<PAGE>

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



                                  UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB


(Mark One)

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

                  For the quarterly period ended March 31, 2000

[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
    OF 1934

   For the transition period from ___________________ to ____________________

                         Commission file number 0-19724



                       PROTEIN POLYMER TECHNOLOGIES, INC.
        (Exact name of small business issuer as specified in its charter)


           Delaware                                   33-0311631
 (State or other jurisdiction of             (IRS Employer Identification No.)
  incorporation or organization)


                 10655 Sorrento Valley Road, San Diego, CA 92121
                    (Address of principal executive offices)

                                 (858) 558-6064
                           (Issuer's telephone number)


Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 [_]


State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 12, 2000, 18,379,010 shares
of common stock were outstanding.

Transitional Small Business Disclosure Format (check one):   Yes [_]  No [X]

================================================================================
<PAGE>

                       PROTEIN POLYMER TECHNOLOGIES, INC.

                                   FORM 10-QSB

                                      INDEX


<TABLE>
<CAPTION>
                                                                                                      Page No.
                                                                                                      --------
     <S>                                                                                              <C>
     PART I.  FINANCIAL INFORMATION

     Item 1.  Financial Statements (unaudited)

              Condensed Balance Sheets -
                March 31, 2000 and December 31, 1999................................................      3

              Condensed Statements of Operations -
                For the Three Months ended March 31, 2000 and 1999 and the period
                July 6, 1988 (inception) to March 31, 2000..........................................      4

              Condensed Statements of Cash Flows -
                For the Three Months ended March 31, 2000 and 1999 and the period
                July 6, 1988 (inception) to March 31, 2000..........................................      5

              Notes to Condensed Financial Statements...............................................      7

     Item 2.  Management's Discussion and Analysis of Financial Condition and
               Results of Operations................................................................      9


     PART II.  OTHER INFORMATION

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

              Signature ............................................................................     15
</TABLE>

                                       2
<PAGE>

                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                            Condensed Balance Sheets
<TABLE>
<CAPTION>
                                                                                 March 31,      December 31,
                                                                                   2000             1999
                                                                                ------------    ------------
                                                                                (Unaudited)
<S>                                                                             <C>            <C>
ASSETS
Current assets:
   Cash and cash equivalents ................................................   $  2,153,893    $    155,692
   Accounts Receivable ......................................................        574,869            --
   Other current assets .....................................................         19,490          49,266
                                                                                ------------    ------------
Total current assets ........................................................      2,748,252         204,958

   Deposits .................................................................         36,177          36,177
   Notes receivable from officers ...........................................        140,000         140,000
   Equipment and leasehold improvements, net ................................        339,992         360,005
                                                                                ------------    ------------
                                                                                $  3,264,421    $    741,140
                                                                                ============    ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable .........................................................   $    290,042    $    385,932
   Accrued employee benefits ................................................         60,642          84,335
   Other accrued expenses ...................................................         61,778          17,118
   Current portion capital lease obligations ................................         80,493          79,593
   Current portion deferred revenue .........................................        250,000            --
   Deferred rent ............................................................        102,753          95,973
                                                                                ------------    ------------
                                                                                     845,708         662,951
Long-term portion deferred revenue ..........................................        666,667            --
Long-term portion capital lease obligations .................................          4,117          25,088

Stockholders' equity:
   Convertible Preferred Stock, $.01 par value, 5,000,000 shares authorized,
     84,077 and 91,065 shares issued and outstanding at March 31, 2000 and
     December 31, 1999, respectively; liquidation preference - $8,407,700
                                                                                   8,062,272       8,761,072
   Common stock, $.01 par value, 40,000,000 shares authorized, 18,286,510 and
     13,443,510 shares issued and outstanding at March 31, 2000 and December
     31, 1999, respectively .................................................        182,877         134,447
   Additional paid-in capital ...............................................     31,226,747      28,403,077
   Deficit accumulated during development stage .............................    (37,723,967)    (37,245,495)
                                                                                ------------    ------------
   Total stockholders' equity ...............................................      1,747,929          53,101
                                                                                ------------    ------------
                                                                                $  3,264,421    $    741,140
                                                                                ============    ============
</TABLE>

See accompanying notes.

