<PAGE>   1


                       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 June 30, 1999

[ ]  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 0-19267

                                 ALKERMES, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

              PENNSYLVANIA                                       23-2472830
     -------------------------------                          ----------------
     (State or other jurisdiction of                          (I.R.S. Employer
      incorporation or organization)                         Identification No.)

      64 SIDNEY STREET, CAMBRIDGE, MA                            02139-4136
  ----------------------------------------                       ----------
  (Address of principal executive offices)                       (Zip Code)

Registrant's telephone number including area code:  (617) 494-0171
                                                   -----------------------------

                                 NOT APPLICABLE
              ----------------------------------------------------
              Former name, former address, and former fiscal year,
                          if changed since last report

         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 [ ]_


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

              CLASS                  SHARES OUTSTANDING AS OF AUGUST 6, 1999

  Common Stock, par value $.01                      25,215,260

  Non-Voting Common Stock,
    par value $.01                                           0


<PAGE>   2


                         ALKERMES, INC. AND SUBSIDIARIES


                                      INDEX


                                                                        PAGE NO.

PART I - FINANCIAL INFORMATION

     Item 1. Consolidated Financial Statements

             Consolidated Balance Sheets                                    3
             - June 30, 1999 and March 31, 1999

             Consolidated Statements of Operations                          4
             - Three months ended June 30, 1999 and 1998

             Consolidated Statement of Shareholders' Equity                 5
             - Three months ended June 30, 1999

             Consolidated Statements of Cash Flows                          6
             - Three months ended June 30, 1999 and 1998

             Notes to Consolidated Financial Statements                     7

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

     Item 3. Quantitative and Qualitative Disclosures About Market Risk    14

PART II - OTHER INFORMATION

     Item 4. Submission of Matters to a Vote of Security Holders           15

     Item 6. Exhibits and Reports on Form 8-K                              16

SIGNATURES                                                                 19

EXHIBIT INDEX                                                              20


                                       (2)

<PAGE>   3


ITEM 1.  CONSOLIDATED FINANCIAL STATEMENTS:

                         ALKERMES, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                    June 30,        March 31,
                                                                                      1999            1999
                                                                                  ------------    ------------

                                                  ASSETS
Current Assets:
<S>                                                                               <C>             <C>
      Cash and cash equivalents                                                   $  4,464,507    $  9,115,432
      Short-term investments                                                       182,591,646     154,303,220
      Prepaid expenses and other current assets                                      5,666,013       5,745,047
                                                                                  ------------    ------------
           Total current assets                                                    192,722,166     169,163,699
                                                                                  ------------    ------------
Property, Plant and Equipment:
      Land                                                                             235,000         235,000
      Building                                                                       3,486,087       3,483,862
      Furniture, fixtures and equipment                                             32,507,581      31,302,274
      Leasehold improvements                                                        12,858,511      12,635,756
                                                                                  ------------    ------------
                                                                                    49,087,179      47,656,892
           Less accumulated depreciation and amortization                          (16,010,019)    (14,292,146)
                                                                                  ------------    ------------
                                                                                    33,077,160      33,364,746
                                                                                  ------------    ------------
Investments                                                                          5,152,759       8,436,067
                                                                                  ------------    ------------
Other Assets                                                                         2,410,569       2,487,757
                                                                                  ------------    ------------
                                                                                  $233,362,654    $213,452,269
                                                                                  ============    ============


                                            LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
      Accounts payable and accrued expenses                                       $  5,223,113    $  6,642,005
      Accrued interest                                                               1,721,329       1,570,201
      Deferred revenue                                                               7,056,154       9,587,933
      Long-term obligations-current portion                                         10,325,000      10,700,000
                                                                                  ------------    ------------
           Total current liabilities                                                24,325,596      28,500,139
                                                                                  ------------    ------------
Long-Term Obligations                                                               26,991,625      28,416,625
                                                                                  ------------    ------------
Other Long-Term Liabilities                                                            424,869         329,614
                                                                                  ------------    ------------
Shareholders' Equity:
      Capital stock, par value $.01 per share:
        authorized, 2,700,000 shares; none issued
      $3.25 Convertible exchangeable preferred stock, par value $.01 per share:
        authorized and issued, 2,300,000 shares at June 30, 1999 and
        March 31, 1999 (liquidation preference of $115,000,000)                         23,000          23,000
      1999 Convertible exchangeable preferred stock, par value $.01 per share:
        authorized and issued, 3,500 shares at June 30, 1999
        (liquidation preference of $35,000,000)                                             35              --
      Common stock, par value $.01 per share:
        authorized, 40,000,000 shares; issued 25,086,837 shares at
        June 30, 1999 and 24,982,459 shares at March 31, 1999                          250,868         249,825
      Additional paid-in capital                                                   379,941,002     346,849,432
      Deferred compensation                                                         (7,307,947)     (9,932,199)
      Accumulated other comprehensive income (loss)                                     38,453         (46,873)
      Accumulated deficit                                                         (191,324,847)   (180,937,294)
                                                                                  ------------    ------------
           Total shareholders' equity                                              181,620,564     156,205,891
                                                                                  ------------    ------------
                                                                                  $233,362,654    $213,452,269
                                                                                  ============    ============
</TABLE>


See notes to consolidated financial statements.

