<PAGE>   1

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


                                   FORM 10-Q


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

FOR QUARTER ENDED JUNE 30, 1997
                  -------------
                                       OR

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

FOR THE TRANSITION PERIOD FROM           TO          
                               ----------  ----------

                        Commission file number 33-90516
                                               --------

                                 NEOPHARM, INC.
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


           Delaware                                        51-0327886         
(State or other jurisdiction of                         (I.R.S. Employer      
incorporation or organization)                       Identification Number)   
                                            
                               225 East Deerpath
                                   Suite 250
                         Lake Forest, Illinois   60045
              (Address of principal executive offices)  (Zip Code)

                                 (847) 295-8678
              (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  X    No    .
                ---      ---

     Indicate the number of shares outstanding of each of the issuer's
     classes of common  stock, as of the close of the period covered by
     this report:



            Title of each class                  Number of shares outstanding
            -------------------                  ----------------------------
     Common Stock ($.0002145 par value)                   8,137,268

     Warrants to purchase shares of 
     Common Stock($.0002145 par value)                      837,067
     

<PAGE>   2




                                 NEOPHARM, INC.
               (A DELAWARE CORPORATION IN THE DEVELOPMENT STAGE)


                                                                     Page Number


PART I.         Financial Information

       ITEM 1.  Financial Statements

                          Balance Sheets                                 3
                                                                         
                          Statement of Operations                        4
                                                                         
                          Statement of Cash Flows                        5
                                                                         
                          Notes to Financial Statements                  6
                                                                         
                                                                         
       ITEM 2.  Management's Discussion and Analysis of Financial        
                Condition and Results of Operations                      7
                                                                         
                                                                         
PART II.        Other Information                                        9
                                                                         
SIGNATURE PAGE                                                           10
                                                                         
                                                                         








                                                                              2
<PAGE>   3


PART I - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS
------
NEOPHARM, INC.
(A DELAWARE CORPORATION IN THE DEVELOPMENT STAGE)
BALANCE SHEET
(Unaudited)


<TABLE>
<CAPTION>

                                                             JUNE 30,         DECEMBER 31,     
                                                               1997              1996          
                                                               ----              ----          
<S>                                                          <C>              <C>              
                                                            
ASSETS                                                      

Current assets:                                               
  Cash and cash equivalents                                $ 3,867,251     $  4,479,041      
  Prepaid expenses and other                                    35,580               --      
                                                           -----------     ------------     
      Total current assets                                   3,902,331        4,479,041     
                                                                                            
Equipment and furniture:                                      
  Equipment                                                     27,007           27,007     
  Furniture                                                     26,230           12,988     
  Less accumulated depreciation                                (29,718)         (26,828)     
                                                           -----------     ------------     
      Total equipment and furniture, net                        23,519           13,167     
                                                           -----------     ------------     
                                                              
      Total assets                                         $ 3,925,850     $  4,492,208     
                                                           ===========     ============     
                                                              
                                                              
LIABILITIES AND STOCKHOLDERS' EQUITY                        
                                                              
Current liabilities:                                          
  Accounts payable and accrued liabilities:                                                 
    Obligations under research agreements                  $    90,000     $     80,000     
    Due to related parties                                      37,464           43,239     
    Accounts payable and accrued liabilities                    56,222          232,792     
    Accrued compensation                                            --          110,000     
                                                              
      Total current liabilities                                183,687          466,031     
                                                           -----------     ------------     
                                                              
                                                              
Commitments and contingencies                                       --               --     
                                                              
Stockholders' equity (deficit):                               
  Common stock, $.0002145 par value;                          
    15,000,000 shares authorized:                             
    8,137,268 and 8,130,268 shares issued                     
    and outstanding, respectively                                1,746            1,744     
  Additional paid-in capital                                 5,914,648        5,890,078     
  Deficit accumulated during the                              
    development stage                                       (2,174,231)      (1,865,645)     
                                                           -----------     ------------     
      Total stockholders' equity                             3,742,163        4,026,177     
                                                           -----------     ------------     
      Total liabilities and stockholders'                     
        equity                                             $ 3,925,850     $  4,492,208     
                                                           ===========     ============     
</TABLE>                                                            
                                                         


      The accompanying notes are an integral part of these balance sheets.


