<PAGE>   1

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                                 UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                            ------------------------

                                   FORM 10-Q
                            ------------------------

(MARK ONE)

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

                 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000

                                       OR

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

         FOR THE TRANSITION PERIOD FROM ____________ TO ____________ .

                         COMMISSION FILE NUMBER 0-28402

                              ARADIGM CORPORATION
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S>                                            <C>
                  CALIFORNIA                                     94-3133088
       (STATE OR OTHER JURISDICTION OF                        (I.R.S. EMPLOYER
        INCORPORATION OR ORGANIZATION)                      IDENTIFICATION NO.)
</TABLE>

                              3929 POINT EDEN WAY
                               HAYWARD, CA 94545
          (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES INCLUDING ZIP CODE)

                                 (510) 265-9000
              (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 latest practicable date.

<TABLE>
<S>                                            <C>
          Common Stock, no par value                         17,912,806 shares
                   (Class)                              (Outstanding at May 4, 2000)
</TABLE>

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<PAGE>   2

                              ARADIGM CORPORATION

                                     INDEX

                         PART I.  FINANCIAL INFORMATION

<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       NO.
                                                                       ----
<S>      <C>                                                           <C>
Item 1.  Financial Statements
         Statements of Operations (Unaudited)
         Three months ended March 31, 2000 and 1999..................    3
         Balance Sheets
         March 31, 2000 (Unaudited) and December 31, 1999............    4
         Statements of Cash Flows (Unaudited)
         Three months ended March 31, 2000 and 1999..................    5
         Notes to Unaudited Financial Statements.....................    6

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

Item 3.  Quantitative and Qualitative Disclosure About Market Risk...   10

                        PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings...........................................   11

Item 6.  Exhibits and Reports on Form 8-K............................   11

Signature............................................................   12

Exhibits.............................................................   13
</TABLE>

                                        2
<PAGE>   3

                         PART I.  FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                              ARADIGM CORPORATION

                            STATEMENTS OF OPERATIONS
                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                  MARCH 31,
                                                              ------------------
                                                               2000       1999
                                                              -------    -------
                                                                 (UNAUDITED)
<S>                                                           <C>        <C>
Contract revenues...........................................  $ 5,700    $ 3,586
Expenses:
  Research and development..................................   10,896      7,587
  General and administrative................................    2,073      1,609
                                                              -------    -------
          Total expenses....................................   12,969      9,196
                                                              -------    -------
Loss from operations........................................   (7,269)    (5,610)
Interest income.............................................      395        420
Interest expense and other..................................     (321)      (289)
                                                              -------    -------
Net loss....................................................  $(7,195)   $(5,479)
                                                              =======    =======
Basic and diluted net loss per share........................  $ (0.48)   $ (0.43)
                                                              =======    =======
Shares used in computing basic and diluted net loss per
  share.....................................................   14,846     12,737
                                                              =======    =======
</TABLE>

                            See accompanying notes.

                                        3
<PAGE>   4

                              ARADIGM CORPORATION

                                 BALANCE SHEETS
                    (IN THOUSANDS, EXCEPT SHARE INFORMATION)

                                     ASSETS

<TABLE>
<CAPTION>
                                                               MARCH 31,     DECEMBER 31,
                                                                 2000            1999
                                                              -----------    ------------
                                                              (UNAUDITED)
<S>                                                           <C>            <C>
Current assets:
  Cash and cash equivalents.................................   $ 14,833        $  9,347
  Short-term investments....................................     10,894          21,912
  Receivables...............................................      3,736           3,886
  Other current assets......................................        562           1,187
                                                               --------        --------
          Total current assets..............................     30,025          36,332
Property and equipment, net.................................     14,911          14,160
Notes receivable from officers..............................         96             130
Other assets................................................        168             168
                                                               --------        --------
          Total assets......................................   $ 45,200        $ 50,790
                                                               ========        ========

