<PAGE>   1
                                    FORM 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                   Quarterly Report Under Section 13 or 15(d)
                     of the Securities Exchange Act of 1934




For Quarter Ended                           JUNE 30, 1998

Commission File Number                      0-19529


                                   ALTEON INC.
             (Exact name of registrant as specified in its charter)


         DELAWARE                                                13-3304550
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               identification No.)


         170 WILLIAMS DRIVE, RAMSEY, NEW JERSEY                    07446
         (Address of principal executive offices)                (Zip Code)

                                 (201) 934-5000
              (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 requirements for the past 90 days. YES:  *  NO:
                                               ---     ---

On July 31, 1998, 17,983,036 shares of Registrant's Common Stock were
outstanding.


                                        1
<PAGE>   2
                                   ALTEON INC.

                                      INDEX




PART I.  FINANCIAL INFORMATION                                              Page
                                                                            ----


  Item 1. - Financial Statements:

        Balance sheets as of December 31, 1997
        and June 30, 1998.....................................................3

        Statements of operations for the three months and six months 
        ended June 30, 1997 and 1998..........................................4

        Statements of cash flows for the six months ended
        June 30, 1997 and 1998................................................5

        Notes to financial statements.........................................6

  Item 2. - Management's Discussion and
  Analysis of Financial Condition and
  Results of Operations.......................................................8


PART II.  OTHER INFORMATION

  Item 5. - Other Information................................................11


  Item 6. - Exhibits and Reports on Form 8-K.................................12


SIGNATURES...................................................................14


                                        2
<PAGE>   3
                                     PART I
ITEM 1.  FINANCIAL STATEMENTS.
                                   ALTEON INC.

                                 BALANCE SHEETS
                                   (Unaudited)
<TABLE>
<CAPTION>

                                                                                     DECEMBER 31,             JUNE 30,
                                                                                        1997                   1998
                                                                                   ---------------         ---------------
                                     ASSETS                                        
                                                                                   
CURRENT ASSETS:                                                                    
                                                                                           
  <S>                                                                                <C>                     <C>
  Cash and cash equivalents ...................................................      $ 20,423,675            $  3,174,480
  Short-term investments ......................................................         8,550,063              13,060,755
  Other current assets.........................................................           468,680                 859,743
                                                                                   ---------------         ---------------
                                                                                   
     Total current assets......................................................        29,442,418              17,094,978
                                                                                   
Property and equipment, net....................................................         3,183,362               3,220,609
Deposits and other assets......................................................           261,358                 273,890
Restricted cash................................................................           620,400                     ---
                                                                                   ---------------         ---------------
                                                                                   
  Total assets.................................................................      $ 33,507,538            $ 20,589,477
                                                                                   ===============         ===============
                                                                                   
                                                                                   
                                    LIABILITIES AND STOCKHOLDERS' EQUITY        
                                                                                   
CURRENT LIABILITIES:                                                               
                                                                                   
  Accounts payable.............................................................      $    921,637            $  1,420,359
  Accrued expenses.............................................................         5,969,384               3,185,276
  Obligations under capital leases ............................................           161,581                     ---
                                                                                   ---------------         ---------------
                                                                                   
     Total current liabilities.................................................         7,052,602               4,605,635
                                                                                   ---------------         ---------------
                                                                                   
STOCKHOLDERS' EQUITY:                                                              
                                                                                   
  Preferred stock, $.01 par value; 1,993,329 shares authorized, and 942 and 982    
    shares issued and outstanding, as of December 31, 1997 and June 30, 1998,      
    respectively...............................................................                 9                      10
                                                                                   
  Common stock, $.01 par value; 30,000,000 shares authorized and 17,922,319 and    
    17,980,425 shares issued and outstanding, as of December 31, 1997 and          
    June 30, 1998, respectively................................................           179,223                 179,804
                                                                                   
  Additional paid-in capital...................................................       105,585,019             106,496,612
                                                                                   
  Accumulated deficit .........................................................       (79,303,374)            (90,687,308)
                                                                                   
  Accumulated other comprehensive loss.........................................            (5,941)                 (5,276)
                                                                                   ---------------         ---------------
                                                                                   
     Total stockholders' equity................................................        26,454,936              15,983,842
                                                                                   ---------------         ---------------
                                                                                   
  Total liabilities and stockholders' equity...................................      $ 33,507,538            $ 20,589,477
                                                                                   ===============         ===============
                                                                                   
</TABLE>

                 See accompanying notes to financial statements                


                                       3
<PAGE>   4




                                   ALTEON INC.

