<PAGE>   1


                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 quarter period ended September 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: 0-10640


                              COLLAGEN CORPORATION

             (Exact name of registrant as specified in its charter)


        Delaware                                         94-2300486
----------------------                        ----------------------------------
State of Incorporation                        I.R.S. Employer Identification No.

                  2500 Faber Place, Palo Alto, California 94303
                            Telephone: (415) 856-0200


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.

As of October 31, 1997, Registrant had outstanding 8,898,364 shares of common
stock, exclusive of 1,947,900 shares held by the Registrant as treasury stock.



<PAGE>   2



                              COLLAGEN CORPORATION

                                      INDEX



<TABLE>
<CAPTION>
PART I.        Financial Information                                          Page No.
------------------------------------                                          --------
<S>                                                                            <C>
Consolidated Balance Sheets -
September 30, 1997 and June 30, 1997 ..........................................    3
                                                                               
Consolidated Statements of Income -                                            
Three months ended September 30, 1997 and 1996 ................................    4
                                                                               
Condensed Consolidated Statements of Cash Flows -                              
Three months ended September 30, 1997 and 1996 ................................    5
                                                                               
Notes to Condensed Consolidated Financial Statements ..........................  6-9
                                                                               
Management's Discussion and Analysis of Financial                              
Condition and Results of Operations ........................................... 10-17

                                                                               
PART II.       Other Information                                               
--------------------------------                                               
                                                                               
Other Information ............................................................. 18-20
                                                                               
Signatures ....................................................................    21
                                                                            
</TABLE>




                                       2
<PAGE>   3



                              COLLAGEN CORPORATION
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
               (In thousands, except share and per share amounts)

<TABLE>
<CAPTION>
                                                                 September 30,            June 30,  
                                                                    1997                   1997 *
                                                                 -------------          ------------
<S>                                                               <C>                   <C>         
ASSETS
   Current assets:
     Cash and cash equivalents                                    $     16,162          $     18,481
     Short-term investments                                              7,792                 5,117
     Accounts receivable, net                                           12,701                10,759
     Inventories, net                                                   13,610                14,293
     Other current assets, net                                           9,957                 9,314
                                                                  ------------         -------------
           Total current assets                                         60,222                57,964

   Property and equipment, net                                          15,670                15,260
   Intangible assets and goodwill, net                                  13,979                14,764
   Investment in Boston Scientific Corporation                          70,522                83,874
   Other investments and assets, net                                    17,309                13,049
                                                                  ------------         -------------
                                                                  $    177,702         $     184,911
                                                                  ============         =============

LIABILITIES AND STOCKHOLDERS' EQUITY
   Current liabilities:
     Accounts payable                                             $      1,620          $      2,638
     Other accrued liabilities                                          12,828                13,638
     Income taxes payable                                               10,084                 9,376
     Notes payable                                                       2,030                    70
                                                                  ------------         -------------
           Total current liabilities                                    26,562                25,722

   Long-term liabilities:
     Deferred income taxes                                              32,345                35,448
     Other long-term liabilities                                         1,800                 3,795
                                                                  ------------         -------------
           Total long-term liabilities                                  34,145                39,243

   Commitments and contingencies
   Minority Interest                                                        19                    49

   Stockholders' equity:

     Preferred Stock, $.01 par value, authorized: 
        5,000,000 shares; none issued and outstanding                       --                    --
     Common stock, $.01 par value, authorized: 
        28,950,000 shares, issued: 10,770,304 shares 
        at September 30, 1997 (10,756,935 shares at 
        June 30, 1997), outstanding: 8,822,404 shares at
        September  30, 1997 (8,809,035 shares at June 30, 1997             108                   108
     Additional paid-in capital                                         67,297                67,204
     Retained earnings                                                  50,009                47,999
     Cumulative translation adjustment                                  (2,002)               (1,717)
     Unrealized gain on available-for-sale investments                  42,430                47,069
     Treasury stock, at cost, 1,947,900 shares at 
        September 30, 1997 and June 30, 1997                           (40,766)              (40,766)
                                                                  ------------         -------------
           Total stockholders' equity                                  117,076               119,897
                                                                  ------------         -------------
                                                                  $    177,702         $     184,911
                                                                  ============         =============
</TABLE>
* Amounts derived from audited financial statements at the date indicated.