                                       3
<PAGE>

                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                       Condensed Statements of Operations
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                       For the Period
                                                                                        July 6, 1988
                                                             Three Months Ended          (Inception)
                                                                 March 31,              to March 31,
                                                           2000            1999             2000
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
Revenues:
   Contract and licensing revenue ..................        386,574    $       --      $  4,743,859
   Interest income .................................         13,809          13,002       1,134,081
   Product and other income ........................          2,866          22,649         687,184
                                                       ------------    ------------    ------------
Total revenues .....................................        403,249          35,651       6,565,124

Expenses:
   Research and development ........................        554,187         714,132      25,308,268
   Selling, general and administrative .............        327,532         427,619      15,032,435
                                                       ------------    ------------    ------------
Total expenses .....................................        881,719       1,141,751      40,340,703
                                                       ------------    ------------    ------------
Net loss ...........................................       (478,470)     (1,106,100)    (33,775,579)

Undeclared dividends on preferred stock ............         69,220          68,459       5,308,874
                                                       ------------    ------------    ------------
Net loss applicable to common shareholders .........   $   (547,690)   $ (1,174,559)   $(39,084,453)
                                                       ============    ============    ============
Net loss per common share - basic and diluted ......   $      (0.04)   $      (0.11)
                                                       ============    ============
Shares used in computing net loss per common share -
   basic and diluted ...............................     15,320,744      10,940,748
                                                       ============    ============
</TABLE>

See accompanying notes.

                                       4
<PAGE>

                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                       Condensed Statements of Cash Flows
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                        For the Period
                                                                                         July 6, 1988
                                                              Three Months Ended         (Inception)
                                                                   March 31,             to March 31,
                                                             2000            1999            2000
                                                         ------------    ------------    ------------
<S>                                                      <C>             <C>             <C>
OPERATING ACTIVITIES
Net loss .............................................   $   (478,470)   $ (1,106,100)   $(33,781,499)
Adjustments to reconcile net loss to net cash used for
   operating activities:
     Stock issued for compensation and interest ......           --            18,000         131,515
     Depreciation and amortization ...................         43,963          84,592       1,936,800
     Write-off of purchased technology ...............           --              --           503,500
       Deferred revenue ..............................        916,667            --           916,667
       Deferred rent .................................          6,780            --           102,753
     Changes in assets and liabilities:
       Deposits ......................................           --              (800)        (36,177)
       Notes receivable from officers ................           --             1,000        (140,000)
       Other current assets ..........................       (545,093)        (10,519)       (594,359)
       Accounts payable ..............................        (95,890)        (45,902)        290,042
       Accrued employee benefits .....................        (23,693)         11,032          60,642
       Other accrued expenses ........................         44,660           4,378          61,778
                                                         ------------    ------------    ------------
 Net cash used for operating activities ..............       (131,076)     (1,044,319)    (30,548,338)

INVESTING ACTIVITIES
Purchase of technology ...............................           --              --          (570,000)
Purchase of equipment and improvements ...............        (23,951)        (22,282)     (1,834,765)
Purchases of short-term investments ..................           --              --       (16,161,667)
Sales of short-term investments ......................           --              --        16,161,667
                                                         ------------    ------------    ------------
Net cash provided by (used for) investing activities..   $    (23,951)   $    (22,282)   $ (2,404,765)
                                                         ------------    ------------    ------------
</TABLE>

