<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, 2001

                                       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                             19,221,879
                   (CLASS)                            (OUTSTANDING AT APRIL 24, 2001)
</TABLE>

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<PAGE>   2

                              ARADIGM CORPORATION

                                     INDEX

<TABLE>
<CAPTION>
                                                                       PAGE
                                                                       NO.
                                                                       ----
<S>      <C>                                                           <C>
                       PART I. FINANCIAL INFORMATION
Item 1.  Financial Statements
         Statements of Operations (Unaudited)
         Three months ended March 31, 2001 and 2000..................    1
         Balance Sheets
         March 31, 2001 (Unaudited) and December 31, 2000............    2
         Statements of Cash Flows (Unaudited)
         Three months ended March 31, 2001 and 2000..................    3
         Notes to Unaudited Financial Statements.....................    4
         Management's Discussion and Analysis of Financial Condition
Item 2.  and Results of Operations...................................    6
Item 3.  Quantitative and Qualitative Disclosure About Market Risk...    9

                        PART II. OTHER INFORMATION
Item 6.  Exhibits and Reports on Form 8-K............................   10
Signature............................................................   11
</TABLE>

                                        i
<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,
                                                              ------------------
                                                               2001       2000
                                                              -------    -------
                                                                 (UNAUDITED)
<S>                                                           <C>        <C>
Contract revenues...........................................  $ 6,687    $ 5,700
                                                              -------    -------
Expenses:
  Research and development..................................   14,160     10,896
  General and administrative................................    2,328      2,073
                                                              -------    -------
          Total expenses....................................   16,488     12,969
                                                              -------    -------
Loss from operations........................................   (9,801)    (7,269)
Interest income.............................................      668        395
Interest expense and other..................................     (262)      (321)
                                                              -------    -------
Loss before extraordinary gain..............................   (9,395)    (7,195)
Extraordinary gain..........................................    6,675         --
                                                              -------    -------
Net loss....................................................  $(2,720)   $(7,195)
                                                              =======    =======
Basic and diluted net loss per share:
Loss before extraordinary gain..............................  $ (0.50)   $ (0.48)
Extraordinary gain..........................................     0.36         --
                                                              -------    -------
Net loss per share..........................................  $ (0.14)   $ (0.48)
                                                              -------    -------
Shares used in computing basic and diluted net loss per
  share.....................................................   18,838     14,846
                                                              =======    =======
</TABLE>

                            See accompanying notes.
                                        1
<PAGE>   4

                              ARADIGM CORPORATION

                                 BALANCE SHEETS
                       (IN THOUSANDS, EXCEPT SHARES DATA)

                                     ASSETS

<TABLE>
<CAPTION>
                                                               MARCH 31,     DECEMBER 31,
                                                                 2001            2000
                                                              -----------    ------------
                                                              (UNAUDITED)
<S>                                                           <C>            <C>
Current assets:
  Cash and cash equivalents.................................   $  14,602      $  20,732
  Short-term investments....................................      13,689         23,649
  Receivables...............................................       3,234             70
  Prepaid expenses and other current assets.................       1,744            735
                                                               ---------      ---------
          Total current assets..............................      33,269         45,186
Property and equipment, net.................................      34,373         25,323
Notes receivable from officers..............................         108            119
Other assets................................................         683            743
                                                               ---------      ---------
          Total assets......................................   $  68,433      $  71,371
                                                               =========      =========

                          LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................   $   3,628      $   4,894
  Accrued clinical and cost of other studies................         405            517
  Accrued compensation......................................       2,288          1,246
  Deferred revenue..........................................       3,371          6,622
  Other accrued liabilities.................................       1,346          2,234
  Notes payable.............................................         773          6,712
  Current portion of capital lease obligations..............       3,323          3,099
                                                               ---------      ---------
          Total current liabilities.........................      15,134         25,324
Noncurrent portion of deferred revenue......................       2,667          2,032
Capital lease obligations, less current portion.............       5,283          6,230
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,
     2001 -- 19,069,825; December 31, 2000 -- 18,266,955....     158,763        148,573
Shareholder notes receivable................................         (94)          (131)
Deferred compensation.......................................        (176)          (216)
Accumulated deficit.........................................    (113,144)      (110,441)
                                                               ---------      ---------
          Total shareholders' equity........................      45,349         37,785
                                                               ---------      ---------
          Total liabilities and shareholders' equity........   $  68,433      $  71,371
                                                               =========      =========
</TABLE>

