<PAGE>

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q


  X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----- EXCHANGE ACT OF 1934

      For the quarterly period Ended September 30, 1996 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 0-11839


                          ALZA TTS RESEARCH PARTNERS, LTD. 
                -----------------------------------------------------
                (Exact name of registrant as specified in its charter)


                     California                     94-2863497
              ----------------------------        ----------------
              (State or other jurisdiction        (I.R.S. Employer
            of incorporation or organization)   Identification Number)


            950 Page Mill Road, P.O. Box 10950, Palo Alto, CA, 94303-0802
            -------------------------------------------------------------
              (Address of principal executive offices)      (Zip Code)


Registrant's telephone number, including area code  (415) 494-5300
                                                    --------------

     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
                                  ----      ----

<PAGE>


PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements


                            ALZA TTS RESEARCH PARTNERS, LTD.
                                 (A limited partnership)

                      Statements of Revenue Collected and Expenses
                                      (unaudited)

<TABLE>
<CAPTION>
                                 Three Months                     Nine Months
                              Ended September 30,              Ended September 30,
                         ----------------------------       --------------------------
<S>                          <C>           <C>                 <C>          <C>
                                1996         1995                  1996        1995
                             ----------    ----------          ----------   ----------
REVENUE:
 Royalty income              $1,466,697    $1,124,258          $4,505,437   $3,116,565
 Interest income                  7,054         5,219              20,912       13,510
                             ----------    ----------          ----------   ----------

   Total revenue              1,473,751     1,129,477           4,526,349    3,130,075


EXPENSES:
 General and
      administrative             12,711        16,333              58,602       72,473
                             ----------    ----------          ----------   ----------

NET INCOME                   $1,461,040    $1,113,144          $4,467,747   $3,057,602
                             ----------    ----------          ----------   ----------
                             ----------    ----------          ----------   ----------


Allocation of net income:

 General Partner             $   14,610    $   11,131          $   44,678   $   30,576
 Class A Limited Partners     1,412,245     1,102,013           4,388,884    3,027,026
 Class B Limited Partner         34,185            --              34,185           --
                             ----------    ----------          ----------   ----------

NET INCOME                   $1,461,040    $1,113,144          $4,467,747   $3,057,602
                             ----------    ----------          ----------   ----------
                             ----------    ----------          ----------   ----------
NET INCOME PER CLASS A
   LIMITED PARTNERSHIP UNIT  $   441.33    $   344.38          $ 1,371.53   $   945.95
                             ----------    ----------          ----------   ----------
                             ----------    ----------          ----------   ----------
</TABLE>
                              See accompanying notes.

                                      -2-


<PAGE>


                             ALZA TTS RESEARCH PARTNERS, LTD.
                                  (A limited partnership)

                           Statements of Assets, Liabilities and
                                 Partners' Capital (Deficit)


                                                  September 30,     December 31,
                                                      1996              1995
                                                  -------------     ------------
                                                   (unaudited)

ASSETS
------

Current assets - Cash                               $   69,159       $   48,245
                                                    ----------       ----------
                                                    ----------       ----------

LIABILITIES AND PARTNERS' CAPITAL (DEFICIT)
-------------------------------------------

Current liabilities - Payable to
  ALZA Corporation                                  $  165,129       $  227,446


Partners' capital (deficit):
  Class A Limited Partners,
    3,200 units outstanding                            (95,624)        (336,732)
  Class B Limited Partner                                  609          159,343
  General Partner                                         (955)          (1,812)
                                                    ----------       ----------

  Total partners' (deficit)                            (95,970)        (179,201)
                                                    ----------       ----------

                                                    $   69,159       $   48,245
                                                    ----------       ----------
                                                    ----------       ----------







                             See accompanying notes.


                                      -3-

<PAGE>


                         ALZA TTS RESEARCH PARTNERS, LTD.
                             (A limited partnership)

                      Statement of Partners' Capital (Deficit)
                                   (unaudited)

                        Class A       Class B                    Total
                        Limited       Limited      General       Partners'
                        Partners      Partner      Partner       Capital
                      -----------    ---------    ---------     -----------

BALANCE,
  DECEMBER 31, 1993   $  (764,075)   $ 482,259    $ (2,883)     $ (284,699)

Net income              3,052,032           --      30,828       3,082,860
Payments to
  partners             (2,868,864)    (133,435)    (30,309)     (3,032,608)
                       ----------    ---------    --------      ----------