                                       5
<PAGE>

                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                  Condensed Statements of Cash Flows, continued
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                      For the Period
                                                                                       July 6, 1988
                                                            Three Months Ended          (Inception)
                                                                 March 31,             to March 31,
                                                           2000            1999            2000
                                                       ------------    ------------    ------------
<S>                                                    <C>             <C>             <C>
FINANCING ACTIVITIES
Net proceeds from exercise of options and warrants,
   and sale of common stock ........................   $  2,173,299    $      8,770    $ 19,710,966
Net proceeds from issuance of preferred stock.......           --              --        14,290,160
Net proceeds from convertible notes and
   detachable warrants .............................           --              --         1,068,457
Payments on capital lease obligations ..............        (20,071)        (20,204)       (204,160)
Payment on note payable ............................           --              --          (242,750)
Proceeds from note payable .........................           --              --           484,323
                                                       ------------    ------------    ------------
Net cash provided by (used for) financing activities      2,153,228         (11,434)     35,106,996
                                                       ------------    ------------    ------------
Net increase (decrease) in cash and cash equivalents      1,998,201      (1,078,035)      2,153,893
Cash and cash equivalents at beginning of period....        155,692       1,383,148            --
                                                       ------------    ------------    ------------
Cash and cash equivalents at end of period .........   $  2,153,893    $    305,113    $  2,153,893
                                                       ============    ============    ============


SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Equipment purchased by capital leases ..............   $       --      $       --      $    288,772
Interest paid ......................................          2,731           5,270         120,642
Conversion of Series E preferred stock
   to common stock .................................        698,800         200,000       1,912,550
Series D stock issued for Series C stock ...........           --              --         2,073,925
Series C dividends paid with Series D stock ........           --              --           253,875
Series D dividends paid with common stock ..........   $       --      $       --      $    422,341
</TABLE>


See accompanying notes.

                                       6
<PAGE>

                       PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                     Notes to Condensed Financial Statements
                                   (unaudited)

                                 March 31, 2000


1.  BASIS OF PRESENTATION

The condensed financial statements of Protein Polymer Technologies, Inc. (the
"Company") for the three months ended March 31, 2000 and 1999 are unaudited.
These financial statements reflect all adjustments, consisting of only normal
recurring adjustments which, in the opinion of management, are necessary to
state fairly the financial position at March 31, 2000 and the results of
operations for the three months ended March 31, 2000 and 1999. The results of
operations for the three months ended March 31, 2000 are not necessarily
indicative of the results to be expected for the year ended December 31, 2000.
For more complete financial information, these financial statements and the
notes thereto should be read in conjunction with the audited financial
statements included in the Company's Annual Report on Form 10-KSB for the year
ended December 31, 1999, filed with the Securities and Exchange Commission.

2.  NET LOSS PER SHARE

Net loss per share is computed using the weighted average number of common
shares outstanding during the period. The loss figures used for this calculation
recognize accumulated dividends on the Company's Series D and Series F Preferred
Stock. Such dividends are payable when declared by the Board of Directors in
cash or common stock.

3.  BASIC AND DILUTED LOSS PER SHARE

In accordance with FAS No. 128, the Company is required to present basic and
diluted earnings per share if applicable. Basic and diluted earnings per share
are determined based on the weighted average number of shares outstanding during
the period. Diluted earnings per share also includes potentially dilutive
securities such as options and warrants outstanding and securities convertible
into common stock.

Both the basic and diluted loss per share for the three months ended March 31,
2000 and 1999 are based on the weighted average number of shares of common stock
outstanding during the periods. Since potentially dilutive securities have not
been included in the calculation of the diluted loss per share for both periods
as their affect is antidilutive, there is no difference between the basic and
diluted loss per share calculations.

4.  REVENUE AND EXPENSE RECOGNITION

License fees and research and development contract revenues are recorded as
earned based on the performance requirements of the contracts. If the research
and development activities are not successful, the Company is not obligated to
refund payments previously received. Milestone payments are recorded as revenue
when received as they have not been refundable and the Company has no future
performance obligations. Payments received in advance of amounts earned are
recorded as deferred revenue. Research and development costs are expensed as
incurred.

