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                      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 June 30, 1997
                                      OR
    ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
        EXCHANGE ACT OF 1934

                  For the transition period from _________ to _________
                          Commission File No. 0-20111
                         ARONEX PHARMACEUTICALS, INC.
            (Exact name of Registrant as specified in its charter)

               Delaware                               76-0196535
      (State or other jurisdiction        (I.R.S. Employer Identification No.)
   of incorporation or organization)
          3400 Research Forest Drive, The Woodlands, Texas 77381-4223
               (Address of principal executive office) (Zip Code)
      Registrant's telephone number, including area code: (281) 367-1666

      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.
                  Class                         Outstanding at June 30, 1997
                  -----                         ----------------------------
     Common Stock, $.001 par value                    14,687,394 shares

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<PAGE>




                         ARONEX PHARMACEUTICALS, INC.
                        Quarterly Period June 30, 1997

                                     INDEX
                                                                          Page

FACTORS AFFECTING FORWARD LOOKING STATEMENTS..............................   3

PART I.     Financial Information

Item 1 Financial Statements...............................................   3

       Balance Sheets - December 31, 1996 and June 30, 1997 (unaudited)...   4

       Statements of Operations:
         Six Months Ended June 30, 1996 and June 30, 1997
         (unaudited) and for the Period from Inception (June 13, 1986)
         through June 30, 1997 (unaudited)................................   5

       Statements of Cash Flows:
         Six Months Ended June 30, 1996 and June 30, 1997
         (unaudited) and for the Period from Inception (June 13, 1986)
         through June 30, 1997 (unaudited)................................   6

       Notes to Financial Statements - June 30, 1997......................   7

Item 2 Management's Discussion and Analysis of Financial
         Condition and Results of Operations..............................   9


PART II.     Other Information

Item 4 Submission of Matters to Vote of Security Holders .................  12  

Item 6 Exhibits and Reports on Form 8-K...................................  13


SIGNATURES  ..............................................................  14






                               

                                      -2-

<PAGE>



                         

                  FACTORS AFFECTING FORWARD-LOOKING STATEMENTS

      This Quarterly Report on Form 10-Q includes  "forward-looking  statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section  21E of the  Securities  Exchange  Act of 1934,  as  amended.  The words
"anticipate," "believe," "expect," "estimate," "project" and similar expressions
are intended to identify forward-looking statements. Such statements are subject
to certain risks,  uncertainties  and  assumptions.  Should one or more of these
risks or  uncertainties  materialize,  or should  underlying  assumptions  prove
incorrect, actual results may vary materially from those anticipated,  believed,
expected,  estimated or  projected.  For  additional  discussion  of such risks,
uncertainties and assumptions,  see "Item 1. Business - Manufacturing," "- Sales
and  Marketing,"  "Patents,  Proprietary  Rights and  Licenses,"  "-  Government
Regulation," "- Competition"  and "- Additional  Business Risks" included in the
Company's  Annual Report on Form 10-K for the year ended  December 31, 1996, and
"Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations"  and "- Liquidity and Capital  Resources"  included  elsewhere in
this report.

PART I.     FINANCIAL INFORMATION

Item 1     Financial Statements

   The following unaudited  financial  statements have been prepared pursuant to
the rules and  regulations of the Securities  and Exchange  Commission.  Certain
information  and  note  disclosures   normally   included  in  annual  financial
statements prepared in accordance with generally accepted accounting  principles
have been condensed or omitted pursuant to those rules and regulations, although
the Company  believes that the disclosures  made herein are adequate to make the
information presented not misleading.  These financial statements should be read
in  conjunction  with the financial  statements  for the year ended December 31,
1996  included in the  Company's  Annual  Report on Form 10-K for the year ended
December  31,  1996,  filed  pursuant  to Section 13 or 15(d) of the  Securities
Exchange Act of 1934.

   The  information  presented  in  the  accompanying  financial  statements  is
unaudited,  but in the opinion of management,  reflects all  adjustments  (which
include only normal  recurring  adjustments)  necessary  to present  fairly such
information.




