managed by an
affiliate of PaineWebber Incorporated ("PWI").

    PWDC and PWI, and its affiliates, have acted in an investment banking
capacity for several of the Sponsor Companies. In addition, PWDC and its
affiliates have direct limited partnership interests in some of the same
Projects as the Partnership.

5.  Product Development Projects

    On January 31, 1997, pursuant to the provision of the Partnership Purchase
Option Agreement between Centocor, Inc. ("Centocor") and the Partnership,
Centocor exercised its option to purchase the limited partnership interests of
Centocor Partners III, L.P. ("CP III"). The Partnership owned 22 Class A limited
partnership units and 111 Class C limited partnership units. As a result, the
Partnership has been and will continue to receive future quarterly payments (the
"CPIs") based on sales of ReoPro(TM), a drug developed by CP III. For the
quarters ended March 31, 2000 and 1999, the Partnership accrued income due from
the CPIs of $2,200,000 and $1,487,679, respectively. With respect to its current
investment of 22 Class A CPIs and 111 Class C CPIs, on February 17, 2000, the
Partnership entered into an Amended and Restated Payment Interest Purchase
Agreement (the "DRI Purchase Agreement") with Drug Royalty USA, Inc. ("DRI").
Subject to the terms and conditions contained in the DRI Purchase Agreement, the
Partnership agreed to sell to DRI seven Class A and thirty-seven Class C CPIs
for an aggregate purchase

                                        7
<PAGE>

                        PAINEWEBBER R&D PARTNERS II, L.P.
                        (a Delaware Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

(Note 5 Continued)

price of $14,722,400 subject to adjustment. The sale is subject to the
fulfillment of certain conditions including the consent of Centocor and the
approval of the Limited Partners. The DRI Purchase Agreement amended the
agreement between the Partnership and DRI on December 17, 1999 for the sale of
ten Class A and fifty Class C CPIs. (See Note 8 - Subsequent Events). Also on
February 17, 2000, the Partnership entered into a Contractual Payment Interest
Purchase Agreement (the "Pharma Purchase Agreement") with Pharmaceutical
Partners, LLC and certain of its affiliates (the "Pharma Purchaser") whereby the
Partnership agreed to sell to the Pharma Purchaser four Class A CPIs and
nineteen Class C CPIs for a purchase price of $7,638,800 subject to adjustment.
Also, the Partnership agreed to make a distribution in kind to the Pharma
Purchaser (as the owner of 28.19% of the Units) for an additional four Class A
CPIs and twenty-two Class C CPIs. (See Note 8 - Subsequent Events). Upon receipt
of such distribution the Pharma Purchaser will waive any right as a Limited
Partner of the Partnership to receive a cash distribution from the Partnership
as a result of the transactions contemplated by the DRI Purchase Agreement and
the Pharma Purchase Agreement. The DRI Purchase Agreement and the Pharma
Purchase Agreement may be terminated by the parties if the closing of the
transactions thereunder do not occur prior to July 15, 2000. As of March 31,
2000, the Partnership has not recognized any income resulting from the
transaction contemplated by the foregoing agreements.

    The Partnership's remaining active Project is an investment of 111 Class A
limited partnership units in Genzyme Development Partners, L.P.

    If the Projects produce any product for commercial sale, the Sponsor
Companies have had the option to enter into joint ventures or royalty agreements
with the Partnership to manufacture and market the products developed. In
addition, the Sponsor Companies have had the option to purchase the
Partnership's interest in the technology.

6.  Income Taxes

    The Partnership is not subject to federal, state or local income taxes.
Accordingly, the individual Partners are required to report their distributive
shares of realized income and loss on their individual federal and state income
tax returns.

7.  Legal Proceeding

    On July 12, 1995, the Partnership commenced a derivative action against
Centocor and Centocor Development Corporation III ("CDC III") in the Chancery
Court of Delaware (the "Court") arising from certain agreements entered into by
Centocor and Eli Lilly & Company ("Lilly") in July 1992. The Partnership's
complaint alleged, among other things that: at least $25 million of the $100
million paid by Lilly to Centocor represented profits from the sale of ReoPro, a
Centocor drug, that Centocor is required to share with CP III; and because of
the Lilly transaction, Centocor was required to increase the percentages of
profits and revenues from ReoPro that it pays to CP III investors. Centocor had
taken the position that only

                                        8
<PAGE>

                        PAINEWEBBER R&D PARTNERS II, L.P.
                        (a Delaware Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

(Note 7 Continued)

$500,000 of the $100 million had to be shared with CP III and that Centocor had
no obligation to increase the percentages of ReoPro profits and revenues that it
pays to CP III investors. The Partnership sought to proceed on behalf of CP III.
The complaint sought to require Centocor and CDC III to pay damages to CP III
and to increase the percentages of future ReoPro profits and revenues that
Centocor must pay to CP III and its investors.