                            STATEMENTS OF OPERATIONS
                                   (Unaudited)


<TABLE>
<CAPTION>

                                                                    FOR THE THREE MONTHS ENDED         FOR THE SIX MONTHS ENDED
                                                                            JUNE 30,                          JUNE 30,
                                                                   ------------------------------    -----------------------------

                                                                        1997            1998             1997           1998
                                                                   -------------   -------------   --------------   --------------

Revenues:

<S>                                                                <C>             <C>             <C>              <C>      
  Investment income............................................... $    408,828    $    287,567    $   $ 852,797    $     673,020

Expenses:

  Research and development .......................................    5,946,838       5,524,504       11,292,134       11,281,432
  Elimination of previously accrued loss contingency (See Note 8).          ---      (1,770,975)             ---       (1,770,975)
  General and administrative......................................      814,302         989,951        1,682,128        2,141,804
  Interest........................................................        7,004           1,038           15,429            3,610
                                                                   -------------   -------------   --------------   --------------

     Total expenses...............................................    6,768,144       4,744,518       12,989,691       11,655,871
                                                                   -------------   -------------   --------------   --------------

     Net loss .................................................... $ (6,359,316)   $ (4,456,951)   $ (12,136,894)   $ (10,982,851)
                                                                   -------------   -------------   --------------   --------------

  Preferred stock dividends.......................................      360,351         202,349          360,351          401,083
                                                                   -------------   -------------   --------------   --------------

     Net loss applicable to common shareholders................... $ (6,719,667)   $ (4,659,300)   $ (12,497,245)   $ (11,383,934)
                                                                   =============   =============   ==============   ==============

Basic loss per share to common shareholders....................... $      (0.43)   $      (0.26)   $       (0.80)   $       (0.63)
                                                                   =============   =============   ==============   ==============

Diluted loss per share to common shareholders..................... $      (0.43)   $      (0.26)   $       (0.80)   $       (0.63)
                                                                   =============   =============   ==============   ==============
Weighted average common shares used in computing
  basic and diluted loss per share................................   15,712,407      17,975,137       15,710,681       17,965,105
                                                                   =============   =============   ==============   ==============
</TABLE>
                 See accompanying notes to financial statements 


                                       4
<PAGE>   5

                                   ALTEON INC.

                            STATEMENTS OF CASH FLOWS
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                            FOR THE SIX MONTHS ENDED
                                                                                                    JUNE 30,
                                                                                     ---------------------------------------

                                                                                          1997                     1998
                                                                                     --------------           --------------
 <S>                                                                                 <C>                      <C>
Cash Flows from Operating Activities:
  Net loss.....................................................................      $ (12,497,245)           $ (10,982,851)

  Adjustments to reconcile net loss to net cash used in operating activities:

        Depreciation and amortization..........................................            385,673                  325,911
        Amortization of deferred compensation..................................             17,622                  323,189
        Accrued preferred stock dividends......................................            360,351                      ---

        Changes in operating assets and liabilities:
           Other current assets................................................            155,264                 (391,063)
           Other assets........................................................             (7,477)                 (12,533)
           Accounts payable and accrued expenses...............................         (1,988,345)              (2,285,382)
                                                                                     --------------           --------------

           Net cash used in operating activities...............................        (13,574,157)             (13,022,729)
                                                                                     --------------           --------------

Cash Flows from Investing Activities:
  Capital expenditures.........................................................                ---                 (363,157)
  Purchases of marketable securities...........................................        (65,501,645)             (58,806,907)
  Sales and maturities of marketable securities................................         60,839,101               54,296,880
  Restricted cash..............................................................                ---                  620,400
                                                                                     --------------           --------------

