<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549


                                    FORM 10-Q
(Mark One)

                 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
                  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended  June 30, 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   0-19472


                             CELLPRO, INCORPORATED
             (exact name of registrant as specified in its charter)


         Delaware                                    94-3087971
    (State or other jurisdiction of                  (I.R.S. Employer
    incorporation or organization)                   Identification No.)

              22215 - 26th Avenue, S.E., Bothell, Washington 98021
              (Address of registrant's principal executive offices)
                                   (Zip Code)
                                 (425) 485-7644
              (Registrant's telephone number, including area code)

                                 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 [ ]

                                             Outstanding at
                                             July 31, 1997

    Common Stock, $0.001 par value           14,514,040


Page 1 of 15
<PAGE>   2

                                      INDEX


<TABLE>
<CAPTION>
PART I:   FINANCIAL INFORMATION                                             PAGE

<S>                                                                         <C>                       
Item 1.   Financial Statements:


          Consolidated Balance Sheets - June 30, 1997
          and March 31, 1997...............................................   3

          Consolidated Statements of Operations -
              Three months ended June 30, 1997
              and 1996.....................................................   4

          Consolidated Statements of Cash Flows -
              Three months ended June 30, 1997 and 1996....................   5

          Notes to Consolidated Financial Statements.......................   6 -7


Item 2.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations....................   7-14


PART II:  OTHER INFORMATION

Item 1.   Legal Proceedings................................................   14

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

          All other items under Part II are inapplicable or have a
          negative response and are therefore omitted.


SIGNATURES        ..........................................................  15
</TABLE>



Page 2 of 15
<PAGE>   3
                          PART I: FINANCIAL INFORMATION


ITEM 1.  FINANCIAL STATEMENTS

                     CELLPRO, INCORPORATED AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                        JUNE 30, 1997 AND MARCH 31, 1997

                                     ASSETS

<TABLE>
<CAPTION>
                                                               June 30,           March 31,
                                                                1997                1997
                                                           -------------       -------------
Current Assets:                                              (Unaudited)
<S>                                                        <C>                 <C>          
    Cash and cash equivalents                              $  17,671,071       $  15,052,804
    Securities available for sale                             30,123,864          38,990,371
    Trade receivables                                          2,515,674           3,158,729
    Inventories                                                5,524,737           5,078,257
    Other current assets                                         340,247             548,558
                                                           -------------       -------------

         Total current assets                                 56,175,593          62,828,719

Property and equipment, net                                   12,367,576          13,183,854
Other assets                                                     171,704             111,124
                                                           -------------       -------------

         Total assets                                      $  68,714,873       $  76,123,697
                                                           =============       =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
    Current portion of long-term debt                      $     138,129       $     149,750
    Accounts payable                                           1,142,785             991,297
    Accrued liabilities                                        2,244,149           3,852,349
    Accrual for litigation claim and costs
                                                              15,944,001          17,000,000
                                                           -------------       -------------

         Total current liabilities                            19,469,064          21,993,396

    Long-term debt, net of current portion                       161,502             152,943

    Other liabilities                                          1,196,710           1,196,710
                                                           -------------       -------------

         Total liabilities                                    20,827,276          23,343,049
                                                           -------------       -------------

Stockholders' equity:
    Common stock                                                  14,500              14,487
    Additional paid-in capital                               169,616,903         169,556,157
    Foreign currency translation                                (190,076)           (173,315)
    Net unrealized gain(loss) on securities available
         for sale                                                 64,565             (80,331)
    Accumulated deficit                                     (121,618,295)       (116,536,350)
                                                           -------------       -------------
    Total stockholders' equity                                47,887,597          52,780,648
                                                           -------------       -------------

         Total liabilities and stockholders' equity        $  68,714,873       $  76,123,697
                                                           =============       =============
</TABLE>

          See accompanying notes to consolidated financial statements.



