<PAGE>   1
                       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, 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 0-16614

                                NEORX CORPORATION
             (Exact Name of Registrant as Specified in its Charter)

     WASHINGTON                                       91-1261311
(State or other jurisdiction of                      (IRS Employer
 incorporation or organization)                   Identification No.)

               410 West Harrison Street, Seattle, Washington 98119
              (Address of Principal Executive Offices)    (Zip Code)

       Registrant's telephone number, including area code: (206) 281-7001

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 [ ]

Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of the latest practicable date.

As of May 7, 2001 there were outstanding 26,384,998 shares of the Company's
Common Stock, $.02 par value.


<PAGE>   2

                                TABLE OF CONTENTS

                          QUARTERLY REPORT ON FORM 10-Q
                      FOR THE QUARTER ENDED MARCH 31, 2001

<TABLE>
<CAPTION>

PART I                        FINANCIAL INFORMATION                           PAGE
------                        ---------------------                           ----
<S>         <C>                                                               <C>
Item 1.     Financial Statements:

            Balance Sheets as of March 31, 2001 and December 31, 2000          3

            Statements of Operations for the three months ended March 31,
            2001 and 2000                                                      4

            Statements of Cash Flows for the three months ended March 31,
            2001 and 2000                                                      5

            Notes to Financial Statements                                      6

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

Item 3.     Quantitative and Qualitative Disclosures About Market Risk        27

PART II                         OTHER INFORMATION

Item 5.     Other Information                                                 28

Item 6.     Exhibits                                                          28

            Signature                                                         32
</TABLE>



                                       2
<PAGE>   3

                                NEORX CORPORATION

<TABLE>
<CAPTION>

BALANCE SHEETS
(in thousands, except share data)
(unaudited)                                                                            MARCH 31,      DECEMBER 31,
                                                                                          2001            2000
                                                                                       ---------      ------------
<S>                                                                                    <C>            <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                                            $   8,812       $   8,389
  Investment securities                                                                   45,172          49,189
  Notes receivable                                                                         2,617           2,617
  Prepaid expenses and other current assets                                                1,295           1,333
                                                                                       ---------       ---------
     Total current assets                                                                 57,896          61,528
                                                                                       ---------       ---------

FACILITIES AND EQUIPMENT, at cost:
  Leasehold improvements                                                                   3,283           3,283
  Equipment and furniture                                                                  6,443           6,152
                                                                                       ---------       ---------
                                                                                           9,726           9,435
  Less: accumulated depreciation and amortization                                         (7,915)         (7,791)
                                                                                       ---------       ---------
     Facilities and equipment, net                                                         1,811           1,644
                                                                                       ---------       ---------

OTHER ASSETS, net                                                                          1,797           1,286
                                                                                       ---------       ---------
     Total Assets                                                                      $  61,504       $  64,458
                                                                                       =========       =========


LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
  Accounts payable                                                                     $     934       $   1,702
  Accrued liabilities                                                                        733             511
                                                                                       ---------       ---------
     Total current liabilities                                                             1,667           2,213
                                                                                       ---------       ---------

SHAREHOLDERS' EQUITY
  Series preferred stock, $.02 par value, 3,000,000 shares authorized:
    Convertible exchangeable preferred stock, Series 1, 205,340 shares issued
    and outstanding at March 31, 2001 and December 31, 2000 (entitled in
    liquidation to $5,300 and $5,176 at March 31, 2001 and December 31, 2000,
    respectively)                                                                              4               4
  Common stock, $.02 par value, 60,000,000 shares authorized, 26,384,998 and
    26,197,699 shares issued and outstanding, at March 31, 2001 and
    December 31, 2000, respectively                                                          528             524
  Additional paid-in capital                                                             221,712         220,702
  Accumulated deficit                                                                   (162,707)       (159,001)
  Accumulated other comprehensive income -- unrealized
    gain on investment securities                                                            300              16
                                                                                       ---------       ---------
    Total shareholders' equity                                                            59,837          62,245
                                                                                       ---------       ---------
      Total liabilities and shareholders' equity                                       $  61,504       $  64,458
                                                                                       =========       =========

                               See accompanying notes to the financial statements.
</TABLE>



                                        3
<PAGE>   4

                                NEORX CORPORATION

<TABLE>
<CAPTION>

STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
                                                             THREE MONTHS
                                                            ENDED MARCH 31,
                                                        -----------------------
                                                          2001           2000
                                                        --------       --------
<S>                                                     <C>            <C>
REVENUE                                                 $  1,039       $    149
                                                        --------       --------

OPERATING EXPENSES:

  Research and development                                 3,920          4,526

  General and administrative                               1,566          1,537
                                                        --------       --------

    Total operating expenses                               5,486          6,063
                                                        --------       --------

Loss from operations                                      (4,447)        (5,914)

OTHER INCOME (EXPENSE):
  Interest income                                            813            267

  Realized gain on sale of securities                         85          3,310

  Interest expense                                           (32)           (29)
                                                        --------       --------

Net loss                                                $ (3,581)      $ (2,366)
                                                        ========       ========

Preferred stock dividends                                   (125)          (127)
                                                        --------       --------

Net loss applicable to common shares                    $ (3,706)      $ (2,493)
                                                        ========       ========

Net loss per common share -- basic and diluted          $   (.14)      $   (.12)
                                                        ========       ========

Weighted average common shares outstanding --
  basic and diluted                                       26,245         21,363
                                                        ========       ========

              See accompanying notes to the financial statements.
</TABLE>



                                       4
<PAGE>   5

                                NEORX CORPORATION

<TABLE>
<CAPTION>

STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
                                                             THREE MONTHS
                                                            ENDED MARCH 31,
                                                        -----------------------
                                                          2001           2000
                                                        --------       --------
<S>                                                     <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss                                                $ (3,581)      $ (2,366)
Adjustments to reconcile net loss to net
  cash used in operating activities:
    Depreciation and amortization                            156             85
    Gain on sale of securities                               (85)        (3,310)
    Common stock issued for services                          --             81
    Stock options and warrants issued for services           741            206
    Increase in prepaid expenses and other assets           (375)          (581)
    Increase (decrease) in accounts payable                 (768)           529
    Increase (decrease) in accrued liabilities                97           (358)
                                                        --------       --------

Net cash used in operating activities                     (3,815)        (5,714)
                                                        --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:

Proceeds from sales of investment securities              17,100          6,775
Purchases of investment securities                       (12,714)        (5,624)
Facilities and equipment purchases                          (421)           (10)
                                                        --------       --------

Net cash provided by investing activities                  3,965          1,141
                                                        --------       --------

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from stock options and warrants exercised           273          1,775
                                                        --------       --------

Net cash provided by financing activities                    273          1,775
                                                        --------       --------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS         423         (2,798)

CASH AND CASH EQUIVALENTS:

Beginning of period                                        8,389          3,752
                                                        --------       --------

End of period                                           $  8,812       $    954
                                                        ========       ========

              See accompanying notes to the financial statements.
</TABLE>



                                       5
<PAGE>   6

                                NEORX CORPORATION

NOTES TO FINANCIAL STATEMENTS

Note 1. Basis of Presentation

      The interim financial statements contained herein 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 are adequate to make the
information presented not misleading. These financial statements should be read
in conjunction with the Company's annual report on Form 10-K for the year ended
December 31, 2000.

