<PAGE>   1
                                                                   Page 1 of 12

                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC. 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, 1997
                                            -------------------------

                                       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       0-15070
                                                -----------------

                           Alpha 1 Biomedicals, Inc.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

           Delaware                                    52-1253406
-------------------------------        ---------------------------------------
(State or other jurisdiction of        (I.R.S. Employer Identification Number)
incorporation or organization)

                            6707 Democracy Boulevard
                                    Suite 111
                            Bethesda, MD 20817-1129
          ------------------------------------------------------------
          (Address of principal executive offices, including zip code)

                                 (301) 564-4400
               ---------------------------------------------------
               (Registrants telephone number, including area code)


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

         As of May 14, 1997, 11,977,429 shares of the registrant's common stock,
par value $.001 per share, were issued and outstanding.

<PAGE>   2

                                                                   Page 2 of 12


                            ALPHA 1 BIOMEDICALS, INC.

                                    FORM 10-Q

                          QUARTER ENDED March 31, 1997

                                      INDEX
<TABLE>
<CAPTION>

                                                                                                 Page No.
Part I.   Financial Information                                                                 ---------
<S>       <C>                                                                                  <C>
          Item 1.  Financial Statements
          
                   Balance Sheets at March 31, 1997          
                   (unaudited) and December 31, 1996         
                   (audited)                                                                         3
          
                   Statements of Operations for the three-         
                   months periods ended March 31, 1997             
                   and 1996 (unaudited)                                                              4
          
                   Statements of Cash Flows for the three-         
                   month periods ended March 31, 1997 and          
                   1996 (unaudited)                                                                  5
                                                                   
                   Notes to Financial Statements                                                   6-7
          
          Item 2.  Management's Discussion and Analysis of
                   Financial Condition and Results of         
                   Operations                                                                      8-10
          
Part II.  Other Information
          
          Item 6.  Exhibits and Reports on Form 8-K                                                 11
          
Signatures                                                                                          12

</TABLE>


<PAGE>   3

                                                                    Page 3 of 12

                                       
                         Part 1. Financial Information

                           ALPHA 1 BIOMEDICALS, INC.
                                BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                  March 31,             December 31,
                                                                                     1997                   1996
                                                                                     ----                   ----
                                                                                 (unaudited)

ASSETS
------
<S>                                                                       <C>                     <C>         

Current assets
      Cash and cash equivalents                                            $           107,370     $              153,725
      Prepaid insurance                                                                 41,793                     61,048
      Other current assets                                                           -                              3,677
                                                                           --------------------    -----------------------

             Total current assets                                                      149,163                    218,450

Fixed assets, net                                                                        3,961                      6,344
Due from related party                                                                  72,613                     72,643
Other assets                                                                            15,831                     15,831
                                                                           --------------------    -----------------------

             Total assets                                                  $           241,568     $              313,268
                                                                           ====================    =======================

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
----------------------------------------------

Current liabilities
      Accounts payable                                                     $           184,162     $              165,084
      Accrued expenses                                                                 295,224                    463,393
      Letter agreements with vendors                                                 1,306,257                  1,323,022
                                                                           --------------------    -----------------------

             Total current liabilities                                               1,785,643                  1,951,499
                                                                           --------------------    -----------------------


Stockholders' equity (deficit)
      Preferred stock, $.001 par value per share,
       1,000,000 authorized; no shares issued                                        -                         -
      Common stock, par value $.001 per share,
       20,000,000 shares authorized; 11,477,429 and 9,102,429 
        issued and outstanding, respectively                                            11,477                      9,102
      Additional paid-in capital                                                    35,915,789                 35,613,164
      Accumulated deficit                                                          (37,471,341)               (37,260,497)
                                                                           --------------------    -----------------------

             Total stockholders' equity (deficit)                                   (1,544,075)                (1,638,231)
                                                                           --------------------    -----------------------

             Total liabilities and stockholders' equity (deficit)          $           241,568     $              313,268
                                                                           ====================    =======================

</TABLE>

<PAGE>   4

                                                                   Page 4 of 12


                           ALPHA 1 BIOMEDICALS, INC.
                           STATEMENTS OF OPERATIONS


<TABLE>
<CAPTION>
                                                              Three months ended
                                                                  March 31,
                                                 ---------------------------------------------

                                                           1997                  1996
                                                           ----                  ----
                                                                 (unaudited)

<S>                                              <C>                      <C>      
Revenues                                         $              9,229     $             8,288

Expenses
     Research and product
      development                                              39,336                 787,528
     General and administrative                               145,925                 230,919
                                                 ---------------------    --------------------