                                                                              3
<PAGE>   4


NEOPHARM, INC.
(A DELAWARE CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF OPERATIONS
THREE AND SIX MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)
     

<TABLE>
<CAPTION>
                                                                                 INCEPTION     
                                                                              (JUNE 15, 1990)  
                             THREE MONTHS                SIX MONTHS               THROUGH      
                               JUNE 30,                   JUNE 30,               JUNE 30,      
                           1997           1996        1997        1996             1997        
                          -----           ----        ----        ----            -----        
<S>                    <C>              <C>         <C>         <C>            <C>             

Revenues:
 Licensing Revenues       $   550,000  $       --  $  550,000  $       --     $    550,000
                          
Expenses:                                                                    
 Research and                                                                
  development                 218,861     164,215     488,703     387,679        4,551,542
 General and                                                                 
  administrative              267,249     191,218     479,273     371,400        2,255,639
                          -----------  ----------  ----------  ----------     ------------
   Total Expenses             486,110     355,433     967,976     759,079        6,807,181
                                                                             
Income (loss)                                                                
from operations                63,890    (355,433)   (417,976)   (759,079)      (6,257,181)
                                                                             
Interest income                51,966      63,813     109,390     112,701          347,665
Interest expense                   --          --          --     (47,364)        (735,606)
                          -----------  ----------  ----------  ----------     ------------
 Interest income          
   (expense) - net             51,966      63,813     109,390      65,337         (387,941)
                          
Net income (loss)         $   115,856  $ (291,620)  $(308,586) $ (693,742)    $ (6,645,122)
                          ===========  ==========  ==========  ==========     ============
                          
Net income (loss)         
  per share               $       .01  $     (.04)  $    (.04) $     (.09)
                          ===========  ==========  ==========  ==========
                          
Weighted average          
  shares used in            
  computing net income      
  (loss) per share          8,131,435   8,050,268   8,130,851   7,490,558
                          ===========  ==========  ==========  ==========
</TABLE>



      The accompanying notes are an integral part of these balance sheets.




                                                                              4
<PAGE>   5



NEOPHARM, INC.
(A DELAWARE CORPORATION IN THE DEVELOPMENT STAGE)
STATEMENT OF CASH FLOWS
SIX  MONTHS ENDED JUNE 30, 1997 AND 1996
(Unaudited)

<TABLE>
<CAPTION>



                                                                                               INCEPTION         
                                                                                            (JUNE 15, 1990)      
                                                                                                THROUGH          
                                                           JUNE 30,           JUNE 30,          JUNE 30,         
                                                             1997               1996              1997           
                                                             ----               ----              ----           
<S>                                                      <C>               <C>               <C>              
                                                                            
Cash flows used in operating activities:                                    
  Net loss                                                $(308,586)       $(693,742)        $(6,645,122)        
  Adjustments to reconcile net loss                                         
    to net cash used by operating                                           
    activities:                                                             
  Depreciation and amortization                                2,890           1,945              41,517         
  Gain on disposal of equipment                                             
    and furniture                                                 --              --                (408)         
  Services contributed (non-cash)                                           
    by related party                                              --              --             101,042         
  Interest payable to principal                                             
    shareholder converted to stock                                --         523,385             523,385         
  Compensation expense from non-employee                                    
    stock options                                                 --              --              73,391         
  Changes in assets and liabilities:                                        
  (Increase) decrease in other assets                       (35,080)         486,436             (46,180)         
  Increase (decrease) in accounts                                           
    payable and accrued liabilities                        (282,344)      (1,069,848)            183,687        
                                                                            
Net cash used in operating activities                      (623,120)        (751,824)         (5,768,688)        
                                                          ----------      ----------         -----------         
                                                                            