                            See accompanying notes.
                                        2
<PAGE>   5

                              ARADIGM CORPORATION

                            STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED
                                                                   MARCH 31,
                                                              -------------------
                                                                2001       2000
                                                              --------    -------
                                                                  (UNAUDITED)
<S>                                                           <C>         <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net loss..................................................  $ (2,720)   $(7,195)
  Adjustments to reconcile net loss to cash used in
     operating activities:
     Depreciation and amortization..........................       992        666
     Extraordinary gain related to the Genentech note.......    (6,675)        --
     Issuance of common stock for services..................         8         --
     Amortization of deferred compensation..................        41         41
     Changes in operating assets and liabilities:
       Receivables..........................................    (3,164)       150
       Prepaid expenses and other current assets............    (1,009)       625
       Other assets.........................................        60         --
       Accounts payable.....................................    (1,266)      (500)
       Accrued compensation.................................     1,042        751
       Other accrued liabilities............................      (264)     1,269
       Deferred revenue.....................................    (2,616)    (2,560)
                                                              --------    -------
          Net cash used in operating activities.............   (15,571)    (6,753)
                                                              --------    -------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Capital expenditures......................................   (10,042)    (1,417)
  Purchase of available-for-sale investments................    (5,733)      (824)
  Proceeds from maturities of available-for-sale
     investments............................................    15,709     11,840
                                                              --------    -------
          Net cash provided (used) by investing
           activities.......................................       (66)     9,599
                                                              --------    -------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Proceeds from issuance of common stock, net...............    10,182      1,451
  Notes payable.............................................        --      1,630
  Proceeds from repayments of shareholder notes.............        37         17
  Notes receivable from officers............................        11         34
  Payments on lease obligations and equipment loans.........      (723)      (492)
                                                              --------    -------
          Net cash provided by financing activities.........     9,507      2,640
                                                              --------    -------
Net increase in cash and cash equivalents...................    (6,130)     5,486
Cash and cash equivalents at beginning of period............    20,732      9,347
                                                              --------    -------
Cash and cash equivalents at end of period..................  $ 14,602    $14,833
                                                              ========    =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
  Cash paid for interest....................................  $    248    $   213
                                                              ========    =======
</TABLE>

                            See accompanying notes.
                                        3
<PAGE>   6

                              ARADIGM CORPORATION

                  NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
                                 MARCH 31, 2001

 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, as amended. 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 period.

  Net Loss Per Share

     Historical net loss per share has been calculated under Statement of
Financial Accounting Standards No. 128, "Earnings 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 January 2001, the Company raised $5 million through the sale of 339,961
common shares at an average price of $14.71 per share to GlaxoSmithKline. The
sale was made pursuant to the exercise of a put option by the Company under the
terms of the collaboration agreement with GlaxoSmithKline.

     In February 2001, the Company had a second sale of common stock to Acqua
Wellington North American Equities Fund, Ltd. under the terms of an equity sales
agreement signed with them in November, 2000. The Company raised $5 million
through the sale of 436,110 common shares at an average price of $11.46 per
share.

 3. CONTINGENCIES

     In June 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 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. 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

                                        4
<PAGE>   7
                              ARADIGM CORPORATION

            NOTES TO THE UNAUDITED FINANCIAL STATEMENTS (CONTINUED)
                                 MARCH 31, 2001

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. The Company filed an answer denying all material
allegations of the complaint and a motion for summary judgment directed against
all claims in Lilly's complaint. The Court has issued two written rulings on the
Company's motion substantially limiting the claims against the Company.
Specifically, the Court granted the Company's motion as to Lilly's claim to
enforce an alleged license agreement, for misappropriation of trade secrets,
breach of fiduciary duty, conversion, estoppel and breach of contract (in part)
and dismissed those claims from the case. The Court denied the Company's motion
to Lilly's claims for declaratory relief, unjust enrichment and breach of
contract (in part), based on factual disputes between the parties, and those
issues remain to be resolved. Trial date has been set for November 2001.
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 financial position, results of operations or cash flows. However,
there can be no assurance that the Company will prevail in this case.

 4. RECENT ACCOUNTING PRONOUNCEMENTS

     In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133, "Accounting for Derivative
Instruments and Hedging Activities" ("FAS 133"), which establishes accounting
and reporting standards for derivative instruments and hedging activities. FAS
133 requires that an entity recognize all derivatives as either assets or
liabilities in the balance sheet and measure those instruments at fair value. In
June 1999, the FASB issued Statement No. 137, "Accounting for Derivative
Instruments and Hedging Activities -- Deferral of the Effective Date of FASB
Statement No. 133", which amended FAS 133 by deferring the effective date to the
fiscal year beginning after June 30, 2000. In June 2000, the FASB issued
Statement No. 138, "Accounting for Certain Derivative Instruments and Certain
Hedging Activities -- an Amendment to FASB Statement No. 133", which amended FAS
133 with respect to four specific issues. The Company adopted FAS 133, as
amended, as of January 1, 2001. The adoption of this statement had no material
effect on the financial position, results of operations or cash flows.