Total expenses                                                185,261               1,018,447
                                                 ---------------------    --------------------

Operating loss                                               (176,032)             (1,010,159)
Loss on sale of VTI                                         -                         (34,028)
Interest expense                                              (35,043)                (29,175)
Interest income                                                   231                   3,599
                                                 ---------------------    --------------------

Net loss                                         $           (210,844)    $        (1,069,763)
                                                 =====================    ====================

Net loss per common share                        $              (0.02)    $             (0.12)
                                                 =====================    ====================


Weighted average number
 of common shares outstanding                               9,746,873               8,977,429
                                                 =====================    ====================

</TABLE>


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                                                                   Page 5 of 12


                          ALPHA 1 BIOMEDICALS, INC.
                           STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
                                                                                       Three months ended
                                                                                            March 31,
                                                                          --------------------------------------------
                                                                                   1997                    1996
                                                                                   ----                    ----
                                                                                            (unaudited)
<S>                                                                       <C>                     <C>
Cash flows from operating activities:
     Net loss                                                             $          (210,844)    $        (1,069,763)

Adjustments to reconcile net loss to net
     cash used in operating activities:
         Depreciation                                                                   2,383                   6,410
         Amortization                                                               -                          64,672
         Litigation settlement in common stock                                        105,000                 (60,000)
         Changes in operating assets and liabilities:
              Decrease in prepaid insurance                                            19,255                  22,259
              Decrease in other current assets                                          3,677                   1,947
              Decrease in due from related party                                           30                   7,826
              Increase (decrease) in accounts payable                                  19,078                (124,177)
              (Decrease) increase in accrued expenses                                (168,169)                163,850
              (Decrease) increase in letter agreements with vendors                   (16,765)                447,635
                                                                          --------------------    --------------------

Net cash used in operating activities                                                (246,355)               (539,341)
                                                                          --------------------    --------------------

Cash flows from investing activities:
     Sale of short term investments, net                                            -                         284,538
                                                                          --------------------    --------------------

Net cash provided by investing activities                                           -                         284,538
                                                                          --------------------    --------------------

Cash flows from financing activities:
     Proceeds from issuance of common stock/warrants                                  200,000               -
                                                                          --------------------    --------------------

Net cash provided by financing activities                                             200,000               -
                                                                          --------------------    --------------------

Net decrease in cash and cash equivalents                                             (46,355)               (254,803)

Cash and cash equivalents at beginning of period                                      153,725                 546,797
                                                                          --------------------    --------------------

Cash and cash equivalents at end of period                                $           107,370     $           291,994
                                                                          ====================    ====================
</TABLE>



<PAGE>   6


                                                                   Page 6 of 12


                            ALPHA 1 BIOMEDICALS, INC.

                          NOTES TO FINANCIAL STATEMENTS


Alpha 1 Biomedicals, Inc. (the "Company"), a Delaware corporation, was
incorporated in 1982. The Company operates predominantly in a single industry
segment, the biotechnology industry, which consists of researching and
developing new pharmaceutical products for the treatment of diseases or
conditions that arise as a result of immune system disorders, including chronic
viral infections, cancer and autoimmune disease.

The Company delayed its development program for Thymosin beta 4 during 1996 and
has no products that have received regulatory approval. The Company has not
generated significant revenues from operations and does not anticipate
generating product revenues for the foreseeable future. The Company will require
substantial funding in order to re-activate and conduct its research and
development activities and to manufacture and market the products which the
Company intends to develop. Management plans to continue to pursue strategic
alliances or other partnership arrangements with entities interested in and with
resources to develop Thymosin beta 4, or other business transactions which would
allow the Company to generate resources to assure continuation of the Company's
operations.

On March 12, 1997, the Company completed a private placement in which it raised
$200,000 through the sale of four units, each consisting of 500,000 shares of
Common Stock and 165,000 Class D Warrants having an exercise price of $0.10 per
warrant and a term of ten years. Subsequent to the close of the quarter, the
Company raised an additional $50,000 through the sale of one unit on
identical terms. The proceeds will be used in part to initiate preclinical
animal studies at a major United States university using the Company's product,
Thymosin beta 4, and to fund current operations. Cash balances at March 31, 1997
total $107,370. Current cash balances will be insufficient to satisfy operating
requirements beyond May 1997.

In the event that substantial funding is not obtained, the Company likely will
be forced to discontinue operations. During 1996, the board of directors
approved a plan which provided for the termination of all ongoing research and
development activities, a reduction of leased space, a reduction of certain
salaries and the severance of administrative staff. Also, during 1996,
management reached agreements with its major vendors to defer approximately
$1,323,000 in payments that are due in exchange for a commitment to the vendors
to make payments from revenues to be received by the Company in the future under
the SciClone license agreement until the full amount of the liabilities have
been liquidated.