                                   - 3-
     
<PAGE>

<TABLE>

                         ARONEX PHARMACEUTICALS, INC.
                         (A development stage company)

                                BALANCE SHEETS
                 (All amounts in thousands, except share data)


                                     ASSETS
<CAPTION>

                                                                     
                                                                     June 30,
                                                      December 31,    1997
                                                          1996     (Unaudited)   
                                                      -----------   ---------
<S>                                                   <C>           <C>
Current Assets:
  Cash and cash equivalents.......................    $     4,179   $   6,233
  Short-term investments..........................         30,414      25,468
  Accounts receivable - affiliates................             78          --
  Prepaid expenses and other assets...............            663         841
                                                      -----------   ---------
     Total current assets.........................         35,334      32,542

Long-term investments.............................          6,795       3,765
Furniture, equipment and leasehold improvements,
   net ...........................................          2,152       1,742
Other assets......................................             --         147
                                                      -----------   ---------
     Total assets.................................    $    44,281   $  38,196
                                                      ===========   =========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable and accrued expenses...........    $     1,191   $   1,153
  Accrued payroll.................................            126         101
  Advance payable to Genzyme......................          2,000       2,000
  Current portion of other notes payable..........            325         298
  Current portion of obligations under capital 
    leases .......................................             16          16
                                                      -----------   ---------
     Total current liabilities....................          3,658       3,568

Long-term obligations:
  Other notes payable, net of current portion.....            121          --
  Obligations under capital leases, net of 
   current portion ...............................             25          18
                                                      -----------   ---------
     Total long-term obligations..................            146          18

Commitments and contingencies

Stockholders' equity:
  Preferred stock $.001 par value, 5,000,000 
   shares authorized, none issued and 
   outstanding.... ...............................             --          --
  Common stock $.001 par value, 30,000,000 shares 
   authorized, 14,597,247 and 14,687,394 shares 
   issued and outstanding, respectively...........             15          15
  Additional paid-in capital......................         93,742      93,699
  Common stock warrants...........................            968         968
  Treasury stock..................................            (11)        (11)
  Deferred compensation...........................         (1,949)     (1,448)
  Unrealized loss on investments..................            (75)       (106)
  Deficit accumulated during development stage....        (52,213)    (58,507)
                                                      -----------   ---------
     Total stockholders' equity...................         40,477      34,610
                                                      -----------   ---------
  Total liabilities and stockholders' equity......    $    44,281   $  38,196
                                                      ===========   =========
</TABLE>

  The accompanying notes are an integral part of these financial statements.

                                   - 4-

<PAGE>
<TABLE>


                         ARONEX PHARMACEUTICALS, INC.
                         (A development stage company)


                           STATEMENTS OF OPERATIONS
            (All amounts in thousands, except loss per share data)
                                  (Unaudited)





<CAPTION>
                                                                      
                                                                        Period
                                                                         from
                                                                       Inception
                                                                       (June 13,
                               Six Months Ended    Three Months Ended    1986)
                                    June 30,            June 30,        through
                                                                        June 30,
                                 1996     1997       1996      1997       1997
                               -------   ------    -------    ------    -------
<S>                            <C>       <C>       <C>        <C>       <C>
Revenues:
  Interest income ............ $   470   $1,123    $   328    $  531   $  4,645
  Research and development
    grants and contracts .....   1,008      316        465        30      4,525
                               -------  -------   --------  --------   --------
Total revenues ...............   1,478    1,439        793       561      9,170
                               -------  -------   --------  --------   --------

Expenses:
  Research and development ...   4,845    6,652      2,523     3,167     45,794
  Purchase of in-process
    research and development .     191       --        191        --      8,625
  General and administrative .     771      931        376       475     12,094
  Interest expense and other .      71      150         30       120      1,164
                               -------  -------   --------  --------   --------
Total expenses ..............    5,878    7,733      3,120     3,762     67,677
                               -------  -------   --------  --------   --------
Net loss ....................  $(4,400) $(6,294)  $ (2,327) $ (3,201)  $(58,507)
                               =======  =======   ========  ========   ======== 
 
                       

Loss per share ..............  $ (0.38)  $(0.43)   $ (0.19)   $(0.22)
                                 =====    =====      =====     =====
Weighted average shares used
 in computing loss per share     11,527   14,646     12,404    14,671
</TABLE>













  The accompanying notes are an integral part of these financial statements.

