<PAGE>

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                   FORM 10-Q



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

                 For the quarterly period ended March 31, 2001

                                       or

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

                       Commission File Number: 000-26929

                              ADOLOR CORPORATION
            (Exact Name of Registrant as Specified in its Charter)


              Delaware                                 31-1429198
  (State or other jurisdiction of        (I.R.S. Employer Identification No.)
   incorporation or organization)

                            620 Pennsylvania Drive
                           Exton, Pennsylvania 19341
             (Address of Principal Executive Offices and Zip Code)

                                 484-595-1500
             (Registrant's Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirement for the past 90 days: Yes  X    No ______
                                      ----

Number of shares outstanding of the issuer's Common Stock, par value $.0001 per
share, as of May 11, 2001: 27,953,646 shares.

<PAGE>

          Adolor Corporation

              INDEX


PART I.   FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                                                   Page
                                                                                                   ----
<S>                                                                                                <C>
  Item 1.  Financial Statements:

   Consolidated Balance Sheets at December 31, 2000 and March 31, 2001                                1

   Consolidated Statements of Operations for the three months ended March 31, 2000 and 2001 and
    the period from August 9, 1993 (inception) to March 31, 2001                                      2


   Consolidated Statements of Cash Flows for the three months ended March 31, 2000 and 2001 and
    the period from August 9, 1993 (inception)  to March 31, 2001                                     3

   Notes to Consolidated Financial Statements                                                         4

  Item 2.  Management's Discussion and Analysis of Financial Condition and
               Results of Operations.                                                                 6

  Item 3.  Quantitative and Qualitative Disclosures About Market Risk                                 7

PART II.   OTHER INFORMATION

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

           Signatures                                                                                 8
</TABLE>

This Report on Form 10-Q includes forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 as amended, and Section 21E of the
Securities Exchange Act. We have based these forward-looking statements on our
current expectations and projections about future events.

These forward-looking statements include statements about the following:

   .     our product development efforts and the implications of their
         preliminary results;

   .     the commercialization of our product candidates, including the
         development of a sales and marketing force;

   .     our intentions regarding the establishment of collaborations;

   .     anticipated operating losses and capital expenditures;

   .     anticipated regulatory filing dates and clinical trial initiation dates
         for our product candidates;

   .     the status of regulatory approval for our product candidates; and

   .     our intention to rely on third parties for manufacturing.

In some cases, you can identify forward-looking statements by terminology such
as "may," "will," "should," "could," "would," "expect," "plan," "anticipate,"
"believe," "estimate," "continue," or the negative of such terms or other
similar expressions. Factors that might cause or contribute to discrepancies
include, but are not limited to, those discussed elsewhere in this Report and
the risks discussed in our other Securities and Exchange Commission ("SEC")
filings including our Registration on Form S-1 declared effective on November
13, 2000 by the SEC (File No. 333-96333) and our report on Form 10-K filed on
April 2, 2001.

                                       i
<PAGE>

PART I.     FINANCIAL INFORMATION
---------------------------------
ITEM 1.      FINANCIAL STATEMENTS

                              Adolor Corporation
                         (A Development Stage Company)
                          Consolidated Balance Sheets
                     December 31, 2000 and March 31, 2001

<TABLE>
<CAPTION>
                                                                                 December 31,     March 31,
                                                                                     2000           2001
                                                                                 ------------    ------------
     Assets                                                                         Audited       Unaudited
                                                                                -------------   -------------
<S>                                                                             <C>             <C>
Current assets:
 Cash and cash equivalents                                                       $ 67,392,849    $ 73,133,082
 Short-term investments                                                            64,237,605      52,266,927
 Prepaid expenses and other current assets                                          2,503,248       3,613,307
                                                                                 ------------    ------------
   Total current assets                                                           134,133,702     129,013,316