Page 3 of 15
<PAGE>   4
                         PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (CONTINUED)

                     CELLPRO, INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                    THREE MONTHS ENDED JUNE 30, 1997 AND 1996
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                   Three months ended
                                                        June 30,
                                                 1997               1996
                                             ------------       ------------
<S>                                          <C>                <C>         
Product sales                                $  2,475,311       $  1,997,960
Contract revenue                                   77,608              7,853
                                             ------------       ------------

         Total revenues                         2,552,919          2,005,813
                                             ------------       ------------

Costs and expenses:
    Cost of product sales                       1,258,805          1,220,616
    Research and development                    3,490,195          3,673,027
    Selling, general and 
      administrative                            3,536,590          2,649,191
                                             ------------       ------------

         Total costs and expenses               8,285,590          7,542,834
                                             ------------       ------------

         Loss from operations                  (5,732,671)        (5,537,021)
                                             ------------       ------------

Other income (expense):
    Interest income                               658,896            983,108
    Interest expense                               (7,469)           (13,803)
    Other, net                                       (701)           (40,477)
                                             ------------       ------------

         Total other income                       650,726            928,828
                                             ------------       ------------

                   Net loss                  $ (5,081,945)      $ (4,608,193)
                                             ============       ============

Net loss per share                           $      (0.35)      $      (0.32)
                                             ============       ============

Weighted average number of shares
  outstanding during the period                14,499,738         14,374,543
                                             ============       ============
</TABLE>

          See accompanying notes to consolidated financial statements.



Page 4 of 15
<PAGE>   5
                          PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (CONTINUED)

                     CELLPRO, INCORPORATED AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                    THREE MONTHS ENDED JUNE 30, 1997 AND 1996
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                         Three months ended
                                                              June 30,
                                                       1997               1996
                                                   ------------       ------------
<S>                                                <C>                <C>          
Net cash used in operating
   activities                                      $ (6,206,392)      $ (4,484,915)
                                                   ------------       ------------
Investing activities:
    Purchase of property and equipment                 (167,100)           (82,557)
    Proceeds from sales and maturities
        of securities available for sale             12,310,801          8,803,561
    Purchase of securities available
        for sale                                     (3,299,398)        (3,416,567)
    Change in other assets                              (60,580)             1,513
                                                   ------------       ------------
    Net cash provided by investing activities         8,783,723          5,305,950
                                                   ------------       ------------

Financing activities:
    Principal payments on
        long-term debt                                   (3,062)           (77,764)
    Issuance of Common Stock, net
        of issuance costs                                60,759            428,025
    Other                                               (16,761)               -
                                                   ------------       ------------
 Net cash provided by financing activities               40,936            350,261
                                                   ------------       ------------
Net increase in cash and cash
    equivalents                                       2,618,267          1,171,296

Cash and cash equivalents:
    Beginning of period                              15,052,804         17,076,098
                                                   ------------       ------------       
    End of period                                  $ 17,671,071       $ 18,247,394
                                                   ============       ============
</TABLE>


          See accompanying notes to consolidated financial statements.



Page 5 of 15
<PAGE>   6
                          PART I: FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS (CONTINUED)

                     CELLPRO, INCORPORATED AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                        THREE MONTHS ENDED JUNE 30, 1997
                                  (UNAUDITED)


1.    Basis of Presentation - The accompanying unaudited financial statements
      should be read in conjunction with the audited financial statements and
      notes thereto contained in the Company's Annual Report on Form 10-K for
      the year ended March 31, 1997. In the opinion of management, all
      adjustments necessary for a fair presentation of the interim operating
      results are reflected herein. All such adjustments are normal and
      recurring in nature.

2.    Principles of Consolidation - The consolidated financial statements
      include the accounts of CellPro, Incorporated (the Company) and its wholly
      owned subsidiaries. Intercompany transactions and balances have been
      eliminated in consolidation.