                                   - 5-

<PAGE>
<TABLE>

                         ARONEX PHARMACEUTICALS, INC.
                         (A development stage company)

                           STATEMENTS OF CASH FLOWS
                          (All amounts in thousands)
                                  (Unaudited)
<CAPTION>
                                                                                                          Period from
                                                                                                            Inception
                                                                                                         (June 13, 1986)
                                                                                     Six Months Ended        through
                                                                                          June 30,           June 30,
                                                                                     1996         1997         1997
                                                                                  ----------- ------------   --------

Cash flows from operating activities:
<S>                                                                               <C>           <C>           <C>
  Net loss ..................................................................     $ (4,400)     $ (6,294)     $(58,507)
                                                                                                                      
  Adjustments to reconcile net loss to net cash provided by
   (used in) operating activities-
      Depreciation and amortization .........................................          486           475         3,362
      Loss on disposal of assets ............................................         --             107           107
      Compensation expense related to stock and stock options ...............          303           315         2,957
      Charge for purchase of in-process research and development                       191          --           8,547
              Unrealized gain (loss) on investment                                       8           (31)         (106)
      Acquisition costs, net of cash received ...............................          (26)         --            (270)
      Loss in affiliate .....................................................           50          --             500
      Changes in assets and liabilities:
        Increase in prepaid expenses and other assets .......................         (443)         (178)         (656)
        Decrease in accounts receivable - affiliates ........................          172            78          --
        Increase (decrease) in accounts payable and accrued
             expenses .......................................................         (413)          (63)        1,181
        Increase (decrease) in deferred revenue .............................           50          --            (353)
      Accrued interest payable converted to stock ...........................         --            --              97
                                                                                  --------      --------      --------
            Net cash used in operating activities ...........................       (4,022)       (5,591)      (43,141)

Cash flows from investing activities:
  Net sales (purchases) of investments ......................................      (35,523)        7,976       (23,498)
  Purchase of furniture, equipment and leasehold improvements ...............          (41)         (206)       (3,975)
  Proceeds from sale of assets ..............................................         --              34            34
  Increase in other assets ..................................................         --            (147)         (147)
  Investment in affiliate ...................................................         --            --            (500)
                                                                                  --------      --------      --------
            Net cash provided by (used in) investing activities .............      (35,564)        7,657       (28,086)

Cash flows from financing activities:
  Proceeds from notes payable and capital leases ............................         --            --           4,672
  Repayment of notes payable and principal payments under capital
   lease obligations ........................................................         (411)         (155)       (2,341)
  Purchase of treasury stock ................................................         --            --             (11)
  Proceeds from issuance of stock ...........................................       35,378           143        75,140
                                                                                  --------      --------      --------
            Net cash provided by (used in) financing activities .............       34,967           (12)       77,460
                                                                                  --------      --------      --------
Net increase (decrease) in cash and cash equivalents ........................       (4,619)        2,054         6,233
Cash and cash equivalents at beginning of period ............................        7,781         4,179          --
                                                                                  --------      --------      --------

Cash and cash equivalents at end of period ..................................     $  3,162       $ 6,233      $  6,233
                                                                                  ========       =======      ========


Supplemental disclosures of cash flow information:
  Cash paid during the period for interest ..................................     $    30        $    43      $    891
Supplemental schedule of noncash financing activities:
  Conversion of notes payable and accrued interest to common$stoc$ ..........     $   --         $   --       $  3,043
</TABLE>
  The accompanying notes are an integral part of these financial statements.