Equipment and leasehold improvements, net                                           1,390,450       1,905,498
Other assets                                                                           86,007          83,294
                                                                                 ------------    ------------
   Total assets                                                                  $135,610,159    $131,002,108
                                                                                 ============    ============
    Liabilities and Stockholders' Equity
Current liabilities:
 Notes payable-current portion                                                        521,053         603,596
 Accounts payable                                                                   1,696,975         604,208
 Accrued expenses                                                                   3,192,533       4,922,178
 Deferred licensing fees                                                               52,632          52,632
                                                                                 ------------    ------------
   Total current liabilities                                                        5,463,193       6,182,614
Notes payable, less current portion                                                   214,819          85,927
Deferred licensing fees                                                               892,543         879,385
                                                                                 ------------    ------------
   Total liabilities                                                                6,570,555       7,147,926
                                                                                 ------------    ------------
Commintments and Contingencies
Stockholders' equity (deficit):
 Series A Junior Participating preferred stock $0.01 par value; 35,000 shares
  authorized, none issued and outstanding                                                   -               -
 Preferred stock,$0.01 par value; 1,000,000 shares authorized; none issued
  and outstanding                                                                           -               -
 Common stock, par value $.0001 per share; 99,000,000 shares authorized;
  27,944,852 and 27,953,646 shares issued and outstanding at
  December 31, 2000 and March 31, 2001, respectively                                    2,794           2,795
 Additional paid-in capital                                                       200,335,775     199,711,865
 Notes receivable for stock options                                                (1,056,488)     (1,121,722)
 Deferred compensation                                                            (18,125,961)    (16,031,471)
 Unrealized gains on available for sale securities                                    125,581         515,197
 Deficit accumulated during the development stage                                 (52,242,097)    (59,222,482)
                                                                                 ------------    ------------
   Total stockholders' equity                                                     129,039,604     123,854,182
                                                                                 ------------    ------------

   Total liabilities and stockholders' equity                                    $135,610,159    $131,002,108
                                                                                 ============    ============
</TABLE>


See accompanying notes to consolidated financial statements.

                                       1
<PAGE>
                              Adolor Corporation
                         (A Development Stage Company)

                     Consolidated Statements of Operations
                                  (unaudited)
              Three months ended March 31, 2000 and 2001 and the
           period from August 9, 1993 (inception) to March 31, 2001

<TABLE>
<CAPTION>
                                                                                       Period from
                                                                                     August 9, 1993
                                                           Three months ended        (inception) to
                                                                  March 31,              March 31,
                                                          2000            2001             2001
                                                      -------------    -----------   --------------
<S>                                                   <C>              <C>           <C>
Revenues:
  Grant, license and milestone revenue                $       6,579    $   533,095     $    737,903
                                                      -------------    -----------   --------------

Operating expenses incurred during the
  development stage:
    Research and development                              3,049,159      6,540,653       46,502,695
    General and administrative                            1,140,151      3,046,570       19,280,508
                                                      -------------    -----------   --------------
      Total operating expenses                            4,189,310      9,587,223       65,783,203
                                                      -------------    -----------   --------------
      Loss from operations                               (4,182,731)    (9,054,128)     (65,045,300)
Interest income                                             153,100      2,112,352        6,103,838
Interest expense                                             (2,034)       (38,609)        (281,020)
                                                      -------------    -----------   --------------
      Net loss                                           (4,031,665)    (6,980,385)     (59,222,482)

Undeclared dividends and accretion of mandatorily
  redeemable convertible preferred stock                   (955,250)         -
Beneficial conversion feature on manditorily
  redeemable convertible preferred stock                (12,306,000)         -

Net loss allocable to common stockholders             $ (17,292,915)   $(6,980,385)
                                                      =============    ===========
Basic and diluted net loss per share allocable
 to common stockholders:                                    $(12.61)        $(0.25)
                                                      =============    ===========
Shares used in computing basic and diluted
 net loss per share allocable to common
 stockholders:                                            1,371,498     27,945,145
                                                      =============    ===========
</TABLE>

See accompanying notes to consolidated financial statements.