                                       (3)

<PAGE>   4


                         ALKERMES, INC. AND SUBSIDIARIES


                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)




                                                    Three Months   Three Months
                                                       Ended          Ended
                                                      June 30,       June 30,
                                                        1999           1998
                                                    ------------   ------------
Revenues:
 Research and development revenue under
    collaborative arrangements                      $  5,762,521   $  7,780,134
 Interest income                                       2,459,989      2,591,547
                                                    ------------   ------------
                                                       8,222,510     10,371,681
                                                    ------------   ------------
Expenses:
 Research and development                             12,270,006      9,531,744
 General and administrative                            3,435,992      2,849,219
 Noncash compensation expense                             62,197      3,303,223
 Interest expense                                        743,154        441,982
 Acquisition of in-process research and development           --      3,221,253
                                                    ------------   ------------
                                                      16,511,349     19,347,421
                                                    ------------   ------------

Net loss                                              (8,288,839)    (8,975,740)

Preferred stock dividends                             (2,098,714)    (1,848,050)

                                                    ------------   ------------
Net loss attributable to common shareholders        $(10,387,553)  $(10,823,790)
                                                    ============   ============

Basic and diluted loss per common share             $      (0.41)  $      (0.44)
                                                    ============   ============

Weighted average number of common shares
  outstanding                                         25,039,627     24,393,900
                                                    ============   ============





See notes to consolidated financial statements.

                                       (4)

<PAGE>   5


                         ALKERMES, INC. AND SUBSIDIARIES

                 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
                                   (Unaudited)
<TABLE>
<CAPTION>


                                                 $3.25 Convertible    1999 Convertible
                                                    Exchangeable        Exchangeable                               Additional
                                                  Preferred Stock     Preferred Stock           Common Stock         Paid-in
                                                 Shares     Amount   Shares     Amount       Shares      Amount      Capital
----------------------------------------        -------     ------   ------     ------       ------      ------    ------------

<S>                                             <C>         <C>        <C>     <C>         <C>          <C>        <C>
Balance, April 1, 1999                          2,300,000   $23,000       --   $     --    24,982,459   $249,825   $346,849,432

Issuance of common stock                               --        --       --         --       104,378      1,043        653,660

Issuance of 1999 convertible
  exchangeable preferred stock                         --        --    3,500         35            --         --     34,999,965

Noncash compensation                                   --        --       --         --            --         --     (2,562,055)

Amortization of noncash compensation                   --        --       --         --            --         --             --

Unrealized gain on marketable securities               --        --       --         --            --         --             --

Cumulative foreign currency translation
  adjustments                                          --        --       --         --            --         --             --

Net loss for period                                    --        --       --         --            --         --             --

Preferred stock dividends                              --        --       --         --            --         --             --
----------------------------------------        ---------   -------    -----   --------    ----------   --------   ------------

Balance, June 30, 1999                          2,300,000   $23,000    3,500   $     35    25,086,837   $250,868   $379,941,002
                                                =========   =======    =====   ========    ==========   ========   ============
</TABLE>


<TABLE>
<CAPTION>

                                                            Other Comprehensive Income (Loss)

                                                            Foreign Currency  Unrealized Gain
                                                Deferred      Translation      on Marketable     Accumulated
                                              Compensation    Adjustments       Securities         Deficit          Total
----------------------------------------      ------------    -----------       ----------       -----------     ------------

<S>                                           <C>                  <C>               <C>        <C>              <C>
Balance, April 1, 1999                        $(9,932,199)         $(46,873)         $     --   $(180,937,294)   $156,205,891

Issuance of common stock                               --                --                --              --         654,703

Issuance of 1999 convertible
  exchangeable preferred stock                         --                --                --              --      35,000,000

Noncash compensation                            2,562,055                --                --              --              --

Amortization of noncash compensation               62,197                --                --              --          62,197

Unrealized gain on marketable securities               --                --           100,500              --         100,500

Cumulative foreign currency translation
  adjustments                                          --           (15,174)               --              --         (15,174)

Net loss for period                                    --                --                --      (8,288,839)     (8,288,839)

Preferred stock dividends                              --                --                --      (2,098,714)     (2,098,714)
----------------------------------------      -----------          --------          --------   -------------    ------------
Balance, June 30, 1999                        $(7,307,947)         $(62,047)         $100,500   $(191,324,847)   $181,620,564
                                              ===========          ========          ========   =============    ============
</TABLE>




See notes to consolidated financial statements.

                                       (5)



<PAGE>   6

                         ALKERMES, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>

                                                                                 Three Months      Three Months
                                                                                    Ended             Ended
                                                                                   June 30,          June 30,
                                                                                     1999              1998
                                                                                  -----------       -----------

Cash flows from operating activities:
<S>                                                                               <C>               <C>
   Net loss                                                                       $(8,288,839)      $(8,975,740)
   Adjustments to reconcile net loss to net cash used by
        operating activities:
        Depreciation and amortization                                               1,751,022         1,157,479
        Amortization of compensation relating to issuance of common stock
            and grant of stock options and awards made                                 62,197         3,303,223
        Adjustments to other assets                                                   258,939                --
        Changes in assets and liabilities:
             Prepaid expenses and other current assets                                 80,929          (226,139)
             Accounts payable and accrued expenses                                 (1,273,540)          273,714
             Deferred revenue                                                      (2,531,779)         (512,620)
             Other long-term liabilities                                               95,255           152,272
                                                                                  -----------       -----------
                  Net cash used by operating activities                            (9,845,816)       (4,827,811)
                                                                                  -----------       -----------

Cash flows from investing activities:
   Additions to property, plant and equipment, net                                 (1,413,373)      (12,139,619)
   (Purchases) maturities of short-term investments, net                          (28,288,426)       21,846,929
   Maturities (purchases) of long-term investments, net                             3,283,308        (2,775,385)
   Increase in other assets                                                          (125,000)         (509,700)
                                                                                  -----------       -----------
                  Net cash (used by) provided by investing activities             (26,543,491)        6,422,225
                                                                                  -----------       -----------

Cash flows from financing activities:
   Proceeds from issuance of 1999 convertible exchangeable preferred stock         35,000,000                --
   Proceeds from issuance of common stock, net                                        654,703         1,634,766
   Payment of preferred stock dividends                                            (2,098,714)       (1,848,050)
   Payment of long-term obligations                                                (1,800,000)       (1,079,505)
                                                                                  -----------       -----------
                  Net cash provided by (used by) financing activities              31,755,989        (1,292,789)
                                                                                  -----------       -----------

Effect of exchange rate changes on cash                                               (17,607)              (81)
                                                                                  -----------       -----------

Net (decrease) increase in cash and cash equivalents                               (4,650,925)          301,544
Cash and cash equivalents, beginning of period                                      9,115,432         3,699,950
                                                                                  -----------       -----------
Cash and cash equivalents, end of period                                          $ 4,464,507       $ 4,001,494
                                                                                  ===========       ===========

Supplementary information:
   Interest paid                                                                 $    476,874      $    262,274
                                                                                 ============      ============
</TABLE>





See notes to consolidated financial statements.

