<PAGE>

                   U. S. SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 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


                        Commission File Number 0-27264


                       GenStar Therapeutics Corporation
                            (formerly Urogen Corp.)
            (Exact name of registrant as specified in its charter)

                                   DELAWARE
                                   --------
                        (State or other jurisdiction of
                        incorporation or organization)


                                  33-0687976
                                  ----------
                               (I.R.S. Employer
                              Identification no.)


               10835 Altman Row, Suite 150, San Diego, CA, 92121
               (Address of principal executive offices)  (Zip code)

      Registrant's Telephone Number, including area code:  (858) 450-5949

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
                                        ---     ---

The number of shares of the Common Stock of the registrant outstanding as of
April 30, 2000, was 21,273,240.
<PAGE>

                       GENSTAR THERAPEUTICS CORPORATION
                            (Formerly UroGen Corp.)
                       (A DEVELOPMENT STAGE ENTERPRISE)

                              INDEX TO FORM 10-Q

                        PART I.  FINANCIAL INFORMATION
                        ------------------------------

                                                                       Page No.
                                                                       --------
Item 1.  Financial Statements

         Condensed Consolidated Balance Sheets
             March 31, 2000 (Unaudited) and  December 31, 1999..........    2

         Condensed Consolidated Statements of Operations (Unaudited)
             Three Months Ended March 31, 2000 and
             1999 and the period from July 1, 1991 (inception)
             to March 31, 2000..........................................    3

         Condensed Consolidated Statements of Cash Flows (Unaudited)
             Three Months Ended March 31, 2000 and
             1999 and the period from July 1, 1991 (inception)
             to March 31, 2000..........................................    4

         Notes to Unaudited Condensed Consolidated
             Financial Statements.......................................    5

Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations..............    5

                          PART II.  OTHER INFORMATION
                          ---------------------------

Item 1.      Legal Proceedings..........................................    9
Item 2.      Changes in Securities......................................    9
Item 3.      Defaults Upon Senior Securities............................    9
Item 4.      Submission of Matters to a Vote
             of Security Holders........................................    9
Item 5.      Other Information..........................................    9
             Market For Registrant's Common Equity
Item 6.      Exhibits and Reports on Form 8-K...........................   10
             Signatures.................................................   10


                                       1
<PAGE>

                       GENSTAR THERAPEUTICS CORPORATION
                           (Formerly UroGen Corp.)
                       (A DEVELOPMENT STAGE ENTERPRISE)
                     CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
                                                                                  March 31,          December 31,
                                                                                    2000                 1999
                                                                                ------------         ------------
                                                                                 (unaudited)
<S>                                                                             <C>                  <C>
ASSETS

Current assets:
   Cash and cash equivalents                                                    $ 24,049,089         $    921,994
   Accounts receivable                                                                   653              114,208
   Other current assets                                                               35,509                9,461
                                                                                ------------         ------------
       Total current assets                                                       24,085,251            1,045,663

Property and equipment, net                                                          840,080              569,121
Investments underlying deferred compensation                                         175,080              134,308
Other assets                                                                          87,150               77,821
                                                                                ------------         ------------
                                                                                $ 25,187,561         $  1,826,913
                                                                                ============         ============

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                                             $    254,647         $    399,485
   Accrued employee benefits                                                         107,211               73,915
   Other accrued liabilities                                                         129,349               81,856
   Current portion of notes payable                                                   57,204                    -
   Current portion of capital lease obligation                                        69,260               42,696
                                                                                ------------         ------------
       Total current liabilities                                                     617,671              597,952

Notes payable, net of current portion                                                125,602                    -
Capital lease obligation, net of current portion                                     114,626               51,314
Deferred compensation                                                                247,734              206,962
Advance from related party                                                         2,649,706            1,876,003

Commitments

Stockholders' equity (deficit):
   Preferred Stock - $0.01 par value, 5,000,000 shares authorized:
         Series A Preferred Stock, 5,830 and 5,830
           issued and outstanding                                                         58                   58
         Series B Preferred Stock, 2,998 and 2,998
           issued and outstanding                                                         30                   30
   Common Stock - $0.001 par value, 40,000,000
       shares authorized; 21,273,240 and 12,104,101
       issued and outstanding                                                         21,273               12,104
   Additional paid-in capital                                                     35,080,647           11,606,880
   Deficit accumulated during development stage                                  (13,669,786)         (12,524,390)
                                                                                ------------         ------------
         Total stockholders' equity (deficit)                                     21,432,222             (905,318)
                                                                                ------------         ------------
                                                                                $ 25,187,561         $  1,826,913
                                                                                ============         ============
</TABLE>
                            See accompanying notes.