                                       2
<PAGE>

                              Adolor Corporation
                         (A Development Stage Company)

                     Consolidated Statements of Cash Flows
                                  (unaudited)
              Three months ended March 31, 2000 and 2001 and the
           period from August 9, 1993 (inception) to March 31, 2001

<TABLE>
<CAPTION>


                                                                                                            Period from
                                                                                                          August 9, 1993
                                                                                 Three months ended       (inception) to
                                                                                       March 31,             March 31,
                                                                                2000           2001             2001
                                                                           --------------  -------------  ---------------
<S>                                                                        <C>             <C>            <C>
Cash flows from operating activities:
 Net loss                                                                     $(4,031,665)  $ (6,980,385)  $ (59,222,482)
 Adjustments to reconcile net loss to net cash
 used in operating activities:
    Non-cash compensation expense                                                 533,749      1,448,773       6,636,011
    Non-cash warrant value                                                              -              -          60,000
    Depreciation and amortization expense                                          69,809        139,511       1,230,496
    Issuance of common stock for technology license agreements                          -              -           6,250
    Changes in assets and liabilities:
     Prepaid expenses and other current assets                                     44,304     (1,110,059)     (3,613,307)
     Other assets                                                                       -          2,713         (83,294)
     Accounts payable                                                             316,827     (1,092,767)        604,208
     Deferred licensing fees                                                       (6,580)       (13,158)        932,017
     Accrued expenses and other current liabilities                               181,308      1,729,645       4,922,178
                                                                              -----------   ------------   -------------
    Net cash used in operating activities                                      (2,892,248)    (5,875,727)    (48,527,923)
                                                                              -----------   ------------   -------------

Cash flows from investing activities:
 Purchase of equipment and leasehold improvements                                 (69,941)      (654,559)     (3,122,654)
 Purchase of short-term investments                                              (304,119)    (9,131,157)   (105,473,065)
 Maturities of short-term investments                                             592,385     21,491,451      53,721,335
                                                                              -----------   ------------   -------------
     Net cash provided (used in) by investing activities                          218,325     11,705,735     (54,874,384)
                                                                              -----------   ------------   -------------

Cash flows from financing activities:
 Net proceeds from issuance of mandatorily redeemable convertible
   preferred stock and Series B warrants                                       12,331,000              -      78,501,909
 Proceeds from Series D mandatorily redeemable convertible preferred
   stock subscription                                                                   -              -         600,000
 Net proceeds from issuance restricted common stock and exercise
   of common stock options                                                        177,087         21,808         432,722
 Proceeds from notes payable-related parties                                            -              -       1,000,000
 Payment of notes payable                                                         (17,129)      (134,380)       (800,619)
 Proceeds received on notes receivable                                                  -          4,105           4,105
 Interest receivable converted to principal on notes                                    -        (69,339)        (69,339)
 Proceeds from notes payable                                                            -         88,031       1,490,142
 Net proceeds from IPO                                                           (317,728)             -      95,376,469
                                                                              -----------   ------------   -------------
     Net cash provided by (used in) financing activities                       12,173,230        (89,775)    176,535,389

Net increase in cash and cash equivalents                                       9,499,307      5,740,233      73,133,082
Cash and cash equivalents at beginning of period                                3,472,164     67,392,849               -
                                                                              -----------   ------------   -------------
Cash and cash equivalents at end of period                                    $12,971,471   $ 73,133,082   $  73,133,082
                                                                              ===========   ============   =============
Supplemental disclosure of cash flow information:
 Cash paid for interest                                                             2,034         38,609         191,145

Supplemental disclosure of noncash transactions:
 Unrealized gains (losses) on available for sale securities                             -        389,616         389,616
Deferred compensation from issuance of common stock, restricted
  common stock and common stock options                                         1,691,439              -      23,313,199
Issuance of common stock for technology license agreements or for
  services                                                                              -              -          19,589
Conversion of Series A through H preferred stock for common stock                       -              -      80,383,703
Conversion of stock subscription to Series D mandatorily redeemable
  preferred stock                                                                       -              -         600,000
Conversion of bridge financing, including accrued interest, to Series B
  mandatorily redeemable preferred stock                                                -              -       1,019,787
                                                                              ===========   ============   =============
</TABLE>

See accompanying notes to consolidated financial statements.