BALANCE,
  DECEMBER 31, 1994      (580,907)     348,824      (2,364)       (234,447)

Net income              4,318,031           --      43,616       4,361,647
Payments to
  partners             (4,073,856)    (189,481)    (43,064)     (4,306,401)
                       ----------    ---------    --------      ----------

BALANCE,
  DECEMBER 31, 1995      (336,732)     159,343      (1,812)       (179,201)

Net income              4,388,884       34,185      44,678       4,467,747
Payments to
  partners             (4,147,776)    (192,919)    (43,821)     (4,384,516)
                       ----------    ---------    --------      ----------

BALANCE,
  SEPTEMBER 30, 1996   $  (95,624)   $     609    $   (955)     $  (95,970)
                       ----------    ---------    --------      ----------
                       ----------    ---------    --------      ----------







                             See accompanying notes.


                                      -4-


<PAGE>

                         ALZA TTS RESEARCH PARTNERS, LTD.
                              (A limited partnership)

                             Statements of Cash Flows
               For the Nine Months Ended September 30, 1996 and 1995
                            Increase (Decrease) in Cash
                                    (unaudited)


                                              Nine Months Ended September 30,
                                                  1996              1995
                                              -----------        -----------
Cash flows from operating activities:

  Net income                                  $ 4,467,747        $ 3,057,602

  Adjustments to reconcile net income
     to net cash used in operating 
     activities:

  Payments to Partners                         (4,384,516)        (3,015,085)

  Decrease in liabilities:
     Payable to ALZA Corporation                  (62,317)           (29,009)
                                              -----------        -----------

Net cash provided by operating
  activities                                       20,914             13,508

Cash at beginning of period                        48,245             28,155
                                              -----------        -----------

Cash at end of period                         $    69,159        $    41,663
                                              -----------        -----------
                                              -----------        -----------



  
  
  


                             See accompanying notes.


                                      -5-


<PAGE>


NOTES TO CONDENSED FINANCIAL STATEMENTS (UNAUDITED)


1.   BASIS OF PRESENTATION 

     INTRODUCTION

     The financial statements of ALZA TTS Research Partners, Ltd. (the
     "Partnership") included herein should be read in conjunction with the
     audited financial statements included in the Partnership's Annual Report on
     Form 10-K for the year ended December 31, 1995.  The accompanying interim
     financial statements of the Partnership for the nine months ended September
     30, 1996 and September 30, 1995 are unaudited but include all adjustments
     which the General Partner (ALZA Development Corporation, a wholly-owned
     subsidiary of ALZA Corporation) believes necessary for fair presentation. 
     These financial statements have been prepared on a modified basis of cash
     receipts and disbursements, which is a comprehensive basis of accounting
     other than generally accepted accounting principles in that royalty
     revenues are not recognized until the related cash is received.

     ORGANIZATION

     The Partnership was formed on December 30, 1982 to conduct research and
     development on products combining the proprietary transdermal therapeutic
     system technology of ALZA Corporation ("ALZA") with certain generic
     compounds (the "TTS Partnership Products"). On April 22, 1983, the closing
     of the sale to the public of Class A Limited Partnership units took place. 
     At September 30, 1996, the Partnership's capital consisted of 3,200 Class A
     Limited Partnership units purchased for $5,000 each, an original investment
     by the Class B Limited Partner of $750,000 and an original investment by
     the General Partner of $169,192. Under the terms of the Agreement of
     Limited Partnership (the "Partnership Agreement"), 


                                      -6-


<PAGE>


     net losses were allocated as follows: first, 1% to the General 
     Partner and 99% to the Class A Limited Partners and then, after the 
     capital account of the Class A Limited Partners was reduced to zero, 1% 
     to the General Partner and 99% to the Class B Limited Partner. After 
     the capital accounts of the Class A and Class B Limited Partners were 
     reduced to zero, losses were allocated 100% to the General Partner.