                                       2
<PAGE>

                       GENSTAR THERAPEUTICS CORPORATION
                            (Formerly UroGen Corp.)
                       (A DEVELOPMENT STAGE ENTERPRISE)
                CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                -----------------------------------------------
                                  (Unaudited)

<TABLE>
<CAPTION>


                                                                               Three Months Ended                    July 1, 1991
                                                                     -------------------------------------          (inception) to
                                                                      March 31,                  March 31,             March 31,
                                                                         2000                      1999                  2000
                                                                     -----------                ----------           ------------
<S>                                                                  <C>                        <C>                  <C>
Revenue                                                              $    32,871                $        -           $    992,118
                                                                     -----------                ----------           ------------
Costs and expenses:
  Cost of sales                                                                -                         -                821,878
  Research and development                                               985,541                   539,276              9,131,130
  Write-off of acquired in-process technology                                  -                         -              5,455,505
  General and administrative                                             333,720                   195,449              2,497,784
                                                                     -----------                ----------           ------------
Total costs and expenses                                               1,319,261                   734,725             17,906,297
                                                                     -----------                ----------           ------------

Loss from operations                                                  (1,286,390)                 (734,725)           (16,914,179)

Other income (expense)                                                        59                       905                 (7,614)
Interest expense                                                         (20,341)                  (58,839)              (686,864)
Interest income                                                          161,275                     2,689                213,077
                                                                     -----------                ----------           ------------
Net loss                                                             $(1,145,397)               $ (789,970)          $(17,395,580)
                                                                     ===========                ==========           ============

Basic and diluted loss per share                                         $(0.07)                   $(0.08 )
                                                                     ===========                ==========
Number of shares used in the computation of basic and
   diluted loss per share                                             17,192,777                 9,382,705
                                                                     ===========                ==========
</TABLE>
                            See accompanying notes.

                                       3
<PAGE>

                       GENSTAR THERAPEUTICS CORPORATION
                            (Formerly UroGen Corp.)
                       (A DEVELOPMENT STAGE ENTERPRISE)
                CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                -----------------------------------------------
                                  (Unaudited)

<TABLE>
<CAPTION>

                                                                                                                    July 1, 1999
                                                                       For the three months ended                  (inception) to
                                                                                March 31,                              March 31,
                                                                       2000                  1999                        2000
                                                                   -----------            -----------                ------------
<S>                                                                <C>                    <C>                        <C>
Net loss                                                           $(1,145,397)           $  (789,970)               $(17,395,580)
Adjustments to reconcile net loss to net cash used
   In operating activities:
     Write-off of in-process technology acquired with
      stock                                                                  -                      -                   5,455,505
      Expenses paid via advances from related  party                         -                      -                     695,557
      Depreciation and amortization                                     58,695                 28,004                     709,547
      Distribution of common stock for services                              -                      -                      21,050
      Accrued interest paid through issuance of common
       stock                                                                 -                      -                      40,245
      Non-cash outside service cost                                     13,140                      -                     119,140
      Loss on disposal of fixed assets                                     363                      -                     (81,444)
      Amortization of debt discount                                          -                 38,752                     574,296
      Change in assets and liabilities:
            Accounts receivable                                        113,555                      -                        (653)
            Other current assets                                       (26,048)                17,470                     (35,509)
            Other assets                                               (50,110)               (52,243)                   (262,239)
            Accounts payable                                          (144,837)               (57,127)                    254,648
            Amounts due to stockholder                                       -               (315,000)                          -
            Other current liabilities                                   80,789                 (3,242)                    279,256
            Deferred compensation                                       40,772                 42,143                     247,734
                                                                   -----------            -----------                ------------
Net cash used in operating activities                               (1,059,078)            (1,091,213)                 (9,378,447)

Cash flows from investing activities:
   Purchase of property and equipment                                 (230,520)               (20,972)                   (979,438)
                                                                   -----------            -----------                ------------
Net cash used in investing activities                                 (230,520)               (20,972)                   (979,438)