                                       3
<PAGE>   4


                              COLLAGEN CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                    (In thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                September 30,
                                                            --------------------
                                                              1997        1996
                                                            --------    --------
<S>                                                         <C>         <C>     
Revenues:
   Product Sales                                            $ 20,402    $ 16,785

Costs and expenses:
   Cost of sales                                               6,502       5,145
   Selling, general and administrative                        10,569       8,848
   Research and development                                    5,726       4,162
                                                            --------    --------
                                                              22,797      18,155
                                                            --------    --------

Loss from operations                                          (2,395)     (1,370)

Other income (expense):
   Net gain on investments, principally Boston Scientific
     Corporation (Target Therapeutics, Inc. in fiscal 1997)    5,932       6,184
   Equity in losses of affiliates, net                           (73)       (474)
   Interest income                                               301         354
   Interest expense                                              (25)        (85)
                                                            --------    --------

Income before income taxes and minority interest               3,740       4,609

Provision for income taxes                                     1,758       2,443
Minority interest                                                (28)       (141)
                                                            --------    --------

Net income                                                  $  2,010    $  2,307
                                                            ========    ========

Net income per share                                        $    .23    $    .25
                                                            ========    ========

Shares used in calculating per share information               8,901       9,086
                                                            ========    ========
</TABLE>


                                       4
<PAGE>   5

                              COLLAGEN CORPORATION
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                Increase (Decrease) in Cash and Cash Equivalents
                                   (Unaudited)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                 Three Months Ended
                                                                                    September 30,
                                                                                --------------------
                                                                                  1997        1996
                                                                                --------    --------
<S>                                                                             <C>         <C>     
Cash flows from operating activities:
   Net income                                                                   $  2,010    $  2,307
   Adjustments to reconcile net income to net cash provided by
    (used in) operating activities:
      Depreciation and amortization                                                1,730       1,617
      Equity in losses of affiliates                                                  73         474
      Gain on investments, net of taxes paid of $0 and $3.5 million
        in fiscal 1998 and 1997, respectively                                     (5,932)     (2,702)
      Other adjustments related to changes in
        assets and liabilities                                                    (2,289)      1,560
                                                                                  -------     ------
    Net cash provided by (used in) operating activities                           (4,408)      3,256
                                                                                  -------     ------

Cash flows from investing activities:
   Proceeds from sale of Boston Scientific Corporation stock
    (Target Therapeutics, Inc. in Fiscal 1997), net of taxes paid                  6,216       3,767
   Proceeds from sale of other affiliate stock                                       704          --
   Proceeds from sales and maturities of short-term investments                    2,650         500
   Purchases of short-term investments                                            (5,324)     (2,865)
   Expenditures for property and equipment                                        (1,414)     (1,704)
   Increase in intangible and other assets                                            --         (46)
   Expenditures for investments in and loans to affiliates, net of repayments         44      (1,255)
                                                                                --------    --------
    Net cash provided by (used in) investing activities                            2,876      (1,603)
                                                                                --------    --------

Cash flows from financing activities:
   Repurchase of common stock                                                         --      (2,547)
   Net proceeds from issuance of common stock                                         94         524
   Cash dividends paid                                                              (881)       (885)
   Repayment of bank loans                                                            --         (41)
                                                                                --------    --------
    Net cash used in financing activities                                           (787)     (2,949)
                                                                                --------    --------

Net decrease in cash and cash equivalents                                         (2,319)     (1,296)

Cash and cash equivalents at beginning of period                                  18,481      21,676
                                                                                --------    --------

Cash and cash equivalents at end of period                                      $ 16,162    $ 20,380
                                                                                ========    ========
</TABLE>



                                       5
<PAGE>   6

                              COLLAGEN CORPORATION
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


1.  Summary of Significant Accounting Policies

    Basis of Presentation

    The consolidated financial statements include the accounts of Collagen
    Corporation (the "Company"), a Delaware corporation, and its wholly-owned
    and majority-owned subsidiaries. All significant intercompany accounts and
    transactions have been eliminated. The Company operates in one industry
    segment focusing on the development, manufacturing, and sale of medical
    devices. Investments in unconsolidated subsidiaries, and other investments
    in which the Company has a 20% to 50% interest or otherwise has the ability
    to exercise significant influence, are accounted for under the equity
    method. Investments in companies in which the Company has less than 20%
    interest with either no readily determinable fair value or with transfer
    restrictions are carried at cost or estimated realizable value, if less, and
    those unrestricted investments with a readily determinable fair value are
    carried at market value with the unrealized gains or losses, net of tax, as
    a component of stockholders' equity.

    The consolidated balance sheet as of September 30, 1997, the consolidated
    statements of income for the three months ended September 30, 1997 and 1996,
    and the condensed consolidated statements of cash flows for the three months
    ended September 30, 1997 and 1996, have been prepared by the Company,
    without audit. In the opinion of management, all necessary adjustments
    (which include only normal recurring adjustments) have been made to present
    fairly the financial position, results of operations, and cash flows at
    September 30, 1997 and for all periods presented. Interim results are not
    necessarily indicative of results for a full fiscal year. The consolidated
    balance sheet as of June 30, 1997 has been derived from the audited
    consolidated financial statements at that date.