      In the opinion of management, the interim financial statements reflect all
adjustments, consisting only of normal recurring accruals necessary to present
fairly the Company's financial position as of March 31, 2001 and the results of
its operations and cash flows for the periods ended March 31, 2001 and 2000.

      The results of operations for the quarters ended March 31, 2001 and 2000
are not necessarily indicative of the expected operating results for the full
year.

Note 2. Shareholders' Equity

      Changes in shareholders' equity from December 31, 2000 to March 31, 2001
are as follows (in thousands):

<TABLE>
<CAPTION>
<S>                                                                    <C>
      Balance, December 31, 2000                                       $ 62,245
        Proceeds from stock options and warrants exercised                  273
        Stock options and warrants issued for services                      741
        Preferred stock dividends                                          (125)
        Net loss                                                         (3,581)
        Accumulated other comprehensive income -- unrealized gain on
          investment securities                                             284
                                                                       --------
      Balance, March 31, 2001                                          $ 59,837
                                                                       ========
</TABLE>



                                       6
<PAGE>   7

NOTES TO FINANCIAL STATEMENTS (Continued)

Note 3. Loss per share

      The following is a reconciliation of the numerator and denominator of the
basic and diluted loss per share computations for the three months ended March
31, 2001 and 2000 (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                           Three months ended
                                                                March 31,
                                                        -----------------------
                                                          2001           2000
                                                        --------       --------
<S>                                                     <C>            <C>
Net loss                                                $ (3,581)      $ (2,366)
Less: preferred stock dividends                             (125)          (127)
                                                        --------       --------
Net loss applicable to common shares                    $ (3,706)      $ (2,493)
                                                        ========       ========

Weighted average common shares
 outstanding -- basic and diluted                         26,245         21,363
                                                        ========       ========

Net loss per common share -- basic and diluted          $   (.14)      $   (.12)
                                                        ========       ========
</TABLE>

The denominator for diluted loss per share calculations for the quarters ended
March 31, 2001 and 2000 excludes the effect of options to purchase additional
shares of common stock because the share increments would be antidilutive.
Excluded for the quarters ended March 31, 2001 and 2000 were 3,186,567 and
2,890,453 shares of common stock issuable under stock options, respectively.

      In addition, 234,088 and 237,394 shares of common stock issuable upon
conversion of Series 1 Preferred Stock were not included in the calculation of
diluted loss per share for the quarters ended March 31, 2001 and 2000,
respectively, because the effect of including such shares would have been
antidilutive. For the same reason, outstanding warrants to purchase 270,000 and
305,000 shares of common stock at March 31, 2001 and 2000, respectively, and
45,930 shares of common stock issuable upon conversion of the Company's
convertible subordinated debentures for the quarter ended March 31, 2000 were
excluded from the calculation.



                                       7
<PAGE>   8

NOTES TO FINANCIAL STATEMENTS (continued)

Note 4. Comprehensive Loss

      The Company's comprehensive loss for the quarters ended March 31,
2001 and 2000 was $3,297,000 and $2,761,000, respectively. The comprehensive
loss for the quarters ended March 31, 2001 and 2000 consisted of net loss of
$3,581,000 and $2,366,000, respectively, and an unrealized gain on investment
securities of $284,000 for the quarter ended March 31, 2001 and a net unrealized
loss on investment securities of $395,000 for the quarter ended March 31, 2000.

Note 5. New Accounting Pronouncements

      In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, also known as SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS 133 establishes a new model
for accounting for derivatives and hedging activities and supersedes and amends
existing accounting standards and was required to be adopted on January 1, 2001.
SFAS 133 requires that all derivatives be recognized in the balance sheet at
their fair market value, and the corresponding derivative gains or losses be
either reported in the statement of operations or as a component of other
comprehensive income depending on the type of hedge relationship that exists
with respect to such derivative. The adoption of SFAS 133 on January 1, 2001 did
not have an impact on the Company's financial statements.



                                       8
<PAGE>   9

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

      This Form 10-Q contains forward-looking statements. These statements
relate to future events or future financial performance. In some cases, you can
identify forward-looking statements by terminology such as "may," "will,"
"should," "expect," "plan," "intend," "anticipate," "believe," "estimate,"
"predict," "potential," "propose" or "continue," the negative of these terms or
other terminology. These statements are only predictions. Actual events or
results may differ materially. In evaluating these statements, you should
specifically consider various factors described below in the section entitled
"Additional factors that may affect results." These factors may cause our actual
results to differ materially from any forward-looking statement.

      Although we believe the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. You should not place undue reliance on
our forward-looking statements, which apply only as of the date of this report.

Quarter ended March 31, 2001 compared to quarter ended March 31, 2000.

      Revenue for the quarter ended March 31, 2001 was $1,039,000 compared to
$149,000 for the quarter ended March 31, 2000. Revenue for the quarter ended
March 31, 2001 was primarily from government grants. The Company recognizes
revenue from government grants as earned. Revenue for the quarter ended March
31, 2000 consisted primarily of licensing revenue from Theseus, Ltd., under an
agreement licensing certain technology unrelated to NeoRx's primary product
development programs.

      Total operating expenses for the quarter ended March 31, 2001 decreased
10% to $5,486,000 from $6,063,000 in the quarter ended March 31, 2000. Research
and development expenses for the quarter ended March 31, 2001 decreased 13% to
$3,920,000 from $4,526,000 for the same time period in 2000. The decrease in
research and development expenses is primarily the result of lower clinical
trial costs. NeoRx's proposed Skeletal Targeted Radiotherapy product, which we
call STR, has been placed on clinical hold with the US Food and Drug
Administration.

      General and administrative expenses for the quarter ended March 31, 2001
were $1,566,000 versus $1,537,000 for the quarter ended March 31, 2000.

      Other income for the first quarter of 2001 was $866,000 compared to
$3,548,000 for the first quarter of 2000. Other income included interest income
for the first quarter of 2001 of $813,000 compared to $267,000 for the first
quarter of 2000. The increase



                                       9
<PAGE>   10

in interest income is due to a higher balance of investment securities. Other
income for the first quarter of 2000 also included $3,310,000 of realized gains
on the sale of the Company's shares of Angiotech Pharmaceuticals, Inc.

Liquidity and capital resources.

      Cash and investment securities as of March 31, 2001 were $53,984,000
compared to $57,578,000 at December 31, 2000.

      The Company has available a line of credit with PPD, Inc., of up to
$5,000,000 to assist in funding its pending phase III trial of its proposed STR
product. The Company has not drawn funds on this line of credit to date.

      On April 19, 2001, the Company completed its purchase from International
Isotopes Inc. of a radiopharmaceutical manufacturing plant and certain other
related assets in Denton, Texas. To acquire the facility and related assets, the
Company paid $6,000,000 in cash and assumed $6,000,000 of restructured debt of
International Isotopes. Of the $6,000,000 in cash paid, approximately $700,000
had been previously advanced and was included in notes receivable at December
31, 2000.