                                       (6)

<PAGE>   7


                         ALKERMES, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.  BASIS OF PRESENTATION

The consolidated financial statements for the three month periods ended June 30,
1999 and 1998 are unaudited and include all adjustments which, in the opinion of
management, are necessary to present fairly the results of operations for the
periods then ended. All such adjustments are of a normal recurring nature. These
financial statements should be read in conjunction with the Company's Annual
Report on Form 10-K for the year ended March 31, 1999, which includes
consolidated financial statements and notes thereto for the years ended March
31, 1999, 1998 and 1997. In addition, the financial statements include the
accounts of Alkermes Controlled Therapeutics, Inc., Alkermes Controlled
Therapeutics Inc. II, Advanced Inhalation Research, Inc. ("AIR"), Alkermes
Investments, Inc., Alkermes Europe, Ltd. and Alkermes Development Corporation II
("ADC II"), wholly owned subsidiaries of the Company.

The consolidated financial statements give retroactive effect to the acquisition
of AIR on February 1, 1999 (see Note 3 to the consolidated financial statements
included in the Company's Annual Report on Form 10-K for the year ended March
31, 1999), which has been accounted for as a pooling of interests.

The results of the Company's operations for any interim period are not
necessarily indicative of the results of the Company's operations for any other
interim period or for a full fiscal year.

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

2.  COMPREHENSIVE INCOME (LOSS)

The Company adopted Statement of Financial Accounting Standards ("SFAS") No.
130, "Reporting Comprehensive Income," on April 1, 1998. SFAS No. 130 requires
companies to display comprehensive income and its components as part of the
Company's full set of consolidated financial statements. Comprehensive income is
comprised of net income and other comprehensive income. The measurement and
presentation of net loss will not change. Other comprehensive income includes
certain changes in equity of the Company that are excluded from the net loss.
Specifically, SFAS No. 130 requires unrealized holding gains and losses on the
Company's available-for-sale securities and cumulative foreign currency
translation adjustments, which are currently reported in shareholders' equity,
to be included in other comprehensive income.

                                       (7)




<PAGE>   8

Comprehensive income (loss) for the three months ended June 30, 1999 and 1998 is
as follows:

                                                     Three Months   Three Months
                                                        Ended          Ended
                                                    June 30, 1999  June 30, 1998
                                                    -------------  -------------

Net loss                                             $(7,988,839)   $(8,975,740)
Cumulative foreign currency translation adjustments      (15,174)         1,908
Carrying value adjustments                                    --             --
Unrealized gain on marketable securities                 100,500         18,750
                                                     -----------    -----------
Comprehensive loss                                   $(7,903,513)   $(8,955,082)
                                                     ===========    ===========

The accumulated other comprehensive income (loss) is as follows:

Balance March 31, 1999                                  $(46,873)
Change for the three months ended June 30, 1999           85,326
                                                        --------
Balance June 30, 1999                                   $ 38,453
                                                        ========


3. GENENTECH, INC. AGREEMENT, 1999 PREFERRED STOCK

In April 1999, the Company amended its license agreement with Genentech, Inc.
("Genentech") to expand their collaboration for Nutropin Depot(TM), an
injectable sustained release formulation of Genentech's human growth hormone
based on Alkermes' ProLease(R) drug delivery system. Under the agreement, the
companies will conduct expanded development activities, including clinical
trials in an additional indication, process and formulation development and
manufacturing. The agreement includes potential milestone payments to the
Company of approximately $40 million.

The terms of the collaboration included the purchase by Genentech of $35 million
(3,500 shares) of newly issued redeemable convertible exchangeable preferred
stock of the Company (the "1999 Preferred Stock"). The 1999 Preferred Stock is
convertible at Genentech's option into shares of common stock and non-voting
common stock of the Company during any period after September 1, 1999 that the
closing price of the Company's common stock is above $45 per share for at least
10 consecutive trading days. The Company has the option to redeem the 1999
Preferred Stock, in whole or in part, at any time at the redemption price of
$10,000 per share plus accrued and unpaid dividends (the "1999 Redemption
Price"). There will be a mandatory redemption of any outstanding shares of the
1999 Preferred Stock on January 1, 2009 at the 1999 Redemption Price. The
Company has the option to pay the 1999 Redemption Price in cash, common stock or
non-voting common stock. Any non-voting common stock to be issued upon
conversion or redemption of the 1999 Preferred Stock is convertible into common
stock under certain circumstances.

The 1999 Preferred Stock is junior to the Company's outstanding $3.25
convertible exchangeable preferred stock issued by the Company in March 1998 for
a purchase price of $115 million. The 1999 Preferred Stock has a liquidation
preference of $10,000 per share, plus accrued and unpaid dividends. Dividends on
the 1999 Preferred Stock are payable quarterly at a floating three-month LIBOR
rate.


                                       (8)

<PAGE>   9

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

INTRODUCTION

Alkermes is developing innovative pharmaceutical products based on sophisticated
drug delivery systems. The Company has several areas of focus: (i) controlled,
sustained release of injectable drugs lasting several days to several weeks,
utilizing its ProLease(R) and Medisorb(R) technologies; (ii) the delivery of
drugs into the brain past the blood-brain barrier utilizing the Cereport(TM)
technology; (iii) oral delivery of drugs using its RingCap(TM) and dose sipping
technologies ("DST"); and (iv) the development of pharmaceutical products based
on proprietary pulmonary drug delivery technologies utilizing its Advanced
Inhalation Research, Inc. ("AIR(TM)") technology. Since its inception in 1987,
the Company has devoted substantially all of its resources to its research and
development programs. Alkermes has not received any revenue from the sale of
products. The Company has been unprofitable since inception and expects to incur
substantial additional operating losses over the next few years. At June 30,
1999, the Company had an accumulated deficit of approximately $191.3 million.