    Certain information and footnote disclosures normally included in financial
    statements prepared in accordance with generally accepted accounting
    principles have been condensed or omitted. These condensed consolidated
    financial statements should be read in conjunction with the audited
    consolidated financial statements and notes included in the Company's Annual
    Report on Form 10-K for the year ended June 30, 1997.


                                       6
<PAGE>   7



2.  Inventories

    Inventories consist of the following (in thousands):



<TABLE>
<CAPTION>
                                      September 30,     June 30,
                                          1997            1997
                                      -------------     --------
<S>                                     <C>             <C>    
                Raw materials           $ 1,231         $   938
                Work-in-process           6,604           7,188
                Finished goods            5,775           6,167
                                        -------         -------
                                        $13,610         $14,293
                                        =======         =======
</TABLE>


3.  Investment in Boston Scientific Corporation

    The Company accounts for its investment in Boston Scientific Corporation
    ("Boston Scientific") as an available-for-sale equity security, which
    accordingly is carried at market value. During the quarter ended September
    30, 1997, the Company sold 87,340 shares of Boston Scientific common stock
    for a pre-tax gain of approximately $5.9 million. Boston Scientific common
    stock is quoted on the New York Stock Exchange under the symbol BSX. The
    closing price of Boston Scientific common stock at September 30, 1997 was
    $55.19 per share. At September 30, 1997, the Company held 1,277,860 shares
    of Boston Scientific common stock and all holding restrictions resulting
    from the acquisition of Target Therapeutics, Inc. by Boston Scientific that
    were applicable at June 30, 1997, had expired. Pursuant to a hedging
    strategy implemented by the Company in mid-August 1997, approximately half
    of the Company's position in Boston Scientific is hedged, utilizing the
    purchase of puts and calls in combination to minimize the downside risk of
    loss should the price of Boston Scientific stock decline while allowing for
    limited upside participation should the stock price rise. The call option is
    collateralized by shares of Boston Scientific common stock held by the
    Company.

    At June 30, 1997 and September 30, 1997, the Company's shares of Boston
    Scientific common stock were recorded at $83.9 and $70.5 million,
    respectively. The $78.0 million unrealized gain ($83.9 million estimated
    fair value less $5.9 million cost) at June 30, 1997 and the $65.0 million
    unrealized gain ($70.5 million estimated fair value less $5.5 million cost)
    at September 30, 1997, on these available-for-sale securities has been
    reported as a separate component of stockholders' equity, net of tax.



4.  Investment in Innovasive Devices, Inc.,

    Prior to October 1996, the Company's 844,000 shares of common stock of
    Innovasive Devices, Inc. ("Innovasive Devices") were valued at cost, or
    $4,064,000, due to restrictions which prevented the sale of any of the
    Company's shares of 



                                       7
<PAGE>   8

    common stock of Innovasive Devices. At September 30, 1997, restrictions were
    no longer applicable on 292,000 shares of common stock which the Company
    holds in Innovasive Devices. As a result, the Company now carries the
    non-restricted portion of its investment in Innovasive Devices as an
    available-for-sale investment at market value, or $2.8 million, reflecting
    an unrealized gain of $1.4 million, which has been included in a separate
    component of stockholders' equity, net of tax. The remaining 552,000
    restricted shares of common stock continue to be valued at cost.

    During the three months ended September 30, 1997, the Company did not sell
    any of its shares of common stock of Innovasive Devices. Innovasive Devices
    common stock is quoted on The Nasdaq Stock Market under the symbol IDEA. The
    closing price of Innovasive Devices common stock at September 30, 1997, was
    $9.56 per share. At September 30, 1997, the Company held approximately a 9%
    ownership position in Innovasive Devices.



5.  Income Taxes

    The provision for income taxes for the three months ended September 30, 1997
    and 1996 was computed by applying the estimated annual income tax rates of
    approximately 47% and 53%, respectively, to income before income taxes and
    minority interest. The lower effective tax rate in the current year
    primarily was due to the ability to utilize net operating loss carryforwards
    in certain foreign subsidiaries as a result of these foreign subsidiaries
    generating net income in the current year.