                                       3
<PAGE>

                              Adolor Corporation
                         (A Development Stage Company)

                  Notes to Consolidated Financial Statements

                                March 31, 2001
                                  (unaudited)


1. ORGANIZATION AND BUSINESS ACTIVITIES

     Adolor Corporation (together with its subsidiaries, "Adolor" or the
"Company") is a development-stage pharmaceutical company engaged in the
development of peripheral and central analgesics based on opiate receptors and
opiate-like receptors. The Company commenced operations on November 7, 1994. The
Company is currently devoting substantially all of its efforts toward conducting
pharmaceutical discovery and development, licensing technology, obtaining
regulatory approval for products under development, negotiating strategic
corporate relationships, recruiting personnel and raising capital.

     The accompanying consolidated financial statements include the results of
operations of the Company for the period from August 9, 1993 (inception) to
March 31, 2001.

     The Company has licensed its core technology from certain universities and
research institutions in exchange for present and future cash payments and, in
certain instances, common stock. The cost of obtaining such technology has
been charged as incurred, to research and development expense in the
accompanying consolidated statements of operations because the core technology
which was licensed had not reached technological feasibility and had no
alternative future uses.

     The Company has not generated any product sales revenues and has not
achieved profitable operations. There is no assurance that profitable
operations, if ever achieved, could be sustained on a continuing basis. In
addition, development activities and clinical and pre-clinical testing and
commercialization of the Company's proprietary technology will require
significant additional financing. The Company's deficit accumulated during the
development stage through March 31, 2001, aggregated approximately $59.2
million, and the Company's management expects to incur substantial and
increasing losses in future periods. Further, the Company's future operations
are dependent on the success of the Company's research, development and
licensing efforts and, ultimately, upon regulatory approval and market
acceptance of the Company's proposed future products.

     The Company plans to finance its future operations with a combination of
license payments, equity offerings, payments from strategic research and
development and marketing arrangements, and revenues from future product
sales, if any. The Company has not generated positive cash flows from
operations, and there are no assurances that the Company will be successful in
obtaining an adequate level of financing for the long-term development and
commercialization of its planned products. The Company believes that its
current financial resources and sources of liquidity are adequate to fund
operations for at least the next year based on a level of research and
development and administrative activities necessary to achieve its short-term
objectives.


Principles of Consolidation

     The consolidated financial statements include the accounts of Adolor
Corporation and its wholly owned subsidiary. All significant intercompany
accounts and transactions have been eliminated in consolidation. The information
at March 31, 2001 and for the period ended March 31, 2000 and 2001, is unaudited
but includes all adjustments (consisting only of normal recurring adjustments)
which, in the opinion of management, are necessary to state fairly the financial
information set forth in accordance with accounting principals generally
accepted in the United States of America. The interim results are not
necessarily indicative of results to be expected for the full fiscal year. These
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements for the year ended December 31, 2000 included
in the Company's Annual Report on Form 10-K filed with the Securities and
Exchange Commission.

                                       4
<PAGE>

(2)COMPREHENSIVE LOSS

In the Company's annual consolidated financial statements, comprehensive loss is
presented as a separate financial statement. For interim consolidated financial
statements,the

Company is permitted to disclose the information in the footnotes to the
financial statements. The disclosures are required for comparative purposes. The
only comprehensive income item the Company has is unrealized gains and losses on
available for sale securities.