                                       7
<PAGE>

                      PROTEIN POLYMER TECHNOLOGIES, INC.
                          (A Development Stage Company)

                     Notes to Condensed Financial Statements
                                   (unaudited)


5.  NOTE RECEIVABLE WITH OFFICER

A loan for $140,000, secured by a pledge of stock, was made to an officer of the
Company on April 16, 1997, solely to meet tax obligations arising from the
exercise of a stock option. Interest accrues at the annual rate of 8% on the
unpaid principal balance. In July 1999, the loan term was extended until April
2005.

6.  EXERCISE AND EXCHANGE OF SERIES G WARRANTS

During February 2000, holders of warrants issued in connection with the sale of
Series G Preferred Stock exercised their warrants to purchase common stock which
were due to expire in September, 2000. The exercise price was $0.50 per share.
As an inducement to exercise the warrant early, the Company offered each holder
a new one year warrant for a similar number of shares at an exercise price of
$1.50 per share. As a result the Company raised $2.1 million (less expenses).
The newly issued warrants will expire on the last day of February 2001.

7.  FEMCARE AGREEMENTS

On January 26, 2000, PPTI and Femcare Ltd. ("Femcare"), headquartered in
Nottingham, Great Britain, executed three related agreements involving the grant
of a license to Femcare to register and market PPTI's urethral bulking agent for
the treatment of female stress urinary incontinence in Europe and Australia. In
addition to the License and Development Agreement, PPTI agreed in a separate
Supply Agreement to provide final product to Femcare, and if unable to do so,
agreed to make the manufacturing methods and materials available to Femcare as
specified in a separate Escrow agreement.

In addition to agreeing to purchase the final product from PPTI for a defined
percentage of the revenues received by Femcare from the sale of the incontinence
product, Femcare agreed to pay PPTI an up front license fee of $1 million in two
installments and agreed to pay PPTI a royalty on revenues received from the sale
of the incontinence product. The agreements specify the performance benchmarks
and timelines for each party, the definition of yearly minimum royalties and
minimum product purchases, and the methods and procedures for determining
product manufacturing requirements. The license grant from PPTI to Femcare is
for the greater of 20 years or the date upon which the last patent included
within the license grant for the territories covered expires, subject to meeting
various sales requirements, and is exclusive in the territories covered, subject
to certain conditions being maintained. The parties agreed to cooperate
extensively in the clinical testing and the registration of the product with the
appropriate governmental authorities. These activities are scheduled to take
place over a period of approximately three years. Accordingly, the Company has
recorded the $1 million up front payment as deferred revenue, and is recognizing
it as license revenue ratably over a period of three years. In the period ended
March 31, 2000, the Company recognized $83,334 of revenue related to this
agreement.

8.  SALE OF IN VITRO CELL CULTURE BUSINESS TO SANYO CHEMICAL INDUSTRIES, LTD.
            --------

On February 18, 2000, PPTI and Sanyo Chemical Industries, Ltd. ("Sanyo") of
Kyoto, Japan, executed an agreement involving the grant of a royalty-free
license to Sanyo for exclusive worldwide rights to make and sell ProNectin(R) F
and ProNectin(R) L and derivative products for in vitro cell culture and related
applications. PPTI received net proceeds of $284,000 from Sanyo for the issuance
of the license, including assignment of the ProNectin(R) and SmartPlastic(R)
trademarks and transfer of remaining product inventory. The agreement remains in
effect until the last patent included within the license grant expires.

9.  LIQUIDITY

The Company believes its existing available cash and cash equivalents as of
March 31, 2000, plus contractual amounts receivable, is sufficient to meet its
anticipated capital requirements until January 2001. Substantial additional
capital resources will be required to fund continuing expenditures related to
the Company's research, development, clinical trials, and product marketing
activities. If adequate funds are not available, the Company will be required to
significantly curtail its operating plans and may have to sell or license out
significant portions of the Company's technology or potential products.