                                   - 6-

<PAGE>
                         ARONEX PHARMACEUTICALS, INC.
                         (A development stage company)

                         NOTES TO FINANCIAL STATEMENTS
                                 June 30, 1997
                                  (Unaudited)

1. Organization and Basis of Presentation

   Aronex Pharmaceuticals,  Inc. ("Aronex" or the "Company") was incorporated in
Delaware  on June 13, 1986 and merged with  Triplex  Pharmaceutical  Corporation
("Triplex")  and Oncologix,  Inc.  ("Oncologix")  effective  September 11, 1995.
Aronex is a development stage company which has devoted substantially all of its
efforts to  research  and  product  development  and has not yet  generated  any
significant revenues, nor is there any assurance of significant future revenues.
In addition, the Company expects to continue to incur losses for the foreseeable
future  and  there  can be no  assurance  that the  Company  will  complete  the
transition  from a  development  stage  company to  successful  operations.  The
research and  development  activities  engaged in by the Company  involve a high
degree of risk and  uncertainty.  The  ability of the  Company  to  successfully
develop,  manufacture and market its proprietary products is dependent upon many
factors.  These factors include, but are not limited to, the need for additional
financing,   attracting  and  retaining  key  personnel  and  consultants,   and
successfully  developing  manufacturing,  sales and  marketing  operations.  The
Company's  ability to develop these  operations may be impacted by uncertainties
related  to  patents  and  proprietary  technologies,  technological  change and
obsolescence,  product  development,  competition,  government  regulations  and
approvals, health care reform and product liability exposure.  Additionally, the
Company is reliant upon  collaborative  arrangements  for research,  contractual
agreements with corporate  partners,  and its exclusive license  agreements with
M.D.  Anderson  Cancer Center ("MD Anderson") and an affiliate of Baylor College
of Medicine  ("Baylor").  Further,  during the period  required to develop these
products,  the Company will require  additional funds which may not be available
to it. The Company  expects that its existing cash  resources will be sufficient
to fund its cash  requirements  through mid-1999.  Accordingly,  there can be no
assurance of the Company's future success.

   The balance  sheet at June 30, 1997 and the related  statements of operations
and cash flows for the six month  period  ending  June 30, 1997 and 1996 and the
period from inception (June 13, 1986) through June 30, 1997 are unaudited. These
interim financial statements should be read in conjunction with the December 31,
1996 financial  statements and related notes.  The unaudited  interim  financial
statements  reflect all  adjustments  which are,  in the opinion of  management,
necessary for a fair statement of results for the interim periods  presented and
all such adjustments are of a normal recurring  nature.  Interim results are not
necessarily indicative of results for a full year.

2. Accounting Policies

   In January 1997, the Financial Accounting Standards Board issued Statement of
Financial  Accounting  Standards  No. 128,  "Earnings  per share"  ("SFAS 128").
Management  believes  that this  statement  will have no material  effect on its
financial statements.

3. Cash, Cash Equivalents and Investments

   Cash and cash equivalents  include money market accounts and investments with
an original maturity of less than three months. At June 30, 1997, all short-term
investments are held to maturity securities  consisting of high-grade commercial
paper  and  U.  S.  Government  backed  securities  with  a  carrying  value  of
$25,468,000,   which   approximates  fair  market  value  and  cost.   Long-term
investments  include (i) held to maturity  securities  consisting  of high-grade
commercial  paper that  mature  over one to two years  with a carrying  value of
$2,000,000,  which  approximates  fair market value and cost, and (ii) available
for sale  securities  which are U.S.  mortgage  backed  securities  with various
maturity  dates  over the next  several  years  that have an  amortized  cost of
$1,871,000,  a fair market value of $1,765,000  and a gross  unrealized  loss of
$106,000 at June 30, 1997. The Company currently has no trading securities.



                              

                                      -7-
<PAGE>


                         ARONEX PHARMACEUTICALS, INC.
                         (A development stage company)

                   NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. Federal Income Taxes

   At  December  31,  1996,   the  Company  had  net   operating   loss  ("NOL")
carryforwards  for federal income tax purposes of  approximately  $66.9 million.
The Tax  Reform  Act of 1986  provided  a  limitation  on the use of NOL and tax
credit  carryforwards  following  certain ownership changes that could limit the
Company's  ability  to  utilize  these NOLs and tax  credits.  Accordingly,  the
Company's  ability to utilize  its NOLs and tax credit  carryforwards  to reduce
future taxable  income and tax  liabilities  may be limited.  As a result of the
1995  mergers  with  Triplex  and  Oncologix  a change in  control as defined by
federal income tax law occurred,  causing the use of these  carryforwards  to be
limited and possibly  eliminated.  Additionally  because U.S. tax laws limit the
time during which NOLs and the tax credit  carryforwards  may be applied against
future taxable income and tax  liabilities,  the Company may not be able to take
full advantage of its NOLs and tax credit  carryforwards  for federal income tax
purposes.  The carryforwards will begin to expire in 2001 if not otherwise used.
A valuation  allowance has been established to offset the Company's deferred tax
assets as the Company has had losses since  inception.  The Company has not made
any income tax payments since inception.