Cash flows used in investing activities:                                    
  Purchase of equipment and furniture                       (13,242)          (7,172)            (54,339)        
  Proceeds from disposal of                                                 
    equipment and furniture                                       --              --                 810         
                                                          ----------      ----------         -----------         
                                                                            
Net cash used in investing activities                       (13,242)          (7,172)            (53,529)        
                                                          ----------      ----------         -----------         
                                                                            
Cash flows from financing activities:                                       
  Proceeds from loan payable to                                             
    principal stockholder                                         --              --           1,500,000         
  Advance on line of credit                                       --         107,000           2,114,652         
  Reduction in line of credit                                     --      (2,114,652)         (2,114,652)        
  Costs incurred related to the                                                                                  
    initial public offering                                       --        (181,180)           (688,321)        
  Proceeds from initial public offering                           --       8,585,438           8,585,438         
  Proceeds from issuance of common stock                      24,572              --             292,351         
                                                          ----------      ----------         -----------         
                                                                            
Net cash provided by financing activities                     24,572       6,396,606           9,689,468         
                                                          ----------      ----------         -----------         
                                                                            
Net increase (decrease) in cash                            (611,790)       5,637,610           3,867,251         
  Cash, beginning of period                                4,479,041             671                  --         
                                                          ----------      ----------         -----------         
  Cash, end of period                                     $3,867,251      $5,638,281         $ 3,867,251         
                                                          ==========      ==========         ===========         
                                                                            
                                                                            
Supplemental disclosure of cash paid for:                                   
  Interest                                                $       --      $   84,585         $   212,222         
  Income taxes                                                    --              --                  --         
</TABLE>                                                                    


      The accompanying notes are an integral part of these balance sheets.




                                                                                
                                                                             5
<PAGE>   6


                                 NEOPHARM, INC.
               (A DELAWARE CORPORATION IN THE DEVELOPMENT STAGE)
                         NOTES TO FINANCIAL STATEMENTS
                                 JUNE 30, 1997

NOTE 1 NATURE OF BUSINESS

NeoPharm, Inc. (the "Company") was founded in 1990 and is a development stage
company engaged in the research and development of drugs for the diagnosis and
treatment of various forms of cancer.  Originally incorporated under the name
Oncomed, Inc., the Company changed its name to NeoPharm, Inc. in March, 1995.
The Company has several drugs in various stages of clinical review and testing.
The Company has one New Drug Application ("NDA") currently under review with
the Food and Drug Administration ("FDA") which was filed in December of 1996.
The NDA currently under review relates to the use of BUdR (Broxuridine) as a
prognostic indicator in breast cancer.

NOTE 2 BASIS OF PRESENTATION

The financial information herein is unaudited, other than the Balance Sheet at
December 31, 1996, which is derived from the audited financial statements.

In the opinion of the Company, the accompanying unaudited interim financial
statements contain all adjustments (consisting of normal recurring adjustments)
necessary to present fairly the Company's financial position as of June 30,
1997, the results of operations for the three and six months ended June 30,
1997 and 1996 and changes in cash flows for the six month periods ended June
30, 1997 and 1996.

While the Company believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these financial statements
be read in conjunction with the financial statements and notes included in the
Company's 1996 annual report on Form 10-K filed with the Securities and
Exchange Commission.

NOTE 3 EARNINGS PER SHARE

In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128, Earnings Per Share, which establishes standards for
computing and presenting earnings per share for publicly held common stock or
potential common stock.  Statement No. 128 supersedes the standards for
computing earnings per share previously found in APB Opinion No. 15, Earnings
Per Share and simplifies the standards for computing earnings per share.  In
addition, Statement No. 128 replaces the presentation of primary earnings per
share with a presentation of basic earnings per share, requires dual
presentation of basic and diluted earnings per share for all entities with
complex capital structures and requires a reconciliation of the numerator and
denominator of the basic earnings per share computation to the numerator and
denominator of the diluted earnings per share computation.  The statement is
effective for financial statements for both interim and annual periods ending
after December 15, 1997.  Management believes that the adoption of the standard
would not have a material effect on the quarters presented.