                          LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................   $  2,006        $  2,506
  Accrued clinical and cost of other studies................        387              95
  Accrued compensation......................................      2,026           1,275
  Deferred revenue..........................................      5,209           7,361
  Other accrued liabilities.................................      1,238             261
  Current portion of capital lease obligations..............      1,892           1,863
                                                               --------        --------
          Total current liabilities.........................     12,758          13,361
Notes Payable...............................................      5,586           3,956
Noncurrent portion of deferred revenue......................      3,255           3,663
Capital lease obligations, less current portion.............      5,132           5,653
Commitments and contingencies
Shareholders' equity:
  Preferred stock, no par value; 5,000,000 shares
     authorized; no shares issued or outstanding............         --              --
  Common stock, no par value; 40,000,000 shares authorized;
     issued and outstanding shares: March 31,
     2000 -- 14,971,517; December 31, 1999 -- 14,749,777....    101,054          99,603
Shareholder notes receivable................................       (146)           (163)
Deferred compensation.......................................       (338)           (379)
Accumulated deficit.........................................    (82,101)        (74,904)
                                                               --------        --------
          Total shareholders' equity........................     18,469          24,157
                                                               --------        --------
          Total liabilities and shareholders' equity........   $ 45,200        $ 50,790
                                                               ========        ========
</TABLE>

                            See accompanying notes.

                                        4
<PAGE>   5

                              ARADIGM CORPORATION

                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                  MARCH 31,
                                                              ------------------
                                                               2000       1999
                                                              -------    -------
                                                                 (UNAUDITED)
<S>                                                           <C>        <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net loss..................................................  $(7,195)   $(5,479)
  Adjustments to reconcile net loss to cash used in
     operating activities:
     Depreciation and amortization..........................      666        527
     Amortization of deferred compensation..................       41         41
     Changes in operating assets and liabilities:
       Receivables..........................................      150       (622)
       Other current assets.................................      625        111
       Other assets.........................................       --     (1,116)
       Accounts payable.....................................     (500)       274
       Accrued liabilities..................................    2,020     (1,329)
       Deferred revenue.....................................   (2,560)    (2,190)
                                                              -------    -------
Net cash used in operating activities.......................   (6,753)    (9,783)
                                                              -------    -------
CASH FLOWS FROM INVESTING ACTIVITIES
  Capital expenditures......................................   (1,417)      (615)
  Purchases of available-for-sale investments...............     (824)        --
  Proceeds from maturities of available-for-sale
     investments............................................   11,840      3,035
                                                              -------    -------
Net cash provided by investing activities...................    9,599      2,420
                                                              -------    -------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common stock, net...............    1,451     25,215
  Issuance of notes payable.................................    1,630         --
  Proceeds from repayments of shareholder notes.............       17          8
  Notes receivable from officers............................       34         20
  Proceeds from equipment loans.............................       --        588
  Payments on lease obligations and equipment loans.........     (492)      (208)
                                                              -------    -------
Net cash provided by financing activities...................    2,640     25,623
                                                              -------    -------
Net increase in cash and cash equivalents...................    5,486     18,260
Cash and cash equivalents at beginning of period............    9,347     10,765
                                                              -------    -------
Cash and cash equivalents at end of period..................  $14,833    $29,025
                                                              =======    =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid for interest....................................  $   213    $   261
                                                              =======    =======
NON-CASH INVESTING AND FINANCING ACTIVITIES
  Issuance of warrants for services.........................  $    --    $   221
                                                              =======    =======
</TABLE>

                            See accompanying notes.
                                        5
<PAGE>   6

                              ARADIGM CORPORATION

                  NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
                                 MARCH 31, 2000

 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  Organization and Basis of Presentation

     Aradigm Corporation (the "Company") is a California corporation. Since
inception, Aradigm has been engaged in the development and commercialization of
non-invasive pulmonary drug delivery systems. Through June 1997, the Company was
in the development stage. The Company does not anticipate receiving significant
revenue from the sale of products in the upcoming year. Principal activities to
date have included obtaining financing, recruiting management and technical
personnel, securing operating facilities, conducting research and development,
and expanding commercial production capabilities. These factors indicate that
the Company's ability to continue its research, development and
commercialization activities is dependent upon the ability of management to
obtain additional financing as required.