                                        5
<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 management, as well as assumptions made by, and information
currently available to 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, 2001, as amended.

     The business is subject to significant risks including, but not limited to,
the success of research and development efforts, dependence on corporate
partners for marketing and distribution resources, obtaining and enforcing
patents important to the business, clearing the lengthy and expensive regulatory
process and possible competition from other products. Even if the 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
may be found to be ineffective during clinical trials, fail to receive necessary
regulatory approvals, are difficult to manufacture on a large scale, are
uneconomical to market, are 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, 2001, we had an accumulated
deficit of $113.1 million. We have not been profitable since inception and
expect to incur additional operating losses over the next several years as
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 revenue
from product sales during 2001. The sources of working capital have been equity
financings, equipment lease financings, contract revenues and interest earned on
investments.

     We have performed initial feasibility work on a number of compounds and
have been compensated for expenses incurred while 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 Novo Nordisk, to manage diabetes using insulin and other
blood glucose regulating compounds, and with GlaxoSmithKline, to manage acute
and breakthrough pain using opioid analgesics.

     The collaborative agreement with Novo Nordisk provides 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
this development partner based on revenues from 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 our collaborative agreement as the
research and development expenses are incurred, to the extent they are
reimbursable.

     During December 2000, GlaxoSmithKline and we amended the product
development and commercialization agreement whereby we assumed full control and
responsibility for conducting and financing the remainder of all development
activities. Under the amendment, unless we have terminated the agreement,
GlaxoSmithKline can restore its rights to participate in development and
commercialization of the product under the amended agreement upon payment of a
restoration fee to us. We anticipate that GlaxoSmithKline will review its
restoration election upon the delivery of Phase 2b trial results, which are
expected to be available during the summer of 2001, but there can be no
assurance that GlaxoSmithKline will elect to restore its rights. If we elect to
terminate the agreement and continue or intend to continue any development
                                        6
<PAGE>   9

activities, either alone or in collaboration with a third party, we will be
obligated to pay an exit fee to GlaxoSmithKline.

     In February 2001, we announced that we had mutually agreed with Genentech
to discontinue the development of rhDNase using our proprietary AERx system. We
also entered into a new agreement allowing Genentech to evaluate the feasibility
of using the AERx Pulmonary Drug Delivery System for pulmonary delivery of other
Genentech compounds. Under the terms of the agreement, Genentech did not require
us to repay the loan of funds required to conduct product development to date
under the discontinued program. Forgiveness of the loan and accrued interest
resulted in an extraordinary gain during the first quarter of 2001 of
approximately $6.7 million. We will be required to reimburse Genentech $773,000
for unspent project prepayments.

RESULTS OF OPERATIONS

  Three Months Ended March 31, 2001 and 2000

     Contract Revenues: Contract revenues for the three months ended March 31,
2001 increased to $6.7 million from $5.7 million for the same period in 2000.
The revenue increase results primarily from an increase in partner-funded
project development revenue from Novo Nordisk offset by the reduction in
partner-funded project development revenue from GlaxoSmithKline. Costs
associated with contract revenues are included in research and development
expenses.

     Research and Development Expenses: Research and development expenses for
the three months ended March 31, 2001 increased to $14.2 million from $10.9
million for the same period in 2000. The increase resulted primarily from the
hiring of additional scientific personnel and the expansion of research and
development efforts to support the ongoing program with Novo Nordisk.

     These expenses represent proprietary research expenses as well as costs
related to contract revenues and include salaries and benefits of scientific and
development personnel, laboratory supplies, consulting services and expenses
associated with the development of manufacturing processes. We expect research
and development spending to increase 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 months ended March 31, 2001 increased to $2.3 million from $2.1
million for the same period in 2000. The increase resulted primarily 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 months ended March 31, 2001
increased to $668,000 from $395,000 for the same period in 2000. The increase is
due to our maintaining larger cash and investment balances. The higher cash and
investment balances in the current period are due to our receiving $5 million in
proceeds from the sale of common stock to GlaxoSmithKline and $5 million from
the sale of common stock to Acqua Wellington North American Equities Fund, Ltd.
("Acqua") under an existing equity sales agreement.