The consolidated financial statements give retroactive effect to the acquisition
of AIR on February 1, 1999 (see Note 3 to the Consolidated Financial Statements
for the year ended March 31, 1999), which has been accounted for as a pooling of
interests.

The Company has funded its operations primarily through public offerings and
private placements of equity securities, bank loans and payments under research
and development agreements with collaborators, including Alkermes Clinical
Partners, L.P. ("Clinical Partners"), a research and development limited
partnership whose operations commenced in April 1992. The Company generally
develops its product candidates in collaboration with others on whom the Company
will rely for funding, development, manufacturing and/or marketing.

FORWARD-LOOKING STATEMENTS

Any statements set forth below or otherwise made in writing or orally by the
Company with regard to its expectations as to financial results and other
aspects of its business may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Although the
Company believes that its expectations are based on reasonable assumptions
within the bounds of its knowledge of its business and operations, the Company's
business is subject to significant risks and there can be no assurance that
actual results of the Company's development activities and its results of
operations will not differ materially from its expectations. Factors which could
cause actual results to differ from expectations include, among others: (i) the
Company and its collaborators could not be permitted by regulatory authorities
to undertake clinical trials for RingCap or DST or to undertake additional
clinical trials for ProLease, Cereport, Medisorb or AIR product candidates or
clinical trials could be delayed; (ii) even if clinical trials are completed and
the data is submitted to the Food and Drug Administration ("FDA") as a New Drug
Application ("NDA") for marketing approval and to other health authorities as a
marketing authorization application, the NDA or marketing authorization
application could fail to be accepted, or upon acceptance, could fail to receive
approval on a timely basis, if at all; (iii) product candidates could be
ineffective or unsafe during clinical trials; (iv) the Company's collaborators
could elect to terminate or delay development


                                       (9)

<PAGE>   10


programs; (v) even if product candidates appear promising at an early stage of
development, product candidates could fail to receive necessary regulatory
approvals, be difficult to manufacture on a large scale, be uneconomical, fail
to achieve market acceptance, be precluded from commercialization by proprietary
rights of third parties or experience substantial competition in the
marketplace; (vi) the Company could incur difficulties or set-backs in obtaining
the substantial additional funding required to continue research and development
programs and clinical trials; (vii) technological change in the biotechnology or
pharmaceutical industries could render the Company's product candidates obsolete
or noncompetitive; (viii) disputes with collaborators, termination of
collaborations or failure to negotiate acceptable new collaborative arrangements
for ProLease, Medisorb, AIR, RingCap or DST technologies, which are not
generally developed independently, or for Cereport, could occur; (ix) disputes
with Clinical Partners over rights to Cereport and related technology could
occur; and (x) difficulties or set-backs in obtaining and enforcing Alkermes'
patents and difficulties with the patent rights of others could occur.

RESULTS OF OPERATIONS

The Company's research and development revenue under collaborative arrangements
for the three months ended June 30, 1999 was $5,762,521 compared to $7,780,134
for the corresponding period of the prior year. The decrease in such revenue for
the three months ended June 30, 1999 as compared to the corresponding period of
the prior year was mainly a result of the decreased funding earned under
collaborative agreements related to the Company's ProLease and Medisorb
technologies. As discussed in Note 3 to the consolidated financial statements
included in this report, Genentech, Inc. ("Genentech") purchased 3,500 shares of
newly issued convertible exchangeable preferred stock (the "1999 Preferred
Stock") of Alkermes in April 1999 at a purchase price of $35,000,000. The
Company is using the net proceeds from the issuance of the 1999 Preferred Stock
to conduct expanded development activities for Nutropin Depot(TM), an injectable
sustained release formulation of Genentech's human growth hormone based on
Alkermes' ProLease drug delivery system.

Interest income for the three months ended June 30, 1999 was $2,459,989 compared
to $2,591,547 for the corresponding period of the prior year. The decrease in
such income for the three months ended June 30, 1999 as compared to the
corresponding period of the prior year was primarily a result of a decrease in
interest rates as compared to the same period of the prior year.

The Company's total operating expenses were $16,511,349 for the three months
ended June 30, 1999 as compared to $16,126,168 for the three months ended June
30, 1998. The Company separately recorded a $3,221,253 nonrecurring charge in
the three months ended June 30, 1998 for DST and RingCap technologies licensed
from ALZA Corporation ("ALZA") which are not yet commercially viable. Research
and development expenses for the three months ended June 30, 1999 were
$12,270,006 compared to $9,531,744 for the corresponding period of the prior
year. The increase in research and development expenses for the three months
ended June 30, 1999 as compared to the three months ended June 30, 1998 was
mainly the result of an increase in salary and related benefits and other costs
associated with an increase in personnel as the Company advances its product
candidates through development and clinical trials and prepares for commercial
scale manufacturing. In addition, the Company had an increase in occupancy costs
and depreciation and amortization expense related to its expanded Medisorb
manufacturing facility in Wilmington, Ohio and its new ProLease manufacturing
facility in Cambridge, Massachusetts. The increase in research and development
expenses was partially offset by a decrease in clinical trial costs as the
Company completed the Phase III clinical trial for Nutropin


                                      (10)

<PAGE>   11


Depot during the prior fiscal year and discontinued the Phase III clinical trial
of Cereport in April 1999.

General and administrative expenses for the three months ended June 30, 1999
were $3,435,992 compared to $2,849,219 for the corresponding period of the prior
year. The increase in the three months ended June 30, 1999 as compared to the
three months ended June 30, 1998 was mainly the result of an increase in salary
and related benefits and other costs relating primarily to an increase in
personnel, as well as an increase in professional fees.