     In the opinion of management, the financial statements reflect all
adjustments, which are of a normal recurring nature, necessary for a fair
presentation. The accompanying financial statements should be read in
conjunction with the financial statements and notes thereto included with the
Company's Annual Report on Form 10-K. The results of the Company's operations
for the interim periods presented are not necessarily indicative of operating
results for the full fiscal year or any future interim periods.

  Use of Estimates

     The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

  Cash Equivalents and Investments

     The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents. The Company
places its cash and cash equivalents in money market funds, commercial paper and
corporate notes. The Company's short-term investments consist of commercial
paper and corporate notes with maturities ranging from three to twelve months.

     The Company classifies its investments as available-for-sale.
Available-for-sale investments are recorded at fair value with unrealized gains
and losses reported in the statement of shareholders' equity. Fair values of
investments are based on quoted market prices, where available. Realized gains
and losses, which have been immaterial to date, are included in interest and
other income and are derived using the specific identification method for
determining the cost of investments sold. Dividend and interest income is
recognized when earned.

  Depreciation and Amortization

     The Company records property and equipment at cost and calculates
depreciation using the straight-line method over the estimated useful lives of
the respective assets, generally three to seven years. Machinery and equipment
acquired under capital leases is amortized over the useful lives of the assets.
Leasehold improvements are amortized over the shorter of the term of the lease
or useful life of the improvement.

  Revenue Recognition

     Contract revenues consist of revenue from collaboration agreements and
feasibility studies. The Company recognizes revenue under the agreements as
reimbursable costs are incurred. Deferred revenue represents the portion of
research payments received that has not been earned. In accordance with contract
terms, milestone payments from collaborative research agreements are considered
reimbursements for costs incurred under the agreements and, accordingly, are
generally deferred when received and recognized as revenue based on actual

                                        6
<PAGE>   7
                              ARADIGM CORPORATION

            NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 31, 2000

efforts expended over the remaining terms of the agreements. Costs of contract
revenue approximate such revenue and are included in research and development
expenses. Refundable development and license fee payments are deferred until the
specified performance criteria are achieved.

  Net Loss Per Share

     Basic net loss per share has been computed using the weighted average
number of shares of common stock outstanding less the weighted average number of
shares subject to repurchase during the period. No diluted loss per share
information has been presented in the accompanying statements of operations
since potential common shares from stock options and warrants are antidilutive.

 2. SHAREHOLDERS' EQUITY

     In March 1999, the Company completed a private placement of 2,428,338
shares of its common stock, raising approximately $24.8 million in net proceeds.
During March 2000, the Company announced a follow-on public offering of common
stock. The offering was completed in April 2000, raising approximately $42.7
million in net proceeds with the issuance of 2,875,000 shares of common stock.
Net proceeds of this offering will be reflected in second quarter 2000 results.

 3. CONTINGENCIES

     In June of 1998, Eli Lilly and Company ("Lilly") filed a complaint against
the Company in the United States District Court for the Southern District of
Indiana. The complaint made various allegations against the Company, arising
from the Company's decision to enter into an exclusive collaboration with Novo
Nordisk A/S with respect to the development and commercialization of a pulmonary
delivery system for insulin and insulin analogs. The Company has sponsored
various studies of the pulmonary delivery of insulin analogs using materials
supplied by Lilly under a series of agreements dating from January 1996. The
Company and Lilly had also conducted negotiations concerning a long-term supply
agreement under which Lilly would supply bulk insulin to the Company for
commercialization in the Company's AERx Diabetes Management System, and a
separate agreement under which the Company would license certain intellectual
property to Lilly. These negotiations were terminated after the Company
proceeded with its agreement with Novo Nordisk A/S. The complaint seeks a
declaration that Lilly scientists were co-inventors of a patent application
filed by the Company relating to pulmonary delivery of an insulin analog or, in
the alternative, enforcement of an alleged agreement to grant Lilly a
nonexclusive license under such patent application. The complaint also contains
allegations of misappropriation of trade secrets, breach of fiduciary duty,
conversion and unjust enrichment and seeks unspecified damages and injunctive
relief. Management believes that it has meritorious defenses against each of Eli
Lilly's claims and that this litigation will not have a material adverse effect
on the Company's results of operations, cash flows or financial position.
However, there can be no assurance that the Company will prevail in this case.
The Company recently filed an answer denying all material allegations of the
complaint and a motion for summary judgment directed against all claims in Eli
Lilly's complaint.