     Under the terms of the Partnership Agreement, net income is allocated in
     the inverse order of the losses previously allocated.  Therefore, to the
     extent losses had been allocated 100% to the General Partner, net income
     was allocated 100% to the General Partner in an amount equal to such losses
     prior to any allocation of net income to the Class A and Class B Limited
     Partners.  Then, to the extent losses had been allocated 99% to the Class B
     Limited Partner, net income was first allocated 99% to the Class B Limited
     Partner (and 1% to the General Partner) in an amount equal to such losses
     prior to any net income being allocated to the Class A Limited Partners. 
     Then, to the extent losses had been allocated 99% to the Class A Limited
     Partners, net income was allocated 99% to the Class A Limited Partners (and
     1% to the General Partner.)  As provided in the Partnership Agreement,
     when, in the third quarter of 1996, the amount of net income allocated to
     the Class A Limited Partners and the General Partner equalled the
     previously allocated losses, subsequent income began to be allocated 99% to
     the Class A and Class B Limited Partners, pro rata, and 1% to the General
     Partner.

     The General Partner is required by the Partnership Agreement to distribute,
     on a quarterly basis, all of the Partnership's Excess Cash (which consists
     of all cash received by the Partnership less all amounts expended in the
     conduct of the Partnership's business, including administrative expenses,
     and working capital) in proportion to the Partners' respective capital
     contribution percentages.  Given the methodology for the allocation of
     losses and income discussed above, deficit 


                                      -7-


<PAGE>


     capital account balances have resulted in the Class A Limited 
     Partners' and General Partner's capital accounts and will continue until 
     future allocated income exceeds cumulative cash distributions required 
     of the General Partner. 







                                      -8-


<PAGE>


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


     LIQUIDITY AND CAPITAL RESOURCES


     Essentially all of the Partnership's Total Funds (as defined in the
     research and development contract between ALZA and the Partnership) have
     been utilized in the development of TTS Partnership Products.  Total Funds
     consisted of the net proceeds from the sale by the Partnership of the Class
     A Limited Partnership units, the General Partner's and Class B Limited
     Partner's capital contributions to the Partnership, and interest and other
     income earned through temporary investment of Partnership funds, less all
     necessary expenses of operating the Partnership.

     In accordance with the agreements between ALZA and the Partnership, the
     Partnership is entitled to receive 4% of net sales of Duragesic-Registered
     Trademark- (fentanyl transdermal system) CII and Testoderm-Registered
     Trademark- (testosterone transdermal system) CIII.  For the quarter ended
     September 30, 1996, cash provided from royalties from Duragesic-Registered
     Trademark- and Testoderm-Registered Trademark- increased to $1,466,697 from
     $1,124,258 for the same period of 1995. Excess Cash (defined as cash 
     received by the Partnership, less all amounts expended in the conduct of 
     the Partnership's business, including administrative expenses, and 
     working capital) is distributed to the Partners.  Because the Partnership 
     does not make commercialization decisions regarding TTS Partnership 
     Products, its potential royalty stream and income are not within the 
     Partnership's control. 

     Janssen Pharmaceutica, Inc. (together with its affiliates "Janssen"), a
     subsidiary of Johnson and Johnson, markets Duragesic-Registered Trademark-
     in the United States, Canada and 15 other countries worldwide.  The product
     has been cleared for marketing in more than 13 additional countries,
     including several in Europe, South America and the Far East (excluding
     Japan).  Submissions for marketing clearance are on file in a 


                                      -9-


<PAGE>


     number of other countries. ALZA Pharmaceuticals, the sales and 
     marketing division of ALZA, co-promotes Duragesic-Registered Trademark- 
     in the United States with Janssen.

     ALZA, through ALZA Pharmaceuticals, markets Testoderm-Registered Trademark-
     in the United States.  The product is expected to be marketed by one or
     more distributors outside the United States and has been cleared for
     marketing in Singapore and in more than ten European countries. 
     Commercialization agreements covering 17 Asian countries (excluding Japan)
     have been signed.

     TTS Partnership Products other than the Duragesic-Registered Trademark- and
     Testoderm-Registered Trademark- products were at very early stages of
     development when essentially all of the Partnership's Total Funds were
     exhausted.  Substantial expenditures would be required if the development
     of these products were to be completed and the products commercialized.  No
     arrangements have been made with development partners for such products and
     further activities are not contemplated at this time.


     RESULTS OF OPERATIONS


     From 1982 through 1987 the Partnership utilized all of the funds raised at
     the time of its formation, primarily to fund product development at ALZA. 
     Until the introduction of Duragesic-Registered Trademark- in 1991, the
     Partnership had been without cash for either operations or distribution
     since 1987.