Should the Company obtain substantial additional funding, other factors
including competition, dependence on third parties, uncertainty regarding
patents, protection of proprietary rights, manufacturing of peptides and
technology obsolescence could have a significant impact on the Company and its
operations.


<PAGE>   7

                                                                   Page 7 of 12



Financial Statements

         The Balance Sheet as of March 31, 1997, the Statement of Operations for
the three-month periods ended March 31, 1997 and 1996, and the Statements of
Cash Flows for the three-month periods ended March 31, 1997 and 1996, have been
prepared without audit. In the opinion of the management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly the
financial position at March 31, 1997 and the results of operations and changes
in cash flows for such period have been made. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted.
These financial statements should be read in conjunction with the financial
statements and notes thereto included in the Company's December 31, 1996 audited
financial statements. The results of operations for the three-month period ended
March 31, 1997, are not necessarily indicative of the operating results for the
full year.  Certain prior year amounts have been reclassified to conform with
current year presentation.

Forward Looking Statements

Any statements which are not actual facts contained in this document are forward
looking statements that involve risks and uncertainties, including but not
limited to, those relating to product demand, pricing, market acceptance, the
effect of economic conditions, intellectual property rights and litigation,
clinical trials, governmental regulations, competitive products, risks in
product and technology development, the results of financing efforts, the
ability to complete transactions and other risks identified in the Company's
Securities and Exchange Commission filings.



<PAGE>   8

                                                                   Page 8 of 12



                            ALPHA 1 BIOMEDICALS, INC.
Item 2.

           Management's Discussion and Analysis of Financial Condition
                            and Results of Operations

      Results of Operations for the Three-Month Period Ended March 31, 1997
             Compared to the Three-Month Period Ended March 31, 1996


Revenues. Revenues for the three-month period ended March 31, 1997 were $9,229
as compared to $8,288 during the comparable period a year earlier. Current
period revenues consisted solely of royalty payments whereas the comparable 
period a year earlier consisted of $4,288 in royalty payments and $4,000
received under a consulting agreement.

Expenses. Expenses for the three-month period ended March 31, 1997 were
$185,261, a decrease of $833,186 from the comparable period a year earlier.
Research and development expenses during the current period were $39,336, a
decrease of $748,192 from the prior period. The current period decrease reflects
the effect of a cost reduction program implemented during early 1996, in
addition to higher prior period expenses incurred for the purchase of Thymosin
beta 4 material and costs incurred for the conduct of clinical studies. General
and administrative expenses during the current period were $145,925, a decrease
of $84,994 from the comparable period a year earlier, primarily reflecting the
effect of the cost reduction program and the effect of proprietary rights
becoming fully amortized during the prior period.

Other Items. During the first quarter of 1996, the Company recorded a loss of
$34,028 as a result of the change in the market value of shares of Viral
Technologies, Inc. when the shares were sold. No such expense was incurred
during the 1997 comparable period. Interest expense during the current period
was $35,043, an increase of $5,868 over the comparable period a year earlier,
representing amounts due under the terms of letter agreements with certain major
vendors. The increase primarily reflects the effect of expenses calculated for
the full three-month period of the current quarter.

Capital Resources and Liquidity

Since its inception in 1982, the Company's activities have consisted of
conducting research and development, sponsoring clinical trials of its
proprietary products, the construction and equipping of laboratory and
production facilities, and the manufacture of products for research, testing and
clinical trials. The Company's accumulated deficit of $37,471,341 through March
31, 1997 has been primarily funded by the proceeds from the issuance of equity
securities (and interest earned on such funds), the licensing of technology
developed or acquired by the Company and limited product sales.

The Company has delayed its development program for Thymosin beta 4, and has no
products that have received regulatory approval. The Company has not generated
significant revenues from operations and does not anticipate generating product
revenues for the foreseeable future. The Company will require substantial
funding in order to re-activate and conduct its research and development

<PAGE>   9

                                                                   Page 9 of 12



activities and to manufacture and market the products which the Company intends
to develop.

During the first three months of 1997, revenues consisted of royalty income from
SciClone. These revenue sources are substantially below the level required to
cover fully the Company's expenses or to provide adequate cash flow. On March
12, 1997, the Company concluded a private placement consisting of shares of
Common Stock and Class D Warrants from which the Company received $200,000. Each
unit consisted of 500,000 shares of Common Stock and 165,000 Class D Warrants
having an exercise price of $0.10 per warrant and a term of ten years.
Subsequent to March 31, 1997, the Company raised an additional $50,000 through
the sale of one unit on identical terms. The proceeds of the offering will
be used to conduct preclinical animal studies at a major United States
university using the Company's product, Thymosin beta 4, and to fund operations
into the second quarter of 1997. The Company currently believes, based on its
existing resources, that it will have sufficient cash to sustain its operations
to the middle of the second quarter of 1997. If additional financing cannot be
obtained prior to that time, the Company likely will be forced to discontinue
operations.