      The Company expects that its capital resources and interest income will be
sufficient to finance its currently anticipated working capital and capital
requirements through at least the second quarter of 2002. The Company's actual
capital requirements will depend on numerous factors, including results of
research and development activities, clinical trials, the levels of resources
that the Company devotes to establishing and expanding marketing and
manufacturing capabilities, competitive and technological developments and the
timing of revenues and expense reimbursements resulting from relationships with
third parties or collaborative agreements. The Company intends to seek
additional funding through arrangements with corporate partners, public or
private equity financing, or other sources. There can be no assurance that the
Company will be able to obtain such additional capital or enter into
relationships with corporate partners on a timely basis, on favorable terms, or
at all. If adequate funds are not available, the Company may be required to
delay, reduce or eliminate expenditures for certain of its programs or products
or enter into relationships with corporate partners to develop or commercialize
products or technologies that the Company would otherwise seek to develop or
commercialize itself.

Recent Developments.

      On April 19, 2001, the Company completed its purchase from



                                       10
<PAGE>   11

International Isotopes Inc. of a radiopharmaceutical manufacturing plant and
certain other related assets in Denton, Texas. The facility acquired has
achieved cGMP, or current Good Manufacturing Practices, status and has qualified
for issuance of appropriate radiation permits from the State of Texas. The
Company has hired certain former employees of International Isotopes to serve on
the Company's radiopharmaceutical manufacturing team at the facility. The
Company intends to use the facility primarily to produce its STR and other
products in development. Additionally, the Company intends to explore certain
select opportunities to provide manufacturing contract services to third
parties. To acquire the facility and related assets, the Company paid $6,000,000
in cash and assumed $6,000,000 of restructured debt of International Isotopes.
In addition, the Company issued to International Isotopes a three-year warrant
to purchase up to 800,000 shares of NeoRx common stock at a purchase price of
$10 per share. The Company has agreed to file a registration statement to
register the warrant shares for resale upon satisfaction of certain conditions.

      On March 21, 2001, the Company announced that it was in continuing
discussions with the FDA regarding its proposed STR product. The Company's phase
III multiple myeloma and other STR studies were placed on clinical hold in
November 2000 by the FDA after some patients developed a serious delayed
toxicity. Communications with the FDA have focused on the relevant factors for
selecting a safe radiation dose and the accuracy of radiation calculations. The
FDA has requested that the Company collect additional dosimetry data from
patients to demonstrate the accuracy of the method the Company proposes to use
to calculate dose in its phase III STR trial. The Company has submitted a
proposed protocol for this study with the FDA. The Company's phase III STR
trials will be delayed pending the completion of this study. The FDA suggested
that the Company analyze the relevant factors to select a radiation dose with
the appropriate safety profile. The Company's current STR phase III protocol may
be modified by this analysis. The Company intends to continue to work diligently
with the FDA to move development of the STR product forward.

      The Company also announced on March 21, 2001, that Douglas Given, MD, PhD,
formerly the Chief Technology Officer of Mallinckrodt, Oye Olukoton, MD,
formerly the Chief Medical Officer of Mallinckrodt, and Ray Schmelter, PhD,
formerly Senior Director of Medical Affairs and Operations of Mallinckrodt, are
consulting with the Company to support its operations, medical and regulatory
functions. On that same date, the Company announced that Richard Anderson
announced his intention to retire in twelve months. Mr. Anderson has stepped
down from his positions as President and Chief Operating Officer of the Company
and will focus on the transition and integration of the Denton, Texas
radiopharmaceutical facility.



                                       11
<PAGE>   12

Paul G. Abrams now serves as President in addition to his previous position as
Chief Executive Officer of the Company.

      In addition, Carl Goldfischer, MD, formerly Chief Financial Officer of
ImClone, Inc., and currently a director of NeoRx, has agreed to serve as a
strategic and financial consultant to NeoRx.

Additional factors that may affect results.

      In addition to the other information contained in this report, the
following factors could affect the Company's actual results and could cause our
actual results to differ materially from those achieved in the past or expressed
in our forward looking statements.

WE HAVE A HISTORY OF OPERATING LOSSES, WE EXPECT TO CONTINUE TO INCUR LOSSES,
AND WE MAY NEVER BECOME PROFITABLE.

      We have not been profitable for any year since our formation in 1984. As
of March 31, 2001, we had an accumulated deficit of $163 million. These losses
have resulted principally from costs incurred in our research and development
programs and from our general and administrative costs. To date, we have been
engaged only in research and development activities and have not generated any
significant revenues from product sales. We do not anticipate that any of our
proposed products will be commercially available for several years. We expect to
incur additional operating losses in the future. These losses may increase
significantly as we expand development and clinical trial efforts. Our ability
to achieve long-term profitability is dependent upon obtaining regulatory
approvals for our proposed products and successfully commercializing our
products alone or with third parties. However, our operations may not be
profitable even if we succeed in commercializing any of our products under
development.

WE WILL NEED TO RAISE ADDITIONAL CAPITAL, AND OUR FUTURE ACCESS TO CAPITAL IS
UNCERTAIN.

      It is expensive to develop cancer therapy products and conduct clinical
trials for these products. We plan to continue to simultaneously conduct
clinical trials and preclinical research for a number of different cancer
therapy products, which is costly. Our future revenues may not be sufficient to
support the expense of our operations and the conduct of our clinical trials and
preclinical research. We will need to raise additional capital:

   -  To fund operations



                                       12
<PAGE>   13

   -  To continue the research and development of our therapeutic products

   -  To commercialize our proposed products.

      We believe that our existing funds will be sufficient to satisfy our
financing requirements through at least the second quarter of 2002. However, we
may need additional financing within this time frame depending on a number of
factors, including the following:

   -  The rate of progress and costs of our research and development and
      clinical trial activities

   -  The costs of developing manufacturing operations

   -  The costs of developing marketing operations, if we undertake those
      activities

   -  The amount of milestone payments we might receive from potential
      collaborators

   -  Our degree of success in commercializing our cancer therapy products

   -  The emergence of competing technologies and other adverse market
      developments

   -  Changes in or terminations of our existing collaborations and licensing
      arrangements

   -  The costs of preparing, filing, prosecuting, maintaining and enforcing
      patent claims and other intellectual property rights.

      We may not be able to obtain additional financing on favorable terms or at
all. If we are unable to raise additional funds when we need them, we may be
required to delay, reduce or eliminate some or all of our development programs
and some or all of our clinical trials. We also may be forced to partner with
third parties to develop or commercialize products or technologies that we
otherwise would have sought to develop independently. If we raise additional
funds by issuing equity securities, further dilution to shareholders may result,
and new investors could have rights superior to current security holders.

OUR POTENTIAL PRODUCTS MUST UNDERGO RIGOROUS CLINICAL TESTING AND



                                       13
<PAGE>   14

REGULATORY APPROVALS, WHICH COULD BE COSTLY, TIME CONSUMING, SUBJECT US TO
UNANTICIPATED DELAYS OR PREVENT US FROM MARKETING ANY PRODUCTS.

      The manufacture and marketing of our proposed products and our research
and development activities are subject to regulation for safety, efficacy and
quality by the U.S. Food and Drug Administration in the United States and
comparable authorities in other countries.