3.    Cash, Cash Equivalents and Securities Available for Sale - Cash, cash
      equivalents and securities available for sale totaled $47.8 million at
      June 30, 1997. As of August 1, 1997, $9.0 million of this amount became
      restricted as part of posting an appeal bond in response to a legal
      judgment issued July 24, 1997. See "Investment Considerations - Legal
      Proceedings," below.

4.    Inventories - Inventories consist of the following:

<TABLE>
<CAPTION>
                                             June 30, 1997         March 31, 1997
                                             -------------         --------------
                  <S>                         <C>                    <C>       
                  Raw materials               $1,281,630             $1,520,000
                  Work in process                654,446                918,632
                  Finished goods               3,588,661              2,639,625
                                               ---------              ---------
                                              $5,524,737             $5,078,257
                                              ==========             ==========
</TABLE>

5.    Accrual for Litigation Claim and Costs - At March 31, 1997, the Company
      established a liability of $17 million to cover potential losses from, and
      future expenses for pursuing, ongoing patent litigation as discussed below
      under "Investment Considerations - Legal Proceedings." During the quarter
      ended June 30, 1997, $1.1 million was charged against the liability,
      representing expenses related to this matter. As a result of an injunction
      against the Company issued July 24, 1997, royalties will be payable for
      sales of the Company's CEPRATE(R) SC System and CEPRATE(R) LC System for
      sales made after March 12, 1997. The amount of such royalties is not known
      at this time.

6.    Supplemental Disclosures of Cash Flow Information - Cash paid for interest
      was $7,469 for the three months ended June 30,1997 and $13,803 for the
      three months ended June 30, 1996. The Company had an unrealized gain on
      securities available for sale of $144,896 for the three months ended June
      30, 1997.




Page 6 of 15
<PAGE>   7

7.    Net Loss Per Share - Net loss per share is based upon the weighted average
      number of shares of Common Stock outstanding. Common stock equivalents
      have not been included because the effect would be anti-dilutive.

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

Except for disclosures that report the Company's historical results, the
statements set forth in this section are forward-looking statements. Actual
results may differ materially from those projected in the forward-looking
statements. Additional information concerning factors that may cause actual
results to differ materially from those in the forward-looking statements are
set forth in the section entitled "Investment Considerations" beginning on page
-- of this quarterly report on Form 10Q, in the section entitled "Investment
Considerations" in the Company's Annual Report on Form 10-K for the year ended
March 31, 1997 and in the Company's other filings with the Securities and
Exchange Commission. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.

Since the commencement of operations in 1989, the Company has primarily engaged
in developing, manufacturing and marketing proprietary continuous-flow,
cell-selection systems. These systems may be used for a variety of therapeutic,
diagnostic and research applications. On December 6, 1996, the U.S. Food and
Drug Administration ("FDA") granted marketing approval for CellPro's CEPRATE(R)
SC System for purification of stem cells for bone marrow transplantation. The
CEPRATE(R) SC System has also received marketing approval throughout the
18-nation European Economic Area and Canada.

The Company's activities have been funded primarily by raising approximately
$153 million through the sale of Common Stock, including two public offerings
and two private offerings to Corange International Limited ("Corange"), and $9.7
million through private sales of Preferred Stock prior to the Company's initial
public offering. The Company has been unprofitable since inception and expects
to incur additional operating losses for at least the next few years.