Noncash compensation expense for the three months ended June 30, 1999 and 1998
were $62,197 and $3,303,223. Noncash compensation charges primarily relate to
equity transactions in the Company's subsidiary, AIR, with respect to common
stock issued and stock options granted to certain employees, consultants and
others.

The Company does not believe that inflation and changing prices have had a
material impact on its results of operations.

LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents and short-term investments were approximately $187.1
million at June 30, 1999 as compared to $163.4 million at March 31, 1999. The
primary source of cash and investments was the proceeds from the purchase by
Genentech of the 1999 Preferred Stock (see below). During the quarter ended June
30, 1999, the primary uses of cash and investments were to finance the Company's
operations, the payment of long-term obligations and the payment of the
dividends on the Company's $3.25 Preferred Stock and the 1999 Preferred Stock.
In addition, Investments include $3.8 million principal amount of high grade
corporate notes with maturities ranging from 13 to 17 months. The Company
invests in cash equivalents, U.S. Government obligations, high grade corporate
notes and commercial paper. The Company's investment objectives taken as a whole
are, first, to assure conservation of capital and liquidity, and second, to
obtain investment income.

In April 1999, the Company amended its license agreement with Genentech to
expand their collaboration for Nutropin Depot, an injectable sustained release
formulation of Genentech's human growth hormone based on Alkermes' ProLease drug
delivery system. The expanded agreement includes potential milestone payments to
the Company of approximately $40 million. The terms of the collaboration
included the purchase by Genentech of the 1999 Preferred Stock which totaled $35
million. The 1999 Preferred Stock is convertible at Genentech's option into
shares of common stock and non-voting common stock during any period after
September 1, 1999 that the closing price of the Company's common stock is above
$45 per share for at least 10 consecutive trading days. The 1999 Preferred Stock
may be redeemed at any time by the Company at a redemption price of $10,000 per
share, plus accrued and unpaid dividends, in cash, common stock or non-voting
common stock, at the Company's option. Dividends on the 1999 Preferred Stock are
payable quarterly at a floating three-month LIBOR rate.

The Company's research and development costs to date have been financed
primarily by sales of equity securities and payments under research and
development collaborative arrangements. The Company expects to incur significant
additional research and development and other costs, including costs related to
preclinical studies, clinical trials and facilities expansion. Therefore, the
Company expects that its costs, including research and development costs for all
of its product candidates, will exceed revenues significantly for the next few
years, which will result in continuing losses from operations.

Since the research and development revenue from Clinical Partners ended during
the quarter ended June 30, 1996, Alkermes has been using its own resources to
continue to develop Cereport. The


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<PAGE>   12


Company is required to fund the development of Cereport to maintain its option
to purchase the limited partnership interests in Clinical Partners. Effective
September 30, 1997, the Company entered into an agreement with ALZA relating to
the development and commercialization of Cereport. ALZA made a $10.0 million
upfront payment to Alkermes to fund clinical development of Cereport, of which
$5.6 million has been recorded as deferred revenue at June 30, 1999. In return,
ALZA will have the option to acquire exclusive worldwide commercialization
rights to Cereport. If ALZA exercises its option, ALZA will make additional
payments to cover costs associated with advanced clinical development. If
Cereport is commercialized successfully by ALZA, ALZA will pay the Company
certain milestone payments. Alkermes would be responsible for the manufacturing
of Cereport, and the two companies would share approximately equally in profits
from product sales.

Capital expenditures were approximately $1.4 million for the three months ended
June 30, 1999, principally reflecting equipment purchases. The Company's capital
expenditures for equipment, facilities and building improvements have been
financed to date primarily with proceeds from bank loans and the sales of equity
securities.

The Company will continue to pursue opportunities to obtain additional financing
in the future. Such financing may be sought through various sources, including
equity offerings, bank borrowings, lease arrangements relating to fixed assets
or other financing methods. The source, timing and availability of any
financings will depend on market conditions, interest rates and other factors.
The Company's future capital requirements will depend on many factors, including
continued scientific progress in its research and development programs, the
magnitude of these programs, progress with preclinical testing and clinical
trials, the time and costs involved in obtaining regulatory approvals, the costs
involved in filing, prosecuting and enforcing patent claims, competing
technological and market developments, the establishment of additional
collaborative arrangements, the cost of manufacturing facilities and of
commercialization activities and arrangements and the cost of product
in-licensing and any possible acquisitions.

The Company may need to raise substantial additional funds for longer-term
product development, regulatory approvals and manufacturing or marketing
activities that it might undertake in the future. There can be no assurance that
additional funds will be available on favorable terms, if at all. If adequate
funds are not available, the Company may be required to curtail significantly
one or more of its research and development programs and/or obtain funds through
arrangements with collaborative partners or others that may require the Company
to relinquish rights to certain of its technologies, product candidates or
future products.

YEAR 2000 READINESS DISCLOSURE

The Year 2000 problem concerns the application of computer systems written using
six (e.g., 12/31/99) versus eight (e.g., 12/31/1999) digits to define the
applicable date. This could result, among other things, in computer systems
recognizing "00" as the year 1900 rather than the year 2000. Computer hardware,
software and embedded chip equipment are potentially affected, and, if such
systems and components are not remediated satisfactorily, could lead to
operational interruptions and business misinformation.

The Company's Year 2000 Compliance Plan provides for a four-phase process:
inventory, assessment, remediation and testing, and preparation of contingency
plans. Alkermes has identified its mission critical and medium priority internal
systems which will require



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<PAGE>   13


remediation to provide for the Company's continuing
business operations after January 1, 2000. The remaining systems are considered
to be of low priority because they are judged to have no direct impact on safety
or the business.