                                       8
<PAGE>

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

FORWARD LOOKING STATEMENTS

CERTAIN STATEMENTS CONTAINED OR INCORPORATED BY REFERENCE IN THIS QUARTERLY
REPORT ON FORM 10-QSB CONSTITUTE "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. SUCH FORWARD-LOOKING
STATEMENTS INVOLVE KNOWN AND UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS
WHICH MAY CAUSE 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 FORWARD-LOOKING STATEMENTS.
SUCH RISKS AND UNCERTAINTIES INCLUDE, AMONG OTHERS, HISTORY OF OPERATING LOSSES,
RAISING ADEQUATE CAPITAL FOR CONTINUING OPERATIONS, EARLY STAGE OF PRODUCT
DEVELOPMENT, SCIENTIFIC AND TECHNICAL UNCERTAINTIES, COMPETITIVE PRODUCTS AND
APPROACHES, RELIANCE UPON COLLABORATIVE PARTNERSHIP AGREEMENTS AND FUNDING,
REGULATORY TESTING AND APPROVALS, PATENT PROTECTION UNCERTAINTIES AND
MANUFACTURING SCALE-UP AND REQUIRED QUALIFICATIONS. WHILE THESE STATEMENTS
REPRESENT MANAGEMENT'S CURRENT JUDGMENT AND EXPECTATIONS FOR THE COMPANY, SUCH
RISKS AND UNCERTAINTIES COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM ANY
FUTURE RESULTS SUGGESTED HEREIN. THE COMPANY UNDERTAKES NO OBLIGATION TO RELEASE
PUBLICLY THE RESULTS OF ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO
REFLECT EVENTS OR CIRCUMSTANCES ARISING AFTER THE DATE HEREOF.

GENERAL OVERVIEW

Incorporated in 1988, Protein Polymer Technologies, Inc. has concentrated its
research and development efforts on establishing a scientific and technical
leadership position in the production and development of unique protein-based
materials. The Company has identified biomedical market and product
opportunities for further research and development that management believes will
exploit the unique properties of the Company's technology to competitive
advantage. The Company has been unprofitable to date, and as of March 31, 2000
has an accumulated deficit of $37,723,967.

The Company's product candidates for surgical repair, augmentation and
regeneration of human tissues are in various stages of research and development.
Its more advanced programs are in the areas of bulking agents for soft tissue
augmentation, particularly for use in urethral tissue for the treatment of
female stress incontinence and in dermal tissue for cosmetic and reconstructive
procedures. The Company currently is devoting the majority of its resources to
the development and registration of these products, with the greatest emphasis
on the incontinence product.

In December 1999, the Company initiated human clinical testing of its urethral
bulking agent for the treatment of female stress urinary incontinence. The
August 1999 approval by the U.S. Food and Drug Administration ("FDA") of the
Company's Investigational Device Exemption ("IDE")

                                       9
<PAGE>

allows PPTI to test the safety and effectiveness of the incontinence product in
women over the age of 40 who have become incontinent due to the shifting of
their bladder or the weakening of the muscle at its base that controls the flow
of urine, or both problems combined. The Company estimates that more than 2.5
million women begin to experience stress urinary incontinence in the United
States each year. In most untreated cases, the problem becomes progressively
more pronounced. Due to limited efficacy or invasiveness of current treatments,
only a small proportion of the women experiencing stress urinary incontinence
are clinically treated, relying instead on pads and plugs and the like that only
address the symptoms. In contrast, PPTI's product is injected, typically in an
outpatient procedure, into urethral tissue at the base of the bladder forming a
solid implant that provides support to the muscles controlling the flow of
urine. The Company believes that its product will prove to be easy for the
physician to use, offer enduring effectiveness, and avoid most of the other
limitations of urethral bulking products on the market or in development.

In January 2000, PPTI established a strategic alliance with Femcare, Ltd. for
the commercialization of the incontinence product in Europe and Australia. In
the agreement, Femcare is responsible for clinical testing, regulatory approval,
and product sales and marketing within these territories, and PPTI is
responsible for product manufacturing. Contingent on successful clinical trials
commercialization of the product in Europe is expected to begin more than a year
before approval for marketing the product in the United States can be obtained.
See also "Femcare Agreements" in the Notes to the Financial Statements. PPTI
also is in discussions with several companies regarding the establishment of
strategic alliances for commercializing the incontinence product in the United
States and other markets outside the Femcare territories.