           Net cash used in investing activities.................                       (4,662,544)              (4,252,784)
                                                                                     --------------           --------------

Cash Flows from Financing Activities:
  Proceeds from issuance of common stock.......................................              8,705                  187,899
  Proceeds from issuance of preferred stock....................................          4,814,329                      ---
  Principal payments under capital lease obligations...........................           (149,757)                (161,581)
                                                                                     --------------           --------------

           Net cash provided by financing activities...........................          4,673,277                   26,318
                                                                                     --------------           --------------

Net decrease in cash and cash equivalents...........................                   (13,563,424)             (17,249,195)
Cash and cash equivalents, beginning of period.................................         31,497,633               20,423,675
                                                                                     --------------           --------------
                                                                                                   

Cash and cash equivalents, end of period.......................................      $  17,934,209            $   3,174,480
                                                                                     ==============           ==============


Supplemental disclosures of cash flow information:
           Cash paid for interest..............................................      $      15,429            $       3,610
                                                                                     ==============           ==============
</TABLE>
                 See accompanying notes to financial statements 


                                       5






<PAGE>   6
                                   ALTEON INC.

                          NOTES TO FINANCIAL STATEMENTS
                                   (Unaudited)


1. BASIS OF PRESENTATION - The accompanying unaudited financial statements have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of Management, all adjustments (consisting
of only normal recurring accruals) considered necessary for a fair presentation
have been included. Operating results for the six months ended June 30, 1998,
are not necessarily indicative of the results that may be expected for the year
ending December 31, 1998. For further information refer to the financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-K for the year ended December 31, 1997.

2. CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS - Cash and cash equivalents
include highly liquid investments which have a maturity of less than ninety days
at the time of purchase. Short-term investments are recorded at fair market
value. As of June 30, 1998, short-term investments were invested in debt
instruments of the U.S. Government, government agencies and financial
institutions and corporations with strong credit ratings.

         At June 30, 1998, $13,061,000 of the Company's short term investments
are classified as available for sale. A net unrealized loss of $5,000 relating
to the available for sale securities has been recorded as a separate component
of stockholders' equity at June 30, 1998.

3. NET LOSS PER SHARE - Effective for the year ended December 31, 1997, the
Company adopted statement of Financial Accounting Standards Board No. 128,
Earnings Per Share ("SFAS 128"). SFAS 128 requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share. Basic loss per
share is based on the average numbers of shares outstanding during the year.
Diluted loss per share is the same as basic loss per share, as the inclusion of
common stock equivalents would be antidilutive.

4. COMPREHENSIVE INCOME - Effective January 1, 1998, the Company adopted the
provisions of Financial Accounting Standards Board No. 130, Reporting
Comprehensive Income ("SFAS 130"), which establishes standards for reporting and
displaying comprehensive income and its components. The adoption of this
statement has no effect on the Company's financial position or operating
results.

         The following sets forth comprehensive income as required by SFAS 130
for the periods ended June 30,:

<TABLE>
<CAPTION>
                                                              1997        1998
                                                              ----        ----
<S>                                                        <C>         <C>      
Net Loss ...............................................   $(12,137)   $(10,983)
Net Unrealized Gains/ Losses on Marketable Securities ..          1          (5)
                                                           --------    -------- 
Comprehensive Loss .....................................   $(12,136)   $(10,988)
                                                           ========    ======== 
</TABLE>

5. EVENTS CONCERNING COLLABORATIVE PARTNERS - In December 1997, Alteon and
Genentech, Inc. ("Genentech") entered into a stock purchase agreement and a
development collaboration and license agreement providing for the development
and marketing of pimagedine and second-generation A.G.E.-formation inhibitors.
In December 1997, Genentech purchased Common Stock and Series G Preferred 


                                       6
<PAGE>   7
Stock for an aggregate purchase price of $15,000,000. The use of these funds is
unrestricted to the Company. Genentech has agreed to fund the continued
development of pimagedine and support possible additional clinical trials for
expanded indications of the drug through the periodic purchase of up to
$48,000,000 in Series H Preferred Stock. The first such purchase, in the amount
of $8,000,000, occurred on July 27, 1998. In addition, Genentech will fund the
agreed-upon development costs for second-generation A.G.E. formation inhibitors.