The inventory phase is completed for Alkermes, except that the Company's new
subsidiary, AIR, is in the final stages of completing its inventory. The
assessment phase is substantially completed, except for information not yet
received from external suppliers, vendors and manufacturers. Progress continues
to be made in the remediation phase of the Company's plan in which systems that
are not Year 2000 compliant are repaired, replaced or retired, and remediated
systems are tested and returned to active use. Alkermes has requested all
suppliers of mission critical equipment owned or leased by the Company
containing embedded chip technology to provide Alkermes with each supplier's
Year 2000 testing methodology and results and/or the Company has performed
in-house testing on such equipment. As of August 13, 1999, there has been an
approximate 34% response rate to the Company's requests for information sent to
vendors and manufacturers of equipment, hardware and software purchased or
leased by the Company. This percentage reflects new information obtained in
Alkermes' continuing efforts to bring its new subsidiary, AIR, up to date with
Alkermes' Year 2000 Compliance Plan and finalized inventory information for all
of Alkermes' departments. Based on the responses received as of August 13, 1999,
approximately 1% of Alkermes' mission critical systems are not compliant. The
Company has determined what is required to make these systems compliant and is
either in the process of remediation or will begin remediation soon. All
assessment and remediation efforts are scheduled to be completed by September
30, 1999.

Alkermes believes its mission critical and medium priority internal computer
systems will be Year 2000 compliant in a timely manner. However, the Company's
computer systems are complex, highly interdependent and there are a number of
risks associated with the complexity and high degree of integration of the
systems. For example, an incorrect classification of the importance of a system
or systems, or the cumulative effect of a number of low priority systems that
have not been remediated, could result in an unpredicted failure or shutdown in
one or more of the Company's business, processing or manufacturing systems,
which could have a material adverse effect on production or cost of operations.
The Company's current belief is that this has a relatively low probability of
occurring. To minimize these risks, Alkermes is utilizing its skilled and
knowledgeable internal resources and has employed contract personnel in its
decision-making processes and to perform integrated systems testing.

Alkermes is continuing a process of requesting and assessing compliance
information from all of its suppliers, strategic partners and other
organizations with which the Company does business (each a "Third Party").
Certain of these Third Parties may refuse to respond to a readiness survey or
request for information. It is possible that Third Parties may, in fact, be
prepared to address Year 2000 concerns, but simply refuse to respond.
Conversely, various Third Parties may respond that they are Year 2000 ready,
when, in fact, they are not ready. As of August 13, 1999, approximately 50% of
all Third Parties have responded to the survey. Approximately 48% of all Third
Parties have responded that they are or will be Year 2000 compliant on a timely
basis. These percentages reflect responses from


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<PAGE>   14


all Third Parties.

If the Year 2000 problem causes suppliers and utility providers to fail to
deliver essential materials and services, multiple disruptions in the Company's
operations, computer infrastructure or telecommunications systems could result.
Because of the inherent uncertainties associated with the Year 2000 problem,
including understanding the Year 2000 readiness of the Third Parties, it is not
possible to quantify the potential impact. However, failure of key suppliers,
utility providers, strategic partners, other organizations or Alkermes to
address properly and timely the Year 2000 problem could have a material adverse
effect on the Company's financial condition, results of operations or liquidity.
Furthermore, there can be no guarantee that any contingency plans developed by
the Company will prevent such failures from having a material adverse effect.
Alkermes believes that there is a low probability that these multiple failures
will occur.

Contingency plans are being formulated by each of the Company's various
departments. The plans are to be completed by September 30, 1999 for each of the
Company's mission critical systems. These plans may be updated or revised during
the remainder of 1999. Alkermes currently expects total external expenditures to
become Year 2000 compliant to be less than $1 million. To date, Alkermes has
incurred external expenditures of approximately $500,000. In addition, the
Company has dedicated significant internal resources, including staff and
equipment, to Year 2000 projects, but does not track such costs and therefore
cannot provide an estimate of the amount of such internal costs. Alkermes will
fund Year 2000 expenditures from cash and expects that total remediation costs,
including the reallocation of internal resources, will not have a material
adverse effect on the Company's financial condition, results of operations or
liquidity.

The foregoing information reflects management's best estimates. These estimates
are based upon many assumptions, including: assumptions about cost, availability
and ability of resources to identify and classify systems properly; properly
identifying them as needing remediation; locating, remediating and modifying
affected systems; and making various assessments of Year 2000 readiness of key
Third Parties. Based upon its activities to date, the Company does not believe
that these factors will cause its current cost and timetable projections to
differ significantly from those estimated. However, the Company cannot
reasonably estimate the potential impact on its financial condition, results of
operations or liquidity if critical Third Parties, including suppliers and
governments, do not become Year 2000 compliant on a timely basis.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company's Investments consist of U.S. Treasuries and other government
securities, commercial paper and corporate notes. Substantially all Investments
mature within one year, are not callable by the issuer and have fixed interest
rates. A 10% decline in the average yield of the investments would not have a
material effect on the Company's results of operations or cash flows. The
Company's debt instruments approximate fair value and generally have fixed
interest rates. See "Liquidity and Capital Resources."

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<PAGE>   15


PART II.  OTHER INFORMATION

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Shareholders of the Registrant held on August 6, 1999,
the holders of Common Stock approved the 1999 Stock Option Plan of Alkermes.
There were 15,705,688 votes for, and 4,712,172 votes against, the adoption of
the plan, 3,189,981 broker non-votes and 42,697 abstentions.

Also at the Annual Meeting of Shareholders, the holders of Common Stock approved
an amendment to the Registrant's Second Amended and Restated Articles of
Incorporation, as amended, to increase the total number of authorized shares of
the Registrant from 45,000,000 to 85,000,000, including an increase in the
number of authorized shares of the Registrant's Common Stock from 40,000,000 to
80,000,000. There were 22,990,606 votes for, and 640,903 votes against, the
adoption of the amendment, no broker non-votes and 19,029 abstentions.