6.  Per Share Information

    Net income per share for the three months ended September 30, 1997 and 1996,
    have been computed based upon the weighted average number of common stock
    and dilutive common stock equivalent shares outstanding. Shares used in the
    per share computations are as follows (in thousands):



<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                               September 30,
                                                            --------------------
                                                            1997           1996
                                                            -----          -----
<S>                                                         <C>            <C>  
Primary:

Common stock                                                8,819          8,963
Stock options                                                  82            123
                                                            -----          -----

Weighted average number of common stock
   and dilutive common stock equivalent shares
   outstanding                                              8,901          9,086
                                                            =====          =====
</TABLE>


                                       8
<PAGE>   9

7.  Earnings per share

    In February 1997, the Financial Accounting Standards Board issued Statement
    of Financial Accounting Standards No. 128, Earnings Per Share ("SFAS#128"),
    which is required to be adopted by December 31, 1997. At that time, the
    Company will be required to change the method currently used to compute
    earnings per share and to restate all prior periods. Under the new
    requirements for calculating basic earnings per share, the dilutive effect
    of stock options will be excluded. The impact of SFAS#128 is expected to
    result in no change to the Company's net income per share for the three
    months ended September 30, 1997 compared to an increase of $0.01 per share
    for the three months ended September 30, 1996. The Company does not expect
    the impact on the calculation of the Company's fully diluted earnings per
    share to be material.






                                       9
<PAGE>   10


         MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
                             RESULTS OF OPERATIONS




Except for historical information contained herein, the matters discussed in
this report are forward-looking statements, the accuracy of which is necessarily
subject to risks and uncertainties. The Company's actual activities with regard
to its Collagen Technologies Group and Aesthetic Technologies Group may differ
significantly from those discussed in the forward-looking statements, given the
legal, tax, market and operational uncertainties associated with the separation
of these divisions. Actual results may differ significantly from the results
discussed in the forward-looking statements and may be affected by, among other
things, future results of operations, strategic decisions by management or the
Company's Board of Directors, uncertainties regarding timing of regulatory
approvals, new product introductions and market acceptance of new products,
product development cycles, results of clinical trials, potential unfavorable
publicity regarding the Company or its products, possible reversals of sales
trends and introduction of competitive products and, in particular the factors
described below under "Factors That May Affect Future Results of Operations" as
well as those under the same heading in the Company's Annual Report on Form 10-K
for the fiscal year ended June 30, 1997.

The Company

Collagen Corporation (the "Company") designs, develops, manufactures and markets
on a worldwide basis biomedical devices for the treatment of defective,
diseased, traumatized or aging human tissues. The Company's core products are
used principally in aesthetic and reconstructive applications, the treatment of
stress urinary incontinence, and bone repair. The Company markets its aesthetic
and reconstructive products directly and through a network of international
distributors and its stress urinary incontinence and bone repair products
through marketing partners.

In addition to internal research and development ("R&D") and joint product
development arrangements, the Company has an active program for developing new
products through affiliated companies in which the Company makes equity and debt
investments. The Company believes the formation of new companies allows each to
focus its technology on select market segments to bring products to market
efficiently and to expand its proprietary knowledge.



Separation of Aesthetic Technologies Group and Collagen Technologies Group

In October 1997, the Company announced that it had determined to proceed to
separate its Aesthetic Technologies Group and its Collagen Technologies Group
into two independent, publicly-traded companies. The separation will be effected
through a complete, 100-percent spin-off of Collagen Technologies Group by means
of a distribution of all shares of such new entity to Collagen Corporation
stockholders as of a 



                                       10
<PAGE>   11

record date to be determined. The separation is subject to a number of
conditions, including, without limitation, receipt of a ruling from the Internal
Revenue Service ("IRS") that the transaction will be tax-free to the Company and
its stockholders. The Company is in the process of preparing a ruling request
for submission to the IRS in the next few weeks. Actual timing of the
distribution will depend upon tax, legal, and other considerations, and is
expected to be completed by fiscal year-end.



Results of Operations

The following table shows for the periods indicated the percentage relationship
to product sales of certain items in the Consolidated Statements of Income.



<TABLE>
<CAPTION>
                                                       PERCENT OF PRODUCT
                                                              SALES
                                                       Three Months Ended
                                                          September 30,
                                                      ------------------- 
                                                      1997           1996
                                                      ----           ----
          <S>                                         <C>            <C>
           Product sales                              100%           100%
           Costs and expenses:
             Cost of sales                             32%            31%
             Selling, general and administrative       52%            53%
             Research and development                  28%            25%
</TABLE>                                        


Product sales. Product sales of $20.4 million in the three months ended
September 30, 1997 increased approximately $3.6 million, or 22%, over the same
prior-year quarter. The increase in sales primarily was due to the increase in
income from direct sales of Contigen(R) Bard collagen implant ("Contigen
implant") to physician customers by C.R. Bard Inc. ("Bard"), the Company's
marketing partner for Contigen implant and United States sales of plastic
surgery and dermatological products (including injectable collagen products and
SoftForm(TM) facial implant ("SoftForm implant")) for the three months ended
September 30, 1997 compared with the same period in the prior year. (See
"Operating income/loss " below.)