         Pursuant to the development collaboration and license agreement, Alteon
has granted Genentech an exclusive license to use and sell pimagedine in all
areas of the world except for Japan, China, South Korea and Taiwan, territories
covered under Alteon's agreement with Yamanouchi Pharmaceutical Co., Ltd.
("Yamanouchi"), and Israel, Jordan, Bulgaria, Cyprus and South Africa,
territories covered under Alteon's agreement with Gamida (the "Genentech
Territory"). Alteon has also granted Genentech an exclusive license to use and
sell second-generation A.G.E.-formation inhibitor products (and any future
Alteon compounds in this class), to be selected by Genentech after review of
Alteon's A.G.E.-formation inhibitor portfolio, in the Genentech Territory. In
consideration of the license, Alteon will receive $50,000,000 in payments from
Genentech upon meeting milestones relating to U.S. and European regulatory
filings and approvals for pimagedine product and an additional $50,000,000 upon
meeting milestones relating to U.S. and European regulatory filings and
approvals for a second-generation A.G.E.-formation inhibitor product. Following
commercialization, Alteon will receive royalties on net sales of pimagedine and
second-generation A.G.E.-formation products within the Genentech Territory.

         The development collaboration and license agreement provides that all
development activities in the United States for pimagedine and second-generation
A.G.E.-formation inhibitors will be jointly managed by a steering committee with
representatives from Alteon and Genentech. Genentech will be responsible for
development outside the United States and for marketing and sales of the
licensed products in the Genentech Territory. Alteon has granted Genentech the
right to manufacture pimagedine for its pre-clinical, clinical and commercial
supplies of licensed products and has agreed to supply all pimagedine for
pre-clinical and clinical trials in the United States. The parties have agreed
to enter into a manufacturing and supply agreement covering supplies on terms to
be agreed upon.

         The development collaboration and license agreement may be terminated
upon six months' notice by Genentech in its entirety or with respect to any
licensed product. If terminated after the Series H funds are received, certain
of the funds may be refundable to Genentech, as defined in the agreement. If
terminated prior to the receipt of Series H funds, Genentech would be required
to pay certain amounts, as defined in the agreement. Genentech's license expires
as to each product in each country in the Genentech Territory upon the later of
the expiration of the last patent applicable to the product in such country or
twelve and one-half years after the first commercial sale of the product in such
country.

6. PREFERRED STOCK TRANSACTIONS - In December 1997, the Company and Genentech
entered into a stock purchase agreement pursuant to which Genentech agreed to
buy shares of Common Stock, Series G Preferred Stock and Series H Preferred
Stock (the "Securities"). On December 19, 1997, the Company sold to Genentech
837,314 shares of Common Stock and 939 shares of Series G Preferred Stock for an
aggregate purchase price of $15,000,000. The Securities were offered and sold to
a single accredited investor in compliance with the requirements of Rule 506
under the Securities Act of 1933, and accordingly the transaction was exempt
from registration under such Act. Each share of Series G Preferred Stock is
convertible at any time upon seventy days' written notice into a number of
shares of Common Stock determined by dividing $10,000 by the average of the
closing sales price of the Common Stock, as reported on the Nasdaq National
Market, for the twenty business days immediately preceding the date of
conversion. The shares of Series H Preferred Stock will be convertible on the
same basis at any time after the earlier of (i) the granting of approval by the
U.S. Food and Drug Administration for 


                                       7
<PAGE>   8
the marketing and sale of any pimagedine product specified in the development
collaboration and license agreement between the Company and Genentech, (ii)
termination by Genentech of the development collaboration and license agreement
or (iii) December 1, 2002.