5. Reverse Stock Split

   At a special Meeting of Stockholders held on May 24,1996, the stockholders of
the  Company  approved a  one-for-two  reverse  split of the  Common  Stock (the
"Reverse  Split").  The Reverse  Split  became  effective  with the filing of an
amendment to the Company's  Certificate  of  Incorporation  on July 1, 1996. The
accompanying  financial  statements  have been  restated  to give  effect to the
Reverse Split.

6. Building Lease

   In April 1997, the Company signed a lease for a new building with its current
landlord, under which, the Company has committed to lease 30,000 square feet for
ten years at  approximately  $2.00 per square  foot per month and to pay certain
construction  costs. The Company expects to occupy this lease space late in 1997
or early in 1998.

7. Contingent Stock Rights

   In  connection  with  the  Triplex  merger  agreement,   the  Company  issued
contingent rights (the "Triplex  Contingent Stock Rights") to the former holders
of Triplex  stock and options  entitling  them to receive  additional  shares of
Common Stock upon the occurrence of certain events. The Triplex Contingent Stock
Rights  entitle the former Triplex stock and option holders to receive shares of
Common Stock with an aggregate fair market value at the time of issuance of $5.0
million  (subject to certain  adjustments) if the Company either (i) enters into
an agreement on or before  September  11, 1997 with  respect to the licensing of
ZintevirTM  whereby  the Company  receives  at least $5.0  million in cash or an
unconditional  binding commitment for at least $5.0 million or (ii) obtains data
from  clinical  trials of  ZintevirTM  on or before  September 11, 2000 that the
Company's  Board of Directors  determines  to be  sufficient  to file an NDA. In
addition,  the Triplex  Contingent Stock Rights entitle the former Triplex stock
and option  holders to receive  shares of Common  Stock with an  aggregate  fair
market  value at the time of  issuance of $3.0  million if the Company  does not
receive a minimum of $5.0 million in equity  milestone  payments from Genzyme on
or before September 11, 1997 with respect to the development of AtragenTM. In no
event,  however,  shall more than  3,500,097  shares of Common Stock (subject to
adjustments in the event of stock splits, stock dividends or reclassification of
the Common Stock) be issued pursuant to the Triplex Contingent Stock Rights. The
Company has not  received the minimum  equity  milestone  payments  from Genzyme
contemplated  by the  Triplex  Contingent  Stock  Rights.  The  Company  will be
required to issue  shares of Common Stock under such  contingent  rights with an
aggregate  fair  market  value at the time of issuance  of  $3,000,000  and will
record a corresponding  non-cash research and development  expense of $3,000,000
in the third quarter of 1997 if equity milestone  payments of $5,000,000 are not
received from Genzyme relating to AtragenTM on or before September 11, 1997.


                                      -8-
<PAGE>
 
     Item 2  Management's  Discussion  and Analysis of Financial  Condition  and
Results of Operations

Results of Operations

   Overview

   Since its inception in 1986, Aronex  Pharmaceuticals,  Inc.  ("Aronex" or the
"Company") has primarily devoted its resources to fund research,  drug discovery
and development.  The Company has been unprofitable to date and expects to incur
substantial  operating  losses  for the next  several  years as it  expends  its
resources for product research and development, preclinical and clinical testing
and regulatory  compliance.  The Company has sustained  losses of  approximately
$58.5 million  through June 30, 1997.  The Company has financed its research and
development  activities  and  operations  primarily  through  public and private
offerings  of  securities.  The  Company's  operating  results  have  fluctuated
significantly  during  each  quarter,  and the  Company  anticipates  that  such
fluctuations,  largely  attributable to varying commitments and expenditures for
clinical trials and research and development, will continue for the next several
years.