                                        7
<PAGE>   8

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

     The discussion below contains forward-looking statements that are based on
the beliefs of our management, as well as assumptions made by, and information
currently available to, our management. Our future results, performance or
achievements could differ materially from those expressed in, or implied by, any
such forward-looking statements as a result of certain factors, including, but
not limited to, those discussed in this section as well as in the section
entitled "Risk Factors" and elsewhere in the Company's Form 10-K filed with the
Securities and Exchange Commission on March 30, 2000.

     Our business is subject to significant risks including, but not limited to,
the success of its research and development efforts, its dependence on corporate
partners for marketing and distribution resources, obtaining and enforcing
patents important to our business, clearing the lengthy and expensive regulatory
process and possible competition from other products. Even if our products
appear promising at various stages of development they may not reach the market
or may not be commercially successful for a number of reasons. Such reasons
include, but are not limited to, the possibilities that the potential products
will be found to be ineffective during clinical trials, fail to receive
necessary regulatory approvals, be difficult to manufacture on a large scale, be
uneconomical to market, be precluded from commercialization by proprietary
rights of third parties or may not gain acceptance from health care
professionals and patients. Readers are cautioned not to place undue reliance on
the forward-looking statements contained herein. We undertake no obligation to
publicly release the results of any revision to these forward-looking statements
which may be made to reflect events or circumstances occurring after the date
hereof or to reflect the occurrence of unanticipated events.

OVERVIEW

     Since our inception in 1991, we have been engaged in the development of
pulmonary drug delivery systems. As of March 31, 2000, we had an accumulated
deficit of $82.1 million. We have not been profitable since inception and expect
to incur additional operating losses over the next several years as our research
and development efforts, preclinical and clinical testing activities and
manufacturing scale-up efforts expand and as we plan and build our late-stage
clinical and early commercial production capabilities. To date, we have not had
any material product sales and do not anticipate receiving significant revenue
from product sales during 2000. The sources of working capital have been equity
financings, equipment lease financings, contract research funding and interest
earned on investments.

     We have performed initial feasibility work on a number of compounds and
have been compensated for expenses incurred by us in performing this work in
several cases pursuant to feasibility study agreements with third parties. Once
feasibility is demonstrated with respect to a potential product, we seek to
enter into development contracts with pharmaceutical corporate partners. We
currently have such agreements pursuant to which we are developing pulmonary
delivery systems with Genentech, to manage cystic fibrosis with dornase alfa,
the active ingredient in Pulmozyme, with Novo Nordisk, to manage diabetes using
insulin and other blood glucose regulating compounds and with SmithKline
Beecham, to manage acute and breakthrough pain using opioid analgesics.

     Our collaborative agreements with Novo Nordisk and SmithKline Beecham
provide for reimbursement of research and development expenses as well as
additional payments to us as we achieve certain significant milestones. We also
expect to receive royalties from these development partners based on revenues
from partner sales of product and to receive revenue from the manufacturing of
unit dose packets and hand-held devices. We recognize revenues under the terms
of these collaborative agreements as the research and development expenses are
incurred, to the extent they are reimbursable.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 2000 AND 1999

     Contract Revenues. We reported revenues from collaborative contracts of
$5.7 million for the three-month period ended March 31, 2000, compared to $3.6
million for the same period in 1999. The revenue increase resulted from the
expansion of our partner-funded project development program, primarily the Novo

                                        8
<PAGE>   9

Nordisk agreement signed in June 1998. Costs associated with contract research
revenue are included in research and development expenses.