The tissue augmentation materials and technology underlying the incontinence
product have the potential to be effective and desirable in a number of other
clinical applications. Assuming additional financial resources are available,
the Company intends to submit an additional IDE to the FDA in 2000 to obtain
approval to begin human clinical testing of its dermal bulking agent for use in
cosmetic and reconstructive surgery applications. PPTI began studies to identify
its most promising biomaterial formulations for use in these soft tissue
augmentation products in 1996, devoted increasing resources through 1997, 1998
and 1999, and at present is focused primarily on completing human clinical
testing of the incontinence product.

The Company's first commercial products, ProNectin F and SmartPlastic, are used
by biologists and cell culture laboratories, principally to grow mammalian cells
for biomedical research purposes. In February 2000, the Company licensed the
rights for the manufacture and sale of these products for use in in vitro cell
culture, including the transfer of all existing inventory, to a third party. See
also "Sale of In Vitro Cell Culture Business to Sanyo Chemical Industries, Ltd."
in the Notes to the Financial Statements.

The Company's other advanced product technology is in the area of tissue
adhesives and sealants. Currently the Company's research and development in this
area is focused on the repair of spinal discs for the treatment of lower back
pain. The Company's strategy with most of its programs is to enter into
collaborative development agreements with major medical product marketing and
distribution companies. Although these relationships, to the extent any are
consummated, may provide significant near-term revenues through up-front
licensing fees, research and development reimbursements and milestone payments,
the Company expects to continue incurring operating losses for the next several
years.

As of March 31, 2000 the Company had cash and cash equivalents totaling
$2,154,000, and $573,000 in receivables, primarily from licensing and R&D
agreements with Femcare, Ltd. for the European and Australian marketing rights
to the stress urinary incontinence bulking product, and from Perkin-Elmer for a
research and development project and commercialization option. The Company
believes its available cash and cash equivalents and future contractual R&D
payments would be sufficient to meet its anticipated capital requirements
through January 2001. The

                                       10
<PAGE>

Company will continue to attempt to raise additional funds for continuing
operations through private or public offerings and collaborative agreements. See
"Liquidity and Capital Resources" below for additional information and a
description of the associated risks.

To the extent sufficient resources are available, the Company continues to
research the use of its protein polymers for other tissue repair and medical
device applications, principally for use in tissue engineering matrices and drug
delivery devices.

PPTI is aggressively pursuing domestic and international patent protection for
its technology, making claim to an extensive range of recombinantly prepared
structural and functional proteins, methods for preparing synthetic repetitive
DNA, methods for the production and purification of protein polymers, end-use
products incorporating such materials and methods for their use. To date, the
United States Patent and Trademark Office ("USPTO") has issued 18 patents to the
Company, four of which have been issued in 2000. In addition, PPTI has filed
corresponding patent applications in other relevant commercial jurisdictions.

In April and May of 1998, the Company raised approximately $5.4 million from the
sale of 54,437.5 shares of the Company's unregistered Series E Convertible
Preferred Stock ("Series E Stock") priced at $100 per share with warrants to
purchase an aggregate of 3,266,250 shares of common stock to a small group of
institutional and accredited investors. In connection with this transaction, the
Company issued 26,240 shares of Series F Convertible Preferred Stock in exchange
for the same number of shares of outstanding Series D Convertible Preferred
Stock.

Between April 1 and April 15, 1999, the Company received approximately $508,000
from the exercise of redeemable, publicly traded, warrants to purchase common
stock originally issued as part of PPTI's initial public offering. Following the
close of business on April 15, the remaining unexercised redeemable, publicly
traded, warrants expired. On May 12, 1999, the Company received approximately
$416,000 from the exercise of warrants to purchase common stock issued in
conjunction with the private placement of the Company's Series E Convertible
Preferred Stock.