   Three and Six Month Periods Ended June 30, 1996 and 1997

   Revenues from research and development  grants and contracts were $30,000 and
$465,000  for the three  months  ended June 30, 1997 and 1996,  respectively,  a
decrease  of  $435,000.  Research  and  development  grants and  contracts  were
$316,000  and  $1,008,000  for the six  months  ended  June 30,  1997 and  1996,
respectively, a decrease of $692,000. These decreases were due to the following:
(i) no revenues from Hoechst Marion Roussel,  Inc.  ("Hoechst") in 1997 compared
to $600,000 for the six months ended June 30, 1996, as the agreement  terminated
at the end of 1996; (ii) no Small Business  Innovative  Research  ("SBIR") grant
revenue in 1997  compared to $73,000 for the six months ended June 30, 1996,  as
there  are  currently  no SBIR  grants  in 1997  and  (iii)  a  decrease  in the
development revenue from Targeted Genetics Incorporated ("Targeted") to $150,000
for the six  months  ended June 30,  1997 from  $335,000  for the  corresponding
period in 1996.  This three year  agreement  with  Targeted  ended in the second
quarter of 1997.  The  decreases  in  research  and  development  revenues  were
partially  offset by $150,000 in revenue  received in the first  quarter of 1997
from the Company's license agreement with Boehringer Mannheim GmbH.

   Interest income was $531,000 and $328,000 for the three months ended June 30,
1997 and 1996,  respectively,  an  increase  of  $203,000.  Interest  income was
$1,123,000  and  $470,000  for the six  months  ended  June 30,  1997 and  1996,
respectively,  an increase of $653,000. These increases were primarily due to an
increase of funds available for investment resulting from cash received from the
completion of a stock offering in May 1996.

   Research and  development  expenses were  $3,167,000  and  $2,523,000 for the
three  months  ended  June 30,  1997 and  1996,  respectively,  an  increase  of
$644,000.  Research and development  expenses were $6,652,000 and $4,845,000 for
the six months  ended  June 30,  1997 and 1996,  respectively,  an  increase  of
$1,807,000.  These  increases  were  primarily due to an increase of $756,000 in
medical  affairs and  pharmaceutical  development  salaries  and payroll  costs,
including  costs  relating to the hiring of a Vice  President of  Pharmaceutical
Development  and Operations  and a Senior Vice President of Medical  Affairs and
Chief  Medical  Officer,  an increase of  $789,000 in drug  manufacturing  costs
relating  mainly to  NyotranTM  and  ZintevirTM  and an  increase of $406,000 in
outside  pharmacology  studies  relating mainly to NyotranTM and AtragenTM.  The
increases were partially  offset by a decrease of $287,000 in research  expenses
in the second quarter of 1997 as the majority of the Company's internal research
efforts were eliminated in the second quarter of 1997. The Company's decision to
eliminate  such  research  efforts  was  related in part to the  termination  of
research funding from Hoechst.


                                      -9-
<PAGE>


   In-process research and development  represents costs incurred during the six
month  period  ended  June 30,  1996  related  to the 1995  mergers  of  Triplex
Pharmaceutical  Corporation  ("Triplex") and Oncologix,  Inc.("Oncologix")  with
subsidiaries  of the Company,  and consists of the  settlement of a lawsuit that
had been filed by certain common  stockholders of Oncologix.  In connection with
the Triplex merger,  the Company issued  contingent rights to the former holders
of Triplex  stock and options  entitling  them to receive  additional  shares of
Common Stock upon the occurrence of certain events. The Company will be required
to issue shares of Common Stock under such  contingent  rights with an aggregate
fair  market  value at the time of  issuance  of  $3,000,000  and will  record a
corresponding  non-cash  research and  development  expense of $3,000,000 in the
third  quarter  of 1997 if  equity  milestone  payments  of  $5,000,000  are not
received from Genzyme relating to AtragenTM on or before September 11, 1997. See
Note 7 of Notes to Finanacial Statements.