The Company's first commercial product, the CEPRATE(R) LC System, was introduced
in October 1991 and is being sold on a world-wide basis for various research
applications. Additionally, the Company commenced sales of its CEPRATE(R) SC
System for certain therapeutic purposes in Europe in August 1993 and in the U.S.
in January 1997. The CEPRATE(R) SC System is also being sold in Canada, South
America and Asia-Pacific. However, sale of the Company's products is subject to
an injunction against the Company issued July 24, 1997 which ultimately
prohibits the Company from selling or manufacturing its principal products in
the U.S., as presently constituted, and from conducting certain related research
activities in the U.S. during the term of the patents in question. Under a
partial stay of such injunction, the Company is permitted to continue selling
its primary products subject to payment of a substantial portion of the
Company's profit to the Plaintiffs in the litigation described hereinafter. See
"Investment Considerations - Legal Proceedings." Absent procuring a stay of the
injunction or obtaining a reasonable license to sell its products, the
injunction will have a material adverse effect on the Company's business,
prospects, financial condition and results of operations. The Company expects to
continue to incur substantial expenses to support its 


Page 7 of 15
<PAGE>   8

operations, including the costs of preclinical and clinical studies,
manufacturing scale-up costs and the expansion of its sales and marketing
organization. The Company's results of operations may vary significantly from
quarter to quarter during this period of development and the Company expects to
continue to incur net operating losses during this period.

RESULTS OF OPERATIONS

THREE MONTHS ENDED JUNE 30, 1997 AND 1996

PRODUCT SALES

Product sales increased to $2.5 million for the three months ended June 30,
1997, from $2.0 million in the three months ended June 30, 1996. European sales
increased 12% to $1.6 million for the three months ended June 30, 1997 from $1.4
million for the three months ended June 30, 1996. This was fueled by a 22%
increase in CEPRATE(R) SC System unit sales. These sales are denominated in
various European currencies. As a result, product sales have been and will
continue to be affected by changing currency exchange rates. The increase in
dollar denominated sales was lower than the unit sales increased due to
unfavorable exchange rates in the current quarter. During January 1997, the
Company commenced commercial shipments of the CEPRATE(R) SC System in the U.S.
During the three months ended June 30, 1997, combined U.S. and export sales to
Asia-Pacific, Canada and South America totaled $0.9 million, compared to $0.6
million during the three months ended June 30, 1996. The increase primarily
resulted from U.S. commercial sales of CEPRATE(R) SC Systems.

COST OF PRODUCT SALES

Cost of product sales was $1.3 and $1.2 million for the fiscal quarters ended
June 30, 1997 and 1996, respectively. The Company's gross margin percentage
improved in the quarter ended June 30, 1997 compared to the quarter ended June
30, 1996. Unit costs were lower in the quarter ended June 30, 1997 due to
increased production volumes. This was partially offset by lower average sales
prices in the European market resulting from the strength of the U.S. dollar.

RESEARCH AND DEVELOPMENT

Research and development expenses totaled $3.5 million in the fiscal quarter
ended June 30, 1997, consistent with the $3.7 million level in the fiscal
quarter ended June 30, 1996.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses increased to $3.5 million in the
fiscal quarter ended June 30, 1997 from $2.6 million for the fiscal quarter
ended June 30, 1996. The increase in the current quarter expenses reflects
higher sales and marketing expenses resulting from activities in support of
commercialization of the CEPRATE(R) SC System in the United States and Europe.
The U.S. product launch began in December 1996 following FDA approval of the
CEPRATE(R) SC System for purification of stem cells for bone marrow
transplantation. The CEPRATE(R) SC System is the only cell processing system
which has been approved by the FDA for this indication.



Page 8 of 15
<PAGE>   9

INTEREST INCOME

The Company also reported interest income totaling $659,000 for the fiscal
quarter ended June 30, 1997 compared to $983,000 for the quarter ended June 30,
1996. The decrease was due to lower average cash balances available for
investment in the quarter ended June 30, 1997.

The above factors resulted in net operating losses of $5.1 million and $4.6
million in the fiscal quarters ended June 30, 1997 and 1996, respectively.

LIQUIDITY AND CAPITAL RESOURCES

The Company has financed its operations since inception primarily through the
sale of Common Stock and Preferred Stock, generation of interest income and
arrangements for equipment financing. Through June 30, 1997, the Company has
raised $73.3 million through two public offerings and $79.7 million through two
private sales of Common Stock, and $9.7 million from the sale of Preferred
Stock. It has generated $17.4 million in interest income, $24.7 million in
product sales and $9.2 million in contract and related party revenues.