The following reconciles net loss to comprehensive loss for the three months
ended March 31, 2000 and 2001:


                                            2000         2001
                                            ----         ----

 Net loss                              $(4,031,665) $(6,980,385)

 Other comprehensive income:

   Unrealized gains on available
   for sale securities                           -      389,616
                                       -----------  -----------
 Comprehensive loss                    $(4,031,665) $(6,590,769)
                                       ===========   ==========

                                       5
<PAGE>

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

Overview

      We have devoted substantially all of our resources since we began our
operations in November 1994 to the discovery and development of proprietary
pharmaceutical products for the treatment of pain and the side effects that are
caused by current pain treatments.  We are a development stage pharmaceutical
company and have not generated any revenues from product sales.  We have not
been profitable and, since our inception, we have incurred a cumulative net loss
of approximately $59.2 million through March 31, 2001.  These losses have
resulted principally from costs incurred in research and development activities
and general and administrative expenses.  We have four product candidates in
Phase III or Phase II clinical trials and several compounds in Phase I clinical
trials and preclinical studies.

      Our revenues in the near term are expected to consist primarily of
milestone payments on certain of our product candidates licensed to others for
development. These payments are dependent on continued development and
achievement of certain clinical and regulatory milestones by licensees and will
not, in any event, be material relative to our operating expenses. In the event
that our development efforts or those of our licensees result in regulatory
approval and successful commercialization of our product candidates, we will
generate revenues from sales of our products and from the receipt of royalties
on sales of licensed products. Product revenues will depend on our ability to
receive regulatory approvals for, and successfully market, our product
candidates.

      We expect to incur additional operating losses for at least the next
several years.  Research, development and clinical trial costs relating to
product candidates will continue to increase.  Manufacturing, marketing and
sales costs will increase as we prepare for the commercialization of ADL 8-2698
which, assuming regulatory approval, we expect to occur in 2003.

      We intend to expand our marketing activities in 2001 and 2002 in
preparation for the establishment of a sales force for our product candidates in
the Unites States.  In international markets we intend to rely on collaborations
with pharmaceutical companies to market and sell our product candidates rather
than establish our own sales force.

Milestone Payments, Royalties and License Fees

      We paid Roberts Laboratories, Inc., which recently merged with Shire
Pharmaceutical, plc, a total of $600,000 through March 31, 2001 for the
exclusive worldwide license to ADL 8-2698.  Our license agreement with Roberts
requires us to make payments to Roberts if and when two milestones are achieved.
Roberts licensed the rights to ADL 8-2698 from Eli Lilly, and Eli Lilly
consented to the assignment by Roberts to us of Roberts' rights and obligations.
Under the agreement with Eli Lilly, we will make a milestone payment to Eli
Lilly if and when we receive FDA approval to sell ADL 8-2698.  We will be
required to pay royalties to Eli Lilly and Roberts on any sales of ADL 8-2698.

      Under an agreement with Oregon Health Sciences University, we paid Oregon
Health Sciences University for a nonexclusive license for the use of patented
inventions which relate to an opioid receptor. There are no other payments or
royalties due in this agreement.

      Under an agreement with Arch Development Corporation, the technology
transfer office of the University of Chicago, we obtained an exclusive worldwide
license covering the nucleotide sequence encoding the mammalian kappa opioid
receptor and related opioid receptor technologies. We reimbursed Arch
Development Corporation for actual patent expenses incurred. In addition we will
make a license payment, milestone payments and royalty payments on future net
sales of products discovered, if any, utilizing this technology.

Results of Operations

Three Months Ended March 31, 2001 and 2000

      Grant and license revenues. Our grant and license revenues were $533,095
and $6,579 for the three months ended March 31, 2001 and 2000, respectively.
Revenues recognized for the three months ended March 31, 2001 consisted of a
milestone payment of $500,000 from an affiliate of GlaxoSmithKline, $6,579 which
is a portion of the $500,000 license fee received from the same affiliate of
GlaxoSmithKline on signing of the agreement in July 1999, $6,579 which is a
portion of the $500,000 license fee received from Santen Pharmaceutical Co.,
Ltd. on signing that agreement in April 2000 and a patent cost reimbursement
from Santen Pharmaceutical Co. Ltd of $19,937. Revenue recognized for the three
months ended March 31, 2000 consisted of $6,579, which is a portion of the
$500,000 license fee received from the same affiliate of GlaxoSmithKline in July
1999. The license fee revenues are being recognized over the remaining life of
the patents that were licensed in those collaborations.