7. OTHER RELATED PARTY TRANSACTIONS - In July 1993, a Company officer received a
loan which bore interest at a rate equal to the prime rate as published in the
Wall Street Journal, adjusted quarterly, for the purpose of purchasing a home.
The loan is secured by a second mortgage on the premises purchased by the
officer. In February 1998, the terms of the loan were amended so that interest
will stop accruing as of July 1999 and the principal and interest shall be paid
in equal installments in July, 1999, 2000 and 2001. In the event an installment
is not paid when due, interest shall accrue at a rate of one percent per month
until payment is made. As of June 30, 1998, $271,075, including accrued
interest, remained outstanding. A $25,000 payment was made on December 31, 1997.

8. CONTINGENCIES - In December 1990, the Company and Marion Merrell Dow, Inc.,
which was subsequently acquired by an affiliate of Hoechst AG and renamed
Hoechst Marion Roussel, Inc. ("HMRI"), formed a strategic alliance to develop
and commercialize the Company's A.G.E. technology for therapeutics in the areas
of diabetic and aging complications. In 1996, HMRI ended the collaboration as a
result of HMRI's continuing prioritization of its new product pipeline, and the
Company regained all rights granted to HMRI covering the Company's technology.
In June 1998, the Company and HMRI resolved various open issues arising from the
termination of their collaboration. As a result, the previously established
accrual in the amount of $1.8 million has been eliminated and credited to the
Statement of Operations.

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

OVERVIEW

         Since its inception in October 1986, Alteon has devoted substantially
all of its resources to its research, drug discovery and development programs.
To date, Alteon has not generated any revenues from the sale of products and
does not expect to generate any such revenues for several years, if at all.
Alteon has incurred a cumulative net loss of $90,687,000 as of June 30, 1998,
and expects to incur operating losses, potentially greater than losses in prior
years, for a number of years.

         Alteon has financed its operations through proceeds from an initial
public offering of Common Stock in 1991, a follow-on offering of Common Stock
completed in 1995, private placements of common and preferred equity securities,
revenue from its collaborations with Hoechst Marion Roussel, Inc. ("HMRI") and
Yamanouchi, reimbursement of certain of Alteon's research and development
expenses by its collaborative partners, and investment income earned on cash
balances and short-term investments.

         In December 1997, Alteon and Genentech entered into a stock purchase
agreement and a development collaboration and license agreement providing for
the development and marketing of pimagedine and second-generation
A.G.E.-formation inhibitors. The agreements were amended in April 1998. In
December 1997, Genentech purchased Common Stock and Series G Preferred Stock for
an aggregate purchase price of $15,000,000. The use of these funds is
unrestricted to the Company. Genentech has agreed to fund continued development
of pimagedine and support possible additional clinical trials for expanded
indications of the drug through the periodic purchase of up to $48,000,000 in
Series H Preferred Stock. The first such purchase, in the amount of $8,000,000,
occurred on July 27, 1998. Genentech will also fund agreed-upon development
costs for second-generation A.G.E.-formation inhibitors. Genentech may terminate
the license agreement upon six months' notice to the Company.


                                       8
<PAGE>   9
         Although the Company anticipates increased expenditures in research and
development expenses as it develops products and extends its clinical trials, a
portion of such development expenses is expected to be reimbursed by Alteon's
collaborative partners. Yamanouchi has agreed to fund pre-clinical studies,
including most toxicology studies, on pimagedine and any other products that the
parties jointly agree to develop including a second generation A.G.E.-formation
inhibitor and a macrophage stimulator. Yamanouchi does not fund Alteon's
research or early product development expenses.

         The Company's business is subject to significant risks including, but
not limited to, (i) its ability to obtain funding, (ii) the risks inherent in
its research and development efforts, including clinical trials, (iii)
uncertainties associated both with obtaining and enforcing its patents and with
the patent rights of others, (iv) the lengthy, expensive and uncertain process
of seeking regulatory approvals, (v) uncertainties regarding government reforms
and product pricing and reimbursement levels, (vi) technological change and
competition, (vii) manufacturing uncertainties, and (viii) dependence on
collaborative partners and other third parties. Even if the Company's product
candidates appear promising at an early stage of development, they may not reach
the market for numerous reasons. Such reasons include the possibilities that the
products will prove ineffective or unsafe during clinical trials, will fail to
receive necessary regulatory approvals, will be difficult to manufacture on a
large scale, will be uneconomical to market or will be precluded from
commercialization by proprietary rights of third parties.