During the three months ended June 30, 1997, the Company has used $6.2 million
of cash in operating activities and invested $167,000 in equipment and leasehold
improvements.

The Company expects to incur substantial expenses in support of additional
research and development activities, including the costs of preclinical and
clinical studies, expansion of manufacturing activities and new product
development. Selling, general and administrative expenses are also expected to
increase as the Company builds its sales and marketing organization, continues
to pursue on-going litigation, and expands administrative activities in support
of the Company's anticipated expansion of commercial sales.

At June 30, 1997, the Company had $47.8 million in cash and securities available
for sale to meet its future working capital needs. As noted previously, $9.0
million of this amount became restricted as part of posting an appeal bond on
August 1, 1997 in response to a legal judgment issued July 24, 1997. See
"Investment Considerations - Legal Proceedings." The Company anticipates that
its capital resources should be sufficient to fund its cash requirements for at
least the next 12 months. The preceding forward-looking statement is subject to
certain risks and uncertainties that could cause actual results to differ
materially from those projected. In particular, any requirement to segregate
significant additional damages in connection with ongoing patent litigation
would have a material impact on this projection. In addition, the amount and
timing of working capital resources consumed will depend on the Company's level
of product sales, the timing and extent of sales and marketing expenditures,
including those incurred in support of product launches, the progress of ongoing
research and development, the results of preclinical testing and clinical
trials, the rate at which operating losses are incurred, the execution of any
collaborative research and development agreements, product marketing or
licensing agreements, or other corporate partner arrangements, the FDA
regulatory process, the impact of the injunction against the Company issued on
July 24, 1997 on the Company's ability to sell its products or retain its
profits on such product sales, costs incurred in





Page 9 of 15
<PAGE>   10

connection with relocating manufacturing operations for the Company's products
outside the U.S. and ultimately the outcome of continuing patent litigation, as
discussed below, and other factors, many of which are beyond the Company's
control.

INVESTMENT CONSIDERATIONS

The Company desires to take advantage of certain provisions of the Private
Securities Litigation Reform Act of 1995, enacted in December 1995 (the "Reform
Act") that provided a "safe harbor" for forward-looking statements made by or on
behalf of the Company. The Company hereby cautions stockholders, prospective
investors in the Company and other readers that certain important factors in
some cases have affected, and in the future could affect, the Company's stock
price or cause the Company's actual results for the fiscal year ending March 31,
1998, and for future fiscal years and quarters to differ materially from those
expressed in any forward-looking statements, oral or written, made by or on
behalf of the Company. Stockholders, prospective investors and other readers
should also refer to the more extensive discussion of investment considerations
set forth in the Company's Annual Report on Form 10K for the year ended March
31, 1997 in the section titled "Investment Considerations". Particular attention
should be given to the Investment Considerations labeled "Legal Proceedings",
"Patents and Proprietary Technology" and "Dependence on CEPRATE(R) SC System" in
CellPro's Annual Report on Form 10-K for the fiscal year ended March 31, 1997.

LEGAL PROCEEDINGS

The Company is engaged in litigation with Baxter Healthcare Corporation
("Baxter"), the Johns Hopkins University ("Hopkins") and Becton Dickinson &
Company ("BD") (Baxter, Hopkins and BD hereinafter being collectively referred
to as "Plaintiffs) concerning certain U.S. patents. There have been two jury
trials in the case. Following the first trial in the Summer of 1995, a unanimous
seven-member jury in the U.S. District Court in Wilmington, Delaware, rendered a
verdict wholly favorable to CellPro relating to the four U.S. patents then in
suit: Patent Nos. 4,714,680, 4,965,204, 5,035,994 and 5,130,144 (hereinafter the
'680, '204, '994 and '144 patents), which had been assigned to Hopkins, licensed
to BD and sublicensed to Baxter. The '680 patent purports to cover certain
suspensions of stem cells in isolation from a mixed cell population; the '204
patent purports to cover hybridomas that produce monoclonal antibodies having
certain characteristics relating to stem cells, and to cover such antibodies
themselves; the '994 patent purports to cover a method of stem cell isolation
using such antibodies; and the '144 patent purports to cover a method of
transplanting stem cells in a human patient.