      The process of obtaining FDA and other required regulatory approvals,
including foreign approvals, is expensive and often takes many years and can
vary substantially based upon the type, complexity and novelty of the products
involved. Our Skeletal Targeted Radiation, which we call STR, and PRETARGET(R)
products are novel; therefore, regulatory agencies lack experience with them.
This may lengthen the regulatory review process, increase our development costs
and delay or prevent commercialization of our STR and PRETARGET(R) products. Our
current STR studies were placed on clinical hold after some phase I/II patients
in our STR multiple myeloma trials developed a serious late toxicity. The FDA
has requested that we collect additional dosimetry data from patients to
demonstrate the accuracy of the method we propose to use to calculate dose in
our phase III trial. Our phase III STR trials may be delayed until the dosimetry
trial is completed. The FDA has also suggested that we analyze our patient data
to determine the relevant factors for selecting a radiation dose likely to
produce an appropriate safety profile. Our current STR phase III protocol could
be modified based on this analysis. Our trials cannot begin until we receive
authorization from the FDA.

      No cancer products using our STR or PRETARGET(R) technologies have been
approved for marketing. Consequently, there is no precedent for the successful
commercialization of products based on our technologies. In addition, we have
had only limited experience in filing and pursuing applications necessary to
gain regulatory approvals. This may impede our ability to obtain timely FDA
approvals, if at all. We will not be able to commercialize any of our potential
products until we obtain FDA approval, and consequently any delay in obtaining,
or inability to obtain, FDA approval could harm our business.

      If we violate regulatory requirements at any stage, whether before or
after marketing approval is obtained, we may be fined, forced to remove a
product from the market and experience other adverse consequences, including
delay, which could materially harm our financial results. Additionally, we may
not be able to obtain the labeling claims necessary or desirable for the
promotion of our proposed products. We may also be required to undertake
post-



                                       14
<PAGE>   15

marketing trials. In addition, if others or we identify side effects after
any of our products are on the market, or if manufacturing problems occur,
regulatory approval may be withdrawn and reformulation of our products,
additional clinical trials, changes in labeling of our products, and additional
marketing applications may be required.

      The requirements governing the conduct of clinical trials, manufacturing
and marketing of our proposed products outside the United States vary widely
from country to country. Foreign approvals may take longer to obtain than FDA
approvals and can involve additional testing. Foreign regulatory approval
processes include all of the risks associated with the FDA approval processes.
Also, approval of a product by the FDA does not ensure approval of the same
product by the health authorities of other countries.

WE MAY TAKE LONGER TO COMPLETE OUR CLINICAL TRIALS THAN WE PROJECT, OR WE MAY BE
UNABLE TO COMPLETE THEM AT ALL.

      Although for planning purposes we project the commencement, continuation
and completion of our clinical trials, a number of factors may cause significant
delays, including scheduling conflicts with participating clinicians and
clinical institutions and difficulties in identifying and enrolling patients who
meet trial eligibility criteria. We may not commence or complete clinical trials
involving any of our products as projected or may not conduct them successfully.

      We rely on academic institutions or clinical research organizations to
conduct, supervise or monitor some or all aspects of clinical trials involving
our proposed products. We will have less control over the timing and other
aspects of those clinical trials than if we conducted them entirely on our own.
If we fail to commence or complete, or experience delays in, any of our planned
clinical trials, our stock price and our ability to conduct our business as
currently planned could be harmed.

IF TESTING OF A PARTICULAR PRODUCT DOES NOT YIELD SUCCESSFUL RESULTS, WE WILL BE
UNABLE TO COMMERCIALIZE THAT PRODUCT.

      Our research and development programs are designed to test the safety and
efficacy of our proposed products in humans through extensive preclinical and
clinical testing. We may experience numerous unforeseen events during, or as a
result of, the testing process that could delay or prevent commercialization of
our proposed products, including the following:



                                       15
<PAGE>   16

   -  Safety and efficacy results attained in early human clinical trials may
      not be indicative of results that are obtained in later clinical trials.

   -  The results of preclinical studies may be inconclusive, or they may not be
      indicative of results that will be obtained in human clinical trials.

   -  After reviewing test results, we or any potential collaborators may
      abandon projects that we previously believed were promising.

   -  Our potential collaborators or regulators may suspend or terminate
      clinical trials if the participating subjects or patients are being
      exposed to unacceptable health risks.

   -  The effects our potential products have may not be the desired effects or
      may include undesirable side effects or other characteristics that
      preclude regulatory approval or limit their commercial use if approved.

      Clinical testing is very expensive, can take many years, and the outcome
is uncertain. We cannot at this time predict if, when or under what conditions
we will be permitted to restart our STR phase III trial or our other STR
clinical trials. The data collected from our clinical trials may not be
sufficient to support approval by the FDA of our proposed STR multiple myeloma
product, or any of our other proposed products. The clinical trials of our
proposed STR multiple myeloma product, and our other products under development,
may not be completed on schedule and the FDA may not ultimately approve any of
our product candidates for commercial sale. Our failure to adequately
demonstrate the safety and efficacy of a cancer therapy product under
development would delay or prevent regulatory approval of the product, which
could prevent us from achieving profitability.

WE ARE DEPENDENT ON SUPPLIERS FOR THE TIMELY DELIVERY OF MATERIALS AND SERVICES
AND MAY EXPERIENCE INTERRUPTIONS IN SUPPLY IN THE FUTURE.

      To be successful, we need to develop and maintain reliable and affordable
third party suppliers of:

   -  Commercial quantities of holmium-166, the form of radiation used in our
      STR product, and yttrium-90, the form of radiation used in our
      PRETARGET(R) program



                                       16
<PAGE>   17

   -  The chemical agent used in our STR product to deliver holmium-166 to the
      bone

   -  The antibodies and proteins used in our PRETARGET(R) program.

      Sources of some of these materials are limited, and we may be unable to
obtain these materials in amounts and at prices necessary to successfully
commercialize our proposed products. Timely delivery of materials is critical to
our success. For example, holmium-166, the form of radiation used in our STR
product, loses its effectiveness for treating patients within a short period of
time. As a result, our suppliers must ship the STR product to the patient within
24-hours after it is manufactured. Failures or delays in the manufacturing and
shipping processes could compromise the quality and effectiveness of our
products. We currently depend on a single source vendor for the holmium-166
component of our STR product. We plan to establish an additional supplier for
this material, but this may take several years. There are, in general,
relatively few alternative sources of holmium-166. While the current vendor
generally has provided us these materials with acceptable quality, quantity and
cost in the past, it may be unable or unwilling to meet out future demands. If
we have to switch to a replacement vendor, the manufacture and delivery of our
products could be interrupted for an extended period.

      We have entered into an arrangement with the University of Missouri
research reactor facility group, also known as MURR, to produce holmium-166.
MURR currently is responsible for the manufacture of holmium-166, including
process qualification, quality control, packaging and shipping, from its
Columbia, Missouri reactor facility. Our business and operations could be
materially adversely affected if MURR does not perform satisfactorily under this
arrangement. We plan to negotiate a long-term supply contract with MURR. If we
are unable to negotiate a long-term contract in a timely fashion upon favorable
terms, or if MURR is unable or unwilling to provide supplies of holmium-166
under such contract in a satisfactory manner, we may suffer delays in, or be
prevented from, initiating or completing clinical trials of our STR product.

IF WE FAIL TO NEGOTIATE AND MAINTAIN COLLABORATIVE ARRANGEMENTS WITH THIRD
PARTIES, OUR MANUFACTURING, CLINICAL TESTING, SALES AND MARKETING ACTIVITIES MAY
BE DELAYED OR REDUCED.