     Interest Expense and Other: Interest expense and other for the three months
ended March 31, 2001 decreased to $262,000 from $321,000 for the same period in
2000. The decrease is primarily due to lower interest expense on loan balances
that resulted from reimbursement of development expenses from Genentech offset
by higher interest expense on capital lease and equipment loan balances.

     Extraordinary Gain: For the three months ended March 31, 2001, we reported
an extraordinary gain of approximately $6.7 million. The extraordinary gain
results from the cancellation of outstanding loans and accrued interest required
to conduct development for the Pulmozyme program that had been funded by
Genentech. Cancellation of this program was announced in February, 2001.

                                        7
<PAGE>   10

LIQUIDITY AND CAPITAL RESOURCES

     The business has financed its operations since inception primarily through
private placements and public offerings of capital stock, proceeds from
equipment lease financing, contract revenues and interest earned on investments.
As of March 31, 2001, we have received approximately $158.8 million in net
proceeds from sales of capital stock. As of March 31, 2001, we had cash, cash
equivalents and short-term investments of approximately $28.3 million.

     In January 2001, we raised $5 million through the sale of 339,961 common
shares at an average price of $14.71 per share to GlaxoSmithKline. The sale was
made pursuant to the exercise of a put option by us under the terms of the
collaboration agreement with GlaxoSmithKline.

     In February 2001, we sold common stock to Acqua under the terms of an
equity sales agreement signed with them in November, 2000. We raised $5 million
through the sale of 436,110 common shares at an average price of $11.46 per
share.

     Net cash used in operating activities for the three months ended March 31,
2001 increased to $15.6 million from $6.8 million for the same period in 2000.
The increase in net cash used resulted primarily from decreases in accounts
payable and deferred revenue combined with increases in receivables, other
current assets and net loss before extraordinary gain partially offset by an
increase in accrued compensation. The decrease in the net loss was a result of
the forgiveness of notes payable under the cancellation of the development
agreement with Genentech.

     Net cash used by investing activities for the three months ended March 31,
2001 was $66,000 compared to cash provided by investing activities of $9.6
million for the same period in 2000. The decrease results primarily from
increased capital expenditures.

     Net cash provided by financing activities for the three months ended March
31, 2001 increased to $9.5 million from $2.6 million for the same period in
2000. The increase primarily reflects receipt of $5 million in proceeds from the
Acqua common stock purchase, the exercise of a put option by us in the amount of
$5 million under the terms of the collaboration agreement with GlaxoSmithKline
partially offset by net payments from the use of equipment lines of credit.

     The development of our technology and proposed products will require a
commitment of substantial funds to conduct the costly and time-consuming
research, preclinical studies and clinical trial activities necessary to develop
and refine the technology and proposed products and bring such products to
market. Future capital requirements will depend on many factors, including
continued progress and results from research and development for the technology
and drug delivery systems, the 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
for the required production technologies, the costs involved in preparing,
filing, prosecuting, maintaining and enforcing patent claims and the need to
acquire licenses or other rights to new technology.

     We are currently reviewing our planned operations through the end of 2001,
and beyond, focusing particularly on capital spending requirements to ensure
that capital outlays are not expended sooner than is necessary. As a result, we
now expect our capital outlays for 2001 will be approximately $25 million. We
believe our existing cash balances, together with proceeds from the existing
equity line and other equipment lease financing agreements, should be sufficient
to meet our needs through the end of the year. If we continue to make good
progress in our development programs, however, we expect our cash requirements
for capital spending and operations will increase in future periods. We will
need to raise additional capital to fund our capital spending and operations
before we become profitable. We may seek additional funding through
collaborations, borrowing arrangements or through public or private equity
financings. There can be no assurance that additional financing can be obtained
on acceptable terms, or at all. Dilution to shareholders may result if funds are
raised by issuing additional equity securities. 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.
                                        8
<PAGE>   11

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 a 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.

     As of March 31, 2001, we had cash and cash equivalents and short-term
investments of $28.3 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.

                                        9
<PAGE>   12

                           PART II. OTHER INFORMATION

ITEM 6. EXHIBITS

     (a) Exhibits

     None

     (b) Reports on Form 8-K

     The Company did not file any reports on Form 8-K during the quarter ended
March 31, 2001.

                                        10
<PAGE>   13

                                   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 11, 2001

                                          ARADIGM CORPORATION
                                          (Registrant)

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

                                                 /s/ MICHAEL MOLKENTIN
                                          --------------------------------------
                                                    Michael Molkentin
                                              Acting Chief Financial Officer

                                        11