    Centocor answered the Partnership's complaint, as well as a similar
complaint filed by John E. Abdo, another limited partner of CP III, denying the
material allegations of those complaints and asserting purported affirmative
defenses and third-party claims against PWG, PWDC and PWI.

    In April and July 1996, Mr. Abdo moved to amend his complaint to assert
claims on behalf of CP III against two of PWDC's nominees to the CDC III Board
of Directors. On July 12, 1996, counsel chosen by Centocor to represent CP III
moved to disqualify the Partnership from serving as a plaintiff in this action,
alleging that Mr. Abdo should be the sole plaintiff because the Partnership has
conflicts of interest with CP III and its other limited partners, including
conflicts arising out of the alleged claims against the PWDC nominees. Mr. Abdo
and Centocor also moved to disqualify the Partnership. In January 1997, the
Court granted, in part, Mr. Abdo's motion to amend his complaint to assert
claims against the PWDC nominees.

    In June 1997, the parties to the Partnership's action entered into an
agreement to settle the action. The agreement provided, among other things, for
Centocor to pay to CP III investors (including the Partnership, a former limited
partner in CP III) in the aggregate: $10.8 million, net of attorneys' fees and
expenses (the "Initial Payment") as may be awarded by the Court; an additional
$5.0 million, if and when cumulative world-wide sales of ReoPro exceed $600
million (the "Milestone Payment"); and possible additional payments totaling
$2.2 million, depending upon regulatory developments in Japan.

    The agreement further provided for revisions to the ReoPro royalties payable
by Centocor to CP III investors through 2007 (the "Retroactive Payments"). Under
the agreement, those royalties would be paid based on revenues from end-sales by
Lilly and other distributors, as opposed to Centocor's revenues on its sales to
distributors. For 1997 and 1998, Centocor would pay an aggregate of 6.5% of the
first $175 million of United States end-sales revenues, 3.25% of such revenues
above $175 million, and 3.25% of foreign end-sales revenues. For 1999 through
2007, Centocor would pay an aggregate of 6.5% of the first $250 million of
United States end-sales revenues, 4% of such revenues above $250 million, and
3.25% of foreign end-sales revenues. The agreement provided that investors would
not receive less than Centocor would otherwise have paid based on Centocor's
sales of ReoPro.

    On June 27, 1997, the Court entered an order: preliminarily approving the
settlement; providing for notice to a class consisting of all holders of CP III
Class A and C limited partnership interests as of the close of business on
January 31, 1997, and all holders of CP III Class B limited partnership
interests as of the close of business on May 31, 1997, and their transferees,
successors, and assigns, other than defendants; and designating the
Partnership's counsel as counsel for the class.

                                        9
<PAGE>

                        PAINEWEBBER R&D PARTNERS II, L.P.
                        (a Delaware Limited Partnership)

                          NOTES TO FINANCIAL STATEMENTS
                                   (UNAUDITED)

(Note 7 Continued)

    Mr. Abdo and Pharmaceutical Partners, L.P., another former limited partner
of CP III, objected to the proposed settlement. They asserted, among other
things, that the consideration is inadequate and that the proposed allocations
of the consideration among the classes of former limited partners of CP III
improperly favors the Partnership. On September 4, 1997, the Court held a
hearing on the objections and reserved decision. On March 15, 1999, the Court
issued a memorandum opinion and order overruling the objections and approving
the settlement as fair and reasonable.

    On January 31, 2000, the Court awarded legal fees and expenses relating to
the Centocor litigation approximating $1,476,000 to the Partnership's counsel
plus interest at the statutory rate. PWDC, which had advanced the funds
necessary to pay the Partnership's legal fees and expenses relating to this
litigation, was reimbursed its applicable share of this award. Legal fees and
expenses in the amount of $650,000 together with interest at the statutory rate
was awarded to counsel for the objectors. On February 17, 2000, the Court signed
an order of final judgment resolving all settlement matters regarding the
litigation with Centocor which was subject to an appeal period which expired on
March 21, 2000 without an appeal being taken. On March 24, 2000, the Partnership
received $3,195,190 representing its allocable share of the Initial Payment
which has been included in income from product development projects in the
accompanying financial statements. (See Note 8 - Subsequent Event).