      We rely in part on collaborators and other third parties to perform for us
or assist us with a variety of important functions, including research and
development, manufacturing and clinical trials management. We also license
technology from others to



                                       17
<PAGE>   18

enhance or supplement our technologies. We may not be able to locate suppliers
to manufacture our products at a cost or in quantities necessary to make them
commercially viable. We intend to rely on third party contract manufacturers to
produce large quantities of materials needed for clinical trials and product
commercialization. Third party manufacturers may not be able to meet our needs
with respect to timing, quantity or quality. If we are unable to contract for a
sufficient supply of needed materials on acceptable terms, or if we should
encounter delays or difficulties in our relationships with manufacturers, our
clinical testing may be delayed, thereby delaying the submission of products for
regulatory approval or the market introduction and subsequent sales of our
products. Any such delay may lower our revenues and potential profitability.

      Moreover, any potential third-party manufacturers and we must continually
adhere to cGMP regulations enforced by the FDA through its facilities inspection
program. If our facilities, or the facilities of these manufacturers, cannot
pass a pre-approval plant inspection, the FDA will not grant pre-market approval
of our cancer therapy products. In complying with cGMP and foreign regulatory
requirements, we and any of our third-party manufacturers will be obligated to
expend time, money and effort in production, record-keeping and quality control
to assure that our products meet applicable specifications and other
requirements. If any of our third-party manufacturers or we fail to comply with
these requirements, we may be subject to regulatory action.

      ABC Laboratories, Inc., which we call ABC Labs, currently is our sole
collaborator manufacturing STR for our pending multiple myeloma clinical trials.
As such, ABC Labs would be responsible for all aspects of the manufacture of
STR, including process qualification, quality control, packaging and shipping.
We believe that ABC's manufacturing facilities will be sufficient to meet our
initial needs for the planned STR multiple myeloma and other STR clinical
trials. In the past, we have experienced interruptions in ABC Labs' STR
manufacturing processes, which if they occur in the future, could result in
material delays in, or prevent us from completing, our clinical trials and
otherwise commercializing our STR product. To help protect against such future
interruptions or delays in supply, on April 19, 2001, we purchased, from
International Isotopes Inc., a radiopharmaceutical manufacturing facility and
certain other assets, located in Denton, Texas. We have hired certain former
employees of International Isotopes to serve on the Company's
radiopharmaceutical manufacturing team at the facility. We intend to use the
facility primarily to produce our STR and other products in development.
Additionally, we intend to explore certain select opportunities to provide
manufacturing contract services to third parties. To acquire the facility and



                                       18
<PAGE>   19

related assets, we paid $6,000,000 in cash and assumed $6,000,000 of
restructured debt of International Isotopes. In addition, we issued to
International Isotopes a three-year warrant to purchase up to 800,000 shares of
NeoRx common stock at a purchase price of $10 per share. We currently expect
this manufacturing facility to be operational in the third quarter of 2001. In
this case, ABC Labs and NeoRx would share the manufacture of STR for clinical
trials.

      If we lose or are unable to secure collaborators, or if we are not
successful in initiating manufacturing operations at the Denton, Texas facility,
or if our current collaborators, including ABC Labs, do not apply adequate
resources to their collaboration with us, our product development and potential
for profitability may suffer. We intend to enter into collaborations for one or
more of the research, development, manufacturing, marketing and other
commercialization activities relating to some of our products under development.
If any collaborator breaches or terminates its agreement with us, or fails to
conduct its collaborative activities in a timely manner, the commercialization
of our products under development could be slowed down or blocked completely.
Disputes may arise between us and ABC Labs or other collaborators on a variety
of matters, including financial or other obligations under our agreements. These
disputes may be both expensive and time consuming and may result in delays in
the development and commercialization of our proposed products.

WE FACE SUBSTANTIAL COMPETITION IN THE DEVELOPMENT OF CANCER THERAPIES AND MAY
NOT BE ABLE TO SUCCESSFULLY COMPETE, AND OUR POTENTIAL PRODUCTS MAY BE RENDERED
OBSOLETE BY RAPID TECHNOLOGICAL CHANGE.

      The competition for development of cancer therapies is intense. There are
numerous competitors developing products to treat the diseases for which we are
seeking to develop products. We are initially focusing our STR product on the
treatment of multiple myeloma. Celgene Corporation's thalidomide product is
being sold for multiple myeloma, and Cell Therapeutics, Inc.'s arsenic trioxide
also is being tested in that disease. Some competitors have adopted product
development strategies targeting cancer cells with antibodies. Many emerging
companies, including IDEC Pharmaceuticals, Cytogen Corp. and Coulter
Pharmaceuticals, have corporate partnership arrangements with large, established
companies to support the research, development and commercialization of products
that may be competitive with ours. In addition, a number of established
pharmaceutical companies, including SmithKline Beecham, Nycomed Amersham,
Mallinkrodt, Inc. and Bristol-Myers Squibb, are developing proprietary
technologies or have enhanced their capabilities by entering into arrangements
with, or acquiring, companies with proprietary antibody-based



                                       19
<PAGE>   20

technology or other technologies applicable to the treatment of cancer. Many of
our existing or potential competitors have, or have access to, substantially
greater financial, research and development, marketing and production resources
than we do and may be better equipped than us to develop, manufacture and market
competing products. Our competitors may have, or may develop and introduce, new
products that would render our technology and products under development less
competitive, uneconomical or obsolete.

      We also expect to face increasing competition from universities and other
non-profit research organizations. These institutions carry out a significant
amount of cancer research and development. These institutions are becoming
increasingly aware of the commercial value of their findings and more active in
seeking patent and other proprietary rights, as well as licensing revenues.

IF WE ARE UNABLE TO PROTECT OUR PROPRIETARY RIGHTS, WE MAY NOT BE ABLE TO
COMPETE EFFECTIVELY, OR OPERATE PROFITABLY.

      Our success is dependent in part on obtaining, maintaining and enforcing
our patents and other proprietary rights and our ability to avoid infringing the
proprietary rights of others. Patent law relating to the scope of claims in the
biotechnology field in which we operate is still evolving and, consequently,
patent positions in our industry may not be as strong as in other
better-established fields. Accordingly, the United States Patent and Trademark
Office may not issue patents from the patent applications owned by or licensed
to us. If issued, the patents may not give us an advantage over competitors with
similar technology.

      We own more than 100 issued United States patents and have licenses to
additional patents. However, the issuance of a patent is not conclusive as to
its validity or enforceability and it is uncertain how much protection, if any,
will be given to our patents if we attempt to enforce them and they are
challenged in court or in other proceedings, such as oppositions, which may be
brought in foreign jurisdictions to challenge the validity of a patent. A third
party may challenge the validity or enforceability of a patent after its
issuance by the Patent and Technology Office. It is possible that a competitor
may successfully challenge our patents or that a challenge will result in
limiting their coverage. Moreover, the cost of litigation to uphold the validity
of patents and to prevent infringement can be substantial. If the outcome of
litigation is adverse to us, third parties may be able to use our patented
invention without payment to us. Moreover, it is possible that competitors may
infringe our patents or successfully avoid them through design innovation. To
stop these activities we may need to file a lawsuit. These lawsuits are
expensive and would



                                       20
<PAGE>   21

consume time and other resources, even if we were successful in stopping the
violation of our patent rights. In addition, there is a risk that a court would
decide that our patents are not valid and that we do not have the right to stop
the other party from using the inventions. There is also the risk that, even if
the validity of our patents was upheld, a court would refuse to stop the other
party on the ground that its activities do not infringe our patents.