Cash flows from financing activities:
   Advances from related party                                         773,703              1,440,664                   4,952,149
   Repayment of note receivable from stockholder                             -                 20,000                      20,000
   Proceeds from notes payable                                         188,780                      -                   1,618,780
   Repayment of capital lease and notes payable                        (15,585)                     -                     (26,226)
   Stock issuance costs                                             (1,882,610)                     -                  (1,965,976)
   Proceeds from issuance of common stock upon exercise
    of options and warrants                                             43,817                  1,511                     116,046
   Proceeds from sale of Common Stock                               25,308,588                      -                  25,308,736
   Net advances from Medstone                                                -                      -                   3,883,465
   Capital contribution by Medstone                                          -                      -                     500,000
                                                                   -----------            -----------                ------------
Net cash provided by financing activities                           24,416,693              1,462,175                  34,406,974
                                                                   -----------            -----------                ------------

Net increase in cash and equivalents                                23,127,095                349,990                  24,049,089

Cash and equivalents, beginning of period                              921,994                314,983                           -
                                                                   -----------            -----------                ------------
Cash and equivalents, end of period                                $24,049,089            $   664,973                $ 24,049,089
                                                                   ===========            ===========                ============
</TABLE>
                            See accompanying notes.

                                       4
<PAGE>

                       GENSTAR THERAPEUTICS CORPORATION
                            (Formerly UroGen Corp.)
                       (A DEVELOPMENT STAGE ENTERPRISE)

        NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
        --------------------------------------------------------------
                                March 31, 2000
                                --------------


1.  The unaudited financial information furnished herein, in the opinion of
    management, reflects all adjustments, consisting only of normal recurring
    adjustments, which are necessary to state fairly the consolidated financial
    position, results of operations, and cash flows of GenStar Therapeutics
    Corporation as of and for the periods indicated. GenStar presumes that users
    of the interim financial information have read or have access to the
    Company's audited consolidated financial statements and Management's
    Discussion and Analysis of Financial Condition and Results of Operations for
    the year ended December 31, 1999 and that the adequacy of additional
    disclosure needed for a fair presentation, except in regard to material
    contingencies or recent significant events, may be determined in that
    context. Accordingly, footnote and other disclosures which would
    substantially duplicate the disclosures contained in Form 10-KSB for the
    year ended December 31, 1999 filed on March 30, 2000 by the Company have
    been omitted. The financial information herein is not necessarily
    representative of a full year's operations.

2.  In accordance with the Financial Accounting Standards Board's Statement of
    Financial Accounting Standards ("SFAS") No. 128, Earnings per Share, net
    loss per share is based on the average number of shares of common stock
    outstanding during the three-month periods ended March 31, 2000 and 1999.
    Equivalent shares arising from convertible preferred stock, convertible
    debt, warrants for Common Stock and outstanding stock options have not been
    included in the computation of net loss per share as their effect would be
    antidilutive.

3.  In January and February 2000, the Company issued 8,362,801 shares of Common
    Stock and warrants for an additional 1,773,899 shares of Common Stock for
    total gross proceeds of $25,309,000. The warrants are exercisable for five
    years and have an exercise price of $0.75 per share.


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

OVERVIEW

GenStar Therapeutics Corporation changed its name from UroGen Corp. in March
2000. GenStar commenced operations as a stand-alone entity in January 1996 and
has been in the development stage since inception. Our original mission was to
develop products to treat diseases in urology, with a particular interest in
prostate cancer. We had licensed technology that uses the IL-3 gene to treat
several types of cancer, but did not have the technology to deliver the gene. On
July 8, 1998, we entered into an agreement with Baxter Healthcare Corporation in
which we acquired the exclusive rights to gene delivery technologies and
laboratory equipment. The gene delivery technology will be used to enhance our
existing technology and to develop products to deliver other genes. We believe
that the gene delivery technology provides a higher level of expression of the
gene being delivered compared to other gene therapy approaches. Prior to our
license of the technology, Baxter had been developing this technology

                                       5
<PAGE>

for the treatment of hemophilia and cancer and has continued to fund the
development of our Factor VIII product for hemophilia.

In exchange for the exclusive license to the gene delivery technology and
equipment, we issued 1,841,219 shares of common stock and 5,830 shares of Series
A Preferred Stock to Baxter.  The assets acquired from Baxter were valued based
on the fair market value of our common stock on the date of the agreement.  We
obtained an appraisal of the value of the equipment acquired.  Based upon the
very early stage of development of the technology, the value of the technology
was charged to acquired in-process technology.