Worldwide sales of plastic surgery and dermatological products for the three
months ended September 30, 1997 were $15.4 million, up 9% from sales of $14.2
million for the same period in the prior year. Worldwide unit sales of plastic
surgery and dermatological products for the three months ended September 30,
1997 increased approximately 10% over the same period in the prior year. The
increase in both worldwide sales and units primarily was due to the introduction
of Hylaform(R) viscoelastic gel ("Hylaform gel") in certain European countries
and SoftForm implant in the United States, an increase in sales in Europe of
Trilucent(TM) breast implant ("Trilucent implant"), a triglyceride-filled 



                                       11
<PAGE>   12

breast implant, and strong collagen injectable sales by the Company's Japanese
distributor, partially offset by lower international sales of collagen
injectable products. The Company believes the increase in injectable collagen
sales in the United States in the current fiscal quarter was a result of the
continuation of United States marketing programs designed to increase average
treatment volume per patient and to attract and retain new and existing
patients, the implementation of a new sales incentive program for its sales
force, and contact made with physicians not previously purchasing
collagen-injectable products as a result of the introduction of SoftForm
implant. The Company anticipates continued dollar growth in worldwide product
sales of plastic surgery and dermatological products during fiscal 1998. The
Company announced previously its plan to restructure manufacturing of the
Trilucent implant to achieve long-term manufacturing efficiencies. This plan
involves relocating shell manufacturing to a third party and moving the filling
process to its facilities in Fremont, California. The Company is electing to
shift a portion of its selling and marketing efforts away from this product
during this interim transition in an effort to avoid a short supply situation.
As a result, the Company does not anticipate growth in Trilucent implant sales
in fiscal year 1998 over fiscal year 1997.

During the three months ended September 30, 1997 and September 30, 1996,
pursuant to the Company's sales agreement with Bard, the Company recorded income
of $1.7 million and $1.6 million, respectively, from Bard based on Bard's direct
sales of Contigen implant to physician customers. In addition, the Company
recorded $2.7 million of income from shipments of Contigen implant to Bard in
the three months ended September 30, 1997 and no income for the same period in
the prior year due to excess inventory at Bard. The Company expects that
revenues from Contigen implant sales in fiscal 1998 will increase as a result of
the resumption of shipments of Contigen implant to Bard.

For the three months ended September 30, 1997, sales of Collagraft(R) bone graft
matrix and Collagraft(R) bone graft matrix strip ("Collagraft bone graft
products") to the Company's marketing partner, Zimmer, Inc. ("Zimmer"), were
approximately $542,000 compared to $739,000 in the same period in the prior
year. The decrease in sales in the current fiscal year period was due to the
timing of shipments. The Company expects sales of Collagraft bone graft products
in fiscal 1998 to be at the same levels recorded in fiscal 1997.

A number of uncertainties exist surrounding the marketing and distribution of
Contigen implant and Collagraft bone graft products. The Company's primary means
of distribution for these products is through third party firms, Bard in the
case of Contigen implant and Zimmer in the case of Collagraft bone graft
products. The Company's business and financial results could be adversely
affected in the event that either or both of these parties are unable to market
the products effectively, anticipate customer demand accurately, or effectively
manage industry-wide pricing and cost containment pressures in health care.

Cost of sales. Cost of sales as a percentage of product sales was 32% for the
three months ended September 30, 1997, compared with 31% for the same prior-year
period. The higher cost of sales as a percentage of product sales in the current
fiscal quarter primarily was due to the introduction of product line extensions,
Hylaform gel and SoftForm implant. Both products are manufactured by third
parties and as a result, have higher costs per unit. Due to the high fixed costs
of the Company's Fremont, California manufacturing facility, unit cost of
manufacturing is expected to remain highly 



                                       12
<PAGE>   13

dependent on the level of output at the Company's manufacturing facility, which
is affected by incremental production of collagen-based injectable products. The
Company anticipates that cost of sales as a percentage of sales will continue to
increase slightly as a result of introducing additional product line extensions,
having higher costs per unit, partially offset by lower manufacturing costs per
unit for collagen-based injectable products.