The jury in the first trial determined that the Company did not literally
infringe any of these four patents; that all claims of all four patents were
invalid for obviousness under 35 U.S.C. Section 103; and that, with the
exception of two claims of the '204 patent, all claims of all four patents were
invalid on the additional ground of failure to enable under 35 U.S.C. Section
112. The two claims of the '204 patent as to which the jury did not render a
verdict of "nonenablement" invalidity under 35 U.S.C. Section 112 are limited in
their literal scope to the My-10 antibody and its accompanying hybridoma, an
antibody and hybridoma which are not employed by the Company.



Page 10 of 15
<PAGE>   11

Following the first jury verdict, Plaintiffs filed post-trial motions and, on
July 1, 1996, the Delaware District Court (per Judge Roderick R. McKelvie)
partially granted Plaintiffs' motion for judgment as a matter of law as to the
issues of infringement, inducement of infringement and enablement with respect
to the '680 patent, as well as the issue of induced infringement with respect to
the '144 patent. The Court ordered a new trial on remaining liability and
infringement issues.

In a series of decisions subsequent to the July 1, 1996 order, Judge McKelvie
granted motions by the Plaintiffs to dismiss CellPro's remaining liability and
infringement defenses. Plaintiffs moved to withdraw two of the four patents (the
'994 and '144 patents) from suit, which motion was granted upon Plaintiffs'
undertaking that they would not accuse any present product of CellPro of
infringing those patents.

A second jury trial was held in March, 1997, at which the jury was instructed to
the effect that the Court had already determined that CellPro infringed the two
patents remaining in the suit, that its defenses had been dismissed, and that
the jury was bound by those determinations. Hence, the jury at the second trial
heard evidence and arguments only as to the amount of damages to be awarded and
as to whether CellPro's conduct had been willful. On March 11, 1997, the jury
reached a verdict finding willfulness and awarding some $2.3 million in damages
to Plaintiffs.

After the second jury's verdict the following motions were filed, argued and
treated as follows:

         (1) Plaintiffs' motion for enhanced damages, whereby they asked the
         Court to treble the jury's damage award, was granted, and on July 24,
         1997, final judgment was entered against the Company for $6,961,479, a
         sum which, with the addition of stipulated prejudgment interest, will
         rise to $7,239,883.

         (2) Plaintiffs' motion for attorney fees, whereby they seek a
         deter-mination that CellPro is liable to reimburse them for some $7
         million in attorney fees and related litigation costs, has been put in
         abeyance by the Court, which may, but is not required to, reserve
         decision on it until after the case is decided on appeal.

         (3) Plaintiffs' motion for a permanent injunction, which was granted on
         July 24, 1997 and which grants relief to Plaintiffs, is further
         discussed below.

         (4) The Company's alternative motion for a stay of injunction in its
         entirety pending appeal was denied by the Delaware District Court,
         although the Court did enter a partial stay, as further described
         below. The Company intends to appeal to the U.S. Court of Appeals for
         the Federal Circuit for a reversal of the rulings entered by the
         District Court.

The Court also dismissed CellPro's defense that the patents are unenforceable
for misuse by reason of an attempt by the Plaintiffs to extend the reach of
their patents beyond the territory of the U.S.