     The Partnership earned net income during the third quarter of 1996 of
     $1,461,040 as compared to $1,113,144 for the third quarter of 1995.  The
     Partnership's royalty income received from ALZA, resulting from Janssen's
     reported net sales of Duragesic-Registered Trademark- and ALZA's net sales
     of Testoderm-Registered Trademark-, was $1,466,697 during the third quarter
     of 1996 as compared to $1,124,258 for the third quarter of 1995.  The


                                      -10-


<PAGE>


     increase is due to increased sales of Duragesic-Registered
     Trademark-.  The Partnership had interest income of $7,054 for the third
     quarter of 1996 as compared to interest income of $5,219 for the third
     quarter of 1995. The increase was due to a higher level of cash available
     for investment during the third quarter of 1996 as a result of the higher
     royalty payment received from ALZA during the quarter.

     General and administrative expenses for the continuing administrative
     support required for the Partnership are payable to ALZA under an
     administrative services agreement between ALZA and the Partnership. 
     General and administrative expenses were $12,711 for the third quarter of
     1996 as compared to $16,333 for the third quarter of 1995.

     In 1994 and 1995, payments for past administrative services totaled
     $135,307 and $138,607, respectively.  In the first nine months of 1996,
     payments for administrative services have totaled $124,021.  Between
     December 1987 (at which time all Partnership funds raised at the time of
     its formation had been utilized) and December 1991 (when the Partnership
     began receiving royalty revenues on TTS Partnership Product sales), the
     administrative costs were approximately $20,000 per quarter, totaling
     approximately $295,000.  These costs were payable to ALZA upon receipt of
     invoice; however, ALZA agreed that the costs could be reimbursed, 
     initially, at a quarterly rate of $5.00 per Partnership unit, which was 
     deducted from Excess Cash from December 1991 through December 1993.  In 
     March 1994, the quarterly rate was increased to $10.00 per Partnership 
     unit. In June 1996, it was determined that a further increase in the 
     reimbursement rate was necessary to fully reimburse ALZA for past 
     administrative costs on a more timely basis.  Therefore, beginning with 
     the September 1996 distribution, a quarterly deduction has been made from 
     Excess Cash in an amount equal to the actual administrative expenses of 
     the Partnership for the previous quarter plus $10 per Partnership unit to 
     repay past administrative costs.  As of September 30, 1996, the Partnership


                                     -11-


<PAGE>


     owed ALZA $165,129 for administrative services, of which $151,918 
     is for past due administrative costs. ALZA has not charged any 
     interest on the past due amounts. At a rate of $10.00 per Partnership 
     unit per quarter, all past administrative costs are expected to be 
     repaid during the fourth quarter of 1997.




                                     -12-


<PAGE>


PART II.  OTHER INFORMATION

Item 1.   LEGAL PROCEEDINGS
          
          In January 1994, a suit was filed against ALZA by Cygnus Therapeutic
          Systems ("Cygnus") in the United States District Court for the
          Northern District of California, seeking a declaration of
          unenforceability and invalidity of an ALZA patent relating to
          transdermal administration of fentanyl and alleging violation of
          antitrust laws.  In April 1995, the District Court granted ALZA's
          motion to dismiss the lawsuit.  Cygnus appealed that ruling.  In
          August 1996, the Court of Appeals of the Federal Circuit upheld the
          District Court's dismissal of Cygnus' claims against ALZA.  Cygnus has
          no further right of appeal.


Item 6.   EXHIBITS AND REPORTS ON FORM 8-K

  (a)   Exhibits:

          27  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.


                                 ALZA TTS Research Partners, Ltd.
                                          (Registrant)

                                 By:  ALZA Development Corporation
                                          General Partner

                                          By: /s/ David R. Hoffmann
                                             ----------------------
                                                  David R. Hoffmann
                                             President (Chief Executive 
                                              Officer), Chief Financial
                                                 Officer and Director


     Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant by its General Partner and in the capacities and on the dates
indicated.


Date:  November 13, 1996                  By: /s/ David R. Hoffmann 
                                             ----------------------
                                                  David R. Hoffmann
                                             President (Chief Executive
                                              Officer), Chief Financial
                                                 Officer and Director

Date:  November 13, 1996                 By: /s/ Bonnie J. Burdett
                                             ----------------------
                                                 Bonnie J. Burdett
                                                  Vice President,
                                              Secretary and Director

Date:  November 13, 1996                 By: /s/ James W. Young
                                             ------------------
                                                 James W. Young
                                             Vice President and
                                                   Director


                                     -14-

<PAGE>


Exhibit Index


EXHIBIT

  27      Financial Data Schedule






                                     -15-