SG&A. Selling, general, and administrative ("SG&A") expenses were $10.6 million
for the three months ended September 30, 1997, an increase of 19% over $8.8
million for the same prior-year period. SG&A expenses as a percentage of product
sales were 52% for the three months ended September 30, 1997, compared to 53%
for the same prior-year period. The increase in SG&A expenses, in absolute
dollars, in the current fiscal quarter primarily resulted from expenses related
to the separation of the Aesthetic Technologies Group and Collagen Technologies
Group and marketing costs related to the introduction in the United States of
SoftForm implant. The Company expects SG&A expenses in fiscal 1998 as a
percentage of product sales to be at levels lower than those of fiscal 1997.

R&D. Research and development ("R&D") expenses, which include expenditures for
regulatory compliance, were $5.7 million (28% of product sales) for the three
months ended September 30, 1997, an increase of 38% over $4.2 million (25% of
product sales), for the same prior-year period. The increase in R&D spending in
the current fiscal quarter primarily was attributable to the ramp-up of expenses
at Cohesion Corporation ("Cohesion", a controlled affiliate) to support planned
development programs, including clinical trials and the ramp-up of the Company's
orthopaedics programs. The Company expects R&D spending in fiscal 1998 to be at
levels higher than fiscal 1997 primarily due to increased expenses for Cohesion
and orthopaedics projects.

Loss from operations. Loss from operations was $2.4 million for the three months
ended September 30, 1997, compared with a loss from operations of $1.4 million
for the same prior-year period. The loss in the current fiscal quarter primarily
was due to the ramp-up of R&D expenses at Cohesion to support planned
development programs, including clinical trials, the ramp-up of the Company's
orthopaedics programs, and marketing costs related to SoftForm implant,
partially offset by higher Contigen implant sales and sales from product line
extensions.

Compared with foreign exchange rates for the same prior-year quarter, the impact
of foreign exchange rates in the current fiscal quarter on operating income was
a net increase of $183,000 on equivalent local currency basis, resulting from a
decrease of approximately $846,000 in operating expenses, partially offset by a
decrease of approximately $663,000 in revenue.

Net gain on investments, principally Boston Scientific Corporation. In the three
months ended September 30, 1997, the Company recorded a gain on investments of
$5.9 million primarily resulting from the sale of 87,340 shares of Boston
Scientific Corporation ("Boston Scientific") common stock compared to $6.2
million from the sale of 230,000 shares of Target Therapeutics, Inc. ("Target")
common stock in the three months ended September 30, 1996. The Company may
continue to sell a portion of it shares of Boston Scientific common stock during
fiscal 1998.



                                       13
<PAGE>   14

Equity in losses of affiliates, net. Equity in losses of affiliate companies was
approximately $73,000 for the three months ended September 30, 1997, compared to
equity in losses of approximately $474,000 for the same prior-year period. The
decrease in equity in losses of affiliates primarily was due to lower
CollOptics, Inc. ("CollOptics") losses as a result of CollOptics reducing its
R&D efforts until it obtains additional funding.

The Company intends to continue to expand its new product development activities
through more equity investments in or loans to affiliate companies during fiscal
year 1998. These affiliate companies typically are in an early stage of
development and may be expected to incur substantial losses which in turn will
have an adverse effect on the Company's operating results. There can be no
assurance that these investments will result in positive returns nor can there
be any assurance on the timing of any return on investment, or that the Company
will not lose its entire investment.

Interest income. Interest income was $301,000 for the three months ended
September 30, 1997, compared to $354,000 for the same period in the prior year.
The decrease in the current fiscal year primarily was due to lower average cash
and short-term investment balances and a lower average interest rate.

Provision for income taxes. The provision for income taxes for the three months
ended September 30, 1997 and 1996 was computed by applying the estimated annual
income tax rates of approximately 47% and 53%, respectively, to income before
income taxes and minority interest. The lower effective tax rate in the current
year primarily was due to the ability to utilize net operating loss
carryforwards in certain foreign subsidiaries as a result of these foreign
subsidiaries generating net income in the current year.


Liquidity and Capital Resources

At September 30, 1997, the Company's cash and cash equivalents were $16.2
million compared to $18.5 million at June 30, 1997. Net cash used in operating
activities was approximately $4.4 million in the three months ended September
30, 1997, compared to approximately $3.3 million of net cash provided by
operating activities for the same prior-year period.

The $4.4 million of net cash used in operating activities mainly was
attributable to a $2.1 million net loss after adjusting for gain on investments
(net of taxes paid), depreciation and amortization expense, and equity in
losses, a $1.9 million increase in accounts receivable resulting from the
resumption of Contigen implant shipments to Bard, a $1.0 million decrease in
accounts payable, a $.9 million increase in prepaid expenses, partially offset
by a $.8 million payment of annual employee bonuses, and a $.7 million decrease
in inventory.