On August 16, 1999, the Company received $1,775,000 for 17,750 shares of Series
G Preferred Stock from several institutional and accredited individual investors
following the 10 day stockholder notification period required by the NASD prior
to the sale. On September 15, 1999, the Company received an additional $325,000
for 3,250 shares of Series G Preferred Stock, for total proceeds of $2,100,000.
Each share of Series G Convertible Preferred Stock was priced at $100 per share.
Each share can be converted at any time by the holder into common stock at a
price of $0.50 per share, subject to certain antidilution adjustments. Each
share of Preferred Stock also received a common stock warrant, exercisable for
12 months, that allows the holder to acquire 200 shares of PPTI common stock at
a price of $0.50 per share.

During February 2000, holders of warrants issued in connection with the sale of
Series G Preferred Stock exercised their warrants to purchase common stock which
were due to expire in September, 2000. The exercise price was $0.50 per share.
As an inducement to exercise the warrant early, the Company offered each holder
a new one year warrant for a similar number of shares at an exercise price of
$1.50 per share. As a result the Company raised $2.1 million (less expenses).
The newly issued warrants will expire on the last day of February 2001.

RESULTS OF OPERATIONS

The Company received $386,574 in contract and licensing revenue for the three
months ended March 31, 2000 as compared to no contract or licensing revenue for
the three months ended March 31, 1999. The increase in contract and licensing
revenue primarily represents the amortized portion of an up front license
payment of $1 million (being recognized ratably over a period of three years)
from Femcare Ltd. for the commercial rights to PPTI's incontinence product in
Europe and Australia, payments from Sanyo Chemical Industries Ltd. for the
comprehensive license to PPTI's

                                       11
<PAGE>

in vitro cell culture business and existing product inventory, and initial R&D
payments from Perkin-Elmer for a development project. The lack of revenue in
1999 reflects primarily the termination of research and development
reimbursements from various operating entities of the Johnson & Johnson Company,
including Ethicon, Inc.

Interest income was $14,000 for the three months ended March 31, 2000 versus
$13,000 for the same period in 1999.

For the three months ended March 31, 2000 and 1999, sales and license fees from
the Company's ProNectin(R) and SmartPlastic(R) products were $3,000 and $23,000,
respectively. The Company incurred no cost of sales nor royalty payments for the
three months ended March 31, 2000, compared to a royalty expense of $6,000 the
three month period ended March 31, 1999. The decline in all of these items was
due to the sale of this business to Sanyo Chemical Industries, Ltd. in February
2000.

Research and development expenses for the three months ended March 31, 2000 were
$554,000, compared to $714,000 for the same period in 1999, a 22% decrease. The
decrease was primarily attributable to downsizing reductions in personnel and
expenditures implemented in June 1999, and completion of external contracts and
consulting services related to the Company's soft tissue augmentation program,
including preclinical testing and preparation of the Investigational Device
Exemption approved by the Food and Drug Administration ("FDA") in August 1999
granting permission to begin human clinical testing. The Company expects, in
general, that its research and development, human clinical testing, and
manufacturing expenses will increase over time if its incontinence product and
other products in development successfully progress and additional capital is
obtained.

Selling, general and administrative expenses for the three months ended March
31, 2000 were $328,000, as compared to $428,000 for the same period in 1999, a
23% decrease. This decrease was due both to the downsizing in 1999 and to a
reduction in legal and other professional services primarily related to
Securities and Exchange Commission filings and reduced investor relations
expenses. The Company expects its selling, general and administrative expenses
remain largely unchanged in the near term, but will increase in the future as
support for its research and development and manufacturing efforts may require
and to the extent additional capital is obtained.