      Research and development expenses.  Our research and development expenses
consist primarily of salaries and other personnel-related expense, costs of
clinical trials, costs to manufacture drug candidates, stock-based compensation
and other research expense. Research and development expenses increased to
approximately $6.5 million for the three months ended March 31, 2001 from
approximately $3.1 million for the three months ended March 31, 2000. This
increase is primarily due to the costs of developing our product candidates as
well as higher personnel costs resulting from increased staffing levels. In the
three months ended March 31, 2001, the costs of conducting Phase I, and Phase II
clinical trials, the start of Phase III clinical trials and the costs of
manufacturing the clinical trial materials for ADL 8-2698 increased

                                       6
<PAGE>

by approximately $1.5 million compared to the same period in 2000. Personnel
costs increased by approximately $1.0 million compared to the same period in
2000. Amortization of deferred stock-based compensation expenses increased by
$0.5 million in the year 2001 compared to the same period in 2000. An increase
in other expenses including office rent and office expense compared to the same
period in 2000 resulted from an increase in office space because of additional
personnel.

     General and administrative expenses. Our general and administrative
expenses increased to approximately $3.0 million for the three months ended
March 31, 2001 from approximately $1.1 million in the three months ended March
31, 2000, an increase of $1.9 million. The increase is primarily due to
approximately $0.4 million of higher amortization of deferred stock-based
compensation expense, approximately $0.4 million of higher payroll expenses
related to additional personnel, approximately $0.6 million of marketing
research, and an increase of other expenses including insurance, office rent and
office expense.

      Net interest income (expense). Our interest income increased from
approximately $0.2 million for the three months ended March 31, 2000 to
approximately $2.1 million for the same period in 2001 due to investment returns
on the proceeds from our initial public offering in November 2000 and the sale
of Series G and H mandatorily redeemable convertible preferred stock in January
and July 2000, respectively. Our interest expense represents interest incurred
on the financing of insurance premiums.

      Net loss. Our net loss for the three months ended March 31, 2000 and 2001
was approximately $4.0 million and $7.0 million, respectively. The increase in
the net loss reflects higher costs associated with the expansion of Phase II and
Phase III clinical development, higher manufacturing costs for the clinical
trial materials for ADL 8-2698 and increased staffing levels.

      Net loss allocable to common stockholders. Our net loss allocable to
common stockholders was approximately $17.3 million for the three months ended
March 31, 2000 compared to approximately $6.9 million in the same period of
2001. Although our net loss increased by approximately $3.0 million, the net
loss allocable to common stockholders decreased because of the elimination of
the undeclared dividends on mandatorily redeemable convertible preferred stock
and beneficial conversion charges in the three months ended March 31, 2001.

      Beneficial Conversion Feature. In January 2000, we sold 12,306,000 shares
of mandatorily redeemable convertible Series G preferred stock for net proceeds
of approximately $12.3 million. After evaluating the fair value of our common
stock in contemplation of our initial public offering, we determined that the
issuance of the mandatorily redeemable convertible Series G preferred stock
resulted in a beneficial conversion feature calculated in accordance with
Emerging Issues Task Force consensus No. 98-5, "Accounting for Convertible
Securities with Beneficial Conversion Features." Because the shares of
mandatorily redeemable convertible Series G preferred stock were issued below
the fair value, a beneficial conversion feature of $12.3 million was reflected
in calculating the net loss allocable to common shareholders for the three
months ended March 31, 2000. The beneficial conversion feature cannot exceed the
proceeds from the sale of the securities.

Liquidity and capital resources

      As of March 31, 2001, we had cash, cash equivalents and short term
investments of approximately $125.4 million, and our working capital was
approximately $122.8 million.

      From inception through March 31, 2001, net cash used in operating
activities was approximately $48.5 million. Net cash used in investing
activities since inception was approximately $54.9 million and was used
primarily for the acquisition of laboratory equipment, leasehold improvements,
furniture and fixtures and office equipment, and for the net purchases of short-
term investments.