                                                                             6
<PAGE>   7



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

Overview

Since its inception in 1990, the Company has devoted substantially all of its
efforts and resources to sponsoring and conducting research and development on
its own behalf and through collaborations with academic research and clinical
institutions.  Through June 30, 1997, with the exception of license fees, the
Company has not generated any revenue from operations.

The Company's operating results may fluctuate from period to period as a result
of, among other things, the receipt of license fee payments, the timing and
costs associated with clinical trials and the regulatory approval process, and
the acquisition of additional product rights.  The Company participates in a
highly dynamic industry, which often results in significant volatility of the
Company's common stock price.  Any setbacks in clinical trials, in the
regulatory approval process or in relationships with collaborative partners,
and any shortfalls in revenue or earnings from levels expected by securities
analysts, among other developments, have in the past had and could in the
future have an immediate and significant adverse effect on the trading price of
the Company's common stock in any given period.

Results of Operations - Six Months Ended June 30, 1997 vs. Six Months Ended
June 30, 1996

Revenues were related to a $550,000 license fee payment from a Canadian
distribution company for the rights to distribute certain products in Canada.
The unconditional payment was received by the Company at signing.  Future
licensing income is possible if certain milestones are met.

Research and development expenses increased by 26% or $101,024 for the
six-month period ended June 30, 1997 compared to the six-month period ended
June 30, 1996. The increase is due primarily to regulatory and analytical
support of the Company's pending New Drug Application at the Food and Drug
Administration ("FDA"), the initiation of Phase I clinical trials for
liposome-encapsulated doxorubicin ("LED") and formulation and scale-up of
liposome-encapsulated paclitaxel ("LEP").

General and administration expenses increased 29% or $107,873 for the six-month
period ended June 30, 1997 compared to the six-month period ended June 30,
1996.  This increase was primarily due to payroll costs, legal expenses,
accounting fees and investor communications activities.  Salaries were not paid
to officers prior to the completion of the Company's initial public offering.
The Company expects general and administrative expenses to vary quarter to
quarter as its general and administrative activities increase to support
clinical development, regulatory and marketing activities.

The Company generated interest income on excess cash balances of $109,390 and
$112,701 for the six-month periods ended June 30, 1997 and June 30, 1996,
respectively.  Interest expense of $47,364 was incurred during the six-month
period ended June 30, 1996 representing the cost of borrowing against a letter
of credit and a shareholder loan for one month.   These debts were repaid
following completion of the Company's initial public offering in January 1996.

The net loss for the six-month period ended June 30, 1997 decreased by 56% or
$385,156 compared to the six-month period ended June 30, 1996 due primarily to
license fee income.  The Company expects losses to continue as planned product
development continues.

Results of Operations - Three Months Ended June 30, 1997 vs. Three Months Ended
June 30, 1996

Revenues were related to a $550,000 license fee payment from a Canadian
distribution company for the rights to distribute certain products in Canada.
The unconditional payment was received by the Company at signing.  Future
licensing income is possible if certain milestones are met.







                                                                             7
<PAGE>   8




Research and development expenses increased by 33% or $54,643 for the
three-month period ended June 30, 1997 compared to the three-month period ended
June 30, 1996. The increase is due primarily to regulatory and analytical
support of the Company's pending New Drug Application at the FDA, the
initiation of Phase I clinical trial for LED and formulation and scale-up of
LEP.

General and administration expenses increased 40% or $76,031 for the
three-month period ended June 30, 1997 compared to the three-month period ended
June 30, 1996.   This increase was primarily due to increased legal and
accounting expenses and to investor communications activities.  The Company
expects general and administrative expenses to vary quarter to quarter as
general and administrative activities increase to support clinical, regulatory
and marketing activities.

The Company generated interest income on excess cash balances of $51,966 for
the three-month period ended June 30, 1997 and $63,813 for the three-month
period ended June 30, 1996.  Excess cash balances for the three-month period
ended June 30, 1997 were lower than the previous comparative quarter.