8.  Subsequent Events

    In April 2000 Centocor remitted to the former limited partners of CP III the
payments due pursuant to the Milestone Payment as well as the Retroactive
Payments due for years 1997 through 1999. The Partnership received $4,064,308
relating to these payments and accrued for such as income from product
development projects in the accompanying financial statements. Additional
amounts relating to the Retroactive Payments for years 1997 through 1999 may be
paid to the Partnership in the future.

    On April 4, 2000, the Partnership and DRI entered into the First Amendment
to the DRI Purchase Agreement whereby the parties agreed to the sale of 7 Class
A and 39 Class C CPIs for an aggregate purchase price of $15,444,800 subject to
adjustment. On April 5, 2000, the Partnership and the Pharma Purchaser entered
into the Amended and Restated Contractual Payment Interest Purchase Agreement
for the sale of 8.75 Class A and 40.75 Class C CPIs for an aggregate purchase
price of $16,416,400 (subject to adjustment) and to distribute to the Pharma
Purchaser an additional 6.25 Class A and 31.25 Class C CPIs. If the sales
contemplated by the foregoing agreements are consummated in accordance with
their terms, the Partnership will have sold all its CPIs relating to the sale of
ReoPro. As of March 31, 2000, the Partnership has not recognized any income
relating to these transactions.

                                       10
<PAGE>

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

Liquidity and Capital Resources

    Partners' capital increased from $1.2 million at December 31, 1999, to $10.5
million at March 31, 2000, resulting from the recognition of net income of $9.3
million (as more fully explained in Results of Operations below).

    The Partnership's funds are invested in a money market fund until cash is
needed to pay for the ongoing management and administrative expenses of the
Partnership or upon the remittance of cash distributions to the Partners. Liquid
assets increased from $0.2 million at December 31, 1999 to $4.4 million at March
31, 2000 resulting primarily from the receipt of payments due from Centocor of
$4.3 million offset by the payment of Partnership expenses of $0.1 million.

Results of Operations

Three months ended March 31, 2000 compared to the three months ended March 31,
1999:

    Net income for the quarters ended March 31, 2000 and 1999 was $9.3 million
and $2.1 million, respectively. The favorable change of $7.2 million resulted
primarily from of an increase in revenues of $7.3 million offset by an increase
in expenses of $0.1 million.

    Revenues for the three months ended March 31, 2000 and 1999 were $9.5
million and $2.2 million, respectively. The increase of $7.3 million was due
from an increase in income from product development projects of $7.9 million
offset by a decrease in unrealized appreciation of marketable securities of $0.6
million. Income from product development projects for the quarters March 31,
2000 and 1999 was $9.4 million and $1.5 million, respectively, resulting
primarily from Partnership income due as a former limited partner of CP III. For
the quarters ended March 31, 2000 and 1999, the Partnership accrued $2.2 million
and $1.5 million, respectively, with regard to the quarterly CPI payments due as
of these dates. In addition, for the three months ended March 31, 2000, the
Partnership received and/or accrued for its allocable share of the payments due
from Centocor pursuant to the settlement agreement aggregating $7.3 million.
Unrealized appreciation for the quarter ended March 31, 1999 was $0.6 million
resulting from the Partnership's investment of 0.24 million shares of Cygnus,
Inc. The market value of the shares increased from $4.875 per share as of
December 31, 1998 to $7.50 per share at March 31, 1999.

    Expenses for the three months ended March 31, 2000 and 1999 were $0.2
million and $0.1 million, respectively. The increase was due primarily to
increased legal fees incurred with respect to the sale of 22 Class A CPIs and
111 Class C CPIs to DRI and the Pharma Purchaser.

                                       11
<PAGE>

(Item 2 Continued)

Year 2000

    Currently, the Partnership utilizes computer programs, through services
provided by a third-party servicing agent. The servicing agent has informed the
Partnership that it has successfully completed a comprehensive plan achieving
Year 2000 compliance. The incremental costs associated with the plan were borne
by the servicing agent.

    The Partnership has not been advised by the Sponsor Companies of any Year
2000 complications experienced by them. The Partnership will continue to monitor
the Sponsor Companies as it relates to this issue.

                                       12
<PAGE>

                            PART II OTHER INFORMATION

Item 1. Legal Proceedings.

      Action Against Centocor, Inc. and Centocor Development Corporation III.

         Information regarding this action was disclosed on the Partnership's
      Form 10-K for the year ended December 31, 1999. On January 31, 2000, the
      Court awarded legal fees and expenses relating to the Centocor litigation
      approximating $1,476,000 to the Partnership's counsel plus interest at the
      statutory rate. Legal fees and expenses in the amount of $650,000 together
      with interest at the statutory rate was awarded to counsel for the
      objectors. On February 17, 2000, the Court signed an order of final
      judgment resolving all settlement matters regarding the litigation with
      Centocor which was subject to an appeal period which expired on March 21,
      2000 without an appeal being taken.