Our current activities consist of the development of the gene transfer system in
our Factor VIII Mini-Ad product for hemophilia and our tumor killing IL-3 viral
vector product for prostate cancer.  We anticipate defining additional uses for
our vector technology and potentially acquiring other technologies.  We expect
to incur increasing research and development expenditures as we focus our
efforts on further development of these products.  We expect no significant
revenues and to incur significant losses for at least the next five years.

RESULTS OF OPERATIONS

REVENUES

GenStar has generated revenues to date of $992,000 from contract research
agreements and grants.   Total revenues for the three months ended March 31,
1999 and 2000 were none and $33,000, respectively. We anticipate seeking
additional research agreements and grants to help fund research and development
efforts; however, we do not expect that contract research will result in
significant revenues in the future. We do not anticipate revenues from products
for at least five years.

RESEARCH AND DEVELOPMENT AND ACQUIRED IN-PROCESS TECHNOLOGY

Research and development expenses during the three months ended March 31, 1999
and 2000 were $539,000 and $986,000, respectively.  Research and development
expense increased $447,000, or 83%, in the first quarter of 2000 compared to the
first quarter of 1999 due to an increase in research and development activity
and the commencement of operations of our manufacturing facility in the first
quarter of 2000.  We anticipate increasing research and development expenditures
in the future as we conduct preclinical and clinical testing necessary to bring
our products to market and to establish manufacturing and marketing
capabilities.

GENERAL AND ADMINISTRATIVE EXPENSE

General and administrative expense during the three months ended March 31, 1999
and 2000 were $195,000 and $334,000, respectively. General and administrative
expense increased $139,000, or 71%, in the first quarter of 2000 compared to the
first quarter of 1999.  General and administrative expenses include the costs of
our administrative personnel and consultants, office lease expenses and other
overhead costs, including legal and accounting costs. General and administrative
expenses have increased related to the increased level of operations, and we
expect general and administrative expenses to continue to increase to support
our increasing research and development activities.

INTEREST INCOME AND EXPENSE

Interest income during the three months ended March 31, 1999 and 2000 of $3,000
and $161,000, respectively, is a result of investment of excess cash in money
market accounts.  Interest expense for the three months ended March 31, 1999 and
2000 was $59,000 and $20,000, respectively.  Interest expense in

                                       6
<PAGE>

1999 related to convertible notes payable which were converted to Common Stock
in June 1999. Interest expense in 2000 relates to equipment financing.

LIQUIDITY AND CAPITAL RESOURCES

Net cash used by operating activities during the three months ended March 31,
1999 and 2000 was $1,091,000 and $1,059,000, respectively. Net cash used by
operating activities consists primarily of GenStar's net loss increased by non-
cash expenses. Net cash used by investing activities during the three months
ended March 31, 1999 and 2000 of $21,000 and $231,000, respectively, consists of
the purchase of furniture and equipment. Net cash provided by financing
activities during the three months ended March 31, 1999 of $1,462,000 consists
primarily of $1,441,000 paid by Baxter under the credit agreement for
development of the hemophelia product.  Net cash provided by financing
activities of $24,417,000 for the three months ended March 31, 2000 consists
primarily of net proceeds from the sale of common stock and warrants for common
stock and $774,000 paid by Baxter under the aforementioned credit agreement.

GenStar's future capital requirements will depend on many factors, including
scientific progress in our research and development programs, our ability to
establish collaborative arrangements with others for drug development, progress
with preclinical and clinical trials, the time and costs involved in obtaining
regulatory approvals and effective commercialization activities.  Medstone
International, Inc. funded all of GenStar's operations from July 1, 1991
(inception) through and ending with a $500,000 capital contribution of cash on
February 9, 1996. In July 1998, we completed an offering of 8% Convertible
Subordinated Notes due June 30, 1999, which raised $1,030,000, which was
converted to common stock on June 22, 1999. In April 1999, we completed another
offering of Convertible Subordinated Notes due March 30, 2000, which raised
$400,000, which was converted to common stock on June 22, 1999. During the
quarter ended March 31, 2000, we completed the private placement of 8,362,801
shares of common stock and warrants for an additional 1,773,899 shares of common
stock.  Net proceeds from these financings was $23,426,000.  GenStar has
incurred net losses of $17,396,000 since its inception and has never been
profitable during its existence. We expect to incur significant additional
operating losses over the next several years as our research and development
efforts expand. Our ability to achieve profitability depends upon our ability,
alone or with others, to successfully complete development of products, obtain
required regulatory approvals and manufacture and market products. We cannot
assure you that we will be successful or that we will attain significant
revenues or profitability. Our operations to date have consumed substantial
amounts of cash. The negative cash flow from operations is expected to continue
and to accelerate for at least the next four years. The development of our
products will require a commitment of substantial funds to conduct the costly
and time-consuming research, preclinical and clinical testing necessary to bring
our products to market and to establish manufacturing and marketing
capabilities.