The $2.1 million of net cash provided by investing and financing activities
primarily was due to proceeds of $6.2 million (net of taxes paid) from the sale
of 87,340 shares of common stock of Boston Scientific by the Company during the
quarter, proceeds of $2.7 million received from the sale of short-term
investments, proceeds of $.7 million from the sale of the Company's shares in
affiliates, and proceeds of $.1 million from the issuance 


                                       14
<PAGE>   15

of the Company's common stock, partially offset by a payment of $5.3 million to
purchase short-term investments, capital expenditures of approximately $1.4
million, and payment of cash dividends of approximately $.9 million to the
Company's stockholders in July 1997.

The Company anticipates capital expenditures, equity investments in, and loans
to affiliate companies to be approximately $9.0 million in fiscal 1998. As of
September 30, 1997, the Company's capital expenditures, equity investments in,
and loans to affiliate companies totaled approximately $1.4 million. In June
1996, the Board of Directors authorized the Company to repurchase an additional
500,000 shares of the Company's common stock in the open market, of which the
Company has repurchased 147,900 shares as of September 30, 1997.

The Company's principal sources of liquidity include cash generated from
operations, sales of Boston Scientific common stock, and the Company's cash,
cash equivalents, and short-term investments. At September 30, 1997, the Company
held 1,277,860 shares of Boston Scientific common stock and all holding
restrictions resulting from the acquisition of Target by Boston Scientific that
were applicable at June 30, 1997, had expired. The Company's Board of Directors
has authorized the Company to sell portions of its holdings in Boston
Scientific. The Company anticipates that stock sales pursuant to this
authorization will be made from time to time with the objective of generating
cash, for among other things, further investments in both current and new
affiliate companies.

The Company believes that the above sources of liquidity should be adequate to
fund its anticipated cash needs through at least the next twelve months.


Factors That May Affect Future Results of Operations

A large portion of the Company's revenues in recent years has come from its
international operations. As a result, the Company's operations and financial
results could be significantly affected by international factors, including
numerous regulatory agencies, changes in foreign currency exchange rates and
foreign economic and political conditions generally. The Company's results of
operations could be significantly affected by fluctuations in foreign currency
exchange rates or disruptions to shipments.

Sales of the Company's collagen-based injectable products, Zyderm(R) I implant,
Zyderm(R) II implant and Zyplast(R) implant, as well as Trilucent implant and
Contigen implant, accounted for approximately 89% of consolidated product sales
for the quarter ended September 30, 1997. The Company's product sales may
continue to consist primarily of sales of these principal products. Factors such
as adverse rulings by regulatory authorities, product liability lawsuits,
introduction of competitive products by third parties, other loss of market
acceptance or other adverse publicity for these principal products may
significantly and adversely affect the Company's sales of these products.

The Company's quarterly operating results may vary significantly in the future
depending upon factors such as timing of significant orders and shipments,
changes in pricing policies by the Company and its competitors, increased
competition, demand for the 



                                       15
<PAGE>   16

Company's products, the number, timing and significance of new product and
product enhancement announcements by the Company and its competitors, the
ability of the Company to develop, introduce and market new and enhanced
versions of the Company's products on a timely basis, the mix of direct and
indirect sales, the timing of investments in affiliate companies and general
economic factors, among others. If revenue levels are below expectations,
operating results are likely to be materially adversely affected. In particular,
because only a small portion of the Company's expenses varies with revenue in
the short term, net income may be disproportionately affected by a reduction in
revenue.

All of the Company's manufacturing capacity for collagen products, the majority
of its research and development activities, its corporate headquarters, and
other critical business functions are located near major earthquake faults. In
addition, all of the Company's manufacturing capacity for collagen-based
products is located in one primary facility with the Company currently
maintaining only limited amounts of finished product inventory. While the
Company has some limited protection in the form of disaster recovery programs
and basic insurance coverage, the Company's operating results and financial
condition would be materially adversely affected in the event of a major
earthquake, fire or other similar calamity, affecting its manufacturing
facility. The Company is involved in various legal actions arising in the course
of business, some of which involve product liability claims. The Company
operates in an industry susceptible to claims that may allege that the use of
the Company's technology or products has resulted in adverse effects or
infringes on third-party technology. With respect to product liability claims,
such risks will exist even with respect to those products that have received, or
in the future may receive, regulatory approval for commercial sale. It is
possible that adverse product liability or intellectual property actions could
negatively affect the Company's future results of operations.