      In addition to the intellectual property rights described above, we also
rely on unpatented technology, trade secrets and confidential information.
Therefore, others may independently develop substantially equivalent information
and techniques or otherwise gain access to or disclose our technology. We may
not be able to effectively protect our rights in unpatented technology, trade
secrets and confidential information. We require each of our employees,
consultants and advisors to execute a confidentiality agreement at the
commencement of an employment or consulting relationship with us. However, these
agreements may not provide effective protection of our information or, in the
event of unauthorized use or disclosure, they may not provide adequate remedies.

THE USE OF OUR TECHNOLOGIES COULD POTENTIALLY CONFLICT WITH THE RIGHTS OF
OTHERS.

      Our competitors or others may have or acquire patent rights that they
could enforce against us. If they do so, we may be required to alter our
products, pay licensing fees or cease activities. If our products conflict with
patent rights of others, third parties could bring legal actions against us
claiming damages and seeking to enjoin manufacturing and marketing of the
affected products. If these legal actions are successful, in addition to any
potential liability for damages, we could be required to obtain a license in
order to continue to manufacture or market the affected products. We may not
prevail in any legal action and a required license under the patent may not be
available on acceptable terms or at all.

WE MAY INCUR SUBSTANTIAL COSTS AS A RESULT OF LITIGATION OR OTHER PROCEEDINGS
RELATING TO PATENT AND OTHER INTELLECTUAL PROPERTY RIGHTS.

      The cost to us of any litigation or other proceedings relating to
intellectual property rights, even if resolved in our favor, could be
substantial. Some of our competitors may be better able to sustain the costs of
complex patent litigation because they have substantially greater resources. If
there is litigation against



                                       21
<PAGE>   22

us, we may not be able to continue our operations. If third parties file patent
applications, or are issued patents claiming technology also claimed by us in
pending applications, we may be required to participate in interference
proceedings in the Patent and Trademark Office to determine priority of
invention. We may be required to participate in interference proceedings
involving our issued patents and pending applications. We may be required to
cease using the technology or to license rights from prevailing third parties as
a result of an unfavorable outcome in an interference proceeding. A prevailing
party in that case may not offer us a license on commercially acceptable terms.

PRODUCT LIABILITY CLAIMS IN EXCESS OF THE AMOUNT OF OUR INSURANCE WOULD
ADVERSELY AFFECT OUR FINANCIAL CONDITION.

      The testing, manufacturing, marketing and sale of the cancer therapy
products that we have under development may subject us to product liability
claims. We are insured against such risks up to a $10 million annual aggregate
limit in connection with clinical trials of our products under development and
intend to obtain product liability coverage in the future. However, insurance
coverage may not be available to us at an acceptable cost, if at all. We may not
be able to obtain insurance coverage that will be adequate to satisfy any
liability that may arise. Regardless of merit or eventual outcome, product
liability claims may result in decreased demand for a product, injury to our
reputation, withdrawal of clinical trial volunteers and loss of revenues. As a
result, regardless of whether we are insured, a product liability claim or
product recall may result in losses that could be material.

OUR USE OF RADIOACTIVE AND OTHER HAZARDOUS MATERIALS EXPOSES US TO THE RISK OF
MATERIAL ENVIRONMENTAL LIABILITIES, AND WE MAY INCUR SIGNIFICANT ADDITIONAL
COSTS TO COMPLY WITH ENVIRONMENTAL LAWS IN THE FUTURE.

      Our research and development and clinical manufacturing processes, as well
as the manufacturing processes used by our collaborators, involve the controlled
use of hazardous and radioactive materials. As a result, we are subject to
foreign, federal, state and local laws, rules, regulations and policies
governing the use, generation, manufacture, storage, air emission, effluent
discharge, handling and disposal of certain materials and wastes in connection
with our use of these materials. Although we believe that our safety procedures
and the safety procedures utilized by our collaborative partners for handling
and disposing of such materials comply with the standards prescribed by such
laws and regulations, we may be required to incur significant costs to



                                       22
<PAGE>   23

comply with environmental and health and safety regulations in the future. In
addition, the risk of accidental contamination or injury from hazardous and
radioactive materials cannot be completely eliminated. In the event of such an
accident, we could be held liable for any resulting damages, and any such
liability could exceed our resources.

EVEN IF WE BRING PRODUCTS TO MARKET, CHANGES IN HEALTHCARE REIMBURSEMENT COULD
ADVERSELY AFFECT OUR ABILITY TO EFFECTIVELY PRICE OUR PRODUCTS OR OBTAIN
ADEQUATE REIMBURSEMENT FOR SALES OF OUR PRODUCTS.

      The levels of revenues and profitability of biotechnology companies may be
affected by the continuing efforts of government and third-party payors to
contain or reduce the costs of healthcare through various means. For example, in
certain foreign markets pricing or profitability of prescription pharmaceuticals
is subject to governmental control. In the United States, there have been, and
we expect that there will continue to be, a number of federal and state
proposals to implement similar governmental controls. It is uncertain what
legislative proposals will be adopted or what actions federal, state or private
payors for healthcare goods and services may take in response to any healthcare
reform proposals or legislation. Even in the absence of statutory change, market
forces are changing the healthcare sector. We cannot predict the effect
healthcare reforms may have on the development, testing, commercialization and
marketability of our cancer therapy products. Further, our ability to
commercialize our products under development may be adversely affected to the
extent that such proposals or reforms have a material adverse effect on the
business, financial condition and profitability of other companies that are
prospective collaborators for certain of our potential products. In addition,
both in the United States and elsewhere, sales of prescription pharmaceuticals
depend in part on the availability of reimbursement to the consumer from
third-party payors, such as governmental and private insurance plans.
Third-party payors are increasingly challenging the prices charged for medical
products and services. If we succeed in bringing one or more products to market,
we cannot be certain that these products will be considered cost-effective and
that reimbursement to the consumer will be available or will be sufficient to
allow us to sell our products on a competitive or profitable basis.

THE LOSS OF KEY EMPLOYEES COULD ADVERSELY AFFECT OUR OPERATIONS.

      We are a small company with approximately 110 employees as of April 19,
2001 subsequent to the purchase of the Denton, Texas facility and hiring of
personnel for that facility. Our success



                                       23
<PAGE>   24

depends, to a significant extent, on the continued contributions of our
principal management and scientific personnel. The loss of the services of one
or more of our key personnel, including Paul G. Abrams, President and Chief
Executive Officer of the Company, and other principal members of our scientific
and management staff, could delay our product development programs and our
research and development efforts. We do not maintain key person life insurance
on any of our officers, employees or consultants.

      Competition for qualified employees among companies in the biotechnology
and biopharmaceutical industry is intense. Our future success depends upon our
ability to attract, retain and motivate highly skilled employees. In order to
commercialize our proposed products successfully, we may be required to expand
substantially our workforce, particularly in the areas of manufacturing,
clinical trials management, regulatory affairs, business development and sales
and marketing. These activities will require the addition of new personnel,
including management, and the development of additional expertise by existing
management personnel.

