<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 MARCH 31, 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:



<TABLE>
<CAPTION>
       Title of each class                 Number of shares outstanding
----------------------------------         ----------------------------
<S>                                                <C>
Common Stock ($.0002145 par value)                 8,130,268

  Warrants to purchase shares of
   Common Stock ($.0002145 par
             value)                                2,079,134
</TABLE>



<PAGE>   2




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


<TABLE>
<CAPTION>
                                                                          Page Number
                                                                          -----------
<S>                     <C>                                                    <C> 
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                                       8

SIGNATURE PAGE                                                                  9
</TABLE>








                                      -2-
<PAGE>   3

PART I - FINANCIAL INFORMATION

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

<TABLE>
<CAPTION>
                                                       MARCH 31,    DECEMBER 31,
                                                         1997          1996
<S>                                                <C>            <C>
ASSETS

Current assets:
 Cash and Cash Equivalents                         $   3,930,885  $  4,479,041
 Prepaid Expenses                                         51,750            --
                                                   -------------  ------------
       Total current assets                            3,982,635     4,479,041
                                                   
Equipment and Furniture:                           
 Equipment                                                27,007        27,007
 Furniture                                                12,988        12,988
 Less accumulated depreciation                           (28,273)      (26,828)
                                                   -------------  ------------
       Total equipment and furniture, net                 11,722        13,167
                                                   -------------  ------------
                                                   
       Total assets                                $   3,994,357  $  4,492,208
                                                   =============  ============
                                                   
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)     
                                                   
Current liabilities:                               
Accounts payable and accrued liabilities:          
  Obligations under research agreements            $      60,000  $     80,000
  Due to related parties                                      --        43,239
  Accounts payable                                       332,610       232,792
  Accrued compensation                                        --       110,000
                                                   -------------  ------------
                                                   
       Total current liabilities                         392,610       466,031
                                                   -------------  ------------
                                                   
                                                   
Stockholders' equity (deficit):                    
 Common stock, $.0002145 par value;                 
  15,000,000 shares authorized:                     
  8,130,268 shares issued and                       
  outstanding, respectively                                1,744         1,744
 Additional paid-in capital                            5,890,078     5,890,078
 Deficit accumulated during the                     
  development stage                                   (2,290,075)   (1,865,645)
                                                   -------------  ------------
       Total stockholders' equity (deficit)            3,601,747     4,026,177
                                                   -------------  ------------
       Total liabilities and stockholders'         
        equity (deficit)                           $   3,994,357  $  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 MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)

<TABLE>
<CAPTION>
                                                                               INCEPTION
                                                                             (JUNE 15, 1990)
                                                                                THROUGH
                                                   MARCH 31,    MARCH 31,       MARCH 31,
                                                      1997         1996           1996

<S>                                                <C>         <C>           <C>
Revenues                                           $       --  $         --  $            --

Expenses:
Research and development                              269,842       223,464        4,332,681
General and administrative                            212,011       180,182        1,988,377
                                                   ----------  ------------  ---------------
 Total Expenses                                       481,853       403,646        6,321,058

         Loss from Operations                        (481,853)     (403,646)      (6,321,058)

Interest income                                        57,424        48,888          295,699
Interest expense                                           --       (47,364)        (735,606)
                                                   ----------  ------------  ---------------
 Interest income(expense) - net                        57,424         1,524         (439,907)

Net loss                                            $(424,429)  $  (402,122)   $  (6,760,965)
                                                   ==========  ============   ==============

Net loss per share                                  $    (.05)  $      (.06)
                                                   ==========  ============

Weighted average shares used in
 computing net loss per share                       8,130,268     6,930,844
                                                   ==========  ============
</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
THREE MONTHS ENDED MARCH 31, 1997 AND 1996
(Unaudited)


<TABLE>
<CAPTION>
                                                                        INCEPTION
                                                                     (JUNE 15, 1990)
                                                                         THROUGH
                                                MARCH 31,   MARCH 31,    MARCH 31,
                                                  1997        1996         1996
<S>                                            <C>         <C>         <C>
Cash flows used in operating activities:
Net loss                                       $(424,429)  $ (402,122) $(6,760,965)
Adjustments to reconcile net loss
  to net cash used by operating
  activities:
Depreciation and amortization                      1,445        1,445       40,072
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                                         (51,750)          --      (62,850)
Increase (decrease) in accounts
  payable and accrued liabilities                (73,422)  (1,041,335)     392,609
                                               ---------  -----------  -----------

Net cash used in operating activities           (548,156)    (918,627)  (5,693,724)
                                               ---------  -----------  -----------

Cash flows used in investing activities:
Purchase of equipment and
 furniture                                            --       (3,782)     (41,097)
Proceeds from disposal of
 equipment and furniture                              --           --          810
                                              ----------  -----------  -----------

Net cash used in investing activities                 --       (3,782)     (40,287)
                                              ----------  -----------  -----------

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                --           --      267,779
                                              ----------  -----------  -----------

Net cash provided by financing activities             --    6,396,606    9,664,896
                                              ----------  -----------  -----------

Net increase (decrease) in cash                 (548,156)   5,474,197    3,930,885
Cash, beginning of period                      4,479,041          671           --
                                              ----------  -----------  -----------
Cash, end of period                           $3,930,885   $5,474,868   $3,930,885
                                              ==========  ===========  ===========

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
                                 MARCH 31, 1997

NOTE 1

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 March 31,
1997, the results of operations for the three months ended March 31, 1997 and
1996 and changes in cash flows for the three month periods ended March 31, 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 2

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

Results of Operations - Three Months Ended March 31, 1997 vs. Three Months
Ended March 31, 1996

Research and development expenses increased by 21% or $46,378 for the three
month period ended March 31, 1997 compared to the three month period ended
March 31, 1996.  The increase is due primarily to regulatory and analytical
support of the Company's pending New Drug Application at the FDA.

General and administration expenses increased 18% or $31,829 for the three
month period ended March 31, 1997 compared to the three month period ended
March 31, 1996, primarily due to payroll.  Salaries were not paid to officers 
prior to completion of the Companies initial public offering.

The Company generated interest income on excess cash balances of $57,424 and
$48,888 for the three month periods ended March 31, 1997 and March 31, 1996,
respectively.  Interest expense of $47,364 was incurred during the three month
period ended March 31, 1996 representing the cost of borrowing against a letter
of credit and a shareholder loan for one month.   These debts were extinguished
as part of the Company's initial public offering in January 1996.

The net loss for the three month period ended March 31, 1997 increased by 6% or
$22,307 compared to the three month period ended March 31, 1996.  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 March 31, 1997, the Company's cash and cash equivalents were $3,930,885
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.





                                      -7-
<PAGE>   8




PART II - OTHER INFORMATION


<TABLE>
                <S>      <C>                               <C>
                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               None

                Item 5.  Other Information                 None

                Item 6.  Exhibits and Reports on Form 8-K

                         (a)  Exhibits                     None
                         (b)  Reports on Form 8-K          None

</TABLE>









                                      -8-


<PAGE>   9




                                 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: May 10, 1997












                                     -9-