     Our collaborative development agreement with Genentech, entered into as of
May 21, 1999, provides that certain expense reimbursements received from
Genentech under this agreement are subject to repayment if the product does not
receive approval from the Food and Drug Administration ("FDA"). Development
expenses incurred are reimbursed by Genentech in the form of loans supported by
promissory notes bearing interest at 2% over the prime rate. Upon receipt of FDA
approval, we will receive a milestone payment that is larger than the loan
principal and accrued interest, allowing the loan to be fully repaid at that
time. We will also receive certain milestone payments at various points of
product development.

     Research and Development Expenses. Research and development expenses for
the three-month period ended March 31, 2000 increased to $10.9 million from $7.6
million for the same period in 1999. This increase was attributable to the
hiring of additional scientific personnel and the expansion of research and
development efforts to support the ongoing programs with Novo Nordisk and
SmithKline Beecham and the addition of the Genentech program.

     These expenses represent proprietary research expenses as well as the costs
related to contract research revenue and include salaries and benefits of
scientific and development personnel, laboratory supplies, consulting services
and the expenses associated with the development of manufacturing processes. We
expect research and development spending to increase significantly over the next
few years as we continue to expand our development activities to support current
and potential future collaborations and initiate commercial manufacturing of the
AERx systems. The increase in research and development expenditures cannot be
predicted accurately as it depends in part upon future success in pursuing
existing development collaborations, as well as obtaining new collaborative
agreements.

     General and Administrative Expenses. General and administrative expenses
for the three-month period ended March 31, 2000 increased to $2.1 million from
$1.6 million for the same period in 1999. The increase resulted from additional
personnel and leased facilities to support our expansion of research,
development and manufacturing activities, and increased efforts to develop
collaborative relationships with corporate partners.

     Interest Income. Interest income for the three-month period ended March 31,
2000 decreased to $395,000 from $420,000 for the same period in 1999. The
decrease was due to our maintaining smaller cash and investment balances than in
the same period in 1999. The higher cash and investment balances in 1999 were a
result of the private offering of common stock for approximately $25.5 million
in March 1999.

     Interest Expense and Other. Interest expense for the three-month period
ended March 31, 2000 increased to $321,000 from $289,000 for the same period in
1999. These increases are a result of higher outstanding capital lease and
equipment loan balances under our equipment and lease lines of credit.

LIQUIDITY AND CAPITAL RESOURCES

     We have financed our operations since inception primarily through private
placements and public offerings of our capital stock, proceeds from equipment
lease financings, contract research funding and interest earned on investments.
As of March 31, 2000, we had received approximately $101.1 million in net
proceeds from sales of our capital stock. In April 1999, we obtained an
additional $3.0 million equipment line of credit, of which $1.6 million was
funded during 1999. We have no open equipment lines of credit as of March 31,
2000. As of March 31, 2000, we had cash, cash equivalents and short-term
investments of approximately $25.7 million. During March 2000, we announced a
follow-on public offering of common stock which was completed in April 2000,
raising approximately $42.7 million in net proceeds with the issuance of
2,875,000 shares of common stock. The increase in cash and equity will be
reflected in our second quarter 2000 results.

     Net cash used in operating activities in the three months ended March 31,
2000 was $6.8 million compared to $9.8 million in the same period in 1999. The
decrease in cash used resulted from increases in accrued liabilities and
decreases in receivables, other assets and accounts payable, offset partially by
an increase in the net loss.
                                        9
<PAGE>   10

     Net cash provided by investing activities in the three months ended March
31, 2000 was $9.6 million compared to $2.4 million in the same period in 1999.
The increase resulted primarily from increased maturities of available-for-sale
investments, offset partially by increased purchases of investments and
expenditures made for capital equipment.

     Net cash provided by financing activities in the three months ended March
31, 2000 was $2.6 million compared to $25.6 million in the same period in 1999.
The decrease reflects receipt of proceeds from the completion of a private
placement of common stock in March 1999, which raised net proceeds of
approximately $24.8 million in the prior period. Partially offsetting the
decrease are notes payable supporting loans received under a collaborative
development agreement with Genentech.