OUR STOCK PRICE IS VOLATILE AND, AS A RESULT, YOU COULD LOSE SOME OR ALL OF YOUR
INVESTMENT.

      There has been a history of significant volatility in the market prices of
securities of biotechnology companies, including our common stock, and it is
likely that the market price of our common stock will continue to be highly
volatile. Our business and the relative prices of our common stock may be
influenced by a large variety of industry factors, including:

   -  Announcements by us or our competitors concerning acquisitions, strategic
      alliances, technological innovations and new commercial products

   -  The availability of critical materials used in developing our products

   -  The results of clinical trials

   -  Developments concerning patents, proprietary rights and potential
      infringement

   -  The expense and time associated with and the extent of our ultimate
      success in securing government approvals.

      In addition, public concern about the safety of the products we develop,
comments by securities analysts, and general market



                                       24
<PAGE>   25

conditions may have a significant effect on the market price of our common
stock. The realization of any of the risks described in this report, as well as
other factors, could have a material adverse impact on the market price of our
common stock and may result in a loss of some or all of your investment.

      In the past, securities class action litigation has often been brought
against companies following periods of volatility in their stock prices. We may
in the future be the targets of similar litigation. Securities litigation could
result in substantial costs and divert our management's time and resources,
which could cause our business to suffer.

CERTAIN PROVISIONS IN OUR ARTICLES OF INCORPORATION AND WASHINGTON STATE LAW
COULD DISCOURAGE A CHANGE OF CONTROL OF NEORX.

      Our articles of incorporation authorize our board of directors to issue up
to 3,000,000 shares of preferred stock and to determine the price, rights,
preference, privileges and restrictions, including voting rights, of those
shares without any further vote or action by our shareholders. The issuance of
preferred stock could have the effect or delaying, deferring or preventing a
change of control of NeoRx, even if this change would benefit our shareholders.
In addition, the issuance of preferred stock may adversely affect the market
price of our common stock and the voting and other rights of the holders of our
common stock.

      We have adopted a shareholders' rights plan, which is intended to protect
the rights of shareholders by deterring coercive or unfair takeover tactics. The
board of directors declared a dividend to holders of our common stock of one
preferred share purchase right for each outstanding share of the common stock.
The right is exercisable ten days following the offer to purchase or acquisition
of beneficial ownership of 20% of the outstanding common stock by a person or
group of affiliated persons. Each right entitles the registered holder, other
than the acquiring person or group, to purchase from NeoRx one-hundredth of one
share of Series A Junior Participating Preferred Stock at the price of $40,
subject to adjustment. The rights expire April 10, 2006. In lieu of exercising
the right by purchasing one one-hundredth of one share of Series A Preferred
Stock, the holder of the right, other than the acquiring person or group, may
purchase for $40 that number of shares of our common stock having a market value
of twice that price.

      Washington law imposes restrictions on some transactions between a
corporation and significant shareholders. Chapter 23B.19 of the Washington
Business Corporation Act prohibits a target corporation, with some exceptions,
from engaging in particular



                                       25
<PAGE>   26

significant business transactions with an acquiring person, which is defined as
a person or group of persons that beneficially owns 10% or more of the voting
securities of the target corporation, for a period of five years after the
acquisition, unless the transaction or acquisition of shares is approved by a
majority of the members of the target corporation's board of directors prior to
the acquisition. Prohibited transactions include, among other things:

   -  A merger or consolidation with, disposition of assets to, or issuance or
      redemption of stock to or from the acquiring person

   -  Termination of 5% or more of the employees of the target corporation

   -  Receipt by the acquiring person of any disproportionate benefit as a
      shareholder.

      A corporation may not opt out of this statute. This provision may have the
effect of delaying, deterring or preventing a change in control of NeoRx.



                                       26
<PAGE>   27

Item 3. Quantitative and Qualitative Disclosures about Market Risk

      The Company is exposed to the impact of interest rate changes and changes
in the market values of its investments.

INTEREST RATE RISK

      The Company's exposure to market rate risk for changes in interest rates
relates primarily to the Company's debt securities included in its investment
portfolio. The Company does not have any derivative financial instruments. The
Company invests in debt instruments of the U.S. Government and its agencies and
high-quality corporate issuers. Investments in both fixed rate and floating rate
interest earning instruments carry a degree of interest rate risk. Fixed rate
securities may have their fair market value adversely impacted due to a rise in
interest rates, while floating rate securities may produce less income than
expected if interest rates fall. Due in part to these factors, the Company's
future investment income may fall short of expectations due to changes in
interest rates or the Company may suffer losses in principal if forced to sell
securities that have declined in market value due to changes in interest rates.
At March 31, 2001, the Company owned government debt instruments in the amount
of $10.2 million and corporate debt securities in the amount of $34.8 million.
The Company's exposure to losses as a result of interest rate changes is managed
through investing primarily in securities with relatively short maturities of up
to three years.

INVESTMENT RISK

      The Company has received equity instruments under licensing agreements.
These instruments are included in investment securities and are accounted for at
fair value with unrealized gains and losses reported as a component of
comprehensive loss and classified as accumulated other comprehensive income -
unrealized gain on investment securities in shareholders' equity. Such
investments are subject to significant fluctuations in fair market value due to
the volatility of the stock market. At March 31, 2001, the Company owned such
corporate equity securities in the amount of $0.2 million.



                                       27
<PAGE>   28

Item 5. Other Information

None.

Item 6. Exhibits and Reports on Form 8-K


                                  EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                  INCORPORATION
EXHIBIT                            DESCRIPTION                   BY REFERENCE TO
-------                            -----------                   ---------------
<S>         <C>                                                  <C>
  3.1(a)    Restated Articles of Incorporation, dated April
            29, 1996                                                    *

  3.1(b)    Articles of Amendment, dated March 31, 1997, to
            Restated Articles of Incorporation                         **

  3.1(c)    Articles of Amendment, dated August 8, 1997, to
            Restated Articles of Incorporation                        XXXXX

  3.2       Bylaws, as amended, of the registrant                     XXXXX

  4.1       Form of Indenture, dated as of June 1, 1989,
            between NeoRx Corporation and First Interstate
            Bank of Washington, N.A., as Trustee                       ***

 10.1       Restated 1994 Stock Option Plan(++)                        (R)

 10.2       Lease Agreement for 410 West Harrison facility,
            dated February 15, 1996, between NeoRx
            Corporation and Diamond Parking, Inc.                       #

 10.3       Amendment No. 1, dated August 14, 2000, to Lease
            Agreement between NeoRx Corporation and Dina
            Corporation                                                 X

 10.4       1991 Stock Option Plan for Non-Employee
            Directors, as amended(++)                                  ==

 10.5       1991 Restricted Stock Option Plan(++)                    ******

 10.6       Agreement, dated as of December 15, 1995                  =====

 10.7       Consulting Agreement, dated as of July 7, 1993,
            between NeoRx Corporation and Dr. Fred Craves(++)          =

 10.8       Amendment No. 4 to consulting agreement, dated
            July 1, 2000 between NeoRx Corporation and Dr.
            Fred Craves(++)                                            X