Under the terms of our Developmental Collaboration Agreement and Credit
Agreements with Baxter, Baxter is required to provide funding for development of
the hemophilia product until we commence a Phase I Clinical Trial for the
hemophilia product, at which time a milestone payment of $2,000,000 is due from
Baxter. The funding provided by Baxter is in the form of a note payable, which
can be converted to Series B Preferred Stock at our option on December 31 of
each year of the agreement.  The $2,000,000 milestone payment is in the form of
a purchase of Series C Preferred Stock.

We anticipate our existing capital resources, including funds received from
Baxter under the Developmental Collaboration Agreement, will enable us to
maintain our current and planned operations for at least the next two years.  We
will need to raise substantial additional capital to fund future operations.  We
intend to seek additional funding either through collaborative arrangements or
through public or private equity or debt financings. Additional financing may
not be available on acceptable terms or at all.  If adequate funds are not
available, we may be required to delay or reduce the scope of our operations or
to obtain funds through arrangements with collaborative partners or others that
may require

                                       7
<PAGE>

us to relinquish rights we may otherwise have.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

At March 31, 2000, the Company's cash and cash equivalents were invested in
liquid checking and money market accounts, and will not change significantly in
value if interest rates change. Accordingly, an immediate 10% change in interest
rates would not have a material impact on our financial condition or results of
operations.

The Company does not conduct business with foreign entities, and does not have
any foreign exchange risk.

                                       8
<PAGE>

                       GENSTAR THERAPEUTICS CORPORATION
                            (Formerly UroGen Corp.)
                       (A DEVELOPMENT STAGE ENTERPRISE)

                          PART II.  OTHER INFORMATION
                          ---------------------------


ITEM 1.  LEGAL PROCEEDINGS

     None.

ITEM 2.  CHANGES IN SECURITIES

         1)  In January 2000, the Company issued 6,362,801 shares of Common
             Stock and warrants for 1,773,899 shares of Common Stock to twenty-
             two institutional and private accredited investors for $8,308,588.
             The warrants are exercisable for five years and have an exercise
             price of $0.75 per share.

         2)  In February 2000, the Company issued 2,000,000 shares of Common
             Stock to three institutional accredited investors for $17,000,000.

     GenStar Therapeutics Corporation relied on the exemption from registration
     provided by Rule 506 of Regulation D, and Section 4 (2) under the
     Securities Act of 1933, as amended, for each of the above issuances.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

     None.

Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     None.

ITEM 5.  OTHER INFORMATION

     Market for Registrant's Common Equity

       None of the shares of capital stock of the Company issued in the
       Distribution or otherwise, or acquired through the exercise of stock
       options could be sold prior to December 31, 1997 except for the following
       transfers: (i) transfers by gift, will, bequest or the applicable laws of
       descent and distribution; (ii) non-sale distributions by partnerships,
       corporations or trusts to their partners, shareholders or beneficiaries;
       (iii) transfers to the Company; and (iv) transfers pursuant to qualified
       domestic relations order as defined by the Code or the rules thereunder.
       In the case of any such permitted transfers, the shares in the hands of
       the transferees will continue to be subject to the same transfer
       restriction.  No market for the Company's shares of capital stock existed
       prior to January 1, 1998.  The Company trades under the symbol GNT on the
       American Stock Exchange.

                                       9
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

     Exhibit 27     Financial Data Schedule



                                  SIGNATURES


In accordance with the requirements of the Exchange Act, the Registrant has
caused this Report to be signed on its behalf by the undersigned, hereunto duly
authorized.



                                GENSTAR THERAPEUTICS CORPORATION
                                --------------------------------
                                A Delaware Corporation



Date:  May 8, 2000              /s/  Carin D. Sandvik
                                -----------------------
                                Carin D. Sandvik
                                Controller, Chief Accounting Officer & Secretary
                                (Principal financial and accounting officer)

                                       10