     The development of our technology and proposed products will require a
commitment of substantial funds to conduct the costly and time-consuming
research and preclinical and clinical testing activities necessary to develop
and refine such technology and proposed products and to bring any such products
to market. Our future capital requirements will depend on many factors,
including continued progress and the results of the research and development of
the our technology and drug delivery systems, our ability to establish and
maintain favorable collaborative arrangements with others, progress with
preclinical studies and clinical trials and the results thereof, the time and
costs involved in obtaining regulatory approvals, the cost of development and
the rate of scale-up of our production technologies, the cost involved in
preparing, filing, prosecuting, maintaining and enforcing patent claims, and the
need to acquire licenses or other rights to new technology.

     We expect that our cash requirements will increase in future periods and
that we will need to raise additional capital before we become profitable. Given
our projected cash requirements, we believe that our existing capital resources
and committed funding from our collaborative partners, together with the
proceeds of our April 2000 offering and projected interest income will enable us
to maintain current and planned operations, including anticipated capital
spending requirements of approximately $50 million, through the end of 2001.
However, there can be no assurance that we will not need to raise substantial
additional capital to fund our operations and capital spending within this
period. We may seek additional funding through collaborations or through public
or private equity or debt financing. There cannot be any assurance that
additional financing can be obtained on acceptable terms, or at all. If
additional funds are raised by issuing equity securities, dilution to
shareholders may result. If adequate funds are not available, we may be required
to delay, to reduce the scope of, or to eliminate one or more of our research
and development programs, or to obtain funds through arrangements with
collaborative partners or other sources that may require us to relinquish rights
to certain of our technologies or products that we would not otherwise
relinquish.

NEW ACCOUNTING PRONOUNCEMENTS

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements." SAB
101 provides guidance on the recognition, presentation and disclosure of revenue
in financial statements of all public registrants. Any change in our revenue
recognition policy resulting from the interpretation of SAB 101 is to be
reported as a change in accounting principle in the quarter ending June 30,
2000. While we have not fully assessed the impact of the adoption of SAB 101, we
believe that implementation of SAB 101 will not have a material adverse impact
on our existing revenue recognition policies or our reported results of
operations for fiscal 2000.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

  Market Risk Disclosures

     In the normal course of business, our financial position is routinely
subject to variety of risks, including market risk associated with interest rate
movement. We regularly assess these risks and have established policies and
business practices to protect against these and other exposures. As a result, we
do not anticipate material potential losses in these areas.

                                       10
<PAGE>   11

     As of March 31, 2000, we had cash and cash equivalents and short-term
investments of $25.7 million consisting of cash and highly liquid, short-term
investments. Our short-term investments will decline by an immaterial amount if
market interest rates increase, and therefore, our exposure to interest rate
changes has been immaterial. Declines of interest rates over time will, however,
reduce our interest income from our short-term investments. Our outstanding
capital lease obligations are all at fixed interest rates and, therefore, have
minimal exposure to changes in interest rates.

                          PART II.  OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

     Reference is hereby made to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1999, as initially filed with the Securities
and Exchange Commission on March 30, 2000.

ITEM 6. EXHIBITS

     (a) EXHIBITS

<TABLE>
        <C>     <S>
        27.1    Financial Data Schedule
</TABLE>

     (b) REPORTS ON FORM 8-K

     The Company did not file any reports on Form 8-K during the quarter ended
March 31, 2000.

                                       11
<PAGE>   12

                                   SIGNATURE

     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.

Dated: May 12, 2000

                                          ARADIGM CORPORATION
                                          (Registrant)

                                                /s/ RICHARD P. THOMPSON
                                          --------------------------------------
                                                   Richard P. Thompson
                                          President and Chief Executive Officer

                                                  /s/ NORMAN HALLEEN
                                          --------------------------------------
                                                      Norman Halleen
                                               Vice President, Finance and
                                                      Administration
                                               and Chief Financial Officer

                                       12
<PAGE>   13

                              ARADIGM CORPORATION

                                   FORM 10-Q

                               INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                             DESCRIPTION
-------                            -----------
<C>        <S>
 27.1      Financial Data Schedule
</TABLE>

                                       13