   General and administrative  expenses were $475,000 and $376,000 for the three
months  ended June 30,  1997 and 1996,  respectively,  an  increase  of $99,000.
General and  administrative  expenses  were  $931,000  and  $771,000 for the six
months  ended June 30, 1997 and 1996,  respectively,  an  increase of  $160,000.
These  increases  were  primarily due to an increase of $106,000 in salaries and
payroll costs,  which includes  several new positions and a related  increase in
operating costs.

   Interest  expense and other was  $120,000  and  $30,000 for the three  months
ended June 30, 1997 and 1996,  respectively,  an  increase of $90,000.  Interest
expense and other was  $150,000  and  $71,000 for the six months  ended June 30,
1997 and 1996, respectively, an increase of $71,000. These increases in interest
expense  and  other  resulted  primarily  from a loss on  disposal  of assets of
$107,000 in the quarter ended June 30, 1997 that relates to the  disposition  of
equipment and leasehold  improvements that had been used in research  activities
that have been  eliminated.  These increases were partially offset by a decrease
in  interest  expense as the amount of  outstanding  debt  which  resulted  from
obtaining  laboratory  equipment through leases and promissory notes payable has
decreased.

   Net loss was  $3,201,000  and  $2,327,000 for the three months ended June 30,
1997 and 1996,  respectively,  an  increase  of  $874,000.  Net loss for the six
months  ended  June  30,  1997  and  1996,  respectively,   was  $6,294,000  and
$4,400,000, an increase of $1,894,000. These increases were primarily due to the
increase in research and development expenses.

Liquidity and Capital Resources

   Since  its  inception,  the  Company's  primary  source of cash has been from
financing  activities,  which  have  consisted  primarily  of  sales  of  equity
securities.  The Company has raised an  aggregate of  approximately  $75 million
from the sale of equity  securities from its inception through June 30, 1997. In
July 1992, the Company raised net proceeds of approximately $10.7 million in the
initial  public  offering of its Common Stock.  In September  1993,  the Company
entered into a collaborative  agreement with Genzyme relating to the development
and  commercialization  of  AtrogenTM,  in  connection  with  which the  Company
received  net  proceeds of  approximately  $4.5  million from the sale of Common
Stock to Genzyme. In November 1993 and May 1996, the Company raised net proceeds
of approximately $11.5 and $32.1 million,  respectively,  in public offerings of
Common  Stock.  From October 1995  through June 30, 1997,  the Company  received
aggregate  net  proceeds of  approximately  $6.5  million  from the  exercise of
certain  warrants  issued  in its 1995  merger  with  Oncologix,  Inc.  From its
inception  until June 30, 1997,  the Company also  received an aggregate of $4.5
million cash from collaborative arrangements and SBIR grants. In September 1995,
the Company's cash and securities  held to maturity  increased by  approximately
$6.7  million  as a  result  of its  1995  merger  with  Triplex  Pharmaceutical
Corporation.


                                      -10-
<PAGE>

   The Company's primary use of cash to date has been in operating activities to
fund  research  and  development,  including  preclinical  studies and  clinical
trials, and general and administrative  expenses.  Cash of $5.6 million and $4.0
million was used in operating activities during the first six months of 1997 and
1996,  respectively.  The Company had cash,  cash-equivalents and short-term and
long-term investments of $35.5 million as of June 30, 1997, consisting primarily
of cash and money market accounts,  and United States government  securities and
investment grade commercial paper.