RESULTS OF OPERATIONS

         THREE MONTHS ENDED JUNE 30, 1998 AND 1997

         Total revenues for the three months ended June 30, 1998, and the three
months ended June 30, 1997 were $288,000 and $409,000, respectively. Revenues
were derived from interest earned on cash and cash equivalents and short-term
investments. The 29.6% decrease in investment income was attributed to the
decrease in cash and cash equivalents and short-term investments.

         The Company's total expenses decreased to $4,745,000 for the three
months ended June 30, 1998, from $6,768,000 for the three months ended June 30,
1997, and consisted primarily of research and development expenses. Research and
development expenses were $5,525,000 for the three months ended June 30, 1998,
and $5,947,000 for the three months ended June 30, 1997, a 7.1% decrease. This
decrease was primarily due to expenses related to the clinical trial costs.

         General and administrative expenses increased to $990,000 for the three
months ended June 30, 1998, from $814,000 for the three months ended June 30,
1997, a 21.6% increase. This increase is due primarily to an increase in
personnel-related expenses and investor relations expenses.

         The Company's net loss applicable to common shareholders decreased to
$4,659,000 for the three months ended June 30, 1998, from $6,720,000 in the same
period in 1997, a decrease of 30.7%. This was primarily a result of decreased
research and development expenses, the elimination of a previously accrued loss
contingency (see Note 8 - Notes to Financial Statements), decreased preferred
stock dividends and investment income, offset by an increase in general and
administrative expenses.

         SIX MONTHS ENDED JUNE 30, 1998 AND 1997

         Total revenues for the six months ended June 30, 1998, and the six
months ended June 30, 1997, were $673,000 and $853,000, respectively. Revenues
were derived from interest earned on cash and cash equivalents and short-term
investments. The 21.1% decrease in investment income was attributed to the
decrease in cash and cash equivalents and short-term investment balances.


                                       9
<PAGE>   10
         The Company's total expenses decreased to $11,656,000 for the six
months ended June 30, 1998, from $12,990,000 for the six months ended June 30,
1997, and consisted primarily of research and development expenses. Research and
development expenses were $11,281,000 for the six months ended June 30, 1998,
and $11,292,000 for the six months ended June 30, 1997.

         General and administrative expenses increased to $2,142,000 for the six
months ended June 30, 1998, from $1,682,000 for the six months ended June 30,
1997, a 27.3% increase. This increase is due primarily to an increase in
personnel-related expenses and investor relations expenses offset by decreased
depreciation expenses.

     The Company's net loss applicable to common shareholders decreased to
$11,384,000 for the six months ended June 30, 1998, from $12,497,000 in the same
period in 1997, a decrease of 8.9%. This was primarily a result of the
elimination of a previously accrued loss contingency (see Note 8 - Notes to
Financial Statements) and decreased investment income, offset by increased
general and administrative expenses.

LIQUIDITY AND CAPITAL RESOURCES

         Alteon had cash, cash equivalents and short-term investments at June
30, 1998, of $16,235,000 compared to $28,974,000 at December 31, 1997. This is a
decrease in cash, cash equivalents and short-term investments for the six months
ended June 30, 1998, of $12,739,000. This consisted of $13,022,000 of cash used
in operations consisting primarily of research and development expenses,
personnel and related costs and facility expenses and $363,000 of capital
expenditures. This was offset by $620,000 resulting from the release of escrow
funds and by $26,000 of financing activities primarily related to proceeds from
stock option exercises offset by capital lease obligations. As of June 30, 1998,
Alteon had invested $7,716,000 in capital equipment and leasehold improvements,
of which a cumulative $1,347,000 had been funded through capital leases.