During 1995, the Company refocused its research efforts to Thymosin beta 4.
Research activities and preclinical studies were initiated and accelerated based
on anticipated cash resources that the Company expected to materialize through a
proposed merger. In anticipation of the merger and the cash that was to become
available, the Company commenced placing orders for the conduct of research
studies and for the purchase of Thymosin beta 4 material totaling $2,704,000. In
January 1996, the Company learned of the issuance of a U.S. patent that could
block the commercialization of Thymosin beta 4 as a mucolytic for the treatment
for cystic fibrosis. Thereafter, the merger agreement was terminated by mutual
agreement.

The Company continues to pursue strategic alliances or other partnership
arrangements with entities interested in and with resources to develop Thymosin
beta 4, or other business transactions which would allow the Company to generate
resources to assure continuation of the Company's operations.

As a result of the termination of research and development activities during
1996, the Company canceled research orders with certain vendors. The Company was
able to cancel approximately $1,200,000 of work on outstanding orders of
approximately $2,700,000. Management entered into separate letter agreements
with four vendors, which in the aggregate totaled $1,323,000, to defer payment
in exchange for a commitment to the vendors of revenues received by the Company
in the future under a license agreement with SciClone Pharmaceuticals, Inc.
until the full amounts of the liabilities have been liquidated. In the event
that sufficient funding is obtained for the Thymosin beta 4 program, all amounts
then due would become payable immediately.

The effect of inflation and changing prices on the continuing operations of the
Company is not expected to be significant.

<PAGE>   10
                                                                  Page 10 of 12



New Accounting Standard

In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128"). 
This statement establishes new standards for computing and presenting earnings
per share ("EPS").  This standard replaces Accounting Principles Board Opinion
No. 15 ("APB 15") presentation of "primary EPS" with "basic EPS," computed as
income available to common stockholders divided by the weighted average number
of common shares outstanding during the period.  SFAS 128 also requires dual
presentation of basic and diluted EPS on the face of the income statement for
entities with complex capital structures.  Diluted EPS is computed similarly to
"fully diluted EPS," as defined in APB 15.  In addition, the statement requires
a reconciliation of the numerator and denominator of the basic to diluted EPS. 
SFAS 128 is effective for financial statements issued for periods ending after
December 15, 1997, with early adoption not permitted.  Restatement of all prior
period EPS data is not required.  The Company anticipates that adoption of SFAS
128 will not have a significant impact on its EPS.



<PAGE>   11


                                                                   Page 11 of 12


                            ALPHA 1 BIOMEDICALS, INC.

                           Part II - Other Information

Item 2.           Changes in Securities

                  (a)      not applicable

                  (b)      not applicable

                  (c)      Recent Sales of Unregistered Securities

                           As more fully described in Item 1, during the first
                           quarter of 1997, the Company sold for cash a total of
                           4 units, each consisting of 500,000 shares of
                           Common Stock and 165,000 Class D Warrants exercisable
                           at a price of $.10 per warrant to purchase an equal
                           number of shares of Common Stock, to several
                           individuals, at a price of $50,000 per unit. The
                           purchasers included Michael Berman, the Company's
                           President and Chief Executive Officer, Robert J.
                           Lanham, the Company's Chief Financial Officer, and
                           Joseph McNay, a director of the Company.  An
                           additional unit was sold subsequent to the end of 
                           the first quarter of 1997.  The sale of the units 
                           was effected in reliance on an exemption
                           from registration pursuant to Section 4 (2) of the
                           Securities Act of 1933, as amended.

Item 6.           Exhibits and Reports on Form 8-K

                  (a)      Exhibits

                           Exhibit
                           Number
                               27           Financial Data Schedule

                  (b)      Reports on Form 8-K -- A current report on Form 8-K
                                 was filed on March 13, 1997 (Item 5).



<PAGE>   12


                                                                   Page 12 of 12


                                   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.



                                            Alpha 1 Biomedicals, Inc.
                                            -------------------------
                                                   (Registrant)





Date: May 15, 1997                          By:      /s/  R.J. Lanham
                                               ------------------------------
                                                     R.J. Lanham
                                                     Vice President and
                                                     Chief Financial Officer