     The Company has experienced  negative cash flows from operations  since its
inception  and  has  funded  its   activities  to  date  primarily  from  equity
financings. The Company has expended, and will continue to require,  substantial
funds to continue research and development,  including  preclinical  studies and
clinical trials of its products,  and to commence sales and marketing efforts if
FDA and other  regulatory  approvals are obtained.  The Company expects that its
existing capital  resources will be sufficient to fund its capital  requirements
through  mid-1999.  Thereafter,  the  Company  will  need to  raise  substantial
additional  capital to fund its operations.  The Company's capital  requirements
will depend on many  factors,  including  the  problems,  delays,  expenses  and
complications   frequently  encountered  by  development  stage  companies;  the
progress of the Company's research, development and clinical trial programs; the
extent and terms of any future collaborative research, manufacturing,  marketing
or other  funding  arrangements;  the costs and  timing  of  seeking  regulatory
approvals of the Company's products;  the Company's ability to obtain regulatory
approvals;  the success of the Company's sales and marketing programs;  costs of
filing,  prosecuting  and  defending  and  enforcing any patent claims and other
intellectual property rights; and changes in economic, regulatory or competitive
conditions of the Company's  planned  business.  Estimates about the adequacy of
funding for the Company's activities are based on certain assumptions, including
the assumption that testing and regulatory  procedures relating to the Company's
products can be conducted at  projected  costs.  There can be no assurance  that
changes in the Company's research and development plans, acquisitions,  or other
events will not result in accelerated or unexpected expenditures. To satisfy its
capital  requirements,  the  Company may seek to raise  additional  funds in the
public or private capital  markets.  The Company's  ability to raise  additional
funds in the public or private markets will be adversely affected if the results
of its current or future clinical trials are not favorable. The Company may seek
additional   funding  through  corporate   collaborations  and  other  financing
vehicles.  There can be no assurance  that any such funding will be available to
the Company on favorable  terms or at all. If adequate  funds are not available,
the Company may be required to curtail significantly one or more of its research
or  development  programs,  or it  may  be  required  to  obtain  funds  through
arrangements with future  collaborative  partners or others that may require the
Company to relinquish rights to some or all of its technologies or products.  If
the Company is successful in obtaining additional  financing,  the terms of such
financing may have the effect of diluting or adversely affecting the holdings or
the rights of the holders of the Company's Common Stock.


                                      -11-
<PAGE>


PART II.    OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders

     The Annual Meeting of the Stockholders of Aronex Pharmaceuticals,  Inc. was
held on May 14, 1997 to consider and vote upon the following proposals:

     (i)  Election  of  Class  II  Directors.  The  following  individuals  were
          nominated  and  elected  as Class  II  directors,  with the  following
          numbers  of  shares  voted  for and  against  and  withheld  for  each
          director:

                                                For              Withheld
              Geoffrey F. Cox, Ph.D.          12,357,339         1,006,593
              Gabriel Lopez-Berestein, M.D.   13,166,801           197,131


                                                 For       Against    Abstain
 
     (ii) Amendment  and  restatement  of 
          Amended and  Restated  1989 Stock
          Option Plan                         7,696,414   2,492,730    38,669

     (iii)Amendment and restatement of  
          Amended and Restated 1993
          Non-Employee Director Stock 
          Option Plan                        10,236,639     513,595    31,494

     (iv) Approval of 1997 Employee Stock 
          Purchase Plan                      10,385,171     368,163    28,394
               
      (v) Amendment of Restated Certificate 
          of Incorporation                   10,086,176      46,788    24,052 

     (vi) Ratification and Selection of 
          Arthur Andersen LLP as Independent 
          Public Accountants                 13,331,146     14,141    18,645





                                      -12-
<PAGE>


Item 6 Exhibits and Reports on Form 8-K

(a)Exhibits

     3.1  Restated Certificate of Incorporation, as amended.

     10.1 Amended and Restated 1989 Stock Option Plan.

     10.2 Amended and Restated 1993 Non-Employee Director Stock Option Plan.

     10.3 Lease  Agreement  dated  April 4, 1997  between  the  Company  and The
          Woodlands Corporation.

     11.1 Statement regarding computation of per share earnings.

     27.1 Financial data schedule.

 (b)Reports on Form 8-K

     None


                                   
                                      -13-
<PAGE>


                                  SIGNATURES

   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.



                                      ARONEX PHARMACEUTICALS, INC.




Dated:  August 12, 1997               By:/S/JAMES M. CHUBB
                                         -----------------
                                      James M. Chubb, Ph.D.
                                      President and Chief Executive Officer







Dated:  August 12, 1997               By:/S/TERANCE A. MURNANE
                                         ---------------------
                                      Terance A. Murnane
                                      Controller


     
                                 -14-