                                 Page 11 of 15
<PAGE>   12

The permanent injunction entered July 24, 1997 is complex in form, but it
prohibits CellPro (subject to a stay hereinafter described) from making, using
and selling products in the U.S. which utilized the anti-stem-cell monoclonal
antibody that is essential to the Company's principal products as they are
presently constituted, and from conducting certain research activities in the
U.S. during the term of the patents. The injunction also requires a one-year
phase-down of sales in the rest of the world of disposables to support those
products with an immediate freeze on delivery of new instruments. In the U.S.,
the partial stay is by its terms effective until such time as another stem-cell
immunoseparation product (such as Baxter's ISOLEX(R) product) gains approval
from the FDA, an event which Plaintiffs have contended is probably six months
away but which may take significantly longer. Under the partial stay, the
Company is permitted to continue supplying its principal products to support FDA
approved studies and trials (in the U.S. only) commenced before such time as an
alternative device wins FDA approval. Under the stay, all other commercial and
cost recovery sales of disposable components, apart from FDA studies and trials,
would be subject to the requirement that CellPro pay over to Plaintiffs 60% of
their "incremental profits" (as defined in the injunction) on those sales, but
not less than $2,000 per commercial sale of disposable product. An ambiguity
exists with respect to the amount to be paid in situations where $2,000 is more
than 60% of defined incremental profit, which ambiguity is presently a subject
of discussion among the parties.

The Company is presently attempting to obtain clarifications and modifications
of the injunction and stay in other respects as well, including: deletion of the
"instrument-freeze" and "one-year-phase-down" provisions that apply to the
ex-U.S. market; simplification of the profit-payover calculation; a relaxation
or clarification of provisions that would otherwise restrict certain research
uses of antibodies and purified suspensions; and a relaxation or clarification
of provisions bearing on what antibodies CellPro may use to develop an ex-U.S.
source of antibody manufacture to supply the ex-U.S. market. If these matters
cannot be resolved by discussion with the Plaintiffs, CellPro may seek rulings
from the Delaware Court to resolve them and, if unsuccessful at that level, may
apply to the U.S. Court of Appeals for the Federal Circuit for modification
and/or a more expansive stay of the injunction while the case is on appeal.

The Company has filed in the Delaware Court a renewed motion for judgment as a
matter of law which attacks the sufficiency of the second jury's verdict; and to
the extent necessary the Company intends to appeal to the U.S. Court of Appeals
for the Federal Circuit from the final judgment entered upon the jury's verdict.
The Company plans to urge that reversible errors were made by the Court in
trying this case, that the second jury's verdict is contrary to the evidence and
the law, and that the first jury's invalidity verdicts, wholly favorable to
CellPro, should be reinstated and judgment entered thereon. The Company has
already filed a separate notice of appeal from the July 24, 1997 order for
permanent injunction and is pursuing that appeal expeditiously.

Certain antitrust and unfair competition claims filed by CellPro against the
Plaintiffs have been stayed pending completion of the patent litigation.

Simultaneously with the patent litigation in the Delaware District Court, the
Company instituted an administrative proceeding before the U.S. Department of
Health and Human Services ("the Department") seeking to have it exercise its
"march-in" rights under the Bayh-Dole Act (35 U.S.C. Section 203) by requiring


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<PAGE>   13

Hopkins to license to CellPro, on reasonable terms, the technology covered by
the Hopkins patents. However, the Department has never before exercised its
march-in rights under the Bayh-Dole Act. March-in rights may be exercised if no
practical application of the technology in dispute has been made in a reasonable
time and none is expected, and such a license is necessary to protect public
health. On August 1, 1997, the Department determined not to initiate a march-in
proceeding at this time, but did state that it will continue to monitor the
situation to assure itself that public health interests in the United States
will not be compromised by developments in the federal court litigation.

The course of litigation is inherently uncertain and there can be no assurance
of a favorable outcome. The Company expects to continue to make substantial
expenditures in connection with this litigation for the foreseeable future.
Future expenses in connection with this litigation could have a material adverse
effect on the Company's results of operations and financial position in future
periods.