Also at the Annual Meeting of Shareholders, the holders of Common Stock elected
the following as directors for terms of one year expiring on the date of the
2000 Annual Meeting or until their respective successors are duly elected and
shall qualify:

                                    Votes                     Authority
Nominee                             For                       Withheld
-------                             ---                       --------

Floyd E. Bloom                      23,349,557                300,981

Robert A. Breyer                    23,347,512                303,026

John K. Clarke                      23,478,388                172,150

Richard F. Pops                     23,350,159                300,379

Alexander Rich                      23,348,194                302,344

Paul Schimmel                       23,350,112                300,426

Michael A. Wall                     23,348,719                301,819


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<PAGE>   16




ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)  Exhibits:
                Number                        Exhibit
                ------                        -------

                3.1(a)    Second Amended and Restated Articles of Incorporation
                          of Alkermes, Inc., effective July 23, 1991.
                          (Incorporated by reference to Exhibit 4.1(a) to the
                          Company's Report on Form 10-Q for the quarter ended
                          June 30, 1991).

                3.1(b)    Statement of Change of Registered Office of Alkermes,
                          Inc. effective July 23, 1991. (Incorporated by
                          reference to Exhibit 4.1(b) to the Company's Report on
                          Form 10-Q for the quarter ended June 30, 1991).

                3.1(c)    Amendment to the Second Amended and Restated Articles
                          of Incorporation, as filed with the Pennsylvania
                          Secretary of State on November 1, 1991. (Incorporated
                          by reference to Exhibit 4.1(c) to the Company's Report
                          on Form 10-Q for the quarter ended September 30,
                          1991).

                3.1(d)    Amendment to the Second Amended and Restated Articles
                          of Incorporation, as amended, as filed with the
                          Pennsylvania Secretary of State on February 12, 1993.
                          (Incorporated by reference to Exhibit 4.1(d) to the
                          Company's Report on Form 10-Q for the quarter ended
                          December 31, 1992).

                3.1(e)    Amendment to the Second Amended and Restated Articles
                          of Incorporation, as filed with the Pennsylvania
                          Secretary of State on February 26, 1998. (Incorporated
                          by reference to Exhibit 4.6 to the Company's
                          Registration Statement on Form S-3, as amended (File
                          No. 333-50157)).

                3.1(f)    Amendment to the Second Amended and Restated Articles
                          of Incorporation, as filed with the Pennsylvania
                          Secretary of State on April 12, 1999 (1999 Preferred
                          Stock Terms). (Incorporated by reference to Exhibit
                          3.1(f) to the Company's Report on Form 10-K for the
                          year ended March 31, 1999).

                3.1(g)    Amendment to the Second Amended and Restated Articles
                          of Incorporation, as filed with the Pennsylvania
                          Secretary of State on April 12, 1999 (Non-Voting
                          Common Stock Terms). (Incorporated by reference to
                          Exhibit 3.1(g) to the Company's Report on Form 10-K
                          for the year ended March 31, 1999).


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<PAGE>   17

                  3.2      Amended and Restated By-Laws of Alkermes, Inc.,
                           effective as of June 2, 1999. (Incorporated by
                           reference to Exhibit 3.2 to the Company's Report on
                           Form 10-K for the year ended March 31, 1999).

                  4.1      Specimen of Common Stock Certificate of Alkermes,
                           Inc. (Incorporated by reference to Exhibit 4 to the
                           Company's Registration Statement on Form S-1, as
                           amended (File No. 33-40250)).

                  4.2      Specimen of Preferred Stock Certificate of Alkermes,
                           Inc. (Incorporated by reference to Exhibit 4.1 to the
                           Company's Registration Statement on Form S-3, as
                           amended (File No. 333-50157)).

                  4.3      Specimen of 1999 Preferred Stock Certificate of
                           Alkermes, Inc. (Incorporated by reference to Exhibit
                           4.3 to the Company's Report on Form 10-K for the
                           fiscal year ended March 31, 1999).

                  4.4      Specimen of Non-Voting Common Stock Certificate of
                           Alkermes, Inc. (Incorporated by reference to Exhibit
                           4.4 to the Company's Report on Form 10-K for the
                           fiscal year ended March 31, 1999).

                  4.5      Form of 1992 Warrant to purchase 2,800 shares of the
                           Company's Common Stock. (Incorporated by reference to
                           Exhibit 4.2 to the Company's Report on Form 10-K for
                           the fiscal year ended March 31, 1992).

                  4.6      Form of 1995 Warrant to purchase 300 shares of the
                           Company's Common Stock. (Incorporated by reference to
                           Exhibit 4.3 to the Company's Report on Form 10-K for
                           the fiscal year ended March 31, 1992).

                  4.7      Form of Global Warrant Certificate for 1994 Class A
                           Warrants. (Incorporated by reference to Exhibit 4.6
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).

                  4.8      Form of Global Warrant Certificate for 1994 Class B
                           Warrants. (Incorporated by reference to Exhibit 4.7
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).

                  4.9      Form of Global Warrant Certificate for 1994 Affiliate
                           Warrants. (Incorporated by reference to Exhibit 4.8
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).

                  4.10     Form of Global Warrant Certificate for 1994 Incentive
                           Warrants. (Incorporated by reference to Exhibit 4.9
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).


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<PAGE>   18


                  4.11     Warrant Agreement, dated as of November 18, 1994, by
                           and between the Company and The First National Bank
                           of Boston. (Incorporated by reference to Exhibit 4.10
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).

                  4.12     Indenture, dated as of March 1, 1998, between
                           Alkermes, Inc. and State Street Bank and Trust
                           Company, as Trustee. (Incorporated by reference to
                           Exhibit 4.7 to the Company's Registration Statement
                           on Form S-3, as amended (File No. 333-50157)).

                  27       Financial Data Schedule.

(b)  During the quarter ended June 30, 1999, the Registrant filed Reports on
     Form 8-K dated April 7, 1999 and April 15, 1999 each under Item 5.