For the three months ended March 31, 2000, the Company recorded a net loss
applicable to common shareholders of $547,690, or $0.04 per share compared to a
loss of $1,175,000, or $0.11 per share for the same period in 1999. Also
included in each of the three month periods of 2000 and 1999 was $69,000 and
$68,000, respectively, for undeclared dividends related to the Company's
preferred stock.

In general, there can be significant fluctuation in revenue from quarter to
quarter due to variability in outside contract and licensing payments. In
general, the Company expects to incur increasing operating losses in the future
(to the extent additional capital is obtained), due primarily to increases in
the Company's soft tissue augmentation program's development, manufacturing and
business development activities. The Company's results depend on its ability to
establish strategic alliances and generate contract revenues, increased
research, development and manufacturing efforts, preclinical and clinical
product testing and commercialization expenditures, expenses incurred for
regulatory compliance and patent prosecution, and other factors.

To date the Company believes that inflation and changing prices have not had a
material effect on its continuing operations.

                                       12
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

As of March 31, 2000, the Company had cash and cash equivalents of $2,154,000 as
compared to $156,000 at December 31, 1999. As of March 31, 2000, the Company had
working capital of $1,902,544 as compared to ($458,000) at December 31, 1999.
The difference is due primarily to the completion in January 2000 of the
strategic alliance with Femcare, Ltd., and in February 2000 from the sale of the
in vitro cell culture business to Sanyo Chemical Industries, Ltd., and the
receipt of $2,100,000 from the exercise of common stock warrants granted in
association with the Series G Convertible Preferred Stock.

The Company had long-term debt obligations as of March 31, 2000 of $4,000 in the
form of capital lease obligations, versus $25,000 as of December 31, 1999. For
the three months ending March 31, 2000, the Company's expenditures for capital
equipment and leasehold improvements totaled $24,000, compared with $22,000 for
the same period last year. The Company is expecting to increase its capital
expenditures in the next few quarters (to the extent additional capital is
obtained), as the Company improves existing space to expand capacity to meet
materials manufacturing requirements for clinical testing. The Company may enter
into additional capital lease arrangements if available at appropriate rates and
terms.

The Company believes its existing available cash and cash equivalents, in
combination with anticipated contract research payments and revenues received
from the transfer of clinical testing materials, will be sufficient to meet its
anticipated capital requirements until January 2001. Substantial additional
capital resources will be required to fund continuing expenditures related to
the Company's research, development, manufacturing and business development
activities. The Company believes there may be a number of alternatives to
meeting the continuing capital requirements of its operations, including
additional collaborative agreements and public or private financings. The
Company is currently in discussions at various stages with several potential
collaborative partners that, based on the results of various in vitro and in
vivo product performance evaluations, could result in generating revenues in the
form of license fees, milestone payments or research and development
reimbursements. However, there can be no assurance that any of these fundings
will be consummated in the necessary time frames needed for continuing
operations or on terms favorable to the Company. If adequate funds are not
available, the Company will be required to significantly curtail its operating
plans and may have to sell or license out significant portions of the Company's
technology or potential products.

                                       13
<PAGE>

                           PART II. OTHER INFORMATION



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K


         a.  Exhibits:

             Exhibit
             Number        Description
             -------       -----------
               27          Financial Data Schedule.


         b.  Reports on Form 8-K

             None.

                                       14
<PAGE>

                                    SIGNATURE


In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.


                                     PROTEIN POLYMER TECHNOLOGIES, INC.



     Date  May 15, 2000                  By  /s/  J. Thomas Parmeter
           ------------                      -----------------------
                                              J. Thomas Parmeter
                                              Chairman of the Board, Chief
                                              Executive Officer, President


     Date  May 15, 2000                  By  /s/  Janis Y. Neves
           ------------                      -------------------
                                              Janis Y. Neves
                                              Director of Finance, Controller
                                              and Assistant Secretary

                                       15
<PAGE>

                                  EXHIBIT INDEX




     Exhibit                                                      Sequentially
     Number           Description                                 Numbered Page
     -------          -----------                                 -------------

       27             Financial Data Schedule.

                                       16