The Company has been, and may in the future, be the subject of negative
publicity, which can arise from various sources, ranging from the news media on
cosmetic procedures in general to legislative and regulatory investigations
specific to the Company concerning, among other things, the safety and efficacy
of its products. There can be no assurance that such investigations or negative
publicity from such investigations or from the news media will not result in a
material adverse effect on the Company's future financial position, its results
of operations or the market price of its stock. In addition, significant
negative publicity could result in an increased number of product liability
claims.

The Company's manufacturing activities and products sold in the United States
are subject to extensive and rigorous regulations by the Food and Drug
Administration ("FDA") and by comparable agencies in certain foreign countries
where these products are manufactured or distributed. The FDA regulates the
manufacture and sale of medical devices in the United States, including
labeling, advertising and record keeping. Failure to obtain, or delays in
obtaining, the required regulatory approvals for new products, as well as
product recalls, both inside and outside of the United States could adversely
affect the Company.

Due to the factors noted above, as well as other factors that may affect the
Company's operating results, the Company's future earnings and stock price may
be subject to significant volatility, particularly on a quarterly basis. Any
shortfall in revenue or 



                                       16
<PAGE>   17

earnings from levels expected by securities analysts could have an immediate and
significant adverse effect on the trading price of the Company's common stock in
any given period. Additionally, the Company may not learn of, or be able to
confirm, such shortfalls until late in the fiscal quarter, or following the end
of the quarter, which could result in an even more immediate and adverse effect
on the trading price of the Company's common stock. Finally, the Company
participates in a highly dynamic industry, which often results in significant
volatility of the Company's common stock.

For a more complete discussion of risks and uncertainties involving the
Company's business, please see the risks factors described under the heading
"Factors That May Affect Future Results of Operations" set forth in the
Company's Annual Report on Form 10-K for the fiscal year ended June 30, 1997.








                                       17
<PAGE>   18



                           PART II. OTHER INFORMATION
                              COLLAGEN CORPORATION


Item 1.  Legal Proceedings

         None

Item 2.  Changes in Securities

         None

Item 3.  Defaults Upon Senior Securities

         None

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

         A.  On October 29, 1997, the Registrant held its Annual Meeting of
             Stockholders.

         B.  As listed below, all of management's nominees for directors were
             elected at the meeting pursuant to proxies solicited pursuant to
             Regulation 14 under the Securities and Exchange Act of 1934 (in
             thousands).


<TABLE>
<CAPTION>
                                   No. of   No. of    No of      No of       No of
                                    Votes    Votes    Votes      Votes    Broker Non-
             Name of Nominee         For    Against  Withheld  Abstained     Votes
             -------------------   ------- -------- --------- ---------- -------------
<S>                                 <C>          <C>     <C>          <C>           <C>
             Gary S. Petersmeyer    7,240        0       193          0             0


             Anne L. Bakar          7,259        0       174          0             0


             John R. Daniels, MD    7,320        0       113          0             0


             William G. Davis       7,323        0       111          0             0


             Reid W. Dennis         7,318        0       116          0             0


             Craig W. Johnson       7,265        0       168          0             0
</TABLE>


         C.  The adoption of an amendment to the 1995 Employee Stock Purchase
             Plan to increase the number of shares of common stock reserved for
             issuance thereunder by 100,000 shares and to permit participants to
             purchase up to 3,000 shares during any offering period, was
             approved with 6,034,083 shares voting in favor, 1,300,778 shares
             voting against, 51,268 shares abstaining and 46,930 broker
             non-votes.

         D.  The appointment of Ernst & Young LLP as independent auditors of the
             Company for the fiscal year ending June 30, 1998 was ratified with
             7,357,482 shares voting in favor, 65,679 voting against and 9,898
             shares abstaining.




                                       18
<PAGE>   19


Item 5.  Other Information

         None



Item 6.  Exhibits and Reports on Form 8-K

         A.   Exhibits

         Exhibit 10.93 - License Agreement between Registrant and Tristrata
         Technology, Inc., dated September 1, 1997

         Exhibit 27 - Financial Data Schedule


         B.  Reports on Form 8-K

         None




                                       19
<PAGE>   20


                              COLLAGEN CORPORATION
                                INDEX TO EXHIBITS



<TABLE>
<CAPTION>
Exhibit Number                          Description
--------------                          -----------
<S>                         <C>                          
Exhibit 10.93              License  Agreement  between  Registrant  and Tristrata  Technology,
                           Inc., dated September 1, 1997

Exhibit 27                 Financial Data Schedule
</TABLE>


                                       20


<PAGE>   21



                                   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.





                                                   COLLAGEN CORPORATION





Date:  November 13, 1997                           /s/ NORMAN HALLEEN
       -----------------                           --------------------------
                                                   Norman Halleen
                                                   Vice President Finance
                                                   Chief Financial Officer


















                                       21