         The Company's research and development expenses, to date, have been
funded primarily by research and development collaborative arrangements and
sales of equity securities. In programs that are subject to joint development
agreements, the Company expects to incur substantial additional research and
development costs, including costs related to drug discovery, pre-clinical
research and clinical trials. The Company anticipates that it will be able to
offset a portion of its research and development expenses and its clinical
development expenses with funding from its collaborative partners.

         Alteon anticipates that its existing available cash and cash
equivalents and short-term investments will be adequate to satisfy its working
capital requirements for its current and planned operations at least into the
second half of 1999. On April 24, 1997, the Company raised $4.8 million, net of
offering costs, through the issuance of 5,000 shares of its $0.01 par value, 6%
Cumulative Convertible Preferred Stock. As of December 31, 1997, all of the
Preferred Stock has been converted. In December 1997, Alteon and Genentech
entered into a stock purchase agreement and a development collaboration and
license agreement providing for the development and marketing of pimagedine and
second-generation A.G.E.-formation inhibitors. In December 1997, Genentech
purchased Common Stock and Series G Preferred Stock for an aggregate purchase
price of $15,000,000. The use of these funds is unrestricted to the Company.
Genentech has agreed to fund the continued development of pimagedine and support
possible additional clinical trials for expanded indications of the drug through
the periodic purchase of up to $48,000,000 in Series H Preferred Stock. The
first such purchase, in the amount of $8,000,000, occurred on July 27, 1998. In
addition, Genentech will fund agreed-upon development costs for
second-


                                       10
<PAGE>   11
generation A.G.E.-formation inhibitors. Genentech may terminate the license
agreement on six months' notice to the Company.

         Future capital requirements will depend on numerous factors, including
the progress of the Company's research and development programs, the conduct of
pre-clinical tests and clinical trials, the development of regulatory
submissions, the costs associated with protecting patents and other proprietary
rights, the development of marketing and sales capabilities and the availability
of third party funding.

         Because of the Company's long-term capital requirements, it may seek
access to the public or private equity markets whenever conditions are
favorable. The Company may also seek additional funding through corporate
collaborations and other financing vehicles, potentially including off-balance
sheet financing through limited partnerships or corporations. There can be no
assurance that such funding will be available at all or on terms acceptable to
the Company. If adequate funds are not available, the Company may be required to
curtail significantly one or more it its research or development programs or
obtain funds through arrangements with collaborative partners or others. This
may require the Company to relinquish rights to certain of its technologies or
product candidates.

         Alteon's commercial partners may develop, either alone or with others,
products that compete with the development and marketing of the Company's
products. Competing products, either developed by the corporate partners or to
which the corporate partners have rights, may result in their withdrawal of
support with respect to all or a portion of the Company's technology, which
would have a material adverse effect on the Company's business, financial
condition and results of operations.

         The Company is conducting a review of its computer systems to identify
the systems that could be affected by the year 2000 issue and is currently
implementing a plan, which includes a review of all hardware/software vendors,
as well as other Alteon suppliers, vendors and partners. The Company believes
that, with minor hardware modifications, the year 2000 issue will not pose
significant operational problems for the Company's internal computer systems as
so modified. The Company is still assessing the possible effects on the
Company's operation of the year 2000 readiness of third party vendors; however,
the potential impact and related costs, if any, are not known at this time.

                                     PART II

ITEM 5.  OTHER INFORMATION

         As previously reported, in April 1998 the Company and Genentech amended
their agreements regarding Genentech's purchases of the Company's preferred
stock to impose certain restrictions upon Genentech's purchase and conversion of
such stock in order to comply with requirements of the Nasdaq National Market.
The amendment provided that the restrictions would remain in place until the
Company's stockholders approved their removal. At the Company's 1998 Annual
Meeting of Stockholders held on July 22, 1998, the Company's stockholders
approved the removal of these restrictions.


                                       11
<PAGE>   12
ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

a)  Exhibits

       Exhibit
          No.                               Description of Exhibit
       -------                              ----------------------

         3.1          Restated Certificate of Incorporation. (Incorporated by
                      reference to Exhibit 3.1 to the Company's Registration
                      Statement on Form S-1 (File Number 33-42574) which became
                      effective on November 1, 1991).