 10.9       Agreement, dated as of June 1, 1987, between
            NeoRx Corporation and the Board of Trustees of
            the Leland Stanford Junior University, as
            amended                                                   ==

 10.10      Amendment No. 4, dated July 11, 1997, to
            Contract between NeoRx Corporation and the Board
            of Trustees of the Leland Stanford Junior
            University                                                 X

 10.11      Indemnification Agreement(++)                              #

 10.12      Form of Key Executive Severance Agreement(++)             ##

 10.13      Officer Change in Control Agreement(++)                  XXXXX

 10.14      Key Executive Severance Agreement(++)                    XXXXX

 10.15      License Agreement, dated June 30, 1999,
</TABLE>




                             28
<PAGE>   29

<TABLE>
<CAPTION>
                                                                  INCORPORATION
EXHIBIT                            DESCRIPTION                   BY REFERENCE TO
-------                            -----------                   ---------------
<S>         <C>                                                  <C>

            between NeoRx Corporation and The Dow Chemical
            Company                                                  (DELTA)

 10.16      Credit Facility Agreement, dated February 3,
            2000, between NeoRx Corporation and PPD, Inc.         (DELTA)(DELTA)

 10.17      Clinical Manufacture and Supply Agreement, dated
            February 21, 2000, between NeoRx Corporation and
            International Isotopes, Inc.                          (DELTA)(DELTA)

 10.18      Clinical Manufacture and Supply Agreement, dated
            September 1, 2000, between NeoRx Corporation and
            ABC Labs                                           (DELTA)(DELTA)(DELTA)

 10.19      Facilities Lease, dated July 24, 2000, between
            NeoRx Corporation and F5 Networks                  (DELTA)(DELTA)(DELTA)

 10.20      Stock Option Agreement, dated December 19, 2000,
            between NeoRx Corporation and Carl S.
            Goldfischer(++)                                            X

 10.21      Asset Purchase Agreement, dated March 20, 2001,
            between International Isotopes Inc. and NeoRx
            Corporation                                                X

 10.22      Stock Option Agreement, dated January 17, 2001,
            between NeoRx Corporation and Carl S.
            Goldfischer(++)                                            X

 10.23      Consulting Agreement, dated December 19, 2000,
            between NeoRx Corporation and Carl S.
            Goldfischer(++)                                            X

 10.24      Consulting Agreement, dated November 6, 2000,
            between NeoRx Corporation and Douglass Given(++)           X

 10.25      Stock Option Agreement, dated November 16, 2000,
            between NeoRx Corporation and Douglass Given(++)           X

 10.26      Sublicense Agreement, dated May 15, 1997,
            between NeoRx Corporation and Boehringer Manheim
            GmbH. Certain portions of the agreement have
            been omitted pursuant to a grant of confidential
            treatment.                                                 /\

 10.27      Clinical Manufacture and Supply Agreement, dated
            January 25, 2001, between NeoRx Corporation and
            ABC Labs, Inc. Certain portions of the agreement
            have been omitted pursuant to a grant of
            confidential treatment.                                    /\

 10.28      Consulting Agreement, dated February 28, 2001,
            between NeoRx Corporation and CR Strategies,
            L.L.C. Certain portions of the agreement have
            been omitted pursuant to a grant of confidential
            treatment.                                                 /\

 10.29      Stock Option Agreement, dated March 12, 2001,
            between NeoRx Corporation and Adeoye Y. Olukotun(++)      /\/\

 10.30      Stock Option Agreement, dated March 12, 2001,
            between NeoRx Corporation and Raymond F. Smelter(++)      /\/\

 10.31      First Amendment to Sublease Agreement, dated

</TABLE>




                             29
<PAGE>   30

<TABLE>
<CAPTION>
                                                                  INCORPORATION
EXHIBIT                            DESCRIPTION                   BY REFERENCE TO
-------                            -----------                   ---------------
<S>         <C>                                                  <C>
            March 30, 2001, between NeoRx Corporation and F5
            Networks                                                  /\/\

 23.1       Consent of KPMG LLP                                        X
</TABLE>

<TABLE>
<CAPTION>
<S>                     <C>
*                       Filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1996
                        and incorporated herein by reference.

**                      Filed as an exhibit to the Company's Registration Statement on Form S-3 (Registration No.
                        333-25161), filed April 14, 1997 and incorporated herein by reference.

***                     Filed as an exhibit to the Company's Registration Statement on Form S-1 (Registration No.
                        33-28545), effective May 31, 1989 and incorporated herein by reference.

******                  Filed as an exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended
                        September 30, 1991 and incorporated herein by reference.


=                       Filed as an exhibit to the Company's Registration Statement on Form S-2 (Registration No.
                        33-71164) effective December 13, 1993 and incorporated herein by reference.

==                      Filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1994
                        and incorporated herein by reference.

=====                   Filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31, 1995
                        and incorporated herein by reference.

(R)                     Filed as an exhibit to the Company's Registration Statement on Form S-8, filed July 31,
                        1997 and incorporated herein by reference.

#                       Filed as an exhibit to the Company's Form 10-Q for the quarterly period ended March 31,
                        1996 and incorporated herein by reference.

##                      Filed as an exhibit to the Company's Form 10-Q for the quarterly period ended June 30,
                        1996 and incorporated herein by reference.


X                       Filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31,
                        2000.

XXXXX                   Filed as an exhibit to the Company's Form 10-K for the fiscal year ended December 31,
                        1998.

(DELTA)                 Filed as an exhibit to the Company's Form 10-Q for the quarterly period ended September
                        30, 1999 and incorporated herein by reference. Certain portions of the agreement have been
                        omitted pursuant to a grant of confidential
</TABLE>



                                       30
<PAGE>   31

<TABLE>
<CAPTION>
<S>                     <C>
                        treatment.

(DELTA)(DELTA)          Filed as an exhibit to the Company's Form 10-Q for the quarterly period ended March 31,
                        2000 and incorporated herein by reference. Certain portions of the agreement have been
                        omitted pursuant to a grant of confidential treatment.

(DELTA)(DELTA)(DELTA)   Filed as an exhibit to the Company's Form 10-Q for the quarterly period ended September
                        30, 2000 and incorporated herein by reference. Certain portions of the agreement have been
                        omitted pursuant to a grant of confidential treatment.

/\                      Filed as an exhibit to the Company's Form 10-Q for the quarterly period ended March 31,
                        2001 and incorporated herein by reference. Certain portions of the agreement have been
                        omitted pursuant to a grant of confidential treatment.

/\/\                    Filed as an exhibit to the Company's Form 10-Q for the quarterly period ended March 31,
                        2001 and incorporated herein by reference.

++                      Management contract or compensatory plan.
</TABLE>

(b)   Current Reports on Form 8-K.

      Form 8-K dated January 11, 2001, relating to suspension of STR trials.

      Form 8-K dated March 21, 2001, relating to agreement to purchase
      radiopharmaceutical manufacturing facility, reports on FDA status of STR
      and additions to NeoRx team.



                                       31
<PAGE>   32

                                    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.

                                          NeoRx Corporation
                                          (Registrant)



Date: May 14, 2001

                                          By: /s/ Melinda G. Kile
                                             ----------------------------------
                                                  Melinda G. Kile
                                                  Controller
                                                  (Principal Financial and
                                                  Accounting Officer, Secretary)



                                       32