Item 5. Other Information.

         As a former partner of CP III the Partnership is entitled to receive
      from Centocor CPIs relating to the sale of Reopro(TM). The Partnership
      currently owns 22 Class A CPIs and 111 Class C CPIs. On February 17, 2000,
      the Partnership entered into the DRI Purchase Agreement with DRI. Subject
      to the terms and conditions contained in the DRI Purchase Agreement, the
      Partnership agreed to sell to DRI seven Class A CPIs and thirty-seven
      Class C CPIs for an aggregate purchase price of $14,722,400 subject to
      adjustment. The sale is subject to the fulfillment of certain conditions
      including the consent of Centocor and the approval of the Limited
      Partners. The DRI Purchase Agreement amended the agreement between the
      Partnership and DRI on December 17, 1999 for the sale of ten Class A CPIs
      and fifty Class C CPIs. On April 4, 2000, the DRI Purchase Agreement was
      amended for the sale by the Partnership to DRI of seven Class A CPIs and
      thirty-nine Class C CPIs for an aggregate purchase price of $15,444,800
      (subject to adjustment) which is the same per CPI purchase price as per
      the DRI Purchase Agreement. Also, on February 17, 2000, the Partnership
      entered into the Pharma Purchase Agreement whereby the Partnership agreed
      to sell to the Pharma Purchaser four Class A CPIs and nineteen Class C
      CPIs for a purchase price of $7,638,800 subject to adjustment. Also, the
      Partnership agreed to make a distribution in kind to the Pharma Purchaser
      (as the owner of 28.19% of the Units) for an additional four Class A CPIs
      and twenty-two Class C CPIs. Upon receipt of such distribution the Pharma
      Purchaser will waive any right as a Limited Partner of the Partnership to
      receive a cash distribution from the Partnership as a result of the
      transactions contemplated by the DRI Purchase Agreement and the Pharma
      Purchase Agreement. On April 5, 2000, the Pharma Purchase Agreement was
      amended to reflect the sale of 8.75 Class A and 40.75 Class C CPIs for an
      aggregate purchase price of $16,416,400 subject to adjustment which is the
      same per CPI purchase price as per the Pharma Purchase Agreement. In
      addition, the distribution to the Pharma Purchaser was amended to 6.25
      Class A and 31.25 Class C CPIs. The DRI Purchase Agreement and the Pharma
      Purchase Agreement, as amended, may be terminated by the parties if the
      closings of the transactions thereunder do not occur prior to July 15,
      2000. If the sales contemplated by the foregoing agreements are
      consummated in accordance with their terms, the Partnership will have sold
      all its CPIs relating to the sale of ReoPro.

                                       13
<PAGE>

Item 6. Exhibits and Reports on Form 8-K.

       a) Exhibits:

          None

       b) Reports on Form 8-K:

          On February 9, 2000, the Partnership filed a report on Form 8-K
       relating to the discontinuance of the right of Limited Partners to
       transfer Units except for transfers that may occur as a result of the
       laws of descent and distribution or by operation of law.

          On February 17, 2000, the Partnership filed a report on Form 8-K
       relating to the execution of a final judgment by the Court resolving all
       settlement matters in the litigation with Centocor.

          On February 17, 2000, the Partnership filed a report on Form 8-K with
       respect to the execution of an agreement for the sale by the Partnership
       to DRI of certain Class A and Class C CPIs as well as the execution of an
       agreement for the sale and distribution of other Class A and Class C CPIs
       by the Partnership to the Pharma Purchaser.

          On April 7, 2000, the Partnership filed a report on Form 8-K relating
       to the amendment of agreements for the sale and distribution of Class A
       and Class C CPIs to DRI and the Pharma Purchaser previously disclosed by
       the Partnership on a filing dated February 17, 2000.

                                       14
<PAGE>

                                   SIGNATURES


    Pursuant to the requirements of Section 13 or 15(d) 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, on this 15th day of
May 2000.

                  PAINEWEBBER R&D PARTNERS II, L.P.


                  By: PaineWebber Technologies II, L.P.
                      (General Partner)


                  By: PWDC Holding Company
                      (general partner of the General Partner)


                  By: /s/ Dhananjay M. Pai
                      ----------------------------------------
                      Dhananjay M. Pai
                      President*


                  By: /s/ Robert J. Chersi
                      ----------------------------------------
                      Robert J. Chersi
                      Principal Financial and Accounting Officer*

*  The capacities listed are with respect to PWDC Holding Company, the Manager,
   as well as PWDC, the parent company of the Manager.

                                       15