         3.2          Certificate of the Voting Powers, Designations, Preference
                      and Relative Participating, Optional and Other Special
                      Rights and Qualifications, Limitations or Restrictions of
                      Series F Preferred Stock of the Company. (Incorporated by
                      reference to Exhibit 4.2 to the Company's Current Report
                      on Form 8-K filed on August 4, 1995).

         3.3          Certificate of Designations of Series G Preferred Stock of
                      Alteon Inc. (Incorporated by reference to Exhibit 3.4 to
                      the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1997).

         3.4          Certificate of Amendment of Certificate of Designations of
                      Series G Preferred Stock of Alteon Inc.

         3.5          Certificate of Designations of Series H Preferred Stock of
                      Alteon Inc. (Incorporated by reference to Exhibit 3.5 to
                      the Company's Annual Report on Form 10-K for the year
                      ended December 31, 1997).

         3.6          Amended Certificate of Designations of Series H Preferred
                      Stock of Alteon Inc.

         3.7          By-laws, as amended. (Incorporated by reference to Exhibit
                      3.1 to the Company's Current Report on Form 8-K filed on
                      April 22, 1996).

         4.1          Stockholders' Rights Agreement dated as of July 27, 1995
                      between Alteon Inc. and Registrar and Transfer Company, as
                      Rights Agent. (Incorporated by reference to Exhibit 4.1 to
                      the Company's Current Report on Form 8-K filed on August
                      4, 1995).

         4.2          Amendment to Stockholders' Rights Agreement dated as of
                      April 24, 1997 between Alteon Inc. and Registrar and
                      Transfer Company, as Rights Agent. (Incorporated by
                      reference to Exhibit 4.4 to the Company's Current Report
                      on Form 8-K filed on May 9, 1997).

         4.3          Amendment to Stockholders' Rights Agreement dated as of
                      December 1, 1997 between Alteon Inc. and Registrar and
                      Transfer Company, as Rights Agent. (Incorporated by
                      reference to Exhibit 4.1 to the Company's Current Report
                      on Form 8-K filed on December 10, 1997).

         10.1*        Letter Agreement dated as of April 1, 1998 between Alteon
                      Inc. and Cerami Consulting Corporation.


                                       12
<PAGE>   13
         10.2*        Letter Agreement dated as of April 1, 1998 between Alteon
                      Inc. and Kenneth S. Warren Laboratories, Inc.

         10.3         Amendment to Stock Purchase Agreement and Development
                      Collaboration and License Agreement dated as of April 29,
                      1998 between Alteon Inc. and Genentech, Inc. (Incorporated
                      by reference to Exhibit 10.1 to the Company's Current
                      Report on Form 8-K filed on May 6, 1998).

         10.4         Letter Agreement dated June 30, 1998 between Alteon Inc.
                      and Hoechst Marion Roussel, Inc.

         27           Financial Data Schedule.

*Confidential treatment has been requested for a portion of this document.

b)       The following report on Form 8-K was filed during the quarter ended
June 30, 1998:

         On May 6, 1998 the Company filed a Current Report on Form 8-K which
reported that the Company and Genentech, Inc. entered into an Amendment to Stock
Purchase Agreement and Development Collaboration and License Agreement dated as
of April 29, 1998 amending certain provisions of the Stock Purchase Agreement
and Development Collaboration and License Agreement, each dated as of December
1, 1998, between the parties.


                                       13
<PAGE>   14
                                   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.



Date:    August 14, 1998



                                       ALTEON INC.




                                           /s/ James J. Mauzey
                                           ------------------------------------
                                       By: James J. Mauzey
                                           Chairman of the Board,
                                           Chief Executive Officer and Director
                                           (principal executive officer)



                                           /s/ Kenneth I. Moch
                                           ------------------------------------
                                       By: Kenneth I. Moch
                                           Senior Vice President,
                                           Finance and Business Development
                                           and Chief Financial Officer
                                           (principal financial officer)


                                       14