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<PAGE>   19


                                   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.

                                            ALKERMES, INC.
                                            (Registrant)

Date:  August 16, 1999                      By: /s/  Richard F. Pops
                                                --------------------------------
                                                Richard F. Pops
                                                Chief Executive Officer and
                                                 Director
                                                 (Principal Executive Officer)


Date:  August 16, 1999                      By: /s/  James M. Frates
                                                --------------------------------
                                                James M. Frates
                                                Vice President, Chief
                                                Financial Officer and Treasurer
                                                 (Principal Financial and
                                                   Accounting Officer)


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<PAGE>   20


                                  EXHIBIT INDEX


                  Exhibit
                  Number   Description
                  -------  -----------


                  3.1(a)   Second Amended and Restated Articles of Incorporation
                           of Alkermes, Inc., effective July 23, 1991.
                           (Incorporated by reference to Exhibit 4.1(a) to the
                           Company's Report on Form 10-Q for the quarter ended
                           June 30, 1991).

                  3.1(b)   Statement of Change of Registered Office of Alkermes,
                           Inc. effective July 23, 1991. (Incorporated by
                           reference to Exhibit 4.1(b) to the Company's Report
                           on Form 10-Q for the quarter ended June 30, 1991).

                  3.1(c)   Amendment to the Second Amended and Restated Articles
                           of Incorporation, as filed with the Pennsylvania
                           Secretary of State on November 1, 1991. (Incorporated
                           by reference to Exhibit 4.1(c) to the Company's
                           Report on Form 10-Q for the quarter ended September
                           30, 1991).

                  3.1(d)   Amendment to the Second Amended and Restated Articles
                           of Incorporation, as amended, as filed with the
                           Pennsylvania Secretary of State on February 12, 1993.
                           (Incorporated by reference to Exhibit 4.1(d) to the
                           Company's Report on Form 10-Q for the quarter ended
                           December 31, 1992).

                  3.1(e)   Amendment to the Second Amended and Restated Articles
                           of Incorporation, as filed with the Pennsylvania
                           Secretary of State on February 26, 1998.
                           (Incorporated by reference to Exhibit 4.6 to the
                           Company's Registration Statement on Form S-3, as
                           amended (File No. 333-50157)).

                  3.1(f)   Amendment to the Second Amended and Restated Articles
                           of Incorporation, as filed with the Pennsylvania
                           Secretary of State on April 12, 1999 (1999 Preferred
                           Stock Terms). (Incorporated by reference to Exhibit
                           3.1(f) to the Company's Report on Form 10-K for the
                           year ended March 31, 1999).

                  3.1(g)   Amendment to the Second Amended and Restated Articles
                           of Incorporation, as filed with the Pennsylvania
                           Secretary of State on April 12, 1999 (Non-Voting
                           Common Stock Terms). (Incorporated by reference to
                           Exhibit 3.1(g) to the Company's Report on Form 10-K
                           for the year ended March 31, 1999).


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<PAGE>   21

                  3.2      Amended and Restated By-Laws of Alkermes, Inc.,
                           effective as of June 2, 1999.  (Incorporated by
                           reference to Exhibit 3.2 to the Company's Report on
                           Form 10-K for the year ended March 31, 1999).

                  4.1      Specimen of Common Stock Certificate of Alkermes,
                           Inc.  (Incorporated by reference to Exhibit 4 to the
                           Company's Registration Statement on Form S-1, as
                           amended (File No. 33-40250)).

                  4.2      Specimen of Preferred Stock Certificate of Alkermes,
                           Inc. (Incorporated by reference to Exhibit 4.1 to the
                           Company's Registration Statement on Form S-3, as
                           amended (File No. 333-50157)).

                  4.3      Specimen of 1999 Preferred Stock Certificate of
                           Alkermes, Inc. (Incorporated by reference to Exhibit
                           4.3 to the Company's Report on Form 10-K for the
                           fiscal year ended March 31, 1999).

                  4.4      Specimen of Non-Voting Common Stock Certificate of
                           Alkermes, Inc. (Incorporated by reference to Exhibit
                           4.4 to the Company's Report on Form 10-K for the
                           fiscal year ended March 31, 1999).

                  4.5      Form of 1992 Warrant to purchase 2,800 shares of the
                           Company's Common Stock.  (Incorporated by reference
                           to Exhibit 4.2 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1992).

                  4.6      Form of 1995 Warrant to purchase 300 shares of the
                           Company's Common Stock.  (Incorporated by reference
                           to Exhibit 4.3 to the Company's Report on Form 10-K
                           for the fiscal year ended March 31, 1992).

                  4.7      Form of Global Warrant Certificate for 1994 Class A
                           Warrants.  (Incorporated by reference to Exhibit 4.6
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).

                  4.8      Form of Global Warrant Certificate for 1994 Class B
                           Warrants.  (Incorporated by reference to Exhibit 4.7
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).

                  4.9      Form of Global Warrant Certificate for 1994 Affiliate
                           Warrants.  (Incorporated by reference to Exhibit 4.8
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).

                  4.10     Form of Global Warrant Certificate for 1994 Incentive
                           Warrants.  (Incorporated by reference to Exhibit 4.9
                           to the Company's Report on Form 10-Q for the quarter
                           ended December 31, 1994).


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<PAGE>   22

                  4.11     Warrant Agreement, dated as of November 18, 1994, by
                           and between the Company and The First National Bank
                           of Boston.  (Incorporated by reference to Exhibit
                           4.10 to the Company's Report on Form 10-Q for the
                           quarter ended December 31, 1994).

                  4.12     Indenture, dated as of March 1, 1998, between
                           Alkermes, Inc. and State Street Bank and Trust
                           Company, as Trustee.  (Incorporated by reference to
                           Exhibit 4.7 to the Company's Registration Statement
                           on Form S-3, as amended (File No. 333-50157)).

                  27       Financial Data Schedule.


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