If Plaintiffs should succeed in their application for an award of attorney fees,
and if they should succeed in defending their position on this and the
willfulness issue in the Federal Circuit Court on appeal, then the Company would
be required to pay a judgment for damages and fees of approximately $15 million,
which would have a substantial adverse impact on the Company's business and
financial condition. As discussed previously, the Company has an accrual of
$15.9 million as of June 30, 1997 to cover potential losses from and future
expenses for pursuing this litigation.

If the Plaintiffs should succeed in defending the permanent injunction in the
form in which it has been entered, then the Company will ultimately be
prohibited from selling its principal products as presently constituted, and
from conducting certain related research activities, in the U.S. during the term
of the patents, and will need to arrange for manufacture of those products
outside the U.S. to the extent it wishes to sell them in markets outside the
U.S., all of which would greatly disrupt the Company's operations and would have
a material adverse effect on the Company's business, prospects, financial
condition and results of operations. Absent a reasonable license, and if a
suitable stay of injunction cannot be negotiated or procured by court action
pending appeal, and in the absence of other alternatives which may or may not be
available, the Company, according to a declaration of its chief financial
officer filed May 28, 1997, would likely find it necessary to significantly
restrict operations so as to conserve capital while awaiting the outcome of the
appeal. Any such event could result in a significant decrease in the value of
the Company and therefore makes any investment in the Company inherently highly
speculative.

As a possible alternative to a litigated result on appeal, the Company could
pursue further attempts to obtain commercially reasonable licenses under the
four Johns Hopkins patents at issue through various means, including through
negotiations with Plaintiffs. Attempts to negotiate licenses with the Plaintiffs
have not been successful to date, however, and no assurance can be given that
Plaintiffs would license the patents to the Company at all or on terms that
would permit commercialization of the Company's stem cell separation technology.



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<PAGE>   14

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130, Reporting Comprehensive Income. SFAS No. 130 establishes requirements for
disclosure of comprehensive income and becomes effective for the Company for the
year ending March 31, 1999. Comprehensive income includes such items as foreign
currency translation adjustments and unrealized holding gains and losses on
securities available for sale that are currently being presented by the Company
as a component of stockholders' equity. The Company does not expect this
pronouncement to materially impact the Company's results of operations.

In June 1997, the FASB issued SFAS No. 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS No. 131 establishes standards for
disclosure about operating segments in annual financial statements and selected
information in interim financial reports. It also establishes standards for
related disclosures about products and services, geographic areas and major
customers. This statement supersedes SFAS No. 14, Financial Reporting for
Segments of a Business Enterprise. The new standard becomes effective for the
Company for the year ending March 31, 1999, and requires that comparative
information from earlier years be restated to conform to the requirements of
this standard. The Company does not expect this pronouncement to materially
change the Company's current reporting and disclosures.

                           PART II. OTHER INFORMATION


ITEM 1.  LEGAL PROCEEDINGS

See discussion under "Investment Considerations - Legal Proceedings" in Part I,
Item 2, above.



ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

         (a)      Exhibits

                  Exhibit 27 - Financial Data Schedule

         (b)      No reports on Form 8-K were filed during the first quarter 
                  ended June 30, 1997.



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<PAGE>   15
                                   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.








                                      CELLPRO, INCORPORATED
                                      (Registrant)


Date:  August 13, 1997

                                      /s/ Larry G. Culver
                                      -------------------------------------
                                      Larry G. Culver
                                      Executive Vice President,
                                      Chief Operating Officer,
                                      Chief Financial Officer
                                      and Director


                                      /s/ Larry G. Culver
                                      ------------------------------------
                                      Larry G. Culver
                                      Executive Vice President,
                                      Chief Operating Officer,
                                      Chief Financial Officer
                                      and Director
                                      (Chief Accounting Officer)



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