The Company realized a net income for the three-month period ended June 30,
1997 of $115,856 due primarily to income from a licensing agreement.  Future
licensing income is possible if certain milestones are met.  The net loss for
the three-month period ended June 30, 1996 was $291,620.  Irrespective of the
net income reported for the three-month period ended June 30, 1997, the Company
expects losses to continue as planned product development continues.

Liquidity and Capital Resources

Cash expenditures have exceeded revenues since the Company's inception.
Operations have principally been funded through a loan from the Company's
Chairman, a bank line-of-credit and since January 1996, the initial public
offering of common stock.  The Company expects to incur additional expenses,
resulting in potentially significant losses, as it continues and expands its
research and development activities and undertakes additional clinical trials
of compounds obtained under proprietary licenses.  The Company also expects to
incur substantial administrative and commercialization expenditures in the
future as it seeks FDA approval of drugs under development and initiates
marketing activities.

At June 30, 1997, the Company's cash and cash equivalents were $3,867,251
compared to $4,479,041 at December 31, 1996.  The Company plans to finance its
needs principally from its existing capital resources and interest thereon, and
to the extent available, through collaborative agreements with corporate
partners and future public and private financing.  The Company's long-term
capital requirements and the adequacy of its available funds will depend upon
many factors, including results of research and development, results of product
testing, relationships with potential partnerships and collaborations, and the
FDA regulatory process.  Additional funding may not be available when needed or
on terms acceptable to the Company.  Insufficient funds my require the Company
to delay, scale-back or eliminate certain of its research and development
programs or to license third parties to commercialize products or technologies
that the Company would otherwise undertake itself.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995

The Company cautions readers that important factors may affect the Company's
actual results and could cause such results to differ materially from
forward-looking statements made by or on behalf of the Company.  Such factors
include, but are not limited to, changing market conditions, the impact of
competitive products and pricing, the timely development, approval by the FDA
and foreign health authorities, and market acceptance, of the Company's
products in development, the Company's ability to further raise capital, the
Company's dependence on key personnel, and other risks detailed herein and in
other filings the Company makes with the Securities and Exchange Commission.






                                                                             8
<PAGE>   9



PART II - OTHER INFORMATION


      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           
                            

      On May 16, 1997, the Company held its annual meeting of
      Stockholders for the purpose of electing 5 directors to serve
      until the 1998 Annual Meeting of Stockholders and to ratify an
      amendment to the Company's 1995 Stock Plan to provide for an
      increase in the number of shares available for issuance
      thereunder.

      The amendment to the Company's 1995 Stock Plan was adopted with
      5,457,650 votes cast for, 172,700 against and 1,500 withheld.

      With respect to the election for directors, the votes were as
      follows:


<TABLE>
<CAPTION>
                                    Votes For            Votes Against    Votes Withheld
                                    ---------            -------------    --------------
<S>                               <C>                  <C>              <C>             
     William C. Govier              7,132,901                        0           140,000
     John N. Kapoor                 7,132,901                        0           140,000
     Aquilur Rahman                 7,132,901                        0           140,000
     Anatoly Dritschilo             7,132,901                        0           140,000
     Erick E. Hanson                7,132,901                        0           140,000

</TABLE>
     
     
      Item 5.             Other Information                           None

      Item 6.             Exhibits and Reports on Form 8-K


                          (a)  Exhibits

                          3.2 Bylaws of the Registrant, as amended, 
                          incorporated by reference to the Company's
                          Registration Statement on Form S-1 (File No.
                          33-90516).

                          (b)  Reports on Form 8-K                    None








                                                                             9

<PAGE>   10



                                 SIGNATURE PAGE

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.

                                           NEOPHARM, INC.                      
                                                                               
                                           By: /s/  David E. Riggs             
                                           -----------------------             
                                           David E. Riggs,,                    
                                           Chief Financial Officer             
                                           and authorized officer              
                                                                               
                                           Date: August 13, 1997               
                                                 ----------------






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