      From inception through March 31, 2001, we have financed our operations
primarily from the net proceeds generated from the issuance of mandatorily
redeemable convertible preferred stock and the issuance of common stock in our
initial public offering. As of March 31, 2001, we had received total net
proceeds of approximately $79.1 million from the sales of mandatorily redeemable
convertible preferred stock. In November 2000, we received net proceeds of
approximately $95.0 million from our initial public offering.

      Our capital expenditures in the three months ended March 31, 2001 were
approximately $0.7 million.

      We lease our corporate and research and development facilities under three
operating leases expiring on October 15, 2002, November 30, 2002 and May 31,
2003. Current total minimum annual payments under these leases are $722,345 in
2001, $849,810 in 2002 and $153,885 in 2003.

      Research and development expenditures, including clinical trial
expenditures, are expected to increase as we continue to develop new product
candidates. We expect that our operating expenses and capital expenditures will
increase in future periods as a result of the manufacturing scale-up and in
anticipation of commercialization of our product candidates, assuming we receive
the necessary regulatory approvals. The initiation of commercial activities will
require the hiring of additional staff to coordinate contract-manufacturing
services at multiple locations. Sales and marketing activities will require
hiring and training of a sales and marketing staff in 2001, 2002 and 2003. As of
March 31, 2001, we may be required to pay up to an aggregate of $6.0 million
upon the occurrence of certain future clinical and regulatory events under
various agreements (including our agreement with Eli Lilly). We also intend to
hire additional research and development, clinical and administrative staff. Our
capital expenditure requirements will depend on numerous factors, including the
progress of our research and development programs, the time required to file and
process regulatory approval applications, the development of commercial
manufacturing capability, the ability to obtain additional licensing
arrangements, and the demand for our product candidates, if and when approved by
the U.S. Food and Drug Administration or other regulatory authorities.

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

      A substantial portion of our assets are investment grade debt instruments,
such as direct obligations of the U.S. Treasury and corporate securities,
including commercial paper and corporate debt instruments. The market value of
such investments fluctuates with current market interest rates. In general, as
rates increase, the market value of a debt instrument would be expected to
decrease. The opposite is also true. To minimize such market risk, we have in
the past and, to the extent possible, will continue in the future to hold such
debt instruments to maturity, at which time the debt instrument will be redeemed
at its stated or face value. Due to the short duration and nature of these
instruments, we do not believe that we have a material exposure to interest rate
risk related to our investment portfolio. The investment portfolio at March 31,
2001 was $52.3 million and the weighted average interest rate was approximately
six percent (6.9%).

                                       7
<PAGE>

PART II.  OTHER INFORMATION
---------------------------

ITEM 6.   Exhibits and Reports on Form 8-K:

     (a)   The following exhibits are filed as part of this Report on Form 10-Q:


3.1  Amended and Restated Certificate of Incorporation of Adolor.

3.2  Restated Bylaws of Adolor.

3.3  Certificate of Designation, Preferences and Rights of Series A Junior
     Participating Preferred Stock of Adolor.

4.1  Rights Agreement, dated as of February 20, 2001, between Adolor and
     StockTrans, Inc., as Rights Agent, which includes as Exhibit B thereto the
     Form of Rights Certificate.  (Incorporated by reference to Exhibit 1.1 to
     Adolor's Registration Statement on Form 8-A, dated February 22, 2001.)


     (b)   We filed the following Current Reports on Form 8-K during the quarter
           ended March 31, 2001:

           We filed a Current Report on Form 8-K on February 23, 2001 to report,
           pursuant to Item 5, the adoption by our Board of Directors of a
           stockholder rights plan



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.


                                   ADOLOR CORPORATION

Date: May 11, 2001                 By: /s/ John J. Farrar
                                   ------------------------------
                                       John J. Farrar
                                       President and Chief Executive Officer

                                   By: /s/ Peter J. Schied
                                   --------------------------------
                                       Peter J. Schied
                                       Vice President, Chief Financail Officer
                                       and Secretary

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